• 13 hours U.S. Oil Production To Increase in November As Rig Count Falls
  • 15 hours Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 17 hours Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 18 hours EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 20 hours Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 21 hours Aramco Says No Plans To Shelve IPO
  • 3 days Trump Passes Iran Nuclear Deal Back to Congress
  • 4 days Texas Shutters More Coal-Fired Plants
  • 4 days Oil Trading Firm Expects Unprecedented U.S. Crude Exports
  • 4 days UK’s FCA Met With Aramco Prior To Proposing Listing Rule Change
  • 4 days Chevron Quits Australian Deepwater Oil Exploration
  • 4 days Europe Braces For End Of Iran Nuclear Deal
  • 4 days Renewable Energy Startup Powering Native American Protest Camp
  • 5 days Husky Energy Set To Restart Pipeline
  • 5 days Russia, Morocco Sign String Of Energy And Military Deals
  • 5 days Norway Looks To Cut Some Of Its Generous Tax Breaks For EVs
  • 5 days China Set To Continue Crude Oil Buying Spree, IEA Says
  • 5 days India Needs Help To Boost Oil Production
  • 5 days Shell Buys One Of Europe’s Largest EV Charging Networks
  • 5 days Oil Throwback: BP Is Bringing Back The Amoco Brand
  • 5 days Libyan Oil Output Covers 25% Of 2017 Budget Needs
  • 5 days District Judge Rules Dakota Access Can Continue Operating
  • 6 days Surprise Oil Inventory Build Shocks Markets
  • 6 days France’s Biggest Listed Bank To Stop Funding Shale, Oil Sands Projects
  • 6 days Syria’s Kurds Aim To Control Oil-Rich Areas
  • 6 days Chinese Teapots Create $5B JV To Compete With State Firms
  • 6 days Oil M&A Deals Set To Rise
  • 6 days South Sudan Tightens Oil Industry Security
  • 6 days Over 1 Million Bpd Remain Offline In Gulf Of Mexico
  • 7 days Turkmenistan To Spend $93-Billion On Oil And Gas Sector
  • 7 days Indian Hydrocarbon Projects Get $300 Billion Boost Over 10 Years
  • 7 days Record U.S. Crude Exports Squeeze North Sea Oil
  • 7 days Iraq Aims To Reopen Kirkuk-Turkey Oil Pipeline Bypassing Kurdistan
  • 7 days Supply Crunch To Lead To Oil Price Spike By 2020s, Expert Says
  • 7 days Saudi Arabia Ups November Oil Exports To 7-Million Bpd
  • 7 days Niger Delta State Looks To Break Free From Oil
  • 7 days Brazilian Conglomerate To Expand Into Renewables
  • 8 days Kurdish Independence Could Spark Civil War
  • 8 days Chevron, Total Waiting In The Wings As Shell Mulls Majnoon Exit
  • 8 days The Capital Of Coal Is Looking For Other Options
Brian Westenhaus

Brian Westenhaus

Brian is the editor of the popular energy technology site New Energy and Fuel. The site’s mission is to inform, stimulate, amuse and abuse the…

More Info

Low Cost U.S. Natural Gas Production Put at Risk

A lawsuit in Pennsylvania has put the state’s natural gas production at risk.  Thousands of oil and gas properties in the Marcellus Shale thought to have the ownership of the underlying oil and gas and mineral rights solidly set have been put to doubt.

Gas production in Pennsylvania increased to about 2.8 billion cubic feet a day in July 2011, up from about 0.6 billion cubic feet in January 2010, according to the U.S. Energy Information Administration.  This is no small matter for the Northeast’s supply for the 2011-12 winter heating season and industrial production.

Locally about 218,000 Pennsylvanians worked in Marcellus Shale-related industries at year-end 2010, helping drive the state’s unemployment rate below the national average.  The oil and gas industry’s beating on about energy jobs they could provide is ringing very true now that nearly a quarter million jobs are suddenly at risk.

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 shale gas is different and should be considered part of the mineral rights because it is contained inside rock.  It’s going to be a very hard sell that any hydrocarbon isn’t lodged in “rock” so to speak.

The Butlers leased the property about two years ago with a coalition of neighbors to Talisman Energy of Calgary who believes the lease is valid.

In the middle of all this is an 1881 deed for 244 acres in Pennsylvania’s Susquehanna County transferring “half the minerals and petroleum oils” under the land to Charles Powers.  The Butlers say they own all the gas because the deed transferring minerals to Powers’ heirs failed to specifically mention gas.

The key in this seems to be around the natural gas being a mineral or a petroleum product.  The Butler’s hope to keep gas in the petroleum definition and the Powers want the natural gas to be a mineral within a rock.

How this got this far is a question for Pennsylvanian property lawyers.

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 be hashed out by the lower court.

Meanwhile – oil and gas companies will face uncertainty about whether they’ve signed drilling leases with the right people – owners of oil and gas rights who signed leases with gas producers could find that they don’t own the gas after all – the oil and gas companies may need to check the title to thousands of oil and gas properties they’ve leased – lots of leases will have to be renegotiated.

Cases like these can take years to work their way through the court system.  Most worrisome for the long term is that Powers wins and sets off a revolution in oil and gas mineral rights.

If Pennsylvania is like most states in reporting legal proceedings the Bulters sued the Powers for all the money.

With the gas production at risk, the jobs at risk, more uncertainty in an already way overloaded economic uncertainty, a whole new set of expenses to clear up leases there’d be a lot of pressure on to get this resolved.

For a non-attorney looking at the reports is certainly seems to be a hot fight over a few words that say pretty clearly that half the mineral rights and petroleum’s oils would cover the Powers right to half the money.  If natural gas is one of the petroleum products and petroleum means oil the Powers are in.  Even if the revolution sets in and natural gas isn’t a petroleum product and is a mineral product the Powers still have half.  The court has to decide if the missing natural gas words are still inclusive from a document made in 1881. 

Who would have thought that the nuisance of natural gas 1881 would be such a huge problem 130 years later.

Hopefully the folks in Pennsylvania will wake up and sort this out in short order. But don’t count on it.  There is a lot at stake there, right now.  That doesn’t mean the problem, which is a real one, will get the attention it deserves.

By. Brian Westenhaus

Source: Low Cost Abundant US Natural Gas at Risk

Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News