Originally published by Charles Sartain.
We know that in Texas the mineral owner has the right to explore for and produce the minerals. What does that leave for the surface owner? In Lightning Oil Company v. Anadarko E&P Onshore, LLC the Texas Supreme Court tells us he owns the right to possess the specific place or space where the minerals are located. Absent pooling or some other contractual arrangement, with that comes the right to grant (for a price) or deny an off-lease operator the right to drill through the mineral estate to reach minerals under an adjacent tract.
- Anadarko entered into a lease with the State of Texas for the mineral estate underlying the Chaparral Wildlife Management Area in South Texas. The lease required Anadarko to drill from off-site locations when prudent and feasible.
- Anadarko entered into a Surface Use and Subsurface Easement Agreement with the surface owner of the adjacent tract, Briscoe Ranch, which permitted Anadarko to place wells on the Briscoe Ranch to access the minerals under the Chaparral. To do that, Anadarko’s well-bore would pass through the Briscoe Ranch subsurface.
- The mineral estate under the Briscoe Ranch was leased by Lightning, who was not a party to the Surface Use and Easement Agreement.
- Lightning sued Anadarko for trespass and tortious interference, and sought to enjoin Anadarko from drilling. Lightning claimed that the Briscoe Ranch, as a mere surface owner, could not consent to drilling through Lightning’s mineral estate.
Lightning argued (without success)
- The holder of the dominant mineral estate has the right to exclude others from passing through it; to hold otherwise would transform a mineral lease into a “mere license to hunt for minerals.”
- Anadarko’s activities would interfere with Lightning’s ability to develop its minerals.
- Anadarko’s well-bore would remove at least some minerals, and removal of even that small volume is an actionable trespass.
The court said
The court noted two basic principles:
- The surface owner owns all non-mineral molecules, i.e., the mass of earth that undergirds the surface estate.
- The mineral owner is only entitled to a “fair chance to recover the oil and gas in place or under” the surface estate.
- The rights conveyed by a mineral lease do not include the right to possess the specific place or space where the minerals are located.
- Lightning, as mineral owner, has no right to exclude others from traversing through the subsurface. Anadarko will not commit trespass by doing so with the surface owner’s permission.
- Lightning produced no evidence that Anadarko’s activities would interfere with Lightning’s development of its mineral estate.
- Though Anadarko’s activities would necessarily remove some minerals, that small volume is not large enough to be actionable.
There’s always an exception
The court left open the possibility that a mineral owner could prevent pass-through drilling if it can show that such activity would either (i) unreasonably interfere with the mineral estate owner’s development of the estate or (ii) remove or destroy a sizeable quantum of minerals.
from Texas Bar Today http://ift.tt/2rdbfeE
via Abogado Aly Website