Chesapeake Exploration, LLC v. Buell: A Flawed Decision

• Author: Melissa Stimpert
• Position: Capital University Law School, Juris Doctor candidate 2018; Ohio University, Summa cum laude, B.A. in History, Minor in Political Science, Top Student Award in History, May 2015. This Note would not have been possible without the guidance of Professor Charles E. Cohen of Capital University Law School. Thank you for your help. This Note would...
• Pages: 287-311

CHESAPEAKE EXPLORATION, LLC V. BUELL: A FLAWED

DECISION

MELISSA STIMPERT*

I. INTRODUCTION

In 1814, in Caldwell, Ohio, Silas Thorla and Robert McKee dug a well

searching for salt brine.1They discovered salt but, by accident, they also

discovered oil.2At that time, oil’s value was unknown to them, so they

separated the oil from the salt water, and bottled up the oil.3They called

the oil “Seneca Oil,” and started selling it as a medicine that could “cure

all.”4Nearly 200 years later, the resource that was discovered, and thought

to have no value, became a “hot commodity.”5If Thorla and McKee were

living today, their land would be in the heart of the oil-and-gas boom, and

they would have been quite wealthy.6Today, because of new technology,

Copyright © 2018, Melissa Stimpert.

*Capital University Law School, Juris Doctor candidate 2018; Ohio University, Summa

cum laude, B.A. in History, Minor in Political Science, Top Student Award in History, May

2015. This Note would not have been possible without the guidance of Professor Charles

E. Cohen of Capital University Law School. Thank you for your help. This Note would

also not be possible without the invaluable guidance and support of Craig E. Sweeney of

Bricker and Eckler and Richard A. Yoss of Yoss Law Office. I would not have the passion

for oil and gas law nor be the student I am today without your unwavering support and

guidance. Thank you. Also, a special thank you for the support from my parents, my sister,

and Johnny who took the time to encourage me, read rough drafts, and remind me to take

breaks.

1First Oil Well in North America, ROADSIDE AMERICA, https://www.roadsideamerica.

com/story/11665 [https://perma.cc/LL3A-T2U4].

2Id.

3Id.

4Id.;Thorla-McKee Well,OHIO EXP LORATION SOC’Y, https://www.ohioexploration.

com/miscellaneous/thorlamckeewell/ [https://perma.cc/76X8-483M].

5First Oil Well in North America,supra note 1; Melinda Peer, Oil Is One Hot

Commodity, FORBES (Sept. 30, 2009, 4:50 PM), https://www.forbes.com/2009/09/30/crude-

oil-inventories-markets-commodities-energy.html [https://perma.cc/GG39-T5L6].

6As of February 3, 2018, 4,921 well permits have been issued and 3,746 wells have

been drilled. OHIO DNR DIVISION OF OIL AND GAS, http://oilandgas.ohiodnr.gov/oil-gas-

home/leasing-information [https://perma.cc/W3AG-JTF6]. Fifty-one of the permits were

for Marcellus activity and thirty-five of those have been drilled. Id. In contrast, 2,754

(continued)

288 CAPITAL UNIVERSITY LAW REVIEW [46:287

landowners in southeast Ohio have earned millions of dollars simply

because of the resources below their land.7

While the oil-and-gas boom in Ohio has been relatively good for

landowners who own their mineral rights, the ambiguous language in the

Ohio Dormant Mineral Act (DMA) has caused a headache for attorneys,

judges, and landowners whose mineral rights were severed from the land.8

The DMA was enacted as a way for the current surface owner to eliminate

the threat of outdated claims and to ultimately reunite the mineral rights

with the surface rights.9This reuniting of the mineral interest with the

landowner can only happen if none of the six “savings events” listed in the

statute took place within the preceding twenty years.10 The savings event

Utica permits were issued while 2,254 wells were drilled. Id. The remainder of the permits

and drilled wells were for Conventional wells. Id. According to ODNR, “During the third

quarter of 2016, Ohio's horizontal shale wells produced 3,954,095 barrels of oil and

360,681,356 Mcf (360 billion cubic feet) of natural gas . .. .” Ohio’s Utica Shale Third

Quarter Production Totals Released,OHIO DEP’T O F NAT.RESOURCES (Dec. 9, 2016),

http://ohiodnr.gov/news/post/ohio-s-utica-shale-third-quarter-production-totals-released

[https://perma.cc/B5JX-Q579]. Despite this phenomenal production in southeastern Ohio,

“[n]atural gas prices are expected to rise over the next two years due to weather-driven

demand for the fuel and withdrawals from storage facilities being at their highest level in

years . . . .” Matt Warnock, Prices for Natural Gas Expected to Rise over Next Two Years,

SHALEOHIO (Jan. 31, 2017), http://www.shaleohio.com/post/detail/prices-for-natural-gas-

expected-to-rise-over-next-two-years-233448 [https://perma.cc/8XTQ-D8KL].

7John Funk, Rural Ohio Is the Wild West as Gas and Oil Companies Compete for

Drilling Rights, CLEVELAN D PLAIN DEALER (Nov. 18, 2011, 11:48 AM),

http://www.cleveland.com/business/index.ssf/2011/10/gas_companies_swarm_in_frackin.ht

ml [https://perma.cc/6TQE-Y37N].

8Fenner L. Stewart, When the Shale Gale Hit Ohio: The Failures of the Dormant

Mineral Act, Its Heroic Interpretations, and Grave Choices Facing the Supreme Court, 43

CAP.U.L.REV. 435, 454–55 (2015) (discussing problems that started when lawyers and

clients started to file affidavits instead of quiet title actions because they were cheaper).

9See infra Section I.B; Alexander McElroy, Ohio’s Dormant Mineral Act: Current and

Unresolved Issues, 44 CAP.U.L.REV. 325, 326–27 (2016).

10 OHIO REV.CODE ANN. § 5301.56(B)(3) (West 2017). The six possible savings events

are as follows: (1) a “title transaction” involving the mineral interest (this is the savings

event that is at the forefront of most litigation and is the savings event that is at issue in this

case); (2) actual production or withdrawal of minerals from the land, a unitized pool, or a

mine “a portion of which is located beneath the lands”; (3) use of the mineral interest for

underground gas storage; (4) issuance of a drilling or mining permit to the holder; (5) filing

(continued)