Southwestern Energy Company is asking the Pennsylvania Supreme Court to reverse a lower court’s decision that overturned decades of the state’s oil and gas law by defining hydraulic fracturing that drains oil and gas stored in shale rock formations from beneath neighboring properties as a form of trespass.
For more than 100 years, Pennsylvania’s “rule of capture” allowed drilling companies to sink wells on one property and drain oil and gas originating beneath neighboring properties without it being considered trespass. In April, a state appeals court decided this no longer applies to fracking in tight rock formations such as the Marcellus Shale, where gas doesn’t flow as freely or generally escape without great effort.
Southwestern Energy says the lower court’s ruling will throw “the law surrounding oil and gas rights into chaos.”
No Evidence of Trespass
Bob Dick, a senior policy analyst with the Commonwealth Foundation and a policy advisor to The Heartland Institute, which publishes Environment & Climate News, says the question in the case is the dispute over how natural gas migrates.
“Southwestern argues they can’t be held liable for trespass because their operations never extended into the Briggs’ property,” Dick said. “Instead, they used the fracking process on their own property to capture natural gas, which they say naturally migrated from the Briggs’ property.
“If this is true, then there is no violation under the rule of capture,” said Dick.
Dick says the plaintiffs should have had to prove Southwestern trespassed physically onto their property.
Says Court Was Wrong
As a reservoir engineer for more than 40 years, Gary Stone, executive vice president of engineering at Five States Energy Company, is very familiar with the geological and legal aspects of oil and gas production. He says the case was decided incorrectly.
“The Pennsylvania Superior Court ruled ‘natural gas, when trapped in a shale formation, is non-migratory in nature,’ which is technically incorrect,” Stone said. “Over long periods of time, hydrocarbons migrate from shales to generally shallower sand or carbonate formations, where they are trapped by a variety of factors. Shales are also subject to natural geologic fracturing along stress boundaries, and movement can occur in this fashion.”
Stone says the court also mistakenly concluded the rule of capture applies only “whenever such flow occurs solely through the operation of natural agencies in a normal manner, as distinguished from artificial means applied to stimulate such a flow.”
“Again, incorrect, since wells have been hydraulically fracked since the late 1940s, fractured by nitroglycerine before that, and stimulated with acid to encourage flow for over 120 years, and these wells have never been excluded from rulings involving capture,” Stone said. “For instance, in the Coastal v Garza Energy ruling in 2008, the Supreme Court of Texas held hydraulic fracturing was not an actionable trespass.”
Kenneth Artz ([email protected]) writes from Dallas, Texas.