A further hearing of the case was held on April 24, 1918, at which time Baker and Henshaw requested certain modifications in the work outlined. The commissioners reaffirmed their decision of March 20, 1918.

The formal appeal, above referred to, was that of Union Oil Company from Order No. 5 of the Supervisors relative to method of drilling, prospecting, and shutting off water in well No. 7 (International), Section 4, T. 11 N., R. 23 W., S. B. B. & M. The commissioners, at a special meeting on May 4, 1918, reversed the order of the Supervisor and upset all previously accepted practices as to the protection of oil sands from infiltrating water. The matter is fully set forth as follows:

ORDER NUMBER FIVE-STATE OIL AND GAS SUPERVISOR. April 22, 1918.

To Union Oil Company of California:

The question as to the proper method of drilling oil wells with a view to protecting the oil deposits in the vicinity of Sec. 4, T. 11 N., R. 23 W., S. B. B. & M., in the Maricopa Flat, Kern County, California, has been particularly brought to the attention of the State Oil and Gas Supervisor on several occasions. The method pursued or proposed by the Union Oil Company in the drilling of wells in the said locality has been the subject of much correspondence and discussion between the Supervisor and said Company, and other companies operating in the neighborhood.

The question was first brought particularly to the attention of the Supervisor by letter of complaint dated August 23, 1916, and written by Howard M. Payne, Receiver.

The question was made the subject of a public conference at Taft, California, on July 27, 1917, which was held at the request of the Union Oil Company. The Supervisor presided at the meeting, which was attended by representatives of the Union Oil Company and by representatives of other concerns operating in the aforementioned locality. A complete written record of the proceedings was kept in such form as to show all correspondence beginning with the original letter of complaint, dated August 23, 1916, and also all remarks made. A copy of the written record was furnished to the Union Oil Company and to other operators; a copy is on file with the Supervisor, and reference is hereby specifically made to said record.

The record of the said public conference shows that International well No. 6, belonging to the Union Oil Company, was the special subject of discussion. The record also shows that previous to that time, namely, on November 1, 1916, the operators of the locality had held a meeting for the purpose of discussing methods of protecting the oil

deposits, and advising the Supervisor as to their opinions. Written opinions were furnished to the Supervisor by several parties, but not by the Union Oil Company, and the record does not disclose whether or not the said Company was at that time co-operating with the neighboring operators. An assumption that there had not been complete. co-operation seems justified by statements of representatives of the Union Oil Company at the meeting of July 27, 1917 (page 134 of transcript), to the effect that objections and opinions of neighbors had not previously come to the attention of said company.

The record shows that under date of November 28, 1916, after receipt of written opinions from various operators, the Supervisor formulated a policy for protecting the oil deposits. The said policy specified two methods of drilling wells for two different underground geological conditions. One method provided that a string of casing should be cemented and tested above the top producing oil sand; the second method provided for cementing a string of casing below the top oil sand in case certain formations were found to be more than 400 feet apart.

In view of all the facts before the Supervisor after the public conference of July 27, 1917, a written recommendation and requirement as to the method of drilling International well No. 6 was furnished to the Union Oil Company by Deputy Supervisor R. N. Ferguson, under date of July 28, 1917. Said recommendation and requirement provided for cementing and testing a string of casing above the top sand, and definitely rejected a proposal to carry the casing below said top sand. The recommendation and requirement were based upon further study, investigation and new facts, and it therefore amended the policy of November 28, 1916, and eliminated the alternative method which allowed casing to be cemented below the top sand. Since the issuance of the recommendation and requirement of July 28, 1917, approval has been given only to proposals to land and cement above the top sand. The previously announced alternative method of cementing casing below the top sand was abandoned because it was found that in the case of a failure of water shut-off, by use of mud and cement, it is difficult, if not impossible, to protect the said top sand. This was specifically demonstrated in March, 1917, at Pat Welch well No. 4, on Sec. 4, and at Southern Pacific well No. 31, on Sec. 5, all in T. 11 N., R. 23 W., S. B. B. & M.

