Browse Tag: oil

Oil Prices Continue To Fall, Effects Felt In CRE Sectors


As reporting about the world’s oil markets increasingly features terms like “glut” and “supply overhang,” property prices directly related to US oil extraction are widely taking a beating. At the same time, other indirectly related property sectors such as retail are benefitting from low gas prices.  In the wake of the latest drop in oil prices, here’s a quick roundup of the recently reported ripple effects in commercial property:

Drilling Dispute: Anatomy Of A Mineral Lease Case


A pumpjack in Texas

Texas oil attorneys Charles Sartain and Brooke Sizer wrote today about an interesting Louisiana case concerning the challenge of a 108-year old lease of mineral rights.  The plaintiffs are the lessor in the case and the defendant, Exxon Mobil, is the lessee.

In 1907, leases on over 3,000 acres of land in northwestern Caddo Parish, LA were executed by the plaintiff’s predecessor to the defendant’s predecessors, who sold the mineral rights to Standard Oil (now Exxon Mobil) in 1920.

The lease terms spell out that the leases were granted  “for a term of ten years from date hereof and as much longer thereafter as gas or oil is found or produced in paying quantities […]”.

And that’s where the fun begins, because the lessor believed the lessee was failing to drill deeper than 6,000 feet, even though there are hundreds of shallow and productive oil wells on the property. The lessor asked for cancellation and release of the portion of the leases below 6,000 feet.

Long story short: Exxon wins. To find out why — and to learn why 99 year lease term limits in this case did not apply, check out the entire JDSupra post by Sartain and Sizer (and enjoy the wonderful baseball metaphors put on display in the telling of the tale).

Additional background: a link to the appellate court case  spelling out the facts.

The Hidden Oil Wells Of Los Angeles

During a recent trip to LA, while driving I spotted something I don’t usually see: a building in an urban setting that I absolutely couldn’t identify.  It was slender, tall, tapered and seemed to be covered in what amounted to a gigantic tea cozy.  It looked like this:

Set in a fully urbanized area – abutting Beverly Hills High School, in and among a mixed residential and office-use area in West LA, this odd structure had me wondering what it could possibly be.  It was too narrow for occupancy, and too distant from industry to be functional.  It was too…festive-looking to be a smokestack – and even it if was, what could be the source of the fumes?  The chemistry class bunsen burners of Beverly Hills High?

Later, this midwestern born-and-bred blogger came to find out the amazing truth.  What I had seen was a Los Angeles oil well. An active, productive, yet entirely urban oil well, one of hundreds across the city remarkably well-integrated into the bustling landscape.  These structures are actively drilling into the ground beneath LA, extracting black gold quietly, with no apparent neighbor impact, and one presumes, profitably.

I left town thinking I had seen something rare, but the fact is, LA is a very active oil producer and these wells and production facilities are just another type of commercial property.  Why no noise?  Why no smell?  How are the spills and hazards normally associated with oil drilling handled?  How do NIMBYs cope?  As it turns out, Los Angeles has California’s legendary regulatory tendency to thank for the apparent harmony.  Which is not to say there aren’t concerns about the tight integration of industrial production and residential areas, it’s just that if there’s any state with a long track record of balancing these conflicts, it’s California.

An incredible video by VBS TV was produced that takes a look at this most unusual commercial real estate phenomenon.  We see oil wells in the back of shopping malls, oil wells situated inside five-story faux-office buildings, oil drilling technology allowing horizontal drilling, and a discussion, of course, of the mineral rights attached to real property in California (and just about all 49 of the other states.)  Fascinating stuff!

Watch the VBS Clip “Uneven Terrain” at LA.Curbed.Com

(Photo Credit: