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Trial opens in Midway-Sunset oil dispute

Competing accusations of negligence marked Tuesday's opening statements in a long-brewing legal battle over years of lost oil production in the Midway-Sunset Oil Field in southwest Kern County.

TRC Operating Co. Inc. of Taft blamed its neighbor in the oilfield, San Ramon-based Chevron U.S.A. Inc., for causing unstable and dangerous conditions by injecting high-pressure steam near Chevron's own broken oil wells, then installing a drain that ended up worsening the situation and costing TRC tens of millions of dollars in lost revenue.

Chevron, likewise, accused TRC of continuing to inject steam in an area where it had broken wells even though such activity was causing eruptions of fluid, steam and rocks and costing Chevron $50 million in lost oil sales.

The hours-long statements, rendered by outside litigators from Southern California, kicked off a trial expected to last until mid-September as each side makes the case that the other should compensate for wells that had to be shut in to halt violent oil-field eruptions.

No mention was made Tuesday of the fatality that resulted in June 2011 when a sinkhole linked to high-pressure steaming in the area opened up and swallowed Chevron supervisor Robert David Taylor. TRC's lawyer referred to the event only as an "industrial incident," while Chevron's attorney avoided the occurrence altogether.

The case is significant not only because of Taylor's death, which led to an undisclosed settlement in an earlier court case filed by his family, but because it contributed to wider regulatory scrutiny that remains unresolved more than a decade later.

TRC's attorney, Christopher Tayback with the Los Angeles firm of Quinn Emanuel Urquhart & Sullivan LLP, opened his statement Tuesday morning by painting a picture of bowling ball-size rocks flying 50 to 100 feet in the air, accompanied by a resounding boom and a mushroom cloud rising over Midway-Sunset near Taft.

He said the eruption stemmed from Chevron's use of the oilfield technique called cyclic steaming, in which steam is injected underground at high pressure to make the underlying oil less viscous and drive it to the surface through new and enhanced subsurface pathways.

While TRC continued to do business as it had for 15 years prior, Tayback said, Chevron neglected to properly address broken wells on its side of their shared border. This interrupted TRC production at a time oil was selling at record highs of about $100 per barrel.

He argued, as Chevron's lawyer later would, that the problem lay underground as pressurized steam from a broken well crossed their shared lease line and brought about the sinkhole and associated eruptions.

"What happens on one side of the property … affects the other side of the (lease line)," Tayback said.

He asserted a well on Chevron's property caused shallow ground movement every time it was steamed, a sign that something was wrong. He pointed to two other wells on Chevron's side that also appeared to be broken, contributing to the problem of uncontrolled releases of steam and fluids.

To address a swimming pool-size lake of oil-field fluids that developed on Chevron's side of the line, Tayback noted, Chevron switched from berms as a containment measure to a French drain designed to gather up petroleum and water that could then be pumped out.

That 60-foot-long drain, he argued, altered underground steam pathways such that eruptions, also known as "surface expressions," required TRC to stop steaming for a period of four years, during which time about 115 of the company's wells, accounting for more than three-quarters of its production, had to be taken offline.

Tayback also pointed to a well located outside the area where Chevron had self-imposed a ban on cyclic steaming within 300 feet of a well believed to have contributed to the sinkhole. He said tests showed the well contributed to the problem of steam migrating to areas where it was not intended to travel.

After lunch on Tuesday, Maureen J. Bright, with the Glendale firm of Bright and Brown, delivered the opening statement for Chevron, which filed a counter-suit in 2017 after TRC sued in 2014.

Bright said TRC was responsible for creating unstable subsurface conditions, not Chevron. She noted TRC's side of the lease line shows evidence of 28 surface expressions to Chevron's one.

Chevron did much to investigate and address the expressions, even placing many of its wells on a "no-steam list," while TRC continued to conduct cyclic steaming on its side of their shared border.

Not until TRC's suit was filed, and its records were opened to inspection, was Chevron finally able to piece together what had happened, Bright said. She added that TRC knew its wells were broken and it continued high-pressure steaming regardless.

Testing done in 2000 following an eruption in the area showed there was nothing wrong with a Chevron well TRC says was broken, Bright said. But TRC was steaming at the time, she said, and one of its wells was broken.

"TRC kept on steaming," she said.

Later, when in 2008 Chevron scaled back its steaming in the area where the sinkhole later developed, surface expressions continued — an indication, she said, that TRC's wells were to blame.

Expert testimony will show Chevron's construction of a French drain did not disrupt underground steam pathways, Bright said.

"(The drain) was working just fine," she said.

Tests show the Chevron well located outside the no-steaming radius that TRC asserts was broken was working properly, too, she said.

On the other hand, excavation work done by TRC in 2013 took pressure off an underground geological formation, contributing to surface expressions on Chevron's side of the lease line.

She promised Chevron's case will draw upon data from a variety of sources, from oil well files and steam records to temperature surveys and well integrity tests.

The trial is scheduled to resume Wednesday morning with testimony and evidence supporting TRC's case, followed by the same process when it's Chevron's turn.