Famous Buell well (Buell 8H) about to be shut down!!! Chesapeake doesn't own horizontal drilling rights!

Looks like Chesapeake's "best shale well ever" is actually owned by Kenneth Buell.

You can find all the relevant court documents (very hard to get your hands on - rural public records...) and analysis here:

And the Buell well will soon look like this.

p.s. the well is in Harrison County, Ohio.

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Permalink Reply by AT on July 12, 2012 at 4:05pm

For those who have sent me private messages asking what "laches" is...

A defense to an equitable action, that bars recovery by the plaintiff because of the plaintiff's undue delay in seeking relief.

Laches is a defense to a proceeding in which a plaintiff seeks equitable relief. Cases in Equity are distinguished from cases at law by the type of remedy, or judicial relief, sought by the plaintiff. Generally, law cases involve a problem that can be solved by the payment of monetary damages. Equity cases involve remedies directed by the court against a party.

Types of equitable relief include Injunction, where the court orders a party to do or not to do something; declaratory relief, where the court declares the rights of the two parties to a controversy; and accounting, where the court orders a detailed written statement of money owed, paid, and held. Courts have complete discretion in equity, and weigh equitable principles against the facts of the case to determine whether relief is warranted.

The rules of equity are built on a series of legal maxims, which serve as broad statements of principle, the truth and reasonableness of which are self-evident. The basis of equity is contained in the Maxim "Equity will not suffer an injustice." Other maxims present reasons for not granting equitable relief. Laches is one such defense.

Laches is based on the legal maxim "Equity aids the vigilant, not those who slumber on their rights." Laches recognizes that a party to an action can lose evidence, witnesses, and a fair chance to defend himself or herself after the passage of time from the date the wrong was committed. If the defendant can show disadvantages because for a long time he or she relied on the fact that no lawsuit would be started, then the case should be dismissed in the interests of justice.

The law encourages a speedy resolution for every dispute. Cases in law are governed by Statutes of Limitations, which are laws that determine how long a person has to file a lawsuit before the right to sue expires. Different types of injuries (e.g., Tort and contract) have different time periods in which to file a lawsuit. Laches is the equitable equivalent of statutes of limitations. However, unlike statutes of limitations, laches leaves it up to the court to determine, based on the unique facts of the case, whether a plaintiff has waited too long to seek relief.

Real estate boundary disputes are resolved in equity and may involve laches. For instance, if a person starts to build a garage that extends beyond the boundary line and into a neighbor's property, and the neighbor immediately files a suit in equity and asks the court to issue an injunction to stop the construction, the neighbor will likely prevail. On the other hand, if the neighbor observes the construction of the garage on her property and does not file suit until the garage is completed, the defendant may plead laches, arguing that the neighbor had ample time to protect her property rights before the construction was completed, and the court may find it unfair to order that the garage be torn down.

The laches defense, like most of equity law, is a general concept containing many variations on the maxim. Phrases used to describe laches include "delay that works to the disadvantage of another," "inexcusable delay coupled with prejudice to the party raising the defense," "failure to assert rights," "lack of diligence," and "neglect or omission to assert a right."

Source: http://legal-dictionary.thefreedictionary.com/laches

Permalink Reply by Buell Well on July 12, 2012 at 8:49am

Dan:

So just because you've made repeated efforts to get someone to agree to certain terms you don't actually need an agreement? In other words, private contracting and property rights are not hard and fast principles for you? OK, well you must be very happy with our current President then.

Permalink Reply by Dan on July 12, 2012 at 10:25am

Actually I do hold those principles dear, as well as the absolute right of a mineral owner to extract his minerals after offering reasonable compensation to the surface owner, whether they accept it or not. AT is right - Kenneth Buell should hav contested the surface damage amount in court right away if he didn't think it was fair.

Permalink Reply by Buell Well on July 12, 2012 at 11:28am

Dan:

OK, so you believe in the unilateral power of a lessee to decide what is reasonable? And you believe there should no checks on that power before they can exercise it (neither administrative nor judicial)?

