Thursday, July 2, 2015

PA court leaves Marcellus gas leases 'in doubt'

Could take '2 years' for Exxon, Shell, gas giants to know if Pennsylvania drilling contracts are valid, thanks to Superior Court ruling, says Bloomberg

PA court leaves Marcellus gas leases 'in doubt'

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Govs. Corbett and Rendell and the Pennsylvania General Assembly have done everything they can to make the natural gas industry feel at home in Pennsylvania, by declining to tax extraction like other states do, by leasing state lands for wells, etc. But the state's elected judiciary just threw a wrench in the business.

A Superior Court ruling Sept. 7 "has raised questions about who can claim ownership of natural gas embedded in the Marcellus shale formation, potentially putting in doubt the legitimacy of thousands of drilling leases," reports Bloomberg here.

"The state’s Superior Court said Pennsylvania law governing ownership of oil and gas rights isn’t clear and a lower-court judge should solicit expert opinions in a case pitting current landowners against the heirs to an 1881 deed...

"For more than a century, Pennsylvania has required landowners to consider oil and gas rights separate from more general 'mineral rights' when transferring ownership of resources beneath the surface of their property. The defendants in the title dispute argued shale gas is different and should be considered part of the mineral rights because it is contained inside rock.

"The Superior Court, the second-highest court in the state, ruled that current law doesn’t sufficiently address whether 'Marcellus shale constitutes a mineral'...

"Until the case is decided, oil and gas companies will face uncertainty about whether they’ve signed drilling leases with the right people, legal experts say. Owners of oil and gas rights who signed leases with gas producers could find that they don’t own the gas after all... The case may take as long as two years to wind through the courts."

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PhillyDeals posts drafts, transcripts and updates of Joseph N. DiStefano's columns and stories about Philly-area business, which he's been writing since 1989.

DiStefano studied economics, history and a little engineering at Penn and taught writing at St. Joseph's. He has written thousands of columns and articles for the Inquirer, Bloomberg and other media, wrote the book Comcasted, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com, distefano251@gmail.com, 215.854.5194 or 302.652.2004.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

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