Replies to This Discussion

Permalink Reply by Frank Walker on October 14, 2011 at 8:39am

I can answer if you will allow me to limit your question to Marcellus well horizontal bores:

 

The answer in PA is zero feet.

 

You are correct about TX, the 330 feet I mean.  But there is a key legal finding in TX that we do not have in PA:

 

In the Garza decision, the TX Supreme Court allowed fracking of shale well horizontal bores, knowing those bores would be at least 330 feet from unleased lands.

 

In PA, no such decision has ever been handed down by our courts.  So even though they can drill right alongside unleased land here, nothing promises them the right to frack unleased shale.  And if they don't frack your (unleased) land, it is much more difficult for them to steal your (Marcellus) gas.  

 

 

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Permalink Reply by Blindsquirell on October 14, 2011 at 9:05am

Thanks Frank. Very interesting...I would have thought there would be a setback/variance. I guess OGM owners would be even more eager to sign knowing that their resources can be "sucked" right from under their noses. Would this also apply to a vertical well bore?

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Permalink Reply by J Wilson on February 18, 2014 at 1:38am

Frank,

Interestingly, the field rules for the Barnett (Newark East) do allow for wells to be drilled within 0' of unleased property lines. If an Operator files for a permit to drill a well with 0' unleased spacing, they must put NPZs (non-perf zones) on the plat that accompanies the application to the Railroad Commission. The Operator is not permitted to perf of stimulate within the field rule limits which, as you state above, are 330' of unleased property.

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Permalink Reply by Jim Litwinowicz on October 14, 2011 at 9:29am

I have heard this question asked at several seminars and get different answers from different attorneys.  Some say they have to stay back and not frac under unleased properties others say they can go right up to the line, frac under unleased properties, and take what ever gas comes out by rule of capture. I asked a law professor from the Penn State Dickenson Law School and he stated it is a grey area that is not covered by law. These technologies didn't exist when the laws were written and there has been no case law on this issue. Therefore no one knows the answer with any certainty. This answer seemed to make the most sense to me.

But I would think that very few O&G firms would want to be the first in court over this issue.  The risk of losing is high and could be expensive. And the bad publicity they would get would be very damaging. I'm not saying no company will try it. Just saying it will be ugly if and when one does.

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Permalink Reply by Blindsquirell on October 14, 2011 at 9:34am

Im talking about the bore itself, not any horizonal laterals.  Just the vertical bore. 

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Permalink Reply by Rodney T Hytonen on February 14, 2014 at 8:52am

A lateral IS part of the bore.

 

The term only means a hole in the earth,

and is NOT specific as to direction or orientation..

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Permalink Reply by Frank Walker on October 15, 2011 at 6:46am

Jim

The law professor with whom you spoke is smarter, and better informed, than many of his ilk.  And he is correct.  Again with respect to Marcellus horizontals:

There is no question the issue of (so-called) "frac trespass" is a "grey area" and unadjudicated in the Commonwealth of Pennsylvania.  To my knowledge no such case ever has arisen here.  That's why I earlier mentioned Garza in TX, the difference being that TX has the 330' setback and we do not.  So any potential frac trespass in TX starts out at least 330' away from the unleased property, whereas here it could by law be zero feet.  That is quite and large and important difference!

Also, FWIW I agree with your closing comments.  I have written on this matter for several years, all the while believing no smart gas company would risk a frac trespass and all the potential ensuing litigation and mess.  And most of the companies are smart . . . . but sadly . . . . not all.

For Blindsquirell:

I intend no disrespect to your initial inquiry.  If they drill alongside your unleased property and don't frac, they still would be able to access a small amount of your gas.  PA persons need to live with this possibility as a condition of residence here.  There is no legal remedy and no chance for success in court if you want to challenge this.  Pure and simple, in PA you are permitted to drill your own land, and a gas company is permitted to drill (all of the) land it leases for that purpose.

The really big deal would be for them to drill (horizontally) close to you and then frac your shale.  At that point your gas would escape like crazy to their wellhead and you could lose tens of thousands of dollars.  That's why the focus is more on fracking and less on merely drilling.

The arguments against legality of frac trespass go to disturbance and pollution (with chemicals) of another person's land.

The argument in favor goes back to early times and water wells, when dynamite was legally used to increase water well yield, even when the well was close to the property line and the neighbor's land was obviously being disturbed.

The issue of frac trespass will some day be adjudicated in PA.  I don't know what our courts will decide.

 

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Permalink Reply by HawkDriver on October 20, 2011 at 7:23am

Does anyone know if it is the same situation in OH or WV for this issue?  Thanks in advance.

