Continental Resources of Illinois, Inc. v. Illinois Methane, LLC

Brief Fact Summary.

Continental Resources of Illinois, Inc. appealed the decision of the lower courts that prevented Continental’s rights to coalbed methane gas under the rule of capture.

Synopsis of Rule of Law.

Under the rule of capture, natural gas cannot be owned prior to possession.

Facts.

Continental Resources of Illinois, Inc. (Continental) leased the right to drill for oil and gas on a coal mining property. Continental’s actions produced coalbedmethane gas from voids left underground by the coal mining process. Continental’s lease prohibited Continental from collecting coalbed methane gas from the use of underground voids. Illinois Methane, LLC (Illinois) sought to collect the coalbed methane gas that was left over after Continental’s mining and Continental sued on Rule of Capture claims. The lower court granted judgment in favor of Illinois.

Issue.

Whether natural gas can be owned under the rule of capture?

Held.

No. Under the lease, Continental was prohibited from mining coalbed methane gas and the coalbed methane gas was found in voids. Gas trapped in mine voids is not considered captured or possessed. The judgment of the lower courts is affirmed.

Discussion.

When gas is in the ground, the gas is reduced to a mineral and becomes owned by whoever owns the soil. Under the rule of capture, if the gas moves from underground, the gas is the property of whoever’s land the gas occupies at the time of capture.