HARRISBURG – Long-standing case law on the ownership of below-ground minerals and natural gas that has guided the natural gas industry since it began exploring the vast Marcellus Shale formation is still in force, Pennsylvania’s Supreme Court ruled Wednesday.
The case raised legal questions about whether natural gas trapped in the thick shale is somehow different than natural gas in different formations and had the potential to upend some of the leases between property owners and the natural gas industry. But the court sided unanimously with a Susquehanna County couple in ruling that legal precedent going back at least 130 years “remains viable and controlling.”
The court’s review was prompted by the lower Superior Court’s action in 2011 that suggested that perhaps the precedent set in an 1882 case, Dunham v. Kirkpatrick, could not be used to separate mineral rights from gas rights in instances involving the Marcellus Shale.
But the Supreme Court soundly rejected that view, saying that natural gas is not a mineral, regardless of what it is trapped in or what method is used to extract it from the ground.
“In our view, neither the Superior Court nor appellees have provided any justification for overruling or limiting the Dunham Rule and its long-standing progeny that have formed the bedrock for innumerable private, real property transactions for nearly two centuries,” the court wrote.
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 split “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 contended. A Susquehanna County judge agreed, citing the Dunham rule.
But Powers’ heirs appealed, and a Superior Court panel said it could not say with certainty that Powers’ heirs have no claim to the gas. Rather, it said, expert testimony helped decide whether the Marcellus Shale is a mineral and whether the gas it holds falls within the deed, prompting the Butlers to seek Supreme Court review.