Oil and Gas Lawyer Blog

Published on: April 1, 2022

West Texas Earthquakes

I first wrote about earthquakes caused by injection wells in 2015. After earthquake events large enough to be felt in the Dallas-Fort Worth area, the Legislature funded a $4.4 million study by UT’s Bureau of Economic Geology to monitor quake activity in areas where disposal wells were active. Because of quakes in Oklahoma, the Oklahoma Corporation Commission had already begun studying the connection. Up until that time the Railroad Commissioners refused to recognize a connection between quakes and oil and gas production or injection. At a RRC hearing asking XTO to show cause why its activity in Parker County were not being caused by its injection wells, XTO argued that the quakes were natural phenomena not cause by their injection activities despite a study from Southern Methodist University making that connection. Meanwhile, Oklahoma began slashing injection rates near seismic activity in that state. In 2016 the Dallas Morning News published an investigative report, “Seismic Denial? Why Texas Won’t admit Fracking Wastewater is Causing Earthquakes,” in which it said:

Not only has the Texas Railroad Commission consistently denied man-made earthquakes in the face of compelling science, it also worked overtime to protect the oil and gas industry from accountability for its role in an earthquake swarm that rattled Azle and Reno [in North Texas] in late 2013 and early 2014.

In 2017 UT’s BEG went live with its website TexNet, documenting seismic activity in the Texas. Here’s a snapshot for Culberson and Reeves Counties showing quakes since the beginning of 2021 (click on image to enlarge):

Continue reading →

Published on: March 22, 2022

The Cornerstone Speech

By John McFarland

On this day in 1861 Georgia Senator Alexander Stephens gave a speech, known as the Cornerstone Speech, in Savannah Georgia, just after he became the provisional vice president of the Confederacy. Less than a month later the Confederates fired on a federal fort in Charleston Harbor, starting the Civil War.

Here are excerpts from his speech:

The new constitution [of the Confederacy] has put at rest, forever, all the agitating questions relating to our peculiar institution African slavery as it exists amongst us the proper status of the negro in our form of civilization. This was the immediate cause of the late rupture and present revolution. Jefferson in his forecast, had anticipated this, as the “rock upon which the old Union would split.” He was right. What was conjecture with him, is now a realized fact. But whether he fully comprehended the great truth upon which that rock stood and stands, may be doubted. The prevailing ideas entertained by him and most of the leading statesmen at the time of the formation of the old constitution, were that the enslavement of the African was in violation of the laws of nature; that it was wrong in principle, socially, morally, and politically. It was an evil they knew not well how to deal with, but the general opinion of the men of that day was that, somehow or other in the order of Providence, the institution would be evanescent and pass away. This idea, though not incorporated in the constitution, was the prevailing idea at that time. The constitution, it is true, secured every essential guarantee to the institution while it should last, and hence no argument can be justly urged against the constitutional guarantees thus secured, because of the common sentiment of the day. Those ideas, however, were fundamentally wrong. They rested upon the assumption of the equality of races. This was an error. It was a sandy foundation, and the government built upon it fell when the “storm came and the wind blew.”

Continue reading →

Published on: March 21, 2022

The Boom in Carbon Capture and Storage – Another Source of Revenue for Texas Landowners

By John McFarland

Talos Energy announced that it has signed a lease with the Texas General Land Office for more than 40,000 acres offshore to store CO2 captured from industrial sites along the coast. Talos said it is capable of storing up to 275 million metric tons of Co2 and is “the first ever major offshore carbon sequestration site” in the U.S.”

Talos is also planning a CCS site along the Mississippi River with a capacity to store 500 million metric tons of CO2. Talos leased 26,000 acres along the Mississippi for a “carbon sequestration hub” with Storegga Limited and EnLink Midstream, to link with industrial emitters along the Louisiana coast that emit some 80 million metric tons of CO2 per year — with a right of first refusal to lease another 63,000 acres in the area.

Oxy is developing a carbon capture facility in the Permian Basin capable of removing one million tons a year from the atmosphere.

Continue reading →

Published on: March 10, 2022

Foote v. Texcel – Oil and Cattle Don’t Mix

By John McFarland

Foote v. Texcel Exploration, decided by the 11th Court of Appeals in Eastland, provides a lesson to surface owners.

Foote grazed cattle on land in Knox County under a lease with Styles. He put 650 head of cattle on the property, grazing winter wheat.

Texcel operated oil and gas wells on the property. Foote’s agent told Texcel it would be putting cattle on the property. Although the oil and gas lease did not require Texcel to fence its equipment, Texcel had a one-strand electric fence around its equipment. The cattle kept breaking through the fence, and Texcel’s pumper kept putting it back up. Finally, the cattle broke through again and knocked over a pipe coming out of a tank, resulting in an oil spill. The cattle ingested the oil, and 132 head of cattle died.

Continue reading →

Published on: February 18, 2022

Exxon and “Lawfare”

By John McFarland

Wikipedia defines “lawfare” as “using legal systems and institutions to achieve a goal.” Some use the term to refer to the misuse of legal systems against an enemy, “such as by damaging or delegitimizing them, wasting their time and money, or winning a public relations victory.” The Fort Worth Court of Appeals used the term in an opinion that has caused quite a stir in legal circles.

