Recent legal rulings on fracking have the oil companies worried. Read the original article in Energy for Energy Economics and Financial Analysis.
Comments by OSFR historian Jim Tatum.
-A river is like a life: once taken, it cannot be brought back-
Anxiety is building around a court ruling in Pennsylvania that could potentially upend long-standing oil and gas arrangements, and affect hydraulic fracturing efforts nationwide.
Natural gas driller Southwestern Energy Production Co. has asked Pennsylvania’s Superior Court to rehear the case with more judges after a two-judge panel ruled April 2 that hydraulic fracturing could create liability when fluids released from the fracking process flow onto adjoining properties. The case, Briggs v. Southwestern Energy Production Co., in Pennsylvania’s Superior Court, has caught the attention of energy companies, oil and gas attorneys, and legal scholars nationwide, attorneys from around the country told Bloomberg Environment.
The ruling could have a chilling effect on oil and gas development because it overturns a long-standing, seemingly settled legal principle known as the “rule of capture,” they said. According to the rule of capture, a driller on one parcel of land may extract oil and gas from underneath adjoining properties as long as the driller doesn’t physically trespass over the property line.
The ruling holds potential for a significant economic impact for companies invested in gas development, because it increases the possibility that energy companies could face trespass claims in connection with their fracking operations that they otherwise wouldn’t have been exposed to, Anthony J. Carna, chair of McGuireWoods LLP’s oil and gas practice, told Bloomberg Environment May 3.
The case involves Southwestern Energy Production Co., a subsidiary of Houston-based Southwestern Energy Co., and the Briggs family, who own a roughly 11-acre property in Susquehanna County next to two hydraulic fracturing wells that the company has operated since 2011. The Briggs sued the driller in November 2015 for trespass and conversion, seeking punitive damages. They argued that extracting the natural gas from beneath their property through hydraulic fracturing is a trespass, because the gas would be trapped forever if it weren’t forcefully fracked out.
Fracking the Marcellus Shale to extract natural gas from beneath the Briggs’ property is “akin to opening the gate of a neighbor’s livestock pen and taking the livestock as they walk out,” they said in a court filing April 30, arguing that the court’s April 2 ruling should stand.