Articles, Newsletters and Advisories
(by Jennifer Hicks)
The Supreme Court of Appeals of West Virginia will hear argument and issue a decision this year in EQT Production Company v. Crowder, et al., Appeal No. 17-0968, a case that could have far-reaching implications for oil and gas operators here.
In 2015, surface owners Beth Crowder and David Wentz filed suit alleging trespass and other claims arising when EQT Production entered the plaintiffs’ surface tract and drilled nine horizontal gas wells that extended into neighboring tracts. The parties’ predecessors had entered into an oil and gas lease in 1901 that was amended in 2011, after the surface and mineral estates were severed, to allow the pooling and unitization of the tract with the oil and gas from neighboring tracts. Plaintiffs argued that neither the lease nor the amendment gave EQT Production the right to use their surface to access and produce gas from neighboring tracts.
They claimed that despite having a valid oil and gas lease that allowed pooling, the producer did not have express permission to utilize the plaintiffs’ surface property to produce natural gas from neighboring mineral tracts. While the plaintiffs acknowledged that the mineral lessee is entitled to “reasonable use” of the surface to extract oil and gas, they argued that such “reasonable use” was limited to extraction from the subject tract only, not neighboring tracts.
Circuit Court Judge Timothy Sweeney agreed. In his summary judgment Order, Judge Sweeney found that because the mineral owners no longer owned the right to use the surface lands for exploration and production from neighboring tracts, they could not have given those rights to EQT Production in the lease amendment. Judge Sweeney found that only the surface owners or their predecessors could have expanded EQT Production’s rights to use the surface. Judge Sweeney concluded that the “reasonable use” doctrine did not even come into play, and he granted summary judgment to the plaintiffs on their trespass and unjust enrichment claims. Following a jury trial on damages, EQT Production appealed.
The Supreme Court declined in 2016 to docket a similar certified question in this very case but now has a fully developed record. If the Court af rms Judge Sweeney’s decision, this will no doubt be a landmark decision that will result in increased litigation over existing operations and create additional hurdles and costs for all future oil and gas operations in the state.
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