Subsurface Trespass and Hydraulic Fractures

Subsurface Trespass and Hydraulic Fractures

QUESTION: Can a cause of action for subsurface trespass arise if hydraulic fractures extend beyond the leased horizons into an adjacent mineral estate?

I. DISCUSSION: The issue of subsurface trespass and hydraulic fracturing has been brought up numerous times in recent litigation, but Texas courts are reluctant to uphold the application of a subsurface trespass cause of action where hydraulic fractures unintentionally extend in to an adjacent owner's mineral estate causing the oil and gas to drain from the against estate. Instead Texas courts have deferred to the Supreme Court of Texas's holding in Coastal Oil & Gas Corp. v. Garza Energy Trust, 268 S.W. 3d. 1 (Tex. 2008) to deny said causes of action holding the rule of capture bars a plaintiff's recovery of damages against a neighboring mineral estate owner and/or operator for subsurface trespass as a result of subsurface fractures that extend beyond the lease boundaries.

In order to understand the Supreme Court of Texas's application of the Rule of Capture to subsurface trespass, a brief discussion of Coastal v. Garza is warranted.

II. Coastal Oil & Gas Corp. v. Garza Energy Trust, 268 S.W. 3d. 1 (Tex. 2008):

Fact Summary: Royalty interest owners of a natural gas lease on an adjacent tract of property brought suit against a neighboring operator for, among other things, subsurface trespass for oil and gas that had drained from their mineral estate as a result of hydraulic fractures that extend beyond the lease lines.

Holding: In its holding, the Supreme Court of Texas elected to punt on the subsurface trespass argument, and, instead, held the "Rule of Capture" precluded the trespass cause of action. Rule of Capture: Rule of non-liability for causing oil and gas to migrate across property lines; first one to capture the resources gets them. Drained neighbors do not have a right to seek reimbursement or damages. Instead, the neighbors have an obligation to drill their own well to limit/offset their damages

Discussion: In holding that a landowner has no right to sue another for oil and gas drained by hydraulic fractures that extend beyond the lease boundaries, the Supreme Court of Texas stated the law already affords the owner of the adjacent tract full recourse for the captured oil and gas. The landowner can drill a well of his own to offset the drainage from his property. If there is already a lease in place, the landowner can elect to sue the lessee for violations of the implied covenant in the lease to protect against drainage. In addition, he may offer to pool, and if the offer is rejected, apply to the Texas Railroad Commission for forced pooling.

III. CONCLUSION: Until Texas courts address the question of hydraulic fracturing and subsurface trespass head-on, the aforementioned cause of action will continue to be precluded by the application of the Rule of Capture and the Supreme Court of Texas's holding in Garza.

Gregory Klipp, Attorney at Law: January 31, 2018

DISCLAIMER: The foregoing information is not legal advice and is general in nature and not applicable to all situations. The reader should not rely on these general statements and should consult with knowledgeable persons before taking any actions.

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