State's top court to decide if Marcellus shale is a mineral

| Thursday, April 5, 2012

Pennsylvania's highest court will continue efforts to clarify 130 years of legal precedent that governs modern gas drilling techniques statewide by agreeing to hear a crucial case from Susquehanna County, lawyers said on Wednesday.

The state Supreme Court on Tuesday agreed to hear arguments in a case called Butler v. Powers estate, which questions whether rights to natural gas produced from the Marcellus shale should be included in "mineral" rights under old leases.

A decision could cut out years of court wrangling from a case that brings deep-shale-drilling agreements into question right in the middle of a statewide drilling boom.

The Supreme Court has heard several cases on oil and gas law -- often based on century-old court rulings -- in recent years as shale formations have drawn thousands of new wells and billions of dollars of investment in new techniques to extract it using modern horizontal drilling technology. It's the second recent gas law case in which the court has accepted a request to intervene while the lower courts were handling it, said Ross Pifer, director of the Agricultural Law Resource and Reference Center at Penn State's Dickinson School of Law.

"It may signal a willingness or an intention of the Supreme Court that they are interested in clarifying Pennsylvania laws on these issues," he added. "The potential impact of this case is very large. And I think the Supreme Court recognizes that."

The Butler v. Powers case started two years ago when John E. and Mary Josephine Butler filed a title complaint on a land deal that originated in 1881. The deed for their 244 acres in Apolacon reserves "half the minerals and petroleum oils," giving the other half to a man named Charles Powers and his heirs. Natural gas was not listed among the rights, so all of the gas should belong to the property, the Butlers argued.

They won that argument in the county court, but in September the Superior Court reversed that decision. The appellate court requested the county court call for expert testimony on whether Marcellus shale is a mineral, which may make its gas included in any general agreement for mineral rights where oil and gas rights are not specifically mentioned.

The Supreme Court will not hear a scientific case with expert testimony on that question, but will decide only whether the Superior Court could legitimately ask for that type of hearing. This case should be decided only on what the Butler and Power families intended in 1881, not how modern science has changed our understanding of what minerals are and how they're extracted, said Gregory Krock, the Butlers' attorney who asked the high court to take the case.

"Science really has nothing to do with the dispute," said Krock, of Buchanan Ingersoll & Rooney PC, Downtown. "It's old law but it's established law -- and what it established and why it's important today, is that when people buy and sell their properties they often have a different idea of what mineral means to them compared to what it means to scientists and geologists."

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