MINERAL RIGHTS AND REAL PROPERTY IN THE CA DELTA

MINERAL RIGHTS AND REAL PROPERTY

You may be asking what are mineral rights and what do they have to do with real estate? A ‘mineral right’ is a right to extract a mineral from the earth or to receive payment in the form of a royalty, for the extraction of minerals. When referring to ‘minerals’ in the Delta area it is usually referring to natural gas.

The Rio Vista Gas Unit and a significant portion of the deep rights below the Rio Vista Gas Unit, together constitute the greater Rio Vista Field, is the largest onshore natural gas field in California and one of the 15 largest natural gas fields in the United States and was originally discovered in 1936 and currently has over 142 producing wells with many more closed or idle.

You will see around the Delta many ‘rigs’ and odd looking equipment that looks like a tank with pipes leading out of it in the middle of a field or on the edge of the road. These are often natural gas rigs or the remains of the tanks after they have initially been drilled. They are in the main in evasive and produce a gentle hum.

In purchasing real estate up and down the Delta you may be asked to sign a disclosure stating you are so many feet from a producing operative gas well, particularly common with the new home builders.

Recently, in Walnut Grove there was a well that was being erected and local residents complained about the noise of the ‘rig’ on it’s erection, many residents did not know about mineral rights and although had lived in the vicinity were not aware of the natural gas and gas wells on surrounding agricultural land. For many years farmers have been collecting the royalties for the right of the gas companies to drill on their land. The royalties can be quite a handsome price if it is a ‘producing well. Many mineral rights are not owned by the sellers, they have already been taken out and put into a trust or not conveyed with the property.

Minerals can be conveyed separately from the surface of the property. The mineral estate can therefore by severed from the surface rights of the property. The seller of a piece of land or property may not even know about the mineral rights, when selling a piece of property always check the title records to see if there are mineral rights and even then there may have to be a more thorough search done by the title department to show any records of mineral rights.

Whilst mineral rights can become a point of negotiation, it is often a gamble if they are located in an area of possible production. The equipment that is now used to determine this is so accurate that often the drilling companies do not have to access the property the gas is on and can be accessed from the neighboring property.