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As anyone who reads my blog is aware, I am a Texas oil and gas attorney who only represents mineral, royalty and surface owners and I never represent oil companies. My passion has always been helping land and mineral owners make the best use of their land and mineral assets and get the best compensation and terms for leases, pipeline and utility easements and surface use agreements. However, the current political discussions regarding the oil and gas industry seem to disregard some important facts that we may all want to keep in mind.

The oil and gas industry has been the subject of many public discussions, and that is a good thing. Regardless of your political view, the suggestions that we eliminate fracking, limit oil and gas production offshore and on federal lands, transition away from oil and gas and remove what have been called “subsidies” to the oil and gas industry, involve a number of potential unintended consequences that we all should be aware of. These include:

  • All the plastics and a number of medicines in our life are derived from oil and gas. Without petroleum, there will be no cell phones, computers, appliances, cars and many other items that we use in our daily life. (Maybe that’s a good thing!). If the supply of oil and gas becomes limited, all these things will become more expensive.
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As most people are aware, President Biden has canceled the permit for the Keystone pipeline with one of his first executive orders. While environmental interests certainly applaud this move, there will be consequences that politicians may not be taking into account.

First, without the pipeline, oil will need to be moved by railroad cars and trucks. Both of these methods involve a greater rate of accidents and spills than the pipeline.

Secondly, using rail and trucks to move oil will result in an increase in carbon emissions compared with the pipeline.

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The El Paso Court of Appeals recently decided a case that involved the use of the surface of land by a solar farm that was objected to by the Lyles, the  mineral owners of the property. That case is Lyle et al v. Midway Solar LLC et al. 

The Defendant Midway operated a large solar facility on the property in Pecos County, Texas under a 55 year lease with the surface owner. The solar leases designated drill sites for the benefit of future oil and gas production at either end of the property. The drill sites were about 30% of the surface area. The mineral owners claimed that the solar panels and transmission and electrical lines and cables serving the facility interfered with their ability to produce their mineral interests. At the time of the litigation, the mineral owners did not have an active oil and gas lease for the property and were not actively seeking a lease. In fact, the Court noted that “(i)t is undisputed that the Lyles have never leased out their interests to any oil and gas operators and have no current plans to lease their estate or to otherwise develop their mineral interests at this time. They have commissioned no geological studies, nor entered into any drilling contracts for the minerals. Since January 1, 2015, the Lyles had not received a single request to lease or purchase the mineral estate in Section 14. And the Lyles conceded they had no plans for drilling any wells.”

The mineral owners filed suit based on several claims, including a claim that the solar panels were a trespass, and requested that the Court order all solar panels and related lines be removed from the property. The Defendants claimed that the accommodation doctrine authorized their surface use.

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In a bit of welcome news for Texas mineral owners, according to the metrics calculated by Baker Hughes, the oil and gas drilling rig count for Texas and the United States is going up. Specifically, the rig count has gone up by 13 rigs since October 9, 2020. This represents the fifth week in a row that there has been an increase in the rig count. This past week has represented the largest increase since January 2020. Of course, there has been a decrease of 569 rigs since October 2019, so there is a ways to go.

Over half of the rigs have been added in Texas and especially in the Eagle Ford Shale.

The downward pressure on oil and gas prices due to the OPEC/Russian price war and the erosion of demand due to the covid virus has decimated oil prices, although they currently seen to be holding steady at about $40 per barrel for oil, according to the Energy Information Administration. In September, the Henry Hub natural gas spot price averaged $1.92 per million British thermal units (MMBtu), down from an average of $2.30/MMBtu in August, 2020.


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In August 2020, the Energy Information Administration (EIA) issued the second part of its report on the Wolfcamp shale play of the Midland sub-basin section of the Permian Basin, which you can read here. The report is an interesting analysis of the geology of this area. The accumulations in the Permian Basin that became hydrocarbons were deposited during the Pennsylvanian through the late Wolfecampian geologic era while an inland sea covered this area.

As many of you know, the Permian Basin has been producing for about 100 years. So far, it has produced more than 35.6 billion barrels of oil and about 125 trillion cubic feet of natural gas. Last year, this area accounted for more than 35% of total U.S. crude oil production. The EIA estimates that its reserves of oil and gas make the Permian one of the largest hydrocarbon producing basins in the world.

The Permian Basin contains three sub-basins: the Delaware, Central and Midland. The Wolfcamp play extends in the subsurface of all three of these sub-basins. It has been called the most prolific oil and gas bearing formation within the Permian Basin. The Wolfcamp formation is, in turn, divided into four sections, or benches, designated by A, B, C and D. Each bench differs in a number of ways, including its porosity and organic content. Since many areas of this play have very low permeability, production often requires multistage hydraulic fracturing.

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There is a new book out in September 2020 by Daniel Yergin. As some of you know, he is the author of The Prize (which won a Pulitzer Prize) and The Quest, both of which are essential reading for anyone seeking an understanding of the history and nature of the oil and gas industry. The new book is entitled: The New Map: Energy, Climate, and the Clash of Nations, and will no doubt be just as interesting as his previous books.

