Co-author Rusty Tucker

In Texan Land & Cattle II, Ltd. v. ExxonMobil Pipeline Company a Texas court of appeals ruled that “oil or gas” is not limited to “crude petroleum,” but includes refined petroleum products gasoline and diesel.

The easement

Texas Land’s property in Harris County is burdened by an easement obtained by ExxonMobil from Humble Oil Company in 1919 that granted the right to lay, maintain, operate, and remove a pipeline for the “transportation of oil or gas” across Texas Land’s property. The easement does not define oil or gas.

The arguments

The sole issue was the definition of oil and gas as used in the easement. Texas Land contended that “oil and gas” granted the right to transport only “crude oil” or “crude petroleum,” but not refined products. ExxonMobil argued that “oil and gas,” as used in the early 20th century, included refined products such as gasoline and diesel.

What do the dictionaries say?

Because “oil or gas” was not defined in the instrument, the court’s task was to give the terms their plain, ordinary, generally accepted meaning. The court looked primarily to dictionaries, referring first to The Century Dictionary (1915):

“Oil”: the general name for a class of bodies which have all or most of the following properties in common: they are neutral bodies having a more or less unctuous feel and viscous consistence, are liquid at ordinary temperatures, are lighter than water, and are insoluble in it, but dissolve in alcohol and more readily in ether, and take fire when heated in air, burning with a luminous smoky flame.

“[O]il” is divided in 3 categories: (i) “fatty or fixed oils, essential or volatile oils, and the mineral oils.” “‘Mineral oils’” include ‘petroleum and its derivatives . . . mixtures of hydrocarbons, … containing varying quantities of hydrocarbons of the olefine and naphthene series.’” The court noted “mixtures of hydrocarbons.”

Then the court looked to Webster’s New Int’l Dictionary of the English Language (1915) for the definition of “gas,” and defined it as:

“ . . . Any combustible gaseous mixture used for illuminating or as a fuel[.]’”

The court then considered an industry-specific source, A Handbook of the Petroleum Industry (1922) where the glossary defined “oil” as:

[a]n unctuous combustible substance, liquid, or at lease easily liquefiable on warming and soluble in ether but not water. This term includes (a) fatty oils and acids; … and (c) mineral oils, such as petroleum products, including lubricating oils. The handbook described gasoline as “‘clear, white-water oil.” And referred to gasoline and other petroleum products as “oils,” and that oil may be “distillate or crude.”

The court explained that these sources “appropriately provided both layman’s dictionaries and industry reference books establishing that refined petroleum products, like gasoline and diesel, fell within the commonly accepted meaning of the terms oil or gas at the easement’s approximate date.”

Finally, squelching any chance for a Texas Land Hail Mary, the court discussed how Texas courts have found that the terms “natural gas” or “gas” in a deed or lease include “all constituent elements,” such as refined products like gasoline. Ohio courts have addressed this precise question and held that “oil and gas” include products in both refined and natural states.

The result

Based on the ordinary meaning of “oil and gas” ExxonMobil did not exceed its rights under the easement by transporting the refined products, gasoline and diesel, through the pipeline.

Musical interlude

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