Land owner certifies horizontal drilling question to WV Supreme - WOWK 13 Charleston, Huntington WV News, Weather, Sports

Surface owner certifies horizontal drilling question to WV Supreme Court

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Can a company drill horizontal wells on a property owner's land to extract neighboring oil and gas from a shared pool that is beyond that tract of land?

This is a question certified to the state Supreme Court, stemming from a federal case in the Northern District of West Virginia, filed by Marion County property owner Richard Cain against XTO Energy Inc.

Cain, a 61-year-old farmer, filed his amended complaint in April 2012 seeking declaratory, injunctive and compensatory relief. 

In his suit, Cain says he owns 105 acres in Marion County, including the surface underlain by the 138-acre tract of reserved oil and gas rights.

XTO obtained three West Virginia Department of Environmental Protection permits to drill Marcellus Shale gas from not only the 138-acre tract of land but neighboring plots as well, Cain says.

Cain said his 105 acres is part of the 138.05 acres of combined surface and minerals, and in 1907 the oil and gas rights were severed from ownership. However, the grantor retained the right on the surface to do what is "necessary and convenient" to obtain oil and gas within the underlying tract.

In his suit, Cain asserts West Virginia common law allows the mineral owner to perform activities that are "fairly necessary" to produce the oil and gas, "so long as the surface use was in the contemplation of the parties to the agreement."

Cain said the company can use the 138 acres but can't use the surface to extract from neighboring mineral tracts outside of that— even with a pooling agreement.

He additionally said in the 1900s, parties could not have contemplated the extent of surface damage caused by horizontal drilling because it did not exist back then.

Horizontal drilling in many directions to great distances has allowed companies to drain much larger areas of gas from single wellpads but requires that those wellpads be larger than were typical with the previous technology.

Additionally, Cain asserts "almost all" of the productive portions of the wells are outside of his property and the 138-acre tract of oil and gas rights.

The activity, Cain continues, would disrupt his property and use the best of his land, leaving him with "mostly steep hillsides."

He said the surface burden is shifted from the owners of the neighboring surfaces, who own the minerals and will receive "abundant royalty," while he will not receive royalty payments.

The lessee has drilled wells and prepared the well site for the three permitted wells plus three additional wells on the same site.

U.S. District Judge Irene Keeley entered an order March 28 certifying a question to the state Supreme Court. Cain's motion originally certified three questions.

The first two sought clarification of remedies available for trespass and unjust enrichment, court documents state. Keeley denied these first two questions because they are not currently ripe for disposition.

His last question, which Keeley certified in the March 28 order, asked, "May a mineral owner or lessee, whose rights are expressly limited by deed to surface rights for the production of oil and/or gas within and underlying the subject tract, nonetheless use, occupy and burden the surface for the production of oil and/or gas that is not within and underlying the subject tract?"

"Further, the court is well aware that the resolution of this question could have far-reaching legal and economic implications for the state of West Virginia," the order states. "Such important and unsettled issues of state law should, in the first instance, be decided by West Virginia's highest court."