Rule of capture: Difference between revisions

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(also referred to as the “law of capture”)

Generally

The common law rule of capture determines ownership of subsurface oil and gas. The general rule is that a landowner who extracts or “captures” 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.^[1] A corollary of this rule is that a person who drills for oil or gas may not extract the substance from a well that bottoms within the subsurface estate of another by drilling on a slant.

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 whomsoever owns the soil, it is theirs up to the sky and down to the depths).

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.^[2] 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: a landowner owns a corporeal possessory interest (similar to a fee simple) in the substances beneath his land, but his ownership is subject to the rule of capture. 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.^[3] The difference between the two theories is primarily of import in determining remedies.

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 oil or gas before his neighbor. Very dense drilling can lead to dissipation of the pressure within an oil or gas reservoir, and therefore, to incomplete extraction of the substance. To mitigate this danger, many states have sought to supersede the rule of capture with conservation acts.^[4] Such acts enforce prorationing, pooling, and limits on density of drilling to avoid physical waste and ensure maximum ultimate recovery.

References

^ 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).
^ See generally E. Kuntz, A Treatise on the Law of Oil and Gas.
^ See, e.g., Arkansas Code Annotated § 15-72-101 et seq.

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 ==Theories of ownership==
-When presented with oil and gas cases, early 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.<ref>''See, e.g., Hammonds v. Central Kentucky Natural Gas Co.'', 75 S.W.2d 204 (Ky.1934).</ref> 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: a landowner owns a corporeal possessory interest (similar to a [[fee simple]]) in the substances beneath his land, but his ownership is subject to the rule of capture.  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.<ref>''See generally'' E. Kuntz, A Treatise on the Law of Oil and Gas.</ref> The difference between the two theories is primarily of import in determining [[legal_remedy|remedies]].
+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.<ref>''See, e.g., Hammonds v. Central Kentucky Natural Gas Co.'', 75 S.W.2d 204 (Ky.1934).</ref> 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: a landowner owns a corporeal possessory interest (similar to a [[fee simple]]) in the substances beneath his land, but his ownership is subject to the rule of capture.  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.<ref>''See generally'' E. Kuntz, A Treatise on the Law of Oil and Gas.</ref> The difference between the two theories is primarily of import in determining [[legal_remedy|remedies]].
 ==Conservation acts==