Discovery Operating, Inc. v. BP America Production Company ( 2010 )

Opinion filed April 15, 2010
In The
Eleventh Court of Appeals
__________
Nos. 11-08-00127-CV & No. 11-08-00171-CV
__________
DISCOVERY OPERATING, INC., Appellant
V.
BP AMERICA PRODUCTION COMPANY, Appellee
On Appeal from the 385th District Court
Midland County, Texas
Trial Court Cause Nos. CV44540 & CV46312
OPINION
Discovery Operating, Inc. encountered a highly pressurized water flow while drilling an oil
well. After investigating the matter, Discovery believed that BP America Production Company’s
operation of two injection wells caused the water flow. Discovery brought suit against BP to recover
damages that allegedly resulted from the water flow. Discovery asserted claims for negligence,
negligence per se, and common-law and statutory waste. The trial court granted summary judgment
to BP on Discovery’s negligence per se claims and severed those claims from the remainder of the
case.1 The parties proceeded to a jury trial on Discovery’s other claims. The jury returned a verdict
in favor of BP, and the trial court rendered a take-nothing judgment against Discovery.
In Cause No. 11-08-00127-CV, Discovery asserts that the trial court erred in granting
summary judgment on its negligence per se claims. Based on the Texas Supreme Court’s recent
holding in Exxon Corp. v. Emerald Oil & Gas Co., L.C., No. 05-0729, 2009 WL 795760 (Tex.
March 27, 2009, reh’g granted), and as explained in this opinion, we conclude that the trial court
erred in granting summary judgment to BP on Discovery’s negligence per se claims. Because
Discovery’s negligence per se claims are inextricably intertwined with its other claims, we conclude
that the error in granting summary judgment on the negligence per se claims harmed Discovery in
the presentation of its entire case. Therefore, the error in granting summary judgment in Cause No.
11-08-00127-CV necessitates a reversal and a remand of each of the trial court’s judgments in both
appellate causes.
In Cause No. 11-08-00171-CV, Discovery complains of four evidentiary rulings. Discovery
asserts that the trial court erred in the following respects:
(1) in admitting testimony from BP’s expert, William D. Griffin, that
Discovery encountered a cavern while drilling its well because Griffin’s “cavern”
testimony was based on speculation and constituted a new opinion that had not been
disclosed before trial;
(2) in admitting testimony from BP’s experts, Roy C. Williamson and Dr.
William M. Cobb, about injection pressure data relating to Queen injection projects
because such testimony amounted to a previously undisclosed expert opinion that the
Queen projects caused the water flow that Discovery encountered in drilling its well;
(3) in excluding testimony from Discovery’s expert, Don Sparks, that BP
violated the standard of care for operating its injection wells because the issue of
whether BP violated the standard of care for operating such wells is not a matter
within the knowledge and experience of the average juror; and
(4) in admitting expert testimony from two Texas Railroad Commission
employees, Stephen Christopher Boger and Joe Millhollon, that no correlation
1
BP contends that the trial court granted summary judgment on only one of Discovery’s negligence per se claims. For the
reasons stated in this opinion, we conclude that the trial court granted summary judgment on all of Discovery’s negligence per se
claims.
2
existed between BP’s injection wells and the water flow in Discovery’s well because
their testimony had not been tested during the Daubert2 proceedings.
For the reasons stated in this opinion, we conclude that the trial court erred (1) in admitting Griffin’s
“cavern” testimony, (2) in admitting Williamson’s and Dr. Cobb’s pressure injection data testimony,
and (3) in excluding testimony from Don Sparks that BP violated the standard of care for operating
its injection wells. We also conclude that the evidentiary errors harmed Discovery and necessitate
reversal of the trial court’s judgment in Cause No. 11-08-00171-CV.
Therefore, based on the trial court’s erroneous summary judgment on Discovery’s negligence
per se claims, we reverse the judgments of the trial court in Cause No. 11-08-00127-CV and Cause
No. 11-08-00171-CV. In addition, based on the trial court’s erroneous evidentiary rulings, we
reverse the trial court’s judgment in Cause No. 11-08-00171-CV. We remand both causes to the trial
court for further proceedings consistent with this opinion.
Introduction
Discovery encountered a highly pressurized flow of brine water at a depth of about 3,895 feet
while drilling its Geronimo 15, No. 6 well.3 Initially, the water flowed from the well at a rate of
about 1,500 to 1,600 barrels per hour, and water continued to flow from the well until Discovery
brought the well under control six or seven days later. As a result of the water flow and actions that
had to be taken to control the well, Discovery could not complete it.
Because no similar problems had occurred in the area in the past, Discovery concluded that
the water flow in the 15-6 well had not been caused by a natural occurrence but, instead, had been
caused by man-made subsurface injection. After investigating various injection projects in the area,
Discovery concluded that BP’s operation of its Sanders A 25 injection well (the 25 well) and its
Sweetie Peck 2D injection well (the 2D well) caused the water flow in Discovery’s 15-6 well.
Therefore, Discovery brought this suit against BP.
Discovery and BP designated experts on the issues of negligence, causation, and damages,
and all of these issues were hotly contested. The trial court conducted Daubert proceedings to
2
See Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579 (1993).
3
TMBR/Sharp was Discovery’s drilling contractor on the well.
3
determine whether the designated experts were qualified to testify as expert witnesses at trial.
During the Daubert proceedings, the trial court heard testimony on eight days during a period of
about four months. The trial court ruled that all of the witnesses who had testified during the
Daubert proceedings were qualified to testify as expert witnesses at trial. The jury trial was
dominated by detailed, sophisticated, and complex expert testimony. The jury heard testimony on
thirteen days.
The case involved the following central issue: What caused the water flow in the 15-6 well?
Discovery encountered the water flow in the 15-6 well at a depth of 3,895 feet, which was either at
the base of the Seven Rivers formation or at the top of the Queen formation. Initially, Discovery
believed that the water flow had been caused by BP’s injections into its 25 well and its 2D well. The
Texas Railroad Commission had issued permits allowing BP to use these wells as injection wells.4
With the 25 well, BP injected fluids into the War-San San Andres (WSSA) reservoir, which was part
of the San Andres formation, at a depth of about 6,100 feet. With the 2D well, BP injected fluids
into the San Andres formation at a depth above the WSSA reservoir.
At trial, Discovery’s experts testified that BP’s injections into its 25 well caused the water
flow in the 15-6 well. Discovery did not offer expert testimony that BP’s injections into its 2D well
caused the water flow in the 15-6 well, and the trial court granted a verdict in BP’s favor on
Discovery’s claims relating to the 2D well. Thus, the primary disputed causation issue at trial was
whether BP’s injections into its 25 well at a depth of about 6,100 feet in the WSSA reservoir caused
the water flow encountered by Discovery in its 15-6 well at a depth of 3,895 feet in the Seven Rivers
formation or the Queen formation. BP’s 25 well was about a mile away from Discovery’s 15-6 well.
BP injected sulfur water into its 25 well, which was much different from the brine water that
Discovery encountered in its 15-6 well. However, Discovery’s experts contended that pressures and
waters injected by BP into its 25 well had escaped the interval allowed by the Railroad Commission
permit for the well and had moved pressures and brine water into the area where Discovery
encountered the water flow. BP’s experts disputed this contention.
4
The permit for the 25 well allowed BP to inject fluids into the San Andres formation at a depth interval from 6,070 feet
to 6,170 feet. The permit for the 2D well allowed BP to inject oil and gas waste into the San Andres formation strata at a depth
interval from 5,350 feet to 6,000 feet.
4
Discovery’s Petition
Discovery alleged that, on April 17, 2003, while drilling the 15-6 well, it encountered a
strong flow of saltwater at a depth of about 3,895 feet and that the water flow was caused by BP’s
operations of its 25 well, its 2D well, or both wells. With respect to its negligence cause of action,
Discovery alleged that BP owed and breached a duty to it “to exercise reasonable care to prevent its
injected fluids from migrating from the approved injection strata, and from entering and/or
pressurizing intervals other than those intervals permitted by the Texas Railroad Commission.” With
respect to its negligence per se cause of action, Discovery alleged that, in operating the injection
wells, BP violated the terms of the Railroad Commission permits for the wells, Railroad
Commission Statewide Rules 9 and 46, and Sections 86.045 and 91.143 of the Texas Natural
Resources Code. See 16 TEX . ADMIN . CODE § 3.9 (2004) (Tex. R.R. Comm’n, Disposal Wells),
§ 3.46 (2004) (Tex. R.R. Comm’n, Fluid Injection Into Productive Reservoirs); TEX . NAT . RES.
CODE ANN . § 91.143 (Vernon Supp. 2009). Apparently due to a typographical error, Discovery
referred to Section 86.045 of the Natural Resources Code in its petition instead of Section 85.045
or Section 85.046. See TEX . NAT . RES. CODE ANN . §§ 85.045, 85.046 (Vernon 2001). There is no
Section 86.045 in the Natural Resources Code. The record shows that Discovery was asserting a
negligence per se claim for a violation of Section 85.045, which provides that waste is illegal and
prohibited, based on the definition of “waste” in Section 85.046. Therefore, we will refer to
Section 85.045, Section 85.046, or both sections in our discussion of Discovery’s negligence per se
claims. With respect to its common-law and statutory waste claims, Discovery alleged that BP’s
actions in operating “the [i]njection [w]ells in a manner that allowed the injected fluids to escape the
permitted intervals” resulted in the “charged interval” that Discovery encountered and, therefore,
caused the waste of hydrocarbons that Discovery could have otherwise recovered.
Discovery alleged that it was entitled to recover various elements of damages from BP,
including the costs incurred in bringing the 15-6 well under control after the water flow was
encountered and costs that would be incurred in the future to plug and abandon the well. Discovery
also sought to recover damages “[for the lost] value of the oil and gas that should have been
produced from the 15-6 well.”
BP’s Plea in Abatement
BP filed a plea in abatement in the trial court contending that the Railroad Commission had
either exclusive or primary jurisdiction over issues relating to whether it had violated Railroad
5
Commission rules, regulations, or permits in operating its injection wells. The trial court agreed with
BP’s position and entered an order on plea in abatement. In the order, the trial court stated “that
exclusive jurisdiction lies with the Railroad Commission to make all preliminary determinations of
what, if any, Railroad Commission rules, regulations or permits were violated.” The trial court also
stated that, if it had erred in concluding that the Railroad Commission had exclusive jurisdiction,
then the Railroad Commission had primary jurisdiction to make such determinations. The trial court
ordered that the cause be abated “until a ruling or rulings of the Railroad Commission can be had
to determine what, if any, violations of the Railroad Commission rules, regulations or permits have
occurred.”
Discovery filed a petition for writ of mandamus in this court requesting that the order of
abatement be vacated and the referral to the Railroad Commission be withdrawn. Relying on TEX .
NAT . RES. CODE ANN . §§ 85.321, 85.322 (Vernon 2001), we held that the trial court had committed
a clear abuse of discretion in determining that the Railroad Commission had exclusive or primary
jurisdiction. In re Discovery Operating, Inc., 216 S.W.3d 898, 905 (Tex. App.—Eastland 2007,
orig. proceeding). Therefore, we conditionally granted Discovery’s petition for writ of mandamus.
Id. Later, the trial court entered an order rescinding its order on plea in abatement.
The Trial Court’s Summary Judgment
BP moved for a no-evidence summary judgment on multiple grounds. BP asserted that it was
entitled to summary judgment on Discovery’s negligence per se claims because the statutes, rules,
and permits relied upon by Discovery in its pleadings did not provide a basis for imposing
negligence per se liability. After holding a hearing on BP’s motion for summary judgment, the trial
court sent a letter to counsel for the parties. The trial court stated the following in the letter:
In determining whether or not to grant the motion for partial summary
judgment regarding negligence per se, Entex, 94 SW3d 1,5 tells me that when civil
liability is based on a statute the standard of conduct must be clearly defined in the
statute and the injury must grow directly out of a breach of that standard. I am not
clear which statute your negligence per se cause of action refers to. There is no
86.045 in the Natural Resources Code. I assume from the other briefing that is a
typographical error, but I need to know specifically on what section you intend to
rely.
