What Is Oil And Gas Law?

oil well

What is oil and gas law in the United States? These are laws that pertain to the acquisition and ownership of oil and gas rights. These laws cover oil and gas before discovery, after its capture, and its sell.

Overview

The oil and gas laws in the US are generally different from those in Europe and other countries. This is because, in the US, oil and gas are often owned privately unlike in other countries where they are owned by the national government.

Jurisdiction

The extraction of oil and gas in the US is regulated by the individual states through Federal law, constitutional law, common law, and statutes.

Ownership

As mentioned earlier, the ownership of oil and gas rights in the US is different from other countries. Oil and gas parcels may be owned by Indian tribes, private individuals, corporations, or by local, state, or federal governments. These rights extend vertically downward. This means that the right extends from the surface to deep in the ground. The surface landowner owns the rights to oil and gas unless explicitly separated by a deed.

The state or federal government owns the rights to offshore oil and gas and leases these rights to oil companies for development. Different states have different laws on oil and gas, but those regarding ownership before, during, and after mining are nearly the same. The owner of a piece of land also owns the minerals underneath the surface. However, he or she will not own the minerals if they are severed by an agreement or a previous deed.

Before and during extraction

The person owning the deed to the property also owns the minerals and resources beneath the surface unless his or her rights are severed. The surface rights can limit the extent of the mineral rights. In cases where the oil and gas flow in the subsurface across property boundaries, a mining company can extract it from beneath the land of the neighbor. However, the miner can only do this if the extraction is done according to the law. The law forbids the miner from angling a well to penetrate and extract oil and gas found on land that is not leased or owned by him or her.

There are two conflicting doctrines covering oil and gas extraction. These doctrines are the correlative rights doctrine and the rule of capture. Between these two, the doctrine that applies to you depends on state law or US federal law in the case of the federal offshore zone.

The doctrine of the rule of capture allows a miner to extract oil from underneath his or her property even if some of it originated from the neighboring property through drainage or geologic forces. This doctrine motivates landowners to extract oil and gas a quickly as possible to capture that of their neighbor even if it will require them to drill multiple wells. The problem with the rule of capture is it may lead to depletion of the pressure of gas required to force oil from the ground.

The correlative rights doctrine, on the other hand, regulates the extraction of oil by individual owners. It does so to prevent physical and economic waste and to protect the rights of the mineral owners.

Split estates

Split estate is a scenario where the ownership rights of the surface and the subsurface are split between two parties. In this scenario, ownership rights to oil and gas, which are found underground can be transferred, bought, or sold. Different layers below the surface can be further divided and sold to different individuals. The right to the subsurface is reverted to the owner of the surface land if the mineral rights are not exercised for some time in some states.

There are other elements of oil and gas laws in the United States that we have not covered. But we hope that this article has expanded your knowledge in case you were asking yourself what is an oil and gas lawyer in the US.

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