The policy of requiring that casing be cemented above the top sand was again definitely stated in writing by Deputy Supervisor R. N. Ferguson, under date of August 24, 1917, in a formal report to the Union Oil Company, in reply to their proposal to drill International well No. 7, said proposal bearing date of August 21, 1917. The Union

Oil Company agreed to said policy and ruling, as is shown in their proposal dated January 13, 1918, which states that the intention had previously been to cement the 10-inch casing at a depth of 2840 feet.

The Union Oil Company, however, proposed, under date of January 13, 1918, to complete International well No. 7 by a method not in accord with the policy requiring that casing be cemented and water shut off immediately above the top oil sand. The reason of the company for wishing to depart from the policy is that it has failed in its proposed program of mechanical operations at said well No. 7. No facts are set forth tending to show that the underground geological conditions as to water and oil sands are different from those originally assumed in formulating the policy for protection.

It can not be too emphatically and clearly set forth that, if failure of an operator to successfully carry out a mechanical operation were to be accepted as excuse for altering requirements, the legal regulation of drilling operations would immediately fall to the standard of operations set by the most inefficient operator in the State, and the law would be rendered null and void. The tendency to excuse and assist an operator who has been unfortunate in mechanical operations is a constant temptation to any official who desires to assist operations rather than to simply retard and drastically regulate them. Therefore, the logical outcome of any policy must be kept clearly and constantly in mind.

Sec. 3, Chapter 718, Statutes of 1915, amended 1917, reads as follows:

"It shall be the duty of the state oil and gas supervisor so to supervise the drilling, operation and maintenance and abandonment of petroleum or gas wells in the state of California, as to prevent, as far as possible, damage to underground petroleum and gas deposits from infiltrating water and other causes and loss of petroleum and natural gas."

After the mechanical difficulty which prevented the Union Oil Company from carrying the 10-inch casing deeper than 2570 feet, or about 270 feet above the probable position of the top sand, there was considerable discussion between representatives of the company and the Supervisor as to the method of completing the well. An agreement was not arrived at, and the company requested that the matter be referred to the District Oil and Gas Commissioners.

In order to place the matter formally before the said Commissioners, it became necessary, according to the provisions of the law, for the Supervisor to issue a formal order directing certain procedure at the well. For the purpose of assembling and considering all evidence upon which a formal order should rest, a formal hearing was held by the Supervisor at Taft on April 9, 1918. A complete written record of the proceedings was kept, and is hereby referred to.

The District Oil and Gas Commissioners were notified to attend, and did attend, the hearing for the purpose of being fully informed should the order of the Supervisor be appealed to them.

The assembling of evidence as to underground conditions was considered to be of such importance that the Supervisor detailed several engineers and geologists from other districts of the State to the study of the subject at hand. All but purely routine work in the fourth district was laid aside in order that this particular locality could be investigated. The Union Oil Company was given notice that complete technical and geological information would be gathered, and that the Supervisor hoped that the company would co-operate in such work to the same extent that neighboring operators had already done. Supervisor has repeatedly called the attention of the company to the fact that engineering and geological study of a locality must precede and accompany the mechanical work of drilling if oil deposits are to be properly protected from damage. Notwithstanding the requests for co-operation in technical work, the company failed to give it. The extent of such failure may be judged by the fact that the company did not even furnish a map accurately showing the location and elevation of its own wells. The failure of the company to co-operate in the matter of technical information is further shown by the fact that at the formal hearing the company was represented solely by its superintendent. Mr. George Kammerer, who is highly skilled in the mechanical details of well drilling, but lays no claim to knowledge of engineering or geology.

