Most property owners in the US are unaware of mineral rights. Property ownership goes way beyond what’s on the surface. This makes things a little more complicated for the property or landowner.
Whether or not you’re sitting on a gold mine or an oil well, knowing all the terms regarding mineral rights and property rights, in general, can save you from unforeseen trouble and even make you rich.
In this article, we’ll talk in detail about depth rights. We’ll discuss what they mean for different parties in the conveyance of land and mineral rights.
What are Depth Rights?
Depth rights are part of mineral rights. To understand depth rights, you have to understand mineral rights first.
Mineral rights pertain to all the minerals, generally oil, gas, or solid minerals like gold or silver underneath the surface. At times, mineral rights also include surface rights, which give ownership of all the minerals on the surface.
Depth right indicates the depth into the surface the mineral owner has rights over. This is something that would be defined in the ownership deed or lease as to how much depth below the surface belongs to the mineral rights owner.
Now, if the mineral owner has all the depth rights, that would mean they own all the minerals below the surface. It doesn’t matter how deep below the surface they are buried. In other words, they have the right to drill and excavate as deep as they want or sell those rights to another party, of course, in compliance with any other applicable laws.
On the contrary, if they have depth rights to a certain amount of depth, say 10,000 feet below ground, they only have rights over that particular depth. Anything deeper than that belongs to the original mineral owner.
Why are Depth Rights Important?
In the oil and gas industry, the depth to which the company can drill is very important. Not only is it a legal matter but also an economical one. The more you need to dig deep inside the Earth, the higher the costs would be.
For royalties rights owners or lessors, the clause regarding depth rights is crucial because that will help determine the price or royalties that commensurate with the extent of those rights.
If you’re buying or selling mineral rights, you have to analyze the deed to determine who really owns the depth rights. In places like Texas, not only are surface rights bifurcated but also depth rights may be distributed among several parties.
Whenever buying a property with a potential for minerals or one that already has proven reserves, it’s necessary that you determine how much depth you will get rights over. The seller may not have all depth rights, which means you only have mineral rights over a certain extent of depth.
A mineral rights and royalties company is better equipped at ascertaining these little but crucial details about the property. Knowing the exact depth rights can help the seller get the right value for their property.
How Far Do Depth Rights Go?
We have come a long way in mineral extraction from underground to know which minerals may be found at what depth. So mineral rights, in general, and depth rights, in particular, depend on the minerals the buyer is looking for and the technology they plan on using.
Generally, the depth for open-pit mining is 100 to 500 meters (up to 1640 feet). This depth can be used for surface mining to extract elements like nickel, copper, coal, and even uranium.
Anything below 9000 feet or 2.8 kilometers is considered deep mining. For oil, companies typically want deep mining rights for at least 6000 feet below the surface. This is the average depth of oil and gas wells in the United States, according to the US Energy Information Administration (EIA).
It’s important to note here that the average depth of these wells has been increasing over the past decades.
The lack of technology was also a reason for that. However, the main reason for the increasing depths of oil wells is that oil is a finite asset. Therefore, companies are digging deeper to get more oil.
In the future, when oil reserves dwindle, oil companies may have to dig even deeper.
Do I Have Depth Rights of My Property?
As a property owner, you might be wondering if you even own the depth below the surface of the property.
This is something you can confirm in your deed or lease. It will indicate whether you have any rights over what’s under the ground. It will also indicate whether that includes all depth or a portion of it.
If you live in a city or populated sub-urban area, you don’t need to worry about depth rights so much. Many laws prohibit digging or excavating deep in such areas as that could result in damage to the infrastructure.
However, if you own an estate that has potential for minerals or is near oil fields, you should know the depth rights. You should find out who really owns the mineral rights and to what depth for your property.
For those buying new properties, make sure to include depth rights in the deed or lease document if they aren’t already owned by someone other than your seller.
Typically, landowners in the US have rights to both the surface and the minerals underneath. Depth rights and mineral rights questions don’t arise until those rights are sold by the rightful owner. After that, surface rights and mineral rights become separate and may be owned by many different parties.
As new technologies allow oil and gas companies to dig deeper into the Earth’s surface, depth rights will be an important consideration. Obviously, it would make sense to dig deeper where there are oil wells already instead of exploring new fields.
If you have royalty rights or have leased out the mining rights, you should know your depth rights as well. Knowing how deep the mineral rights actually go can help the parties involved avoid getting into legal trouble.