Ownership of Abandoned or Dormant Minerals: A Comparison of Pennsylvania and Ohio Law

Written by Michael K. Vennum and Kristin M. McCormish on . Posted in Volume 1 - Issue 2

Ownership of Abandoned or Dormant Minerals: A Comparison of Pennsylvania and Ohio LawCurrently, Pennsylvania and Ohio are experiencing a boom in the production of natural gas and by-products from their respective deep shale plays. In order to explore and produce that natural gas, energy companies are generally required to obtain leases from the respective owners of the natural gas. Because Pennsylvania and Ohio permit the severance of minerals from the surface estate, the owners of the subsurface natural gas may not necessarily be the owners of the surface acreage. Often, the severance of the subsurface interests occurred anywhere from decades to a century ago, creating difficulty in identifying and locating the proper, contemporary owners. In order to combat such an obstacle, thus allowing for the proper leasing and production of the natural gas, both Pennsylvania and Ohio have enacted dormant mineral statutes; however, the laws of each state differ greatly as to how the dormant minerals are vested and consequently leased. This paper provides information as to Pennsylvania’s Dormant Oil and Gas Act (the “DOGA”); the procedures that must be followed in order for an energy company to properly lease unlocatable individuals who purportedly have abandoned their mineral interests or allowed those interests to become dormant; possible alternatives to filing a DOGA action; and current legislation being reviewed by the Pennsylvania General Assembly intended to amend the DOGA. Further, the authors provide information as to Ohio’s Dormant Mineral Act (the “DMA”), its legislative history, and the DMA’s current applicability pursuant to various trial and, albeit few, appellate court decisions attempting to interpret the mechanisms of the DMA.

Fictitiously, let us begin in the year 1901, when Henry Ash sold his family farm of 100 contiguous acres—50 acres of which were located in Columbiana County, Ohio, and the other 50 acres in adjoining Beaver County, Pennsylvania. Pursuant to the recorded deeds, Henry reserved to himself and his heirs the oil and gas estates underlying his farm. In 1920, Henry died and, pursuant to his last will and testament, devised the reserved oil and gas to his two sons: Harold and Paul. Harold Ash received the oil and gas underlying the 50 acres located in Columbiana County, Ohio, and Paul Ash received the oil and gas underlying the 50 acres in Beaver County, Pennsylvania. For nearly 100 years, the brothers’ oil and gas interests remained dormant and forgotten until Energy Company USA determined that it wanted to explore and produce the natural gas contained in the regional shale plays.

Although Pennsylvania and Ohio have enacted dormant mineral acts, Energy Company USA was surprised to learn that the brothers’ natural gas interests are treated differently in each state. In Ohio, Harold’s heirs have possibly lost their interest, which was likely rejoined (or could be rejoined) with the surface estate according to one of three statutory scenarios originally stemming from Ohio’s Marketable Title Act. However, in Pennsylvania, Paul’s heirs continue to be vested in the natural gas, and any unlocatable heir is provided statutory protection under Pennsylvania’s Dormant Oil and Gas Act.

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