The oil and gas laws of the United States are the legal branches relating to acquisitions and property rights in oil and gas underground prior to discovery and after his arrest, and adjudication of those rights.
Video Oil and gas law in the United States
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The laws governing oil and gas ownership in the US generally differ significantly from European law because oil and gas are often privately owned in the US as opposed to those held by national governments in many other countries.
Jurisdiction
In the US, oil and gas extraction is generally regulated by individual states through legislation and general law. Federal and constitutional laws also apply.
Maps Oil and gas law in the United States
Ownership
In the United States, oil and gas rights for certain packages may be owned by individuals, corporations, Indian tribes, or by local, state, or federal governments. Oil and gas rights extend vertically downward from the property boundary. Unless explicitly separated by a deed, the rights of oil and gas are owned by the landlord.
Oil and gas rights offshore are owned by state or federal governments and leased to oil companies for development. Controversy tidelands involve the limit of state ownership.
Although oil and gas laws vary by country, the law on ownership before, on, and after extraction is almost universal.
Before and on extraction
Because oil and gas are liquids, they can flow beneath the surface across the boundaries of the property. In this way, the operator can extract oil and gas from someone else's underground, if the extraction is done legally in its own property. An operator may not corner a well to penetrate under a property that is not owned or leased to him or her.
Two contradictory legal doctrines which include oil and gas extraction are the rules of arrest, and the doctrine of correlative rights. Which of the doctrines that apply in a particular case depends on state law, which varies greatly from state to state, or in the case of a federal offshore zone, to US federal law.
The arrest rules provide that oil producers with wellbore on its property are allowed to drain the oil from underground - even if some oil originating from neighboring lands, migrate to oil producer land through geological or drainage forces. The arrest rules give landowners an incentive to pump oil as quickly as possible by speeding up the operation or drilling of several wells to capture their neighboring oil. Such practices can reduce the gas pressure required to force oil from the soil, which will reduce the amount of oil available for recovery from the reservoir. State law often limits arrest rules to protect the correlative rights of neighboring owners. Government agencies and state oil and gas conservation commissions, such as the Texas Railway Commission, have developed conservation laws that regulate extraction by individual owners to protect the rights of mineral owners and to prevent economic and physical waste.
Divide the plantation
Mineral rights may be decided by a deed of the rights to the surface. This condition is called a split estate. Once separated from ownership on the surface, oil and gas rights can be bought, sold, or transferred, like other real estate properties. Ownership in oil and gas rights for different horizontal layers, or strata, can be subdivided and sold to various parties. In some states, mineral rights are disconnected back to landowners if mineral rights are not exercised for a certain period of time.
In most states, unless specified otherwise by a deed, the owners of oil and gas interests allegedly have the right to occupy as much of the surface property required to extract oil and gas, subject to regulation for minimum distance from home or building. The courts generally argue that, without this implied right of access and surface occupancy, ownership of oil and gas rights will be meaningless. This is called subsurface supremacy.
Ownership of oil and gas extraction
The purified hydrocarbons that pass to the ground are not subject to the law of arrest, unless evidence indicates that the distiller leaves it. The extracted oil and gas which is then stored in the underground reservoir is considered a private property, not as an interest in real estate.
Rent
Oil and gas producers do not always have the land they have ulcers. Often, the company (lessee ) leases the mineral rights from the owner (lessee ). The main points in the lease include property description, term (duration), and payment to the lessor.
Reduction of mineral rights has the right to sensible access to leased land to explore, develop and transport minerals unless the lease declares otherwise (leased "surfaceless access").
Rental period
Rent remains valid for a certain period of time, called the main term, as long as the tenant pays the annual rent. Rent will expire after the first term, unless drilling or oil and gas production has commenced on lease. If production is set, the lease will remain in effect after the main term, as long as the lease continues to produce oil or gas. However, rent can be revived based on a delayed lease. Rental delay is the fee paid to the lessor, to delay production or start drilling, without terminating the lease. There are other clauses that also revive the lease.
To start drilling wells below the habendum clause means that substantial preparation for drilling should be done, as long as the steps have been initiated in good faith and with due diligence. The habendum clause establishes these terms, as well as the most significant, identifying the parties in the transaction and their interests in the real property submitted.
An oil and gas lease generally includes a force majeure clause. Such an agreement relieves the lessee of responsibility for the offense, if party performance is hampered as a result of natural causes that can not be anticipated or prevented. This God's action must really prevent performance and should not be anticipated. Courts often interpret this clause very closely and seldom enforce it. For example, a tornado that prevents performance in Oklahoma will not trigger a force majeure clause because a tornado is a common occurrence in Oklahoma.
The Responsible Federal Oil and Gas Lease Law (2008), also called the "Use or Decrease" bill (HR 6251 IH), proposes to forbid the Interior Secretary from issuing a new federal oil and gas lease to an existing lease holder develop land that is subject to existing rent or release the rent. The bill failed to be ratified in the House.
Pugh clause
Unless otherwise specified, building commercial production from one well in the lease will hold the entire lease as long as production continues. The opposite language is called the Pugh clause. The Pugh clause may state that the production well can hold only a certain area around the well; after the main term, the owner of the mineral is free to lease the rest of the land to others.
The Pugh vertical clause limits the rent to a certain depth or a particular geological formation. A common form of the vertical Pugh clause limits the depth held by production from the soil surface to the deepest producer formation established at the end of the primary term.
Payments
Payments to the lessor usually take three forms: bonuses, rent, and royalties, as negotiated among the parties. The bonus is a prepayment made at the time the lease is in effect. Rents are annual payments, usually made until the property begins producing oil or gas in commercial quantities.
