Shale Gas Contract Heads to Supreme Court

On Wednesday, October 12, 2011 0 comments

(HARRISBURG) A case raising doubts about whether Pennsylvania's booming natural gas industry has the right to extract the methane from the thick shale more than a mile beneath countless properties is being appealed to the state's high court.

A Susquehanna County couple on Friday asked the Supreme Court to reinforce that a nearly 130-year-old ruling applies to the Marcellus Shale, which lies underneath much of Pennsylvania and is considered the nation's largest-known natural gas reservoir.

The appeal was motivated by a lower Superior Court action last month suggesting that perhaps the 1882 case cannot be used to separate mineral rights from gas rights in the case of the Marcellus Shale.
"Even if it was unintentional, the Superior Court did call it into question, perhaps not intentionally, but inadvertently, call into question longstanding law on what the term `mineral' means," said Gregory Krock, a Pittsburgh lawyer representing the couple. "But you also have to realize the case is at an early stage."

The Supreme Court must decide whether to hear the appeal.

If the courts decide that mineral rights do not cover the gas from the Marcellus Shale, it could upend some of the leases between property owners and the natural gas industry exploring the Marcellus Shale, some lawyers say.

A lot of leases say a lot of different things, especially over the years, and some are more specific than others, Krock said.

The case stems from a dispute between John E. and Mary Josephine Butler and a man named Charles Powers and his heirs.

The deed for the Butler's 244 acres in Apolacon Township splits "minerals and petroleum oils" between the parties in a land deal that originated in 1881. Natural gas rights were not mentioned, so all of the gas should still belong to the property, the Butlers contend.

A Susquehanna County judge agreed, citing the precedent the state Supreme Court set in the 1882 case, Dunham v. Kirkpatrick.

But Powers' heirs appealed, and a Superior Court panel last month said it could not say with certainty that Powers' heirs have no claim to the gas. The parties should have the opportunity to assemble expert testimony on whether the Marcellus Shale is a mineral and whether the gas it holds falls within the deed, the panel said.

It ordered a county judge to hold further hearings take expert testimony on whether the Marcellus Shale is a mineral, and whether the owners of the mineral rights or the gas rights own the gas it holds.
More than 3,000 wells have been drilled into the Marcellus Shale in the past three years and thousands more are planned in the coming years.

Read the original article here.


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