Gathering pipeline prices

I was just wondering if someone could give me some of the offers that have been made for gathering pipeline leases.  We have been approached about leasing 4000ft long and 50ft wide  for a 8" pipeline easement.  The lease is really vague and cheap in my book.  $25 per ft and $10 for any additional.  What kind of money should we be compensated?  And yes, our lawyer will be involved.  The land is in Tuscarawas County, Ohio.  Thanks in advance.

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Permalink Reply by Theresa Kolk on July 2, 2015 at 12:56pm

     I am in Pennsylvania and don't know how different things are in your neck of the woods but I would search Pipeline lease prices or something similar. If they offer you a lease you might want to look up this link... www.wvsoro.org/resources/advice/Pipelines_What_Surface_Owner...  

that should take you to a VERY informative list of things to look for in a pipeline lease..

I found that in the blog section (underneath the forum section )... hope this helps, Theresa 

Permalink Reply by markkot on July 3, 2015 at 2:11am

Jason, I can't help you with pricing info (I wish!), but even though you have an atty, here's some info for you to read including ROW considerations and a 'sample' ROW agreement. So, you know what you should be looking for. Best of luck, and I hope you get what you want....

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Permalink Reply by Frank Walker on July 3, 2015 at 2:55am

Hi, Jason

Let me warn you up front that my views on this vary widely from those of many landowners, and even more widely from industry convention:

I would never lease land for any purpose on a one-time-payment basis.  Such an approach, which makes no provision for lease value inflation or for property tax increases, is ridiculous from a landowner's perspective, and it is manifestly unfair to us.

Clearly as a practical matter, once the pipeline is constructed, no lease can be cancelled.  So what is needed is lease terms which contemplate changes in (our) costs going forward in time, as well as changes in the value of the asset in the future.  The lease needs to include escalators to allow for inevitable cost increases.  As the landowner's costs increase, so must the gas company's lease costs.  Do not forget, even though the land is leased, you will continue to be responsible for payment of property taxes on that land . . . unless you work out in advance, in the lease, an approach wherein the gas company shares those costs, in a fair manner, as they rise.

To help you think about the inflation aspect, think back twenty-five years ago when lease rates were very low . . . peanuts.  Now consider in your mind that the gas company, which paid such a small amount back then, still has the right today to use that land for their pipeline, even though the value of that right today is far, far, higher than what they actually paid!!

One time, up front, payments for pipeline rights of way are great deals for the gas companies.  But for us landowners . . . . not so much!!    

Permalink Reply by Jason on July 3, 2015 at 3:57am

Thank you all for this valuable information.  The initial lease was such a joke(but other neighbors saw $$$ and signed it without doing their homework)!! When we set a time to meet to negotiate because we had a "couple" issues, he cancelled and we never heard back from him.  I think that he got the hint that if this pipeline is going through us, it is going to be a very descriptive lease and very expensive!!!!  

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