Chapter 42 - § 42.3 • HISTORY OF OIL AND GAS LAW

• Jurisdiction: Colorado

§ 42.3 • HISTORY OF OIL AND GAS LAW

The policies behind many modern oil and gas cases, statutes, and regulations, including those in Colorado, stem from how mineral interests were historically treated and how this body of law has evolved throughout the years. As such, it is helpful to summarize the history of oil and gas law in Colorado, as well as other oil and gas producing states.

§ 42.3.1—Ad Coelum Doctrine

Oil and gas law is an example of the development of a new body of law by modification of existing common law concepts. Lowe, supra. In 1859, when the first well was drilled in Titusville, Pennsylvania, the prevailing principle of mineral ownership in the United States, including Colorado, was the "ad coelum doctrine." See, e.g., Wolfley v. Lebanon Mining Co., 4 Colo. 112, 114 (Colo. 1878). Also described as the "heaven to hell" principle, the ad coelum doctrine stated that the owner of property owned everything under the surface of his or her lands up to the heavens. This doctrine worked well for hard rock minerals. However, it did not work well for oil and gas because a single reservoir often underlies the land of many different landowners. Disputes arose about landowners' rights to oil and gas beneath their land because landowners, drilling on their own property, could extract oil and gas from beneath adjacent lands due to the migratory nature of petroleum. Courts soon realized that, because of these characteristics, strict application of the hard rock mineral doctrine to oil and gas would discourage mineral owners from drilling for fear of liability for drainage from their neighbors' properties. To avoid such liability, the ad coelum doctrine was soon modified by the rule of capture, which many describe as a "rule of convenience."

§ 42.3.2—Rule of Capture Doctrine

The rule of capture provides that the owner of a tract of land acquires title to the oil and gas that he or she produces from wells drilled on that land without liability, even though it may be proved that part of the oil and gas migrated from adjoining lands. Under the rule, there was no liability for capturing oil and gas that drains from another's lands. Lowe, supra. The rule of capture encouraged development of oil and gas resources by recognizing the migratory character of oil and gas and the impossibility of determining liability for drainage where a landowner lawfully produces from wells located on his or her land. Robert E. Sullivan, "Oil and Gas Conservation Law and Practice...