Posted on 11/09/2011 5:36:27 AM PST by thackney
It has recently come to our attention that a lawsuit in Pennsylvania over the ownership of Marcellus shale gas rights could put many leases in jeopardy and slow the development of this huge natural gas resource. The case is John E. and Mary Josephine Butler v. Charles Powers Estate et al, filed in the Superior Court of Pennsylvania. The Butlers are relying on previous rulings that established ownership of oil or gas doesn't change hands unless it's specified in a deed. In opposition, the Powers' heirs argue that the deed gave them the right to other minerals such as coal, and that they own the gas trapped in the shale the same way they would own the gas trapped in a coal seam.
For over a century, Pennsylvania has required landowners to consider oil and gas rights separate from the more general and common "mineral rights" when transferring ownership of resources beneath the surface of their property. The Powers argue that shale gas is different and should be considered part of the mineral rights because it is contained inside rock. Part of the argument rests on the fact that the gas in the Marcellus shale is not free-flowing since it has to be fractured in order to release it. In the case of coalbed gas, which also is trapped in the coal rock and only released once mining is underway, the ownership always remains with the mineral rights.
The Superior Court, the second-highest court in Pennsylvania, ruled that current law doesn't sufficiently address whether "Marcellus shale constitutes a mineral," sending the question back to the lower court to develop a trial fact record. Many oil and gas professionals would say that the Marcellus shale is merely a tight rock formation, but under laws that are more than a century old, that definition should not be considered a given. We will be watching this issue closely as it has the potential to upset popular assumptions about the role the Marcellus shale will play in America's energy strategy.
If it's your property, whether separated from another element or not ... it is your property.
The real question comes in when discussing leases and should have been addressed by now, especially in the case of producing wells.
Also, if ceding title to the land does not cede mineral (oil and gas) rights, wouldn't those revert to the descendents of the tribes which occupied the area before the european settlers? Or do they not count? This could get really sticky.
Read this one last night and have to wonder how this will end. How do you see it?
The argument that shale oil is different from coal will be hard to argue when shale oil is referred to as “rock oil”.
I also wonder if this will be that big a deal in that how much of the leases in the Marcellus were actually proceeded by leases for coal.
I know of no distinction in mineral rights in Texas. They can either go with the property in a sale or be retained by the seller as per the contract and the deed.
Thanks for the article. Shale oil/gas is widespread, Colorado has deposits that are being produced too.
I have leased farmland for the coal in my career. You would be surprised at the number of land owners who don’t know someone else owns the coal or other valuables underneath.
I don’t know if you remember the “White Oil” fiasco in the Texas panhandle in the 1980’s, but this could be a similar situation if they let it get out of hand.
It’s an issue because the gas companies want to alter state law to skirt your rights as an individual property owner to say no to drilling.
They want to bundle or “collectivize” these rights for streamlined negotiation purposes and to minimize the impact of holdout landowners.
I am all for Marcellus Fracking but we cannot do this sort of harm to individual property rights.
Not generally. Mineral rights exist separate from the property ownership. They have separate deeds and separate transferal procedures—in most jurisdictions. It’s been that way for a very long time.
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