Leveraging the Benefits of Pore Space Law in North Dakota
In our nation, North Dakota has become a hub for the energy industry, particularly in oil and gas production. However, recent legislation and court cases have introduced a new dimension to the property rights of landowners in the state. This article discusses the issue of pore space ownership, the associated legislation, and the legal implications for landowners.
Pore space is the empty space or void within rock formations or soil particles beneath the earth’s surface. These spaces, which can occur naturally or be artificially created, are often associated with depleted oil and gas reservoirs. Once the oil or gas is extracted from these underground reservoirs, the resulting void is known as pore space.
A common use of pore space in North Dakota is for the injection of saltwater, a byproduct of oil and gas production. For every barrel of oil generated in North Dakota, an equivalent amount of saltwater is also produced. Typically, the salinity level of this saltwater is too high for it to be reused, necessitating its disposal into a saltwater disposal well. Owning a saltwater disposal well can be a lucrative and profitable venture. As the oil and gas industry expands, the need for saltwater disposal increases. This demand creates a unique opportunity for those who own these disposal wells, especially because saltwater disposal wells are the only approved method of disposing of saltwater in North Dakota.
Under North Dakota law, despite pore space being located at a considerable depth beneath the land’s surface, the surface owner overlying such pore space retains ownership. (N.D.C.C. § 47-31-03). Additionally, North Dakota law prohibits the severance of pore space from the surface estate in any transactions after April 8, 2009. (N.D.C.C. § 47-31-05). Importantly, however, the surface estate owner retains the right to lease the pore space. (N.D.C.C. § 47-31-06).
The issue of pore space ownership in North Dakota was thrust into the spotlight with the enactment of Senate Bill 2344 (S.B. 2344) in 2019. This legislation had three main effects. First, it allowed oil and gas operators unrestricted use of pore space without requiring landowner consent or compensation. Second, it amended N.D.C.C. § 38-11.1, also known as the Damage Compensation Act, to exclude pore space from the definition of “land,” thereby eliminating the pore space owners right to compensation for “lost land value, lost use of and access to the surface owner’s land, and lost value of improvements caused by drilling operations.” N.D.C.C. § 38-11.1-04. Lastly, it barred a landowner’s trespass, tort, and nuisance claims against oil and gas operators for injecting, migrating, and storing substances in pore spaces without the landowner’s permission.
The enactment of S.B. 2344 was controversial and faced substantial legal obstacles, most notably in Northwest Landowners Association v. State of North Dakota, 2022 ND 150. In a unanimous decision, the North Dakota Supreme Court declared specific provisions of S.B. 2344 unconstitutional, ruling that it constituted a direct infringement on private property rights in contravention of both state and federal constitutions. The Court determined that surface owners possess a legitimate property interest in pore space and have a legal right to compensation when their pore spaces are utilized for disposal and storage operations.
In conclusion, the pore space legal landscape in North Dakota is complex and continually evolving. It is imperative for landowners to stay informed about these developments and understand their legal rights and obligations. The Court’s decision in Northwest Landowners underscores the fundamental rights of landowners, especially in the context of pore space utilization. It opens up new avenues for landowners to derive economic benefits from their property, specifically in areas rich in oil and gas resources. Understanding these rights is crucial, as it could significantly impact how landowners utilize and value their land. At DeMakis Law, PLLC, we possess extensive expertise in pore space agreements and skillfully negotiating on behalf of our clients. Our primary goal is to guide our clients through these agreements’ intricacies while helping them remain well-informed throughout the process. With our assistance, clients can gain a deeper understanding of these agreements and are empowered to negotiate effectively, better ensuring their rights and interests are preserved.
Disclaimer—The information provided in this article is for informational purposes only and should not be interpreted as legal advice. No attorney-client relationship is formed by reading this article. The content of this article is intended to provide a general understanding of the law. It is not intended to be comprehensive legal advice or a substitute for professional counsel. Readers should always consult an attorney for personalized legal advice.
