The Rule of Capture

The following is a brief excerpt from a more in depth article published by the West Virginia Surface Owners Rights Organization:

“Currently, for most oil and gas wells drilled in West Virginia, the laws regarding who owns the gas that comes out of oil or gas wells, and what this means about how many wells are drilled how close together, are based on a common-law principle stemming from hunting rights adopted by courts in England during the Middle Ages. This principle, the Rule of Capture, does not recognize the fact that the boundaries of oil and gas reservoirs (pools) do not follow property lines designated in deeds of mineral interests.

“Oil and gas reservoirs are extensive pools that may extend under hundreds or even thousands of acres of land. Under the Rule of Capture, the first person to drill a well that taps into a pool of oil or gas has the ability to use, and possibly deplete, the oil or gas under not only their own property, but also under the property of neighboring mineral owners, and without paying anything to the neighbors for doing so!”

There is a longer explanation of the Rule of Capture and the abuses it can lead to here.

What we are referencing specifically in this article is found at Slide 24a.

“As part of our third “example” in this slide show, here is another example of a different abuse of the rule of capture. The owner of the surface and minerals labeled the “FOREMAN” land in the middle of the image did not want to lease at all really, and especially not to the driller who was drilling gas wells around him. So the driller drilled six statutory “shallow” gas wells all around him, right across his boundaries. The result was that the driller legally stole the gas out from under the landowner without paying him anything for it.”

In our previous article titled, “Signing Gas Leases to Help Protect Our Water Supply”, we explained how the nonprofit corporations managing land in what is known as New Vrindaban only own 25% of the net mineral acres on the ridge where New Vrindaban is located. It is not in one block, but rather scattered amongst the other 75% not controlled by New Vrindaban. At the time New Vrindaban managers were contemplating whether or not to sign gas leases 55% of the mineral rights on the ridge had already been leased to gas drilling companies, and of the other 20% not owned by New Vrindaban, many of the private land owners were on the verge of signing leases with Chesapeake. As of this writing at least 95% of the ridge is known to be leased to drilling companies, less than 1% percent is known to have not leased, and the other 4% (absentee landowners) is unknown but likely to have leased.

The stark reality was that because of the geography of New Vrindaban properties and the Rule of Capture, a significant amount of the natural gas that New Vrindaban had claim to was going to be taken regardless if we signed a lease or not. The only question was who was going to get the royalties — New Vrindaban or other local landowners.

As drilling was already active on neighboring ridges, drilling near New Vrindaban’s lands was imminent. As a matter of fact, within a year of New Vrindaban signing, the first well, Snyder 1H, was drilled on a neighboring property less than 200 yards (200 m) from the Bahulaban property line.

The managers of New Vrindaban’s non-profit corporations decided it would be better if we proactively signed a lease with a more environmentally responsible company, AB Resources, accept the funds and use them in Krishna’s service by making capital improvements in and around the New Vrindaban Community.

The next article will talk about how the principle of yukta-vairagya, true renunciation, was applied in the decision making process.

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