5
Entex, a Div. of Noram Energy Corp. v. Gonzalez, 94 S.W.3d 1 (Tex. App.—Houston [14th Dist.] 2002, pet. denied).
6
Discovery responded to the trial court’s letter by stating that the reference to Section 86.045 was a
typographical error and that the correct statute was Section 85.046.
Later, the trial court entered an order “granting in part and denying in part [BP]’s no-evidence
motion for summary judgment.” The trial court stated in the order “that [Discovery] has raised more
than a scintilla of evidence on all but one point challenged by [BP]’s Motion for Summary
Judgment.” Following this statement, the trial court discussed Hicks v. Humble Oil & Refining Co.,
970 S.W.2d 90, 95 (Tex. App.—Houston [14th Dist.] 1998, pet. denied). The trial court stated that
the Hicks court held “that negligence per se was not applicable to a violation of Railroad
Commission regulation.” The trial court explained that the prohibition against waste that was found
in the Railroad Commission rule involved in Hicks is now found in Section 85.046 of the Natural
Resources Code. Based on the reasoning in Hicks, the trial court held that a failure to comply with
Section 85.046 of the Natural Resources Code does not constitute negligence per se. Therefore, the
trial court granted BP’s motion for summary judgment with regard to Discovery’s negligence per se
claim based on alleged violations of Section 85.046. The trial court also severed the claim from the
other claims in the cause. The trial court also stated that “[a]ll other claims in [BP]’s Motion for
Summary Judgment are denied.” Discovery’s appeal in Cause No. 11-08-00127-CV arises from the
trial court’s order granting in part BP’s no-evidence motion for summary judgment.
The Daubert Proceedings
Discovery presented the following witnesses at the Daubert proceedings: (1) Don L. Sparks,
a petroleum engineer; (2) Robert C. MacDonald, Ph.D., a petroleum engineer; (3) Coley Ronald
Platt, a petroleum engineer; (4) David C. Triana, a petroleum engineer; and (5) Joe C. Neal, a
petroleum engineer. BP presented the following witnesses at the Daubert proceedings:
(1) William D. Griffin, a petroleum engineer; (2) Steven John Seni, Ph.D., a geologist; (3) Roy C.
Williamson, a petroleum engineer and a geological engineer; and (4) William M. Cobb, Ph.D., a
petroleum engineer.
We have reviewed the Daubert testimony in its entirety. While the testimony is helpful to
understanding the issues in the case, in the interest of brevity, we will not summarize it here. We
will refer to the Daubert testimony in this opinion where necessary.
Following the Daubert proceedings, the trial court issued a letter ruling. In the letter, the trial
court concluded that “all experts offered should be allowed to testify.” The trial court found that the
experts were qualified to testify and that, with one qualification, their opinions were reliable and
7
relevant. The only qualification was that Griffin in his testimony had characterized several zones
as “Yates’ et al,” and the trial court stated that “[t]he zones he is designating ‘Yates’ et al’ should
be called what they are.”
Evidence at the Jury Trial
Discovery presented twelve witnesses at trial; BP presented nine witnesses at trial. We have
reviewed all the trial testimony, and we will now summarize it.
Discovery’s Witnesses.
Don Sparks testified that BP’s 25 well was about a mile away from Discovery’s 15-6 well
and that, as such, BP and Discovery were offset operators to each other. TMBR/Sharp was the
drilling company for Discovery on the 15-6 well. Don Sparks said that the drilling company
prepares drilling records that are kept on the rig until it is completed; these records are called “tour
sheets.” Don Sparks also said that the drilling company sends daily reports to the operator. During
his testimony, Don Sparks discussed the April 17, 2003 tour sheet for the 15-6 well. The tour sheet
showed that the water flow was encountered at 5:15 p.m. at 3,895 feet and that, at that time, a
pressure of 900 psi was measured on the standpipe. Don Sparks said that Discovery hit the water
flow at the base of the Seven Rivers formation or the top of the Queen formation. He said that the
900-pound pressure that was measured on the standpipe was not measuring the pressure coming from
the bottom of the hole up or a flowing or shut-in pressure. He also said that, to measure a true
bottom-hole pressure, you must have a closed system in which the blowout preventers are shut in.
Don Sparks testified that the first shut-in pressure measured after Discovery encountered the water
flow was 550 pounds and that this pressure number would be used to compute the bottom-hole
pressure.
Based on a lack of any similar problems in the past, Don Sparks concluded that the water
flow in the 15-6 well had not been caused by Mother Nature. Instead, he believed that it had been
caused by some type of man-made injection. Don Sparks concluded that the pressures and waters
that Discovery encountered in the 15-6 well had been caused by BP’s 25 well (primary source) and
BP’s 2D well (possibly a secondary source) injection sources. Don Sparks testified that water that
had been injected from the source of the pressure – BP’s injection wells – had moved into another
area, pressured water that was already in the other area, and caused that water to move to the area
where Discovery encountered it.
8
Don Sparks testified that the industry standard for the operation of injection wells is to
maintain operations in such a manner so as to prevent anything that would cause damage to any
offset operators. Based on his review of BP’s files, Don Sparks testified that water injected by BP
had escaped the approved interval. He referred to such water as “out of zone.” Don Sparks also said
that BP had record-keeping problems. Based on BP’s objection, the trial court ruled that Don Sparks
could not testify on the issue of whether BP violated the industry standard for operating injection
wells.6
Don Sparks testified that he was not aware of any major problems in the Yates formation in
Midland County. However, he was aware that problems had occurred in the Yates formation in other
counties. He testified that those problems were nothing like what Discovery encountered in the 15-6
well. Don Sparks also testified that Discovery had never sustained a water flow coming from a
blowout in the Yates formation. He said that, normally, high nitrogen comes out of a well when a
Yates blow occurs and that a Yates blow is generally a short-lived problem. He also said that
Discovery had drilled through the Yates formation when it encountered the water flow in the 15-6
well.
Earl Michie, a petroleum engineer, testified that his company, Terrace Petroleum, drilled the
Terrace Peck 21-3 well. Michie testified that drilling operations commenced on the 21-3 well on
March 27, 2005. Michie said that, during drilling, at a depth of about 3,850 feet, Terrace Petroleum
encountered a significant water flow. He said that, to obtain a shut-in pressure on a well, the well
has to be physically shut in. Michie testified that, after Terrace Petroleum shut in the 21-3 well, the
standpipe on the well measured 625 pounds shut-in pressure. Michie testified that, before drilling
the 21-3 well, he had never encountered such a water flow in the area. Michie said that the water
flow encountered in the 21-3 well had no similarities to a Yates air blow. He said that he had never
encountered a Yates blow in the area where the 21-3 well was drilled. He also said that a Yates blow
is gaseous in nature and does not have a liquid flow.
Dr. MacDonald testified that he investigated the waterflood projects that were located within
about a five-mile radius of the 15-6 well. As part of his investigation, he studied the War-San
project, which contained BP’s 25 well. He also studied ten other waterflood projects that were
6
We note that the trial court also ruled that Don Sparks, who had been designated as an expert in petroleum engineering
and drilling and completing wells, could not testify about geology issues because he had not been designated as an expert in geology.
This ruling is confusing. As a petroleum engineer, Don Sparks had obtained expertise in petroleum geology in the Midland County
area. Therefore, the record appears to demonstrate that the designation of Don Sparks as a petroleum engineer included his expertise
in petroleum geology.
9
located in four reservoirs, including the Pegasus San Andres reservoir, the Moose Queen reservoir,
the Concho Bluff Queen reservoir, and the Concho Bluff North Queen reservoir. Dr. MacDonald
testified that he compared the amount of water that had been injected into the project areas with the
amount of oil and water that had been produced from those areas. Dr. MacDonald testified that, the
higher the injection-to-production ratio, the more likelihood that water is out of zone.
Dr. MacDonald prepared a graph showing the injection-to-production ratios (cumulative injection
in barrels of water divided by the cumulative production of barrels of oil plus water) for the projects.
He testified that, with respect to projects other than the War-San project, the injection-to-production
ratios remained relatively constant from 1975 forward. Considering that (1) the injection-to-
production ratio of the War-San project was 3.5 to 1, (2) the injection-to-production ratios of the
other projects, the maximum of which was 1.7 to 1, had remained constant for a number of years,
and (3) the other projects were somewhat distant from the 15-6 well, Dr. MacDonald testified that
he had eliminated the other projects as possible candidates for the water flow encountered by
Discovery in the 15-6 well.
Dr. MacDonald also testified that he conducted a material balance study of the WSSA
reservoir. Dr. MacDonald’s calculations indicated that the reservoir contained 140 million barrels
of pore volume, which he said was the available volume in which liquids and gases could reside.
Dr. MacDonald characterized the WSSA reservoir as a “pot” or a contained reservoir. He said that
one would expect a reservoir’s pressure to increase as injection occurs but that the pressure will not
increase if the reservoir leaks. Based on his study, Dr. MacDonald testified that pressure had leaked
from the WSSA reservoir into the Queen formation. Dr. MacDonald said that the total injection into
the WSSA reservoir had been about 16 million barrels, that total production from the reservoir had
been about 5 million barrels, and that, therefore, about 11 million more barrels had been injected
than had been produced. In Dr. MacDonald’s opinion, the WSSA reservoir could not contain the
amount of fluids that had been injected into it. Dr. MacDonald testified that the WSSA reservoir
reached an injection-to-production ratio of about 1 to 1 in January 1989 and, later, became
significantly over-injected. He said that the WSSA reservoir “pressured up at one time in the
nineties and leaked” and “[t]hat’s what caused the pressure in the other zones.” Dr. MacDonald
testified that, in his opinion, the water injection into the 25 well was the source of the water flow in
the 15-6 well.
10
Platt testified that the WSSA reservoir was a distinct reservoir within the San Andres
formation. Platt said that, in investigating the water flow in the 15-6 well, he conducted research on
forty-six wells that were drilled in the area before 1960. He said that these wells had been drilled
before water injection was taking place in the area. Based on his investigation, Platt concluded that
the pressurized water encountered by Discovery below the 15-6 well was not the result of a natural
occurrence. He based his conclusion on the following: (1) the wells drilled in the area before water
was injected had not encountered water flow problems and (2) his experience in the area.
Platt testified that Discovery studied water injection projects other than the War-San project
in an attempt to eliminate them as potential sources of the water flow in the 15-6 well both (1) by
the distance that they were away from the 15-6 well and (2) by a study of their injection-to-
production ratios. Platt explained that, the farther away an injection project was from the 15-6 well,
the less likely that project was the source of the problem in the 15-6 well. He testified that, in his
opinion, the other projects, which were four to five miles away from the 15-6 well, were not the
source of the pressure increase in the 3,900-foot zone that resulted in the water flow in the 15-6 well.
Platt concluded that Discovery had eliminated the other injection projects as sources of the water
flow in the 15-6 well.
Platt testified that, in his opinion, pathways existed for pressure communication between
BP’s 25 well and Discovery’s 15-6 well. He prepared a schematic drawing demonstrating potential
pathways that involved the 25 well, the 9 well, the 26 well, and the 15-6 well. A copy of the
drawing, which was entitled “Pathways for Pressure Communication Between Sanders A-25 and
Water Flow Encountered in Geronimo 15-6 Well” was introduced into evidence. Platt testified that
the injection pressures used by BP in the 25 well were high enough to cause the pressures
encountered by Discovery in the 3,900-foot zone below the 15-6 well. He said that, in his opinion,
the over-injection of water into the WSSA reservoir by the 25 well caused the water flow in the 15-6
well. He also said that the 900 psi measured on the standpipe during the water flow was not the shut-
in pressure on the 15-6 well.
