Recently, the Texas Supreme Court issued an opinion in Lightning Oil Company v. Anadarko E&P Onshore, LLC, where Lighting claimed that Anadarko’s off-lease drilling location, situated on Lightning’s leasehold, constituted a subsurface trespass as Lightning’s mineral estate located under the drill site. Lightning asked the Court to reverse a decision issued by the Fourth Court of Appeals in San Antonio which upheld the trial court’s grant of Anadarko E&P Onshore, LLC’s Motion for Summary Judgement.

Here, Lightning owns the mineral estate under approximately 3,000 acres in Dimmit County. Briscoe Ranch, Inc., is the owner of the surface estate. Nearby is a 15,200 acre wildlife sanctuary, the surface and 1/6 of the minerals of which is owned by Texas Parks and Wildlife. Anadarko is the owner of the lease that gives it the right to develop the minerals under the sanctuary.

Anadarko planned a drillsite on the surface owned by Briscoe, which necessarily would penetrate Lightning’s mineral estate, but would only have take points in the sanctuary’s mineral estate. The trial court granted Anadarko’s Motion for Summary Judgment, and dismissed Lightning’s claims of both trespass and tortious interference. Lightning appealed the trial court’s judgment, and the Fourth Court of Appeals in San Antonio agreed with Anadarko. The Court of Appeals held that not only was there no evidence that Anadarko trespassed, but also that Anadarko was justified in siting a well on Briscoe’s surface, since it had express permission from Briscoe to do so. Lightning appealed once more to the Texas Supreme Court, asking the high court to reverse both of the lower courts and agree with Lightning that off-lease well locations are a subsurface trespass.

In its petition, Lightning argues that the “mineral-estate owner, as owner of the dominant estate, has the right to make any use of the surface that is necessarily and reasonably incident to the removal of the minerals. […] Accordingly, a mineral owner may enter the surface estate and use as much of the surface, including the subsurface, as is reasonably necessary to remove the minerals. […] Despite established law to the contrary, the court of appeals’ opinion demotes the mineral-interest owner’s vested property right—oil and gas in the subsurface—to a mere license to hunt for this property.” Anadarko responded that the court of appeals was correct in holding that Anadarko needed only the surface owner’s permission to drill, because “the surface estate owner—not the mineral estate owner—controls the matrix of earth underlying the surface. […] Lightning does not own specific oil and gas molecules, and thus its bundle of rights as mineral lessee does not include the right to exclude pass-through drilling.”

The Texas Supreme Court, in analyzing the arguments, first outlined the definition of “trespass”, stating that:

‘[t]respass to real property is an unauthorized entry upon the land of another, and may occur when one enters—or causes something to enter—another’s property.’ […] ‘[E]very unauthorized entry upon land of another is a trespass even if no damage is done or injury is slight.’ […] The owner of realty generally ‘has the right to exclude all others from use of the property.’ […] But ownership of property does not necessarily include the right to exclude every invasion or interference based on what might, at first blush, seem to be rights attached to the ownership. […] [‘]Wheeling an airplane across the surface of one’s property without permission is a trespass; flying the plane through the airspace two miles above the property is not.[’]

Lightning argued that it has rights in the minerals and also rights in the reservoir space that were being infringed upon. And the Court did not wholeheartedly disagree with Lightning. It recognized that “Anadarko’s drilling program will indisputably extract a portion of the subsurface roughly equivalent to the volume of the wellbore—i.e., the cuttings pushed to the surface during the drilling process—and that material will contain minerals.” And though the amount of minerals being extracted would be small, the Court agreed that “every unauthorized entry upon land of another is a trespass even if no damage is done or the injury is slight.” The Court also noted that while “the surface owner owns and controls the mass of earth undergirding the surface, those rights do not necessarily mean it is entitled to make physical intrusions into formations where minerals are located and remove some of the minerals—as is probable if a well is drilled into or through such formations.”

The Court determined that “[w]hether the small amount of minerals lost through that process will support a trespass action must, in the end, be answered by balancing the interests involved[.]” They noted that “[i]n balancing the relevant interests of Lightning and Anadarko, [they] weigh ‘the interests of society and the interest of the oil and gas industry as a whole against the interest of the individual operator.’” Their conclusion was that “[b]alanced against the small loss of minerals a lessee such as Lightning will suffer, if drilling through the minerals is determined to be a non-actionable interference with its property rights, is the longstanding policy of this state to encourage maximum recovery of minerals and to minimize waste.” While noting that such off-lease surface locations did maximize recovery and minimize waste, they concluded “that individual interests in the oil and gas lost through being brought to the surface as part of drilling a well are outweighed by the interests of the industry as a whole and society in maximizing oil and gas recovery.”

As for Lightning’s second argument, “that Anadarko’s proposed well sites, drilling activities, and underground well structures will interfere with both the surface and subsurface spaces necessary for it to exercise its right to develop the minerals in the future,” the Court reasoned that Lightning was speculating, and speculations was not enough to sustain a cause of action. Lightning did not point to anything that indicated the Texas Railroad Commission or application of the accommodation doctrine would not adequately protect its rights.

Therefore, the Court laid to rest whether off-lease locations would be considered a trespass by declaring that there is no trespass action without showing a greater injury to the minerals that the minerals extracted by the drilling of the wellbore, or that the protections in place are not sufficient.