Let's see - Animal - Vegetable or Mineral - It's been awhile since I played this game.
A diamond is a mineral. Coal is a mineral. Gas is a mineral. Is a rock a mineral?
- The Supreme Court of Pennsylvania may have to decide whether it is or not.
The Marcellus Shale deposits located in North East Pennsylvania have been the subject of both adulation and damnation.
- These deposits represent one of the largest fields of natural gas discovered in our country. Some experts predict the fields will supply gas for a hundred years.
Before the nature of the find was fully disclosed, land agents flocked to North East Pa like Carpetbaggers hitting the deep South after the Civil War. They bought up mineral leases for $25.00 an acre speculating on the richness of the find. Most land owners did not comprehend the significance of Marcellus Shale.
Penn State began holding seminars to explain to landowners how much potential gas was underground and the revolutionary method of horizontal drilling and fracturing which would bring it to the surface.
Then the boom was on.
Major oil and gas companies set up booths inside of school auditoriums, hoping to "sign up" property owners as they left these meetings with Sugar Plum Fairies Dancing in their heads.
The price per acre began to shoot up as every major oil/gas company wanted to capture their piece of the pie. Before long gas leases were at $7500.00 an acre and up depending on the size of the parcel.
Along with the leases came promises of drilling revenues.
Instant Millionaires walked away from the signing tables.
A new crop of Beverly Hillbillies was created.
The owners still retained their property, but now were enriched with new found wealth from their leases.
Today when you see property for sale in these counties there is a very good chance it is land only - the seller is retaining the mineral rights. It is also possible for the seller to sell mineral rights and gas/oil rights separately. Doing title research on some of these properties involves extensive research into mineral ownership.
- Drilling started a couple of years ago and the law suits soon got into full swing. Claims of home water wells being polluted lead the list of complaints by residents and property owners.
The latest lawsuit seeks to define whether Marcellus Shale is a mineral or not. Gas and oil companies invested billions of dollars buying up these mineral leases. Some companies had leases where the language included the rights to oil and gas. Some strictly say mineral rights.
- The gas is trapped within the Marcellus Shale beds or inside the rock. An earlier ruling from a Pa Superior Court indicated that current law does not sufficiently address whether Marcellus Shale should be considered a type of mineral.
The Defendants in the case maintain that shale gas should be considered part of mineral rights because the gas is contained in the rock.
- The gas companies took leases on contiguous land parcels to form blocks of 640 acres. I believe that is the size of a field.
The case is likely to go on for years. According to press releases today, only a small percentage of the total gas leases might be brought into question.
If a questionable mineral lease sits in the middle of a field of gas leases - it could potentially halt extraction of gas on the entire field.
With the method of extraction it is possible to "suck" if you will, gas from the entire field with only a couple of drilled wells.
There is no way to exclude a parcel or avoid pumping the gas from it.
Is shale a mineral if its just shale, or is it a mineral if it contains gas?
This should be an interesting ruling to watch play out.
