Encana suing WPX Energy for trespass, for knowingly drilling a well horizontally through Encana’s mineral “estate.” What about Encana intentionally drilling and trespassing through Ernst’s “estate?”

Energy firms
 are in court 
for trespass 
allegations by Dennis Webb, June 14, 2015, The Daily Sentinel, Grand Junction, Colorado

The two leading natural gas producers in western Colorado’s Piceance Basin are squaring off in court over allegations of trespass via horizontal drilling.

Encana has sued WPX Energy, alleging WPX knowingly drilled a well that passed horizontally through Encana’s mineral estate in the Parachute Creek area outside Parachute without getting Encana’s permission.

WPX, Encana and other companies have been increasingly using horizontal drilling to explore for and develop gas from deep Mancos/Niobrara shale formations. They’ve drilled down into the shale and then out sometimes miles laterally through the formation, which is then hydraulically fractured to tap the gas. Companies have reported high production from exploratory wells, and WPX sees shale drilling as a potentially prolific new drilling opportunity for it in the Piceance Basin.

Encana’s suit says WPX drilled the well at issue down through adjoining lands, then out laterally through Encana’s mineral estate in the Niobrara shale before reaching minerals beneath land on the other side of Encana’s minerals. It says WPX had written documentation of Encana’s ownership of the minerals, including title opinions from its own lawyers, but proceeded to drill without permission.

[How Encana treats “estate” owners in Rosebud, Alberta: In 2011, 7.5 years after Encana illegally fractured and contaminated Rosebud’s drinking water aquifers and the Ernst water well, Encana drilled on an angle under (trespassed?) and through Ernst’s privately owned estate, without lease, without payment, without obtaining Ernst’s written permission, and disregarded the company’s own non-compliance with their application for the well to the AER and her detailed written objection.

Encana survey 2-13 Directional Drill under Ernst property and Rosebud River, near contaminated water well

Encana 2-13 (gas well directionally drilled under Ernst’s land) survey (water wells and colour key added). Yellow hilights the north boundary of the Ernst property (the Old Rosebud River meanders through it). The ERCB refused Ernst any standing.

2011 04 11 ERCB Laurie Wilson-Temple ERCB Manager Applications letter to Ernst, no standing not even regarding her own property or water well

Encana also refused to disclose the chemicals injected under and through Ernst’s “estate.”

2011 10 EnCana 02-13-27-22 W4M deviated drilling under Ernst land, her dangerously contaminated water well is in the barnEncana drilling under Ernst’s “estate” – without asking or obtaining her permission or signing a lease to access through in October 2011, eventually lining up directly with Ernst water well, which is in this barn. Where’s the data Encana?

The AER approved the trespassing application by Encana in one day. After Ernst presented evidence of Encana’s non-compliance to the regulator and company, Encana “self-disclosed” to the AER that the company was non-compliant, which the regulator then used to judge that the company was compliant (by way of self-disclosure, except it wasn’t self disclosure, it was Ernst-disclosure). Encana remains trespassed under Ernst’s private “estate.” Encana owns the gas, but not the sand or clay, etc.]

WPX hasn’t yet hydraulically fractured the well, and Encana is seeking an injunction barring it from doing so. [Tit for Tat, Encana?] The suit says WPX has said it plans to complete the well and produce from it despite Encana’s demands that it not produce through, or from, Encana’s mineral estate.

The suit says WPX removed oil- and gas-bearing rock from the wellbore. Companies use such rock samples to characterize the available mineral reserves and help hone their approach to developing those reserves.

“When the Trespass Well was drilled, Defendant (WPX) gathered valuable geophysical data regarding Encana’s Mineral Estate. The rights to this data are owned exclusively by Encana,” the suit says. [And, Ernst exclusively owns the rights to her estate but Encana violated those rights with full blessings from the regulator. Will Encana return to Ernst’s estate what is rightfully hers? Will the regulator make right the wrongs done to Ernst and her privately owned estate?]

WPX had not filed a response to Encana’s suit as of early last week. The companies declined to comment, as is standard practice for both of them in the case of litigation.

The suit says that nothing in Colorado Oil and Gas Conservation Commission rules “allows or authorizes mineral trespass,” but the agency also doesn’t have jurisdiction to adjudicate mineral ownership or trespass claims. However, COGCC requires Niobrara wells to be located at least 300 feet from existing ones, which limits Encana’s ability to develop its minerals near the well in question, the suit claims.

Nathan Keever, a Grand Junction attorney who has represented many mineral owners in Garfield County cases, said he doesn’t have any inside information on the Encana suit. But he said it appears to be in the same position as a lot of mineral owners who have been in negotiations with an energy company and weren’t able to reach agreement, so the company proceeded with drilling.

“WPX went ahead with drilling of the well and now (Encana has) no option but to sue,” Keever said.

He said Encana has done the same in the case of other mineral owners, moving forward with drilling with the intent of figuring things out later, force-pooling the minerals with other leased minerals in the area, or arguing the matter in court. Forced pooling is a process undertaken through the COGCC that lets companies group unleased minerals with leased ones in order to be able to proceed with development, allocating royalties to the holdout mineral owner as well as others.

Keever said that in the Encana case, “it looks like what WPX is going to say is, we’re not taking any of Encana’s minerals. We’re drilling through Encana’s minerals to get to other minerals.”

Keever said he’s not seen that issue come up a lot with horizontal drilling, and it’s unusual to see two companies end up in court on a mineral rights issue.

“The norm would be they would work it out and they would figure out what everybody’s rights are,” he said. [Encana and the AER violated Ernst’s rights, year after year after year after year, gas well after gas well after gas well after gas well …]

He said it’s possible WPX will say Encana should take the matter before the COGCC because the COGCC permitted the well.

But he added, “I don’t think the COGCC typically has asserted any jurisdiction over something like this.”

He said there’s case law establishing that acquiring others’ geophysical data without their permission is trespass, but the question will be what value can be attached to such a trespass.

“Encana may struggle with what the damages are,” he said.

As for the COGCC’s 300-foot setback rule, he said WPX may argue that the impact on Encana is limited and Encana still can largely develop its minerals in the area in question, hydraulically fracturing closer to the WPX well.“They just have to drill a well more than 300 feet away,” he said.

Keever said it will be interesting to see what becomes of the suit.“My guess is, it won’t go very far. I don’t think they’ll battle this out. At some point someone will blink and they’ll resolve it.” [GAG AND SETTLE? Emphasis added]

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