Rule of capture: Difference between revisions
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==Conservation acts== |
==Conservation acts== |
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The rule of capture creates an incentive for an owner to drill as many wells as possible on his piece of land so as to extract the groundwater, oil, or gas before his neighbor. Very dense drilling can lead to dissipation of the pressure within an aquifer or oil and gas reservoir, and therefore to |
The rule of capture creates an incentive for an owner to drill as many wells as possible on his piece of land so as to extract the groundwater, oil, or gas before his neighbor. Very dense drilling can lead to dissipation of the pressure within an aquifer or oil and gas reservoir, and therefore to overdrafting the aquifer or incomplete extraction of the substance. To mitigate this danger, many states have sought to supersede the rule of capture with conservation acts.<ref>''See, e.g.,'' Arkansas Code Annotated § 15-72-101 et seq.</ref> Such acts enforce prorationing, pooling, and limits on density of drilling to avoid physical waste and ensure maximum ultimate recovery. |
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==References in popular culture== |
==References in popular culture== |
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Revision as of 05:50, 11 January 2009
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The law of capture or rule of capture is common law from England[1], adopted by a number of jurisdictions in the United States, that determines ownership of captured natural resources including groundwater, oil, gas, and game animals. The general rule is that the first person to "capture" such a resource owns that resource. For example, the landowner who extracts or “captures” groundwater, oil, or gas from a well that bottoms within the subsurface of his land acquires absolute ownership of the substance, even if it is drained from the subsurface of another’s land.[2] A corollary of this rule is that a person who drills for groundwater, oil, or gas may not extract the substance from a well that bottoms within the subsurface estate of another by drilling on a slant.
Theories of ownership
When presented with oil and gas cases, early common law jurists were somewhat reluctant to recognize a corporeal possessory interest in substances they considered to be fugacious or “wild and migratory,” and therefore subject to loss by drainage.[3] Among U.S. states, two different theories of ownership of oil and gas arose. Some states, such as Texas, have adopted the “ownership-in-place” theory for oil and gas: a landowner owns a corporeal possessory interest (similar to a fee simple) in the substances beneath his land, but his ownership is a determinable fee subject to the rule of capture.[4] Other states, like Oklahoma, have adopted the “exclusive-right-to-take” theory: a landowner does not own the substances that underlie his land; he merely retains the exclusive right to capture the substances, a non-corporeal interest.[5] The difference between the two theories is primarily of import in determining remedies.
Boundary determination
Subsurface ownership boundaries are the same as those upon the surface, projected downward to the center of the earth. This concept is based upon the Roman legal principle of property law, cuius est solum eius est usque ad coelum et ad inferos (for whosoever owns the soil, it is theirs up to the sky and down to the depths).
Conservation acts
The rule of capture creates an incentive for an owner to drill as many wells as possible on his piece of land so as to extract the groundwater, oil, or gas before his neighbor. Very dense drilling can lead to dissipation of the pressure within an aquifer or oil and gas reservoir, and therefore to overdrafting the aquifer or incomplete extraction of the substance. To mitigate this danger, many states have sought to supersede the rule of capture with conservation acts.[6] Such acts enforce prorationing, pooling, and limits on density of drilling to avoid physical waste and ensure maximum ultimate recovery.
References in popular culture
A scene from the 2007 film There Will Be Blood illustrates the rule of capture. Eli Sunday (Paul Dano) asks oilman Daniel Plainview (Daniel Day-Lewis) to purchase an oil and gas lease on land owned by a member of Sunday's church. Plainview, who owns the subsurface rights on an adjacent piece of land, had already extracted the oil. He explains: "If you have a milkshake, and I have a milkshake, and I have a straw... and my straw reaches across the room, and starts to drink your milkshake, I drink your milkshake! I drink it up!"
References
- ^ Acton v. Blundell, 12 Mees. & W. 324, 354, 152 Eng. Rep. 1223, 1235 (Ex. Ch. 1843).
- ^ See, e.g., Ohio Oil Co. v. Indiana, 177 U.S. 190, 203 (1900).
- ^ See, e.g., Hammonds v. Central Kentucky Natural Gas Co., 75 S.W.2d 204 (Ky.1934).
- ^ Michel T. Halbouty et al., v. Railroad Commission of Texas et al., 357 S.W.2d 364 (Tex. 1962)
- ^ See generally E. Kuntz, A Treatise on the Law of Oil and Gas.
- ^ See, e.g., Arkansas Code Annotated § 15-72-101 et seq.
Further reading
- Lowe, et al., Cases and Materials on Oil and Gas Law, 4th Ed. West Group (2002).