Schexnaydre Law Firm, LLC

Sinkholes in the Permian: liability in the making

Scientists at Southern Methodist University have been studying the sinkholes near Wink, Texas lately. The startling conclusion that they came to was that the entire Permian Basin area should get ready for more of the same. Decades of pumping oil from the ground followed by more recent fracking of the rock have created instabilities.

To date there have been no significant lawsuits over these sinkholes. But if the recent decision on the Bayou Corne sinkhole here in Louisiana is a good guide we can expect liability over a wide range of companies should more sinkholes develop over populated areas.

The new study

The team from SMU used satellite radar to examine a large section of the Permian Basin around the famous "Wink Sinks" which opened up in the 1980s. They found that the ground is moving at a rate not considered normal. Sections of the 4,000 square mile are they studies were moving as much as 40 inches in two and half years.

The area studied has seen significant oil production since the 1940s, which continues to this day. This includes injection wells and more recently fracking operations which have renewed the Permian operations and created a rush to wells once thought to be dry.

The study concluded that sinkholes are very likely to appear, and not just near where they have opened before. There is a chance that the entire region can expect to see many more, given the heaving it is seeing.

The liability

Since it has not been thoroughly tested in court, it is hard to determine exactly who would be held liable if sinkholes did indeed start opening up in populated areas. Once guide can be a recent ruling on liability for the famous Bayou Corne sinkhole in Assumption Parish.

Previously, Texas Brine had been held fully responsible for this salt dome collapse as the operator on record. They have been paying weekly checks to residents and offered to buyout 350 homes since 2013.

In 2015, Texas Brine sued land owner Occidental Chemical (OxyChem) and subcontractor Vulcan for the role in the collapse. Last December Judge Thomas Kliebert Jr. of 23rd Judicial District Court found that Texas Brine was no more than 35 percent at fault, essentially sharing blame with the all companies equally.

This decision was based on all the parties having equal knowledge and decision making in the operation, meaning that any one of them could have stopped or significantly altered the drilling which took place from the 1970s onward for nearly 40 years.

In the Permian

From this decision, we can see how things might proceed in the Permian should more sinkholes open up. The most important difference is that with operations going back 70 years or more, operational decisions and corresponding liability are going to be even more difficult to determine.  This is going to be difficult and require pages and pages of records dating back decades.

It is important to have an attorney who understands the unique challenges of the oil and gas industry to evaluate the potential liability for all operations, regardless of where they are. In the Permian there is reason to believe that liability might be as deep as the Wink Sink if you are not careful.

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