The modern producing gas well is a sophisticated and complex piece of equipment. The basic well head itself consists of several meters, valves and other components, each of which is under constant stress and pressure. In addition to the well head, the producing gas well will be connected to an active network of gathering and transmission pipelines. Proper maintenance is a necessary and ongoing activity at any well site. Such maintenance, however, often requires the producer to take the well temporarily out of production. Moreover, unexpected breakdowns can and do occur over the life of a well. These breakdowns inevitably also take the well out of production. In the absence of a specific clause in the applicable lease, it is unclear under Pennsylvania law exactly how much “time” a producer has to repair or rework the well before the entire lease will be declared terminated due to non-production.

1. Temporary Cessation of Production:
Three Gateway Center How much time does a producer have under Pennsylvania law?
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The modern producing gas well is a sophisticated and complex piece of equipment. The basic
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well head itself consists of several meters, valves and other components, each of which is
under constant stress and pressure. In addition to the well head, the producing gas well will be
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connected to an active network of gathering and transmission pipelines. Proper maintenance is
a necessary and ongoing activity at any well site. Such maintenance, however, often requires
the producer to take the well temporarily out of production. Moreover, unexpected breakdowns
can and do occur over the life of a well. These breakdowns inevitably also take the well out
of production.
In the absence of a specific clause in the applicable lease, it is unclear under Pennsylvania law
exactly how much “time” a producer has to repair or rework the well before the entire lease
will be declared terminated due to non-production. Pennsylvania has historically applied the
“automatic termination rule” during the secondary term of a gas lease. Under this harsh rule,
the secondary term of a lease will automatically expire unless there is a well producing gas “in
paying quantities.” See, Cassell v. Crothers, 44 A. 446 (Pa. 1899) (“the moment she failed to
produce oil in paying quantities, that moment the tenancy became a tenancy at will...”); Brown
v. Haight, 255 A.2d 508 (Pa. 1969) (“...when oil and gas were not produced in paying
quantities, the grantee’s fee interest terminated automatically...”); White v. Young, 156 A.2d
919 (Pa. 1963) (failure to produce gas in paying quantities results in termination of lease after
primary term expired).
As such, any cessation of production during the secondary term, even one for routine
maintenance or repair, will theoretically trigger the “automatic termination rule” and terminate
the lease. Most oil/gas jurisdictions, however, have recognized the inflexibility of this rule and
have adopted what is commonly known as the “temporary cessation of production” (“TCOP”)
doctrine. Pennsylvania has not. Given the number of new Marcellus wells being drilled every
day throughout this Commonwealth, it is time for Pennsylvania to formally recognize and adopt
the TCOP doctrine and provide clarity and predictability to the industry.
What is the TCOP doctrine? In essence, the doctrine recognizes that it is nearly impossible for
a producer to operate a lease continuously without any interruption. “[T]he TCOP doctrine
presumes that the parties understood that mechanical problems, reworking operations or other
similar events would inevitably interrupt production from time to time.” Natural Gas Pipeline
Co. v. Pool, 124 S.W.3d 188, 204 (Texas 2003). The doctrine further assumes that the parties
“did not intend such occurrences, which are incidental to normal oil and gas operations, to
terminate the lease.” Midwest Oil Corp. v Winsauer, 323 S.W.2d 944, 946 (Texas 1959); See
also McCullough Oil Inc. v Rezek, 346 S.E.2d 788, 794 (W.Va. 1986) (“...mere temporary
cessation of production during secondary term for equipment repairs or technical problems,

2. Temporary Cessation of Production
reworking operations ... does not result in automatic termination of the lease...”). The doctrine
gives the producer a “reasonable period” of time which to remedy the defect and resume
production. Winsauer, 323 S.W.2d at 946.
The modern TCOP doctrine can be traced to the Texas Supreme Court’s decision in Watson v.
Rockmill, 155 S.W.2d 783 (Texas 1941). In Watson, the well had been in production for
approximately eight (8) years before it became clogged with salt deposits. Watson, 155 S.W.
2d at 784. The well produced about one barrel of oil to ten barrels of salt water per day. Id.
Though the producer could have continued production, he concluded that the “lack of market”
for low gravity oil did not justify operation of the well. Id. The cessation lasted over two (2)
years before the salt deposits were removed. Id. The landowner filed suit for a judgment
declaring the lease terminated due to non-production. Id. The producer defended the suit on
the grounds that the cessation was temporary and should not automatically terminate the
lease. Id. The Watson court concluded that to prevent termination pursuant to the TCOP
doctrine, the cessation must be “due to a sudden stoppage of the well or such mechanical
breakdown of the equipment used in connection therewith, or the like.” Watson, 155 S.W.2d
at 784. Because the cessation was unrelated to actual repairs or reworking operations, the
court held that the lease was not saved by the TCOP doctrine and terminated the lease. Id.
