Peacock Tales • Fall 2011

Oil & Gas News

For more than 100 years Pennsylvania courts have adhered to “Dunham’s Rule.” In 1882 the Pennsylvania Supreme Court established a rule holding that a conveyance, or exception and reservation of “minerals” in a deed, without a specific reference to oil and or natural gas, did not include oil or natural gas. The Dunham rule is based on the principal that conventional natural gas reserves contain “ferea naturae,” or free flowing “wild” gas.

In January, 2010, the Susquehanna County Court of Common Pleas decided a case in accordance with Dunham’s Rule. In September, 2011, the Pennsylvania Superior Court reversed and remanded that case based on the proposition that Marcellus shale gas is unconventional gas. The Court noted that Marcellus shale gas, much like coalbed gas, is trapped within its formation and can only be developed after being released by hydrofracturing.

The Superior Court directed the trial court to determine (1) whether Marcellus shale gas constitutes a “mineral”; (2) whether Marcellus shale gas constitutes the type of conventional gas contemplated in Dunham; and (3) whether Marcellus shale gas is similar to coalbed gas to the extent that whoever owns the shale, also owns the gas.

We will continue to follow this case. Stay tuned.

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