Star Energy Weald Basin Limited and another (Respondents) v Bocardo SA (Appellant)
Linked as:
Extract
Star Energy Weald Basin Limited and another (Respondents) v Bocardo SA (Appellant)
Trinity Term [2010] UKSC 35 On appeal from: 2008 EWCA Civ 579
JUDGMENT Star Energy Weald Basin Limited and another (Respondents) v Bocardo SA (Appellant) before Lord Hope, Deputy President Lord Walker Lord Brown Lord Collins Lord Clarke JUDGMENT GIVEN ON 28 July 2010 Heard on 22, 23 and 24 June 2010Appellant Respondent Jonathan Gaunt QC Michael Driscoll QC Michael Beloff QC Edward Peters Ciaran Keller (Instructed by Norton Rose LLP) Intervener (Secretary of State for Energy and Climate Change) James Strachan (Instructed by Treasury Solicitor) (Instructed by Denton Wilde Sapte LLP ) LORD HOPE 1. The Palmers Wood Oil Field is a naturally occurring reservoir of petroleum and petroleum gas, the north eastern part of which extends beneath the Oxted Estate of which the appellant Bocardo ("Bocardo") is the freehold owner. The rest of the Oil Field lies under land in different ownerships. Petroleum cannot be recovered from an underground reservoir without carrying out works of some kind below the surface of the land. An oil company such as the first respondent, Star Energy Weald Basin Ltd, which has a licence under section 2 of the Petroleum (Production) Act 1934 (now repealed and replaced by section 3 of the Petroleum Act 1998, Schedule 3, para 4 of which preserves pre-existing licences) to search, bore for and get petroleum will have to sink wells into the substratum by means of drilling in order to recover it. It may have to do this by means of wells that are drilled diagonally rather than vertically from the well head. 2. A particular feature of this case is that the apex of the Oil Field lies beneath Bocardo's land. The most efficient means of recovering the petroleum is to sink a well as close to the apex as possible. If this is not done, and the well is sunk to a point that is substantially below the apex, much of the oil that could otherwise be recovered will be lost. It was for this reason that the respondents' predecessors sunk three wells from the well head by what is known as deviated or directional drilling from one of the two drilling sites that were created for the extraction of petroleum from the Palmers Wood Oil Field. The wells enter the substrata below the Oxted Estate at depths of about 1,300, 800 and 950 feet beneath the surface respectively. Two of them are known as PW5 and PW8. They are used to extract petroleum and petroleum gas from the reservoir beneath the Oxted Estate and terminate at about 2,900 and 2,800 feet below the surface of its land respectively. The third, known as PW9, passes through the substrata beneath the Oxted Estate at a depth of about 950 feet below the surface and ends beyond its perimeter at a point in the reservoir at about 1,400 feet below ground level. It is used for injecting water into the Oil Field to maximise and speed recovery. 3. The respondents' predecessors, Conoco (UK) Ltd, did not seek to negotiate any contractual licence or wayleave from Bocardo to drill the wells, lay the casing and tubing within them or extract the petroleum and petroleum gas by this means from the Oil Field. Nor did they apply for any statutory right to do this under the Mines (Working Facilities and Support) Act 1966 or the Pipelines Act 1962. The respondents in their turn did not seek to do this when they acquired the petroleum production licence from their predecessors. It appears to have been assumed all along that this was not necessary. The evidence at the trial of the respondents' expert was that, although deviated or directional drilling has been common industry practice for some years, he was not aware that any onshore oil company had applied for ancillary rights to permit deviated drilling on UK onshore operations. Bocardo was unaware until July 2006 that petroleum and petroleum gas was being extracted by this means from beneath its land. 4. The issues that this case raises fall into two parts. First, there is the question whether the drilling of the three wells under Bocardo's land was an actionable trespass. Peter Smith J held that it was: [2008] EWHC 1756 (Ch); [2009] 1 All ER 517. His decision was affirmed by the Court of Appeal (Jacob, Aikens and Sullivan LJJ): [2009] EWCA Civ 579; [2009] 3 WLR 1010; [2010] Ch 100. Secondly, if there was an actionable trespass, there is the question what is the correct measure of damages. The measure that was adopted by the trial judge was rejected by the Court of Appeal, which made a very substantial reduction in the award of damages. Bocardo appeal to this court on the damages issue, and the respondents cross-appeal on the issue of trespass. (a) Trespass 5. On 21 July 2006 Bocardo commenced proceedings against the respondents for trespass. The question which this issue raises is whether an oil company which has been granted a licence...See the full content of this document
Sponsored links
