For most of the history of the oil and gas industry, saltwater has been an expensive nuisance. Oil wells frequently produce substantial quantities of saltwater along with their hydrocarbons, and operators have historically spent enormous sums of money trying to get rid of it. This isn’t ordinary saltwater, either. The brine produced from oil and gas formations can be many times saltier than seawater and may contain residual hydrocarbons, hydrogen sulfide, naturally occurring radioactive materials, and other unpleasant substances. It is corrosive, potentially dangerous, and capable of causing serious environmental damage if improperly handled. In short, it’s nasty stuff. Texas law has long treated produced water as oilfield waste and placed an affirmative obligation on operators to handle and dispose of it properly. The Railroad Commission strictly regulates its disposal, and operators who violate those requirements face substantial penalties. In fact, operating an unpermitted oilfield waste disposal well is a felony under Section 27.031 of the Texas Water Code. For generations, the industry’s principal concern about saltwater was not who owned it, but how to get rid of it without spending a fortune or getting into trouble with the Railroad Commission.
That conventional understanding is beginning to change. Although brine has been commercially produced for salt, bromine, and other minerals for decades, most saltwater produced as a byproduct of oil and gas operations has historically been regarded as a liability rather than an asset. Recent advances in extraction technology, however, have made it increasingly practical to recover valuable substances from certain underground brines. Of particular interest is lithium, an essential component of the rechargeable batteries used in electric vehicles, cell phones, and countless other electronic devices. The Smackover Formation, which extends across portions of East Texas, Arkansas, and neighboring states, has attracted considerable attention because of the lithium concentrations found in its brine. In June 2025, Chevron announced that it had acquired approximately 125,000 net acres of lithium leasehold interests in northeast Texas and southwest Arkansas. Other companies have made substantial investments in the region, hoping that lithium extraction will become a profitable industry in its own right. The commercial value of brine, at least in certain formations, may be changing dramatically.
For Texas landowners and mineral owners, these developments present an interesting legal question: who owns the lithium? And in order to answer that, we have to look at all cases and contracts that presuppose the lithium is waste. Texas law has long distinguished between ownership of the surface estate, which generally includes groundwater, and ownership of the mineral estate. Oil and gas operators, meanwhile, ordinarily have the right to possess and dispose of saltwater produced incidentally with hydrocarbons under their leases. Those distinctions made sense when the water itself was effectively worthless and nobody was especially interested in the substances dissolved within it. But what happens when an operator produces saltwater containing commercially valuable lithium? Does the operator own everything that comes out of its well? Does the mineral owner retain ownership of the lithium? Or does the surface owner’s ownership of groundwater include the minerals dissolved within it? Somewhat surprisingly, the Texas Supreme Court considered a remarkably similar question more than fifty years ago.
In Robinson v. Robbins Petroleum Corp., 501 S.W.2d 865 (Tex. 1973), the Texas Supreme Court addressed a dispute over saltwater produced from a well and used in secondary recovery operations. The operator claimed rights to the water under its mineral lease, while the surface owner argued that the saltwater belonged to him. The Court concluded that saltwater, like freshwater, was ordinarily part of the surface estate. It rejected the proposition that the presence of dissolved minerals automatically transformed water into something belonging to the mineral estate. But the Court also recognized that the result might be different if a mineral dissolved in water became sufficiently valuable to justify producing the water specifically to extract that mineral. Under those circumstances, the Court suggested that the extracted substance might belong to the mineral owner, who might also have the right to use the water to recover it. That observation is dicta, but it is remarkably apt. More than fifty years before the current interest in lithium extraction, the Texas Supreme Court recognized that the ownership of water and the ownership of valuable minerals dissolved in it might be two entirely different questions.
Another important decision is Moser v. U.S. Steel Corp., 676 S.W.2d 99 (Tex. 1984), in which the Texas Supreme Court considered whether uranium was included in a reservation of “oil, gas and other minerals.” The Court held that uranium was included and adopted a rule generally treating substances falling within the ordinary and natural meaning of the word “minerals” as part of the mineral estate, regardless of whether their existence or value was known when the mineral estate was severed. There are important limitations to that holding, including the prospective application of the rule beginning June 8, 1983, but its implications for lithium are substantial. Lithium is a metallic element that would appear to fall comfortably within the ordinary meaning of a mineral, and there is a strong argument that a conveyance or reservation of “oil, gas and other minerals” includes lithium. It’s even listed on the periodic table. Nevertheless, whether a particular mineral owner actually owns the lithium will depend on the language and history of the applicable conveyances. Establishing that lithium is a mineral also does not necessarily answer who has the right to extract it from water or brine.
