Jury verdict: Chevron owes $73M over lost production

A Kern County jury on Monday decided Chevron U.S.A. Inc. owes more than $73 million to its neighbor in the Midway-Sunset Oil Field because of lost production following a fatal sinkhole accident in 2011 near Taft.

The verdict favoring Taft oil producer TRC Operating Co. Inc. came just hours after jurors began deliberation in a lawsuit originally filed in Kern County Superior Court seven years ago.

Chevron immediately said it plans to appeal the $73,039,191 award against it.

“Chevron appreciates the time and resources dedicated to the trial in this matter, however this case is not over,” the San Ramon-based company said in a written statement. “We remain convinced the evidence Chevron presented supports a contrary verdict and that there are strong grounds for appeal, which we will pursue.”

TRC said the award reflects the injury Chevron caused to its company.

“TRC, its founders and employees thank the jury for their service,” the company said in a written statement. “We are pleased that after Chevron’s negligence seriously injured its neighbor, the jury has set things right. We also thank our legal team for their hard work and dedication to the case.”

The Taft company has blamed Chevron for unstable conditions at Midway-Sunset connected to underground steam injection work near broken wells on Chevron’s side of their shared property line. TRC alleged Chevron worsened the situation by installing a drain at the site.

Chevron, for its part, accused TRC of being responsible for lost

production, saying the Taft company continued to inject steam near broken wells despite clear signs of trouble: eruptions of fluid, steam and rocks. It noted TRC had broken wells, too.

The lawsuit did not focus on the related death of Chevron supervisor Robert David Taylor, who was checking on discolored soil in the area when on June 2011 a sinkhole opened up and swallowed him. Taylor’s death led to an undisclosed settlement in an earlier court case filed by his family.

Taylor’s death and the violence of the eruptions contributed to wider regulatory scrutiny by the state that still has not been fully resolved more than a decade later.

The trial looked at broken oil wells, various oil-field data and cyclic steaming, which is often used at high pressure in Kern County to help coax oil out of diatomaceous formations such as exists at Midway-Sunset.

Financial repercussions of uncontrolled releases at the sinkhole site went on for years at a time when oil was selling for record highs, at some points topping $100 per barrel. Both companies missed out on substantial production during that period as a result of problems state regulators have said were related to cyclic steaming at Midway-Sunset.

TRC, represented in court by Christopher Tayback with the Los Angeles firm of Quinn Emanuel Urquhart & Sullivan LLP, asserted in court that a well on Chevron’s property caused shallow ground movement whenever it was steamed.

The Taft company also said Chevron’s use of a French drain to address a swimming pool-size lake of oil-field fluids ended up altering underground steam pathways, leading to “surface expressions” that resulted in oily fluids shooting through the surface. It contended that forced the closure of 115 TRC wells for a period of several years.

But Chevron, which counter-sued in 2017 and was represented in court by Maureen J. Bright with the Glendale firm of Bright and Brown, laid the blame with TRC, saying its side of the lease line showed evidence of 28 surface expressions to Chevron’s one.

While Chevron placed many of its wells on a “no-steam list,” it said TRC continued to do cyclic steaming on its side of the border.