Who owns rights to store oil in an underground salt cavern?

Last June the Corpus Christi Court of Appeals decided that the right to store oil in a salt cavern belongs to the surface owner. In Myers-Woodward, LLC v. Underground Services Markham, LLC, et al., No. 13-20-00172-CV, the court addressed a dispute between Myers-Woodward, which owned the surface estate and a royalty on minerals, including salt, in a tract in which Underground Services owned the salt. Underground Services mined and sold salt by solution-mining from a salt cavern under the land. Myers-Woodward disputed how Underground calculated its royalties on the salt. Underground also asserted that, as owner of the salt, it has the right to use the resulting salt cavern to store hydrocarbons. The court ruled in favor of Underground on its method of determining the royalties owed, but it ruled in favor of Myers-Underwood on the right to use the resulting salt cavern, holding that Myers-Underwood held the storage rights, a part of its rights as owner of the surface estate.

Underground cited Mapco, Inc. v. Carter, 808 S.W.2d 262 (Tex.App.–Beaumont 1991), rev’d on other grounds 817 S.W.2d 686 (Tex 1991), in support of its claim to storage rights. Mapco has often been cited as lending uncertainty to the issue of whether the surface owner owns the pore space under its land. The Beaumont court in Mapco, without citing any authority, held that the mineral owner had storage rights for underground storage facilities. After reviewing other authority, the Corpus Christi court concluded that, contrary to Mapco, “the well-recognized, decisional law states that the mineral estate owner owns the minerals but not the subsurface. … Therefore, we decline to follow Mapco in this case.”

Storage rights have become a more important issue recently with the advent of CO2 sequestration projects in Texas. Although the court did not cite Lightning Oil v. Anadarko, Lightning would seem to support its conclusion as well.

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