Lightning Oil Co. v. Anadarko E&P Onshore, LLC
2017 Tex. LEXIS 463, 60 Tex. Sup. Ct. J. 997, 520 S.W.3d 39 (2017)
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Rule of Law:
The owner of the surface estate controls the subsurface mass and may grant permission to a third party to drill through the subsurface to reach minerals under an adjacent tract, even if it passes through a severed mineral estate leased by another party. Such drilling does not constitute a trespass against the mineral lessee unless it substantially interferes with the lessee's existing or planned development of its own minerals.
Facts:
- Briscoe Ranch, Inc. ('Briscoe') owns the surface estate of a property known as the Briscoe Ranch.
- The mineral estate beneath the Briscoe Ranch was severed and is owned by the Hurd Family, who leased it to Lightning Oil Co. ('Lightning').
- The State of Texas owns the adjacent Chaparral Wildlife Management Area, and Anadarko E&P Onshore, LLC ('Anadarko') leases the minerals beneath it.
- Anadarko's lease for the Chaparral required it to establish drilling locations off-site 'when prudent and feasible.'
- Anadarko entered into a 'Surface Use and Subsurface Easement Agreement' with Briscoe to use the surface of the Briscoe Ranch for its drilling operations.
- Anadarko planned to drill wells from the Briscoe Ranch surface, passing horizontally through the subsurface formations where Lightning's leased minerals are located, to produce minerals from under the Chaparral.
- Anadarko disclaimed any intent to produce minerals from Lightning's leasehold, but its wellbores would physically pass through the mineral-bearing formations leased by Lightning.
Procedural Posture:
- Lightning Oil Co. sued Anadarko E&P Onshore, LLC in district court (trial court) for trespass and tortious interference with contract, seeking a temporary restraining order and an injunction.
- Both parties filed traditional and no-evidence motions for summary judgment.
- The trial court granted Anadarko's motion for partial summary judgment and denied Lightning's motions.
- Lightning, as appellant, appealed the trial court's judgment to the court of appeals.
- The court of appeals affirmed the trial court's judgment in favor of Anadarko, the appellee.
- Lightning appealed to the Supreme Court of Texas for review.
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Issue:
Does an oil and gas operator commit trespass against a mineral lessee by drilling through the lessee's mineral estate with only the surface owner's permission to access minerals under an adjacent tract of land?
Opinions:
Majority - Justice Johnson
No. Drilling through a mineral estate with the surface owner's permission to access adjacent minerals is not a trespass against the mineral lessee. The surface estate owner, not the mineral owner, controls the subsurface mass, including the rock and earth surrounding the minerals. A mineral lessee owns the oil and gas in place and has the right to develop them, but does not own the physical space containing those minerals. An interference with that space constitutes a trespass against the mineral estate only if it infringes upon the lessee's ability to exercise its development rights. Here, Lightning's claim of potential future interference was speculative and insufficient to warrant an injunction. While Anadarko's drilling would inevitably extract a small amount of Lightning's minerals in the well cuttings, this minor loss is outweighed by the strong public policy of encouraging maximum recovery of resources and minimizing waste. Therefore, this incidental loss is not a legally sufficient injury to support a trespass claim.
Analysis:
This decision clarifies the distinct property rights in the subsurface, affirming the surface owner's control over the geological structures versus the mineral lessee's control over the hydrocarbons within them. It provides significant legal support for modern horizontal drilling techniques, allowing operators to access minerals under sensitive or developed areas by drilling from adjacent properties without the consent of the pass-through mineral owner. The court's use of a balancing test, weighing the de minimis loss of minerals against the public policy of efficient resource recovery, establishes a precedent that may limit trespass claims for minor, incidental intrusions in the oil and gas context. This reinforces the accommodation doctrine as the primary tool for resolving conflicts between surface and mineral uses, rather than allowing mineral lessees to prospectively block activities based on speculative future interference.
