Litigation Over Mineral Rights Could Stymie Fracking

The natural-gas boom in Pennsylvania is causing legal battles over who owns gas in underground formations. Lawsuits over the mineral rights in Pennsylvania are proliferating. Hydraulic fracturing (fracking), a relatively new drilling technique, has made it possible for energy companies to extract natural gas from a layer of rock deep underground called the Marcellus Shale, and the companies have paid Pennsylvania property owners billions of dollars since 2008 for the right to do so. But because surface rights to properties in the state are sometimes sold separately from rights to the underlying minerals, such as coal, or oil and gas, and because mineral law in Pennsylvania remains murky, lawsuits are mounting.

This litigation could cause problems both for the energy industry and for land owners. No one tracks the number of disputes over gas ownership in Pennsylvania, but lawyers and court clerks in counties with heavy drilling say such conflicts are mounting. Pennsylvania is a particularly fertile ground for lawsuits because mineral law there hasn't developed as thoroughly as in states with longer histories of natural-gas production.  Laws governing ownership of mineral rights vary from state to state, but it is common in many to sell separate rights to minerals, coal, oil and gas.

That is the case in Pennsylvania, where new legal questions are coming up on some fundamental issues. These include whether ownership of shale gas, which is tightly bound to the rock in which it is found and usually extracted using horizontal-drilling techniques, should be treated differently from conventional gas extracted through traditional vertical wells. (WSJ, 10/31/2011)