Karen J. GreenwellWyatt, Tarrant & Combs, LLP

250 West Main Street, Ste. 1600Lexington, Kentucky 40507

(859) 233-2012

Oil and Gas Ownership and Regulation

Ownership of Real Property

Ownership Of Real Property

What Do You Own?

The “Bundle Of Sticks” Analogy

The Most Simple Fee Ownership – One Person Owns All The Sticks

Own “From The Top Of The Sky To The Center Of The Earth.” (Cujus est solum, ejus est useque ad coelum et ad infernos.)

Dividing Real Property

Vertical DivisionsDivide A Large Tract Into Smaller Tracts

Keep All The Sticks – Just Make Each Smaller

Dividing Real Property

Horizontal Divisions

Convey Different “Estates” Out Of The Fee

Divide The “Bundle” And Separate The Sticks

Oil &/Or Gas

Coal

Surface

Other Minerals

Dividing Real Property

Estates In Real Property Are Created By Grant Or Reservation

Grant Of “Minerals” Leaves The Grantor With The Surface Estate

The Owner Of The Minerals Can Further Divide Them Granting The Coal (Or Certain Seams) To One And The Oil And/Or Gas (Or Certain Depths) To Another

Severed Minerals

The Terms Of The Documents By Which Minerals Are Severed Control The Nature and Extent of the Grant

What Minerals Were Granted Or Reserved And How They Are Described

Solid Minerals

Oil and Gas

Coalbed Methane

Surface Rights

Surface Rights “Appurtenant” To Minerals

Uses Of The “Servient” Surface To Remove The “Dominant” Minerals

Drill Pad, Tank Area, Gathering Lines

Portal, Haul Road, Fan Shaft

Drill Hole Through Coal To Get To Oil Or Gas

Ownership of Oil & Gas

Rule of Capture

Owner of property acquires title to all the oil or gas produced from wells on that property, regardless of whether it migrated from adjacent lands.

Pierson v. Post – Ferae Naturae

OIL AND GAS CONSERVATION

Develop the resource in the most efficient and economical manner

Control Well Density

Control Proximity of Wells to Adjacent Properties

Assigning acreage to a well

Equitable sharing of oil and gas

Ability to pool or communitize acreage (voluntarily and involuntarily)

Protect the resource from wasteful or harmful practices

Prevention of adverse environmental impacts

WELL DRILLING TECHNOLOGY

Vertical Horizontal Directional

Federal Regulation of Oil & Gas Development

Clean Water ActAddresses Discharges Into The “Waters Of The U.S.”

Handling Of Water On The Surface

Control Of Runoff From Work And Storage Sites

Clean Air ActAddresses Emissions OF VOCs And Methane From Wells, Pipelines And Other Facilities

Federal Regulation of Oil & Gas Development

Safe Drinking Water ActRequires Protection of “Potable Water” by Casing and Cementing Wells In Freshwater Zones

Regulations for Wastewater Injection Wells

Endangered Species ActProtects endangered plants and animals and their habitat

Oil and Gas Ownership and Regulation

Karen J. GreenwellWyatt, Tarrant & Combs, LLP

250 West Main Street, Ste. 1600Lexington, Kentucky 40507

(859) 233-2012