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
SUMMARY

The Ohio Dormant Mineral Act (DMA) has caused numerous headaches over the past years as the statute is interpreted for landowners whose mineral rights were severed from their land. In Chesapeake Exploration, LLC v. Buell, the Ohio Supreme Court attempted to provide some clarity to the DMA, but this interpretation is completely flawed of the Ohio General Assembly's legislative intent because the... (see full summary)

 
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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 SOCY, 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
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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 eventslisted 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 DEPT 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, 45455 (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, 32627 (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)

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