SpaceX and oil company in legal battle over 24 acres of land near Starship facilities

SpaceX and several Texas energy companies are embroiled in a legal battle on a barren swath of land near the commercial space company’s Starship production facility outside Brownsville.

The feud finds multiple parties arguing over who owns what rights to the property, threats of criminal intrusion and allegations of theft and attempted extortion – all on 24 acres worth $ 24,210, according to tax records.

Against the backdrop of skyrocketing property values ​​with SpaceX’s rapid development in the region, the case dates back to 2017.

He went to court in October, when Dallas Petroleum Group LLC filed a lawsuit in Cameron County District Court. He alleges that Houston’s Sanchez Midstream Partners broke the terms of a 2017 purchase agreement, worth $ 6.25 million, for various oil and gas leases comprising two wells on an adjacent 24-acre parcel to the SpaceX installation.

The two inactive wells are called La Pita 2R and 3. As part of the larger transaction, Sanchez asked Dallas Petroleum “to take responsibility for plugging and abandoning two wells on the 24.21 acre land. Said Jordan Farrar, a Dallas oil lawyer. in an email response to questions. In exchange for assuming responsibility, he said, “Sanchez offered to include the 24.21-acre area for review.”

Sanchez Oil and Gas Corp., a subsidiary of Sanchez Midstream, owned the acreage. During negotiations, “an employee of (Sanchez Oil and Gas) represented to (Dallas Petroleum) that the 24 acres were part of the ‘ownership’ of the sale in order to offset the costs of plugging and abandoning the wells” , according to the complaint.

The Dallas Petroleum principal testified that Sanchez’s rep said, “Someday (Dallas Petroleum) could sell the 24.21 acres to SpaceX,” Farrar said.

But Sanchez Oil and Gas was not on the real estate documents, and Dallas Petroleum says the omission came at a cost. The documents, including the transfer, assignment and deed of sale, list SEP Holdings IV, another entity controlled by Sanchez Midstream.

Cameron County land records show a bill of sale for wells, equipment, permits, easements, contracts and records associated with the land between SEP Holdings and Dallas Petroleum, while county tax records show Sanchez Oil and Gas as landowner.

Farrar maintains that the documents show that the “title to the surface” belongs to Dallas Petroleum. He added, “The county valuation district records do not always accurately reflect the property in the property records.”

In mid-February, Sanchez Midstream changed its name to Evolve Transition Infrastructure. The company declined to comment. The case also trapped a network of affiliates, including Sanchez Midstream Partners Limited and General Partnerships, Sanchez Oil and Gas Corp., real estate acquisition company SpaceX Dogleg Park LLC, and oil and gas exploration company of the space company, Lone Star Mineral Mineral Development. LLC.

In May 2020, SpaceX leased the area from Sanchez Oil and Gas.

According to the Dallas Petroleum complaint, “SpaceX and / or (Sanchez Oil and Gas) have created an entity called Lone Star Mineral Development, LLC” to lease the mining estate underground. The Texas Railroad Commission shows that Lone Star acquired the 806-acre oil and gas lease from La Pita.

Dallas Petroleum believes it owns the land Sanchez is trying to sell to SpaceX. He’s looking for clear title to the 24 acres, or its damages value, Farrar said. He declined to indicate a specific dollar amount sought.

Sanchez denies the allegations. He maintains that the Dallas Petroleum agreement never included surface rights to the land. For their part, attorneys for SpaceX and Dogleg Park said the lawsuit “attempts to interfere with the lease and purchase agreement between (Sanchez Oil and Gas) and Dogleg Park LLC.”

Dogleg Park, the real estate company SpaceX, has been swallowing up properties around Boca Chica and Brownsville since the space company landed in South Texas. She named herself a third party to the case in November.

The SpaceX entity said Dallas Petroleum “has no right, title or interest in the 24 acres, but it entered and attempted to illegally exercise control over the property” by installing locks on the access gate. . The filing continues that Dogleg Park decided to purchase the land in September.

He said the 2017 agreement between Dallas Petroleum and SEP Holdings IV had “nothing to do with the 24-acre estate.” Dallas Petroleum, he said, claimed ownership “for the sole purpose of extorting money from SpaceX and its subsidiary Dogleg Park.”

Sanchez and SpaceX have both threatened Dallas Petroleum president Matt Williams and company employees with trespassing charges. In a July 9 letter to Williams, space company attorney David Asmus wrote: “SpaceX will not accept any interference with its surface rights.”

SpaceX did not respond to a request for comment.

Farrar said aerial photos show others are using the land and the Dallas Petroleum property has been removed without permission. A Dallas Petroleum official believes someone illegally tested both wells and removed company equipment, including tanks, stairs, walkways, and field separators.

Dallas Petroleum filed a theft report with the Cameron County Sheriff, but has not heard from the department since January 25. Sheriff Eric Garza said he was reviewing the status of the case, but did not answer questions before the print deadline.

The Texas Railroad Commission held a hearing on Jan. 22 to consider a change in operator request for La Pita gas leases from Dallas Petroleum to Lone Star Mineral Development, according to a spokesperson for the agency. The case was closed on March 22 and the judge has 90 days to render a verdict.

As of Thursday, there was no future hearing on the role of the 445th district court for the case.

Brandon Lingle writes for Express-News through Report for America, a national service program that places reporters in local newsrooms. [email protected]

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