A jury trial is about to begin in a years-long dispute between two Kern County oil companies accusing each other of damaging their property and limiting production on a scale of tens of millions of dollars.
TRC Operating Co. Inc. of Taft filed suit in July 2014 against San Ramon-based Chevron U.S.A. Inc. in Kern County Superior Court seeking compensatory damages and interest. Chevron counter-sued for damages in May 2017.
At issue in both suits is whose steam injections and other oilfield work caused seepage and related problems that led to state-imposed restrictions at the companies' neighboring operations in the Midway-Sunset Oil field near Taft.
The situation gained notoriety after the seepage contributed to the formation of a sinkhole that swallowed Chevron supervisor Robert David Taylor on June 21, 2011. Taylor's death led his family to file a lawsuit that ended in a financial settlement, the terms of which have not been publicly disclosed.
TRC says Chevron failed to properly abandon a well it spent more than $1 million trying to fix over a period of years. TRC's suit claims Chevron's attempt to fix the seepage, also known as a "surface expression," relied on the negligent design, construction and installation of a French drain at the site.
The lawsuit also accuses Chevron of negligent use of an oilfield technique called cyclic steaming, which injects vapor underground at high pressure to make crude less viscous and create fissures through which oil can be brought to the surface.
TRC termed Chevron's actions "subsurface trespass" and said because of that, its production — previously about 1,000 barrels per day — had to be curtailed for four years because of state concerns about nearby surface expressions. It estimated its out-of-pocket remediation costs as $10 million.
“For many years prior to the summer of 2011 TRC safely operated our wells in the Midway-Sunset field," a TRC spokesperson said by email Thursday. "Chevron’s mismanagement of its operations meant that starting that summer and for years after we were forced to shut in a large portion of our field."
"TRC has since been able to resume normal operations," the statement continued. "We look forward to the jury hearing how Chevron’s operations interfered with our business and hope we will finally be compensated for the losses we suffered by Chevron’s negligence.”
Chevron declined to offer a public statement on the upcoming trial. But its cross-complaint pointed to numerous surface expressions on TRC's property at Midway-Sunset. It accuses TRC of creating or allowing conditions to occur that permitted fluids to migrate onto, and damage, Chevron's property.
The suit says TRC's actions, including excavation it claims crossed onto Chevron's property, caused or exacerbated trouble at the well Chevron had tried to abandon. It asserts TRC "intentionally, recklessly and/or negligently" caused steam and reservoir fluids to migrate through the subsurface and emerge to the surface on Chevron's property.
Chevron's cross-complaint blames state regulatory orders for the lost production TRC is trying to recover financially. It says that if TRC can collect money from Chevron based on compliance with state orders, then Chevron should be able to recover lost profits and damages from the state.
The trial before Judge David Lampe is expected to begin in early August and then go to the jury for deliberations in mid-September.