There is a big difference between surface rights and mineral rights. At LandGate, we assist thousands of property rights owners and have seen an increase in questions related to surface rights. As a result of the recent push to increase the development of wind and solar farms, it is becoming increasingly important to understand the difference between mineral and surface rights in 2021.
When you think of property, you might visualize a farm or a ranch, or perhaps something you could walk or drive across, or build a home on. That would be called the surface of the property. When you think of oil and gas mineral rights, you might visualize an oil company operating a drilling rig in hopes of producing oil and gas.
The surface and underlying oil and gas minerals were originally “bundled” together. In other words, the surface rights and mineral rights were originally owned by the same individual, state, or government agency. There are two ways to sever the surface rights from the mineral rights. The property owner can sell the surface and retain the minerals rights. Or the property owner can sell the minerals and retain the surface. This severance would create a surface estate and mineral estate.
What are surface rights?
The surface owner has an exclusive right to enjoy the surface to the fullest extent. Examples would be to farm the property, run cattle, hunt, fish, and build homes and businesses. Surface rights would also include the ability to lease the property to others for farming, ranching, hunting, etc.
What are mineral rights?
For the purpose of this article, when referring to mineral rights, we are referring to oil, gas, and other hydrocarbons that can be produced from wells drilled down into hydrocarbon-bearing formations. Mineral rights are property rights whereby the mineral owner has the right to explore for and produce oil and gas. The mineral owner has the right to:
Enter the property to explore for oil and gas.
Authorize another to enter onto the property to explore (by granting an oil and gas lease).
Receive the benefits (from granting an oil and gas lease), such as bonus consideration for royalty.
Mineral owners also have the right to use a reasonable amount of the surface to explore for hydrocarbons.
Even though the mineral owner may own no part of the surface, courts have ruled that the Mineral Estate is the Dominant Estate. The only way for the mineral rights owner to benefit from mineral ownership is by having the ability to get a well drilled from a surface location down into the hydrocarbon-bearing formation. So, the surface owner must allow for a reasonable amount of the surface to be used as a drill site location and possible production facilities. The Bureau of Land Management, BLM, explain the laws and amendments that surround leasing and development of split surface and mineral rights.
Surface Owner Rights - Leasing Land for Solar Panels or Wind Turbines
The surface owner has the right to lease or sell all or a portion of the surface estate for the development of wind turbines and solar panels. Additionally, the surface owner has the ability to sell the surface and retain the right to lease or sell wind rights and solar rights.
Are there conflicts between the surface estate and the mineral estate?
Absolutely there are conflicts! Historically, in the oil and gas business, mineral owners lease the minerals to an oil company. Then the oil company notifies the surface owner that it plans to drill a well on the surface owner’s property. Disputes have found their way into the courts, where it was determined that the oil company has the right to use a reasonable amount of the surface for drilling operations.
Do these conflicts impact wind farm and solar farm development?
These conflicts can impact the development of wind farms and solar farms. It is especially important for wind and solar companies to know the status of the mineral estate. Even if the mineral owner has not yet leased the mineral rights to an oil company, the mineral owners will always have the right to grant an oil and gas lease. That lease will grant the oil company the right to build roads, build drill site locations, dig water pits and lay pipelines, etc. Wind and solar companies will send a landman to the county courthouse to see if the minerals were severed from the surface estate and if the minerals have been leased. If the surface owner also owns the minerals, the wind and solar developers will coordinate their efforts with the surface owner, which will allow their minerals to still be explored in the future but require the oil company to coordinate drilling plans with the wind and solar developers first. Curious about what your surface or minerals are worth? You can find your parcel on our map to get your free lease and sale estimates in your Property Report. From there, you can list your surface or mineral rights for lease or sale on our free leading marketplace.