2013

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With the bankruptcy of dozens of traditional defendants in asbestos litigation, plaintiffs’ attorneys have been creative in pursuing claims in previously untapped areas. One such area is alleged oilfield worker exposure via asbestos-containing drilling mud additives. These were specialty products used to raise viscosity in a well (bentonite or “gel” was by far the most common viscosity producer used by the drilling industry). Asbestos-containing drilling mud additives were first introduced to the market in the mid-1960’s and production ceased in the mid-1980’s. While mass screenings by plaintiffs’ lawyers have largely ceased in others areas of asbestos litigation, they are alive and well in the context of drilling mud litigation. (more…)

Mississippi’s Statewide Rule 13, addressing blowout preventers, currently states that, “[i]n drilling areas where high pressures are likely to exist and on all wildcat wells, all proper and necessary precautions shall be taken for keeping the well under control, including the use of blowout preventers and high pressure fittings attached to properly anchored and cemented casing strings.”  This Rule, however, is likely getting a major overhaul aimed at enhancing the safety of the general public and oilfield workers. (more…)

The American Association of Professional Landmen (AAPL) anticipates the release of the newest Operating Agreement format specifically related to horizontal drilling. Beginning in 1956 the AAPL has promulgated a standard format Operating Agreement for use onshore in the oil and gas industry, with revision in 1977, 1982 and 1989. Also the AAPL has developed standard Operating Agreement for use offshore. (more…)

A recent study supports producers with regard to air quality in the Barnett Shale and its effects on health risks. Houston-based ToxStrategies published its study, funded by the Barnett Shale Energy Education Council, and using data from the Texas Commission on Environmental Quality (the “TCEQ”) found that emissions related to natural gas production are below levels that would pose health concerns. (more…)

On August 23rd, OSHA released the long awaited proposed rule on silica. The proposed regulation would split the regulation of silica into two separate standards, one affecting the general and maritime industries and the other affecting the construction industry. The silica standard has not been updated since the early 1970s. This proposed rule would significantly change the manner that silica is regulated in all industries, setting a permissible exposure limit of 50 micrograms of respirable crystalline silica per cubic meter on a time weighted average. Currently, there is no specific standard related to silica; rather it is part of all regulated air contaminants under 29 CFR 1910.1000.  (more…)

Underpayment of royalties continues to represent a hot topic in oil and gas litigation.  Property owners who enter into royalty agreements dream of enjoying riches at the hands of companies with the resources to explore for, produce and market minerals.  By nature, a royalty owner’s rights are passive.  The royalty owner generally has an interest in a stipulated fraction of production free of production costs, if and when production occurs, and has no obligation or right to participate in the operations related to exploration, production or marketing.  The royalty owner merely waits for the check to come in the mail.  Difficulties inevitably arise when a royalty owner receives a check that appears inadequate, either by comparison to previous checks from the same company or to checks from another company or to checks he sees his neighbor receiving.  Royalty payments may slow even as the production of minerals appears to increase. The instinctive reaction:  assume manipulation by the oil and gas company. Landowner disappointment, however, often flows from a failure to read or understand basic mineral lease terms. Royalty owners, believing that oil companies use various tactics to cheat them of their due, increasingly are turning to the courts. (more…)

In PanAmerican Operating, Inc. v. Maud Smith Estate, the Texas Court of Appeals for the Eight District addressed risks associated with working through independent landmen. In this case, PanAmerican hired an independent contractor, Robert Wormser, a landman, to obtain an oil and gas lease. Mr. Wormser called the attorney for Maud Smith Estate and, without disclosing that he was an independent contractor, began negotiating the lease. After executing and mailing the lease to PanAmerican and attempting for seven months to get paid, Maud Smith Estate sued for breach of contract. In its answer, PanAmerican claimed the lease was invalid. PanAmerican denied that Mr. Wormser was an employee and argued that Mr. Wormser did not have the apparent authority to bind PanAmerican. The trial court and the Court of Appeals disagreed. (more…)