In the 2007 film There Will Be Blood, Eli Sunday offers to sell Daniel Plainview the drilling rights to land of the recently-deceased William Bandy. Plainview mocks Sunday’s offer, revealing that he has already drained Bandy’s land dry of oil, and the land is now worthless. To illustrate, Plainview uses the analogy of reaching a straw across the room to drink Sunday’s imaginary milkshake. Plainview shouts “I drink your milkshake . . . I drink it up!” in Sunday’s face.
The practice of draining hydrocarbons from beneath an adjoining property is nothing new and is subject to the legal concept known as “the rule of capture.” In the context of oil and gas law, the rule of capture precludes liability for draining oil and gas from under another’s property so long as there has been no trespass. In Pennsylvania, a trespass occurs when a person intrudes onto property owned by someone else without their consent or places an object on someone’s property without their consent. On January 22, 2020, the Supreme Court of Pennsylvania declared that protection under the rule of capture applies to hydraulic fracturing, i.e. “fracking.” More specifically, developers who use hydraulic fracturing may rely on pressure differentials to drain oil and gas from under another’s property, as long as there is no trespass. The case, Briggs v. Southwestern Energy Production Co., 2020 Pa. LEXIS 343, was a case of first impression in Pennsylvania.
The Briggs own an eleven-acre parcel (“Briggs Property”) that is adjacent to a tract of land leased by Southwestern for natural gas extraction (“Production Property”). Southwestern operated wellbores on the Production Property and used hydraulic fracturing to increase natural gas extraction from the Marcellus Shale formation that runs beneath the Briggs Property and the Production Property. The Briggs, believing Southwestern was using hydraulic fracturing to extract gas from the shale beneath the Briggs Property, filed suit against Southwestern for trespass and conversion. The Briggs claimed that Southwestern trespassed onto the Briggs Property by injecting fracking fluid into the shale formation under the Briggs Property and taking natural gas belonging to the Briggs.
The Supreme Court held that, unless fracking fluids or fractures from a well actually cross neighboring property lines below the surface, the rule of capture remains a defense for developers utilizing hydraulic fracturing. Briggs, however, is a victory for both developers and adjoining landowners alike. While the Court’s decision extends the rule of capture to developers, it also preserves the ability of an adjoining landowner to assert a claim for subsurface trespass against a developer if the hydraulic fluids or the fractures they create reach the adjoining property. The decision makes it clear that trespass-by-fracking cases are to be decided on a case-by-case basis based upon the unique facts and circumstances of each case. How the Briggs ruling will play out in future litigation is unclear.
Please feel free to contact any member of the McNees Wallace & Nurick Land Use Group for assistance with any land use or development issues or if you have any questions regarding this post.