CHAPTER 3 RIGHTS OF ACCESS BETWEEN SURFACE OWNERS AND MINERAL LESSEES

• Jurisdiction: United States

Rights-of-Way How Right is Your Right-of-Way?
(May 1998)
CHAPTER 3
RIGHTS OF ACCESS BETWEEN SURFACE OWNERS AND MINERAL LESSEES
Rick D. Davis, Jr.
Cotton, Bledsoe, Tighe & Dawson, P.C.
Midland, Texas

TABLE OF CONTENTS

SYNOPSIS

§ 1.0 INTRODUCTION

§ 2.0 THE GENERAL RULE — THE MINERAL ESTATE IS THE DOMINANT ESTATE

§ 3.0 LIMITATIONS TO THE MINERAL ESTATE'S DOMINANCE

§ 3.01 Reasonably Necessary Surface Use.

[1] The Right to Enter Upon the Surface

[2] The Right to Construct Roads to Drill Sites

[3] The Right to Take a Reasonable Amount of Water

[4] The Right to House Employees

[5] The Right to Mine Caliche

[6] The Right to Construct Production and Storage Facilities

[7] The Right to Select Drilling Sites

[8] The Right to Select the Timing of Drilling Operations

[10] The Right to Conduct Geophysical Exploration and Seismic Operations

[11] The Right to Enter Premises With Growing Crops

[a] Use of an Excessive Amount of Surface

[b] Use of Fresh Water for Secondary Recovery

[c] Excessive Use of Water

[d] The Use of Obstructing Equipment

3.02 Non-Negligent Use

[1] Instances of Negligence

[2] Instances of Non-Negligent Operations

[3] Standard of Care

[4] Negligence Per Se

3.03 The Accommodation Doctrine

[1] Due Regard

[2] Getty Oil Co. v. Jones

[3] The Accommodation Doctrine Test

[4] Subsequent Limitations to the Accommodation Doctrine

[a] Lessee Does Not Have to Purchase Water Off-Premises

[b] Lessee May Take Salt Water for Water Flooding

[c] Surface Owner Must Show More Than Inconvenience

[Page 3-ii]

3.04 Statutory Limitations — Surface Damage Legislation

[1] The North Dakota Act

[2] The Oklahoma Act

[3] The Illinois Act. The Kentucky Act.

[4] The Indiana Act

[5] Colorado Regulations

4.01 Pooling and Unitization Surface Access Issues

[a] The General Rule

[b] Effect of Pooling or Unitization

5.01 Injury-to-Livestock — A Different Standard

6.01 Lease-Imposed Obligation to Pay Surface Damages

7.01 Surface Owner's Liability for Interference

8.01 Geophysical Trespass

[1] Physical Entry Requirement

[2] Non-Physical Entry Possibility

9.01 Geophysical Trespass Causes of Action and Damages

[1] Mineral Interest Owner/Lessee

[2] Surface Owner

———————

[Page 3-1]

§ 1.0 INTRODUCTION

Many states have long allowed the severance of the surface estate from the mineral estate.¹ As a result, many surface owners today do not own the minerals underneath their own land. This severance can lead to many problems because the surface owner's use is often inconsistent with either mineral exploration or production activities. This inherent conflict between the surface estate and mineral estate was accurately articulated by the 5th Circuit Court of Appeals as follows:

From the viewpoint of the surface owner when mineral operations are conducted all across his land, interfering constantly with his ranching or farming, the mineral use becomes unreasonable. But the mineral operator who employs the usual and customary methods of the industry views the matter differently; it would be unreasonable for him to give way to grazing animals by not developing the underlying minerals, i.e., by not drilling wells and building roads and power lines and flow lines and tank batteries. The viewpoint of these parties on reasonableness is quite different. Sadly for the surface owner, Texas Law, which governs in the present case, implies that a mineral lease gives a large measure of deference to the lessee's view of reasonableness.²

Given this context, what happens when the mineral owners decide to drill a well, and the best possible location is in the middle of a surface owner's crop? Or mineral lessees decide to conduct a seismic survey and need access to a pasture currently in use by the surface owner? This paper will address the respective rights of the surface owner and the mineral owner or its lessee. Its primary focus will be on Texas law as it is generally looked to for leadership on oil and gas legal issues. However, the law of other states is also included.

[Page 3-2]

§ 2.0 THE GENERAL RULE — THE MINERAL ESTATE IS THE DOMINANT ESTATE

The general rule is that the mineral estate owner has the right to use so much of the surface as may be reasonably necessary to enjoy the mineral estate, Harris v. Currie, 142 Tex. 93, 176 S.W.2d 302, 305 (Tex. 1943), and to interfere with the surface owner's use of it. Vest v. Exxon, 752 F.2d 959, 961 (5th Cir. 1985). This is because, as the Texas Supreme Court noted in its comprehensive decision in Harris:

a grant or reservation of minerals would be worthless if the grantee and reserver could not enter upon the land in order to explore for and extract the minerals granted or reserved.

