On April 2, 2018, the Pennsylvania Superior Court (Pennsylvania’s intermediate court of appeals) held that the rule of capture did not apply to preclude claims for subsurface trespass arising from hydraulic fracturing. Briggs v. Sw. Energy Prod. Co., No. 1351 MDA 2017, 2018 WL 1572729, --- A.3d --- (Pa. Super. Apr. 2, 2018). The Briggs plaintiffs, owners of an 11-acre tract in Susquehanna County, Pennsylvania, sued Southwestern Energy Production Company, “Southwestern,” the oil and gas lessee on a neighboring tract, alleging trespass and conversion by unlawfully extracting natural gas beneath the Briggs’ property. Southwestern filed a summary judgment motion seeking dismissal of the Briggs’ trespass claim arguing, among other things, that the rule of capture bars damages for drainage of natural gas due to hydraulic fracturing. The trial court granted Southwestern’s motion and the case proceed to appeal.
Historically, Pennsylvania courts have recognized that the rule of capture allows an owner to extract oil and gas even when extraction depletes a single oil or gas reserve lying beneath adjoining lands. Pennsylvania adopted the rule of capture, in part, because of oil and gas’s “fugitive and wandering” existence. Because of that, possession and ownership of oil and gas is only recognized once it has been produced from the ground. In this sense, Pennsylvania law is consistent with Texas law.
Briggs, however, modified that long-standing rule based on several reasons. First, the court observed that the required use of hydraulic fracturing to produce the “non-migratory” oil and gas in shale was distinguishable from conventional methods of oil and gas extraction. Second, the court noted concerns that the traditional remedy for the rule of capture—drilling an offset well—may not be available to a small landowner due to the relatively high cost of a hydraulically fractured well. Third, the court discounted the evidentiary difficulties present in determining the value of natural gas drained through hydraulic fracturing. Fourth, the court was concerned that an oil and gas operator could obtain oil and gas production from an adjoining tract without paying royalty on it.
Ultimately, the court held that there was no evidence, or even an estimate, as to how far the subsurface fractures extend from each of the wellbore on Southwestern’s lease or whether a subsurface trespass had occurred. The court therefore remanded the case to allow the Briggs plaintiffs an opportunity to meet their burden of proving a viable subsurface trespass claim.
Although Briggs represents a case of first impression in Pennsylvania, the case will almost certainly be appealed to the Pennsylvania Supreme Court, which could overturn the court of appeals based on pre-existing law. In Jones v. Forest Oil Co., for example, the Pennsylvania Supreme Court authorized the use of a gas pump to increase production and affirmed the rule of capture, specifically noting that though this particular question is somewhat of a novelty, the principles which control it are very familiar, and perfectly well settled. 44 A. 1074 (Pa. 1900). In that case, a gas pump allowed production of oil and gas by suction, thereby increasing the well’s production of oil. Though a new technology, the court noted that there was no reason why an oil and gas operator should not be permitted to adopt any and all appliances known to the trade to make the production of his wells as large as possible.
Briggs represents a stark departure from Texas law, where subsurface trespass claims based on hydraulic fracturing have been rejected, absent some showing of actual injury, in favor of the Rule of Capture particularly where—as appears to be the case in Briggs—the plaintiff has only a non-possessory interest in the mineral estate (i.e., a royalty interest, not a working interest) that is invaded by the party conducting the fracking operations. This rule was established in Coastal Oil & Gas Corp. v. Garza Energy Trust, 268 S.W.3d 1 (Tex. 2008)—a case the Briggs opinion cited but ultimately disagreed with.
In short, while Texas courts have not completely foreclosed all claims for subsurface trespass, it remains much more difficult to pursue such a claim in Texas than it is in other forums, such as Pennsylvania will be if the Briggs opinion is ultimately upheld on appeal by the Pennsylvania Supreme Court.