In a word, the surface estate owner. If that’s all the learning you are up for today, proceed directly to the musical interludes. If you want to know why the Supreme Court of Texas had to say this again, read on.
In a 1947 mineral deed Myers retained the surface estate in a 160-acre tract. The grantee received “]an] 8/8ths interest in the said oil, gas and other rminerals … ” in the property. Underground Services later acquired “… all of the salt and salt formations … “ from the mineral owner.
In Myers-Woodward, LLC v. Underground Services Markham, LLC et al, the court addressed claims to the right to store oil in large, empty caverns within a salt-rock formation. Citing its holdings in Humble Oil & Refining v. West and Lightning Oil Company v. Anadarko the court concluded that Underground does not own the subsurface caverns remaining after salt production and has no right to use them for purposes not specified in its deed.
Citing Lightning, the court observed that the mineral estate generally includes the right to possess the minerals but does not include the right to possess the specific place or space where the minerals are located.
In Coastal Oil & Gas Corp. v. Garza Energy Trust the court reasoned that the mineral owner’s right does not extend to specific oil and gas beneath the property. The right is not to the molecules actually residing below the surface but to a fair chance to recover the oil and gas in or under the tract. Ownership must be considered in connection with the rule of capture, which is also a property right.
Underground sought to confine these precedents to only migratory minerals like oil and gas, contending that a different rule must apply to solid minerals like salt, which do not migrate and are not subject to the rule of capture. From this, Underground asserted unqualified ownership and control of the molecules actually residing below the surface, which should apply to solid minerals such as salt and, more specifically, ownership of the salt formations themselves.
The court assumed that Underground correctly asserted unqualified title to the molecules of salt underground rather than simply the right to a fair chance to recover them. However, Underground does not own the salt formations; all it owns is the salt. The deed to Underground referred to “salt formations” from which it argued that it owns the other geologic features, including voids contained within the salt formations. But its predecessor did not own the salt formations. A grantor cannot convey a greater or better title than he holds. The predecessor was conveyed the minerals, which includes the salt itself but not the salt formation.
The court declined to make one rule for underground storage space encased in salt or other mineral formations and another rule for underground storage space can say stop encased in nodding mineral rock formations.
Underground argued its right to use that part of the surface estate as an owner of the dominant mineral estate. A mineral owner’s right to use as much of the surface and subsurface as is reasonably necessary to recover applies only to his minerals. Storage of hydrocarbons produced off the property is not related in this case to Underground Services’ production of salt on the property.
The court explicitly overruled Mapco Inc. v. Carter, a 1991 court of appeals opinion holding that the mineral estate owner retains a property interest in the underground storage cavern created by salt mining. Mapco probably presented the last avenue available to the mineral owner to claim dominion over the pore space.
More than once, the opinion qualified its ruling by “unless the parties agree otherwise” language. This signals that pore space can be severed from the surface along with the mineral estate if an instrument is worded the right way, including, one woujld assume, instruments executed in the past and those in the future.
Myers also reserved a 1/8th royalty, the calculation of which we will address next time.
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