On August 6, 2013, Reuters reported that Chesapeake Energy is expected to release 10,000 acres worth of natural gas leases in New York. With the release of these leases, it appears Chesapeake will drop its appeal of a November 2012 decision that held the drilling moratorium in New York did not satisfy the force majeure provision which would allow Chesapeake to extend the leases beyond the primary term. Aukema v. Chesapeake Appalachia, LLC, 904 F.Supp.2d 199 (N.D. N.Y. Nov. 15, 2012). In Aukema, several landowners brought suit for declaratory judgment that Chesapeake had not initiated production in order to hold the leases on their lands and that the leases had lapsed.
According to news sources, Chesapeake entered into the disputed leases, “some for as little as $3 an acre, since 2000.” More recently, however, landowners have negotiated higher per acre prices and greater royalty shares. Since 2008, a drilling moratorium has prevented production of the Marcellus shale in New York, while the state conducts studies on the environmental and health impacts of drilling. It is unlikely the ban will be lifted until at least 2014.
For more information, visit Reuters for further news coverage.
Written by: Garrett Lent, Research Assistant
Agricultural Law Resource and Reference Center