I believe the pore space is owned by the mineral owners, what is the understanding in the Permian Basin of Texas?
Thanks in advance for any help on this issue!
Ralpr
I believe that pore space belongs to the surface owner.
Ok, is that according to the TRRC, too?
r w kennedy said:
I believe that pore space belongs to the surface owner.
After a short search I didn't find anything that definitively said who owns the pore space rights in Texas. I'm pretty sure the mineral owner doesn't get paid if after his oil/gas well is depleted, the operator uses the well as a salt water disposal well, unless the mineral owner owns the surface as well. That is the basis for my belief that the surface owner owns the pore space. It may be a moot point soon. I saw some statements by our presidents energy wonk saying that pore space rights may have to be placed in the public domain just as airspace is, for the common good, in aid of carbon sequestration projects. Sorry I couldn't provide a definitive answer.
One of the basic attributes of a Mineral, at least in Texas, is that it must have intrinsic value and must be mined or extracted (separate from topsoil or gravel for instance), in order to obtain such value. Since pore space in subsurface rock is not capable of being mined or extracted, I would think it would be a property right owned by the surface owner.
I know in some states the pore space belongs to the surface owner, and I would bet that in Texas unless it had been separated from the surface rights at some time it would still belong with the surface. That said, if you were pumping produced water ( or CO2) into underground space for enhanced recovery it would be one thing. If you were pumping produced water into the same space just for disposal it would be something else. Its has potential to become complicated. I dont know for sure exactally how Texas law / TxRRC regulations stand on this, but some states do regard pore space as part of the bundle of rights
My thought exactly, Ed.
Ed said:
One of the basic attributes of a Mineral, at least in Texas, is that it must have intrinsic value and must be mined or extracted (separate from topsoil or gravel for instance), in order to obtain such value. Since pore space in subsurface rock is not capable of being mined or extracted, I would think it would be a property right owned by the surface owner.
Ralphr
I promise that the mineral owner does not own the pore space. This was determined years ago in Texas for underground gas storage. BTW, the RRC has nothing to do with legal determination.
To give you an idea of a concept, expanding on Ed's correct explanation, you start off with an estate in land called fee simple determinable. That is all of the rights in land beginning at the center of the earth, in the shape of an inverted pyramid, extending to the pinnacles of the heavens (sorry for the flowery talk - it is direct out of a very early Texas Supreme Court Case).
Minerals have been defined by the State of Texas several times. In 1984, a case was decided that came up with the "List" of things which might thought of to be minerals that actually belong to the surface owner. Caliche and building stone come to mind, but I cannot remember the rest.
The Supreme Court in all its wisdom, determined that "minerals" were all those things commonly thought of as minerals. Fascinating.
Now, when one reserves the mineral rights in a sale, what does the purchaser receive?
He receives everything from the center of the earth to the pinnacles of the heavens ----- except those things commonly thought of as minerals. But he is called the surface owner, which confuses a lot of people.
So, to answer your question. In a formation that is capable of producing oil and gas, the formation is owned by the surface estate owner, and the minerals in the formation are owned by the mineral estate owner.
Mr. Cotten, et al.,
Thanks for your thoughtful replies. I think the jury is still out on this fascinating issue in Texas. I like the British rules, which are what Texas currently operates under for surface vs. mineral rights. What complicates matters is if further mineral production and access is denied due to CCS - what recourse does a TX mineral owner have? What is the empty pore space filled with, air? Air is a gas, just like the other gases considered to be minerals - e.g. natural gas, hydrogen, hydrogen sulfide, helium, carbon dioxide. Who can say what minerals will be economic in the future?
Private property rights vs. Federal Property rights issues get debateable in a hurry, that's for sure!
The debate is not over by a long shot, IMHO.
Regards,
Ralpr
Buddy Cotten said:
Ralphr
I promise that the mineral owner does not own the pore space. This was determined years ago in Texas for underground gas storage. BTW, the RRC has nothing to do with legal determination.
