The intent and purpose of this presentation is to identify and discuss the presentation is to identify and discuss the major legal problems currently being encountered with respect to determining the ownership of and the right to produce methane (coalbed gas) found in coal seams in the Appalachian Area, as well as express my conclusions as to the legal solutions of those problems.
While "methane gas" is used in the title of this presentation, the real subject matter is the natural gas found in and extracted from coal seams and which has been identified as "coalbed gas" or "firedamp" as well as "methane gas" and consisting of as much as 80% to 90% of methane. The existence of the gas in coal seams has been known from the earliest days of coal mining activities and has been considered at the least a nuisance and at most a serious safety hazard in coal mining.
A number of factors come into play currently to give the ownership and production rights of methane gas a position of high priority among legal and technical problems priority among legal and technical problems needing the attention of property owners, lawyers, courts and operators of oil, gas and coal properties. Some of these factors are:
the realization that neither the United States nor any other part of the world has an inexhaustible supply of fossil fuels;
a greater emphasis on conservation in the production and use of fossil fuels;
the production and use of fossil fuels;
the continued search for greater safety in coal mining, including ways to reduce the hazards from gas encountered in mining operations; and
the increased values in dollars given to natural gas, including coalbed gas, making the economics more attractive for producing and capturing it for sale or use in commercial quantities.
If the coalbed gas does not exist in a particular seam of coal in sufficient quantities to make it worthwhile or desirable to produce and control it apart from the release and dispersion that results from ordinary coal mining and the accompanying ventilation of the mines, then no serious conflicts arise between or among different property owners. It is inevitable that the property owners. It is inevitable that the natural gas present in any coal seam will be released in the ordinary process of mining the seam to the extent the coal is mined and removed. It also is necessary (and in fact required by law) that the gas so released be diluted and removed from the mine to prevent damage to property and injury to persons because of fire, explosion or mere inhalation of excess amounts. It has been the industry practice for many years for the coal operator practice for many years for the coal operator to dilute and remove the gas released in coal mining operations and there has been no challenge of that practice, nor any serious attempt to impose upon the coal operator a duty to capture the released gas nor to charge the coal operator for any value of such gas not captured.
However, today and more probably in the future, when coalbed gas does exist in a coal seam in sufficient quantities to make it possible to extract the gas (in conjunction possible to extract the gas (in conjunction with the coal mining process or separate and apart from actual coal mining) and use it or sell it in quantities and at values that not only will repay the costs of extraction, capture and control, but also produce a profit, legal problems of ownership and profit, legal problems of ownership and production rights have and will become production rights have and will become serious issues for resolution by the courts and perhaps by legislation. As of today the law applicable to these problems is far from settled, but it is in a positive stage of development.