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Wyoming Bill Takes a Look at Mineral Rights

Friday, February 28, 2020 11:00 AM | Texas Energy Advocates Coalition (TEAC) (Administrator)

Wyoming has traditionally been a “first-to-file” state. So when oil prices began to rise back in 2017, oil and natural gas companies in Wyoming started acquiring as many permits as they could, even if they had no intention of immediate drilling. This left operators who were not as quick on the draw, but who wanted to drill right away, out of luck.

First to file

A new rule, advanced in July 2019, kept the “first-to-file” tradition alive but gave other operators a 15-day window after receiving a horizontal well application notice to challenge the permit holding operator. Should they miss this window, their next opportunity would not be until the permit goes up for renewal after two years.  While helping operators, mineral rights owners groups complained that the new rule did nothing to encourage immediate drilling or to break up monopolies held by large companies.

Forced Pooling

This year, a new bill up for debate hopes to revise the terms permitted operators use in negotiations with non-leasing mineral owners. The majority of Wyoming is considered split estate land, meaning a private party owns the surface of the land, but the federal government owns the minerals under it; so with multiple operators, landowners, and the federal government all involved over one piece of land, confusion can quickly spiral out of control. Part of the new bill, therefore, addresses “forced pooling,” enabling multiple working interests in a single drilling unit to pool their funds to cover costs associated with drilling. "Under current law, it’s up to that unleased mineral owner to work out a system themselves to get paid for their minerals," explained Pete Obermueller, President of the Petroleum Association of Wyoming. "This bill just adds some statutory protection for those people."

Surface owners in Texas

In Texas, courts have long considered the mineral owner to be the dominant estate when surface and mineral rights are owned by different entities. That does not mean the surface owner is without protection. Judicial accommodation doctrine requires mineral owners to accommodate existing surface uses such as ranching or agricultural operations as is reasonably practicable. Also, most mineral lessees often voluntarily agree with the surface owner to compensate them for any surface impacts and often agree to restrict drilling within a certain distance of existing structures. 


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