I recently received a Lithium Lease offer in Hopkins County Texas. I have an appointment to visit with my attorney about it, but I thought I would see if any of y’all had any experience with lithium leases. They offered us a 2.5% royalty on lithium and 3/16 royalty on oil with a 100/acre bonus. If you have received a lithium lease offer, I would be interested to know what royalty and bonus you were offered. The company offering to lease is stockyards land and energy. Thanks!
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The laws may need to catch up to lithium leasing. In many states, any brine aquifers belong to the surface owner. Water that comes back out of the hole with oil and gas may be owned by the mineral owner or the operator and may vary by state. Enter this new situation with caution and a good attorney. You may need a separate lease for lithium and a different one for oil and gas. I always ask for more than 3/16ths to see what they will offer.
There are quite a few threads on the forum about lithium so use the magnifying glass to see the other ones and their answers.
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Are you suggesting that an oil and gas lease exclude lithium? And should a separate lease cover lithium? Even in area’s of Texas where lithium is not currently know to exist should it be excluded and handled separately from an oil and gas lease? Also, in Texas, does the surface estate owner the legal owner of lithium produced from the wellbore?
I am saying that expert legal advice is needed depending upon the state, whether one owns the surface and minerals, or just minerals or just surface. Different states have rules on who owns the produced water from an oil and gas well-probably mineral owner or operator, versus produced water from a saltwater aquifer -probably the surface owner in TX. Not my area of expertise.
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My research is that Texas passed legislation giving produced water to the producer . But a lessor can put a clause in their lease retaining an interest in the proceeds, if any.
Produced Water in Texas … Who Owns It?
By Charles Sartain on February 13, 2020
POSTED IN ENVIRONMENTAL POLICY, LEGISLATION, STATUTES
Co-author Stephen Cooney
Recent legislation in Texas to promote the recycling of water produced from oil and gas operations are steps in the right direction but may create as many problems as they fix. As technology improves, our population continues to grow at an unprecedented pace, and our water supplies remain limited, recycling of water is becoming vital. At issue is the ownership of, and with it the right to profit from, produced water.
A measure passed by the 2013 Legislature (HB 2767, enacting new Section 122 of the Natural Resources Code) and then updated in 2019 (HB 3246, amending Section 122.002) provides that any party that takes possession of produced water to treat it for a subsequent beneficial use takes title to that water.
But wait!
Doesn’t produced water belong to the surface owner? Decisions by Texas courts strongly suggest that is the law, and if operators or re-cyclers are making money off that water, even though it has always been viewed as waste to be disposed as a bothersome component of oil and gas production, surface owners will want compensation.
It is well established in Texas that groundwater is part of the surface estate, owned by the surface owner as a vested property right. It is just as well established that mineral owners and their lessees have the implied right to use as much of the surface estate, including groundwater, as is reasonably necessary to extract and produce oil and gas. Along with that duty is the obligation to dispose of the waste that is the byproduct of production. If part of that waste, i.e., produced water, can be sold by the operator for independent economic gain, surface owners will likely have something to say about it.
It will be interesting to see how this tension plays out, either at the courthouse or reviewed again during the next legislative session that begins in January 2021.
For a more detailed discussion of this timely topic, see the Gray Reed Client Alert prepared by Stephen.
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There is actually a lot of acreage in Texas that has some quantities of Lithium. The USGS just actually released a Lithium map showing concentrations of Lithium (measured in milligrams per kilogram) across the continental United States. Hopkins (as can be seen in the heatmap below) does show in one of these good areas. Now, whether this indicates the presence of possible petrolithium or actual lithium rock I am unaware. Pioneer is experimenting with lithium extraction methods from frack wastewater.
Pioneer (PXD) Is Trying to Mine Lithium From Dirty Permian Fracking Water - Bloomberg . Here is an article from University of Texas that goes into a bit of detail (though this may differ from the methods Pioneer is using. New Way to Pull Lithium from Water Could Increase Supply, Efficiency - UT News (utexas.edu)
It would be great if anyone with experience could weigh in on the potential! Especially for mineral owners in the Permian Basin. Anyway, here is the map!
Note: This is for Soil C Horizon, which seems to be the deepest level. I put a thumbtack where Hopkins County is.
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I agree as to the recommendation of separating the leases. Lithium is a very active buzzword today.
Like a magician misdirecting you during a trick, the lure of Lithium could be a misdirection away from unfavorable oil and gas terms. In Texas, 3/16 is low as is the $100 bonus.
Hold on to your hat, it is going to be a wild ride. Issues in mineral and surface ownerships long thought to be settled are now being readdressed.
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Thanks for sharing this map!
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