Supreme Court sides with property owners; companies have no right to get natural gas without permission

CHARLESTON, W.Va. — Surface owners scored a victory over natural gas developers in a ruling handed down by the state Supreme Court on Wednesday.

The court unanimously upheld a Doddridge County Circuit Court ruling that said a developer and mineral owner have no right to use a surface owner’s land to develop minerals under neighboring properties without the surface owner’s express permission.

The Supreme Court said, “A mineral owner or lessee has an implicit right to use the overlying surface to access only the minerals directly below the surface. Using the surface to extract minerals elsewhere, without the permission of the surface owner, is a trespass.”

The case is known as the Crowder-Wentz case, after the plaintiffs, Margot Beth Crowder and David Wentz, a divorced couple who sued EQT over alleged trespass in November 2014.

Crowder and Wentz own a portion of a 351-acre tract known as the Carr Tract. The tract’s original owners signed an oil and gas development lease with EQT’s predecessors in 1901. In 1936, the mineral and surface estates were separated.

Wentz owns two parcels of the Carr Tract and Crowder owns one; they have only surface rights.

In 2011, the mineral owners agreed with EQT to modify the lease to allow pooling or unitization with other tracts.

Crowder and Wentz expressly denied EQT permission to use their surface to develop other mineral tracts. EQT nonetheless entered their land and adjacent parcels in 2013; cleared 42 acres; built roads and a 19.7 acre well pad; and used it to drill nine horizontal wells drawing gas from 3,232 acres. About 37.5% of the bores were under the Carr Tract, the remainder under other tracts.

In their 2014 suit, the plaintiffs acknowledged EQT had a right to use their surface to develop minerals under the Carr Tract, but not from neighboring tracts.

EQT argued that its surface use conformed to existing law regarding reasonable and necessary use of surface to develop minerals.

EQT also argued that because the mineral owners modified the lease in 2001, the modified lease carried with it the right to use the plaintiffs’ surface to develop the larger unit.

The Supreme Court sided with the circuit court in rejecting both arguments. In rejecting the second argument, it said, “in 2011, the owners of the mineral estate no longer owned the right to use the surface estate for exploration on and production from neighboring tracts. Because the mineral estate was severed from the surface estate in 1936, that right belonged to the plaintiffs or, more specifically, was a right attached to their surface estate. Hence, the mineral owners could not have conveyed that right to EQT in the 2011 amendment.”

The Supreme Court did caution that this ruling doesn’t challenge or constrain contemporary drilling methods.

“The industry has shown that horizontal drilling and hydraulic fracturing techniques are evolving at a rapid pace and are an economical and efficient tool for producing hydrocarbons,” the court said. “Our opinion only affirms a classical rule of property jurisprudence: it is trespassing to go on someone’s land without the right to do so. … Should the mineral owner or lessee want to utilize the surface to access minerals under neighboring land, they can certainly reach a separate agreement with the surface owner.”

West Virginia Surface Owners Rights Organization Dave McMahon represented the plaintiffs. After the ruling he told WV MetroNews’ Jeff Jenkins, “We’re absolutely thrilled. We’ve thought this was the law all along. We thought it was obvious.”

But it took eight years for the issue to reach the Supreme Court to affirm it’s the law statewide, McMahon said.

“What’s really kind of sad is for eight years these companies have been going on and implying, if not telling surface owners, they had to allow the pads on there and they had to take whatever money the driller was willing to pay them to do it, and that just wasn’t right,” he said.

One impact of the ruling, McMahon speculated, may be that developers will have to offer surface owners compensation for the land’s mineral production value, not just for the face value of the surface. And if a surface owner doesn’t want the surface disturbed, wellbores are so long the driller can choose another parcel in the unit.

The ruling was released at the end of the business day and EQT could not be reached for comment.

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