Mineral rights ownership – what is it and why is it so unique in the USA?

.Mineral rights ownership refers to who owns the rights to extract minerals – that is, oil,

gas, gold, coal and other metals and minerals – from lands located in that country. This

ownership is very important, since the rights confer considerable potential for profit from

the extraction of these minerals.

In virtually all countries around the world, the owner of the surface land – be it a house or

farmland – has absolutely no rights with regards to mineral ownership. Indeed, it is the

central governments or monarchs who own such rights. For example, in the United

Kingdom, the Queen in theory owns all the rights to extract minerals from all lands in the

country, including those lands located offshore. In practice, of course, this ownership is

actually governed by the central government.

In the USA, however, the owner of the surface land can ALSO have the rights to extract

minerals from underneath that land. In other words, private individuals own much of the

mineral rights across the USA, as opposed to governmental or state organizations.

How does the oil industry get to obtain the ability to extract oil and gas from lands

in these countries?

Typically, governments will section their lands into discrete areas, commonly referred to

as licenses. Governments will then offer such licenses, on a regular basis, to oil

companies, on certain terms that will allow such oil firms to begin exploration and

eventual development and extraction of any oil and gas located under the lands. The

terms offered by governments vary considerably worldwide, but typically they include

the following elements:

 a commitment by the oil company to conduct certain operations such as scientific

analysis and the drilling of test wells. Sometimes this commitment can actually be

a specified amount of money.

 in return for the above commitment, an oil company receives a multiple year right

to conduct oil exploration activities on the license – often this duration is 5 or