Susquehanna County family can proceed with a lawsuit against an energy company that extracted natural gas from beneath their land using wells on an adjacent property, the state Superior Court ruled in a potentially precedent-setting decision.
The ruling in the suit Adam Briggs and his two siblings filed against Southwestern Energy Production Co. is important because it negates a legal principle in oil and gas law that allows companies to siphon natural resources from beneatland
A Susquehanna County judge dismissed the lawsuit in August, after finding Southwestern was not required to pay the Briggs family based on a legal principle known as the “rule of capture.” The rule allows companies to drain a natural resource, including oil, gas or water, from beneath property they do not own as long as they do not trespass on the land.
In its ruling, the Superior Court noted the rule is based on the idea that ownership of underground pools of gas or oil cannot be determined because the resource naturally migrates between property lines.
Multiple appellate courts have found the rule means one property owner can drill a well a short distance from a neighbor and use it to extract oil or gas from the neighbor’s property without paying them. If that neighbor objects, the only recourse would be to “go and do likewise” by drilling their own well to siphon off the other person’s land.
In his appeal, the Briggs’ attorney, Laurence Kelly, of Montrose, argued the rule should not apply to natural gas extracted through hydraulic fracturing because the gas contained in Marcellus Shale does not freely migrate. It is only freed by the fracking process.
The Superior Court agreed.
“Traditionally the rule of capture assumes that oil and gas originate in subsurface reservoirs or pools and can migrate freely within the reservoir and across property lines,” the court said. “Unlike oil and gas originating in a common reservoir, natural gas, when trapped in a shale formation, is nonmigratory in nature.”
I don't know that this is the groundbreaking decision that the reaction would indicate. This was simply a remand of a grant of summary judgment, meaning the Superior Court believes that there is an issue of material fact and the moving party is not entitled to judgment as a matter of law.
Will be an interesting follow on remand.