Mineral Rights: Who Owns What Lies Beneath?
Introduction: What are Mineral Rights?
Ever since humans discovered certain minerals have value, wars have been fought, kingdoms have fallen, and arguments have endured about who owns what. Gold was first discovered several millennia before the Christian Era started, and has ever since increased in value. It was first used as jewelry and other adornments. Now its use has evolved from not only a valuable jewelry piece to being used on spacecraft due to its electrical and mechanical properties.
Perhaps the first challenge about who owns minerals was from an early ruler somewhere, who declared to their kingdom that the ruler owned all the riches, and anyone who disputed that might just lose their head!
Because at least some societies have become more civilized, penalties for disputes of mineral ownership have changed from beheadings to being penalized either monetarily or with prison time. Further, when there is a question of ownership in our modern era, legal questions arise, along with their unique problem set.
A working definition of mineral rights ownership is exactly what it sounds like: Who owns the minerals on or beneath a parcel of land regardless of who owns the land? As a rule of thumb, one can figure that whenever a mineral has monetary value to a person and/or society, it is most likely subjected to mineral rights ownership.
There are four main types of mineral right ownership. First is a unified estate, where one person or entity owns the surface and any minerals beneath. Secondly there is a severed estate. In this case mineral ownership is severed from surface ownership. Historically, in the United States this has happened in two ways. One, the federal government reserved and did not grant minerals in their initial homestead grants. Two, an owner decides to split a property or estate into a surface interest and a mineral interest (1).
Another situation is fractional ownership, where one party owns “X” percent of the total minerals, while “Y” percent is owned by another. This type of arrangement commonly occurs in an estate situation when an owner leaves the mineral rights to children or grandchildren (1).
Finally, severed landowner royalties are encumbrances on a land title, which convey a percentage interest of the minerals to several parties. An example of this is the landowner retaining a 50 percent interest in any monies derived from mineral mining, and conveying 25 percent interests to two other parties (1).
To complicate matters further, ownership of different types of minerals can be separated beneath the same parcel of land. In other words, one party might own the gold, another the silver. Needless to say, the possible combinations of the above scenarios are many.
The following is an example of a complicated instance obtained from an online discussion thread:
“In 2000 I bought my home and 5 acres in Upstate NY and the following year bought a separate parcel of property that is adjacent to it (it once went with the house and 5 acres I bought in 2000). I have been exploring my options and thinking about leasing to a natural gas company, however I am now being told I only own 1/3 the mineral rights to the property. Apparently in the 1930’s when the ” Jones ” family sold the property, they retained 2/3 mineral rights. When looking at my deed, sure enough down through the decades that stipulation is left on all transactions, no matter who purchased the land. I questioned my attorney on this and he said he was aware of it at the time but there were no options, and that it was to be clarified so I can enter into a lease agreement, then the gas company is responsible for attempting to locate any heirs, or ensuring there are none. The deed says nothing of the surface rights, so he said they can’t drill or otherwise explore without my consent, but I can’t lease out the natural gas, as I don’t own the full mineral rights. Any thoughts or suggestions as to what my options are here?”(2).
It is clear with this example that mineral right ownership can get so complicated nothing can be accomplished without miles of legal red tape.
Types of Minerals Subjected to Mineral Rights
What types of minerals are sought after by parties that own mineral rights? The first question before delving into that question is this: What is a mineral by definition?
True minerals are inorganic, solid, have a definite chemical identity, and posses an orderly internal arrangement of atoms. Examples of valuable metallic minerals include, gold, silver, copper, and lead. Examples of non-metallic minerals of value are quartz, calcium carbonate, halite and gypsum.
Although fossil fuels are not technically minerals by definition, they are treated as valuable minerals by society. Fossil fuels can be divided into two categories: petroleum/natural gas deposits, and coal. Mineral rights for petroleum and gas deposits are sought after by the large companies that provide us with gasoline at the convenience store pumps. Many of these companies have “land” departments, whose purpose is to constantly research and acquire mineral rights.
In the United States, over the past ten years or so, emphasis has been placed on enhanced natural gas recovery from shales by “fracking”, which is injecting fluid under pressure into the ground to forcefully remove natural gas. The proliferation of fracking in the United States has led to a surge in the purchase of mineral rights associated with potentially productive lands.
The other category of fossil fuel is coal. Coal is used primarily as fuel for power plants that generate electricity in the United States. Unlike petroleum and gas products, coal can be mined either on the surface or in underground mines.
True minerals that are commonly prospected for if mineral rights are owned include the metallic minerals gold, silver, copper, and lead. Nonmetallic minerals of value include quartz, calcium carbonate, halite and gypsum. How these, and the other minerals mentioned above are used by society, is explained next.
Uses of Minerals Subjected to Mineral Rights
Fossil fuels, by volume, are the most used commodity associated with mineral rights. Raw petroleum (hydrocarbons) pumped from oil wells is refined into several products. Not only is the gasoline we use in our vehicles refined from petroleum, but many plastic products we use are composed of hydrocarbons. The plastic housing in computers, plastics used in kitchen appliances, light housings, outlet covers, TV housings, and many more items come from refining raw petroleum. Our society is petroleum dependent: we use it to heat our homes, drive our vehicles, and create more efficient products.