Some of the points he addresses in the new book are:

  • the future of the shale boom
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The San Antonio Court of Appeals recently issued an interesting opinion regarding a well operator’s claim that H2S/CO2 from a nearby injection well damaged its leased minerals. The case has been appealed to the Texas Supreme Court and oral argument has been scheduled for December 2020.

The case is Swift Energy Operating, LLC v. Regency Field Services LLC. In 2009, Swift, the Plaintiff, leased approximately 4200 acres of a ranch in McMullen County, Texas and operated a number of producing wells on the ranch. In 2006, Regency obtained a permit from the Texas Railroad Commission to operate an injection well in which they would dispose of a gas mixture of concentrated hydrogen sulfide (H2S) and carbon dioxide (CO2) by pumping it into the Wilcox formation. In its application for the permit, Regency submitted a plume model to the Railroad Commission that predicted that the injected material would spread horizontally by approximately 2200 feet after 40 years of injection. The review by the Railroad Commission staff indicated that they believed that shale formations above and below the disposal zone would prevent vertical migration of the injected gas.Deep_injection_well

In 2012, another operator in the area discovered H2S in one of the its wells and testing indicated it came from the Regency injection well. As result, that operator had to plug and abandon that well. An employee of that operator emailed Swift about these developments.

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Many Texas mineral interest and royalty owners have seen their royalty checks shrink or disappear altogether in the second quarter of 2020. The covid crisis caused prices to slip to nearly zero in some cases and in response, in April, May and June 2020, many operators shut in wells that they could no longer afford to operate. There was concern among some in the oil and gas industry that shutting in these wells could cause permanent damage to the wells and/or the reservoirs.images5

It now appears that those fears were probably unfounded. A recent press release by Rystad Energy, based on an analysis of second quarter earnings reports from 25 large, publicly traded oil companies, reports that most US onshore operators will restore nearly all shut-in oil wells by the end of the third quarter of 2020. This has no doubt been driven by the partial rebound in oil  prices. The operators sampled said they did not face any issues in bringing wells back online. Rystad Energy’s Vice President for North American Shale and Upstream, Veronika Akulinitseva, said “No loss of production has been reported by any operator following the shut-ins and moderation of output, with most companies flagging a smooth return of operations, and in some cases posting a positive production impact from those reactivations”. One operator, EOG Resources, indicated that nearly all their reactivated wells have exhibited some degree of “flush production”. Flush production is an increase in production after a well is reactivated because the bottom hole pressure has been building up while the well was shut in.

Many Texas mineral and royalty owners are individuals who depend on their monthly royalty check to pay the bills. The reactivation of these wells, and the larger royalty checks for a month or so, will be good news to these owners. In addition, as production comes back, oil companies will begin to add back laid off employees, which is important to those families and also to the Texas economy as a whole.



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The Texas Supreme Court recently heard a petition for mandamus requesting relief from some of Governor Abbott‘s executive orders that suspended the right of “nonessential” business owners to make a living. The petition was denied for lack of jurisdiction. However, the concurring opinion by Justice John Phillip Devine (that you can read here) sets out a remarkable and eloquent defense of constitutional principals in the context of crises. In his opinion, Justice Devine writes that, while he concurs with the dismissal for lack of jurisdiction, he felt compelled to address the constitutional issues presented by executive orders. To quote Justice Devine:

“…Texans have experienced a suspension of their rights. Suspension of law is serious business. It involves a decision that, at the very least, itself needs a constitutional blessing. In fact, the Texas Constitution speaks to this very issue. In the first article, it states: “No power of suspending laws in this State shall be exercised except by the Legislature.” This provision means what it says. The judiciary may not suspend laws. Nor may the executive. Only the Legislature. … As Relators point out, in Brown Cracker & Candy Co. v. City of Dallas, this Court long ago held that article I, section 28 (of the Texas Constitution) does not permit the Legislature to “delegate to a municipal corporation or to anyone else, authority to suspend a statute law of the State.

Despite this clear constitutional exhortation, we review orders from the Governor that purport to be made under the Texas Disaster Act of 1975, which says that the “governor may suspend provisions of any regulatory statute prescribing the procedures for conduct of state business . . . .” I find it difficult to square this statute, and the orders made under it, with the Texas Constitution.

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There seem to be more and more frequent commercials advertising services to protect homeowners from “home title fraud”. These commercials are not talking about fraudulent applications for mortgages, although that probably happens frequently. Instead, they are talking about someone who forges a deed to themselves and then tries to borrow money against the property or resell the property to a third party. Despite the frantic tone of the commercials, one has to wonder just how common home title theft is.

The FBI reported that in 2017, 9600 people lost a total of $56 million through wire fraud involving real estate. However, that is an extremely broad category and the FBI has not published statistics so far that delineate how much of this is “home title fraud”. In my experience, in Texas it is not very common. I looked for statistics regarding this kind of fraud nationally but numbers just aren’t available.

There are a number of things to know about this kind of fraud. First, in Texas, keep in mind that this kind of fraud is enabled if an unsuspecting buyer purchases property from someone without going through a title company. The title company closing process includes protections designed to prevent this kind of fraud.