Oklahoma City-based Chesapeake Energy leaders might be wondering about the impact of a Pennsylvania Superior Court ruling on their operations in the state.
The Court has ruled a natural gas drilling company trespassed by operating a well through which hydraulic fracturing was used to remove natural gas from beneath the property of a family next door.
Chesapeake Energy currently has one rig drilling in the Marcellus Shale which covers Pennsylvania. But in 2013, in a divestiture move, Chesapeake sold some of its Marcellus Shale assets to Southwestern Energy for $93 million.
A year later, Southwestern Energy acquired 413,000 net acres held by Chesapeake in the Upper Devonian, Marcellus and Utica shales in West Virginia and Southwest Pennsylvania in a $5.375 billion deal.
The case involves Southwestern Energy of Houston, Texas which drilled a well in 2011. A family in Susquehanna county declined to lease their mineral rights for development then in 2015, filed a complaint that Southwestern was trespassing by extracting gas from beneath their property.
A report indicated the company didn’t deny removing the natural gas from beneath the Briggs family land but argued it wasn’t trespassing because of the “Rule of Capture.”
Under the rule, the first person to “capture” a natural resource such as groundwater, gas or oil, owns the resource. A lower court agreed with Southwestern but recently the Pennsylvania Superior Court overturned the decision.
“Unlike oil and gas originating in a common reservoir, natural gas, when trapped in a shale formation, is non-migratory in nature,” ruled the court. “Shale gas does not merely ‘escape’ to adjoining land absent the application of an external force. Instead the shale must be fractured through the process of hydraulic fracturing; only then may the natural gas contained in the shale move freely through the ‘artificially created channel.'”
The case is back to a lower court which will rule whether the Briggs family is entitled to compensation from Southwestern Energy for trespassing on their property.