Natural gas may be used as is, or refined into propane, ethane and methane. Natural gas and its byproducts are “cleaner” burning fuels than gasoline and heating oil. Propane is used as fuel for engines, oxy-gas torches, portable stoves, and residential central heating. Refined ethane is used in anti-freeze and detergents, welding gas, and a refrigerant (3). Finally refined methane is used in rubber tires as a reinforcing agent, spot removal products, and fire extinguishers.
The “solid” fossil fuel, coal, is used in cement manufacture, steel production, and power plants that produce electricity. As it contains carbon, refined coal products are used in filters for water and air purification and kidney dialysis. Further uses include carbon fiber; a lightweight reinforcement material used in construction, mountain bikes, and tennis rackets (4). In addition, refined carbon is used to aid in the production of silicon, which in turn are used to make lubricants, water repellents, resins, cosmetics, hair shampoos and toothpastes (4).
True minerals (by definition) are commonly subjected to mineral rights. Metallic minerals have many uses other than jewelry. Silver, for example is used in electrical contacts, batteries, dental alloys and mirrors. Compounds of silver, such as Silver Bromide and Iodine were important in the history of photography. Silver salts are used to protect against illegal photocopying and are important in producing high quality reproductions (5). Another example is Gold. Its non-jewelry use includes bullion stored as a monetary standard, gears for watches, tooth fillings, and artificial limb joints. Further, it can be beaten into very thin sheets or wire for electrical connections.
Other important, generally non-jewelry metals, include copper and lead. Most copper is used as wiring in motors and other electrical equipment. This is because it conducts both heat and electricity very well, and can be drawn into wires. It also has uses in construction (for example roofing and plumbing), and industrial machinery such as heat exchangers (6). Lead is an easily worked, corrosion-resistant metal that has been used for pipes, pewter and paint since Roman times. It has also been used in lead glazes for pottery and, in this century, insecticides, hair dyes. It has also been used as an anti-knocking additive for petrol. Most of these uses have now been banned, replaced or discouraged as lead is known to be detrimental to health, particularly that of children (7). Now, lead is still widely used for car batteries, pigments, ammunition, cable sheathing, weights for lifting, weight belts for diving, lead crystal glass, radiation protection and in some solders. Further, it is often used to store corrosive liquids. It is also sometimes used in architecture, for roofing and in stained glass windows (7)
With regard to non-metallic minerals, diamonds are probably the most important. Not only are diamonds prized as jewelry, they have great value in certain industrial applications due to their hardness. Industrial-grade diamonds are often used on drill bits, saw blades and grinding wheels because diamond can cut almost every other material known to man. Diamond powder is also used as an abrasive for polishing or fine grinding. (8)
Natural Mineral Combinations and Mineral Rights
Some minerals are formed in certain combinations in nature. In some cases, this makes the pursuit of mineral rights quite interesting. For example, copper, lead, zinc and silver can be found as a “suite” of minerals formed in the same geologic environment.
Some copper deposits provide an example of this. By far the largest amounts of copper are found in the crust in bodies known as porphyry copper deposits. Copper is often associated with other metals such as lead, zinc, gold, and silver. These deposits were once large masses of molten rock that cooled and solidified deep in the Earth’s crust. At first, the molten rock contained a small amount of copper and the other metals. As it cooled and crystals began to form, the fluid portion of the mix became smaller. The copper and other metals remained in the fluid, becoming more and more concentrated. When the rock was almost completely solid, it contracted and cracked and the remaining copper-rich fluid was squeezed into the cracks, where it too finally solidified. Over many millions of years the rocks covering these deposits eroded away and the deposits eventually appeared at the surface (9). When a deposit like this is mined, copper is the primary product, with smaller amounts of the other metals being recovered.
Another natural mineral combination is copper – zinc, with may sometimes contain gold, silver, and lead. These are found in Volcanogenic Massive Sulfide Deposits. These deposits form in association with volcanism on ancient sea floors, and are also associated with past hydrothermal vents. When solidified, uplifted, and exposed on land, they commonly are rich in metals.
There is a common thread associated with these metallic mineral combinations. That is they are formed by hot, hydrothermal fluids rich metallic ions that concentrate the metals in fractures or veins. Minerals rights associated with multiple minerals in the same place could be very complicated. Does one party own it all, or does someone own the gold, someone else the silver?
Petroleum and natural gas are also commonly found together. Oil and natural gas are formed from the remains of prehistoric plants and animals of the ocean. Their remains settled on ancient ocean floors along with sand, silt and rocks. As the sediments settled, layer upon layer piled up on the sea bottom trapping the organic material. Without air, the organic layers could not rot away. Over time, increasing pressure and temperature changed the mud, sand and silt into rock and slowly “cooked” the organic matter into petroleum and natural gas.
