Protection of Oil and Gas Rights

When seeking to identify meritorious subsurface trespass claims, counsel should note (1) what instrument initiated the trespass (i.e. drill pipe, hydraulic fracture fluid, proppant, saltwater, etc.), (2) whether the operation was traversal, secondary, or recovery), (3) the type of interest (surface, mineral, possessory, non-possessory, etc.), and (4) the remedy sought. A brief exposition of the controlling authorities in this area follows.

Carter v. Wallace, 2 Tex. 206 (1847), was the first, if not the first, real property trespass case to come before the Texas Supreme Court. There, the Court adopted the English rule for the doctrine of trespass finding that “an action will lie…though no special damage be proved...[in cases involving an] unwarrantable entry or breach of a man’s close” because such an action was assumed “necessarily to carry along with it some injury or another.” While Texas, like many other states, does recognize that “the rights of the [land] owner extend upward to the heavens and downward to the center of the earth,” (hereafter referred to as the ad coelum and ad inferos doctrines) See, e.g., John Sprankling, Owning the Center of the Earth, 55 UCLA L. Rev. 979 (2008). Texas courts have also recognized that, “the aeronaut’s rights generally terminate at, and the landowner’s exclusive dominion extends at least to the altitude of the owner’s existing and effective reasonable use of the land.” See, e.g., Schronk v. Gilliam, 380 S.W.2d 743 (Tex. Civ. App.—Waco 1964, no writ) (commenting that to prove trespass in one’s airspace the land owner must show that the trespasser’s impermissible entry was made at an altitude within the landowner’s reasonable control of the surface).

In most states, an individual who trespasses onto an oil and gas estate is liable for the value of the oil and gas that it has produced from that estate. See, Guffey v. Smith, 237 U.S. 101 (1915). That value is determined after ascertaining whether the trespasser held an honest belief that he or she had the right to produce oil or gas from the estate upon which it trespassed. United States v. Wyoming, 331 U.S.440 (1947). Here, the trespasser is said to have trespassed in good faith. Conversely, a trespasser acts in bad faith when she or he knowingly produces oil and gas without the right to do so. See, Rudy v. Ellis, 236 S.W.2d 466, 468 (Ky. 1951) This rule, though, is subject to several exceptions

Of course, Texas courts have modified the ad inferos doctrine by recognizing the ‘rule of capture’ – i.e. the owner of oil or natural gas rights in a tract of land acquires title to the oil and gas produced from wells drilled on the land, though part of the oil and gas may have migrated from adjoining lands – as an exception to these general rules. See also, Houston & T.C. Ry. Co. v. East, 81 S.W. 279 (Tex. 1904). This rule does not apply in situations where a driller places a slant-hole well underneath a neighbor, though. See, e.g., Hastings Oil Co. v. Texas Co., 234 S.W.2d 389 (1950). Moreover, Texas courts have also recognized a ‘negative’ rule of capture exception to general real property trespass actions. Here, where the Texas Railroad Commission, the primary state agency charged with regulating the state’s oil and gas industry, has authorized secondary recovery operations and the injected fluids cross lease lines, that transgression cannot be the subject of a subsurface trespass action. See, e.g., Railroad Commission of Texas v. Manziel, 361 S.W.2d 560 (Tex. 1962). In Texas, the rule of capture exception also applies to hydraulic fracking. See, e.g., Coastal Oil & Gas Corp. v. Garza Energy Trust, 268 S.W.3d 1 (Tex. 2008) (commenting that the rule of capture applies with equal force to subsurface fracking because landowners can resort to self-help, recognition of the rule would reinforce the authority to the Texas Railroad Commission, courts are ill-equipped to determine the value of drained oil and gas, and settled expectations among Texas firms dictate against not recognizing the rule). Costal Garza, though, does not categorically preclude damages awards or injunctive relief for other types of injuries to oil wells. Moreover, a traversing drill pipe does not trespass against a mineral estate as long as it is not perforated and only results in a small loss of minerals. See, e.g., Lightning Oil Company v. Anadarko E&P Onshore, LLC, No. 15-0910 (2017).

 Finally, it should also be noted that Texas oil well owners, under the right conditions, could bring actions for slander of title or assumpit to redress the malicious publication of false statements that injure the owner’s title to property or to enforce implied contracts formed in the course of a geophysical search respectively. See, e.g., Kidd v. Hoggett, 331 S.W.2d 515 (Tex.Civ.App.1959) (commenting that actions for slander of title require (1) a false claim of title, (2) asserted with malicious intent, and (3) pecuniary damage); Phillips Petroleum Co. v. Cowden, 241 F.2d 586 (5th Cir.Tex. 1957).