Study the case Geothermal Kinetics v. Union Oil Co. of California and answer the
ID: 2734991 • Letter: S
Question
Study the case Geothermal Kinetics v. Union Oil Co. of California and answer the following questions:
1. Research online for the definition of “mineral.” Define it in your own words.
2. The petitioner/appellant (the party who lost at the trial court level) contends that geothermal energy is not mineral because it is heat transported to the surface of the earth by means of steam and that minerals are by definition physical substance, which does not include the property heat. Based on the definition you found, if you were to decide the case by looking at the meaning of the words in the deed, which party would you rule for and why?
3. Respondent contends that the court should adopt a “functional” approach which focuses upon the purposes and expectations generally attendant to mineral estates and that geothermal resources should follow the mineral estate because the function of owning the mineral estate is to extract valuable resources from the earth, which include geothermal resources. Do you agree with the court in deviating from examining the meaning of the words contained in the deed and adopt the respondent’s “functional” approach?
4. What is the definition of “property”? Research online; find the definition that does not mean the thing one owns, but the quality of something. If the deed expressly states “a grant of mineral and its properties,” how would you rule if you apply the definition you found?
5. Words in a deed are important. Assume that the deed expressly states “a grant of minerals,” that Geothermal Kinetics found a magnetic field in a kind of mineral, and that they had invented a way to transport and convert the force field into useful energy. Force fields are intangible like radio wave. Should the force field be included in the scope of the grant of minerals?
Woudl like some good insight and explanations.
Real esate question
Thank you
Explanation / Answer
Auswer -1 definition of “mineral. A mineral is a naturally occurring substance, representable by a chemical formula, that is usually solid and inorganic, and has a crystal structure. It is different from a rock, which can be an aggregate of minerals or non-minerals and does not have a specific chemical composition. The exact definition of a mineral is under debate, especially with respect to the requirement a valid species be abiogenic, and to a lesser extent with regard to it having an ordered atomic structure.[citation needed] The study of minerals is called mineralogy.There are over 5,300 known mineral species; over 5,070 of these have been approved by the International Mineralogical Association (IMA). The silicate minerals compose over 90% of the Earth's crust. The diversity and abundance of mineral species is controlled by the Earth's chemistry. Silicon and oxygen constitute approximately 75% of the Earth's crust, which translates directly into the predominance of silicate minerals. Minerals are distinguished by various chemical and physical properties. Differences in chemical composition and crystal structure distinguish various species, and these properties in turn are influenced by the mineral's geological environment of formation. Changes in the temperature, pressure, or bulk composition of a rock mass cause changes in its minerals. Minerals can be described by various physical properties which relate to their chemical structure and composition. Common distinguishing characteristics include crystal structure and habit, hardness, lustre, diaphaneity, colour, streak, tenacity, cleavage, fracture, parting, and specific gravity. More specific tests for minerals include magnetism, taste or smell, radioactivity and reaction to acid. Auswer-2 Appellants’ primary contention is that geothermal energy is not a mineral; they argue that the resource is not steam, rocks or the underground reservoir but the heat transported to the surface by means of steam. A mineral, appellants claim, must have physical substance and heat is merely a property of a physical substance. In sup-port of thisontention,appellants cite sev-eral definitions of mineral” containing reference to “substance.” Appellants then reason that because they own everything in the property except for “mineral” sub-stances, they own the geothermal resources,citing Civil Code section 829 which provides: “The owner of land in fee has the right to the surface and to everything per- manently situated beneath or above it.” Auswer-3 Respondent contends that since the parties did not specify particular minerals that were intended to be within the scope of the grant nor include any limitations on it,the grant conveyed the broadest possible estate. It urges that the “grant is to be interpreted in favor of the grantee.” (Civ.Code,1069.) Respondent urges that we not adopt a mechanistic approach based upon textbook definitions of the term mineral; instead we should adopt a “functional” approach which focuses upon the purposes and expectations generally attendant to mineral estates and surface estates. Since normally the owner of the mineral estate seeks to extract valuable resources from the earth, whereas the surface owner generally desires to utilize land and such resources 3s are necessary for his enjoyment of the land, the geothermal resources should follow the mineral estate. We agree with respon- dent’s contention. Auswer-4 the general grant of minerals in, on or under the property included a grant of geothermal resources, including steam therefrom, even if the presence of geothermal resources may not have been known to one or both of parties to the onveyance. Geothermal Kinetics derives its title from a 1951 deed wherein the owners of the property conveyed to Geothermal Kinetics’ predecessor in interest “all minerals in, on or under” the property. George and Hazel Curry succeeded to the surface estate and in 1963 leased to Magma and Thermal (who subsequently assigned a portion of their lease to Union Oil) the right to “drill for, produce, extract, remove and sell steam and steam power and extractable minerals from, and utilize, process, convert and oth- erwise trcat such stcam and steam power upon, said land, and to extract any extract- Auswer-5 deed made and executed at a time when the existence of the geother mal resource was unknown. As such the courts in each case have been asked to interpret the meaning of such reservation clauses to determine whether a geothermal resource is to be considered a mineral, and thus reserved to the mineral estate, or a non-mineral and therefore reserved to the surface owner .bound by real property law to determine whether or not the deed on its face is ambiguous as to the meaning and intent of the parties at the time of execution of such documents. analyzed, that the mineral reservation clauses contained in the deeds to these three cases made no reference to a "geothermal resource." The courts then had little trouble making a determination that the deed on its face was ambiguous as to the intent of the parties on the question of the wnership of geothermal resources. Once the courts made this determination evidence outside the deed was presented to the courts in order to enable the courts to make a determination as to what was the intent of the parties at the time the deed was executed as to the ownership question of geothermal resources.