Tenneco Oil Co. v. State Industrial Commission

The State Industrial Commission (defendant) had set 80-acre spacing units for oil drilling in a field, permitting wells only in the northeast or southwest quarter of each section. Tenneco Oil Co. (plaintiff) held the lease on the west half of a section and sought an exception to drill in the northwest quarter instead of the permitted southwest quarter, even though experts testified a well in the southwest quarter would successfully produce oil. While that application was pending, Tenneco acquired the lease to the section's east half -- including the northeast quarter, where a neighboring company had already drilled a dry hole -- and refiled its exception request using a newly designated spacing unit combining the unproductive northeast quarter with the productive northwest quarter, again seeking to drill only in the northwest quarter. The commission denied the new application, finding the maneuver an attempt to manufacture apparent necessity for an otherwise unwarranted exception, and a lower court upheld that denial; Tenneco appealed again.