Co-author Brittany Blakey

[Updated] The North Dakota Supreme Court will hear oral arguments on Thursday to consider who owns the right to profit from the value of the porous spaces within subsurface rock formations. The issue is over Senate Bill 2344, passed by the Legislature in 2019 and, no surprise here, supported by the oil and gas industry.

The Northwest Landowners Association sued North Dakota arguing that SB 2344 is unconstitutional, that it renders the surface owners’ “pore space estate” worthless, and amounts to a “taking” of property owners’ pore space without compensation. Incidentally, the court in Mosser v. Denbury Resources determined in 2017 that subterranean pore spaces are owned by the landowner.

The trial court in the Northeast District, Bottineau County concluded that landowners in North Dakota have a constitutionally protected property right to their subsurface pore space and said pore space has inherent value. SB 2344 prohibits landowners from obtaining compensation for an oil and gas operator’s use of their pore space estate and “[renders] the pore space worthless in every instance of its application[.]” It “acts to give North Dakota landowners’ value from pore space to the oil and gas industry, for free, under the guise of the North Dakota Industrial Commission.”  The opinion was seen as a huge victory for landowners.

Disputes involving pore space are likely to continue in North Dakota given increased oil and gas activity. North Dakota is a promising area for carbon dioxide injection. For example, there are projects in place and envisioned that would transport carbon dioxide from other areas of the country to North Dakota to be injected into pore space for carbon sequestration.

Compare Denbury with the Texas Supreme Court’s ruling in Lightning Oil Company v. Anadarko E&P Onshore:  The mineral owner has the right to explore for and produce the minerals and the surface owner owns the right to possess the specific place or space where the minerals are located. Looks pretty much the same.

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