Acree v. Shell Oil Co.

• Decision Date: 07 October 1982
• Docket Number: Civ. A. No. 79-41-B.
• Citation: 548 F. Supp. 1150
• Parties: Page W. ACREE, Elizabeth Smith Acree, William Smith Acree, and Kathy Sartori Acree v. SHELL OIL COMPANY, Shell Chemical, Inc., and ABC Pipeline Construction Company.
• Court: U.S. District Court — Middle District of Louisiana

548 F. Supp. 1150

Page W. ACREE, Elizabeth Smith Acree, William Smith Acree, and Kathy Sartori Acree v. SHELL OIL COMPANY, Shell Chemical, Inc., and ABC Pipeline Construction Company.

Civ. A. No. 79-41-B.

United States District Court, M.D. Louisiana.

October 7, 1982.

Russell L. Dornier, Leon Gary, Jr., Gary & Field, Baton Rouge, La., for plaintiffs.

Alvin B. Gibson, New Orleans, La., Tom F. Phillips, John W. Barton, Jr., Taylor, Porter, Brooks & Phillips, Baton Rouge, La., for defendants, Shell Oil Co. and Shell Chemical, Inc.

POLOZOLA, District Judge:

This case is before the Court for a determination of whether the defendants have a contractual right under the terms of an oil and gas lease to lay a pipeline across plaintiffs' property.

The plaintiffs, Page W. Acree, Elizabeth Smith Acree, William Smith Acree, and Kathy Sartori Acree (Acrees) filed this suit against Shell Oil Company (Shell), Shell Chemical Company (Shell), and an unknown pipeline company. Plaintiffs contend that they have been damaged due to a trespass of their property by the defendants who came upon plaintiffs' property, over plaintiffs' objection, and excavated a trench for the purposes of installing a pipeline to be used in the transportation of gas and other petroleum products. Shell argues that it has a right to lay the pipeline across plaintiffs' property under the terms of an oil and gas lease it has with the plaintiffs and others.

The parties have submitted this case to the Court on a stipulation of facts. The Court has also ordered that the present trial be limited to the rights and liabilities of the parties under the lease agreement and has severed the remaining issues in the case. The joint stipulation of facts filed in the record provides:

"JOINT STIPULATION OF FACTS

"Plaintiffs and defendant, through undersigned counsel, submit the following joint stipulation of facts upon which decision in this case may be had, viz:

"A. The plaintiffs are the owners and possessors of the property described in paragraph 3 of the complaint, having acquired the same by separate acts of cash sale dated July 21, 1977, and partition dated August 25, 1977 — which instruments are attached as Exhibit 1.

"B. At the time plaintiffs purchased the described property, defendant, Shell Oil Company, had obtained and filed for record 52 oil, gas and mineral leases enumerated in paragraph 12 of the answer filed by Shell, which leases were obtained from the same owners in indivision of the same property which was subsequently conveyed to plaintiffs, and the lease agreement attached as Exhibit 2 is a photocopy of an unexecuted lease form utilized by the parties except as stated in the next paragraph of this stipulation, and all 52 leases have been maintained in force and effect at all times pertinent hereto.

"C. That the provisions of the 52 leases are identical except for those differences noted by Shell in paragraphs 13 and 14 of its answer filed herein, which paragraphs for convenience of the Court are attached as Exhibit 3. One lease which contained different language was from Tulane Educational Fund which had an interest in the property of approximately forty-five per cent (45%).

"D. That during or prior to January of 1978, Shell Oil Company representatives contacted plaintiff, Smith Acree, concerning acquisition of surface rights in addition to those contained in the mineral leases then held by Shell.

"E. That plaintiffs refused the offers made by representatives of Shell and advised Shell that legal proceedings would be instituted if any construction activity were undertaken on the property.

"F. That Louisiana Intrastate Gas Corporation under a nonexclusive grant from Shell and for the mutual benefits to be derived from the pipeline by Shell and Louisiana Intrastate Gas Corporation, as well as all persons having interests in the production of oil, gas and other minerals from the leased premises or land pooled therewith, and relying on the representations of Shell as to surface rights across plaintiffs' property, went onto plaintiffs' property and constructed a pipeline for the transportation of minerals from a well designated as Turner No. 1, situated in Section 20, Township 3 South, Range 6 East, and within the limits of a Commissioner-of-Conservation-created unit, the center line of which pipeline traverses the eastern portion of the East one-half (E ½) of the Northwest Quarter of Section 17, T-3-S, R-6-E, and through the eastern portion of the Southeast Quarter of the Southwest Quarter (SE ¼ of SW ¼), Section 8, T-3-S, R-6-E, all on plaintiffs' property. The approximate location of the pipeline through plaintiffs' property is shown on the plat attached hereto as Exhibit 4. It is necessary for the oil and gas produced in the field to be transported from the premises for sale and/or use in commercial quantities.

