In most countries subsurface hydrocarbons were nationalized before their potential value became apparent. Canada and the United States are exceptions. In the U.S.A. most subsurface hydrocarbons are owned by surface rights owners or their assigns. A more complex ownership regime evolved in Canada resulting in serious issues for individual freehold mineral owners.
The first oil well in North America was completed in Ontario in 1858. Despite this, land grants issued by the Dominion government to the Hudson’s Bay Company (the HBC), the Canadian Pacific Railway Company (the CPR) and to pioneer settlers continued to include rights to the subsurface for another thirty years. The HBC and the CPR were slow to recognize the potential value of the subsurface hydrocarbons included in their massive land grants. The HBC included the subsurface in land sales to settlers until 1908. The CPR first reserved coal in 1902, coal and petroleum in 1905 and finally all mines and minerals, including natural gas, in 1912. CPR land settlement policies lead to the splitting of subsurface title with powerful corporations holding title to coal or coal and petroleum and the successors or assigns of pioneer settlers holding title to the subsurface hydrocarbons not reserved by the CPR (petroleum and natural gas or just natural gas).
Oil, natural gas and coal have been objects of commerce for over a century so one would think that the legal and technical distinction between these substances would have been resolved long ago. Not so! For decades the distinction for royalty purposes was made by powerful corporations. Individual freeholders ultimately raised split title ownership issues. The response of provincial governments, energy industry regulators and the judiciary is a sad testament to the undue influence of the energy industry in Canada.
Individual freeholders need to understand what they own and support FHOA’s efforts to protect their property rights – no one else is doing so!