In a case being closely monitored by gas industry associations and landowner groups, the Pennsylvania Supreme Court ruled Jan. 22 that drillers can drain natural gas from neighboring properties without compensation.
“Rule of capture” is a long-established legal principle used in conventional well drilling. It holds that a property owner can drill a well and extract oil or gas, even if it comes from beneath another owner’s land, without that person’s permission. It is based on the fact that gas and oil traditionally were found in underground reservoirs and could migrate freely across property lines.
In Briggs vs. Southwestern Energy Production Co., attorneys for the Briggs family argued that rule of capture does not apply to unconventional wells because “natural gas contained in shale formations would remain trapped there forever if not for forced extraction through hydraulic fracturing,” according to the Superior Court opinion in the case. Hydraulic fracturing, or “fracking” involves injecting a high-pressure mixture of fluids and sand through a well into shale layers to create cracks, or fissures, through which the gas can then flow.
The Briggs family owns 11 acres of property in Susquehanna County and Southwestern had leased adjacent land and drilled gas wells there. Southwestern did not lease the Briggs’ land. In 2015, the Briggses sued for trespass, arguing that Southwestern had been unlawfully taking gas from beneath their property.
Southwestern argued that the Briggses claim was barred due to the rule of capture. In 2017, a trial court agreed with Southwestern and dismissed the lawsuit. The Briggses appealed to Superior Court, which said that previous cases involving rule of capture don’t apply to unconventional wells.
But the Supreme Court ruled that the Superior Court erred in making several assumptions, including that hydraulic fracturing alters the rule or capture, and that the “use of hydraulic fracturing is a necessary precondition in all cases for drainage to occur from underneath another property” and that fractures must have extended onto that neighboring land.
The court said that Briggses’ case did not allege that their property had been physically invaded, and that gas may have migrated to the driller’s property through a pre-existing fissure. However, the court decision would still allow landowners to sue for trespass if they have proof that a fracturing operation extended onto their properties.
“The parties in this lawsuit are in agreement – and we concur as well - that the rule of capture remains extant in Pennsylvania and 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 any physical invasion,” the opinion states.
The court’s remanded the case back to the Superior Court, saying that because of the “multiple infirmities” in its opinion, the case should be reconsidered, using the Supreme Court’s opinion as guidance on whether trespass occurred.
While the ruling leaves open the right of landowners to file legal challenges for trespass, it will make it more challenging, as they must provide proof that a hydraulic fracturing operation actually entered their subsurface property. That is likely to be a difficult and expensive process.