By: Sabrina Tour
Earlier this month, a Pennsylvania Superior Court held that the rule of capture is inapplicable to hydraulic fracturing, commonly known as fracking. The longstanding rule of capture means that oil and gas resources belong to the person able to capture them through drilling wells. The rule of capture protects drillers from liability for draining of free-flowing oil and gas below an adjacent property.
In the suit Briggs v. Southwestern Energy Co., a Susquehanna County family who owns an 11-acre parcel of land accused Southwestern Energy of trespass for Southwestern Energy’s fracking two wells on a neighboring piece of property. The court agreed with the family. The court held that the rule of capture does not apply to fracking because fracking is distinguishable from conventional methods of oil and gas extraction. The court also noted its concern that precluding trespass liability based on the rule of capture would “nearly eradicate a mineral lessee’s incentive to negotiate mineral leases with small property owners.” The court relied heavily on the dissenting opinion in the 2008 Texas Supreme Court case Coastal Oil & Gas Corp. v. Garza Energy Trust.
This recent ruling is a huge blow to fracking companies and may severely impact Pennsylvania’s oil and gas industry. The court’s decision essentially creates a “trespass by fracture” cause of action. It has left many Marcellus Shale drillers open to uncertainty. For now, operators should take into consideration the risk of an actionable trespass claim as they plan wellbores that are located near unleased property lines.
Last week, Southwestern Energy asked a Pennsylvania appeals court to reconsider the decision. The company notes that the court’s decision not only affects Pennsylvania, but also unsettles the legal landscape for the entire industry since fracking is the most economic and commonly used method of producing oil and gas across the country, and because Pennsylvania is the second largest natural gas producing state.