Feel that aftershock a few weeks ago? That was the collective shudder of oil and gas lawyers when the Pennsylvania Superior Court remanded a Susquehanna County case for a hearing on whether gas from the Marcellus Shale formation was, or was not, transferred in an 1881 deed that reserved
“[o]ne half the minerals and Petroleum Oils”. See Butler v. Charles Power Estate, 2011 WL 3906897. How can gas be reserved if it is not mentioned? How can gas not be reserved if scientists, and even school children, can agree it is a mineral? The “Rule in Dunhams’ Case” has held since 1882 — in Pennsylvania — that a deed that reserved “minerals” but did not mention gas was bound by a rebuttable presumption that the grantor did not intend to reserve gas. This was not based on the scientific definition of “mineral” but on the common understanding of the term at the time (circa 1882). However, this Rule having been in use by conveyancers for many years, it has been since upheld as a general presumption and rule. After all, if all conveyancers follow a particular rule enunciated by the Supreme Court, wouldn’t a change of that rule also upset the intent of many subsequent conveyances who followed the rule? Among the arguments posed by the challengers to the application of Dunham’s Rule in this case are: (1) this deed was done in 1881 without the benefit of the Rule in Dunham’s Case which was decided a year later and (2) Marcellus Shale is a rock formation and, following the rule for gas embedded in coal, if the rock was reserved then so too was the gas contained in it. The Superior Court stated that it did not have a sufficient understanding of whether “Marcellus shale gas constitutes the type of conventional natural gas contemplated in Dunham and Highland.” Does this statement put “the rabbit in the hat”? Marcellus Shale gas is not conventional gas and could not be removed in 1881. Did Dunham and Highland apply only to conventional gas? It seems we will find out. The Court concluded that “the parties should have the opportunity to obtain appropriate experts on whether Marcellus shale constitutes a type of mineral such that the gas in it falls within the deed’s reservation.” The appellant’s argument has some very profound obstacles to overcome. But, for now, all eyes are on Susquehanna County. George Asimos, Esq.

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