In recent years, the exploration and mining for oil, gas and other minerals has become a booming industry in Ohio. As such, the extent and nature of the rights of both the surface estate and mineral estate owners has become an important issue. On January 17, 2012, Reminger oil and gas attorneys Greg Brunton and David Hudson obtained a favorable decision in the Harrision County Court of Common Pleas which significantly limits a mineral estate owner’s ability to use the surface of a property to remove oil and gas from outside the boundaries of the property. Jewett Sportsmen & Farmers Club, Inc. v. Chesapeake Exploration, LLC, Case No. CVH-2011-0113. The issue was a case of first impression in Ohio as it relates to modern horizontal drilling techniques.
The deed provision at issue in Jewett read, “. . . together with the privileges of mining and removing through and under said described premises other coal, oil, gas or other minerals belonging to said Grantor or which may hereafter be acquired by said Grantor”. (Emphasis added.) In construing the language against the drafter (the mineral rights owner), the court held that “the plain meaning of the phrase through and under only authorizes the mining, transfer, and removal of coal, oil, gas and other minerals found outside the described premises which takes place beneath the surface of the described premises.” The plain meaning of through and under allows “an underground mine operator to ‘wheel’ coal through the underground passages beneath the subject premises...”; however, it does not permit the use of a wellhead on the surface of the premises to extract oil and gas recovered from outside parcels. In the context of mining oil and gas, “[a]lthough oil and gas accessed from properties adjoining the subject premises would travel by way of horizontal wellbore and then come to the surface it would not meet the requirements of through and under because the oil and gas and water recovered would not stay under the surface.”
The court’s interpretation of the phrase “through and under” has potentially far reaching consequences for owners of the surface estate that no longer own their mineral rights. Practically speaking, the decision restricts a mineral owner’s ability to use the surface of the property to remove minerals from the surrounding properties. This gives the owner of the surface estate the leverage necessary to negotiate compensation for the right to use the surface of the property to remove oil and gas from the surrounding properties through modern horizontal drilling techniques.
Notably, the court’s decision in Jewett relied heavily on the specific language of the mineral reservation contained in the deed at issue. Because each grant or reservation of mineral rights is interpreted in the context of the unique deed in which it is contained, the applicability of the Jewett decision depends on the particular language contained of each deed. Thus, it is important to thoroughly examine the specific language of the deed or mineral reservation to accurately determine the respective rights of the mineral estate and surface estate owners.
If you have any questions regarding mineral rights leases or specifically those pertaining to oil and gas, please call anyone of our Oil, Natural Gas and Utilities Practice Group members.