I just want to get straight the implications of what you're saying, because they are pretty profound and absurd. Also, please tell me you are not a landowner nor a mineral owner.

Permalink Reply by Joe Bezel on July 12, 2012 at 6:28pm

I want to ad a little local flavor to this.  I can't verify the truthfulness or accuracy of this, but a number of local citizens here have told me that Mr. Buell didn't even know CHK was on his land until after the well was producing.  He was living in Columbus and was unaware of what was transpiring in Harrison County.  That would explain why he didn't contest right away.  It would also be devastating to CHK in the court of public opinion.  Again, I can't verify if this is accurate, but the people I spoke to are knowledgable about the case and have given me accurate information in the past.

 

By the way, BW, thanks for the response to my earlier question.  I have been offline for a few days.  Computer issues.

Permalink Reply by Dan on July 12, 2012 at 11:55pm

I said nothing about who decides what is reasonable.  Obviously, both sides should agree on what is reasonable, and if they can't reach an agreement, then they should go to arbitration or court to help them reach an agreement.  All I was saying above is that the mineral owner (North American Coal, until proven otherwise) has the right to extract their minerals, and Kenneth Buell can't take away that right; he can only be compensated reasonably for damages to his property.

I can not speak to how the negotiations went between Mr. Buell and Chesapeake.  I don't know how much back and forth went on.  You say things like "Chesapeake ripped up Buell's counteroffer" like they didn't try hard enough to negotiate fairly with Mr. Buell.  I don't know if that was the case or not.  I don't think it was the case, as Joe Bezel recounts, that CHK came onto the property to start drilling the well without Mr. Buell even knowing it, but regardless, at the point that negotiations stalled out, it seems that Mr. Buell should have gotten a lawyer and went to court to decide on fair damages.

Permalink Reply by Buell Well on July 13, 2012 at 4:42am

Exactly. CHK and Buell are in court deciding what should have been decided long ago before CHK entered the property. This is how our system is supposed to work.

Permalink Reply by Buell Well on July 12, 2012 at 9:00am

Dan:

More fundamentally, you have ENTIRELY missed the fundamental story of this case and the Sportsmen Club decision.

Your typical mineral owner also has surface rights to drill horizontally across the property line!! Since North American Coal Royalty Company did not, CHK had to enter into a second agreement with Buell. If Buell was getting royalties he probably wouldn't have needed any additional consideration.

This is precisely why I've pointed out at least one part of the solution may be McClendon, CHK's CEO, transferring his personal royalty interest in every well drilled from the Buell drilling pad TO Buell. It wouldn't cost CHK anything, and while it would cost McClendon, he's a billionaire so what does he care if it makes the problem and embarrassment go away? It might even make McClendon look somewhat magnanimous. Problem is, CHK's arrogance and Buell's logical mistrust of CHK means any settlement would probably have to be a hefty amount of cash in hand.

Permalink Reply by Paul Martinelli on July 12, 2012 at 9:03am

Why wouldn't CHK just purchase surface rights elsewhere in the UNIT and drill from there?  It be cheaper

Permalink Reply by Buell Well on July 12, 2012 at 9:35am

That's a question for CHK. They haven't so far, which is telling since the well literally could be shut down any day now. If I had to guess...probably because 5 square miles around the Buell well has the same deed language. Does that sound plausible?? I am just trying to connect dots here based on what I know from the public records.

Permalink Reply by Paul Martinelli on July 12, 2012 at 9:46am

If CHK purchased surface rights...wouldn't that allow them to drill the entire unit from that location?

 

Are we saying the deed language  in that 5 sq miles, doesn't allow horizonatl drilling to extract O/G, even if the dilling originates from a location where mineral rights and surface rights are owned?

 

 

Permalink Reply by Buell Well on July 12, 2012 at 9:53am

Depends on what surface rights they acquired/hold. What the Court said is the deeds in those 5 square miles include surface rights which only allow for vertical wells, and theoretically a horizontal well, but only one with fairly short laterals.

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