for pooling regarding horizontal drilling and production of oil and gas from the Marcellus Shale Formation, which includes nonparticipating royalty interests, consent or ratification by the holders of the nonparticipating royalty interests to the pooling is not required, where the holders of the nonparticipating royalty interests have conveyed the oil and gas in place and the executive rights thereto to the lessor.” (Emphasis added.) The Supreme Court explicitly rejected the “cross- conveyance” theory and recognized established West Virginia common law in holding that pooling does not create a joint or undivided property interest in the pooled oil and gas; rather, “pooling results in a consolidation of contractual and financial interests regarding the drilling and production of oil and gas from the combined parcels of land.” While the Supreme Court explored the distinction between pooling and unitization in oral argument on May 23, 2017, the Court used the terms interchangeably in its opinion (please see footnote 1 from the ruling below). 1 Although related, pooling and unitization have different technical meanings in oil and gas operations. Generally speaking, pooling arises from the bringing together of tracts of land for oil and gas drilling based primarily upon the allowable spacing of wells. The focus of unitization, however, is more directly on the geologic nature of the underlying oil and gas reservoir and enhanced-recovery techniques. See James E. McDaniel, Statutory Pooling and Unitization in West Virginia: The Case for Protecting Private Landowners, 118 W.Va. L. Rev. 439, 455 (2015) (Although “pooling” and “unitization” are often used interchangeably, pooling occurs “when separately owned tracts of land are ‘pooled’ or joined together in order to comply with spacing requirements or to have sufficient acreage with which to obtain a
well permit.” By contrast, the goal of unitization “is to consolidate enough of the interests in a particular reservoir to allow production to be carried out in the most efficient manner[.]”). See also Patrick H. Martin and Bruce M. Kramer, Williams & Myers, Oil and Gas Law , § 901 (LexisNexis Matthew Bender 2016) (“‘[P]ooling’ means the bringing together of small tracts sufficient for the granting of a well permit under applicable spacing rules whereas ‘unitization,’ or, as it is sometimes described, ‘unit operation,’ means the joint operation of all or some part of a producing reservoir.”). In the current matter, the parties have used the terms “pooling” and “unitization” interchangeably. In this Opinion, we will refer to both terms simply as “pooling.” About the Authors:
Allison Farrell focuses her practice in the area of energy litigation. She represents the interests of the oil, natural gas, and coal industry in state and federal court and has been involved in many aspects of litigation facing the industry. Email: Lauren Williams focuses her practice in the area of energy litigation. She represents the interests of the oil and natural gas industry and focuses on mineral title litigation. Email: lauren.williams@steptoe- johnson.com
allison.farrell@steptoe-johnson.com
Texas Supreme Court: Anti-Gas Lawsuit Filed Too Late Source: the Denton Record-Chronicle
Gas Services , L.L.C. went before the Supreme Court of Texas on March 1, 2017.
In 2011, the town of Dish, TX and some of its property owners filed a lawsuit against multiple natural gas companies in the Denton County state district court, claiming that excessive emissions, noise and light from natural gas compressors and pipelines just outside town caused a nuisance. They also accused the companies of trespassing because the emissions polluted the town’s air. The case against Atmos Energy Corp., Enbridge Gathering (North Texas) L.P., Energy Transfer Fuel, L.P., Enterprise Texas Pipeline, L.L.C and Texas Midstream
On May 19, 2017, Justice Jeffrey Brown delivered an opinion reversing a court of appeals judgment and reinstating the trial court’s take-nothing judgment, which means the plaintiffs obtain no damages or relief. Residents began complaining about noise and odor from the compressor and meter stations as early 2006; however, no lawsuit was filed until 2011, according to the opinion. “We hold that the two-year statute of limitations bars their claims,” Brown wrote.
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G r o w t h T h r o u g h E d u c a t i o n - J u l y / A u g u s t / S e p t e m b e r 2 0 1 7
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