Oil And Gas Attorney Gregory D. Jordan Comments on Hydraulic Fracturing Lawsuit
Austin, TX (Law Firm Newswire) September 27, 2013 – A federal judge said Texas law allows oil and gas drillers to “steal” from small landowners.
John Preston Bailey, a federal judge in Wheeling, West Virginia, had been asked to dismiss a case in which a West Virginia landowner sued a company that drilled a horizontal well for natural gas. The plaintiff alleged that hydraulic fracturing, commonly known as fracking, caused draining of the landowner’s natural gas to the company’s adjacent well. The company’s attorneys cited Coastal Oil & Gas v. Garza Energy Trust, a Texas Supreme Court case that held that the Texas “rule of capture” protects drillers from such claims. Judge Bailey said that gives drillers “a blank check” to “steal” from small landowners.
“There is an argument that hydraulic fracturing leads to more drainage, and that drilling regulations in Texas should be changed to address that,” said Gregory D. Jordan, an oil and gas attorney. “Under Garza, however, the rule of capture protects drillers against a trespass claim, so long as they follow Texas law and do not, for instance, drill a slant well underneath a neighbor’s property.”
The Garza case, decided in 2008, overturned a verdict awarding millions of dollars to Hidalgo County landowners who had sued a natural gas company, claiming that hydraulic fracturing led to drainage of the natural gas on their property to the driller’s well on adjacent property. The Texas Supreme Court said that some drainage is inevitable with hydraulic fracturing, which uses a mixture of water, chemicals and sand to force open rock formations underground to open the flow of oil and gas. The procedure can in some circumstances cause oil and gas to drain from a neighbor’s property. The Court said that neighboring landowners can offset drainage by drilling their own well.
“For landowners worried about drainage, the Texas Supreme Court has said that the remedy is for them to dig their own well,” said Jordan. “Unfortunately this is not always the most practical solution for the landowners involved.”
Landowners who are not in a position to have a well drilled on their property face the potential loss of valuable underground minerals when there is an offset horizontal well. A landowner or driller may apply to the Railroad Commission of Texas, which regulates drilling, for what is called a Rule 37 exception in order to drill close to a boundary line. That, too, may not always be the most equitable answer as a critical analysis by the Texas Tech Law Review has found that such Rule 37 exceptions sometimes allow hydrocarbons to be captured from adjacent property with landowners receiving no compensation.