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Mineral rights
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A mineral right allows a property holder to own, extract, and sell minerals under the Earth's surface. These minerals can include coal, oil, natural gas, gold, silver, copper, iron, and more. Mineral rights differ from surface rights, which allow property holders to develop, transfer, or sell the surface of a particular plot of land. Additionally, surface owners can hold mineral rights, though other surface holders may not hold a mineral right. As such, they cannot extract the resources, such as oil, gold, or copper, under their land.[1][2]
The United States allows property holders to have a right to parcels of land and a right to the minerals under the surface. In contrast, sovereign governments in some countries have total ownership of all subsurface minerals, and individuals and groups must receive governmental approval before they can access those resources.[1][2]
Background
In the United States, individuals and groups may hold surface rights and mineral rights, which is known as a fee simple estate. A fee simple estate involves total private ownership and an owner who holds the land's surface, its subsurface (including minerals and other resources), and the air above a particular piece of land.[3][4]
Owners can sell, lease, or gift surface and mineral rights to individuals, groups, or businesses. Further, owners can sell or lease mineral rights and retain their surface rights. These owners negotiate with individuals, groups, or businesses to extract certain resources under the owner's land. For example, an owner's subsurface may have coal deposits that the owner cannot mine himself. The owner can negotiate with a coal company to extract the coal and retain surface ownership (this includes ownership of any buildings on the surface). These transactions differ depending on the specific agreement. For example, an owner may transfer the mineral right to own all known or unknown minerals under the surface, such as coal, copper, iron, or any other resource. On the other hand, an owner can transfer a more limited mineral right to a company to extract a specific kind of mineral or resource.[1][2]
After an individual or business purchases a mineral right, it purchases the right to enter the property and extract the resource at some later date. The individual or business may provide compensation to the surface owner in the form of cash payments, royalties, or a combination of the two.[1][2]
Oil and gas rights
A mineral right may include the right to oil and natural gas resources, which can be sold or leased to individuals or businesses. For example, an owner may lease these resources to a company if the lessee is uncertain about the actual amount of recoverable oil and gas resources, and leasing is generally less costly than purchasing the mineral right. A company seeking a lease may provide a lease payment, sometimes known as a signing bonus, to persuade a property owner to issue a lease.[1][2]
The lease allows a company or individual to drill an exploratory well or otherwise test whether marketable oil and gas resources exist under the property. In some cases, an exploratory well can extract the oil and natural gas directly, while in other cases more wells must be drilled to access the oil and gas.[1] [5]
See also
Footnotes
- ↑ 1.0 1.1 1.2 1.3 1.4 1.5 Geology.com, “Mineral Rights,” accessed January 29, 2014
- ↑ 2.0 2.1 2.2 2.3 2.4 CourtHouseDirect, "Mineral Rights vs. Property Rights: Are you Sitting on a Gold Mine?" May 3, 2013
- ↑ Montana State University, "Understanding Mineral Rights," accessed April 6, 2015
- ↑ Investopedia, "Mineral Rights," accessed April 24, 2017
- ↑ Mineral Web, "Oil & Gas 101: Oil and Gas Basics for the Mineral Owner," accessed April 24, 2017
