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Encana, WPX Horizontally Cross Swords in Piceance Court Case

Two major exploration/production companies, Encana Corp. and WPX Energy, are facing off in a court battle in western Colorado in which Encana is attempting to get an injunction to block WPX from completing a horizontal well in the Piceance Basin.

Encana is alleging that WPX invaded its mineral holdings in part of the Niobrara Shale, drilling through adjoining properties and then out laterally through Encana holdings. WPX still needs to hydraulic fracture the well to extract the natural gas supplies, and Encana is seeking to block that from happening.

Neither company responded to inquiries from NGI's Shale Daily Monday, and officials at the Colorado Oil and Gas Association said they had no details on the litigation other than what has been reported in recent days in local news media.

After bullishly drilling in the Piceance in Colorado in 2013 and 2014 (see Shale Daily, Aug. 27, 2014; April 9, 2013), Tulsa-based WPX announced major cutbacks this year, dropping 10 of 16 rigs in Colorado, New Mexico and North Dakota, and halting completions on 20 wells in the Piceance (see Shale Daily, Feb. 13).

In its lawsuit, Encana called the disputed action by WPX a "trespass well," contending that WPX had written documentation of Encana's ownership of minerals in the area of contention in the Parachute Creek region. WPX has gained "valuable geophysical data regarding Encana's Mineral Estate," despite the fact that "the rights to this data are owned exclusively by Encana," the company said in its court filing.

Now that WPX has drilled its well, Encana is limited under state regulations from tapping its mineral rights because they are within 300 feet of the new well. In that regard, energy attorneys have told local news media that the company had no other alternative but to ask the court for an injunction.

Nevertheless, WPX may argue in court that Encana still can access its mineral rights, despite the 300-foot setback requirement. The company also likely will argue that it will not be "taking" any of Encana's minerals, but rather drilling through them to get to others.

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