Pioneer Oil Company, Inc. v. ECC Bethany, Inc.

CourtIndiana Court of Appeals
DecidedOctober 9, 2025
Docket24A-PL-02878
StatusPublished

This text of Pioneer Oil Company, Inc. v. ECC Bethany, Inc. (Pioneer Oil Company, Inc. v. ECC Bethany, Inc.) is published on Counsel Stack Legal Research, covering Indiana Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Pioneer Oil Company, Inc. v. ECC Bethany, Inc., (Ind. Ct. App. 2025).

Opinion

FILED Oct 09 2025, 9:06 am

CLERK Indiana Supreme Court Court of Appeals and Tax Court

IN THE

Court of Appeals of Indiana Pioneer Oil Company, Inc., Appellant-Plaintiff

v.

ECC Bethany, Inc., et al., Appellees-Defendants

October 9, 2025 Court of Appeals Case No. 24A-PL-2878 Appeal from the Vanderburgh Superior Court The Honorable Thomas A. Massey, Judge Trial Court Cause No. 82D07-2311-PL-5499

Opinion by Chief Judge Altice Judges Pyle and DeBoer concur.

Court of Appeals of Indiana | Opinion 24A-PL-2878 | October 9, 2025 Page 1 of 18 Altice, Chief Judge.

Case Summary [1] In May 2022, Pioneer Oil Company, Inc. (Pioneer) obtained a lease to produce

methane from coal mine voids underlying a parcel of land in Gibson County

(the Pioneer Leasehold Parcel). The coal mine has a tunnel (the Slope) that

extends 1500 feet diagonally from the underground voids on the Pioneer

Leasehold Parcel to the surface of an adjacent parcel that Gibson County Coal,

LLC (GCC) occupied pursuant to a lease (the GCC Leasehold Parcel). GCC

had previously used that tunnel for mining coal, but GCC abandoned its

mining operations and sealed the Slope in 2020.

[2] Shortly after Pioneer obtained its lease, GCC entered into a methane lease

agreement for the GCC Leasehold Parcel. GCC also entered into a project

development agreement with ECC Bethany, Inc (ECC) to produce and capture

methane by unsealing and repurposing the Slope through use of mechanical

equipment.

[3] Pioneer filed suit against GCC and ECC (collectively, Defendants) seeking

damages and a permanent injunction based on claims of trespass, conversion,

and civil conspiracy. Pioneer claimed that Defendants’ use and repurposing of

the Slope amounted to an unpermitted directional well to siphon methane from

the Pioneer Leasehold Parcel and that Defendants’ actions interfered with

Pioneer’s ability to conduct its permitted operations and to exploit the mineral

rights for which it bargained under its exclusive lease.

Court of Appeals of Indiana | Opinion 24A-PL-2878 | October 9, 2025 Page 2 of 18 [4] Defendants sought dismissal of the complaint based on Ind. Trial Rule 12(B)(6)

for failure to state a claim upon which relief can be granted. After extensive

briefing and argument, the trial court granted the motion to dismiss because

Pioneer had not alleged that Defendants physically entered any portion of the

surface or subsurface of the Pioner Leasehold Parcel and that, pursuant to the

rule of capture, Pioneer could not have sole and exclusive ownership rights to

uncaptured methane within the underground mining voids, including methane

that Defendants were capturing through use of the Slope on the GCC

Leasehold Parcel.

[5] On appeal, Pioneer presents the following issue for our review: Are the facts

alleged in the complaint capable of supporting relief to Pioneer under any set of

circumstances? Concluding that the trial court correctly applied the long-

standing rule of capture, we affirm the dismissal order.

[6] We affirm.

Facts 1 & Procedural History [7] Coal mine methane is a combustible gas that exists naturally within coal seams.

Underground coal mining causes methane to release and accumulate in the

mine voids created when coal is removed. When underground mining activity

ceases, passive venting is required to mitigate the buildup of coal mine

1 For purposes of this appeal, we rely on the facts alleged in the complaint.

Court of Appeals of Indiana | Opinion 24A-PL-2878 | October 9, 2025 Page 3 of 18 methane. Such venting typically consists of vertical vents in the mine voids

where methane—which is lighter than air—can escape. Advancements in

technology and environmental considerations have made the production of coal

mine methane commercially viable, which has resulted in operators around the

world, including in Indiana, producing methane from voids in abandoned

underground coal mines.

[8] The Gibson North Mine, which exists below the surface of the Pioneer

Leasehold Parcel, is an idled coal mine that contained the Springfield V seam of

coal. GCC, as lessee and permittee, operated the Gibson North Mine through

November 2019, when the commercially mineable coal within the Springfield V

coal seam had been exhausted. During its coal mining operations, GCC

constructed and used the Slope as a tunnel to transport materials to and from

the underground mine to the surface. In May 2020, GCC sealed the coal mine,

resulting in an abandoned permit status with the U.S. Mine Safety and Health

Administration, although GCC’s coal mining permit from the Indiana

Department of Natural Resources (the DNR) remains in active status.

[9] On May 2, 2022, Pioneer, a corporation that drills and operates coal bed

methane wells in Indiana, entered into an oil and gas lease with Heidenreich

Farms, Inc. (Heidenreich), the owner of both the surface and mineral rights of

the Pioneer Leasehold Parcel. Heidenreich granted Pioneer exclusive leasehold

rights to develop and produce methane using the surface and the subsurface of

the leased land. The lease provided in part:

Court of Appeals of Indiana | Opinion 24A-PL-2878 | October 9, 2025 Page 4 of 18 Lessor … has granted, demised, leased and let and by these presents does grant, demise, lease, and let, exclusively unto Lessee within 800 feet of the surface for the purpose of exploring by geophysical and other methods, drilling (vertically, horizontally and directionally) and operating for, and producing coal bed methane (CBM), and coal mine methane (CMM) and their constituent products, injecting gas, waters, other fluids and air into subsurface strata, and with Lessor’s consent, which consent will not be unreasonably withheld, laying pipelines, electric transmission lines, roads and structures thereon to produce, vent, flare, save, take care of, treat, process, store and transport gases, and their constituent products, together with the right of ingress and egress thereto or to other land under lease to Lessee, including the right of way and easement to lay, construct, use, maintain, operate, change, replace and remove pipeline or pipelines for such transportation with Lessor’s consent, the [Pioneer Leasehold Parcel.]

Appellant’s Appendix Vol. 2 at 30. Pioneer recorded its lease on May 10, 2022,

and then pursued permits from the DNR to drill and operate three wells, which

descend into the coal mine voids in the Gibson North Mine so that Pioneer can

extract and flare methane.

[10] On May 31, 2022, GCC entered into an agreement with Heidenreich and

obtained a methane lease for the GCC Leasehold Parcel, which is where the

Slope exits onto the surface of that parcel and is adjacent to the Pioneer

Leasehold Parcel. The granting clause of this lease provided in part:

Lessor … does hereby grant, demise, lease and let exclusively unto Lessee all methane gas and its constituent products (hereinafter referred to as the “Methane”) contained within the underground mine voids in the Springfield V vein or seam of

Court of Appeals of Indiana | Opinion 24A-PL-2878 | October 9, 2025 Page 5 of 18 coal and rock formations in communication therewith in and underlying [the GCC Leasehold Parcel], for the purpose of exploring for, drilling, operating, producing, flaring, and destroying such Methane, together with all mining rights, rights of ingress or egress and all other appurtenant easements and rights-of-way Lessor may hold to the surface of the [GCC Leasehold Parcel] ….

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