Just because you can’t “frack” doesn’t mean you can't drill.
That’s what U.S. District Court Judge David Hurd told Chesapeake Appalachia the
other day. In a decision posted November 15, Hurd rejects force majeure as a
reason to hold onto expired leases. Leases, he explain, terminate at the end of
their primary terms. His reasoning:
“… The purpose of the leases is to explore, drill, produce,
and otherwise operate for oil and gas and their constituents.” And the fact
that New York State is still reviewing regulations for high volume horizontal
hydraulic fracturing (HVHF) does not stop oil and gas companies from exploring,
drilling, producing and otherwise operating, says Hurd.
Even though the state does not allow fracking, “… drilling permits
for conventional drilling methods have, and continue to be, issued in the area
of plaintiffs’ lands,” wrote Hurd. He clarified that the leases signed by
landowners did not limit Chesapeake’s right to drill to a specific type of
drilling or a particular formation.
The whole force majeure argument was based on the illusion
that the state was preventing the gas companies from drilling. But, notes Hurd,
“While defendants submit evidence demonstrating that horizontal drilling
combined with HVHF is the only commercially viable method of production in the
Marcellus Shale and drilling using conventional methods is
impractical,"[m]ere impracticality . . . is not enough to excuse
performance." The gas companies “…contracted for access, exploration, and
the right to drill for a set period of time.” Not for a specific technique or
formation.
This decision brings a sigh of relief to more than 50 landowners in Broome and Tioga counties who were trapped in leases that should have expired years ago.
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