Leasing Public Lands

Extensive private ownership of mineral resources is the exception, not the rule, in most nations. Since much of the United States oil and gas is found on state, federal and Native American lands, and Canada's oil and gas largely belongs to the provinces, the lessee of this land deals with a government leasing agency instead of individuals representing their own interests.

State Ownership

Each state has a board or agency that governs the leasing of its lands. The procedures for leasing land owned by a state depend upon the state. For example, Texas holds title to lands in various categories such as riverbeds, estuaries, Gulf Coast areas, park lands, etc. An operator files a request with the state for an area of interest, and the Texas General Land Office determines whether to lease it and what the terms will be. In Alaska, where only 2 percent of the land is in private ownership, the Division of Oil and Gas, part of the Department of Natural Resources, administers the leasing process, which takes into account the social, economic and environmental impacts of the potential development and adds stipulations to modify them.

Federal Ownership

The federal government is a landholder of astonishing size; however, much of its land is unavailable for oil and gas production. Land set aside for military uses, national parks, wildlife refuges and so on is not generally leased to the petroleum industry. The federal government does lease tracts of public domain land, acquired land, certain Native American land, and offshore land.

Both the mineral and the surface estates of land in the public domain belong to the United States. The federal government has also reserved the mineral rights to some property patented to individual citizens. Public domain land is land that the federal government originally owned and did not subsequently sell, while acquired federal lands were acquired by deed from earlier owners.

The Secretary of the Interior makes all decisions to open or close federal lands to leasing, and may refuse to lease certain lands based on conservation principles or wildlife protection. The federal government owns the mineral rights of federal lands and the Bureau of Land Management (BLM) administers leasing and drilling. All BLM public lands and national forests are open to oil and gas leasing unless prohibited by law or administrative decision. Like leases between landowners and operators, a lease from the federal government does not convey title but grants the rights to explore, drill and produce.

Ownership in Canada

With some exceptions, each of the 10 Canadian provinces-Newfoundland, Nova Scotia, New Brunswick, Prince Edward Island, Quebec, Ontario, Manitoba, Saskatchewan, Alberta and British Columbia-owns and manages its own mineral resources. The Canadian government owns and manages the oil and gas of the Northern Territories and offshore lands. Some subsurface minerals are privately owned. In the four western provinces, a number of companies were granted land with attached mineral rights in exchange for their work in building railroads and thus opening the provinces for settlement. Some early settlers of these provinces also acquired mineral rights with their homesteads, which are still in private ownership.