Jeff Sparks, who is a petroleum engineer with Discovery, testified that he prepared drilling
prognoses for the wells that Discovery drilled on the Geronimo lease. Before Discovery drilled its
wells on the Geronimo lease, Jeff Sparks conducted a records search relating to wells that had been
drilled in the area. He testified that his search showed that there had never been any water flow
11
problems in the area. He also testified that Discovery had never encountered a problem in the Yates
formation in Midland County.
Neal testified that Don Sparks requested him to perform a peer review of the depositions of
the expert witnesses in the case and to prepare an engineering evaluation of what would have been
recovered from the 15-6 well had it been completed as a producing well. Neal testified that
Discovery’s experts did not use any unusual procedures or practices to develop their conclusions and
that they used standard and reliable procedures in performing their engineering evaluations. He also
testified that he prepared a reserve study for the 15-6 well. Neal concluded that the well would have
produced about 90,000 barrels of oil and 198,000 mcf of gas and that Discovery’s net revenue from
the well would have been $2,865,495, or $1,748,514 if discounted at a 10% rate.
BP’s Witnesses.
Steven Lee Rowell was a toolpusher for TMBR/Sharp, the drilling company for Discovery
on the 15-6 well, when the water flow was encountered on the well. Rowell testified that he was in
the toolpusher’s trailer house when the water flow was encountered. He said that he went to the rig
floor after being informed of the water flow. He testified that he read a pressure of 900 psi on the
standpipe after the mud pumps had been “kicked out.” Rowell wrote “[w]ell flowing with 900 psi”
on the tour sheet. Rowell testified that, normally, when the mud pumps are kicked out, the standpipe
pressure will go to zero. He said that the pressure was not coming from the pump and that, therefore,
it would have been coming from downhole. He also said that, when the well was flowing, the
blowout preventers were open.
Rowell also testified that brine water was flowing from the well. He said that he had never
seen anything like the water flow in the 15-6 well in Midland County. Rowell testified that he had
experienced Yates air problems in the past. He said that the water flow in the 15-6 well did not
resemble in any way what he had experienced with Yates air blows.
Anthony Ray Aguilar, a BP employee, testified that the water BP injected into the 25 well
was really black and stunk really bad. He said that he took a daily reading on the amount of water
injected and that he wrote down this information. He testified that he never saw a shut-in pressure
on the 25 well that was as high as 900 pounds.
Stephen Christopher Boger was an employee of the Railroad Commission. BP presented his
testimony by deposition. Boger had a degree in geological sciences. He testified that, based on his
experience, it was not possible that 650 pounds of pressure at BP’s injection well could have caused
12
900 pounds of pressure in Discovery’s 15-6 well a mile away. Boger believed that there was no
correlation between BP’s injection wells and the water flow in Discovery’s 15-6 well. Boger also
testified that Joe Millhollon, another Railroad Commission employee, saw no relationship between
BP’s injection wells and Discovery’s 15-6 well. BP also presented Millhollon’s testimony by
deposition. Millhollon concluded that, based on his review of well-monitoring charts, no
relationship or correlation existed between BP’s injection wells and Discovery’s 15-6 well.
Griffin testified about the April 17, 2003 tour sheet for the 15-6 well. The tour sheet
indicated that, between 4:30 p.m. and 5:15 p.m., Discovery drilled from 3,878 feet to 3,895 feet and
that, at 3,895 feet, Discovery hit a brine flow. Griffin testified that, from 5:15 p.m. to 7:30 p.m., the
well was flowing with 900 pounds of pressure on the standpipe. The following exchange took place
during additional questioning by BP’s counsel about entries on the tour sheet:
[BP’S COUNSEL]: All right. And then at 7:30, what did they do, that
evening?
[GRIFFIN]: At 7:30, they started drilling again. As you can see, [the tour
sheet] says, “Drilling with flow from 3,913 feet to 3,988 feet.”
[BP’S COUNSEL]: All right. Now, Mr. Griffin, there is a difference between
where they stopped drilling at 3,895 and where they started drilling at 3,913, of some
18 feet.
[GRIFFIN]: That’s correct. You can see this is where they stopped drilling
at 3,895 feet, and then the next – when they started drilling again was 18 feet deeper
at 3,913 feet.
[BP’S COUNSEL]: And what does that indicate?
[GRIFFIN]: That indicates they didn’t need to drill. They hit a cavern or
extremely soft formation or something like that down there, more likely a cavern.
[DISCOVERY’S COUNSEL]: Your Honor, please, I object to Mr. Griffin
speculating about what that means. It is not on the [tour sheet]. Nobody else has
testified who was on the well. And that’s pure speculation.
[THE COURT]: Just a minute. I’ll overrule the objection and let you
question him about it on cross.
[BP’S COUNSEL]: So that there is an area there that’s about 18-foot thick,
Mr. Griffin, that is either real high porosity or it’s a cavern or something that they
didn’t have to drill through?
13
[GRIFFIN]: Something awful soft or a cavern that just the weight of the bit
just dropped through it.
[BP’S Counsel]: And if it was, in fact, a cavern there, would that sort of
support the 1,500 barrels per hour of flow that was reported coming out of this well?
[DISCOVERY’S COUNSEL]: If your Honor please, that is pure speculation.
Again, he is not going to base an opinion upon speculation as to what – there has
been no predicate laid that they didn’t record – why did they not record the 18 feet?
There is nothing in here about a cavern. There is nothing in here about lost
circulation. It doesn’t say lost circulation. Most of the drilling reports, when they
lose circulation, will say that.
I renew the objection. I don’t think he is entitled to offer an opinion about
that.
[THE COURT]: I’ll overrule the objection.
[BP’S COUNSEL]: Now, if I understand, we are not talking about lost
circulation. We are talking about a flow coming into the well at this interval, aren’t
we, Mr. Griffin?
[GRIFFIN]: That’s correct. [Discovery’s counsel] is correct. I don’t see any
indication of lost circulation up there at all. I just see that they didn’t have to drill
and the bit dropped 18 feet when they went back in the well.
Griffin also testified that the presence of a cavern under the 15-6 well would account for a very rapid
evacuation of fluids from that zone. During cross-examination, Griffin acknowledged that the tour
sheet did not state that the “bit dropped,” but he said, “[T]hat’s what happened.” Griffin also said
that, if inconsistencies existed between the tour sheet and the morning report, he would trust the tour
sheet because it was filled out as drilling occurred.
Griffin also testified that, in his opinion, the water flow in the 15-6 well was caused by a
Yates air blow. He said that the Yates air blow was caused by a partial collapse of the supporting
matrix at 3,900 feet. Griffin explained the concept of “overburden rock.” He said that, if you are
at a depth of 3,900 feet, “overburden rock is everything above [that depth], and whatever it weighs.”
He also said that, when gypsum converts to anhydrite, a 39% reduction in rock volume has occurred.
Griffin testified that, when the collapse of the overburden is more severe, water flows and blowouts
similar to what happened in the 15-6 well will occur. In Griffin’s opinion, compressed nitrogen
drove the water out of the 15-6 well. He said that the gas that was associated with the water flow
14
in the 15-6 well “was almost all nitrogen.” He said that the water flow in the 15-6 well was similar
to what had happened during Yates air flows in Wasson Field wells in Yoakum County.
Griffin also testified about Discovery’s potential pathways for water and pressure to migrate
from BP’s 25 well to Discovery’s 15-6 well. He said that, with respect to the 26 well, if water
entered the wellbore at a depth of 6,100 feet, it could not go up to the 3,900-foot level because the
26 well had a cement plug in it from 5,825 feet to 6,000 feet and another cement plug in it at around
5,200 feet. He said that Discovery’s pathway assumed that the cement plugs in the well did not
exist. Griffin also said that other wells contained plugs and, therefore, could not be pathways from
the 6,100-foot interval to the 3,900-foot interval. In Griffin’s opinion, no single wellbore could have
acted as a pathway for migration of water or pressure from the 6,100-foot interval to the 3,900-foot
interval.
In Griffin’s opinion, injection into BP’s 25 well did not cause the water flow in Discovery’s
15-6 well because the pressure in the 25 well was lower than the pressure in the 15-6 well. Griffin
said that, had the 25 well been connected to the 15-6 well at the time of the water flow, the measured
shut-in pressure in the 15-6 well would have been the same as the shut-in pressure in the 25 well
(260 pounds). Griffin’s theory of a lack of communication between the two wells was based on an
application of Pascal’s law.
Williamson testified about Discovery’s potential pathways for migration of fluids and
pressures from BP’s 25 well to Discovery’s 15-6 well. In Williamson’s opinion, fluids could not
have moved in any of the wellbores around the 25 well and the 15-6 well from the 6,100-foot level
to the 3,900-foot level. He said that adequate pipe and cement existed in the wellbores to prevent
such migration. Williamson testified that Discovery contended, if the cement plugs in the 26 well
had not held, the 26 well by itself would have served as a conduit or a pathway from the 6,100-foot
level to the 3,900-foot level. Williamson said, however, that there was no evidence that the plugs
had not held.
Williamson performed a study to ascertain whether or not there was an area of porous
interval in the San Andres formation around BP’s 25 well and Discovery’s 15-6 well. Based on his
study, Williamson determined that the San Andres formation contained 10.179 billion barrels of
porous rock. Williamson testified that he later corrected his calculations to account for the possible
existence of shale in the formation. He said that taking into account the possibility that shale existed
in the formation reduced his calculation as to storage capacity in the San Andres formation from
15
10.179 billion barrels to 6.126 billion barrels. Thus, in Williamson’s opinion, the San Andres
formation contained a very large area of storage capacity and was large enough to contain the water
that had been injected into it.
BP’s counsel asked Williamson whether he prepared a factual study of the surrounding
Queen injection projects that Dr. MacDonald had excluded as possible causes of the water flow in
the 15-6 well. Over Discovery’s objections, the trial court permitted Williamson to testify about his
study of the Queen projects. Williamson testified that he prepared graphs summarizing information
that he obtained from Railroad Commission H-10 forms relating to the surrounding injection
projects. BP introduced the graphs into evidence. In the graphs, Williamson showed the amount of
water that had been injected in the projects and the pressures that had been used to inject the water.
Williamson testified about the average surface injection pressures shown on the graphs. In summary,
Williamson’s testimony showed that the average surface injection pressures in the Queen projects
were much higher (such as 2,000 psi and 2,500 psi) than the injection pressures in BP’s 25 well.
Williamson also testified that he performed a reserve study and a cash analysis for the 15-6
well. He projected a net revenue for the well in the amount of $578,111, which discounted at the
rate of 10% equaled $134,092.
Dr. Seni testified that BP’s 25 well was permitted under Rule 46 as an injection well. He said
that BP’s injection took place in the War-San Field and that the approved strata for injection was the
entire San Andres formation. Dr. Seni said that the permit for the 25 well did not require the injected
water to be confined to a strata at the depth interval from 6,070 to 6,170 feet. He said that the depth
interval from 6,070 to 6,170 feet was simply where injection was required to take place. Dr. Seni
testified that, in his opinion, there was no evidence indicating that fluids injected by BP had escaped
the approved strata.
Dr. Seni also testified that a main characteristic of a confined reservoir is the presence of high
pressures. He said that a confined reservoir is not surrounded by and attached to a larger water
aquifer and, therefore, has a potential water drive. Dr. Seni said that the WSSA reservoir had
hydrostatic or lower than hydrostatic normal pressures and only a slight water drive, which were not
characteristics of a confined reservoir.
Dr. Cobb testified that Pascal’s law is as follows: “In a closed system, a pressure change
produced at one point in the system will be transmitted throughout the entire system.” Based on an
application of Pascal’s law, Dr. Cobb concluded that BP’s 25 well and Discovery’s 15-6 well were
16
not in communication. He said that the shut-in pressure on the 25 well was 260 psi and that the
injected water weighed 9 pounds per gallon. Dr. Cobb testified that Discovery indicated that the
water flow in the 15-6 well consisted of 10-pound brine water. Dr. Cobb performed an analysis
using a 260 psi shut-in pressure at the 25 well and a 550 psi shut-in pressure at the 15-6 well. He
testified that, under these conditions, communication between the wells could not exist because the
pressures were not the same and that, if the wells were somehow connected, water should be moving
from the 15-6 well toward the 26 well and then toward the 25 well. Dr. Cobb also performed an
analysis using an injection pressure of 520 pounds at the 25 well and a flowing pressure at the
surface of the 15-6 well of 900 pounds. Based on his analysis, he testified that he did not believe
that the wells could have been in communication and that, if the wells were in communication, the
water should have been moving from the 15-6 well toward the 25 well. Based on his studies, Dr.
