Landowner Information

Geothermal rights and leasing for landowners.

If an energy developer has approached you regarding a geothermal lease, option, or surface access agreement, here is how subsurface rights are defined under state law.

Who owns the heat under your land?

For decades, Texas law had ambiguity regarding whether geothermal heat belonged to the surface owner or the mineral owner when estates were severed. In 2023, the Texas Legislature enacted Senate Bill 785, codified in Texas Natural Resources Code Section 141.004(a):

This means that under Texas law, if you own the surface of the land, you own the geothermal heat beneath it by default, even if an oil and gas company or former owner holds the oil, gas, and mineral rights. However, any specific reservation in your chain of deed records can alter this default, which is why a thorough courthouse title search is essential.

Surface Use Agreements (SUA): Protecting your property

A geothermal operation involves large drilling equipment, circulation pumps, piping networks, and electrical interconnect lines. Never sign a bare lease without an enforceable Surface Use Agreement that defines:

• Freshwater Protection: Explicit prohibition against using your domestic or agricultural fresh water wells without separate written compensation. Requirements for continuous groundwater baseline testing.
• Setback Distances: Mandatory minimum buffer zones (typically at least 1000 feet) between well pads or power equipment and your home, barns, livestock tanks, and property lines.
• Road Maintenance & Gates: Developer obligation to build heavy-duty caliche roads, install cattle guards, maintain access gates, and suppress dust during construction.
• Agricultural Accommodation: Compensation for damaged crops, grazing disruption, timber removal, and soil compaction.

Key lease clauses to scrutinize

Before executing any contract, review these critical terms with your qualified oil and gas attorney:

• Option Period vs Primary Term: How long does the developer have to evaluate the tract before committing to drilling? Avoid open-ended options that tie up your land without ongoing payments.
• Shut-In & Delay Rentals: What happens if the developer drills a well but cannot obtain an electric grid interconnect? Ensure shut-in payments are substantial and capped in duration.
• Subsurface Flow Rights: Does the lease grant the developer rights to circulate fluids under your neighboring tracts? Subsurface rights should be clearly delimited.
• Decommissioning & Plugging Liabilities: The lease must mandate complete well plugging, surface reclamation, soil restoration, and equipment removal at the developer's sole expense upon project cessation.

Existing wellbores on your property

Developers frequently look to repurpose idle, shut-in, or unplugged oil and gas wells for geothermal heat extraction. If a company approaches you to evaluate a wellbore on your land, ask:

1. Who is the current operator of record? Check Texas Railroad Commission records to confirm whether the well has an active Form P-5 operator or is currently an orphan well.
2. Will the developer assume all regulatory liability? A transfer of operator status requires Railroad Commission approval (Form P-4) and financial security under 16 TAC Section 3.14. Never permit operations without documented liability transfer.
3. What mechanical integrity testing will occur? Old oilfield casings may have corrosion or pressure limitations that make them unsuitable for high-temperature fluid circulation without major recompletion.

Ask a land question Read technical guides