Utah Resources International, Inc. v. Utah Board of State Lands
Utah Resources International, Inc. v. Utah Board of State Lands
Opinion of the Court
The plaintiffs commenced this action in the court below to enjoin the defendants from issuing to a third party an oil shale lease upon lands which are subject to a lease in favor of the plaintiffs covering oil and gas deposits. The lower court granted injunctive relief to the plaintiffs, and from that decision the defendants have appealed.
On October 7, 1963, the plaintiffs obtained a leasehold interest from the defendants granting to the plaintiffs the right to extract oil from asphaltic and bituminous sands. The lease was amended in 1969 granting to the plaintiffs the right to recover other mineral substances including oil and natural gas, but excluding coal and oil shale. On February 16, 1970, the defendant Board approved an application of a third party covering oil shale upon the same lands leased to the plaintiffs. After a trial was had upon the issues, the district court found that the mineral or minerals recoverable from oil shale in the Green River formation underlying the lands is the same mineral recoverable from liquid petroleum in the Green River formation. The court also was of the opinion that the second lease was prohibited by the provisions of Section 65-1-18, U.C.A.1953, as amended.
It is the defendants’ contention here that the oil recoverable from oil shale known as Kerogen is not the same as the oil recoverable from asphaltic or bituminous sands and liquid petroleum, and that this factor excludes oil shale from the provisions of Section 65-1-18 above referred to.
The state land board may issue mineral leases including without limitation oil, gas and hydro carbon leases for prospecting, exploring, developing, and producing minerals covering any portions of the state lands or the reserved mineral interests in state lands. In furtherance of the principle of mulitple use of state lands, the land board may grant a lease for the prospecting, exploration, development and production of any mineral notwithstanding the issuance of other lease or leases on the same land for other minerals, and shall include in such lease suitable stipulations for simultaneous op*347 eration. The board shall not issue more than one outstanding lease for the same purpose on the same land. * * *
The court was called upon to construe the language of the section as amended in the former Morgan case which was before the court in 1968. The 1969 legislature amended Title 65, Chapter I, by adding Sections 65-1-111 through 114. However, the legislature did not see fit to amend the section we are here concerned with and which was construed by the court in the first Morgan case. It should be noted that the legislature in the 1967 amendment nor in the 1969 amendments did not attempt to deal with oil shale or Kerogen derived therefrom as a separate mineral.
We are of the opinion that the district court was correct in its decision construing the statute to prohibit the defendants from entering into a lease of oil shale lands which were already subject to a prior oil, gas and hydrocarbon lease. The judgment of the district court is affirmed. No costs awarded.
Dissenting Opinion
(dissenting).
I dissent.
The statute (Sec. 65-1-18, U.C.A.1953 as amended) prohibits the defendants from issuing more than one lease for the same purpose on the same land but does permit them to issue a second lease for other minerals.
The lease issued to the plaintiffs specifically excluded coal and oil shale. The plaintiffs therefore cannot develop oil shale but in a “dog in the manger” attitude brought this proceeding to restrain the defendants from issuing a lease to others for the purpose of developing the oil shale on the land.
In the earlier case of Morgan v. Utah Board of State Lands, 21 Utah 2d 364, 445 P.2d 776 (1968), this court determined that oil recoverable from bituminous sand was the same as that pumped from a natural reservoir of oil. It is only necessary to apply heat, pressure or certain detergents through bored holes in the ground to be able to make the oil in bituminous sands flow to the surface of the land.
Such is not the case with oil shale, for oil cannot be made to flow froni the shale. It is necessary to mine the shale, and when it is brought to the surface of the ground, there is no oil in it. There is a substance in it called Kerogen from which petroleum hydrocarbons can be derived by the application of heat and subsequent refining. This is shale oil and not petroleum. It is a black waxy oil which freezes at room temperature. See the article by Felix Jaffee in Mineral Industries Bulle
The prior Morgan case is of no assistance in deciding this matter.
The Federal Government recognized the difference between oil shale and oil in State of Utah, et al., 71 I.D. 392 (1964). There the Interior Department specifically authorized the disposition of land containing oil shale but reserved the oil and gas to the United States. At pages 403 and 404 it was said:
It would appear to follow that, if the base land is mineral land and the selected land is both valuable for oil shale and valuable for oil or gas and is situated within the known geologic structure of a producing oil or gas field or included in a producing or producible oil and gas lease, the State may obtain the selected land, including the oil shale deposits upon consenting to a reservation to the United States under the 1914 act of the oil and gas in the selected land. We so conclude.
There can be no conflict between a lessee who mines oil shale and a lessee who produces oil though holes drilled in the ground. Neither one would, by its operation, interfere in any manner with that of the other; and neither one by its operation could possibly take any property from the other to which it would be entitled under its lease.
I, therefore, would reverse the trial court and remand the case with an order to dissolve the injunction and to dismiss the complaint.
Reference
- Full Case Name
- UTAH RESOURCES INTERNATIONAL, INC., a Utah corporation, John H. Morgan, Jr., Justheim Petroleum Co., a Nevada corporation, Clarence I. Justheim and J. H. Morgan, Sr., and v. UTAH BOARD OF STATE LANDS, Charles R. Hansen, C. S. Thomson, Donald Showalter, M. V. Hatch, Harold Reese, Whitney J. Floyd, Philip V. Christensen, T. H. Bell and W. L. Tueller, and
- Cited By
- 2 cases
- Status
- Published