Cobb did not believe that BP’s injection into the 25 well caused the water flow that Discovery
encountered in the 15-6 well because the pressures in the wells “[did not] match.”
Dr. Cobb testified that, in an ideal world, Pascal’s law requires that everything be static in
a system. In this case, he assumed that the pressures were in static communication with each other.
He said that, when things are dynamic, Pascal’s law provides a very good estimate for what the end
result would be in a static condition. He also said that this case did not involve “a perfectly static
system.”
Dr. Cobb testified that he analyzed Dr. MacDonald’s material balance study of the WSSA
reservoir. Dr. Cobb said that Dr. MacDonald assumed that the water in the aquifer and the oil in the
oil reservoir reacted instantaneously and that, therefore, if the pressure changed in the oil reservoir,
an instantaneous pressure change would occur in the aquifer in the same amount. In Dr. Cobb’s
opinion, based on the conditions in the War-San San Andres Field, Dr. MacDonald’s assumption
was invalid. Dr. Cobb explained that instantaneous transmission of pressure is a reasonable
assumption only if the dimension of the aquifer is of the same order of magnitude as the dimension
of the reservoir and that, in this case, the oil reservoir and the aquifer were not of the same order of
magnitude.
Dr. Cobb testified that he performed work concerning the surrounding Queen floods. Over
Discovery’s objections, the trial court permitted Dr. Cobb to testify about injection pressures that
had been used in the surrounding Queen floods. Dr. Cobb testified that he summarized Railroad
Commission production and injection data by fields. He testified that, between July 1999 and July
17
2004, the Jennifer Queen Unit Number 8 injected at a surface injection pressure, on average, of 2,200
psi. Dr. Cobb’s testimony showed that other wells in the Queen floods injected at similar pressures.
By way of comparison, Dr. Cobb said that the surface injection pressure in BP’s 25 well during the
same period of time ranged from about 900 to 950 psi. Dr. Cobb converted the surface shut-in
pressures for the Queen projects to bottom-hole pressures. He then calculated pressure gradients for
the projects by taking the bottom-hole pressures and dividing those pressures by the depths of the
projects. Dr. Cobb testified that the pressure gradient for the Concho Bluff Queen project was 1.01
psi per foot, that the pressure gradient for the Concho Bluff North Queen project was 1 psi per foot,
and that the pressure gradient for the Moose Queen project was 0.96 psi per foot. By way of
comparison, Dr. Cobb said that the pressure gradient for the War-San project was 0.604 psi per foot.
Dr. Cobb testified that, in his experience, “when the pressure gradient exceeds about .7 to .75, you
are very near, if not perhaps above, the fractured pressure of the reservoir.” He said that injecting
at a pressure above the fracture pressure creates cracks in the rock and allows the water to move in
paths that were previously not available. However, Dr. Cobb testified that he had no evidence that
the operators of the Queen projects had fractured the formations into which they were injecting.
Dave McKenna testified as the corporate representative for BP. McKenna testified that, on
September 10, 2003, he had a meeting with Don Sparks, Kevin Sparks, and Jeff Sparks about
Discovery’s 15-6 well. McKenna said that, after the meeting, Berry Simpson, who was a contract
production engineer for BP, concluded that BP’s injection wells did not cause the problem in
Discovery’s 15-6 well. McKenna testified that most of the water that was injected into the 25 well
was from the Ellenburger formation. He said that Ellenburger water was sour and black and smelled
strongly of H2S. McKenna had heard that clear brine water had flowed out of Discovery’s 15-6
well.
Discovery’s Rebuttal Witnesses.
Platt testified about the pressure data that he used in concluding that pressure communication
existed between the 25 well and the 15-6 well. He said that Dr. Cobb had criticized the pressures
he used in making his calculations. Platt testified that he used a 940 psi injection pressure for the
25 well. He said that BP had reported the 940 psi pressure in a Railroad Commission H-10 form and
that the H-10 form corresponded with pressure information in BP’s records. Platt said that he
converted the 940 psi injection pressure to a shut-in pressure of 590 psi. Platt testified that, “[u]sing
the 590, it shows pressure communication from the 25 to the 15-6.”
18
Platt also testified that he and Dr. MacDonald looked at all the data, including surface
injection pressures, relating to the Queen projects, when they concluded that the Queen projects
could be eliminated as a cause of the water flow in the 15-6 well. Platt said that he and
Dr. MacDonald had no reason to believe that the operators of the Queen projects had fracked the
formation or that the Queen projects had water out of zone.
Don Sparks testified that the 900 psi measurement on the 15-6 well’s standpipe gauge was
not an appropriate number by which to calculate a flowing bottom-hole pressure. He said that, to
obtain a shut-in drillpipe pressure, the blowout preventers must be closed. Don Sparks said that,
when the 900 psi was measured on the standpipe gauge, the blowout preventers were open. He said
that, unless there is a problem, the standpipe gauge measures the pressure that is going down the
hole. Don Sparks testified that, after the system was shut in, the 15-6 well had shut-in pressures
ranging from 400 psi to 550 psi.
Don Sparks also testified about Griffin’s “cavern” testimony. He said that the tour sheets are
kept by the drilling company until the job is finished. He also said that the drilling company
provides Discovery with a morning report each day during drilling. Don Sparks testified that the
April 18, 2003 morning report did not indicate that there was an 18-foot gap in drilling the 15-6 well.
He said that, instead, the morning report showed that, from 7:30 p.m. to 9:00 p.m., TMBR/Sharp
“drilled with flow from 3,895 to 3,988.” He also said that nothing on the morning report indicated
that the drill bit fell or that a cavern was encountered. Don Sparks testified that he had never seen
a drill bit drop eighteen feet and that, if a drill bit fell that far, it would shake the whole location.
The Verdict and Judgment
The trial court granted a directed verdict to BP on Discovery’s claims relating to BP’s 2D
well. The trial court submitted a broad-form negligence question to the jury:
QUESTION NO. 1:
Did the negligence, if any, of B.P. America Production Company, in its
operations of the Sanders A-25 saltwater injection well proximately cause the
uncontrolled water flow in the Discovery Operating, Inc. Geronimo 15-6 well?
In a ten-to-two verdict, the jury answered “no” to Question No. 1. The jury did not answer Question
No. 2, the damages issue, because it was conditioned on a “yes” answer to Question No. 1. Based
on the jury’s verdict, the trial court entered a take-nothing judgment against Discovery.
19
Discovery filed a motion for new trial that was based, in part, on the admission of Griffin’s
“cavern” testimony. Discovery filed an affidavit from Rowell, the toolpusher on the 15-6 well, in
support of the motion. Rowell stated the following in his affidavit: that the water flow was
encountered at 3,895 feet; that, at 7:30 p.m., they resumed drilling with the flow at 3,895 feet as the
morning report indicated; that no soft spot or cavern was encountered in the drilling of the well; that
the drill bit did not drop eighteen feet; that the unexpected water flow and resulting confusion
apparently resulted in the error (failure to log eighteen feet of drilling) in the IADC Report (tour
sheet); that, in preparing the morning report, he noted the discrepancy and made the necessary
correction; and that the morning report was accurate.
Discovery’s motion for new trial was overruled by operation of law, and Discovery filed its
appeal in Cause No. 11-08-00171-CV. In its appeal, Discovery contends that the trial court
committed four errors in making evidentiary rulings and that the errors require a reversal of the
judgment and a remand of the case for a new trial.
Discovery’s Negligence Per Se Claims – Cause No. 11-08-00127-CV
Discovery’s negligence per se claims were based on BP’s alleged violations of two statutes
(Sections 85.045 and 91.143 of the Natural Resources Code), two Railroad Commission Statewide
Rules (Rules 9 and 46), and the Railroad Commission permits for the 2D and 25 wells.
Section 85.045 prohibits waste in the production, storage, or transportation of oil and gas.
Section 91.143 prohibits filing false applications, reports, and documents with the Railroad
Commission and tampering with gauges. Rule 9 applies to operations of disposal wells. Rule 46
applies to operations involving fluid injection into productive reservoirs. Discovery alleged that
BP’s violations of these statutes, rules, and permits constituted negligence per se.
BP filed a no-evidence and supplemental no-evidence motion for summary judgment based
on a number of grounds. In one ground, BP asserted that there was no evidence that it had
committed conduct constituting negligence per se. In its order, the trial court found “that
[Discovery] has raised more than a scintilla of evidence on all but one point challenged by [BP]’s
Motion for Summary Judgment.” The “one point” referred to in the trial court’s order related to
BP’s challenge to Discovery’s negligence per se claims. Although the trial court found that a lack
of evidence existed on “one point,” the trial court decided the issue on a point of law. Specifically,
the trial court, relying on Hicks, held that a failure to comply with Section 85.046 of the Natural
Resources Code does not constitute negligence per se.
20
Review of Summary Judgment
In its sole issue on appeal in Cause No. 11-08-00127-CV, Discovery asserts that the trial
court erred in granting summary judgment on its negligence per se claims. BP asserts that the trial
court’s order granting summary judgment was limited to Discovery’s claim under Section 85.046
and did not grant summary judgment to it on Discovery’s other negligence per se claims. We
disagree with BP for two reasons. First, the trial court, in granting summary judgment, relied on
Hicks for the proposition “that negligence per se was not applicable to a violation of [a] Railroad
Commission regulation.” Thus, the trial court’s reasoning for granting summary judgment applied
equally to all of Discovery’s negligence per se claims. Second, the record in Cause No. 11-08-
00171-CV shows that the trial court and the parties understood that the order granting summary
judgment disposed of all Discovery’s negligence per se claims. During the jury trial, one of BP’s
lawyers made the following statement at the bench: “I thought that we had been very careful that
we weren’t going to talk about rule compliance or rule noncompliance, because negligence per se
is not in this case.” Similarly, counsel for Discovery and BP both made statements during a hearing
on motions in limine that “negligence per se is out of the case.” We conclude that the trial court’s
order granted summary judgment to BP on all of Discovery’s negligence per se claims.
When the trial court ruled on BP’s motion for summary judgment, it did so without the
benefit of the Texas Supreme Court’s recent opinion in Emerald. The Texas Supreme Court issued
its opinion in Emerald after the parties filed their appellate briefs in these appeals. In that case,
Emerald, the current mineral lessee, encountered unexpected problems when it attempted to reenter
wells that had been plugged and abandoned by Exxon, the former mineral lessee. 2009 WL 795760,
at *1. Emerald sued Exxon, alleging that Exxon had caused the problems by improperly plugging
and intentionally sabotaging the wells. Emerald alleged the following claims, among others, against
Exxon: (1) that Exxon violated a statutory duty under TEX . NAT . RES. CODE ANN . § 89.011 (Vernon
Supp. 2009) to plug a well properly; (2) that Exxon violated a statutory duty under Section 85.045
of the Natural Resources Code to not commit waste; and (3) that Exxon engaged in conduct
constituting negligence per se. Emerald asserted that Exxon violated Section 89.011 of the Natural
Resources Code by violating Railroad Commission Statewide Rule 14 regulating plugging of wells.
Id. at *1; see 16 TEX . ADMIN . CODE § 3.14 (2007) (Tex. R.R. Comm’n, Plugging).
21
In Emerald, the Texas Supreme Court first addressed whether Section 85.321 of the Natural
Resources Code created a private cause of action for the claims asserted by Emerald. Section 85.321
provides, in part, as follows:
A party who owns an interest in property or production that may be damaged
by another party violating the provisions of this chapter that were formerly a part of
Chapter 26, Acts of the 42nd Legislature, 1st Called Session, 1931, as amended, or
another law of this state prohibiting waste or a valid rule or order of the commission
may sue for and recover damages and have any other relief to which he may be
entitled at law or in equity.