To give you an idea of a concept, expanding on Ed's correct explanation, you start off with an estate in land called fee simple determinable. That is all of the rights in land beginning at the center of the earth, in the shape of an inverted pyramid, extending to the pinnacles of the heavens (sorry for the flowery talk - it is direct out of a very early Texas Supreme Court Case).
Minerals have been defined by the State of Texas several times. In 1984, a case was decided that came up with the "List" of things which might thought of to be minerals that actually belong to the surface owner. Caliche and building stone come to mind, but I cannot remember the rest.
The Supreme Court in all its wisdom, determined that "minerals" were all those things commonly thought of as minerals. Fascinating.
Now, when one reserves the mineral rights in a sale, what does the purchaser receive?
He receives everything from the center of the earth to the pinnacles of the heavens ----- except those things commonly thought of as minerals. But he is called the surface owner, which confuses a lot of people.
So, to answer your question. In a formation that is capable of producing oil and gas, the formation is owned by the surface estate owner, and the minerals in the formation are owned by the mineral estate owner.
Best,
Buddy Cotten
Interesting discussion. There are two questions here.
1. What is a mineral?
2. If the mineral rights owner owns rights to the minerals, what does the surface rights owner own?
If I understand the concepts correctly here are the answers:
1. Minerals, in law, are naturally occurring substances that are commercially valuable. Apparently they must be more valuable than substances used for building materials because rock, gravel, and sand are not considered minerals.
2. The surface estate owns everything that is not a mineral that is contained in the inverted prism that is defined by the surface within the boundaries of the land and the center of the earth.
So...when a mineral rights owner leases these rights he/she transfers the right to extract whatever minerals the lessee wishes to extract and sell for the duration of the lease and is subject to, and the potential beneficiary of the rule of capture. If, while producing minerals per the lease, the lessee discovers another deposit of minerals of any kind on the property, the lessee has the right to produce the second (or any additional) deposit of minerals under the same lease. However, if the original minerals become depleted and the lessee ceases production, the lease specifies the conditions under which the lease is voided. After the lease is void, the lessee ceases to have any rights involving the property and those rights revert to the mineral owner.
At any time, regardless of any mineral lease, the surface owner may prevent the removal of any substance from the property that is not a "mineral"
Pore Space Ownership issues for CO2 Sequestration in the U.S. (2009)
Bureau of Economic Geology, Jackson School of Geosciences, The University of Texas at Austin, 2009. Ian J. Duncan, Scott Anderson, and Jean-Philippe Nicota. Previous assertions that the ownership of subsurface pore space in states in the US under common law are divided into a majority following the American Rule (surface rights owner owns pore space) and a minority following the English Rule (mineral rights owner owns the pore space) are shown to be inconsistent with case law precedents traced back to 1861. The mineral estate is not likely to “own” the pore space or to have the right to use the pore space for purposes other than extracting minerals. The exception will be where the original fee simple owner sells the surface rights but reserves the subsurface mineral rights. In all other circumstances it is likely that courts will find that the surface owner also owns the pore space under common law.
It would seem to me that a good case can be made that regardless of the possible variations in ownership of the mineral estate and the surface estate, the mineral estate is concerned only with minerals and the right to produce and sell them, and does not include whatever remains in the property after the minerals have been extracted.
However, I am not a lawyer or an expert on the precedents.
To all,
First, Ralphr, thanks for finding those articles and bills that clearly showed the pore space ownership in Texas being vested in the surface owner.
This will give some hope to surface owners who own no mineral rights.
Let's say you have the surface estate on many beaucoup acres lying on top of an old oil field. I would think that the pore space at some point in history must have been determined or presumed to be a real property right, capable of being reserved or conveyed (but I bet nobody can find a legal determination to that effect).
Now, when the landowner sells the land and cannot reserve the minerals because they are gone to another, he could still negotiate the reservation of all or a portion of the pore space, and I would also assume the executive rights on the pore space as well.
