On October 6, 2014, the Commonwealth Court of Pennsylvania in Commonwealth v. Seneca Resources Corp., an unreported panel decision, interpreted a 1928 deed in which Sancrik Lumber Company (“Sancrik”) transferred over 3,000 acres of land to the Pennsylvania Game Commission (“Commission”) but 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.” 2014 WL 4966736 (Pa. Commw. Ct. Oct. 6, 2014). Sancrik thereafter transferred all of the “petroleum oil and natural gas in and under or which may be produced” from the land “TOGETHER with the right to enter upon all of the above[-]described tracts of land at any and all times, for the purpose of operating for, producing and removing said petroleum oil and natural gas in the usual and ordinary manner” to the predecessor of Seneca Resources Corporation (“Seneca”). The Commission filed a complaint seeking declaratory and injunctive relief related to Seneca’s development of oil and natural gas under state game lands. The Commonwealth Court granted partial summary judgment in favor of Seneca finding “that the 1928 Deed [did] not preclude Seneca from horizontally extracting its oil and gas beneath the Property from adjacent land,” and “[t]his permissible use carries with it the same reasonable effect of permitting Seneca to access and extract its oil and gas from under the Property while simultaneously respecting the Commission’s surface rights in accordance with [well-established Pennsylvania precedent].” The court, however, denied summary judgment as to “whether the 1928 Deed restricts Seneca’s oil and gas extraction methods from the Property’s surface to ordinary means in use in 1928.” Although this is an unreported decision limiting its citation largely to persuasive value, it is notable that the Commonwealth Court found a contract pre-dating the invention of hydraulic fracturing to permit drilling and hydraulic fracturing from adjacent lands.
This article was authored by Nicole Starr, Jackson Kelly PLLC. For more information on the author, see here.