Pore Some More: Current Legal Considerations of Pore Space Ownership in Texas

Texas has been the leader in American energy independence for more than a century. Decades of industry innovation have provided Texas real property owners with new ways to extract value from minerals, water, and more recently, subsurface pore space. Due to advances in technology, access to subsurface pore space has become both efficient and economical.

Surface owners and pore space operators alike are obviously concerned with the ownership of the pore spaces, but governmental regulatory issues are also important. The statutes and the regulations concerning the operation of pore spaces are a whole other topic. However, in 2007, Texas House Bill 3732, created tax incentives for carbon sequestration of anthropogenic CO₂ and provided for oversight of these projects by the Texas Railroad Commission (RRC) and the Texas Commission on Environmental Quality (TCEQ). Also, in 2007, Texas House Bill 1967 allowed common carrier status for pipelines carrying CO₂ products. In 2009, Texas Senate Bill 1387 gave the RRC jurisdiction over CO₂ in hydrocarbon reservoirs, including allowing the owner to recover the future CO₂. The Bill also directed the RRC to promulgate permitting rules. The EPA categorizes permits by “Class,” with Class VI covering sequestration permits. The Texas Legislature in 2021 (HB 1284) allowed the RRC jurisdiction over Class VI permits (the EPA allowing same).^[1]

Pore space can be defined colloquially as “empty space between particles of sand and sediment or the space within and between rocks,” or even “the interconnected voids, including pores, fractures, cleats, and cracks, within rocks that define their physical properties and fluid flow characteristics.”^[2] Practitioners want to know who has the right to utilize and monetize the storage capacity of the subsurface. The financial and tax benefits attributable to the capacity to store non-native gas or carbon dioxide in large reservoirs compel an answer.

The English Rule recognizes title in the mineral owner. The majority view, or the American Rule, vests pore space title in the surface owners.^[3]

However, in Mapco v. Carter, a dispute arose concerning the ownership of an underground salt dome storage facility.^[4] The Court made a factual finding that the underground storage cavern was created out of the mineral. The Court concluded that the ownership of the cavern created out of the mineral, in this instance salt, would be “an appurtenance of the mineral estate.”^[5] It is of note that the Court in Mapco came to this decision not through precedential decisions related to prior oil and gas conflicts; it was trying to resolve an equitable dispute of partition. The Court did not cite previous pore space litigation. Mapco has only been cited in three appellate cases since 1993.^[6] It has now been overruled.

Other cases have reached conclusions regarding the ownership of underground pore spaces. For example, in Humble Oil,^[7] the Court made it clear that “the reservoir storage space, subject only to the reserved right of the Wests to the payment of royalties on minerals that are produced and saved,^[8] where it was said that the surface of the leased lands remaining as the property of the respective landowners –included the geological structures beneath the surface, together with any such structure that might be suitable for the underground storage of extraneous gas produced elsewhere.”^[9] Even though the mineral estate owns the gas extracted from that formation, which becomes personal property at the surface, it may then inject the gas back into the same pore space. That pore space would be an attribute of the surface estate.^[10]

In 2022 the Corpus Christi Court of Appeals held in favor of the surface owner.^[11] Here, the surface owner disputed the Company’s use of the salt mine pore space for storing other hydrocarbons; arguing that the surface estate owned the pore space within the underground salt formation.^[12] The Court agreed that the surface estate has an ownership interest within the pore space, continuing:

The Company merely owns the mineral estate, which includes ownership of the salt found in the subsurface materials. Although a mineral owner may have a real property interest in the minerals in place, it does not “own” any specific minerals while they are still in the ground. Coastal Oil & Gas Corp. v. Garza Energy Trust, 268 S.W.3d 1, 15 (Tex. 2008). Rather, “[t]he minerals owner is entitled, not to the molecules actually residing below the surface, but to ‘a fair chance to recover the oil and gas in or under his land, or their equivalents in kind.’” Id. (quoting Gulf Land Co. v. Atlantic Ref’g Co.,131 S.W.2d 73, 80 (1939)). The mineral estate owner is entitled to extract the minerals, lease to a producer the right to extract the minerals, receive royalty payments for minerals that are extracted, receive delay rentals, and receive any other compensation for the minerals. Lightning Oil Co. v. Anadarko E&P Onshore, LLC, 520 S.W.3d 39, 49 (Tex. 2017). There is no case law that supports a conclusion that a mineral estate owner who does not own the surface estate owns the subsurface of the property and may then use the subsurface for its own monetary gain even after extracting all the minerals. See XTO Energy Inc.,584 S.W.3d at 487. Mapco did not make this leap. See 808 S.W.2d at 278.^[13]

On May 19, 2024, the Texas Supreme Court upheld the lower court decision on the issue of pore space ownership (reversed regarding the issue of salt royalty), Myers-Woodward LLC v. Underground Services Markham, LLC and United Brine Pipeline Company, LLC, ___S.W.3d___, No. –22—0878, WL 1415892  (Tex. 2025). The Court held that regardless of value, the pore space is not a mineral. The Court expressly overruled Mapco. Accordingly, it held that the use of the pore spaces by the mineral owner to store off property hydrocarbons violates the correlative rights doctrine implied as the result of the dominance of the mineral estate. The Court relied on Humble and Anadarko to reach the conclusion that in the absence of an agreement to the contrary, the surface owner owns the possessory rights to the subsurface pore space. Accordingly, the mineral owner must comply with the law of correlative rights in the use of the surface estate (see below).

By rejecting Mapco, Myers-Woodward clearly establishes that pore space ownership is vested in the surface estate. Accordingly, the mineral operator is free to exploit the mineral estate. However, any use of the pore spaces adjacent to those mineral molecules must take into consideration the ownership interests of the surface estate.

In a practical sense, pore space operators looking to store any material within underground storage spaces, outside specific disposal wells, are well advised to ensure that adequate consideration is paid to the owner of the surface estate. At a minimum, operators should look at entering into agreements with the surface owner.

The increase in value of storing non-native materials into pore space has created a market involving both the mineral and surface estates. Interest in these operations is shared by renewable energy stakeholders, government regulators, and tax experts. Also concerned are mineral owners and lessors. With the size and scope of this industry expanding, pore space considerations have become an almost hybrid estate. Although Myers-Woodward clarifies the ownership of severed pore space in favor of the surface owner, practitioners must be aware of current case law, regulations, and statutory enactments when representing clients or drafting pore space or injection contracts or related documents.