Matter of Cent. N.Y. Oil & Gas Co., LLC, No. 515347 (N.Y. App. Div. 3d Dep’t June 13, 2013). Petitioner owns a natural gas underground storage facility in Tioga County, New York. In condemnation proceedings to acquire perpetual easements for underground gas storage in land owned by respondents, respondents sought to introduce the testimony of a geologist that the easement would interfere with their rights to develop gas in the Marcellus and Utica shale formations. The New York State Supreme Court, Tioga County barred the expert from testifying, and the Appellate Division, Third Department affirmed, finding that the expert’s testimony was not relevant. The terms of the easement explicitly reserved to respondents the right to grant oil and gas rights in formations others than those in the Oriskany Sandstone formation. Moreover, no commercial development of the Marcellus shale was currently taking place as a result of a New York State moratorium on hydraulic fracturing, so an analysis of the potential effects of such activity would be “premature and speculative.” If hydraulic fracturing eventually proved to pose an unacceptable risk to petitioner’s storage facility, petitioner could at such time seek to acquire whatever additional rights were necessary.
Vavala v. Hall, No. 1147 WDA 2011 (Pa. Super. Ct. May 1, 2013). In 2009, plaintiffs filed a complaint to quiet title with respect to a 71.28-acre tract they owned in Fox Township, Pennsylvania. They alleged that defendants had not paid taxes on the oil and gas rights appurtenant to the property and further alleged that they had obtained the oil and gas rights through adverse possession or abandonment. The trial court granted plaintiffs’ motion for service by publication, and subsequently granted their motion for default judgment. In March 2010, six months after entry of judgment and publication of the judgment in two local newspapers, appellant Seneca Resources Corp. sought to open or strike the judgment, claiming that it was the successor to the oil and gas rights. The trial court denied Seneca’s motion. On appeal, the Superior Court concluded that notice by publication was appropriate and that the trial court therefore had jurisdiction. The Superior Court further found that the trial court had not abused its discretion in denying Seneca’s petition to open the judgment because Seneca’s petition was untimely.
Butler v. Charles Powers Estate, No. 27 MAP 2012 (Pa. Apr. 24, 2013). In this action to quiet title, the Pennsylvania Superior Court had reversed a trial court order and ruled that it was unclear whether Marcellus shale constituted a type of mineral such that the gas in it fell within the deed’s reservation of rights for “minerals.” The Pennsylvania Supreme Court reversed the Superior Court’s decision and reinstated the order of the trial court. Citing the longstanding Dunham Rule (derived from Dunham & Shortt v. Kirkpatrick, 101 Pa. 36 (Pa. 1882), and its progeny), the Supreme Court held that the trial court correctly concluded that Marcellus shale natural gas was not contemplated in the reservation of rights.
Stone v. Chesapeake Appalachia, LLC, No. 5:12-cv-00102 (N.D. W. Va. Apr. 10, 2013). Plaintiffs, who were parties to a lease held by defendants for the oil and gas within and underlying their property, commenced this action alleging (1) breach of contract based on defendants’ pooling and unitizing the Marcellus shale formation underlying plaintiffs’ property in violation of their lease; (2) trespass by engaging in hydraulic fracturing on plaintiffs’ property; and (3) that the defendants failed to protect plaintiffs’ property from drainage. The court denied defendants’ motion for summary judgment. The court found that hydraulic fracturing under the land of a neighboring property without that party’s consent is not protected by the “rule of capture,” but rather constitutes an actionable trespass. In reaching this conclusion, the court determined that the West Virginia Supreme Court would not adopt the “rule of capture” principles ascribed to in the Texas Supreme Court’s Coastal Oil & Gas Corp. v. Garza Energy Trust decision, which in the court’s view “gives oil and gas operators a blank check to steal from the small landowner.” The court also denied summary judgment on the breach of contract and drainage claims.
Cain v. XTO Energy Inc., No. 1:11-cv-111 (N.D. W. Va. Mar. 28, 2013). Plaintiff sought declaratory and injunctive relief to prevent the surface of his land from being used to drill horizontal wells to produce oil and gas from neighboring mineral tracts that do not underlie his land. He alleged that plaintiffs had permits to drill three horizontal wells from one well site on his property, and that plans were underway for additional well sites and horizontal wells, and that these wells would be used to produce gas from tracts beyond the mineral tract of which his land was once a part. In an order filed on March 28, 2013, the court certified to the West Virginia Supreme Court the question of whether a mineral owner or lessee, whose rights are expressly limited by deed to surface rights for the production of oil and/or gas within and underlying the subject tract, nonetheless may use the surface for the production of oil and/or gas that is not within and underlying the subject tract. The court denied plaintiff’s motion to certify other questions that concerned damages since the factual record was underdeveloped on the issue of damages and since any number of issues could moot the question of damages.