Texas Oil Regulator Rules in Favor of SpaceX in Land Dispute

The oil and natural gas industry regulator Railroad Commission of Texas has ruled in favor of SpaceX in a land dispute involving inactive oil and gas wells on 24 acres near the border of Mexico. According to paperwork filings, Sanchez Energy sold the land to a SpaceX subsidiary named Dogleg Park LLC last year. However, Dallas Petroleum Group also claimed ownership over the land, citing a 2017 deal with Sanchez Energy, but did not attempt to pay property taxes on it until just before a January 2021 regulatory hearing in this case.

Dallas Petroleum Group president Matt Williams says that the company plans to appeal the decision, likely through the court system. State law says that Railroad Commission of Texas decisions can be appealed through a lawsuit.

Documents related to the hearing indicate that SpaceX plans to use the site to extract natural gas to use for operations at its Boca Chica, Texas, launch facility. Natural gas, also known as methane, makes up one component of the rocket fuel that the company plans to use for the Starship-Super Heavy stack.

Filings with the Federal Aviation Administration indicate that SpaceX plans to build two natural gas-fired power plants and refrigeration equipment to make liquid methane. This follows Elon Musk’s tendency to control as much of his companies’ supply chain as possible.

This is most visible through news coming out of Tesla, most recently its floating of the possibility of acquiring a semiconductor chip manufacturer in a bid to secure a guaranteed supply of semiconductor chips for its electric vehicle batteries amid a worldwide shortage. It also insists on manufacturing its own batteries when possible and owning stakes in possible suppliers when in-house manufacturing isn’t quite feasible yet. Besides reducing the risk of supply chain meltdowns due to variables like geopolitics that would be out of its control, this helps Tesla accomplish things like improving the efficiency of making car batteries and scoring high places in Cars.com’s “Made in America” list.

SpaceX is currently ramping up for the planned orbital test for Starship. Reports from the local hospitality industry indicate that some hotels in the area are nearly 100% booked by SpaceX employees who have temporarily relocated to help with preparations for the test.

Although SpaceX had hoped to conduct the orbital test in July, delays may have included the usual wrangling with the FAA, which could have delayed the test by several months with its demand for a review of the test’s potential environmental impact. Elon Musk has blasted the FAA in the past for its response to a series of high-altitude tests of Starship prototypes that ended explosively. In testimony before a Congressional committee, however, an FAA spokesman said that the regulatory agency was confident that SpaceX had resolved the possible safety issues related to the tests. SpaceX did end its apparent unlucky streak with the successful landing of the SN15 prototype.

SpaceX may simply see the site containing inactive natural gas wells as a convenient source of rocket fuel for its plans for the Starship-Super Heavy rocket and spacecraft. First, though, it will have to win the legal appeal of the Railroad Commission of Texas’s decision in the Dallas Petroleum Group’s dispute.