176 S.W.2d at 305. See also Texaco, Inc. v. Faris, 413 S.W.2d 147, 149 (Tex. Civ. App.—El Paso 1967, writ ref'd n.r.e.) ("the mere granting of the lease creates and vests in the lessee the dominant estate ...."); Ball v. Dillard, 602 S.W.2d 521, 523 (Tex. 1980) (a mineral lessee has the right to use as much of the surface and in such manner as is reasonably necessary to comply with the terms of the lease and to effectuate its purposes).

Arkansas

Cranston v. Miller, 208 Ark. 156, 185 S.W.2d 920 (1945) (the mineral lessee has the right to use so much of the surface as is reasonably necessary to enable the lessee to perform obligations imposed upon him by the oil and gas lease).

Colorado

Frankfort Oil v. Abrams, 413 P.2d 190, 195 (Colo. 1966) (mineral owner's surface access rights are superior to those of the surface owner in the event of irreconcilable conflict).

Oklahoma

Wellsville Oil Co. v. Carver, 206 Okla. 181, 242 P.2d 151 (1952) (holder of a prior oil lease owns the dominant estate and possesses exclusive right to use so much of the leased premises as is reasonably necessary to oil operations).

North Dakota

Feland v. Placid Oil Co., 171 N.W.2d 829 (N.D. 1969) (whether express uses are set out or not, the mere granting of an oil and gas lease creates and vests in the lessee the dominant estate in the surface of the land for the purposes of the lease).

[Page 3-3]

Kansas

Mai v. Youtsey, 231 Kan. 419, 646 P.2d 475 (1982) (minerals lessee may make reasonable use of surface of leased land in carrying out legitimate object of the lease).

New Mexico

Amoco Oil Co. v. Carler Farms Co., 703 P.2d 894 (N.M. 1985) (mineral lessee is entitled to use so much of the surface as is reasonably necessary for its drilling and production operations).

Oklahoma

Ricks Exploration Co. v. Oklahoma Water Resources Bd, 695 P.2d 498 (Okla. 1984) (ordinary lease carries with it the incidental or implied right to enter and use surface to extent and in such manner as is reasonably necessary to enable lessee to perform all legitimate obligations imposed upon them by the lease); Turley v. Flag-Redfern Oil Co., 782 P.2d 130 (Okla. 1989) (ordinary lease carries with it the incidental or implied right to enter and use surface to extent and in such manner as is reasonably necessary to enable lessee to perform all legitimate obligations imposed upon them by the lease); Davon Drilling Co. v. Ginder, 467 P.2d 470 (Okla. 1970) (lessee has right of ingress and egress and to occupy the surface of the land to the extent reasonably necessary for exploring and marketing oil and gas); Mid-Continent Petroleum Corp. v. Rhodies, 205 Okla. 651, 240 P.2d 95 (1951) (lessee possesses exclusive right to use so much of the leased premises as is reasonably necessary to oil operations).

§ 3.0 LIMITATIONS TO THE MINERAL ESTATE'S DOMINANCE

There are four limitations to the mineral estate's right of dominance over the surface estate:

(1) the mineral owner may only use so much of the surface as is reasonably necessary for the exploration and production of the minerals;

(2) the mineral owner must use the surface and conduct his exploration and production operations in a non-negligent manner;

(3) the mineral owner must conduct his activities with due regard for the surface estate; and

[Page 3-4]

(4) the mineral owner must comply with statutory limitations.

3.01 Reasonably Necessary Surface Use.

Texas courts often express the mineral owner's right to use of the surface as the right to use as much of the surface, and in such a manner, as is reasonably necessary to comply with the terms of the lease and to effectuate its purpose. Ball v. Dillard, 602 S.W.2d 521, 523 (Tex. 1980); TDC Engineering, Inc. v. Dunlap, 686 S.W.2d 346, 348 (Tex. Civ. App. — Eastland 1985, writ ref'd n.r.e.). Lomax v. Henderson, 559 S.W.2d 466, 467 (Tex.Civ.App.- Waco 1977, writ ref'd n.r.e.). This is an important rule of law for the mineral interest owner because its application means that the surface owner has no right, absent some express contractual provision, to recover surface damages from the mineral interest owner or their lessee unless the surface owner can prove that the mineral interest owner or lessee used more of the land than was reasonably necessary or the surface owner can prove specific acts of negligence. Humble Oil &Refining Co. v. Williams, 420 S.W.2d 133, 134 (Tex. 1967). See also Vest v. Exxon, 752 F.2d 959, 961 (5th Cir. 1985) (the "reasonably necessary" limitation is "simply a limit on the manner in which the mineral operation is done, and it does not limit the right of lessee to develop and extract minerals in accordance with the lease."). If, however, a mineral interest owner or their lessee makes an unreasonable use of the surface, they can be held accountable in damages. Ball v. Dillard, 602 S.W.2d 521, 523 (Tex. 1980).

California

California Callahan v. Martin, 43 P.2d 788 (1935) (oil and gas lessee has a right to such possession of the surface as is necessary and convenient for the exercise of the profit).

Colorado

Frankfort Oil Company v. Abrams, 413 P.2d 190, 195 (Colo. 1966) (absent...