Arizona Paper - Principles of Natural-Gas Leasehold Valuation (with Discussion)

The magnitude and economic importance of the problem of correctly valuing natural-gas leaseholds become evident when me consider that: (a) Natural gas is handled in 55 per cent. of the gas distributing plants in the United States. (b) Present known natural-gas acreage forms 47 per cent. of the total known mineral-land acreage in the United States. (c) Five acres of land are now required to protect and maintain continuous service to each of the 2,000,000 domestic natural-gas consumers in the United States. (d) The cost of acquiring and maintaining this acreage of an expendible resource represents a substantial part of the cost of the natural-gas service to the consumer. (e) "The right of a citizen by means of his ownership of or his mining leases on land to draw gas from beneath its surface is property and sometimes valuable property."' A large number of other court decisions have established the basic legal principle that the right to drill for gas within a given area constitutes an interest in the land itself, and is necessarily an exclusive property right. Definition of Vested Interests or Rights "Vested interests are economic interests which are legally recognized to be such that they cannot be impaired by public action, directly or indirectly, without indemnification. Vested interests are largely property interests. The recognition of an interest as a vested interest gives it some of the attributes of property, and by American courts it would be comprised in their very inclusive concept of property. Otherwise than through property, vested interests generally arise through contract."