Steptoe & Johnson PLLC: Ohio Court Limits Surface Rights from Mineral Reservation

By R. Neal Pierce and Lyle B. Brown

On January 17, 2012, the Harrison County (Ohio) Court of Common Pleas ruled that a 1959 mineral reservation did not authorize the use of a well on the surface of the premises to remove oil and gas located beyond its boundaries. Jewett Sportsmen & Farmers Club, Inc. v. Chesapeake Exploration, L.L.C., Case No. CVH-2011-0113.

Although the reservation gave producers clear rights to recover minerals located beneath the premises, two producers wanted to drill one or more wells there to recover, through horizontal drilling, oil and gas located elsewhere. The provision at issue 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). The court interpreted the phrase "through and under" to authorize such activity so long as it "takes place beneath the surface of the described premises" and does not involve use of the surface. The language of the reservation was construed against the drafter, who could have included (but did not) express language to permit the desired use of the surface.

From a practical standpoint, the phrase "through and under" permits "an underground mine operator to 'wheel' coal through the underground passages beneath the subject premises as may be necessary or convenient in mining operations." However, that same phrase does not authorize the use of a wellhead on the premises to extract oil and gas recovered from outside parcels. The reason is that such "oil and gas and water recovered would not stay under the surface," but rather "would exit the wellhead above ground and then would be piped underground to the separator for each well and the oil and water would be stored above ground." Extending the court's reasoning a step further, the producers here arguably could transport outside oil and gas underground so long as the minerals do not reach the surface while traversing the premises.

The court's decision addresses the language contained in a specific mineral reservation. Because each grant of mineral rights should be construed in light of its unique language, the applicability of this decision to disputes involving different language may be limited.

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