Abstract:
The past decade has seen the development of a new type of
landowner lawsuit. Landowners and mineral interest owners in
Louisiana have asserted claims against oil and gas well operators
seeking recovery of damages for alleged destruction of
hydrocarbon reservoirs due to improper operation during
exploration or production. Not surprisingly, these claims have
arisen in the context of wells or fields that have produced most of
their estimated reserves or have experienced a decline in or
cessation of production. To date, the majority of the claims that progressed to litigation settled before trial.1 The only published
decision, Hayes Fund et al. v. Kerr-McGee et al., went all the way
up to the Louisiana Supreme Court (via the Louisiana Third
Circuit Court of Appeal), where the trial court’s original finding of
no liability for the defendant oil companies was reinstated in
December 2015.2 The scope of the trial court ruling, however, left
some of the factual and legal arguments raised by the landowners
unresolved, particularly (1) how litigants can establish breach of
the duty of the reasonably prudent operator standard in these
types of cases, and (2) how to prove damage to a reservoir, as
opposed to an individual well.
