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

Continental Resources of Illinois, Inc. (Continental) (plaintiff) leased the right to drill for oil and gas on a piece of coal-mining property. The coal-mining process had left behind coalbed methane gas. This gas was in existing coal veins and trapped in voids left underground by the coal-mining process. Continental’s leases specifically denied Continental the right to produce coalbed methane from a coal seam or a void. Oil and gas leases traditionally do not permit the mining of coalbed methane gas because it could interfere with the coal-mining safety and operations. Illinois Methane, LLC (Illinois Methane) (defendant) was collecting coalbed methane gas that originated from the land under Continental’s oil and gas leases, using wells that were not on the leased property. Continental sued Illinois Methane, alleging that Continental’s oil and gas leases gave Continental the exclusive right to collect this coalbed methane gas. Recognizing that the rule of capture means a party has to capture and possess natural gas to own the gas, Continental claimed it possessed, and therefore owned, the gas trapped in the mine voids or reservoirs below its leases. The lower court dismissed Continental’s complaint. The lower court held that Continental did not have any right to the coalbed methane under the conventional oil and gas leases, and, under the rule of capture, Illinois Methane’s drainage of the coalbed methane gas was not illegal. Continental appealed.