America’s conversation place for mineral & royalty owners

How many mineral rights owners in US?

I have been involved in several conversations with politically astute people lately. I mentioned that I believe there are one to three million mineral rights owners in the US, and most of these are generally average middle class types. It came as no surprise that I was asked to support that assertion. The contrary argument was that there are very few, and those are mostly "big oil". As I looked around the web, I found little to support either position.

I would like to locate an authoritative source for this figure, so I can speak to the issues with a reasonably accurate number.

Anyone have a link or know of a document that offers an estimate?

Keywords: count, owners, size, strength

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Permalink Reply by Dillon on August 5, 2011 at 7:55am

Mark -

I dont have objections to those states which have laws stating that any mineral rights reserved will revert back to the surface owner if no production in 10 or 20 yrs, because w/out that you can end up w/ so many owners.

I believe Louisana has a 10 yr period, ND a 20 yr period - dont know about other states

I do object to some states that seem to take the position that if it's a small interest, the company shouldn't worry about it - for w/out money being placed in escrow I do consider it a taking w/out compensation.

Mark Phillips said:

Good question. In some jurisdictions, an interest that becomes "too small" is quashed by administration of state law* and the interest is returned to the surface owner. Also, there is brisk trade in some areas from time to time, so tracking all of that would be a lot of work. Clearly, the number ebbs and flows with the market for the products.

I am looking for a snapshot. If I could state, with some authority to back me up, that circa 2010 there were X million owners, I might gain some traction in discussions on how to best preserve and promote private ownership of property.

* As an aside, I feel such laws are patently unfair, as most severed mineral interests were secured by an agreement between willing parties. I know there are exceptions, and real estate in general is rife with traps for the naive. Nevertheless, those laws smack of an unethical taking of property for the benefit of a few; the polar opposite of the intention of public domain policy.

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Permalink Reply by Buddy Cotten on August 5, 2011 at 9:52am

If the government owns 1/3 of the mineral rights, who owns the rest? Big oil? nope, they are minor mineral interest owners. Almost all of their interest comes from leasing and producing activities.

Mark,

"In some jurisdictions, an interest that becomes "too small" is quashed by administration of state law* and the interest is returned to the surface owner."

Please cite your authority, I have never heard such a thing.

Best,

Buddy Cotten

Dillon said:

General Statement:

In almost every other country in the world the govt owns all the mineral rights (oil, gold, silver, etc). That being the case, we shouldn't be assholes all the time leasing here as it's so much easier to lease in some of the other countries where you dont have to deal w/ so many ppl.

Still in the USA the local, state & federal governments own over 1/3rd of the land - most w/ the mineral rights.

I'd make a wild guess that less than 15% of the people in the USA own mineral rights & if you exclude those w/ less than a 5 acre interest it'd be less than 3%.

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Permalink Reply by Mark Phillips on August 5, 2011 at 10:36am

Dillon, you have again presented an interesting but off topic comment. I would be happy to jump into that conversation in another thread if you care to start one.

Mr. Cotten, I will look into finding an authority. However, on second thought, I may have mingled two concepts. I will post again after a bit of research.

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Permalink Reply by De on August 16, 2011 at 4:16pm

NARO did testimony I believe or publicity last year or the previous before Congress committee opposing Obama's push to remove tax incentives favorable to royalty owners. They quoted who their average member was and I think how many royalty owners there are. Contact them.

There are numerous current and past class action lawsuits filed on behalf of royalty owners against the various oil/gas producers. While personal information on class members are not necessarily public record in those cases there is usually some public filing that requires the number of class members to be mentioned. Most names are crossed referenced to a number which may be public. There may be news articles on those cases that mentions the potential class member numbers. This is not fool proof and has many pit falls for accuracy of numbers but gives you an idea of the huge numbers there are all across the USA as most class actions relate to a specific area or situation.

I know of one class action case involving 1 state (small confined area of state) and 1 producer that had over 6,000 royalty owners and another class action case involved in same state but different producer in same confined area of state that has over 4,000. These royalty owners are not typically other oil/gas producers who may also have a royalty interest as oil/gas producers don't like to be included in other oil/gas producers lawsuits. :) Also many times overriding royalty owners are not members of a class action suit as they also have a stake in the producing wells as an owner of such.

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Permalink Reply by Mark Phillips on August 16, 2011 at 4:43pm

Thank you, De.

I appreciate the thought about the legal actions. However, for the reasons you state, I would not be tempted to extrapolate a number from the case work. Nevertheless, the example of 6,000 members in a single class action in a "small" area of a state does give one a sense of the number that may be out there.

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Permalink Reply by De on August 16, 2011 at 5:05pm

In the older oil/gas wells the undivided interests have been diluted greatly. I have seen a family mineral interest get down to the 246th interest. That person is a royalty owner but with that small of an interest they probably are not getting a very large royalty check each month.

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Permalink Reply by out of state on September 21, 2011 at 7:03pm

edited to remove comment: I mentioned NARO, then I saw someone above had already written about it.

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Permalink Reply by Seth on January 26, 2012 at 5:11pm

All,

Last week we sent an alert, urging you to send a letter to the Railroad Commission telling them not to railroad Texans’ property rights via new rules for the Mineral Interest Pooling Act (MIPA) – the law that authorizes forced pooling.

If you haven’t done so, it’s not too late to send a letter.

But even better than sending a letter, come say your piece in person.

WHAT: Railroad Commission hearing to consider whether to proceed with new forced pooling rules under MIPA

WHEN: January 30th at 9:00 am

WHERE: William B. Travis State Office Building, Room 1-111 1701 N. Congress Ave., Austin, TX

WHY: The reason the TRC is considering the rules now? Among other things, they want to legitimize railroading (hah!) small landowners -- who want no part of production/leasing -- into not just drilling, but PAYING for the drilling they don't want. If the well isn't profitable, new rules could wind up losing landowners money.