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Wrestling With a Downhole Dilemma: Subsurface Trespass, Correlative Rights, and the Need For Hydraulic Fracturing in Tight Reservoirs

John W. Broomes, Proceedings of 53rd Annual Rocky Mountain Mineral Law Institute (2007)

Hydraulic fracturing across a lease boundary was first recognized as a potential trespass by the Texas Supreme Court in 1961.1 In the decades since that case was decided, the North American petroleum industry has matured to the point that producers are now developing low permeability reservoirs which 20 years ago were simply passed over in favor of better prospects. Hydraulic fracturing has become an essential tool to enable economic production of these tight formations. Indeed, in 2005 it was reported to Congress that more than 90% of the wells being drilled in the United States were receiving fracture treatments.2
That same year, the Texas Court of Appeals affirmed a lower court ruling in the first reported case awarding damages for a claim of subsurface trespass by hydraulic fracturing.3 Not only were the plaintiffs awarded more than $500,000 in actual damages, they were also awarded $10 million in punitive damages, all [20-3] based on evidence of a trespass that appeared largely conjectural in nature.4
In contrast with this harsh treatment of trespassory fractures, courts have historically dealt more favorably with another method of subsurface trespass--the waterflood. Based on strong public policy arguments regarding the essential nature of waterflooding to the oil and gas industry, courts have often refused to enjoin waterfloods, or even to award damages for the