Hydraulic Fracturing

HYDRAULIC FRACTURING
Small producer wins verdict against Devon in ‘frack hit’ case

An Oklahoma jury has awarded $220,000 to a company that says hydraulic fracturing of a horizontal oil well damaged its conventional oil well.

Advocates for vertical well owners called the verdict against Devon Energy Corp. a significant victory in the bitter fight between small producers and large independents in the state.

“This might just open the floodgates of justice for producers who have lost wells to horizontal fracking,” said Mike Cantrell, legislative director and board member of the small producers’ group, called the Oklahoma Energy Producers Alliance.

Small companies operating vertical wells have filed numerous lawsuits in Oklahoma against larger independent producers that drill long horizontal wells nearby. The small companies say their wells have been damaged by the high-pressure fracture treatments performed on the horizontal wells. The fight has also spilled into the state Legislature.

Devon, based in Oklahoma City, declined comment on the verdict, first reported by OK Energy Today.

The jury sided with H&S Equipment Inc. of Oklahoma City on private nuisance and “subsurface trespass” claims but with Devon on claims of negligence. H&S had said it suffered $2.5 million in damage for the profits it would have made from the damaged well and the costs of plugging the well and drilling a new one.

H&S had a conventional vertical well in Blaine County, Okla., that had been producing oil since 1981. In August 2015, Felix Energy of Denver fracked a well nearby. Devon bought Felix assets in the area in a deal announced in 2015.

In fracturing, water, sand and chemicals are pumped at high pressure into a well to crack open rock and release oil and gas. H&S alleges the frack fluid shot past the area where Felix was to produce and toward the H&S production area.

The day after, the frack fluid started erupting from the well into the air, H&S alleged, as a result of what’s called a “frack hit.”

The frack hit caused serious damage, H&S claimed in the suit, “ruining the well and rendering it incapable of producing oil and gas.” H&S alleged that Felix had fracked “recklessly.”

Devon attorneys argued that Felix had “fully complied” with the rules of the state oil and gas regulators at the Oklahoma Corporation Commission.

They also argued that Felix had not been reckless.

“If a ‘frack hit’ occurred, it was at most inadvertent, and Felix’s engineers did not consciously disregard the risk,” Devon attorneys wrote in a motion, saying fracking fissures are hard to control.

They cited a previous ruling that the cracks created by fracking are “of immeasurable length and uncontrollable direction.”

 

Mike Soraghan, E&E News reporter

Published: Thursday, August 17, 2017

Sharing Our Thoughts

OEPA:
This is a message from one of the 3000+ small Oklahoma oil and gas producers that we are trying to protect. He asked to remain anonymous because he doesn’t want to offend the handful of companies doing this work that will even consider negotiations to pay for the damage they have done. Most say “sue us”.

AUTHOR:

I am a Small oil and gas producer from Kingfisher County. I would like to respond to the recent Journal record article where one of the horizontal fracking associations tried to gloss over the damage they are doing in the stack and scoop plays talking about all their “so-called” community service.

To start this off with I would like to state that I am part of a small family owned oil and gas company in the middle of the stack play. I have no problem with horizontal drilling, in fact, I believe it is a great tool to unlock reserves on the “tight” shale and lime stone zones. I have seen many wells drilled in these “tighter” formation and coexist and just fine with existing vertical wells and be “good neighbors” Where the problem lies is drilling these wells in the very loose, or porous, zones. This is where the good neighbor issue comes to play, in my opinion, with in the oil and gas industry.

I am going to start off with what I am seeing from a community side first then transition to the oil and gas side.

So, from the article, it appears that the major oil companies and the cronies in the OKOGA got together and put on a pig show for kids in Kingfisher. That is 20 miles from me and I heard 0 about this event. Granted, I don’t run in those circles but you would think word would get out about some “huge” pig show 20 miles away.

I want to start this good neighbor debate by comparing the Horizontal industry to the Wind Industry that is also active in my area. The wind company came into our area and rocked all the roads they plan on using to build the farms. They run water trucks up and down the roads all day to cut down on dust. The wind farm company is also very strict on their drivers when it comes to driving the county roads. They don’t tolerate the nonsense that happens on county roads. You get caught messing up, you’re fired. The company that is putting in the wind farm even donated to the town for their fireworks show this year.