The Texas Supreme Court held that the clear language of Section 85.321 creates a private cause of
action for damages resulting from violations of (1) provisions of Chapter 85,7 (2) other laws of this
state prohibiting waste, and (3) valid rules and orders of the Railroad Commission. The court
explained that, while the first two categories refer to claims for waste, the third category is not so
limited. Thus, a violation of any Railroad Commission rule or order triggers the third category of
actions. 2009 WL 795760, at *4.
After concluding that Section 85.321 creates a private cause of action, the Texas Supreme
Court then addressed whether Emerald’s status as a subsequent mineral lessee impacted its standing
to bring a cause of action under Section 85.321. The court explained that, in Section 85.321, the
legislature had provided a private cause of action to a person who “owns an interest . . . that may be
damaged by another party violating the provisions of this chapter.” Id. Based on this language and
applying the common-law principle that a purchaser of real property cannot recover for an injury to
the property that occurred before he acquired his interest, the court concluded that Emerald lacked
standing to bring a cause of action under Section 85.321 because it did not own an interest in the
mineral leases when Exxon allegedly damaged the interest. Id. at *5. The court briefly addressed
Emerald’s negligence per se claim. The court concluded that, “[b]ecause our holding that a
subsequent lessee has no standing to bring a claim under section 85.321 stems from common law
principles, Emerald lacks standing to bring a negligence per se claim for the same reasons.” Id. at
*6.
Emerald stands for two propositions: (1) that Section 85.321 creates a private cause of
action; and (2) that the private cause of action does not extend to subsequent lessees. The Texas
Supreme Court has granted Emerald’s motion for rehearing relating to the second proposition. The
7
TEX. NAT. RES. CODE ANN. ch. 85 (Vernon 2001 & Supp. 2009).
22
second proposition does not apply to Discovery’s claims because it is not a subsequent lessee.
Instead, Discovery owned the mineral interests when the alleged injury occurred. Based on the
Texas Supreme Court’s holding in Emerald, Discovery has the right under Section 85.321 to assert
its negligence per se claims against BP, whether the claims are labeled as a private cause of action
for violations of statutes and Railroad Commission rules and orders or as negligence per se claims
for violations of the same statutes, rules, and orders.
The trial court erred in granting summary judgment to BP on Discovery’s negligence per se
claims. On remand, Discovery will be able to plead its claims in accordance with the Texas Supreme
Court’s opinion in Emerald.
BP contends that Discovery waived its complaint that the trial court erred in granting
summary judgment because Discovery failed to plead a cause of action under Section 85.321 or to
raise Section 85.321 in its response to BP’s motion for summary judgment. Texas follows a “fair
notice” standard for pleading in which courts assess the sufficiency of pleadings by determining
whether an opposing party can ascertain from the pleading the nature, basic issues, and the type of
evidence that might be relevant to the controversy. Low v. Henry, 221 S.W.3d 609, 612 (Tex. 2007);
Horizon/CMS Healthcare Corp. v. Auld, 34 S.W.3d 887, 896 (Tex. 2000). A petition is sufficient
if it gives fair and adequate notice of the facts upon which the pleader bases its claim. The purpose
of this rule is to give the opposing party sufficient information to enable it to prepare a defense.
Horizon/CMS Healthcare, 34 S.W.3d at 897; Roark v. Allen, 633 S.W.2d 804, 810 (Tex. 1982).
Discovery did not specifically refer to Section 85.321 in its petition or in its response to BP’s
motion for summary judgment. However, Discovery alleged in its petition that it owned the mineral
leasehold. Discovery also identified the specific statutes and rules that it contended BP had violated.
Discovery also alleged that it had been damaged as a result of BP’s violations. The facts alleged by
Discovery were sufficient to give BP fair and adequate notice of a claim under Section 85.321. See
Zavala v. Trujillo, 883 S.W.2d 242, 249 (Tex. App.—El Paso 1994, writ denied) (Although the
appellant did not specifically plead a violation of a statute, his allegations were sufficient to impart
fair notice to the appellee that he intended to rely on the statute to impose liability.); Ransopher v.
Deer Trails, Ltd., 647 S.W.2d 106, 110 (Tex. App.—Houston [1st Dist.] 1983, no writ) (Although
the appellee’s pleadings lacked a specific statutory reference, they were sufficient because they
provided fair notice of the issues to be tried.). In addition, Discovery presented summary judgment
evidence in support of its claims that BP had violated the statutes, Railroad Commission rules, and
23
the permits for the 2D and 25 wells. We also note that Section 85.321 was central to the outcome
of the earlier mandamus proceeding in this court. See In re Discovery Operating, 216 S.W.3d at
902-05. Discovery met the fair-notice pleading requirement. Therefore, Discovery did not waive
its complaint that the trial court erred in granting summary judgment.
BP contends that the trial court properly exercised its discretion in concluding that a violation
of Section 85.046 does not constitute negligence per se because (1) Section 85.046 fails to set forth
specific standards of conduct necessary for the imposition of negligence per se liability and (2) it is
not penal in nature. For these same reasons, BP also contends that Section 85.321 will not support
a negligence per se claim. Therefore, BP argues that the trial court did not err in granting summary
judgment.
BP relies on Perry v. S.N., 973 S.W.2d 301, 304 (Tex. 1998), to support the proposition that
determining whether a particular statute will support a negligence per se claim is a matter within the
discretion of the court. Negligence per se is a common-law doctrine that allows courts to rely on a
penal statute to define a reasonably prudent person’s standard of care. Reeder v. Daniel, 61 S.W.3d
359, 361-62 (Tex. 2001). The mere fact that the legislature adopts a criminal statute does not mean
that the courts must accept it as a standard for civil liability. Perry, 973 S.W.2d at 304. In Perry,
the court explained that the adoption of criminal statutes into tort law is a matter of judicial
discretion. Id. The threshold questions in every negligence per se case involving a penal statute are
whether the plaintiff belongs to the class that the statute was intended to protect and whether the
plaintiff’s injury is of a type that the statute was designed to prevent. Id. at 305. If a plaintiff
satisfies these threshold questions, the court must determine whether it is appropriate to impose
negligence per se liability for violations of the statute. In Perry, the Texas Supreme Court identified
five nonexclusive factors to consider in determining whether a statute establishes an appropriate
standard for negligence per se liability: (1) whether the statute is the sole source of any tort duty
from the defendant to the plaintiff or merely supplies a standard of conduct for an existing common-
law duty; (2) whether the statute puts the public on notice by clearly defining the required conduct;
(3) whether the statute would impose liability without fault; (4) whether negligence per se would
result in ruinous damages disproportionate to the seriousness of the statutory violation, particularly
if the liability would fall on a broad and wide range of wrongdoers; and (5) whether the plaintiff’s
injury is due to a direct or indirect violation of the statute. Id. at 309.
24
BP has correctly identified the Perry factors in its brief. However, this case does not involve
the issue of whether it would be proper to impose negligence per se liability for the violation of a
general penal statute. Rather, this case involves a private cause of action that has been created by
the legislature. By enacting Section 85.321, the legislature created a cause of action in favor of a
party who owns an interest in property or production that may be damaged by another party’s
violations of (1) the provisions of Chapter 85, (2) another Texas law prohibiting waste, or (3) a valid
rule or order of the Railroad Commission. Emerald, 2009 WL 795760, at *4. In light of the Texas
Supreme Court’s holding in Emerald and the clear language of Section 85.321, we need not analyze
Sections 85.045 and 85.321 under the Perry factors. Section 85.045 was involved in the Emerald
case, and the Texas Supreme Court recognized that a private cause of action exists for a violation
of that statute. In Section 85.321, the legislature clearly established the conduct required for
imposing liability: a violation of a provision of Chapter 85, another Texas law prohibiting waste,
or a valid rule or order of the Railroad Commission. Emerald, 2009 WL 795760, at *4. Thus, based
on Section 85.321, liability may be imposed for such violations, and the legislature left no discretion
to the courts to determine otherwise.
BP also contends that the issues presented by Discovery in its appeal from the summary
judgment are moot. BP’s contention is based on the jury’s verdict in Cause No. 11-08-00171-CV.
One of the elements of a negligence per se claim is that the defendant’s act or omission proximately
caused the plaintiff’s injury. Ambrosio v. Carter’s Shooting Ctr., Inc., 20 S.W.3d 262, 265 (Tex.
App.—Houston [14th Dist.] 2000, pet. denied). BP asserts that, in Cause No. 11-08-00171-CV, the
jury found that BP’s operations were not a proximate cause of the water flow in Discovery’s 15-6
well. BP argues that this finding negates the proximate cause element of Discovery’s negligence per
se claims and, therefore, renders moot the issues presented by Discovery in its appeal from the
summary judgment.
In Cause No. 11-08-00171-CV, the trial court submitted a broad-form negligence question
to the jury:
Did the negligence, if any, of B.P. America Production Company, in its
operations of the Sanders A-25 saltwater injection well proximately cause the
uncontrolled water flow in the Discovery Operating, Inc. Geronimo 15-6 well?
The jury answered “no” to the question. Based on the broad-form submission of the question, we
cannot determine from the jury’s “no” answer whether the jury believed that BP was not negligent
or that BP’s negligence was not a proximate cause of the water flow. See McRae v. Echols, 8
25
S.W.3d 797, 801 (Tex. App.—Waco 2000, pet. denied) (“The broad-form submission makes it
impossible for a reviewing court to ascertain whether the jury felt that Echols was not negligent or
that his negligence was not a proximate cause of the accident.”); Carr v. Jaffe Aircraft Corp., 884
S.W.2d 797, 802 (Tex. App.—San Antonio 1994, no writ) (“The jury’s negative answer [to a broad-
form negligence question] may have been based on a failure to find either negligence or proximate
cause.”). Therefore, the jury’s “no” answer cannot be used to establish a finding on proximate cause,
and BP’s assertion that the jury made such a finding is incorrect. The issues presented by Discovery
in its appeal from the summary judgment are not moot.
BP argues that, if the trial court erred in granting summary judgment, the error was harmless.
A trial court’s erroneous decision to grant summary judgment can be rendered harmless by
subsequent events in the trial court. Progressive County Mut. Ins. Co. v. Boyd, 177 S.W.3d 919, 921
(Tex. 2005). For example, a subsequent jury finding that negates an essential element of the claim
upon which the trial court erroneously granted summary judgment renders the error harmless. Id.
at 921-22. In Progressive, the court concluded that the jury’s finding on a breach of contract claim
that no coverage existed under the insurance policy negated recovery on the plaintiff’s extra-
contractual claims; therefore, if the trial court had erred in granting summary judgment on the extra-
contractual claims, the error was harmless. Id.
BP’s argument is based on its contention that the trial court granted summary judgment only
on Discovery’s negligence per se claim for violations of Section 85.046 of the Natural Resources
Code. Discovery alleged claims for negligence per se and for statutory waste based on Section
85.046. BP asserts that Discovery’s negligence per se claim under Section 85.046 was cumulative
of its statutory waste claim under that statute and that, because the trial court did not grant summary
judgment on the statutory waste claim, any error in granting summary judgment on the negligence
per se claim was harmless. BP contends that Discovery waived its common-law and statutory waste
claims by failing to request the trial court to submit them to the jury.
We concluded above that the trial court erroneously granted summary judgment to BP on all
of Discovery’s negligence per se claims. Subsequent events in the trial court did not render the
summary judgment harmless. The trial court severed the negligence per se claims from the other
claims in the case. During the jury trial, both BP and Discovery recognized that “negligence per se
[was] out of the case.” The trial court’s summary judgment prevented Discovery from developing
its negligence per se claims and submitting them to the jury. Even if BP is correct in its assertion
26
that Discovery’s negligence per se claim based on the definition of “waste” in Section 85.046 was
cumulative of its statutory waste claim, Discovery’s negligence per se claims for violations of
Section 91.143, Rules 9 and 46, and the injection permits were not cumulative of other claims. The
jury’s verdict did not negate recovery by Discovery on its negligence per se claims. The trial court’s
error in granting summary judgment was not harmless. We sustain Discovery’s issue in Cause No.
