Oil, Gas and Minerals

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Your Right to Oil, Gas or Minerals under Your LandOil, Gas and Minerals
If you own the mineral rights under your land, you can extract oil, natural gas, coal or any other substance found there. However, in the United States, you can transfer the mineral rights to property separately from the property rights. Before you drill or dig, you need to look at the deed of conveyance when you purchased the property, or you may have to look at prior deeds to see what rights prior owners had. A longstanding property rule holds that a seller cannot convey a greater interest that he or she holds. If a prior owner gave away mineral rights, you will have no right to them, short of obtaining them from the rightful owner.

The ownership of mineral rights is known as the “mineral estate” of the land. Typically, it includes all organic and inorganic matter that is part of the soil, with some notable exceptions: sand, subsurface water, gravel and limestone are typically excluded.

Mineral rights automatically pass with the conveyance of land, unless the deed of conveyance specifically denotes otherwise. Because land and mineral rights can be separated, you can transfer mineral rights to one person and land to another, or you can transfer one set of rights and keep the other.

The rights commonly associated with a mineral estate include:

  • The right to pass on those rights to another
  • The right to receive royalties for the exploitation of those minerals
  • The right to use as much of the land surface as is reasonably required to exploit the minerals
  • The right to receive payment to delay production or extraction of minerals
  • The right to receive bonus consideration

As the owner of the mineral estate, you can convey any of these rights separately. In addition, you can sell or transfer some mineral rights, but retain others.

The Challenges that Come with Exploiting Your Mineral Rights

In most situations, it doesn’t matter who owns the mineral rights, as it may be cost prohibitive to get the minerals out of the ground. Furthermore, if you have the resources to do so, you must do so without damaging or interfering with the use of any homes or property around you. State or local laws may also regulate the extent to which a mineral extraction operation can affect the environment.

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