Once severed from the realty, gas and oil, like other minerals, become personal property. Title to natural gas once having been reduced to possession is not lost by the injection of such gas into a natural underground reservoir for storage purposes.
For storage purposes, the utility injected extraneous natural gas into an empty underground reservoir, a portion of which extended under an adjoining tract of land. The utility filed suit alleging that the lessees, who had an oil and gas lease covering the adjoining tract, extracted gas from the reservoir and converted it to their own use. The utility sought compensatory and punitive damages and an injunction to prevent further extraction by the lessees. The district court dismissed the complaint, concluding that the utility failed to state a cause of action because it lost title to the gas when it migrated under the adjoining tract. The utility appealed.
Does natural gas become personal property after extraction and does the gas remain personal property after injection into an underground reservoir for storage?
The court reversed, holding that the natural gas became the personal property of the utility upon extraction and that such possession was not lost by the injection of the gas into a natural, underground reservoir for storage purposes. The court also concluded that the utility did not abandon the gas because the utility injected the gas into the reservoir with the intent to withdraw it as needed to satisfy the demands of its customers.