Energy and Natural Resources

Court to Mull Whether 1920s Deed Contemplated Fracking

, The Legal Intelligencer

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The Commonwealth Court has cleared the way for a suit over whether hydraulic fracturing is allowed under a land deed that was executed decades before the oil and gas extraction method was developed.

In Pennsylvania Game Commission v. Seneca Resources, an en banc panel of the court unanimously ruled to allow the Pennsylvania Game Commission to proceed with its suit seeking to ban driller Seneca Resources from fracking on state game lands in Venango County, Pa., pursuant to a 1928 land deed.

According to Judge Anne E. Covey, writing for the majority, the commission had argued that Seneca was banned from fracking on the land because it's a modern form of extraction not contemplated by the 1928 deed, which expressly excepted and reserved "'all the oil and gas in or under the herein described lands, with the right to operate for same by ordinary means now in use.'"

Instead, the commission claims, it owns the rights to extract oil and gas through fracking, according to Covey.

Covey said the question the court must now consider is whether the 1928 deed limits oil and gas extraction on the land to the technology in existence in 1928.

In Pennsylvania Game Commission, a company called Sancrik Lumber transferred the land at issue to the commission under the 1928 deed, according to Covey.

Sancrik then conveyed the land's oil and gas rights, which had been reserved under the 1928 deed, to Seneca's predecessor, United Natural Gas, under a 1929 deed, Covey said.

United Natural Gas eventually merged with Seneca, which drilled a vertical test well for unconventional natural gas on the land, prompting the commission to file preliminary objections with the Commonwealth Court, arguing that Seneca is prohibited from fracking because Sancrik could not possibly have contemplated that method of extraction in the 1928 deed, nor could it have intended to subject the land to the wells, well pads, water impoundments and water usage the process requires, according to Covey.

Because the rights to frack the land were not reserved by the 1928 deed, the commission argued that it has retained those rights, Covey said.

But Covey said the language of the deed is "ambiguous" and directed Seneca to file an answer to Count I of the commission's complaint within 20 days of the Jan. 27 ruling.

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