Surface Owner’s Use Burdened by Horizontal Wells
September 23, 2019
Is An Unconventional Well A Burden On A Surface Owner’s Use And Enjoyment Of Its Land Where The Well Is Located On Another Property?
In litigation in West Virginia, the surface owners of several tracts of land (“Property Owners”) contended that their use and enjoyment of their lands was improperly and substantially burdened by horizontal wells being used to develop the Marcellus shale under their properties, even though the wells were not physically located on any of their properties. In Andrews v. Antero Resources Corporation, No. 17-0126, 2019 WL 2494598 (W. Va. June 10, 2019), the West Virginia Supreme Court held that this was not the case.
In 2013, the Property Owners filed a complaint in the Circuit Court of Harrison County, West Virginia, alleging claims for “private temporary continuing abatable nuisance and negligence” against Antero Resources Corporation and Antero Resources Bluestone, LLC (collectively “Antero”) and Hall Drilling, LLC (“Hall”), arising from their natural gas exploration, extraction, transportation and associated activities in close proximity to the Property Owners’ properties.
Antero held the leasehold rights to develop the subject oil and gas located in Harrison County, West Virginia, which were derived from severance deeds executed in the early 1900s that retained the mineral rights underlying the properties. Antero operated six well pads to facilitate its horizontal drilling in the Cherry Camp area of Harrison County. The horizontal drilling allowed for the development of multiple wells from each surface well pad. Five of the six well pads at issue were located within a range between .42 miles and 1 mile from the Property Owners’ properties. No well pads were located on any of the Property Owners’ land. In addition to the construction of the well pads and the drilling and operation of the horizontal wells, the development of the Marcellus shale also required the construction and/or operation of well roads, pipelines, and a compressor station. Hydraulic fracturing of the horizontal wells also necessitates water and sand, which are delivered by trucks.
According to the Property Owners, the activities of Antero and Hall in relation to their development of the Marcellus shale caused the Property Owners to lose the use and enjoyment of their properties due to the annoyance, inconvenience, and discomfort caused by excessive heavy equipment and truck traffic, diesel fumes and other emissions from the trucks, gas fumes and odors, vibrations, noise, lights and dust.
The West Virginia Supreme Court transferred the Property Owners’ claim to the West Virginia Mass Litigation Panel (“MLP”). The MLP found that the burden on the surface estates created by horizontal drilling taking place .42 miles to 1 mile away from the subject property was not materially different from the burden that would be endured from the placement of traditional vertical wells directly on the Property Owners’ land along with the construction of an associated well pad, lease road and pipeline for each well, which was within Antero’s rights. Antero and Hall submitted excerpts from the report of their expert who indicated that horizontal drilling is the best means of developing the Marcellus shale formation because it requires fewer wells than vertical drilling and thereby generally minimizes the disruption to nearby surface estates. The Property Owners failed to present evidence to establish how the burdens resulting from the off-site horizontal drilling of which they complained; i.e., dust, traffic, lights, noise and fumes, prohibited them from using their land in any way that would be compatible with the physical presence of vertical wells directly on their land.
The MLP granted summary judgment in favor of Antero and Hall and found that Antero had the leasehold rights to develop the oil and gas underlying the properties that were the subject of the Property Owners’ complaint. These development rights were retained by the oil and gas mineral owners in the severance deeds separating the surface estates from the mineral estates. The Court found that Antero, as the owner of the mineral estate, and its contractors had the right to use the Property Owners’ surface to develop the mineral estate and found that the activities complained of were reasonably necessary to the production of the mineral estate and did not exceed the fairly necessary use thereof or invade the rights of the surface owner. The noise, traffic, dust, lights and odors of which the Property Owners complained were reasonable and necessarily incident to Antero’s development of the underlying minerals.
The MLP concluded that the effects on the surface owners, the Property Owners, resulting from horizontal drilling did not impose a substantial burden on the surface owners. The effects on the surface owners resulting from the horizontal drilling were within the implied rights to use the surface granted by virtue of Antero’s severance deeds.
An appeal was taken to the West Virginia Supreme Court who affirmed the order of the MLP. In affirming the MLP’s grant of summary judgment in favor of Antero and Hall, the West Virginia Supreme Court held that the Property Owners failed to present evidence that the activities complained of were not reasonably necessary for Antero and Hall to develop the Marcellus shale. The Property Owners also failed to present evidence that they were being substantially burdened by these activities, which arise from the extraction of oil and gas from the Marcellus shale using wells that are not located on their properties, and that have caused no damage to their surface estates.
In short, in West Virginia, the development of the minerals under the surface owner’s land by horizontal wells physically located on other properties does not burden the surface owner’s use and enjoyment of the surface owner’s land.