Dec. 09 blog 2–Oil and Gas Dispute

The laws that regulate oil and gas ownership in the United States are significantly different from laws in Europe primarily due to the fact that oil and gas extraction sites located on shore are often privately owned in the U.S. In contrast, in many European countries on-shore extraction sites are owned by the government. In the U.S., oil and gas extraction is most often regulated by the individual state governments through common law and statutes. Additionally, federal and constitutional law, such as the doctrine of correlative rights, also apply. The rights to oil and gas located offshore can be owned by either the state or federal government and leased to oil companies for development.

Although oil and gas laws differ from state to state, the laws regarding ownership prior to, at, and after extraction are almost always universal. For example, the owner of a parcel of land also owns the minerals beneath the surface of that land, unless the minerals are determined to be owned by another party under a previous agreement or deed. Whoever owns the land owns everything below the surface of the land up to the extent of their rights to that surface. A landowner may be allowed to extract oil and gas from beneath the land of another landowner if the substance is extracted on his own property according to the law. However, a landowner may not conduct extraction at an angle to reach deposits of oil and gas located under another individual’s property.

Rules like these function as an incentive to land owners to extract oil as quickly as possible to take possession of it before their neighbors do. As evidenced by extraction practices, this sort of imprudent procedure diminishes surrounding gas pressure to force oil out of the ground. Thus, extraction by individual owners is regulated by government-affiliated agencies.

Mueller Hillin specializes in Oil and Gas Law in Philadelphia, Atlanta, Houston and Austin.