Iskandia Operating Inc. v. SWEPI, LP d/b/a Shell Western E & P reversed summary judgment for the defendant in a subsurface trespass claim involving injection of large amounts of produced water.

The facts

Iskandia produces oil from 100 wells across 5,000 acres from a shallow zone of the Delaware Mountain Group in the Dimmitt Field in Loving County. SWEPI produces from the deeper Bone Springs and Wolfcamp formations.

Iskandia sued SWEPI for trespass, alleging that Iskandia produces and disposes less than 6,000 barrels of salt water per day, maintaining equilibrium in the DMG, while SWEPI produces more than 110,000 barrels per day, injecting exponentially more saltwater than the area would accommodate without adverse effects and injecting saltwater into Iskandia’s producing zone, “swamping” Iskandia’s oil reserves and rendering the reserves economically unrecoverable.

The analysis

In considering SWEPI’s no-evidence motion for summary judgment the trial court excluded two of Iskandia’s expert witnesses, Meehan and Bintu, granted the motion and dismissed Iskandia’s suit.

Iskandia’s experts, using reservoir simulation system FracMod, testified that high-pressure high-volume saltwater injected into the DMG migrated onto Iskandia’s leases and adversely affected the production potential of Iskandia’s wells, damaging 15 wells beyond repair and others to varying degrees.  

SWEPI argued that Meehan was not qualified, his testimony was based on unreliable foundational data and flawed methodology, and he failed to rule out possible alternative causes of damage. The court of appeals discussed each challenge in turn and reversed the trial court. (At this time, feel free to forward this post to your engineering geek colleagues so that they may delight in the magic of Petrel geo-modeling software, the “Nance paper”, facies models, the “Stone Model” and the like.)  

The court accepted Meehan as qualified by education, experience and training (see the opinion for details) and applied the Supreme Court’s six factors under Rule of Evidence 702 for determining the reliability of scientific expert testimony:

• The extent to which the theory has been or can be tested;
• The extent to which the technique relies upon the subjective interpretation of the expert;
• Whether the theory has been subjected to peer review and all publication;
• The technique’s potential rate of error;
• Whether the theory or technique has been generally accepted as valid by the relevant scientific community; and
• Non-judicial uses which have been made of the theory or technique.

The court recognized that reservoir simulations have been used in the industry and litigation for decades and are generally accepted as valid in the relevant scientific community.  The court accepted the data underlying the opinions as sufficiently reliable for Meehan to form an opinion.

TOMORROW, THE COURT’S CONSIDERATION OF TEXAS LAW ON SUBSURFACE TRESPASS BY INJECTED SALTWATER.

Your musical interlude, a query from the appellant.

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