Pipeline Easements

Easement agreements are formal legal agreements granting the pipeline operator long-term use of a right-of-way. A change in ownership of the property does not alter the easement agreement. Because easement agreements are legally binding contracts, landowners should have the contract reviewed by an attorney before signing . Many aspects of a pipeline easement are negotiable. The landowner should consider any contract offered  to be a starting point for a two-way negotiation, or it can be fully accepted or rejected by the landowner.

Following is a list of some  considerations that should be included in a pipeline agreement or addressed with an addendum:

  • Establish the width of the permanent easement and time line for completion of construction.
  • Define the nature and width of the temporary construction easement.
  • Require identification of any independent and sub-contractors that the pipeline company will use and make the pipeline company responsible and liable for all acts on your property by independent and sub-contractors.
  • Require the pipeline company to indemnify (not hold legally liable) the landowner from the acts and omissions of the independent and sub-contractors.
  • Define and limit access to both permanent and temporary easements.
  • Specify payments for trees, crops, and other plants damaged during the installation of the pipeline.
  • Specify re-seeding requirements of easements, such as the types of grasses and other improvements.
  • State the amount of time following completion of construction for surface restoration to be completed.
  • Identify all stream crossings, state methods of stream crossings, and require restoration of stream crossings after construction.
  • Require the landowner be provided an “as constructed” survey of the easement with an official seal      by the surveyor within a stated period of time following completion of construction.
  • Specify replacement or installation of fencing and gates, stating which gates will have locks and nature of the locks.
  • Limit number of keys or number of persons with lock combinations.
  • Identify the named person at the pipeline company who will be the landowner’s contact. Require the pipeline company to give 30 days prior notice to landowner of any change in contact person or contact information.
  • Define access post-construction to the easement with specific method and location of all  access roads and methods.
  • Prohibit or limit surface accessories to the pipeline.
  • Require minimum depth to top of buried pipeline and require that this minimum depth be maintained at all times.
  • Terminate the lease by stated number of days of no use of the pipeline.
  • Define “abandonment” of the pipeline as a termination of easement event and require the pipeline company to remove all abandoned pipeline.
  • Require prior landowner consent for any assignment of the easement to another party.
  • Limit the easement to one pipeline of a stated diameter, with no right to install additional pipelines and no right to increase the diameter of the pipeline.
  • Require the same      post-construction restoration of surface for pipeline repairs as for original construction.
  • Reserve the right to seek surface damages for pipeline repairs as for the initial installation.
  • Confirm whether gas to be transported will be scented or unscented.
  • Ensure that the permanent and temporary easements are by metes and bounds descriptions and with official surveys – pre-construction and post-construction (as-built survey).
  • Choose an alternative dispute resolution method that makes it the cheapest, quickest, and least burdensome way to resolve conflicts between landowner and the pipeline      company.
  • Consider what surface uses by the landowner will be prohibited, if any, on the easement.

Payments to landowners for granting right of way easements can be quite variable between pipeline operators and from location to location. Most payments involve a set dollar amount per linear foot (or per ‘rod’ which is 16.5 feet). Historically,  easement agreements have ranged from less than $5.00 per linear foot to more than $25.00 per linear foot.

There is a post on GMS indicating a current offer of $50 per linear foot.

Some pipeline operators will also offer a ‘signing bonus’ (a fixed dollar amount for signing an easement agreement) in addition to the payment per linear foot. The amount and terms of payments need to be in writing before signing an easement agreement.

 

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Replies to This Discussion

Permalink Reply by Philip Brutz on December 30, 2011 at 3:26am

I have added part of the Rockies Express Pipeline to the Google Earth map of the Utica drilling units. The map image is from 2009 and if you zoom in and follow it you will see them laying the pipe. You will need Google Earth installed on your computer to view it. The pipeline was designed to import gas into Ohio from Colorado. Kinder Morgan is now talking about reversing the flow http://www.pipelineandgasjournal.com/rockies-express-pipeline-may-r...

It will be interesting to see how they connect into it. Here is a very in depth link from the Argonne National Laboratory on gas pipelines http://corridoreis.anl.gov/documents/docs/technical/APT_61034_EVS_T...

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Permalink Reply by scott jackovitch on January 4, 2012 at 11:58am
Permalink Reply by Philip Brutz on January 4, 2012 at 1:00pm

Interesting.  Do pipelines compete with building a Cracker in this area?

Permalink Reply by Al Cramblett on January 5, 2012 at 6:17am

Philip, quite the contrary. Pipelines will be the primary method of transporting the feedstock to the cracker plant.

Permalink Reply by Philip Brutz on January 5, 2012 at 6:25am

Do not get me wrong.  I hope that you are right, but the news article above is talking about "building a 1,230 mile pipeline to transport ethane from the Marcellus and Utica Shale regions in Pennsylvania, West Virginia and Ohio to the U.S. Gulf Coast"

Permalink Reply by Al Cramblett on January 5, 2012 at 6:44am

Yes it does and that makes sense to me! Why, well there are multi-billion-dollar processing plants already located along the golf Coast. Such a proposed pipeline will permit  transport of the necessary feedstock from the Marsalis Shale region if it makes economic sense. You will note that I have started a different thread talking about a cracker plant. Such a plant cannot be constructed and be operational in less than five years. Where does all the production from the eastern Ohio wells go to in the meantime? The answer is that it either goes to existing cracker plants or to the East/West Coast to meet homeowner heating demands. It is this very scenario that is being evaluated by the oil and gas industry. When a cracker plant is constructed in our backyard, it will be economical advantageous to work load such a facility to its maximum capacity

Permalink Reply by Philip Brutz on January 5, 2012 at 7:20am

Do you think that they will run 2 pipelines directly from our wells or will truck the liquids to a central receiving site?

Permalink Reply by Dan on January 5, 2012 at 11:21pm

When we have these long distance transmission lines in place to get our wet gas to the Gulf Coast and to Canada, plus we have cracker plants established locally, then there will be competition between the two.  But I would think that is good competition for landowners and producers.  I'm not sure how the transaction works, but multiple options will either mean lower costs to run the gas through these mid-stream processes before selling to the end user, or higher prices offered if they are buying the gas directly from producers, either way translating to higher revenues and higher royalties.  It seems that these mid-stream players realize that there is going to be plenty of production to keep a local cracker plant and a pipeline out of the area filled close to capacity for a long time, so that each will get a solid return on their infrastructure investment.  That confidence on their part should tell us that we really do have something significant here.

Permalink Reply by scott jackovitch on January 21, 2012 at 4:40am

Here is an article from a few weeks ago. It sounds like another pipeline might be coming through Harrison County. It says the pipeline will originate in Carroll County and head south. It looks like a lot of pipeline work will be coming to our area . http://www.dispatch.com/content/stories/business/2011/12/23/newpipe...

Permalink Reply by Dan on January 21, 2012 at 5:28am

Permalink Reply by scott jackovitch on January 21, 2012 at 5:18am
Permalink Reply by Josh on January 30, 2012 at 1:30am

I was told $7000 an acre for pipeline easment this weekend.  Can anyone confirm any other offers? 

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