"G. That pursuant to order No. 1029-A of the Office of Conservation of the State of Louisiana, three drilling and production units for the 16600 Tuscaloosa Sand, Reservoir B, in the Moncrief Field, St. Landry Parish, Louisiana, were created. Those units are shown on Exhibit 4, and the units designated as 16600 TUSC RB SU A and TUSC RB SU B contain a portion of plaintiffs' property. None of plaintiffs' property in Section 8, T-3-S, R-6-E, through which a portion of the pipe line runs, is included in any of the three units. No portion of plaintiffs' property is situated in the unit designated as TUSC RB SU C.

"H. Initially the pipeline moved gas produced by the well designated as Turner No. 1, which was drilled in Commissioner's unit designated as RB SU A, and in March, 1979, production from the well known as Myers No. 1, situated in the unit designated RB SU B, was transported in a field line constructed by Shell to the LIG pipeline through which it was transported for commercial use. In May, 1981, the well designated as Turner No. 3, situated in the Commissioner's unit designated RB SU C, was placed in production, and the gas produced from that well was transported through field lines constructed by Shell to a collecting point at or near the Turner No. 1 well location, and such production is at that point injected into the LIG pipeline for transportation and commercial utilization. The Turner No. 1 well was plugged and abandoned in October, 1980.

"I. The ownership of property in the area is as shown on attached Exhibit 4.

"J. That the lease agreement attached as Exhibit 2 contains the language of the leases enumerated as Nos. 2 through 52 in Shell's answer at paragraph 12. The names and signatures of the lessees are shown on the original recorded leases although they are not shown on the specimen lease, Exhibit 2."

The relevant portion of the lease agreements provides:

"Lessor, in consideration of the sum of ONE THOUSAND DOLLARS AND OTHER VALUABLE CONSIDERATION ($1000.00 ovc), hereby leases and lets unto Lessee, the exclusive right to enter upon and use the land hereinafter described for the exploration for, and production of oil, gas, sulphur and all other minerals, together with the use of the surface of the land for all purposes incident to the exploration for and production, ownership, possession, storage and transportation of said minerals (either from said land or acreage pooled therewith), and the right to dispose of salt water, with the right of ingress and egress to and from said lands at all times for such purposes, including the right to construct, maintain and use roads, pipelines and/or canals thereon for operations hereunder or in connection with similar operations on adjoining land, and including the right to remove from the land any property placed by Lessee thereon and to draw and remove casing from wells drilled by Lessee on said land, the land to which this lease applies and which is affected hereby being situated in St. Landry Parish, Louisiana, and described as follows, to-wit:"

The underscored language, "or in connection with similar operations on adjoining land" was deleted from fifty-one leases and was only contained in the Tulane lease.

It is well settled that the intention of the parties to a contract must be determined in accordance with the plain, ordinary and popular sense of the language used in the agreement. Texaco, Inc. v. Vermillion Parish School Board, 244 La. 408, 152 So.2d 541 (1963).

Plaintiffs argue that the pipeline constitutes a trespass because it does not transport minerals produced upon the leased acreage or upon "acreage pooled therewith." Plaintiffs also contend that the language contained in the Tulane lease is not binding on them, but even if they are bound by this language, the Turner No. 3 well is not on "adjoining land." Thus, plaintiffs contend that in order for Shell to use the surface of plaintiff's land for the transportation of minerals produced on the leased property or "acreage pooled therewith," the entire tract must be pooled with the other acreage. The Acrees cite other examples in the lease where the additional language "or any part thereof" is used to define Shell's right to use leased property. According to the Acrees, if their interpretation of the lease is incorrect, there would be no need for the language "or any part thereof" in the lease. Finally, the Acrees argue in the alternative, that the use of their land for pipelines should be limited to that portion of the land which is pooled with the adjoining land containing the well site.

After carefully reviewing this very complex and difficult case, the Court finds that the meaning which must be given to the phrase "or acreage pooled therewith" is that if any acreage within the lease is unitized with a producing well, the surface of the leased tract may be used to transport production from the unit well. The Court further finds that Tulane granted Shell a valid lease and, thus, made Shell the owner of an absolute right. Finally, the Court finds that property which touches at a corner is "adjoining property" as...