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be insufficient, accidents will happen, and the groundwater will be contaminated.
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The hearing before the Railroad Commission administrative judges occurred on January 8-11th, 2024. Will the RCC limit Pilot’s disposal in favor of protecting the drinking water, or allow Pilot to inject the wastewater with the additional protections in place? UPDATE as of 1/25/2024: We recently wrote about a dispute between the City of Midland and Pilot Water Solutions. Specifically, the City of Midland sought permission from the Railroad Commission to challenge drilling permits issued to Pilot Water Solutions to inject wastewater near a reservoir that provides roughly 30-35% of the City of Midland’s drinking water. Prior to the hearing before the Railroad Commission, the City of Midland and Pilot reached settlement, which allows Pilot to inject four saltwater disposal wells further away from the reservoir with the possibility of six to eight more with the city’s oversight. Additionally, Pilot is required to pay $400,000 for monitoring of the disposal wells, and ground water monitoring wells to check the reservoir’s water, which was the main push for the City of Midland. Finally, Pilot has agreed to pay for and plug two older wells that were leaking.
Molly Pela Partner, Houston
mpela@oglawyers.com www.oglawyers.com
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Colorado Supreme Court Clarifies the Law Applicable to Oil and Gas Leases
Colorado
arguments that cessation of production clauses are triggered whenever production ceases from leased or pooled lands during the secondary term regardless of whether such cessation is temporary or permanent. The Colorado Supreme Court reversed. Rejecting application of any universal definition of the word “production” (such as the commercial discovery rule), the Supreme Court held that “each oil and gas lease” in Colorado should be interpreted “on its own terms” and the goal of parties and the courts should be to “determine the parties’ meaning within the context of the lease.”
The Colorado Supreme Court announced its long- awaited decision on the universal application of the “commercial discovery rule” to Colorado oil and gas leases on November 20, 2023. The announcement stems from Board of County Commissioners of Boulder County v. Crestone Peak Resources Operating LLC (2023 CO 58, 2023 Colo. LEXIS 1086, 538 P.3d 745, 2023 WL 8010221) . In 2021, a panel of the Colorado Court of Appeals held that an oil and gas lease in Colorado only terminates in its secondary term under a cessation of production clause if wells on leased or pooled lands are incapable of producing oil and gas in commercial quantities. The panel also rejected
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G rowth T hrough E ducat i on - J anuary / F ebruary / M arch 2024
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