Energy Policy

Concepts of Ownership


Energy resources are a lucrative commodity. There are various considerations to explore when it comes to ownership in the context of energy resources. One important distinction when it comes to the extraction of fossil fuels like oil, coal, and natural gas is between surface rights and mineral rights. It is not always the case that the person (or persons) who own(s) the land also own(s) the energy resources beneath it.

Surface rights - the landowner only owns the land, nothing below it.

Mineral rights - refer to ownership of the oil, coal, gas, or other minerals below the surface and includes the right to access the minerals and to receive bonuses and royalties from the extraction/production of the minerals.

It might be surprising that you could own a huge tract of land sitting on top of some valuable energy resources but not actually own any of those minerals, doesn't it? How does this happen? When the property is bought and sold, the seller may choose to retain rights to the minerals and only transfer surface rights to the new owner. But, obviously, the two go hand in hand to some extent - how can the owner of the mineral rights access their property if they do not also have surface rights?

The mineral rights owner can use as much of the surface as is reasonably necessary to extract the mineral resource. In many instances, they do not even need to acquire the permission of the surface rights owner to do so.

Required Reading

Let's explore this further in the context of natural gas exploration in the Marcellus Shale. This has gained a lot of notoriety here in Pennsylvania recently as the gas boom has taken off. Read this article about mineral rights to understand how this process works.