Coal bed methane gas found in coal seams and/or in mine voids is controlled by the coal estate. Under the rule of capture, coal bed methane gas cannot be owned until it is reduced to possession.
Plaintiff brought an action to enforce its coal mining rights, that is to explore, drill and produce the coal bed methane gas. Plaintiff also seeks a share in the proceeds of the defendant’s coal bed methane production from certain coal mine voids because plaintiff owns the coal rights in nearby lands which were a part of the same coal mine. The trial court dismissed plaintiff's complaint for failure to state a cause of action because plaintiff did not have any right to produce coal bed methane gas under the conventional oil and gas leases it controlled. The trial court also found that under the rule of capture, the complaint did not state a cause of action for the drainage of gas. Continental asserts that it was error to find that the language "all gases" in its leases did not include coalbed methane gas.
Does the right to drill through coal include the right to produce coal bed methane?
Plaintiff's leases denied plaintiff the right to produce coal bed methane gas from a coal seam or void, where such gas was found, as the leases specifically required plaintiff to permanently case and cement all holes drilled through coal seams and mine workings. The right to drill through coal did not include the right to drill into the coal and develop coal bed methane. Coal bed methane gas found in coal seams and/or in mine voids was controlled by the coal estate. Under the rule of capture, coal bed methane gas could not be owned until it was reduced to possession. Thus, plaintiff did not and could not own the coal bed methane gas at issue. Defendants' production of coal bed methane gas from wells located outside plaintiff's lands did not violate plaintiff's rights.