LITTLE ROCK — A subsidiary of Southwestern Energy Co. recently bought 5 acres in Quitman where last year a water well started spewing millions of cubic feet of natural gas and is the subject of a lawsuit in federal court.
A.W. Realty Co. completed the purchase of the property at 450 Locust St. in Quitman on Jan. 10, according to records at the Cleburne County Courthouse. Southwestern’s website says that A.W. Realty is a subsidiary of the Houston-based oil and natural-gas producer.
The property was sold by the federal Housing and Urban Development Department to Southwestern for an unknown amount of money. HUD foreclosed on the property in 2010. Nobody was living on the property when the leak started.
Southwestern Energy is the top producer in the Fayetteville Shale natural gas field of north-central Arkansas and has several gas wells in the vicinity of the water well that started leaking gas.
Drilling in the Fayetteville Shale uses horizontal drilling and hydraulic fracturing, or fracking, the process of injecting millions of gallons of water mixed with sand and chemicals to allow for the most natural gas to flow out.
Citing an ongoing lawsuit in the U.S. District Court for the Eastern District of Arkansas, a spokesman for Southwestern would not say why the company bought the property. In court documents, Southwestern denied responsibility for the gas leak.
The Arkansas Oil and Gas Commission said this week that it began investigating in February 2011 why the well was leaking natural gas but that a cause has not been named.
Shane Khoury, deputy director and general counsel for the commission, said in an email that the gas most likely migrated from “a shallow gas source.”
“After our initial investigation in this particular case, we determined that the Fayetteville Shale wells [in the area] were not the probable source,” Khoury said, while adding that it is possible that recent drilling caused the shallow natural gas pocket to migrate to the water well.
In April, the commission pumped water into the well to see whether it was ready to be plugged. After the water was pumped in, the well pressurized and the pumped-in water started spewing, causing area residents to be evacuated at 3:30 a.m., the Heber Springs Sun Times reported.
The commission said it pumped in 100,000 gallons of water, which also caused the natural gas to migrate to other wells on the property and bubble out of a pond.
Records supplied by the Oil and Gas Commission show that on April 21, 288 million cubic feet of gas flowed from the water well. By May 2 the flow had slowed to 6 million cubic feet per day.
Khoury said that the problem was beyond the commission’s authority and expertise, so it asked Southwestern to help solve the problem. Because the water well was leaking so much gas, it could not be plugged. Instead, Southwestern burned off the natural gas.
Because Southwestern would not comment for this article, it is unclear what has happened to the wells. Last week, Flippin Water Well Drilling Pump Contractors could be seen working on several water wells on the property. Flippin did not return calls Thursday.
In Pennsylvania, a natural-gas drilling company was blamed for contaminating water wells near Dimock.
State regulators in Pennsylvania fined Cabot Oil & Gas Corp. of Houston after water wells were contaminated in 2008 and even caught fire at 19 homes in Susquehanna County Records with the Pennsylvania regulators show that Cabot was fined more than $500,000 and had to supply water to residents in Dimock.
According to the federal lawsuit, filed Cleburne County by Phillip and Peggy Berry, “large quantities of methane and hydrogen sulfide” were in the air near the well in question. The Berrys do not have a water well on their property. The suit was filed May 17, 2011, against Southwestern, among others.
They claim that natural gas coming out of the well has caused the value of their property to fall and caused them to potentially inhale methane.
A lawyer representing the Berrys, who live next to the property Southwestern bought, said the land transaction baffled him.
“I don’t know why Southwestern bought the property; it really came out of the blue,” said Timothy Holton of the Memphis-based Deal Cooper and Holton law firm. “It changes the characteristics of the litigation to some extent. ... It’s certainly something we’ll look into very thoroughly.”
Southwestern filed a motion to dismiss the case in July, arguing that the Berrys complaint failed to state any facts for which damages could be assessed.
“Plaintiffs’ bare-bone allegations fail to give rise to a plausible — not merely possible — claim for relief against Southwestern,” the motion says. “[The] Plaintiffs fail to demonstrate any connection between Southwestern and ownership of the land where the allegedly offending well is located.”
The motion, filed before Southwestern bought the property, goes on to say that the “plaintiffs’ allegations amount to this: Gas escaped from the water well next door, and Southwestern, who does not own the land or the well, showed up and fixed the problem.”
Also included in the suit are Australia-based BHP Billiton, Chesapeake Energy and XTO Energy, companies that had drilling operations in the Fayetteville Shale when the water well started leaking gas. BHP bought Chesapeake’s Arkansas assets in February, and the companies were in the process of transferring operations at the time the gas leak became a concern.
On Thursday, a judge had not ruled on the motion to dismiss the lawsuit. A trial has been set for April 15, 2014. The case is titled Phillip and Peggy Berry vs. Southwestern Energy et. al.
Local anti-fracking activists say they are being kept in the dark by Southwestern and would like the company to be more forthcoming with information about what caused the natural gas to migrate to the water well.
Sam Lane, who leads Stop Arkansas Fracking, a group of about 250 who want to end fracking in the Fayetteville Shale, also called for more testing by the Arkansas Oil and Gas Commission.
“The company needs to be more transparent and let people know what is going on,” Lane said. “This really scared a lot of people when it happened.”
Business, Pages 27 on 01/27/2012