Climate change provided the proverbial fuel that resulted in the record production of renewable energy, including solar. With that growth comes countless companies scrambling to secure land rights, including those that no longer or never produced oil and gasoline.
Before this new era, most oil- and gas-producing states divided surface and mineral rights, with the latter dominating due to its much higher revenue stream. In contrast, mineral drilling operations and production provided more of the “heavy lifting.”
An ever-changing landscape
Referred to as severance and common in Texas and New Mexico, both rights can belong to one owner or to countless owners. However, severance takes priority over its counterpart. Oil and gas companies that lease mineral rights can sidestep the surface owner to launch drilling. With that comes production equipment, storage facilities and much-needed access roads. Their dominance not only facilitates production but also minimizes disruptions in the process.
When it comes to solar companies planning to lease land, they face the possibility of energy companies denying reasonable use and sidestepping drilling in the same place as a solar farm. In these scenarios, land use waivers promise to not use the land.
Mineral owners are usually paid to use land use waivers in a variety of ways, including annual fees or royalties in specific scenarios. According to the Environmental Protection Agency, abandoned or unproductive wells not generating revenue currently number more than three million domestically.
In these cases, owners may sign two contracts where equipment exists on a separate land tract to allow oil or gas recovery underneath the solar farm without disruptions. Subsequent payments can take the form of a set amount, with possible increases after a specific time period. Another way to compensate is through a periodic approach based on the electricity produced.
The idea of oil and solar companies involved in different types of minerals and power working together was once thought impossible. Now, with more priorities aligning in certain sectors, two kinds of energy can peacefully and profitably co-exist.