Royalties are part of the gross value of any oil or gas generated from the rent paid to the mineral owner. This is not part of the profits, because it is paid without deducting the cost of drilling, completion, or the operation of the well. Whether an operator can cut costs to process, transport, or market oil and gas, if not mentioned in the lease, has become a matter of legal dispute. The traditional royalty rate for oil and gas in the United States is one-eighth (12.5 percent), although today is often higher. Some states, such as Pennsylvania and West Virginia, have set a legal minimum royalty for private oil and gas leases to eighth.
In the lease "without delay lease", the tenant agrees to pay the delay rent as long as the tenant does not drill on the property. An "exception" lease of oil and gas terminates automatically, if the lessee fails to drill within the prescribed time or pays the lease of deferment as mentioned in the lease.
Contract
Oil and gas contracts have different nuances than standard contracts. For example, when an oil and gas lease assignment expressly states that any renewal or renewal of the lease must be subject to the main royalties, a new lease that is substantially similar to the first lease and earned by the recipient of the rights during the period of the first lease, is deemed, law, as an extension of the first lease extension.
Statutes may override agreements made by the parties. For example, legislation may invalidate an agreement to indemnify a construction worker as a liability for death or bodily injury to an oil well, regardless of indemnite negligence, without affecting the validity of an insurance contract. This affirms the right of each party to obtain insurance, not to protect the interests of compensation. This match for negligence is usually carried by workers at a drilling site known as roustabout.
The two most common contractual agreements made by oil and gas companies are Farmout Agreements and Joint Operations Agreements. Farmout agreements, generally, are between one company that owns a lease, and another company that wants to drill the property. Companies that want to drill, called farmers, provide drilling services in exchange for a majority interest owned by farmers.
Combined operation
In some cases, oil or gas rights or leases within drilling units are held by more than one company or person wishing to participate in drilling and production. In such a case, various interests sign a Joint Operating Agreement, a contract signed by two or more owners or tenants of a lease contract to jointly explore and develop oil and gas properties, including operations, voting mechanisms, subsequent operations, risk sharing, indemnities and exculpatory provisions, revenue allocations, title exams and title issues, and future acquisitions and divestments in the contract area. One company is designated as an operator, and operates the property day by day.
There are various terms that describe the interests of ownership in oil or gas wells. Interest that signifies the duty to pay a fee is called:
- Working Interests : part of a well drilling or a paid operating expense. Employees of work interest will also have an appropriate interest income, but usually lower.
Interest in receiving revenue includes:
- Net Interest Income : revenue share received, connected to work interests
- Royalty Flower : the portion of income received, not related to work interests, and therefore received without paying any fees; usually connected with ownership of hired mineral. When the mineral owner signs the lease, he receives a royalty interest.
- Replace Royalty Interest : the portion of income received, not related to mineral holdings or work interests. A person or company may receive a major royalty by contract with the owner of the net interest income. It's usually acceptable to do some services for job interest owners. Original owners of oil and gas leases will sometimes retain major royalties as part of a farmout agreement.
For oil and gas properties, total working interest should be increased up to 100%. Amounts of net interest income, royalty interest, and major royalties, must also be added up to 100%.
In education and practice
Law school classes that teach oil and gas law generally require students to take first class in property and contract law. In Texas and Wyoming, oil and gas laws are tested on a bar exam.
Oil and gas law practitioners typically fall into three broad categories. First, oil and gas companies usually have an internal lawyer who notifies the company of its rights and legal issues. These lawyers are usually assisted by land people, who inspect property rights, oil and gas rights, and acquire property for the company. The landlord may be his own lawyer. Second, practitioners can represent the private sector. When an oil company tries to acquire land from a private sector, a party may retain advice to get better information about its rights and to negotiate a favorable offer with the oil company. Finally, oil and gas lawyers work for federal and state governments that oversee energy and environmental policies and land acquisitions.
There are several nonprofit foundations available to continue the practical and scientific study of oil and gas law, such as the Energy Foundation and Mineral Law and the Rocky Mountain Mineral Law Foundation.
Rule
Oil and gas drilling and production regulations are largely left to states, except for offshore federal waters, where operations are regulated by the Marine Energy Management Bureau. The names and organizational structures of state agencies that oversee oil and gas extraction vary. In Texas, oil and gas is regulated by the Texas Railway Commission, in Oklahoma by the Oklahoma Corporation Commission, and in North Dakota by the Industrial Commission. In Colorado and Wyoming, these bodies are the State Oil and Gas Conservation Commission.
Local control of oil and gas operations is highly controversial. The main legal issue is generally whether, or to what extent, state regulations precede local control. The results vary from country to country.
Countries need drilling permits before drilling begins well. Requirements for receiving drilling permits generally include minimum setbacks of rents or unit boundaries, and adequate casing and cementing programs.
Countries generally require a permit for or notification of major work done on wells, and periodic reports on oil and gas produced.
When a well reaches the end of economic production, it must be plugged in accordance with the terms of the installation permit.
If the rights of oil and gas on land are owned by the federal government, as is the case for many lands in the western United States, licenses must also be obtained from the Bureau of Land Management and the state, which may have different requirements from equivalent state licenses.
See also
- Energy law # United States
- Renewable energy in the United States
- New York energy law
References
External links
- Biodiversity Center v Dept of Interior 17Apr2009 DC Appeals Declaration on a 5-Year MMS Plan relating to OCS lease Alaska.
Source of the article : Wikipedia
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