The doctrine set forth in Watson has evolved over the years but essentially consists of a
two-part test. The first prong focuses solely on the cause of the cessation. Under this prong,
the producer must demonstrate that the cessation was due to the factors outlined in Watson:
a sudden stoppage or some mechanical breakdown of the equipment. See Somont Oil
Company v. A&G Drilling, 49 P.3d 598 (Mon. 2002); See also, Bryan v. Big Two Mile Gas
Company, 577 S.E.2d 258, 266 (W.Va. 2001) (the doctrine applies if the cessation is required
to “accomplish necessary maintenance, repairs or replacements or to deal with the
unexpected loss of market...”).
Courts have slowly expanded, however, application of the doctrine beyond the “mechanical
breakdowns” envisioned by the Watson court. See, Ridge Oil Company Inc. v. Guinn
Investments Inc., 148 S.W.3d 143 (Texas 2004). Voluntary cessations based on maintenance,
reworking or even litigation have been found to satisfy the first prong of the test. See Midwest
Oil Corp. v. Winsauer, supra (two successive lawsuits and an obstructed pipeline held
sufficient to trigger TCOP); Stuart v. Pundt, 338 S.W.2d 167 (Tex.Civ.App. 1960) (voluntary
plugging of well due to casing collapse and subsequent drilling of new well held sufficient to
trigger TCOP); Amoco Production Company v. Braslau, 561 S.W. 2d 805 (Texas 1978) (casing
collapse in old well and drilling of new well held sufficient to trigger TCOP). Thus, typical
maintenance or reworking operations which require a brief interruption of production clearly
fall within this prong of the test.
Production interruptions caused by the conduct of third-parties have also been found to
satisfy the first prong of the test. The TCOP doctrine has been expanded further to even
include mechanical breakdowns or other physical causes “beyond the well head” and outside
of the producer’s control. See, Krabbe v. Anadarko Petroleum, 46 S.W.3d 308 (Tex. App. 2001)
(shutdown of third-party buyer’s processing plant which necessitated cessation of production
held sufficient); Casey v. Western Oil & Gas, Inc., 611 S.W.2d 676 (Tex. App. 1980) (applying
TCOP doctrine to excuse cessation were well was disconnected by third-party gas purchaser).
Purely economic motivated cessations, however, generally do not satisfy this prong of the test
and will not excuse non-production. See, Bachler v. Rosenthal, 798 S.W.2d 646, 650 (Tex.
App. 1990). Three Gateway Center
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3. Temporary Cessation of Production
The second prong focuses on whether, under the circumstances, the producer exercised For more information, contact:
“diligence to remedy the defect and resumed production in a reasonable time.” Cobb v. Robert J. Burnett, Esq.
Natural Gas Pipeline Co., 897 F.2d 1307, 1309 (5th Cir. 1990). The pivotal issue is often 412.288.2221
whether the period of non-production was truly “temporary” or of a permanent nature. See rburnett@hh-law.com
Wagner v. Smith, 456 N.E.2d 523 (Ohio Ct. App. 1982); See also, Wilson v. Holm, 188 P.2d 899,
907 (Kansas 1948) (the producer is “required to move promptly and by [its] efforts actually
establish that such cessation, regardless of its cause, is temporary, not permanent”). The
producer must act “diligently” to restore production or the TCOP doctrine will not save the
lease. Somont Oil Company v. A&G Drilling, supra (“[T]he diligent lessee who takes immediate
steps to rectify a sudden halt in production will not lose his or her investment”).
As can be imagined, there is no fixed formula on what is or is not a reasonable time to restore
production. Courts have held that a cessation of three months was excused (Cobb v. Natural
Gas Pipeline, supra) but a cessation of four to five months (Bryan v. Big Two Mile Gas Co.,
supra) was not. Such determinations must be made on a case-by-case basis and turn heavily
on the diligence of the producer. In short, most courts have generally applied the TCOP
doctrine and excused the non-production when the producer acted with reasonable diligence
in restoring actual production.
Remarkably, the Pennsylvania Supreme Court has never formally adopted the TCOP doctrine.
In fact, the issue of “temporary cessation” has apparently only been referenced once by the
Pennsylvania Supreme Court. In Cole v. Philadelphia Co., 26 A.2d 920 (Pa. 1942), the Robert J. Burnett is a Director at the
Pennsylvania Supreme Court rejected the producer’s argument that “temporary cessation” downtown law firm Houston Harbaugh, P.C.
constituted “abandonment” of the lease. Cole, 26 A.2d at 923. The landowner in Cole had His practice is concentrated in business and
brought suit to recover unpaid royalties. Id. at 921. The producer defended the suit on the commercial litigation. Robert is a member
grounds that he had “abandoned” the lease prior to that time by temporarily disconnecting of the Environment, Energy and Resources
the well. Id. The Cole panel opined that “[a] cessation of operations for a short time does not section of the American Bar Association as
signify the same intention of abandonment...” Id. well as the Pennsylvania Independent Oil
and Gas Association.
Since 1942, no Pennsylvania appellate court has addressed the issue of “temporary
cessation” or the TCOP doctrine itself. Pennsylvania can no longer ignore this issue. Given the
dramatic increase in drilling operations being conducted across this Commonwealth, litigation
arising out of “temporary cessation” is inevitable. Producers and landowners alike can only
hope that the Pennsylvania appellate courts will adopt the TCOP doctrine and provide much
needed guidance and clarity in this area.
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