11-08-00127-CV. Therefore, the trial court’s order granting summary judgment must be reversed,
and Discovery’s negligence per se claims must be remanded for a new trial.
Effect of Summary Judgment Ruling on Remainder of the Case
We next consider whether the trial court’s erroneous decision to grant summary judgment
requires reversal of the judgment in Cause No. 11-08-00171-CV. An error is harmful if it “probably
caused the rendition of an improper judgment.” TEX . R. APP . P. 44.1(a)(1); In re Columbia Med.
Ctr. of Las Colinas, Subsidiary, L.P., 290 S.W.3d 204, 211 (Tex. 2009) (orig. proceeding); Ford
Motor Co. v. Castillo, 279 S.W.3d 656, 667 (Tex. 2009). We review the entire record to determine
whether an error has resulted in harm. Interstate Northborough P’ship v. State, 66 S.W.3d 213, 220
(Tex. 2001).
As a result of the trial court’s summary judgment ruling, “negligence per se [was] out of the
case.” As such, Discovery was denied the opportunity to prove that BP violated Railroad
Commission rules or the terms of the permits for its injection wells. The summary judgment limited
Discovery’s presentation of its case and prevented it from receiving a fair trial. Instead of being able
to proceed on its negligence per se claims, Discovery was forced to present its case in a piecemeal
fashion. The parties hotly contested the issues of negligence and causation. During jury
deliberations, the jury sent the trial court a note stating, “Judge, we are split on our vote.” After
receiving instructions from the trial court, the jury resumed deliberations and ultimately returned a
nonunanimous, ten-to-two answer to the combined negligence and causation question in BP’s favor.
While there is no way to know how the jury would have answered a question submitting Discovery’s
negligence per se claims, the jury might have answered the negligence question in Discovery’s favor
had the trial court given it the opportunity to consider the negligence per se claims. Based on our
review of the entire record, we conclude that the trial court’s erroneous summary judgment and the
resulting failure to submit Discovery’s negligence per se claims to the jury probably caused the
rendition of an improper judgment in Cause No. 11-08-00171-CV. Therefore, the error in granting
summary judgment was harmful.
27
We have concluded that the trial court’s error in granting summary judgment harmed
Discovery in Cause No. 11-08-00127-CV and in Cause No. 11-08-00171-CV. Therefore, we will
reverse the trial court’s judgments in both causes and remand the causes for new trial. We will next
address the issues raised in Cause No. 11-08-00171-CV.
Evidentiary Issues in Cause No. 11-08-00171-CV
Discovery contends that the trial court made four erroneous evidentiary rulings during the
jury trial. Specifically, Discovery argues that the trial court erred (1) in admitting Griffin’s “cavern”
testimony; (2) in admitting injection pressure data relating to the Queen injection projects through
the testimony of BP’s experts, Williamson and Dr. Cobb; (3) in excluding expert testimony from
Don Sparks that BP violated the standard of care relating to the operation of its injection wells; and
(4) in admitting expert testimony from Railroad Commission employees, Boger and Millhollon.
We review a trial court’s decision to admit or exclude evidence under an abuse of discretion
standard. Interstate Northborough P’ship, 66 S.W.3d at 220; City of Brownsville v. Alvarado, 897
S.W.2d 750, 753 (Tex. 1995). A trial court abuses its discretion if it acts in an arbitrary or
unreasonable manner without reference to any guiding rules or principles. Downer v. Aquamarine
Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985).
An expert’s opinion, to be admissible, must be relevant and reliable. State v. Cent.
Expressway Sign Assocs., 302 S.W.3d 866, 870 (Tex. 2009); Exxon Pipeline Co. v. Zwahr, 88
S.W.3d 623, 628 (Tex. 2002). To be relevant, the expert’s opinion must be based on the facts; to
be reliable, the opinion must be based on sound reasoning and methodology. Cent. Expressway, 302
S.W.3d at 870; Zwahr, 88 S.W.3d at 629. Expert testimony is unreliable if it is no more than
“subjective belief or unsupported speculation.” Zwahr, 88 S.W.3d at 629; City of Sugar Land v.
Home & Hearth Sugarland, L.P., 215 S.W.3d 503, 510 (Tex. App.—Eastland 2007, pet. denied).
Griffin’s “Cavern” Testimony.
Griffin did not testify about his “cavern” theory during the Daubert proceedings. Instead,
he disclosed it for the first time at trial. We have quoted Griffin’s “cavern” testimony above.
Discovery argues that Griffin’s “cavern” testimony was inadmissible because it was “no more than
mere speculation and subjective belief.” Griffin testified that the tour sheet indicated that Discovery
stopped drilling at 3,895 feet and, later, resumed drilling at 3,913 feet. Griffin’s “cavern” testimony
was based on this 18-foot gap in the tour sheet. In response to a question by BP’s counsel, Griffin
testified that the 18-foot gap “indicate[d] that they didn’t need to drill” and that “[t]hey hit a cavern
28
or extremely soft formation or something like that down there, more likely a cavern.” Discovery
objected to this testimony on the ground that it was “pure speculation.” The trial court overruled the
objection, and Griffin provided additional “cavern” testimony that is set forth above, speculating that
the pressurized water came from the cavern.
Griffin’s “cavern” testimony was based solely on his interpretation of the 18-foot gap in the
tour sheet. Rowell was the toolpusher for TMBR/Sharp, and he was present when the water flow
was encountered in the 15-6 well. Although BP called Rowell as its first witness at trial, BP’s
counsel did not ask Rowell about the 18-foot gap in the tour sheet or whether Discovery had hit a
cavern or soft formation during drilling.8 No witness testified to any facts that would support the
conclusion that Discovery encountered a cavern or soft spot while drilling. Because Griffin’s
“cavern” testimony was not supported by facts in evidence, the testimony was no more than Griffin’s
“subjective belief or unsupported speculation.” Therefore, Griffin’s ipse dixit “cavern” testimony
was unreliable and inadmissible. Zwahr, 88 S.W.3d at 629; Gammill v. Jack Williams Chevrolet,
Inc., 972 S.W.2d 713, 727-28 (Tex. 1998).
BP argues that Discovery waived its “speculation” objection to Griffin’s “cavern” testimony
by allowing him to provide additional “cavern” testimony without objection. As shown above, after
the trial court overruled Discovery’s “speculation” objection to Griffin’s initial “cavern” testimony,
BP’s counsel essentially summarized the “cavern” testimony in his next question to Griffin, and
Griffin provided additional “cavern” testimony in response to the question. Discovery did not object
to this question or answer. However, Discovery renewed its “speculation” objection in response to
the next question asked by BP’s counsel, and the trial court again overruled the objection. Thus,
although Discovery did not object to one question and answer, Discovery immediately renewed its
objection in response to the next question. Later, Griffin again restated his “cavern” theory, without
objection, that, “when they went through that 18-foot level, it was at least [an] extremely soft
formation, if it existed at all, as compared to what they were drilling immediately above.” At this
point, the trial court had already overruled two “speculation” objections to Griffin’s “cavern”
testimony, and the trial court undoubtedly would have overruled another such objection. Under these
circumstances, we conclude that Discovery did not waive its “speculation” objection to Griffin’s
8
Although not necessary to our decision, we note that Rowell stated in his post-trial affidavit that no soft spot or cavern
had been encountered during the drilling of the well and that the drill bit had not dropped eighteen feet during drilling.
29
“cavern” testimony. See Atkinson Gas. Co. v. Albrecht, 878 S.W.2d 236, 242 (Tex. App.—Corpus
Christi 1994, writ denied) (“[W]hen a party makes a proper objection to the introduction of certain
testimony by a witness and is overruled, he is entitled to assume that the judge will make the same
ruling as to other offers of similar evidence, and he is not required to repeat the objection.”).
BP also argues that Discovery waived its objections to Griffin’s “cavern” testimony because,
during cross-examination, Discovery asked him “to repeat in large part” his “cavern” testimony.
However, “[i]t is well settled that cross-examination of a witness as to testimony improperly
admitted over objection does not waive the right to complain of the error.” Chandler v. Welborn,
294 S.W.2d 801, 810 (Tex. 1956).
Griffin’s “cavern” testimony was based on unsupported speculation. Therefore, the
testimony was unreliable, and the trial court abused its discretion in admitting it.9
Injection Pressure Data from Queen Projects.
During the jury trial, BP’s counsel asked Williamson whether he had prepared a factual study
of the Queen injection units. Discovery’s counsel objected to this question on the ground that
Williamson had not expressed any opinion on the Queen projects during the Daubert proceedings.
BP’s counsel responded that Williamson was not going to express an expert opinion but was going
to present “factual data” on the surrounding floods. BP’s counsel stated that the “factual data”
refuted Dr. MacDonald’s opinion that the Queen projects were not the cause of the water flow in the
15-6 well. The trial court ruled that Williamson could testify to facts but that he could not testify
to expert opinions that were not tested during the Daubert proceedings. Williamson then testified
that he had prepared graphs summarizing information contained in H-10 injection sheets that were
on file with the Railroad Commission. The graphs showed the volumes of injection and the surface
injection pressures used in the Queen projects. Williamson testified about the surface injection
pressures shown in the graphs. Williamson’s testimony showed that the surface injection pressures
in the Queen projects, such as 2,000 psi and 2,500 psi, were much higher than the injection pressures
in BP’s 25 well.
9
Discovery also argues that Griffin’s “cavern” testimony was inadmissible because it was a “new” opinion that had not been
properly disclosed during the Daubert proceedings. Based on our ruling that the trial court should have excluded the “cavern”
testimony because of its speculative nature, we need not address Discovery’s argument that the testimony was inadmissible because
it constituted a “new” opinion or BP’s argument that Discovery waived its “new” opinion complaint by failing to object on that
ground at trial.
30
BP’s counsel also asked Dr. Cobb about work he had performed in studying the Queen
projects. Discovery’s counsel objected to the question on the ground that Dr. Cobb had not testified
to any opinion about the Queen floods during the Daubert proceedings. BP’s counsel responded that
Dr. Cobb would be testifying about factual evidence that was relevant to whether or not Discovery
had adequately excluded the surrounding floods as a cause of the water flow in the 15-6 well. In
arguing that BP should be allowed to question Dr. Cobb about the injection pressure data, BP’s
counsel stated that “[i]t is up to the Plaintiffs to rule out reasonable alternatives” and that “we are
going to show to the jury this data, and they can draw the conclusions they want to.” The trial court
indicated that Dr. Cobb could testify about facts but not give any opinions about the Queen floods.
Dr. Cobb then testified about the average surface injection pressures for the Queen projects as shown
on the graphs that Williamson had prepared. Dr. Cobb’s testimony showed that the average surface
injection pressures for the Queen projects, such as 2,000 psi and 2,200 psi, were much higher than
the average surface injection pressure of about 900 psi to 950 psi for BP’s 25 well. Dr. Cobb also
testified that he had calculated the pressure gradients for the Queen projects. According to
Dr. Cobb’s testimony, the pressure gradients for three of the Queen projects exceeded the fracture
pressure of the reservoirs. Dr. Cobb testified that injecting at a pressure above the fracture pressure
creates cracks in the rock and allows the water to move in paths that were previously not available.
Discovery contends that Williamson’s and Dr. Cobb’s “factual” testimony about injection
pressures in the Queen projects amounted to a previously undisclosed causation opinion: “[T]hat
the Queen waterfloods were the cause of the loss of the Discovery well.” Discovery asserts that this
causation opinion was speculative and unreliable because it was solely based upon surface injection
pressures. Therefore, Discovery argues that the opinion was inadmissible. BP responds that
Williamson and Dr. Cobb merely presented factual summaries of the data on which Dr. MacDonald
and Platt had relied in excluding the Queen projects as causes of the water flow in the 15-6 well.
