As the name implies, an oil and gas attorney specializes in the law as it pertains to the industry. Even so, it includes a wide range of legal topics, including property law, mineral rights, contract law, and environmental law.
The gas and oil industry becomes more complex by the day, it seems, and the field has been around long enough to spawn a vast array of regulations and requirements. Leases can become quite intricate when multiple property owners and royalty owners are involved. Horizontal drilling introduced new levels of entanglements. Technology brings it to a whole new level. All in all, oil and gas is complicated.
Here’s a deeper look into the profession, and why you may need one on your side.
Why the Industry Needs Lawyers
Property ownership, mineral rights, and the rule of capture all conspire to form a gordian knot of statutes and regulations that binds the industry together yet creates fissures between parties. Considering the amount of money involved in oil and gas exploration and production, it should come as no surprise that emotions (including greed) run high.
The United States is a country bound by law, which is supposed to be applied without emotion. Attorneys act as both champions and go-betweens in an attempt to get the most for their clients while keeping the mayhem to a minimum.
The individual states set much of the law surrounding oil and gas. In mineral-rich states like Texas, the legal situation has been roiling since Spindletop. Over the years, laws have been implemented, challenged, and changed with regularity. By now, only an attorney specializing in the industry, perhaps even a small segment of the industry, can keep everything straight.
The industry, as well as private citizens, need lawyers to research and translate oil and gas rights between companies and landowners. They need someone who understands how the rule of capture applies in their state and can apply the correlative rights. Everyone needs assistance when questions of ownership arise, not just of the surface and mineral rights but of royalties and other remuneration.
Oil and gas attorneys can provide services across multiple practice areas as they touch on the industry. Some practice areas are rather broad and are common to several industries, while others are more closely tied to minerals.
- Mineral Rights:
At the heart of oil and gas law sits mineral rights. In Texas, where the mineral estate can be severed from the surface estate, then split further between owners, mineral rights can become a 1,000-piece puzzle.
In cases of a split estate, there is also the legal concern of reasonable use of the surface to access an area to dig a well and transport product. The oil and gas company would like to use the most efficient and convenient areas while the landowner would prefer to have all the mess somewhere out of the way.
Most states and municipalities have setback rules that further limit the available surface area. The company may not disturb homes or buildings, plus other rules apply. Thus, the need for an attorney familiar with local and state law as it applies to mineral rights.
Contracts and Transactions:
Contract law is big in oil and gas. A single well can spawn multiple contracts that rule every transaction that takes place between mineral rights owner, landowner, and well operation, to name a few.
Contract law involves deed and property transfers, leases, division orders, royalty payments, pooling and unitization agreements, and surface use agreements. Multiple parties may be signatories, and a single lease can encompass numerous owners.
Each signatory must understand the contract as it applies to their rights, and an attorney for each side may be necessary to hash out all the details fairly and according to state law.
Title Examinations and Opinions:
Before a lease is signed, an oil or gas exploration and production company must identify ownership. In Texas, that task includes tracing the ownership of the surface and of the mineral estate, in the event the estates have been split.
A landman performs a title search, tracing the ownership of a particular parcel, sometimes from sovereignty. As land is split up and sold over the years, the mineral rights and surface rights diverge. An attorney takes the title report and prepares an opinion about who owns what and how the rights are shared.
Heirs may not be aware they own the mineral rights to anything, leading to the need for an attorney to make determinations about missing properties or suspended funds. When a mine becomes productive, division orders can muddy the royalty waters still further, requiring legal knowledge and a detail-oriented mind to sort everything out.
Environmental, health, and safety regulations anchor regulatory compliance. Each adds a thick, new layer of rules for companies to follow as they go about their business. It's an unfortunate fact that oil contamination is damaging to most life and that the waste products from mining can cause problems of their own.
To maintain compliance in a complex regulatory environment, oil and gas companies need an attorney well versed in regulatory laws. Regulations are set at the federal, state, and local level, each adding rules that may seem contradictory. To wend your way through them, either to protect your company or guard your ownership rights, an oil and gas lawyer becomes a necessity.
Oil and gas companies are no strangers to litigation. Owners challenge leases, make claims about damages, or attempt to change royalty payouts. Companies can come under fire for environmental damage or breach of contract. Owners may sue each other as can companies.
As the old saying goes, the man who acts as his own lawyer has a fool for a client. All of these cases need attorneys who understand oil and gas law. Litigation is a serious affair. Once the disagreement reaches a courtroom, every bit of minutia comes under scrutiny. Unsurprisingly, feelings can run high.
Each side needs someone in their corner to protect their interests. An attorney is the one who stands up and fights for them.
Oil and gas attorneys are involved in every phase of the industry. Some firms specialize in specific areas, while others offer a range of services. Anyone involved in the sector soon learns how convoluted the legal landscape has become, with technology and new ways of drilling, creating still more complications.
Every property owner, mineral rights owner, or operator needs the services of an oil and gas attorney to keep things straight in a byzantine world.