The Fort Worth Court’s opinion, in City of San Francisco, et al. v. Exxon Mobil Corporation, et al., 2020 WL 3969558, describes a long-ongoing dispute between Exxon Mobil and California municipalities over lawsuits filed against Exxon and other oil companies in California related to climate change. The appeal is from a trial court decision in a suit brought by Exxon against these municipalities and others under Rule 202 of the Texas Rules of Civil Procedure. That rule allows a trial court to authorize a deposition either to perpetuate or obtain testimony for use in a potential suit, or to investigate a potential claim or suit. The defendants have pending claims in California state courts claiming that Exxon’s activities affect climate change and that its public announcements about climate change were intended to downplay its effects, and seeking damages for nuisance and other relief. Exxon’s Texas suit claims that the California lawsuits were brought to silence and delegitimize Exxon “as a political actor” and to coerce Exxon and other Texas-based energy companies into adopting “the climate change policies favored by special interests and their allies in municipal government.” In other words, lawfare. Exxon said it wants to investigate potential claims for violations of Exxon’s First Amendment rights, abuse of process and civil conspiracy.

The defendants moved to dismiss Exxon’s Rule 202 petition on the ground that the court had no personal jurisdiction over them. The suit could not proceed unless the defendants had sufficient contact with Texas to allow Texas courts to exercise personal jurisdiction. The trial court held that Exxon had established facts to show such personal jurisdiction. The Court of Appeals reversed, holding no such jurisdiction existed.

Continue reading →

Published on: February 14, 2022

Oily Stuff

By John McFarland

Another blogger in the oil field: Mike Shelman, OilyStuff.com. Check him out.

Published on: February 11, 2022

Winter Storm Uri: The causes of the massive Texas power failure detailed in UT report

By John McFarland

We’ve seen much posturing and finger-pointing from politicians on who is to blame for power failures during Winter Storm Uri last February. UT’s Austin Energy Institute has issued a report: The timeline and Events of the February 2021 Texas Electric Grid Blackouts, laying out the facts on what happened. The POWER Committee of the Austin Energy Institute, chaired by Dr. Carey King, issued this report. Dr. King does research related to how energy systems interact within the economy and environment, and how policy and social systems can made decisions and trade-offs among competing factors. The report clarifies how much the reduction in natural gas supply contributed to the disaster.

Summary from the report:

Factors contributing to the electricity blackouts of February 15-18, 2021, include the following: Continue reading →

Published on: February 9, 2022

Nettye Engler Energy v. Bluestone Natural Resources: Texas Supreme Court affirms ruling against royalty owner

By John McFarland

Last week the Texas Supreme Court handed down its opinion in Nettye Engler Energy, LP v. Bluestone Natural Resources II, LLC, No. 20-0639, affirming the lower court’s ruling that Engler’s royalty interest bears its share of gas gathering and processing costs.

Engler owns a royalty interest in a section of land in Tarrant County on which Bluestone owns a lease and operates gas wells. Engler’s royalty interest originated in a deed in which the grantor reserved a one-eighth non-participating royalty interest. The deed provides that the grantor reserves “a free one-eighth (1/8) of production … to be delivered to Grantor’s credit, free of cost in the pipe line, if any, otherwise free of cost at the mouth of the well or mine.”

Bluestone contracted with Crestwood Equity Partners to gather its gas through a gathering system owned by Crestwood and deliver it to various delivery points through a processing plant and into a pipeline owned by Energy Transfer, where the gas is sold. Bluestone deducted the gathering fees charged by Crestwood from Engler’s royalty, and the plant processing fees incurred before the gas was sold.

Continue reading →

Published on: January 28, 2022

Texas Supreme Court Agrees to Hear Hlavinka v. HSC Pipeline – Important Eminent Domain Issues

By John McFarland

The Texas Supreme Court agreed to decide Hlavinka v. HSC Pipeline, about which I have written before. The Court’s summary of the issues:

The primary issues in this case are whether (1) Texas law grants eminent domain authority to a pipeline owner shipping polymer grade propylene; (2) a pipeline shipping a product from the pipeline owner’s sole manager to an unaffiliated customer constitutes a public use; and (3) the landowner may properly testify that the highest-and-best use of the taken land is as a pipeline corridor, and value the land through comparisons to past, private pipeline easement sales.

Both parties have appealed. The Hlavinkas argue that HSC does not have eminent domain authority. HSC says Hlavinka’s testimony on value should not have been admissible.

Published on: January 28, 2022

Mitchell v. Map Resources — collateral attack on tax foreclosure judgment

By John McFarland

I wrote about this case before. Today the Texas Supreme Court agreed to hear the plaintiff’s appeal of a judgment of the El Paso Court of Appeals. The Supreme Court’s summary of issues in the case:

At issue in this case is whether courts are barred from considering deed records in a collateral attack on a default judgment. A second issue is whether a rule that bars such evidence shields a default judgment from an otherwise meritorious due process claim. Other issues raised are whether a property owner’s due process rights were violated in obtaining the default judgment and whether the doctrine of laches or provisions in the Tax Code bar a collateral attack on the judgment.

The default judgment was for foreclosure of a tax lien after service by publication. The case has significant due process issues. In a lengthy concurrence in the El Paso court’s judgment, Justice Alley voiced his dissatisfaction with the extrinsic evidence rule but concurred because the court was bound by the Texas Supreme Court precedent. He noted that Ms. Mitchell’s address was in eight warranty deeds that were recorded before the tax suit was filed and could have been easily found.