This article originally provided by The Charleston Gazette

June 1, 2008

Gas drilling lawsuit sent back to lower court

By Paul J. Nyden
Staff writer

In a short opinion issued last week, the state Supreme Court sent a dispute about oil and gas drilling rights back to an unspecified lower court for hearings.

Tuesday's "per curiam" ruling also states the West Virginia Surface Owners' Rights Association "should be given an opportunity to assert its interests and views" challenging plans by oil and gas producers to extract gas resources under land owned by their members.

In the Blue Eagle Land case, coal companies and landholders asked the Supreme Court to prohibit the West Virginia Oil & Gas Conservation Commission, a state agency, from approving gas drilling permits for companies including: Chesapeake Appalachia, Eastern American Energy Corp. and PetroEdge Resources.

The state Oil & Gas Conservation Commission had already granted those companies the right to drill into the Marcellus Shale geological formation to produce gas and oil.

The Marcellus Shale formation is an underground expanse of about 54,000 square miles, larger than the state of Pennsylvania, including most of West Virginia and parts of eastern Ohio, western Pennsylvania and upstate New York.

The coal and landholding companies argued the Oil & Gas Conservation Commission has no right to grant permits because it regulates "deep wells," whereas at least some of the proposed drilling into the Marcellus Shale would be "shallow wells" regulated by the Department of Environmental Protection and the Shallow Well Gas Review Board.

Today, most gas wells in West Virginia are "shallow wells" that penetrate the earth 3,000 feet or less.

In recent years, the coal industry has faced growing safety problems created by oil and gas companies drilling wells into valuable coal seams.

Drilling wells routinely fractures underground coal seams, making mining dangerous or even impossible in nearby areas.

Gas pipelines running along or just beneath the ground's surface create additional problems such as potential explosions when heavy coal-mining vehicles run over them.

Gas companies prefer to have their wells classified as "deep wells" to avoid a current West Virginia law that guarantees property owners the right to collect royalties for gas removed below the surface of their lands.

The Surface Owners' Rights Association, the opinion notes, "asserts that oil and gas royalties from deep wells must be 'pooled' and distributed among the owners of the gas - as opposed to paying royalties only to the owner of the property where the well is located, if a well is classified as a shallow well."

In addition to Blue Eagle, other landholding companies in this legal dispute include: Conquest Development, Pocahontas Land Corp. and Penn Virginia Operating Co.

Coal interests allied with the landholders include: the West Virginia Coal Association, National Council of Coal Lessors, Consolidation Coal Co., Wolf Creek Mining Co. and Horse Creek Land and Mining Co.

A per curiam ruling is a unanimous ruling by the Supreme Court that is not signed by any particular justice.

Justice Brent Benjamin recused himself from this case and was replaced by Fayette County Circuit Judge John W. Hatcher Jr.

To contact staff writer Paul J. Nyden, use e-mail or call 348-5164.