Nov 29, 2018

Trespass: Continuing Issues for Directional Drillers

With the advent of ever more sophisticated drilling technologies, oil and gas drillers, particularly horizontal drillers, find themselves facing trespass issues that would have been unheard of a mere decade ago. This article provides a brief overview about this developing area of law and some of the issues that arise as a result.

Basically, directional drilling disputes arise from the interplay between the property and tort concepts inherent in common law and the surface and subsurface trespass claims that landowners are wont to bring against drillers whose drilling techniques the landowner claims have damaged his or her property. Often the dispute comes down to which party owns which rights to which portions of the property and the oil or gas produced therefrom.

In Louisiana, most land is privately owned, and leases between landowners and oil companies predominate. However, even when landowners sever their surface rights from their subsurface mineral and other rights, such as by leasing them in exchange for royalties, this may not, and often does not, resolve all potential issues. For instance, who has the power to consent to or veto attempts to use the subsurface for the location of a wellbore outside the actual oil- or gas-producing formation? Does the oil company trespass against the landowner or an adjacent landowner if it uses directional drilling techniques?

Trespass

The concept of trespass has its roots firmly embedded in English common law. Per the 18th Century maxim of ad coelum, “he who owns the soil, owns to the heavens and to the depths.” In other words, ownership rights to the land extend to everything under and above its surface. The advent of air travel in the 20th Century resulted in an exception to this rule with respect to airspace. Planes do not commit trespass by flying over a landowner’s property unless they “enter into the immediate reaches of the air space next to the land and interfere substantially with the owner’s use and enjoyment of the land.” Unfortunately, no exemption yet exists with respect to subsurface trespass.

Most states follow the American Rule which holds that even if land and mineral ownership rights become severed, the mineral rights owner does not own the entire geologic formation.

In disputes involving alleged subsurface trespass (either by actual drilling underneath adjacent unleased land, or by the “effects” of tracking extending to adjacent unleased land), the Louisiana Mineral Code provides remedies based either on “good faith” trespass or “bad faith” trespass. The Louisiana Commissioner of Conservation holds the power to create mandatory units to include all properties from which the minerals are drained by directional drilling and tracking. The Louisiana Mineral Code Articles will prevail over general law provisions of the Louisiana Civil Code if the issue is specifically covered in the Mineral Code.

Whenever you need help resolving an energy issue or dispute, contact Deutsch Kerrigan's Marine & Energy Department. We established our reputation in the 1930s and have been representing clients throughout the Gulf Coast ever since in a variety of issues ranging from complex litigation to large commercial transactions and disputes.

 

Francis J. Barry, Jr.

Contributed by:

Frank J. Barry, Jr.
Partner
fbarry@deutschkerrigan.com