As the demand for valuable minerals sourced from produced water increases, the question of ownership surrounding brine and its components becomes increasingly pertinent. Understanding who retains rights to these minerals is essential for those involved in oil and gas production.

Brine, often considered a waste byproduct of oil and gas production, contains various valuable components, including sodium chloride, lithium, magnesium, and iodine, among others. Historically, U.S. law granted producers broad rights to dispose of produced water. However, as the value of renewable energy and essential minerals rises, this old standard is being reassessed. The evolving landscape of ownership laws concerning brine and its minerals presents new challenges for developers in the oil, gas, water, and brine sectors, necessitating carefully examining land ownership laws specific to each state.

One key mineral of interest is lithium, which plays a critical role in the production of rechargeable batteries. In specific regions of the U.S., processing companies may accept brine from oil and gas operations to extract lithium, allowing producers to offset disposal costs by in exchange for delivering the brine to the processing company.

Ownership claims to brine and its minerals can arise from various parties, including oil and gas owners, surface owners, and mineral rights holders. Common questions include:

1.      1. Do surface owners have the right to produce water?
2.      2. Can water owners claim the minerals contained within that water?
3.      3. Are lessees under oil and gas or groundwater leases entitled to the produced water and its components?
4.      4. If lessees do own these minerals, what royalty payment obligations do they face under their lease agreements?
5.      5. Must co-tenant owners account to others for the sale or use of produced water or its minerals?

In Texas, the question of who owns brine produced from oil and gas operations remains contentious. Producers have sidestepped ownership disputes by relying on statutes that seemingly grant them rights over produced water. However, the validity of these statutes raises questions about legislative authority to shift ownership from one party to another.

Additionally, ownership regarding brine in  Texas “brine-only” development projects—where water is processed for mineral extraction and subsequently re-injected—remain unclear. To secure the necessary ownership and development rights, developers engaged in these projects must proactively identify and negotiate with all potential owners, including surface, mineral, and oil and gas stakeholders.

Ownership situations are more clearly defined in Arkansas and Oklahoma. Arkansas has a robust history of brine production from the Smackover formation, with ownership clarity provided by the Strohacker Doctrine, the Brine Act, and its Additional Substances Provision. According to the Strohacker Doctrine, elements and compounds are not considered “minerals” unless they are recognized as commercially valuable at the time of the applicable grant or reservation of minerals. In Oklahoma, statute 52 OS 86.7 stipulates that the oil and gas producer owns both the brine and the minerals extracted from these operations. However, the surface owner retains ownership rights to minerals extracted from brine-only development, provided such extraction began before any oil and gas production in that geological area.

As the landscape of mineral extraction continues to evolve, stakeholders need to stay informed and engaged regarding the implications of brine ownership and the associated minerals to navigate this complex terrain effectively. At RR&A, we frequently address ownership inquiries related to brine. Our expertise offers clarity on these complex issues for producers uncertain about their rights concerning brine and its mineral constituents. Reach out to us today to discuss your specific situation.