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Permalink Reply by George Brown on October 20, 2011 at 8:35am

Great explanation.  Thanks!

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Permalink Reply by Been There on October 20, 2011 at 10:25am

Frank - Garza has nothing to do with shale, it involves a Vicksburg reservoir in Hidalgo County. The 330' distance to which you refer relates to a lease line offset, not a tract offset distance. IN the instance of a pooled unit, which are prevalent in TX and PA, all of the leases (and therefore tracts) are considered to be combined into one tract. Field Rules in the Barnett Shale trend allow wellbores to be literally inches apart and inches from the perimeter of an unleased tract WITHIN A UNIT.  The issue is further complicated, or at least distinguished, in Texas as the governing condition is the location of the perforated interval of vertical or horizontal traverse, not the actual subsurface penetration alone (the "Take Point" Rule). If a lessee wishes to locate a wellbore closer than the statewide leaseline offset (330') from a Take Point, the adminstrative process to obtain a regulatory exception to that rule (Rule 37) is in fact quite easy and approved in the overwhelming majority of instances.

You and other posters are absolutely correct in saying the law is unsettled on this topic in Appalachia. Coincidentally, a significant instance of this type of "trespass" is percolating in Lycoming County as a large, well known and respected operator has drilled through several tracts with unleased undivided interests within a pooled unit. This unit also has multiple non-wellbore tracts that have unleased undivided interests. It will be interesting how the operator resolves the conflict between its duties to their lessors and their desire to avoid "carrying" an unleased interest. I suppose all parties will endeavor to seek a resolution of this matter, thereby leaving the issue to be resolved by others.

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Permalink Reply by Frank Walker on October 21, 2011 at 4:45am

I appreciate the post.  Thanks.

Others can, and should, read the Garza details here:

Link to Garza

While I agree Garza was not contested with regard to a shale formation, neither was the Garza dispute over a conventional play.  My earlier writing concerned "frac trespass".  I believe a fair reading of the above Garza reference will reveal the case was all about "frac trespass", albeit within sandstone.

Let me be as clear as possible:  I live in Pennsylvania.  I do not make now, and I have never made  here or elsewhere, claim to be expert regarding TX law, least of all TX oil and gas law.  But the issue of frac trespass, unaddressed by our PA courts so far, was surely adjudicated in Texas at very great length . . . with early lower court findings having been reversed in the end by the Texas Supreme Court.  So I thought the case was worth mentioning, even though it is not law here.  It's possible the matter of frac trespass also has been addressed by courts in other producing states.  If so, I am unaware.  The Garza decision, when it was handed down several years ago, was quite a surprise to me, and rather a big deal for many of us here in PA following this issue.

Your explanation regarding lease line offset vs. tract offset is fascinating and enlightening.  The O&G law in TX is developed so far beyond anything we have here that it leaves ones head almost literally spinning.  The relatively scant attention paid by our PA courts to these critical O&G legal matters is worrying to me as a landowner.  It should also be a concern for other PA landowners.  For example, the concept of having an unleased tract within a unit is something to which every PA landowner should pay heed.  While obviously a theoretical possibility, such a thing is rare here where I live.  Most landowners where I live are leased.  The OP, Blindsquirell,  did not indicate whether his land lies within a declared unit . . and that possibility never even occurred to me.  This seems to veer into the issue of forced pooling, something else that remains undecided here in PA.  TX might be geographically in the American southwest.  But Pennsylvania is surely the "wild west" where O&G law is concerned.

I was most interested in your mention of the situation in Lycoming County.  I live in Bradford County and I was not aware of the goings on south of me.  I just checked the Lycoming County board of this forum, but apparently nobody here has posted on this issue as yet.  I hope somebody does.

Prior to seeing your post I was under the impression gas companies here were avoiding potential conflicts of the sort you outlined.  There is so much undeveloped land here, so much opportunity to work around such things and avoid potentially difficult situations.  Clearly, I was in error.  I have to wonder if this is happening elsewhere in PA, too.

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Permalink Reply by Jim Litwinowicz on October 21, 2011 at 4:57am

Good discussion by the both of you. This is the first I heard of the Lycoming case also. Has it gone to court or are they still trying to work it out amicably? Is this Marcellus or Utica?

 

There is a provision for forced pooling in the Utica Shale or any deeper layers but no one has done it yet, according to the several attorneys I have discussed it with.  There doesn't even seem to be a system set up to handle this should it arise. No regs, no body with oversight, no appeal process. But I am sure that someone will attempt it soon.

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