Question What can you tell me on the legality of "using force majeure" and "covenant" clauses on lessor's whose leases are about to expire by Chesapeake Energy and other gas companies in New York State?
As you may know, NYS DEC is slowly continuing with their work on updating an environmental reveiw study (SGEISS) on the effects Marcellus Shale and horizontal drilling using the hydro-fracking method to release the gas from the underground rock formations is having on the environment.
Until this study is complete, they are not issuing permits for the horizontal marcellus shale drilling in NYS. (note, it does not include vertical drilling.)
I understand that there is not a moratorium placed on the gas companies by the DEC, and if they want to do their own site-specific study in accordance with the DEC's rules, that option is open to them.
I also believe that when I signed for a lease 5-years ago, it was for the Trenton Black River formation. The Marcellus wasn't being looked into back then. If the gas companies are now using the Marcellus Shale drilling delay to threaten force majeure, surely other formations can be in play for them to drill which there is no delay in requesting permits.
Hence, my question. Your thoughts on the legality of certain gas compainies sending by certified mail their intent on using the "force majeure and "covenant" clause to hold leases beyond there expiration dates indefinely?
Thank you for any help you can offer on the subject.
Sue
Answer Dear Sue,
Sorry I can not answer questions about "New York Law" nor the applicability of lease terms I have not seen.
I can tell you that the Marcellus Shale (Devonian Age) overlies the Trenton and Black River reservoirs. By the way, the Marcellus is in road cuts on I-90 west of Buffalo, the Trenton,of course near Trenton Falls, and near Utica where the Utica shale crops out in I- 90 road cuts. A well to the Trenton would go all the way through the Marcellus (and other Devonian and Silurian) reservoirs.
Many of these rock units contain natural gas (and oil). The delays, however put in place, greatly affect the economics of drilling your well.