BP states that “[t]he summaries were relevant to Dr. MacDonald’s and Platt’s opinion that the Queen
Water Floods could be eliminated as a potential source and cause of the problems with the Geronimo
15-6.” BP contends that the summaries “showed that Discovery had not truly ruled out the Queen
Water Floods.”
The injection pressures in the Queen projects may have been relevant to Dr. MacDonald’s
and Platt’s opinions that the Queen projects could be eliminated as the cause of the water flow in the
31
15-6 well. However, BP did not cross-examine Dr. MacDonald or Platt about the injection
pressures. Instead, BP asked its own experts about the injection pressures without tying the
testimony to any specific expert opinion. As stated by BP’s counsel, BP intended to allow the jury
to draw its own conclusions from the pressure injection data. While neither Williamson nor Dr.
Cobb testified to a specific opinion that the Queen injection projects caused or could have caused
the water flow in the 15-6 well, their testimony about surface injection pressures certainly suggested
such an opinion to the jury. Thus, the manner in which BP presented the testimony about injection
pressures was tantamount to providing a previously undisclosed expert opinion. In the absence of
proper expert opinion testimony from Williamson and Dr. Cobb that tied the injection pressure data
from the Queen projects to the issue of whether they could be eliminated as a cause of the water flow
in the 15-6 well, the jury was left to speculate and could not make an informed decision on the issue.
We conclude that the trial court erred in admitting the injection pressure data through the testimony
of Williamson and Dr. Cobb.
Exclusion of Testimony that BP Violated the Standard of Care.
The trial court allowed Don Sparks to testify that an industry standard of care applies to the
operation of injection wells and to describe the standard. However, the trial court did not allow him
to testify that BP violated that standard. With respect to the issue of whether or not BP violated the
industry standard of care, the trial court stated, “I think that’s a question for the jury.” Based on this
reasoning, the trial court apparently concluded that expert testimony was not proper on the issue of
whether BP violated the standard of care. Thus, the trial court ruled that Don Sparks could “testify
to facts” but could not “opine” on whether or not BP violated the industry standard of care. The trial
court also sustained BP’s objections to such opinion testimony by Don Sparks on the grounds of
relevance and speculation. During a bill of exception, Don Sparks testified that he did not believe
that BP met the industry standard. He said that BP violated the standard by failing to perform
reservoir work to determine whether injected water was staying in zone.
Expert testimony is necessary when the alleged negligence is of such a nature as not to be
within the experience of a layman. Roark, 633 S.W.2d at 809; Parker v. Three Rivers Flying Serv.,
Inc., 220 S.W.3d 160 169 (Tex. App.—Eastland 2007, no pet.); Turbines, Inc. v. Dardis, 1 S.W.3d
726, 738 (Tex. App.—Amarillo 1999, pet. denied). In such a case, the expert testimony must
establish both the standard of care and the violation of that standard. Simmons v. Briggs Equip.
32
Trust, 221 S.W.3d 109, 114 (Tex. App.—Houston [1st Dist.] 2006, no pet.); Parker, 220 S.W.3d
at 169; Dardis, 1 S.W.3d at 738; Hager v. Romines, 913 S.W.2d 733, 734-35 (Tex. App.—Fort
Worth 1995, no writ). The operation of injection wells is not within the experience of a layman. As
such, Discovery was required to present expert testimony on the standard of care for the operation
of injection wells and that BP’s conduct did not meet that standard. Dardis, 1 S.W.3d at 738.
Don Sparks had reviewed BP’s records relating to its operation of the 2D and 25 injection
wells and the Railroad Commission’s records relating to those wells. The record demonstrates that
Don Sparks had studied in detail the history of BP’s operation of its injection wells and that he was
familiar with BP’s operation of those wells. Based on his knowledge of the industry standard of care
and of BP’s operation of its injection wells, Don Sparks’s opinion that BP had violated the standard
of care was not based on speculation. His opinion testimony was also relevant to the issue of
whether BP violated the standard of care. In fact, Discovery was required to present such expert
testimony on the issue. Simmons, 221 S.W.3d at 114; Dardis, 1 S.W.3d at 738; Hager, 913 S.W.2d
at 734-35. Therefore, we conclude that the trial court erred in excluding testimony from Don Sparks
that BP violated the standard of care for operating its injection wells.
Expert Testimony by Railroad Commission Employees.
Based on our rulings on Discovery’s first three issues and our finding below that those
rulings caused harm to Discovery, we need not address Discovery’s fourth issue that the trial court
erred in admitting expert testimony from Boger and Millhollon. TEX . R. APP . P. 47.1.
Harm Caused By Evidentiary Errors
Erroneous admission or exclusion of evidence requires reversal if the error probably caused
the rendition of an improper judgment. Cent. Expressway, 302 S.W.3d at 870; Nissan Motor Co. v.
Armstrong, 145 S.W.3d 131, 144 (Tex. 2004). The Texas Supreme Court has recognized the
impossibility of prescribing a specific test to determine whether a particular error is harmful and
entrusts that determination to the sound discretion of the reviewing court. Cent. Expressway, 302
S.W.3d at 870. In conducting a harm analysis, we review the entire record. Cent. Expressway, 302
S.W.3d at 870; Nissan, 145 S.W.3d at 144; Tex. Dep’t of Transp. v. Able, 35 S.W.3d 608, 617 (Tex.
2000). Typically, a successful challenge to a trial court’s evidentiary rulings requires the
complaining party to demonstrate that the judgment turns on the particular evidence excluded or
admitted. Interstate Northborough P’ship, 66 S.W.3d at 220; Able, 35 S.W.3d at 617; Alvarado, 897
33
S.W.2d at 753-54. Exclusion or admission of evidence is likely harmless if the evidence was
cumulative or if the rest of the evidence was so one-sided that the error likely made no difference
in the judgment. Cent. Expressway, 302 S.W.3d at 870; Reliance Steel & Aluminum Co. v. Sevcik,
267 S.W.3d 867, 873 (Tex. 2008). But if erroneously admitted or excluded evidence was crucial to
a key issue, the error is likely harmful. Cent. Expressway, 302 S.W.3d at 870; Reliance Steel, 267
S.W.3d at 873. In determining whether the erroneous admission of evidence is harmful, we may
consider efforts made by counsel to emphasize the evidence. See Nissan, 145 S.W.3d at 144.
Causation of the water flow in Discovery’s 15-6 well was a key issue at trial. During the
Daubert proceedings and at trial, Griffin testified that, in his opinion, a Yates air blow caused the
water flow in the 15-6 well. Discovery countered this opinion with evidence that it was not drilling
in the Yates formation when it encountered the water flow, that the water flow did not have the
characteristics of a Yates air blow, and that Yates air blows had not occurred in the area where it
drilled the 15-6 well. Griffin presented his “cavern” theory for the first time at trial. He testified that
Discovery hit a “cavern or extremely soft formation” while drilling the 15-6 well and that “a cavern
underneath the 15-6 well, that would account for a very rapid evacuation of fluids from that zone.”
Through Griffin’s trial testimony, Discovery faced the previously undisclosed opinion that
drilling into a cavern caused the high-pressure water flow in the 15-6 well. Griffin’s “cavern”
testimony was not cumulative of other evidence in the trial. No other witness testified that a cavern
or soft formation was present under the 15-6 well. In a case in which causation was a hotly contested
issue and in which much of the competing causation evidence was sophisticated and complex,
Griffin’s speculative “cavern” theory provided the jury with a relatively simple and straightforward
explanation for the water flow in the 15-6 well: that Discovery hit a cavern that was full of water.
As the only evidence that a cavern existed under the 15-6 well, Griffin’s testimony was crucial to
a determination of the causation issue.
Statements made by BP’s counsel during closing argument emphasized Griffin’s “cavern”
testimony to the jury:
Mr. Griffin testified about the 18-foot break – drilling break, bit drop, call it
whatever you want to. But there’s 18 feet there, according to the IADC report, which
he says, in his opinion, is the most reliable of the documents, because it is done
simultaneously with what’s going on on that drilling rig.
He says, “What does that indicate to me?”
34
He says, “They hit a cavern or extremely soft formation or something like that
down there, more like a cavern.”
Well, if you think about it a minute, flowing 18 – or 15,000 barrels of – 1,500
barrels of fluid out of that wellbore per hour, has got to take something other than the
cement in your garage floor as the vehicle for carrying that fluid. It’s got to be like
a cavern, or it has got to be like a very, very porous sponge, because, remember,
that’s what Dr. MacDonald said. It’s like your garage floor. It’s cement.
So it’s not something water moves through easily. And 1,500 barrels an hour
is an extreme amount of water.
These statements by BP’s counsel underscored the crucial nature of Griffin’s “cavern” testimony to
the determination of the causation issue.
Likewise, the testimony from Williamson and Dr. Cobb about the injection pressures that
were used in the Queen projects amounted to a new causation opinion. Their testimony encouraged
the jury to conclude that the Queen projects caused the water flow in Discovery’s 15-6 well. BP’s
counsel emphasized the erroneously admitted evidence during closing argument:
These are Queen floods. They are injecting into the Queen interval, which
is close to – I won’t say it is exactly the same, but it is close to the same interval,
3,900 foot interval where the water flow occurred.
And look at the pressures they are injecting. And look at the bottom-hole
pressures, 4,400 pound there, 4,162.
The significant thing was Dr. Cobb said that when you get to 70 – .7 to maybe
.75 ratio of bottom-hole pressure per foot, this column, that you run the risk of
fracking the formation, if it gets above 7 or 7.5. And that puts cracks – or can put
cracks in the formation. And then the water follows the cracks and can go just about
– and the pressure can follow the cracks and go just about anywhere.
As the only evidence implying the conclusion that the Queen projects caused the water flow in the
15-6 well, Williamson’s and Dr. Cobb’s testimony about the injection pressures in the Queen floods
was crucial to the causation issue. The emphasis placed on that testimony by BP’s counsel certainly
urged the jury to arrive at such a conclusion without expert testimony, only argument by counsel,
supporting that conclusion.
Whether BP violated the applicable standard of care was another key issue at trial. As stated
above, Discovery was required to establish with expert testimony the standard of care and BP’s
violation of that standard. The erroneously excluded testimony by Don Sparks was the only expert
35
testimony that BP violated the standard of care. As the only expert testimony, the excluded evidence
was critical to Discovery’s proof of its negligence claim and was crucial to a key issue.
As a result of erroneously admitted evidence, Discovery faced two new opinions that were
crucial to the causation issue. As a result of the erroneously excluded evidence, Discovery could not
present expert testimony that was crucial to the issue of whether BP violated the standard of care.
Based on the crucial nature of the erroneously admitted evidence, the emphasis that BP’s counsel
placed on the erroneously admitted evidence, and the crucial nature of the erroneously excluded
evidence, we conclude that the trial court’s evidentiary errors probably caused the rendition of an
improper judgment and were, therefore, harmful. We sustain Discovery’s first three issues in Cause
No. 11-08-00171-CV and remand the cause to the trial court for a new trial.
BP’s Cross-Points
BP presents two cross-points for review. In its first cross-point, BP contends that Discovery
lacks standing and capacity to assert the claims in Cause No. 11-08-00171-CV. In its second cross-
point, BP contends that Discovery failed to comply with the requirements under Daubert and E.I.
du Pont de Nemours & Co. v. Robinson, 923 S.W.2d 549 (Tex. 1995), for admission of expert
testimony on causation. Specifically, BP contends that Discovery’s experts, Dr. MacDonald and
Platt, failed to rule out alternative causes of the water flow in the 15-6 well and that, therefore, their
causation testimony should have been excluded.
Discovery’s Standing and Capacity to Sue
A party must have both standing and capacity to bring a lawsuit. Austin Nursing Ctr., Inc. v.
