The Rule of Capture

By Stephen Clayman, career landman · May 7, 2015

Oklahoma Oil and Gas Mineral Owners,

The rule of capture is common in almost all oil and gas producing states. The rule establishes the ownership rights to natural resources. For the Oklahoman, the three most popular areas this rule applies to are oil and gas, groundwater, and wild game.

Why oil and gas are treated like wild game

It is accepted, just like deer jump fences, that oil and gas are migratory in nature. Millions of years ago dinosaurs and ferns died in the Anadarko Basin and through heat and pressure through geologic time, the carbon that made of their structures now are in the form of oil and gas, both fluids. And these fluids move through the pore spaces in the rocks where oil companies drill.

The owner who "captures" the resource or harvests the game within the boundaries of his land is the owner. One cannot drill under his neighbors land to prospect for oil, but he can drill close enough the property line to drink his neighbor's milkshake.

How the rule of capture led to overdrilling

Naturally, the rule of capture incentivizes the individual landowner to drill as many wells as possible on his land and remove all the oil and gas before his neighbors do the same. This is what everyone did during the earliest parts of the 20th Century in the prolific fields of Glenpool, LA, and Beaumont.

Why states created conservation commissions

This massive amount of drilling was enormously wasteful. Too many wells were drilled at high costs when a lesser number of wells could have drained the same reservoirs more efficiently. Also, because the reservoirs were damaged and the pressures were depleted, mass quantities of oil and gas are now prohibitively expensive to extract. The combat the rule of capture and its unintended consequences, states established conservation entities to lessen the waste and protect the rights of adjoining landowners. In Oklahoma, this entity is called the Corporation Commission and in Texas, the entity in called the Railroad Commission. Both have similar missions which will be discussed in the near future.

More to follow.

BR