Over millions of years, the oil and gas that formed in the source rock deep within the Earth moved upward through tiny connected pore spaces in the rocks. Some seeped out at the Earth’s surface, but most of the petroleum hydrocarbons were trapped by nonporous rocks or other barriers. These underground traps of oil and gas are called reservoirs. Reservoirs are not underground “lakes” of oil; they are made up of porous and permeable rocks that can hold significant amounts of oil and gas. Some reservoirs are hundreds of feet below the surface, while others are thousands of feet underground (10).
In general, mineral resources can be somewhat “bundled” into distinct categories, such as metallic metals or petroleum products. In general, where metallic minerals are found, petroleum products are not, and visa versa. Therefore, the types of minerals to be found in certain areas is probably known by all interested parties, making assignment of mineral rights more straightforward than it otherwise might be.
Silicate Minerals and Mineral Rights
Silicate minerals make up approximately 90% of the Earth’s crust. With the exception of quartz in sandstone, all the previously mentioned minerals are non-silicates. Combined, non-silicates form the remaining 10% of the Earth’s crust. Considering the fact of location, depth, and economic cost of processing, the availability of this remaining 10% is likely to be at least cut in half. It appears the more valuable the mineral is, the more rare it is. Indeed, gold is present in the Earth’s crust on average at 1 part per billion.
Therefore, due to their great potential volume, their value is less than, for example, petroleum or silver. Most silicate minerals are of value as gemstones. There are numerous locations around the United States where gems samples can be collected from privately owned locations, where the owner generally owns a unified estate.
In most cases then, severance of minerals rights and surface ownership has not occurred for these silicates, as they are relatively common and are “under the radar” with regard to being hunted for mineral right ownership.
Silicates are also valued as sandstone and quartzite crushed stone products for the construction industry. Here, the silicate quartz is the primary mineral of sandstone. As with most gemstone locations, crushed stone quarries are generally a unified estate situation. Silicates associated with crushed stone locations, are technically considered “Industrial Minerals”, as described next.
Industrial Minerals and Mineral Rights
Industrial minerals, also known as raw minerals, are used either in their natural state or processed state to make building materials, ceramics, glass, plastics, paper, electronics, and many more industrial and domestic products.
Industrial minerals are generally defined as minerals that are not sources of metals, fuel, or gemstones. The most widely used industrial minerals include limestone, clays, sand, gravel, diatomite, kaolin, bentonite, barite, silica, gypsum, potash, and talc. Some of the industrial minerals commonly used in construction, such as crushed stone, sand, gravel, and cement, are called aggregates (11).
Industrial minerals are quite versatile; most have at least two or more applications and span multiple markets. Talc, for example, is used in cosmetics, plastics, and paper. Silica sand is used to make glass, ceramics, and abrasives. While industrial minerals are defined as non-metallic, there are a few that have metallurgical properties, such as bauxite, which is the primary source of aluminum ore and is also used to make cement and abrasives. Bentonite and barite are industrial minerals that have an important application in oil and gas extraction as components in drilling fluids. Bauxite and kaolin are used in fracking operations.
Market demand for industrial minerals influences how they are mined. Industrial minerals are extracted primarily by surface mining, which is less expensive than underground mining. However, even when a location is determined to have a potentially economically viable mineral deposit, the costs of drilling, extraction, and transporting the raw materials still must be considered and weighed against the current market demand for that particular mineral. Industrial minerals are typically mined from existing sites or areas that are close to infrastructure as their price usually doesn’t justify the cost of building up the infrastructure needed to explore a new site (11).
Industrial minerals may be subjected to all the aforementioned types of minerals rights. Again, the general rule of thumb is, the more value a industrial or other type of mineral has, the more likely it has been subjected to having mineral ownership and surface land ownership being divided.
(1) Montana State University Extension. Understanding Mineral Rights.
(2) I am being told I do not own mineral rights on my land. EXPERTLAW Legal Help, Information, and Resources.
Retrieved from: http://www.expertlaw.com/forums/showthread.php?t=16329
(3) Reference.com. What are the uses of Ethane.
Retrieved from: https://www.reference.com/science/uses-ethane-aaba98635dff7c7d
(4) WORLD COAL ASSOCIATION. Uses of coal.
Retrieved from: http://www.worldcoal.org/coal/uses-coal
(5) Silver. Periodic Table. Retrieved from: http://www.rsc.org/periodic-table/element/47/silver
(6) Copper. Periodic Table. Retrieved from: http://www.rsc.org/periodic-table/element/29/copper
(7) Lead. Periodic Table. Retrieved from: http://www.rsc.org/periodic-table/element/82/lead
(8) Reference*com. What are the primary uses of diamonds? Retrieved from:
(9) Minerals Downunder. How Copper deposits are formed.
(10) energy4me. Petroleum – Oil and Natural Gas.
(11) ThermoFisher SCIENTIFIC. Ubiquitous Industrial Minerals: Nature’s Most Popular Raw Materials.