These questions become even more interesting following the Texas Supreme Court’s June 2025 decision in Cactus Water Services, LLC v. COG Operating, LLC, 718 S.W.3d 214 (Tex. 2025). The case arose after the owners of the surface estate executed agreements purporting to convey their rights to produced water to Cactus Water Services, notwithstanding existing oil and gas leases held by COG Operating. Cactus argued that the water belonged to the surface owners because groundwater is generally part of the surface estate. COG maintained that the right to produce oil and gas necessarily included the right to possess and dispose of the waste generated by its operations. The dispute was hardly theoretical. COG’s wells had generated nearly 52 million barrels of produced water, and the company had paid approximately $21 million in disposal fees to a third-party contractor over a period of slightly more than two years. What had previously been an expensive waste product was now the subject of competing contractual claims.
The Supreme Court sided with COG, concluding that an ordinary conveyance of oil and gas rights includes the right to possess, control, and dispose of water incidentally produced with hydrocarbons, unless the parties expressly agree otherwise. The Court placed considerable emphasis on the historical treatment of produced water as waste and the operator’s legal responsibility for its disposal. Indeed, the reasoning was fairly straightforward: an operator cannot produce hydrocarbons without also producing saltwater, and it cannot continue producing hydrocarbons unless it can dispose of that saltwater. It would make little sense to interpret an ordinary oil and gas lease as giving the operator the obligation to dispose of waste while allowing another party to interfere with the operator’s ability to do so. The Court also declined to reinterpret those leases simply because technological advances had made produced water potentially valuable. What had historically been understood as part of the operator’s rights and obligations did not change merely because someone had discovered a way to make money from it.
But the Court was careful about what it did not decide. In a footnote, the majority expressly declined to address ownership of non-hydrocarbon minerals contained in produced water. Justice Busby, joined by two other justices, emphasized the point in a separate concurrence. The leases in Cactus Water conveyed oil, gas, and other hydrocarbons, not every mineral that might be recovered from the formations. The Court’s conclusion that an operator controlled the produced water did not establish that it also owned other, unleased minerals contained within that water. That distinction is particularly important when considering lithium. An operator may have the right to produce and dispose of saltwater under its oil and gas lease, but it does not necessarily follow that the operator can recover valuable minerals from that water and sell them without accounting to the owner of those minerals. Ownership of the water and ownership of the substances dissolved within it are separate legal questions.
The distinction between water produced incidentally during oil and gas operations and brine deliberately produced to recover lithium may also prove important. Cactus Water concerned water that necessarily accompanied hydrocarbon production, whereas Robinson contemplated a situation in which the purpose of producing the water was to extract valuable minerals dissolved within it. Consider an operator holding an oil and gas lease that grants rights only to hydrocarbons. If its wells produce lithium-bearing saltwater, Cactus Water provides a strong argument that the operator controls the resulting waste. But if the operator begins processing that waste to recover lithium, the mineral owner may have a separate claim to the extracted substance. The legal analysis may be different again where a company drills a well for the express purpose of producing lithium-rich brine rather than hydrocarbons. In that situation, the rights granted by a traditional oil and gas lease may provide little assistance, and the company may need to obtain rights from the owners of the lithium and any other interests necessary for production.
For now, there is no definitive Texas Supreme Court ruling establishing who owns lithium dissolved in underground brine, and the answer may vary depending on the language of the applicable deeds and leases. Nevertheless, the existing cases provide considerable guidance. Moser suggests that lithium should ordinarily be treated as part of the mineral estate under a general mineral conveyance. Robinson recognizes that valuable minerals dissolved in water may belong to someone other than the water owner. And Cactus Water establishes that the operator’s right to control produced water does not necessarily extend to ownership of every substance contained within it. As lithium extraction becomes commercially viable, these distinctions are likely to become increasingly important to mineral owners, surface owners, and operators negotiating development agreements.
Perhaps the most interesting aspect of this developing area of law is that ownership of lithium may ultimately be determined by deeds and leases executed decades ago, when nobody gave any thought to the commercial value of the minerals dissolved in oilfield wastewater. If it was thought of at all, it was thought of as a cost or liability, not an asset. The parties to those agreements probably never have contemplated lithium extraction, but that does not mean they failed to establish who owns it. As is so often the case in Texas mineral law, the answer may already be sitting in an old deed.
