“Crude and Imperfect” Engineer’s Expert Witness Report Wrongly Excluded

Imperfect data makes for imperfect expert witness reports, but that does not make them unreliable or unscientific, the U.S. Court of Appeals has ruled, overturning a summary judgment where the trial court acknowledged the report was likely correct in its conclusions.

In Stroud v. Southwestern Energy, No. 15-3458 (8th Cir. 2017), Dale and Kari Stroud filed suit alleging that fracking waste from a nearby disposal well made by Southwestern Energy (SWE) migrated onto their property.

An SWE representative (a "landman") had tried to lease the Strouds' property for SWE to dispose of fracking waste, but negotiations were unsuccessful. SWE then leased 3.29 acres adjacent to the Stroud's property with a well 180 feet from their property line, eventually disposing of approximately 7.6 million barrels of fracking waste.

According to the Strouds' affidavit, after the negotiations with SWE failed, the landman told them that they had been too greedy, that SWE would use the well on their neighbor's property to fill up the empty gas space under the Strouds' property.

The Strouds retained Walter L. Dowdle, a petroleum engineering expert witness to support their claim that the waste had spread to their property. Dowdle had 35 years of experience in the industry, and had been qualified as an expert witness by the Federal Energy Regulatory Commission.

To prove their claim, the Strouds could have drilled to obtain a sample or created a computer model based on seismic data, but both options were prohibitively expensive, according to them. Instead, Dowdle used, according to the Appellate Court,  a "simplistic" equation to create a rough model, making assumptions with the aid of a petrophysicist and geologist, an equation which Dowdle believed adequate "to determine the extent to which fluids injected into the adjacent well had reached the Strouds' property". According to SWE's expert, Dowdle ignored important factors and made simplifying assumptions like radial flow of the waste.

In response, Dowdle created a second report explaining that his findings were averages and his assumptions were supported by SWE's isopach map (a map that illustrates thickness variations of layers of the earth). He explained that it was unnecessary to include permeability and gravity, and that the assumption of a radial pattern of flow was commonly used throughout the oil and gas industry.

The district court excluded Dowdle's expert report because in part it assumed radial flow and was not based on sufficient facts or data. Dowdle had left "too blury a picture" in the absence of a geologist's opinion. The district court granted summary judgment for SWE. The Strouds appealed.

The Appellate Court found that the district court had abused its discretion in excluding Dowdle's report. While Dowdle's equation and report "imperfectly describe where the fracking waste spread", it was scientifically valid.

While the Strouds' evidence was "thin" according the the Appellate Court, it noted the admitted fact that if the leased area were 100% porous (which it was not), it would hold under 1.1 million barrels. The district court had even noted that the experts unanimously agreed that 7.6 million barrels of waste "could not possibly fit in the reservoir space directly beneath the leashold."

The Appellate Court noted somewhat incredulously the district court's acknowledgment that "it seems likely … that the waste migrated under the Strouds' land."

The summary judgment standard does not, the Appellate Court wrote, "require the non-moving party to prove its case", only to give evidence that raises a genuine dispute of material fact.

The Appellate Court reversed the district court's judgment and remanded.