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What is the rule of capture for oil and gas?

On Behalf of | Sep 25, 2023 | Oil & Gas Law

As a property owner, or someone looking to extract resources, you need to be clear about people’s rights.

While this can be complex for resources such as gold or coal which are static, it can be even more complex when the resource concerned can move, such as in the cases of oil and gas.

Oil is found in liquid form, hence it can flow through cracks and fissures both vertically and horizontally. Gas can expand into spaces and can do so in any direction. Thus oil or gas that is currently on one person’s property could disperse into property owned by someone else. Who would own it then?

There are two concepts at play here

The rule of capture says that the first person to capture the resource is entitled to it, although you cannot just drill on another person’s property to get to it.

So, under this rule, if you drill on your land and oil or gas from the neighbor’s land filters down into the spot you are drilling, you are entitled to extract it. Under the rule of capture, they cannot complain, all they can do is set up their own operation to extract it before it leaves their property.

The second concept relates to property ownership

If something is on your property then it is usually yours, unless the right has been signed to someone else. So the oil or gas sitting under your land is yours under this second concept.

So which rule takes precedence?

Does the oil or gas still belong to the property owner when it leaves their property? Does someone who captures it have to share it with the person whose land it was on before?

Individual states have their own opinions about this and it can get complex, so it’s crucial to seek legal help to establish what may apply if you are concerned about your situation.