How the Oil and Gas Industry Contributes to the Texas Economy

Posted by touchoil on in Texas Economy

The oil and gas industry is one of the most lucrative industries in the world. There exist massive oil and natural gas reserves in Texas state. This sector has played a very great role in the development of the State. This is in spite of numerous calls by environmentalists to minimize the use of petroleum products due to their adverse environmental impact. Oil and gas is the primary natural resource and highest income generator of Texas State. The following are some of the ways through which this industry have contributed to the economic well-being of Texas:

Funding of the State’s Key Projects

This is the primary benefit of the industry to the State. The oil and gas industry has been responsible for the funding of significant projects such as schools, health sector, and other vital areas. Texas Oil and Gas Association reports that in 2015, the industry paid approximately $ 13.8 billion in taxes. The most prominent beneficiaries of this money are the State’s projects. These include projects like schools funding, and children insurance programs. The report showed that the oil and gas industry paid more taxes than even the major private companies in Texas.

The funds are paid to an Economic Stabilization Fund (ESF) commonly known as the “Rainy Day Fund.” This fund is in most cases used to help in covering budgetary shortfalls. This means that this industry primarily funds the general government provisions that you enjoy.

Jobs Creation

This sector employs approximately 400,000 people. The oil and gas industry also aids in indirect employment creation in related industries. The industry has enabled numerous companies that use oil and gas products to thrive. Your company is probably thriving due to the easy access to oil and gas in the state. In fact, Texas State is the leading State in the country regarding jobs creation.

The impact of this industry on the economy was felt during the Recession. During this period, the country’s unemployment increased by 10%. The recession was, however, least felt in Texas due to the presence of this industry. Unemployment was also high Texas, but it was significantly low as compared to other states. While other States in the U.S strained to recover from the Recession, Texas recovered all the jobs that were lost during this period.

Benefit to Private Citizens

Many private citizens across the Lone Star State have reaped the financial benefit of owning mineral rights. Since much of Texas is privately owned, oil and gas companies must purchase or lease mineral rights from landowners. Payouts from lump-sum sales and royalty payments can be extremely lucrative for these landowners, in Texas.

Essential Power Source

The natural source of power such as solar and wind cannot produce sufficient energy for an extended period. However, with oil, you are assured of power at all times of the year. The industry has helped the state to provide cheap energy to its residents. This means that the State’s funds that could have been used to purchase power are now used in other crucial projects.

Minimizes dependence of the Country on Others

Texas is the primary oil and gas producing state in the nation. Oil plays a very vital role in international politics. The industry has enabled the United States to remain a significant force in the world regarding energy provision. This industry, therefore, plays a very crucial role in the economy of Texas and the United States at large.

Texas Mineral Rights: What to Know About Mineral Rights in the Lone Star State

Posted by touchoil on in Texas Mineral Rights

If you’re thinking about purchasing real estate in Texas, you’ll want to know what you’re buying. Once you buy, you’ll own what the law calls an estate in land. The unwary might not know what they just purchased though. That’s because, under the Texas Mineral Code, Chapter 75.001, land ownership in Texas contemplates two separate and distinguishable estates, each of which has its own set of legal rights. Those two estates involve the surface estate and the mineral estate on a specifically described property.

You Might Not Own What You Think You Own

Depending on where the real estate is located, those two estates might be held by two different people or legal entities, especially if there has been extensive oil and gas exploration and development in the area. You’ll see that in those areas, it’s more likely that the surface and mineral rights to the property will be severed. Under the Texas Property Code section 5.021, that severance must be memorialized in writing. If the conveyance of the mineral estate isn’t specifically addressed in writing, it passes to the buyer. Although some municipalities forbid severance of surface and mineral rights, you need to make sure that you know what you’re buying.

The Mineral Estate

As per Texas law, regardless of whether the mineral estate is below the surface estate, the general rule is that the mineral estate is the dominant estate. That mineral estate can even be leased out by its owner. The owner or lessee of the mineral estate can then use the surface estate as reasonably necessary for purposes of the exploration, development and the extraction of oil, gas or other minerals under the real estate. Permission to reasonably use the surface estate isn’t needed. Just some of the purposes that it can be used for include:

  • Seismic testing
  • Drilling
  • Ingress and egress to and from sites
  • Building pipelines
  • Using water both on the surface and under the surface of the property
  • Choosing locations of wells and pipelines without input from the surface rights owner

When the Surface Estate is Damaged

The general rule is that the owner or lessee of the mineral estate cannot be held liable for damages unless the owner of the surface estate can prove one or more of the following:

  • The mineral rights owner exceeded what was reasonable and necessary for mineral exploration and production
  • Injuries were caused as a result of the negligence of the owner or lessee of the mineral rights
  • The owner or lessee of the mineral rights failed to accommodate the rights of the surface owner

If you’re planning on purchasing or selling a mineral interest connected to real property, you should consult with a knowledgeable and experienced mineral rights attorney before entering into any contract to purchase. You’ll want to know what you’re getting for your money.