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'Rule of capture' applies to fracked wells: Pennsylvania Supreme Court

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'Rule of capture' applies to fracked wells: Pennsylvania Supreme Court

Highlights

Long-running case is called Southwestern Energy Co. v. Briggs

Appeals court erred in assuming distinction between artificial and natural well construction

New York — The Supreme Court of Pennsylvania said oil and natural gas coming from shale wells drilled and hydraulically fractured are protected by the common "rule of capture," but left open the possibility that neighbors to a fracked well could claim trespassing if fissures opened by fracking extended onto their land.

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The ruling brought a quiet sigh of relief to Pennsylvania's shale gas drillers. Under the rule of capture, oil and gas that flow into a well are the property of the well owner, regardless of how those molecules got there. Had the court ruled that fracked wells illegally pull in a neighbor's gas, the entire land and lease assumptions of the shale gas industry that produces 19.6 Bcf/d from state wells would be called into question.

"The risk of complex litigation may lead to a vast reduction of development activities throughout the commonwealth," the Marcellus Shale Coalition, a trade group for the state's shale gas industry, said in its April 2018 amicus brief on the appeal to the state Supreme Court.

"Developers who use hydraulic fracturing may rely on pressure differentials to drain oil and gas from under another's property, at least in the absence of a physical invasion," the court said in an opinion issued Wednesday.

The case, Southwestern Energy Co. v. Briggs, arose when the Briggs family, whose Susquehanna County farm is adjacent to a Southwestern well, sued in November 2015, claiming that by virtue of fracking, Southwestern was draining gas from their property as well as trespassing on their land, presuming that any shale fractures extended into the shale beneath their farm.

After the county common pleas court issued a summary judgment in favor of Southwestern, the Briggs family appealed and the state's Superior Court found that hydraulically fractured wells were different from conventional vertical wells because they artificially create and stimulate the flow of gas molecules (Superior Court of Pennsylvania No. 1351 MDA 2017). Southwestern appealed that ruling to the state Supreme Court.

The Supreme Court said the appeals court erred in assuming a distinction between artificial and natural well construction techniques, noting that all oil and gas drilling is an artificial imposition on the land. The appeals court also erred in assuming without evidence that because a well is fracked, fissures extend outside the boundary of the driller's leasehold, the high court said (Supreme Court of Pennsylvania 63 MAP 2018).

"Southwestern Energy is pleased that the Supreme Court of Pennsylvania affirmed the time-honored rule of capture, rejected as a matter of law the notion that the rule is inapplicable to drilling in unconventional reservoirs, and left unchanged the long-standing requirement that the plaintiff bears the burden of proving the specific conduct alleged and any damages," Southwestern Energy said in a statement Wednesday.

The critical ruling was not a complete win for the industry. The court left open the question as to what a driller's liability for trespass would be if a neighboring landowner presented evidence that fissures in the shale extended onto their property. The Briggs family did not present any evidence of fissures beneath their land.