The disadvantage and nervous strain under which Mr. Kammerer labored in attempting single-handed to present his contentions and opinions on technical subjects was one of the most lamentable features of the hearing. That the officers of a company as large as the Union Oil company should have so little knowledge or concern as to the difficulty of correctly ascertaining the facts governing the protection of oil deposits is the most astounding feature of the inquiry. If a studied effort had been made by the officers of the company to discredit the administration of the law, the result could not have been better achieved than by placing their sole representative in such a position of tension and anxiety that he did repeatedly make contemptuous and derogatory remarks as to the fairness and integrity of the officers of the law.

The extent to which the company is uninformed as to invisible underground conditions and facts vitally affecting the control of water at their oil wells may be judged by certain testimony of their representative, Mr. Kammerer (page 149 of transcript), relative to ground surface conditions readily observable at International well No. 5:

"MR. MCLAUGHLIN. In this particular well, No. 5, is there not water flowing outside the casing?

MR. KAMMERER.

If there was I don't know it.

MR. MCLAUGHLIN. I was at the well yesterday, and I thought there was water outside of the casing.

MR. KAMMERER. No.

MR. MCLAUGHLIN. Maybe we were mistaken."

Since the hearing, a representative of the Supervisor, Mr. McGregor, petroleum engineer, has visited said well No. 5 and actually confirmed the observation of the Supervisor that water is flowing from behind the casing.

The hearing was conducted for the purpose of considering the physical facts as to underground conditions at International well No. 7, belonging to the Union Oil Company. The facts are developed by study of the observed conditions in wells of the immediate vicinity, and are as follows:

1. There is an anticlinal fold in the formations underlying the land in question. The axis of the fold runs southeasterly through a point near International well No. 4. The axis of the anticline plunges or becomes lower as it is followed toward the southeast.

2. The number of strata carrying either water or oil is extraordinarily great and presents one of the most difficult problems encountered in California, so far as protection of oil sands from damage by water is concerned. However, detailed and careful study shows remarkable persistence and regularity of geological conditions. There are no less than nine separate and distinct beds of sand carrying oil and occurring within a vertical range of about 900 feet. There are at least three strata or groups of strata carrying water. For convenience of description, the oil-bearing strata have been grouped into three zones. The water-bearing zones have been chosen as the division lines between the three oil-bearing zones.

Zone “A” is the uppermost or top oil sand, and is less than 100 feet in thickness. Less than 50 feet above it is a zone carrying water and referred to as the "lowest top water."

Zone "B" is almost 100 feet below zone "A," and is nearly 200 feet thick. Between zones "A" and "B" is a water-bearing zone referred to as the "upper flowing water."

Zone "C" is about 400 feet thick, and is about 100 feet below zone "B." Between zones "B" and "C" is a water-bearing zone referred to as the "lower flowing water." 3. Zone "A" has been encountered and identified in at least twenty-three wells on portions of Sections 4 and 5, T. 11 N., R. 23 W., and Section 32, T. 12 N., R. 23 W., S. B. B. & M., and immediately adjoining the property of the Union Oil Company known as the "International," being the southeast quarter of the northwest quarter of Section 4, T. 11 N., R. 23 W., S. B. B. & M. One well, namely, International No. 1, directly upon the said International property, encountered and actually produced oil from zone "A."

Testimony of witnesses was practically unanimous in the opinion that zone “A” extends under the International property.

At least twenty-two of the wells in the aforesaid sections 4, 5 and 32, have produced oil from zone "A." The total production has been not less than 1,433,173 bbl. of oil ranging from 18° to 22° Baumé. The average daily production of individual wells ranges from 38 to 500 bbl. of oil. There have been about 496,417 bbl. of water lifted with the oil from zone "A," or about one bbl. of water to every three bbl. of oil. The thickness of the productive oil sand in zone "A," as reported by logs of wells, ranges from 3 to 20 feet, the average being 10 feet.

4. Zone "B" has been encountered in at least nine wells in said Sections 4, 5 and 32. Five of the wells have produced a total of at least 1,226,850 bbl. of oil ranging

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