Initial Pipeline ROW Review Fee

I’m fed up!! 

Over the past two or three years, I have probably been approached by over a dozen pipeline land men proposing different Rights-of-Way across my various Harrison County, OH, farms.  I have politely listened to their pitches, reviewed their documents and maps, discussed general terms etc., and even incurred some attorney costs.  I’ve also tolerated their nagging phone calls, numerous emails, and un-announced drop-in visits to the house. 

Then, before we even begin serious negotiations, they vanish!!  Never to be heard from again!  Result?  A huge amount of wasted time, aggravation and some money!

So, I’m seriously considering instituting a “pipeline ROW preliminary review” fee.  Before I even read their emails, open any of their documents, or talk to them on the phone, I will request a $600 up-front, no commitment, non-refundable payment.  Basically, it means “you pay me $600 and you can talk to me”.

I don’t really care if they don’t want to pay the fee as I couldn’t care less.  I don’t really want any pipelines on my land, I'm not adamantly opposed, but I’d be just a happy for them to go build on someone else.  I don't want to be a jerk, but I’m just tired of wasting my time.

Has anyone done this or is currently doing this?  Is $600 too much or not enough?  Does anyone have any template document describing this process?  Opinions or comments?

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Permalink Reply by Superman on November 9, 2015 at 6:10am

Hey Billy Bob, I have dealt with several pipeline land men here in Belmont County on my 2 farms. I just flat tell them on our 1st meeting that I am not opposed to a pipeline but don't call me until it is coming to my farms. What you have to remember is that the guy 2 miles up the road holds outs and they totally change the route. Trust me they know where they want to go but seek out other routes just in case. So I don't sweat it or them until the loggers and dozers show up ( because you don't want to be the 1st one signed up anyway.) This has worked for me to get top dollar, so hope it works for you. Good Luck!!

Permalink Reply by rmc on November 9, 2015 at 7:59am
Hi I have had similar experiences on my farm in Greene County Pa.
Pipeline routes get moved companies get sold plans change etc.
My solution was I would work them on terms compensation etc but when it comes time to have it all reviewed by my attorney they are paying his fee period no pay no contract.
They will squeal but agree on a set amount to pay legal fees if they really need you're property. At least that's my humble opinion.
0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on November 10, 2015 at 2:53am

Billy Bob,

     I believe your problem is that the landmen want your Right Of Way but have no real plans for a pipeline.

If a pipeline was actually planned to pass through your area the landman would be forced to work with you until you signed a ROW. The pipeline company would start using the threat of Immanent Domain even if it wasn't an option.

What you have is the next phase of a shale play, Midstream Theft, turning your potential ROW wealth into their wealth by owning your Right Of Way. When the pipeline actually shows up they won't be talking to you if you sign a bad ROW, since you will no longer own it.

Charging the landman a fee for discussion would no doubt cause them to move on down the road to your neighbors farms.

You may have dodged the bullet. I know I have several times since the Oil & Gas companies came to town.

Next Up: Lawyer Retainer Contracts, possibly the last threat (but probably not) to your potential wealth when you ask for royalty theft help.

Permalink Reply by Louise on November 10, 2015 at 2:25pm

I think this is an incredibly good idea.  I also suffered from numerous emails, contract negotiations, attorney fees and then they stopped.  We spent a couple thousand on them.  I wouldn't have thought of anything like this but it's a great idea.  Let me know if you decide to move forward on this. I would be interested.  

Permalink Reply by Thomas Lilli on November 10, 2015 at 9:30pm
Ron has the right idea! These pipeline companies buy up cheap ROW's and then sell them down the road for ten times what they've paid. Plus they get flowage royalties. This is just like when the land men came around in 05-06 paying $10 for $50 an acre and then horse traded thousands upon thousands of acres for $4K-$6K per acre and 20% royalty. In some ways ROW's can be more lucrative than leases in my opinion because they are forever.

And to top it off, when negotiating ROW's they don't pay you till it's all said and done. Could be years down the road.

Having some legal advice is best but make sure you get a guy who deals with pipe line companies every day. They usually know what's going on with the company your engaged with and have some great inside information.

This, my opinion.
Permalink Reply by Superman on November 11, 2015 at 4:27am

I have often thought about starting a ROW group so every landowner is on the same page. So then like Thomas mentioned in 05-06 won't happen again. What do you think?

Permalink Reply by Louise on November 11, 2015 at 4:40am

I personally feel it would be very helpful, even though we work with an O&G attorney, not everyone has our welfare first.  Great idea!

Permalink Reply by Thomas Lilli on November 11, 2015 at 5:25am
i hope its not too late in Tioga County PA. I am told one local "expert" has been advising neighbors that $15/foot is the best they will get and telling people to agree with the terms. There is so much more to the issue than money.

My attorney went so far as to offer a free seminar a couple weeks ago up there.

I'm all in for starting a group. We have to get to the neighbors though before they sell their soul for pennies.
Permalink Reply by Robert Allingham on November 11, 2015 at 5:10am

That is a great idea. This is my second time being  asked  for the same row. I go through the documents first in order to save time and Money when I take  it to an attorney but after spending hours of my time, the first land man disappeared. The second land man stopped at my house months ago and disappeared until now claiming time is of the essence. He is offering 500.00 dollars for a three year option and it will cost me  a lot more in attorney fees to have everything reviewed. The option may never be used (if I give them one).

Permalink Reply by Thomas Lilli on November 11, 2015 at 5:35am
Robert,

$500 for what? Usually they pay by the foot.

When I was approached, the company who approched me was offering $15/foot while they were pay $37/foot less than 100 miles from us. There were other ROW's going for almost $100/foot. Not including addendums.

The truth is, yes they can go around you. Let'um. Unless they are paying you hansomely, the ROW is for eternity. Do you want to let someone run lines through your property for a few hundred bucks that may keep your property from ever being sold?
Permalink Reply by Louise on November 11, 2015 at 8:44am

I concur. However, I believe it depends on the location and what they are able to get from the neighbors. If you can get your hands on the local ROW already provided in the county court house, it should provide a map of the location of the lines and ROW. From that you can determine where your property is located in accordance with their plans and ROW's already signed. You may be able to hold out for more $ if your property is considered essential to their project. But again, Thomas is correct, they could go around you IF they determine yours is not strategically important. Putting the ROW MAPS together as a puzzle could help with a decision. I know we have representation and I'm very happy we did. Contracts are really viable and you owe it to yourself to look at the wording in all contracts from your county office. There are some that sign for 3 years, others 2. We got ours for 6 months with upfront payment to keep if option not exercised. Then at end they wanted to extend because they were having issues with other surrounding neighbors property not clearing title. they wanted to pay an addition amount but pittance compared to what we knew our property would be worth if they followed through. We declined. Since then, they have signed others for such smaller amounts and longer terms.  I can attest to the fact that $15 pf is pennies if you educate yourself. Please, please do that.  Don't be afraid to do the foot work and then take it to your lawyer. It will cut down the amount of time spent and get a surprised look on his/her face. And hey, if they don't utilize your property, it's the same as if it never happened and better to sell.

Permalink Reply by INVICTUS on November 13, 2015 at 6:30am

My very strong advice is to avoid pipelines an all (or nearly all) costs.

The "nearly all" means you might have to take a line if the pad it is connected to you drains your property.

Any obligation you have will certainly be located within your lease terms.

If you are keeping the property, you don't want the aggravation of a pipeline that doesn't produce regular income.

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