Contrast that to the big oil companies drilling around here. They leave these roads in much worse shape than they were before they were drilling. Sure, they might put a little rock down in some spots but the pot holes in those roads are awful. The rock, sand, and water haulers fly up and down these county roads. They are giving any warm body with a CDL a truck to drive and letting them run free. They are constantly running people off the road and tearing up the county roads. Good luck getting them to fix it, too. The only way you get them to fix it is if it is too muddy to get an oil truck in. I know several roads around here that are almost impassable because of the holes beat in them from the truck traffic.

As far as financial help the major oil companies drilling around here have yet, to my knowledge, to donate to the town or school. There is a local Frac company that is donating to the town and school but that is it. The actual companies doing the drilling have not given anything financially to the local community. If you were to get the donor list from the local, school, church, or town event, you not see any major horizontal companies that are drilling in the area but countless local companies, many of them being the mom and pop oil companies that are getting ran out of business because of the number of wells that are being ruined by the horizontal drilling in porous lime stone formations. Because of this, the donor list will soon be shrinking at the local level and people will begin to wonder what happened, by then it will be too late. The majors will have come, filled their pockets, and left; leaving us to once again fend for ourselves and pick up the pieces.

The next part of “being a good neighbor” is not coming into a community and getting family, neighbors, and old friends to sue each other over minerals and stripper wells holding up leases so the majors can get their leases cheaper and easier and not have to worry about protest at the commission from the small producers already here. When I first started out in this industry 10 years I had countless mineral owners thank me for keeping their wells going while all the majors were leaving so they could still have a little “mailbox money”. I have even had a couple older ladies thank me for trying to fix their wells while in tears when I was plugging the wells on their lands because the old well was just too far gone to repair. Fast forward to the last 3 years and those same people are suing the small companies, being pushed to do this by the leasing agents of the majors with the promise of a “large” lease bonus when in reality it is actually less than they would have to pay the small producer that already bought the lease years ago.

Finally, being a “good neighbor” would be to right the wrong and fairly compensate your neighbor when you ruin their property. The small producers have been through the ups and down of the industry and kept that little stripper well going so you can drill the horizontal well, that in most cases the small producers were forced into through force pooling. When the major companies Frac that horizontal well it waters out the stripper well essentially killing it. When this happens, the small producer is left with nothing but a hefty plugging bill. When they approach the larger companies they are basically told, not our problem – sue us. This is very rare and option since the small producers most likely Don’t have the money to spend on 1 attorney, much the less multiple attorneys it would take to take on the big oil companies and their team of lawyers. Occasionally you hear of companies working out these differences but they are settling for pennies on the dollar for the same reason I mentioned above.

All of that being said, once again, I am not slamming horizontal drilling as a whole, I believe it is a great thing when applied in the proper place. I do believe that drilling these wells in depleted zones already being produced by vertical wells for 30-50 years prior is an awful idea and that is where the problems are lying.

Thank you for listening…

See comments in Facebook:

https://www.facebook.com/OkEnergyProducersAlliance/photos/a.832142450257200.1073741828.832134270258018/899935036811274/?type=3&theater

 

Commentary – Being a good neighbor in STACK, SCOOP

Commentary regarding article in Journal Record – Being a good neighbor in STACK, SCOOP

Article in reference: http://ow.ly/2vci30e1uWn

If the big oil associations really want to be good neighbors they should stop the destruction of the hundreds of vertical wells with their horizontal frack jobs around those communities. While they are at it they should join us in the call to eliminate the special 2% tax rate we all get for new wells and truly fund the schools in those communities.

Looks like they think if they can write a few “puff pieces” about spreading a little money around in the communities where small producers live that they can get their friends and neighbors to “look the other way”. They have obviously stepped up their PR efforts. The image of the industry is important to us as well, and the damage they are causing is hurting that image a lot more than our comments are hurting them. We hope that they will do the right thing, acknowledge the damage to wells belonging to others, acknowledge the environmental damage caused by their actions, and allow the restoration of the 7% tax rate (which is still lower than in any other major producing state) for every producer. We want to find solutions. We want to develop our state’s resources. But we also are committed to developing those resources in concert with the best interest of our state and our fellow Oklahomans.

Good public relations should start with doing good things, not try to gloss over your problems by spreading a few dollars around communities to fool the public into thinking they really are good corporate citizens.

OEPA