Texas Oil and Gas: The Key That Expanded Lessees’ Surface-Use to All Tracts in a Pooled Unit

The mineral estate is the dominant estate over the surface estate in Texas, and nowhere is this clearer than the production of oil and gas. An oil and gas operator can use as much of the surface as is reasonably necessary to effectuate the purpose of its oil and gas lease, subject to few limitations. Under a pooling clause and the Texas Supreme Court’s ruling in Key Operating & Equipment, Inc. v. Hegar, operators can burden the surface of a tract of land for the benefit of an entire pooled oil and gas unit. Synthesizing Key with the Texas Supreme Court’s rulings in Delhi Gas Pipeline Corp. v. Dixon and Wagner & Brown, Ltd. v. Sheppard allows operators to burden surface owners for the benefit of these large pooled oil and gas units—even with postseverance pooling agreements and expired oil and gas leases. Further, as property owners sever the surface estate from their mineral estate, surface owners are left without power to negotiate with oil and gas operators interested in the mineral estate only. The Texas Railroad Commission should require all operator–lessees make a good-faith effort to enter surface-use agreements with surface owners in pooled oil and gas units. Requiring this of all operator–lessees benefits both the surface owners and the operators, even when a surface owner refuses to enter the surface-use agreement. Finally, there are other options the Texas Railroad Commission may consider to correct this issue; however, requiring operators make a good-faith attempt to acquire a surface-use agreement is the cheapest and most efficient way to address this issue without changing Texas oil and gas law jurisprudence