On C02 sequestration or underground gas storage, this could have some amazing value.
Now, when I advise on reserving minerals, I would reserve "all minerals of any kind or class, along with pore space."
Dear Mr. Lobdill,
You got the concept down. However, you cross the border into Louisiana, you do not own the minerals in place when you reserve the minerals. You only own an exclusive right to come and take in the nature of what the Mineral Code calls a profit a prendre (a type of exclusive easement). When the minerals are brought to the surface, they become personal property, not real property, as in any other state.
Jerry Lobdill said:
Interesting discussion. There are two questions here.
1. What is a mineral?
2. If the mineral rights owner owns rights to the minerals, what does the surface rights owner own?
If I understand the concepts correctly here are the answers:
1. Minerals, in law, are naturally occurring substances that are commercially valuable. Apparently they must be more valuable than substances used for building materials because rock, gravel, and sand are not considered minerals.
2. The surface estate owns everything that is not a mineral that is contained in the inverted prism that is defined by the surface within the boundaries of the land and the center of the earth.
So...when a mineral rights owner leases these rights he/she transfers the right to extract whatever minerals the lessee wishes to extract and sell for the duration of the lease and is subject to, and the potential beneficiary of the rule of capture. If, while producing minerals per the lease, the lessee discovers another deposit of minerals of any kind on the property, the lessee has the right to produce the second (or any additional) deposit of minerals under the same lease. However, if the original minerals become depleted and the lessee ceases production, the lease specifies the conditions under which the lease is voided. After the lease is void, the lessee ceases to have any rights involving the property and those rights revert to the mineral owner.
At any time, regardless of any mineral lease, the surface owner may prevent the removal of any substance from the property that is not a "mineral"
Dear Mr. Cotten,
Thanks for that post on theories of ownership. On top of the theory of ownership that applies lies the concept of Rule of Capture which some experts say tends to preempt the practical effect of both theories (Joseph Shade, 4th Ed. pp9-10).
Stuff like this makes one appreciate having a good lawyer.
Dear Mr. Lobdill,
Can you give a different reference or a weblink? I did a google search on Joseph Shade, etc. and came up empty.
And yes, this is one of the most interesting discussions that we have had in a long time.
Dear Mr. Cotten,
I'm sorry. Here you go. Joseph Shade, "Primer on the Texas Law of Oil and Gas" 4th Ed., (Charlottesville, VA, LexisNexis, 2008).
An amusing quote from the cover: "In oil and gas one little fault can make a world of difference."
Jerry Lobdill
Buddy Cotten said:
Dear Mr. Lobdill,
Can you give a different reference or a weblink? I did a google search on Joseph Shade, etc. and came up empty.
And yes, this is one of the most interesting discussions that we have had in a long time.
Thanks,
Buddy Cotten
BBA-PLM-UT
Gentlemen, Thanks for your kind words and excellent analyses!
It’s going to be a boon for many folks!
KInd Regards,
Ralpr
Jerry Lobdill said:
Dear Mr. Cotten,
I’m sorry. Here you go. Joseph Shade, “Primer on the Texas Law of Oil and Gas” 4th Ed., (Charlottesville, VA, LexisNexis, 2008).
An amusing quote from the cover: “In oil and gas one little fault can make a world of difference.”
Jerry Lobdill
Buddy Cotten said:
Dear Mr. Lobdill,
Can you give a different reference or a weblink? I did a google search on Joseph Shade, etc. and came up empty.
And yes, this is one of the most interesting discussions that we have had in a long time.
Thanks,
Buddy Cotten
BBA-PLM-UT
We have a 40 acre tract in Arkansas where the prior owner reserved 50 % of the gravel rights. no other minerals, water, pore space or anything else. It seems that people split up the bundle of rights in what ever way their fancy strikes them at the time. Often without consultation. thanks to Buddy , Jerry and Ralphr for the very informative comments in this thread