Lovato, 171 S.W.3d 845, 848 (Tex. 2005). Standing is a component of subject-matter jurisdiction,
and it is not to be confused with capacity. Nootsie, Ltd. v. Williamson County Appraisal Dist., 925
S.W.2d 659, 661 (Tex. 1996). “A plaintiff has standing when it is personally aggrieved, regardless
of whether it is acting with legal authority; a party has capacity when it has the legal authority to act,
regardless of whether it has a justiciable interest in the controversy.” Id. Capacity concerns “a
party’s personal right to come into court,” while standing concerns “the question of whether a party
has an enforceable right or interest.” Lovato, 171 S.W.3d at 849 (quoting 6A CHARLES ALAN
WRIGHT ET AL, FEDERAL PRACTICE AND PROCEDURE : CIVIL 2d § 1559, at 441 (2d ed. 1990)); Avco
Corp., Textron Lycoming Reciprocating Engine Div. of Avco Corp. v. Interstate Sw., Ltd., 251
S.W.3d 632, 649 (Tex. App.—Houston [14th Dist.] 2007, pet. denied).
36
BP contends that Discovery lacks standing because it failed to prove that it owned the
mineral estate in Section 15. Don Sparks testified that Discovery obtained an oil and gas lease from
Apache Company covering 480 acres in Section 15, and Discovery introduced into evidence a copy
of the lease. BP relies on Murphy v. Tribune Oil Corp., 656 S.W.2d 587, 589 (Tex. App.—Fort
Worth 1983, writ dism’d), in arguing that the evidence was insufficient to establish Discovery’s
standing to maintain its suit. In Murphy, the plaintiffs alleged that they were successors in title to
the mineral estate in certain properties. The defendants owned the surface estate of the land in
question. The plaintiffs sought and obtained from the trial court a temporary injunction that
prohibited the defendants from denying them access to the subject mineral interests. Murphy, 656
S.W.2d at 588. On appeal, the defendants asserted that there was no evidence or insufficient
evidence that the plaintiffs had title to or any other form of right in the subject mineral estate. Id.
At the temporary injunction hearing, the plaintiffs had not offered as evidence any written
documentation to prove that they were successors in title to the mineral estate. Instead, they sought
to prove their status solely through oral testimony. Id. at 589. The court of appeals concluded that
title to the minerals was directly in issue in the case and stated the rule that, “[w]here title to real
property is directly in issue, proof of title must be made by written instruments.” Id. Therefore, the
court held that the oral testimony constituted no evidence that the plaintiffs had any right or title to
the mineral interests, and the court dissolved the injunction. Id.
Based on the rule stated in Murphy, BP asserts that Discovery had the burden to prove the
chain of title to the minerals in Section 15 – apparently from the sovereign to it – by written
instruments. Because Discovery did not introduce into evidence a written instrument proving that
Apache owned the minerals at the time of its lease to Discovery, BP contends that Discovery failed
to meet its burden. BP states in its brief that, “[f]or all that [it] knows, Discovery may have a fatal
defect in the prior chain of title.”
This case is factually distinguishable from Murphy. Discovery did not rely solely on oral
testimony to prove its ownership of the mineral interests. Discovery presented the written lease
agreement as evidence supporting its ownership claim. See Natural Gas Pipeline Co. of Am. v. Pool,
124 S.W.3d 188, 192 (Tex. 2003) (An oil and gas lessee acquires ownership of all the minerals in
place that the lessor owned and purported to lease.). The oil and gas lease, which was effective
January 2, 2001, covered the mineral interests in 480 acres in Section 15. Discovery named the lease
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its “Geronimo lease.” In addition to the lease agreement, Discovery presented ample evidence
supporting its ownership of the minerals. The evidence showed that Discovery entered the
Geronimo lease and drilled five wells on it over a period of about two years before drilling the 15-6
well. There was no evidence that any party ever denied Discovery access to the mineral interests.
Assuming that the rule stated by the Murphy court applies to this case, we conclude that the written
lease agreement, coupled with the other evidence supporting Discovery’s ownership of the mineral
interests, satisfied any burden on the part of Discovery to prove its title.
We also conclude that title to the minerals is not directly in issue in this case. This case does
not involve competing claims to the mineral interests; it is not a trespass to try title case in which the
purpose of the suit is the recovery of title. In fact, there were no pleadings or evidence that any party
other than Discovery owned the minerals. Based on these facts, title to the minerals is not directly
in issue. Brown v. Brown, 520 S.W.2d 571, 577 (Tex. Civ. App.—Houston [14th Dist.] 1975, writ
dism’d); Zieben v. Krakower, 346 S.W.2d 401, 405 (Tex. Civ. App.—Houston [1st Dist.] 1961, writ
ref’d n.r.e.). Instead, title to the minerals is only incidentally involved as a predicate to Discovery’s
recovery of monetary damages. Where title is only incidentally involved, proof of ownership may
be proven with any character of evidence that tends to establish that fact, including oral testimony.
Brown, 520 S.W.2d at 577. For example, a deed is prima facie evidence of a grantee’s ownership.
In re Marriage of Murray, 15 S.W.3d 202, 205 (Tex. App.—Texarkana 2000, no pet.); Zieben, 346
S.W.2d at 405. And, possession of real property is prima facie evidence of ownership. Zieben, 346
S.W.2d at 405; Garner v. McKinney, 255 S.W.2d 529, 531 (Tex. Civ. App.—Eastland 1953, writ
ref’d n.r.e.).
Discovery met its burden to establish that it owned the subject mineral interests. The
evidence demonstrated that Discovery has standing and capacity to sue. We overrule BP’s first
cross-point.
Exclusion of Queen Floods as Cause of the Water Flow
In its second cross-point, BP contends that Discovery’s experts failed to eliminate the Queen
projects as potential causes of the water flow in the 15-6 well and that, therefore, their causation
testimony should have been excluded. Trial courts may consider several factors when determining
whether expert testimony is reliable. Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 714
(Tex. 1997); Robinson, 923 S.W.2d at 557-59. One such factor is whether the expert conducted
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testing to exclude other possible causes of the damage. Robinson, 923 S.W.2d at 558-59; Wyndham
Int’l, Inc. v. Ace Am. Ins. Co., 186 S.W.3d 682, 685 (Tex. App.—Dallas 2006, no pet.). Thus, an
expert who is trying to find a cause of something should carefully consider alternative causes.
Robinson, 923 S.W.2d at 559. An expert’s failure to rule out other causes of damage may render his
or her opinion little more than speculation. Robinson, 923 S.W.2d at 559; Wyndham, 186 S.W.3d
at 689.
Dr. MacDonald testified that he investigated the waterflood projects that were located within
about five miles of Discovery’s 15-6 well. His investigation included the Queen projects, which
were located in the Moose Queen reservoir, the Concho Bluff Queen reservoir, and the Concho Bluff
North Queen reservoir. The Queen projects were about five miles away from the 15-6 well.
Dr. MacDonald testified that, in contrast, the War-San project, which contained BP’s 25 well, was
about a mile away from the 15-6 well.
Dr. MacDonald testified that he was interested in comparing the amount of water and oil
produced from the project areas with the amount of water injected into the project areas.
Dr. MacDonald said that he reviewed Railroad Commission records to make these comparisons.
Using these records, Dr. MacDonald computed an injection-to-production ratio for each of the
projects that he studied. Dr. MacDonald testified that he initially considered data for the projects
from 1982 forward. Using this data, none of the Queen projects had an injection-to-production ratio
that exceeded 1 to 1. Dr. MacDonald said that it was significant that the ratios did not exceed 1 to
1 because “if that ratio is less than one, the likelihood that the water that’s being injected into those
reservoirs will escape is significantly less than those reservoirs in which the injected water exceeds,
and substantially exceeds the amount of volume that was taken out of that reservoir.” Based on the
injection ratios in the Queen projects and “their proximity being somewhat removed from the 15-6
well,” Dr. MacDonald concluded that they could be eliminated as the cause of the water flow in the
15-6 well.
During cross-examination at the Daubert proceedings, Dr. MacDonald acknowledged that
Railroad Commission Bulletin 82 showed pre-1982 data for the Queen injection projects. In a later
Daubert appearance, Dr. MacDonald testified that he had then included data going back to 1972 in
his study. Dr. MacDonald prepared a graph showing his findings. At trial, Dr. MacDonald testified
about the graph, and Discovery introduced the graph into evidence. Dr. MacDonald testified that
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the graph showed “the cumulative injection in barrels of water, divided by the cumulative production
of oil plus water, in time.” The inclusion of the pre-1982 data resulted in the injection-to-production
ratios being higher in the Queen projects. The graph showed (1) that the injection-to-production
ratio for the Concho Bluff Queen projects peaked at about 1.8 to 1 in the early 1990s and had come
down to about 1.7 to 1 in 2003 when Discovery drilled the 15-6 well, (2) that the injection-to-
production ratio for the Concho Bluff North Queen projects peaked at about 1.5 to 1 in 1985 and had
come down to about 1.3 to 1 in 2003, and (3) that the injection-to-production ratio for the Moose
Queen projects peaked at about 1 to 1 in 1982 and had come down to about 0.8 to 1 in 2003.
Dr. MacDonald testified that the injection-to-production ratio for the War-San project was 3.5 to 1
in 2003.
Dr. MacDonald testified that the inclusion of the pre-1982 data in his study did not change
his opinion that the waterflood projects he studied, other than the War-San project, could be ruled
out as causes of the water flow in the 15-6 well. He testified that the injection-to-production ratios
in the other projects, which included the Queen projects, had remained relatively constant since
1975. He said that a constant injection-to-production ratio indicates that there is a “balance between
production and injection” and that, when such a balance exists, there is “no inclination for . . . any
leakage to occur from the system.” Dr. MacDonald testified that, in his opinion, based on the 3.5
to 1 injection-to-production ratio in the War San project, the period of time that the injection-to-
production ratios had remained constant in the other projects, and the distance from the other
projects to the 15-6 well, the other projects could be excluded as possible causes of the water flow
in the 15-6 well. He said that the lack of proximity between the other projects and the 15-6 well was
an important consideration because “it has to be transmitted over a longer distance, plus the fact it
has to find a connected path across that distance,” and that, therefore, “the probability is much lower,
as the distance increases from the 15-6 well.”
Platt also testified about Discovery’s investigation of the surrounding waterflood projects.
He said that he gathered H-1 forms, H-10 forms, and other reservoir information and provided the
information to Dr. MacDonald to use in his study of the waterflood projects. Platt said that
Dr. MacDonald tabulated the information and performed the calculations of the injection-to-
production ratios. Platt testified that he and Dr. MacDonald studied the War-San project and other
projects in the area of the 15-6 well. He said that the other projects were a considerable distance
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away from the 15-6 well and that Discovery studied the other projects “to eliminate [them] as a
potential source of pressure for the water flow in the 15-6 well, both by distance away, remote
locations, and by [Dr. MacDonald’s] study of [their] injection/production ratios.” Platt testified that
the distance between the other projects and the 15-6 well was a significant consideration because
“any type of pressure response ha[d] a much longer distance to travel from these projects that are
further away” and that, “the further away you get from the 15-6, the less likely that is of some
source.” Platt concluded that, in his opinion, “the other projects four to five miles away were not
the source of the pressure increase that we saw at the 3,900 foot zone in the 15-6 well that resulted
in the water flow at that well.”
The evidence showed that Dr. MacDonald and Platt investigated the Queen projects in an
effort to exclude them as a possible cause of the water flow in the 15-6 well. Based on that
investigation, Dr. MacDonald and Platt testified that the Queen floods could be excluded as a cause
of the water flow. The reliability factor – whether the expert conducted testing to exclude other
possible causes of the damage – supports the admissibility of the causation testimony of Discovery’s
experts. We overrule BP’s second cross-point.
This Court’s Ruling
We reverse the judgments of the trial court in these causes and remand them to the trial court
for new trial.
TERRY McCALL
JUSTICE
April 15, 2010
Panel consists of: Wright, C.J.,
McCall, J., and Boyd, S.J.10
10
John T. Boyd, Retired Chief Justice, Court of Appeals, 7th District of Texas at Amarillo, sitting by assignment.
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