Who owns the natural gas?

Owning land doesn’t guarantee you own what lies hundreds or thousands of feet below the surface.

Mineral rights – ownership of coal, gas or other valuable resources – doesn’t automatically come with the deed.

“I never even gave that any thought,” Bonnie Minnich, 2225 E. Grand Ave., Porter Township, said Tuesday.

The Minnichs were one of nine households that received letters in December from Rausch Creek Land LP, a Valley View company that hopes to begin extracting up to 100,000 gallons of water each day from an abandoned strip mine pit in Porter Township. The company’s stated purpose would be “to supply water for drilling and hydrofracturing of proposed Marcellus Shale natural gas wells which are to be drilled and developed on property owned by Rausch Creek Land,” but many questions remain and the company has refused to speak about its plans.

J. Scott Roberts, former deputy secretary for mineral resources management at the state Department of Environmental Protection, said last week that the language surrounding mineral rights is often “bewildering” in estate records, wills, deeds and other documents.

“The amount of money that’s at stake here, the land owner may want to read it one way” and the drilling company another way, Roberts said.

Those differences in interpretation sometimes are not resolved until they reach a courtroom.

Further complicating matters, Ross Pifer, professor and director of the Agricultural Law Resource and Reference Center at Penn State Law, said Pennsylvania law does not always define natural gas as a “mineral.”

“In some respects, oil and natural gas are considered to be minerals and in some respects, they aren’t,” he said.

That could mean that if natural gas or oil were never mentioned in a deed – even one that addresses “mineral rights” – the original property could still hold the rights.

The nine households in Porter Township that received the letters regarding water usage border the land from which water may be extracted, if Rausch Creek Land’s plans are approved by the Susquehanna River Basin Commission.

Experts said last week they believe someone will eventually drill an exploratory well to see if Marcellus Shale reserves lie beneath Minnich’s home and others nearby.

Minnich knows her family does not own the rights to natural gas, coal or other minerals underground.

Paul Ruth, 56, of 1002 Colliery Ave., Tower City, who also got the letter, said he knows he doesn’t own the mineral rights, but is unsure who does.

Finding out who holds the mineral rights for a particular parcel can be an arduous process usually left to attorneys and title insurance companies.

“Very few people own their mineral rights (in Schuylkill County). You could be doing research for days” to find out, county Recorder of Deeds A. Matthew Dudish said Tuesday as he looked through decades of deed information.

That information sometimes raises more questions than it answers. For example, there are instances of an owner selling the surface property but reserving the rights to all minerals up to 500 feet below the surface. Such a clause was valuable in Schuylkill County because of the abundance of anthracite coal.

However, it may not spell out who owns substances farther down, such as shale gas, which can lie many thousands of feet underground. “It’s possible to sever the subsurface rights by substance, by depth or by geologic strata, which means it’s possible that you can have several parties claiming ownership of a mineral interest,” Pifer said. “It could put a land owner in a situation where it’s difficult to tell what he owns.”

During property transactions, land owners usually retain what they perceive to be valuable at the time. Therefore, Schuylkill County deeds may have extensive language on coal rights and not mention natural gas.

“That’s not uncommon. You have to presume when people bought their parcel, they were not putting any value in that. If it were that important, they would have gotten an answer” to who owns natural gas rights, Pifer said.

Drilling companies, Pifer said, will be dealing with the natural gas owner, not the surface property owner, unless it turns out the same person owns both. Pennsylvania case law also gives the owner of the subsurface the ability to undertake “reasonable use” of the surface property to get to the minerals – coal, gas or otherwise – contained underground, according to Pifer.

He said surface property owners are entitled to very little say in mineral extraction beneath their property.

Marcellus Shale drilling technology makes the surface property owner even less relevant.

“One of the big distinctions … is the horizontal drilling portion of it. Quite honestly, they can reach out a mile or more on either side of that well without disturbing that surface,” Roberts said.

Roberts is now an adviser for L.R. Kimball, an Ebensburg-based architecture, engineering and communications technology company.

“It (drilling technology) allows the well paths to be located on less sensitive areas. You can avoid environmental resources … and can still get the gas underneath it,” he said.

http://republicanherald.com/news/who-owns-the-natural-gas-1.1102282
BY BEN WOLFGANG (STAFF WRITER bwolfgang@republicanherald.com)
Published: February 9, 2011