Oilfield Contractor Cannot be Held Liable for Damage to Adjacent Vertical Well

A few months ago, the Wall Street Journal article “Frackers Collide With Traditional Oil Drillers” was widely shared in the oil and gas world, concluding that “[s]upersized new oil wells are sometimes running into existing wells, a little-noticed consequence of the shale boom that has started to trigger complaints and lawsuits.” So-called “well interference” was the talk of the town. Here’s a link to the original WSJ article, which has retreated behind a paywall.

Well, a federal court in Oklahoma has helped clarify who can be sued for well interference and who can’t, at least in Oklahoma. In short, the court held that Halliburton, the completions contractor for a horizontal well drilled by Newfield in the SCOOP/STACK play, could not be held liable for alleged damage to an adjacent vertical well owned by another operator.

Here are the facts: Singer Oil Company, a small privately-held Oklahoma exploration and production company, had a vertical well in Kingfisher County, Oklahoma. Newfield came along and completed a horizontal well next to it, allegedly damaging Singer’s vertical well in the process. Singer sued Newfield and its completion contractor, Halliburton, seeking to recover for the damages to its wellbore.

Halliburton filed a motion for summary judgment, arguing that, as the mere contractor of Newfield, it had no “duty” (a required element for tort claims) to Singer. Thus, it could not be held liable for the damage in this case. Singer tried to keep Halliburton in the case by arguing that Halliburton had a duty to provide Singer with notice of the impending completion job, but the Court rejected this argument and alternatively held that, even if Halliburton had such a duty, the failure to warn was not the “proximate cause” of the vertical well damage.

For now, the case remains pending against Newfield.

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