Last Updated on The correlative rights doctrine is a very important legal doctrine that determines the rights of owners to a common reservoir based on the land owned. It is put in place to prevent overproduction and damage to common reservoirs which could arise from the use of the rule of capture.
What Is The Correlative Rights Doctrine?
The correlative rights doctrine is a legal doctrine that states that each property owner of a common reservoir is expected to have his or her fair share of the recoverable oil or gas beneath the land owned.
When it comes to oil and gas law, the correlative rights doctrine limits the mineral owner’s right to produce oil and gas in the sense that it must be done without waste and negligence.
What Is The Purpose Of Correlative Rights Doctrine?
The main purpose of the correlative rights doctrine is limiting the rule of capture, which means that every owner of a common reservoir is only given their fair share of the attainable oil and gas beneath the land.
What Is An Example Of A Correlative Right?
One example of correlative rights is the correlative right of dominant and servient owners in right-of-way for pipeline. This provides a permanent and limited interest in the land to enable operation without damaging the common reservoir.
When Are Correlative Rights Applied?
These are some of the cases where the correlative rights doctrine is applied:
Water Rights
In a case where various parties rely on a common source of water like an aquifer or river, the correlative rights are applied. So based on their beneficial and reasonable use of the resource, each party is given a correlative right to a share of the available water.
Mineral Rights
Correlative rights also come into play when it comes to the extraction of minerals like coal, oil, or gas. Depending on ownership interest, each person is given a correlative right to a share of the extracted minerals.
Riparian Rights
Riparian rights are given to property owners that have their land adjacent to a water source. The riparian owners are each given correlative rights to a share of the water.
Oil And Gas Production
Correlative rights may sometimes apply to oil and gas production from a common pool. With this in place, each owner with an interest in the pool is given a correlative right to a share of the production.
What Are The Benefits Of The Rule Of Capture?
The rule of capture states that a producer can acquire title to all oil and gas produced from a well on the land, even if some of the oil migrated from an adjoining tract. One of the major benefits is that it tends to encourage exploration of natural resources. It also allows producers to extract oil or gas without considering adjacent properties.
Also, without the rule of capture, oil and gas producers would be reluctant to conduct oil and gas exploration as the costs of paying adjoining landowners would overwhelm the benefits of exploration.
What Is The Problem With The Rule Of Capture?
The major problem with the rule of capture is that as ownership is shared over a common source, it tends to encourage overproduction, which could lead to the damaging of common reservoirs.
Are There Limitations On Correlative Rights?
Even while correlative rights ensure shared resources are fairly allocated and used, there are still some limitations binding each party. These include;
- Pollution: The party given a correlative right should not use their shared resource in a way that would result in pollution or environmental harm.
- Surface Damage: Each party that has a correlative right should take measures to minimize surface damage to the property of other parties.
- Reasonable and Beneficial Use: Each party has to use their share of the common resource reasonably and beneficially. That means the user should not be unreasonable, extravagant, or wasteful.
Conclusion
The correlative rights doctrine and rule of capture are two major laws that address oil and gas extraction. The correlative rights doctrine helps to place a reasonable limit on the overproduction of oil and gas to prevent damage to a common reservoir.
The correlative rights doctrine is protected with pooling and unitization regulation, production allowable, and well-spacing rules.
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