Tuesday, January 15, 2013

Ownership in Place

The State of Texas adopted the Ownership-in-place theory in 1915.  The premise is that because oil and gas resources lie in the ground, by necessity, they are part of the realty.  The authors of Texas Law of Oil and Gas (see Previous Post) cite Texas Co. v. Daugherty (107 Tex. 226, 176 S.W. 717 (1915), which I won't re-state here. 

The same case addressed the issue of what the authors dub the "fugitive" nature of oil and gas by noting that the materials are as likely to flow from the ground just as one who purchases solid minerals (e.g. coal) runs the risk that the minerals are not there.  If the minerals are present, then they can be exploited. 

Texas uses the Correlative Rights doctrine and the fact that claims of injury from drainage from adjacent property is based on conjecture to address the drainage issues.

More later.

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