Land Owner vs Mineral Owner

The American Exception

 

The United States is one of the few countries in which mineral rights actually matter. In most other jurisdictions, sovereign governments retain complete ownership of valuable sub-surface materials. Private or state-run exploration and extraction companies must ink long-term leases to exploit these reserves. Although property owners who live above exploited reserves may be compensated for their troubles, they're not entitled to receive payment for the actual minerals or energy stores beneath their landholdings.

 

A Basic Overview of Mineral Rights in the U.S.

So just what do mineral rights mean for the owner? Quite simply, mineral rights provide their holders with the right to explore, develop, extract and market various resources under the surface of the applicable parcel of land.

 

Like regular property rights, mineral rights can be bought, sold and transferred in accordance with state and federal law. Before the advent of modern drilling and extraction techniques, mineral rights were bound up in the "fee simple" deeds by which private property owners and governments transferred or disposed of parcels of land. Fee simple deeds are comprised of mineral rights and surface rights.

 

Surface Rights

Surface rights confer the legal right to improve, sell, transfer or otherwise manipulate the surface of a given parcel of land. Owners of the surface rights to agricultural land are free to plow or graze it as they see fit. They may also take steps to improve their land to aid these legal uses. Such improvements might even require surface rights owners to dig foundations for buildings or install underground tanks. However, surface rights owners who don't own the corresponding mineral rights to their "surface parcels" can't exploit the valuable resources that they may find beneath their land.

 

It's also important to note that mineral rights parcels are not necessarily coterminous with surface rights parcels. In some cases, a corporation or trust may own the mineral rights to the land beneath a large number of surface parcels.

 

Transferring Mineral Rights

The transfer of mineral rights is perfectly legal and increasingly common. Mining or extraction companies or investor consortia may entice "fee simple" landowners to sell or lease their mineral rights. In exchange, they may provide compensation in the form of a generous cash payment, ongoing royalties, or some combination of the two. In other cases, speculators may pay existing mineral rights owners for the option of buying or developing their property at a later date. Regardless of the circumstances surrounding the transfer of mineral rights, property owners retain their surface rights and may continue to improve the land as they so desire.

 

Disagreements Between Property and Mineral Rights Owners

However, the transfer of mineral rights to an entity that intends to exploit the property's sub-surface resources may create some nasty disputes between the two parties. Despite their retained surface rights claims, property owners who sell their mineral rights are often forced to cede a portion of their landholdings to the exploiting party. Unless the miner or driller is able to access the land via a horizontal rig that originates on another piece of property, it will need to set up an extraction zone on the landholder's property. Such zones typically require the following improvements:

  • Drilling rigs
  • Pumpjacks
  • Workover Rigs
  • Containment ponds
  • Water treatment facilities
  • Roads or tracks
  • Fences

 

Obviously, all of this activity is liable to create noise, light, air and water pollution, and other environmental and safety hazards. 

 

      

Unsightly neglected wells on landowners property which he has no control over.

 

Taking many of the landowners objections into consideration by regular operation of large workover rigs and crews working on their land maintaining oil wells, the Ωmega Production System requires only a pickup truck with our Deployment Spooler and one worker.  More importantly though, there is no surface equipment with the removal of the pumpjack.  All that is required is the existing wellbore with our custom wellhead and a power box.

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