Recent litigation in Pennsylvania threatened to open the door for mineral trespass claims arising from fracking operations. Success in this endeavor would have created a significant and potentially influential minority rule governing the extraction of minerals in gas-rich Pennsylvania. In a win for the industry, the Pennsylvania Supreme Court recently reconfirmed the rule of capture’s application to natural resource recovery regardless of the drilling techniques used.
Under the rule of capture, producers are generally not held accountable for recovery of oil and gas that migrates across subsurface property lines during drilling. In a nutshell, the rule of capture dictates that a person owns all the oil produced from a well on their land, even if resources migrate underground from neighboring tracts. With conventional drilling methods, this rule holds so long as the wellbore stays within the property bounds. During the fracking process, fluids and proppants are pumped into the ground at high pressures to create cracks in the rock and allow trapped resources to migrate to the well. While precision is improving, it is often difficult to control the exact length of the fissures created, and in some cases, they may cross subsurface property lines.
In 2008, in Coastal v. Garza, the Texas Supreme Court reaffirmed the rule of capture’s application to fracking. The decision rested on the difficulty of ascertaining resource origin and the industry’s long-standing reliance on the rule. However, in Pennsylvania, the plaintiffs in Briggs v. Southwestern Energy challenged the rule of capture as it applies to recovery accomplished by fracking. In Briggs, plaintiff-landowners sued Southwestern Energy claiming that fracking operations on a neighboring property were extracting resources from beneath their acreage. In 2018, the Pennsylvania Superior Court commanded the industry’s attention when it issued a ruling which distinguished fracking from conventional drilling and held that the rule of capture did not apply to “artificial” drainage techniques.
While fracking is not a new drilling method, it has recently become more widely used in combination with horizontal drilling, allowing maximum resource extraction with minimum surface impact. Fracking facilitates the recovery of trapped minerals, particularly in shale rock, which is generally considered uneconomical via other methods of extraction. Access to “new” resources has led to increased oil and gas production and in turn, increased energy independence in the U.S. The Marcellus Shale play, a third of which is in Pennsylvania, is a prime example.
Ultimately, the Pennsylvania Supreme Court reversed the Superior Court’s decision in Briggs and recommitted to the rule of capture, citing the difficulties involved in precise fracking and declining to tailor the trespass doctrine to specific drilling techniques. The Court was silent on the issue, but the decision protected the industry and the state’s economy from the broad ramifications of the disruption of this longstanding precedent. The intermediate court’s rule leaves producers open to liability for drainage of neighboring acreage, forcing them to make costly adjustments to operations or to abandon the jurisdiction altogether. Oil and gas extraction has contributed to a surge of financial resources in Pennsylvania, and any deterrent to operations in the state risks massive damage to its economy. The Supreme Court’s decision serves as a stabilizing force and reassures industry players that as technology progresses, they can continue to rely on the state to uphold foundational principles like the rule of capture.
Kuiper Law Firm, PLLC specializes in oil and gas issues; if you have any questions about how the information in this article may apply to you or your operations, do not hesitate to contact us.
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