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Energy Law

Gas from shale isn’t a mineral, Pennsylvania supremes rule in deed dispute

Posted Apr 26, 2013 5:35 AM CDT
By Debra Cassens Weiss

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The Pennsylvania Supreme Court has ruled on behalf of a couple who claimed they had retained all rights to natural gas derived from Marcellus Shale on their property, despite an 1881 deed giving another party partial rights to minerals in the land.

The decision (PDF) issued on Wednesday reaffirmed a 130-year-old opinion that separated mineral from gas rights, the Associated Press reports. The court ruled on behalf of John and Mary Josephine Butler, who own 244 acres of land in Susquehanna County under a deed giving them only half the rights to “minerals and petroleum oils” on their property.

At issue was whether natural gas from shale is considered a mineral in deeds regarding mineral rights. “The rule in Pennsylvania is that natural gas and oil simply are not minerals because they are not of a metallic nature, as the common person would understand minerals,” the court said. The court reaffirmed the state’s so-called Dunham rule, which creates a rebuttable presumption that the term “mineral” does not include oil or gas.

The Dunham rule has “formed the bedrock for innumerable private, real property transactions for nearly two centuries,” the court said. “We see no reason, nor has any party or court provided us with one, to depart from this entrenched rule.”

Prior coverage:

ABAJournal.com: "Is Marcellus Shale a Mineral? Pa. Court’s Answer Will Affect Gas Rights"

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