SWEPI/SHELL Right-of-Way Agreements in Western PA - Please Review Carefully

I have received several calls from western PA landowners and they have provided me the Pipeline Right-of-Way OPTION Agreements presented to them by SWEPI over the last couple months.  I really want to urge landowners to carefully and thoroughly review these Option ROW Agreements before you sign anything.  

I have worked extensively on Pipeline ROW agreements across PA and find this proposed option agreement to be very troubling in many ways.  Landowners must really make sure you not only understand everything in the ROW Agreement that you are presented, but also understand what type of future activity you are exposing your property to, and at what compensation rates in the future.  It is often much easier to think about today than what the future holds.

I get calls virtually every week from landowners who regret signing company friendly ROW and other gas related agreements.  Please do not make the same mistake and regret it later.  Remember, just because someone else, or even many others, entered into bad agreements does not mean that you should do the same.  I am really concerned that landowners are signing ROW Option Agreements that they are going to regret later.  

I have reached Pipeline ROW Agreements with dozens of separate companies all across PA, including several with SWEPI in Tioga County.  I have serious concerns about the ROW Agreements that landowners in western PA are being presented with ,and how the landmen are reportedly pressuring them to sign quickly. Think about it, what is the rush to sign quickly when the ROW Agreement has a 3 year company option?  Please do not be pressured or rushed.  These are important decisions and require careful consideration. 

Also remember, if landowners refuse to sign inferior agreements the companies will have little choice but to present new agreements with better landowner terms.  Please be careful, and please get qualified, experience assistance.  With good credible advice and qualified assistance you will always make the right decision for you and your property.  Please be careful, and be informed.

Douglas A. Clark, Esq. - Protecting Pennsylvania Landowners

 

 

 

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Douglas,

Well said.

I've been preaching to my neighbors and fellow Ohioans to know what they are signing. The ROW agreements I've seen give the pipeline company ownership of the landowners ROW for all future pipelines. A lot of landowners are going to be kicking themselves when the 36 inch pipeline crosses their land and the 1st company they signed a ROW contract with pockets their Big Payday.  

I'm glad to see someone is taking care of the PA folks.   Thanks!  Ron

As a real estate appraiser, I am currently appraising damages from a major 36" line.  All the verbal promises made during negotiations, somehow, never made it to the final agreement.  The process is in year 5 of trying to be settled.  The pipeline company will claim they can exercise eminent domain.  While that is true, they must still pay 'just compensation' (U.S. Constitution).  Here is where the problems begin.  They may 'take' enough for their pipeline.  Yet, deep in the document, might also be the right to put in another pipeline.  So the 'taking' might be enough to build 2 pipelines.  This leads to the next development.  Along with the 'taking' is a temporary construction easement.  Through the wooded areas the trees are removed.  Furthermore, the agreement explains that the vegetation will be replanted.  That's great, but the replanting is grass not trees, and the area will be mowed by the pipeline company to keep the trees from growing.  Now the best part, since the construction easement was temporary, you still own the land.  But there are no longer any trees growing on it that would help you pay the real property taxes.  If by now, you get the idea that pipeline ageements can potentially seriously negatively impact your land value, your right.  Seek professional help.     

Mike Coles - as a Real Estate Appraiser (as well as a 'Family Farm Property Owner', correct?), you undoubtably understand much more of the COMPLEX LAND ISSUES needing addressed in ways that the 'appraisal industry' has not come 'up against' previously - or at least NOT in 'these ways', correct?

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Affecting Property Valuation Factors to think about:

1) TREES  - while a 'pipeline ROW' or 'well site' are only to be 'x' in size - when the process begins, the TREES are NOT going to show the 'continual damage' due to 'ROOT COMPACTION' - people MAY (*will most probably*) LOOSE up to 25' more trees - on EACH SIDE of a 'pipeline right away -or- pad site...due to new 'sun/wind exposure' & root damage. Now HOW does one 'replace' 50 year tree growth? You can't - not in YOUR LIFETIME! (MAYBE your 'kids...but much more likely, your grandchildren!). THINK STRONGLY about that, friends. Once they are gone - they are GONE!

*People will pay more for a 'tree'd lot' of land - only to BUILD on the land & then just a FEW years after building - LOOSE the very trees that they *WANTED & spent good $ for! Think about THAT!

2) Artesian Wells - as well as ANY & ALL 'water sources'. The horrible thing that I keep reading that gets posted is concerning how the 'cleaning' of the water is 'good'. REALLY? It is just NOT SO! Realize this people - before it is TOO LATE! You can't 'drink the gas, the oil, OR the $$$ you'll get from it, BUT you will be able to tell IMMEDIATELY if your water doesn't TASTE RiGHT.

-------how about WELL WATER? (ALWAYS get your OWN water test done (***as WELL as requiring a COPY of the 'G/O Co. water test' - to compare! Also to have for 'BACK-UP for your future peace-of-mind!)

***Mike, what kind of 'value' to land is given due to WATER?...***MAY be something 'new' for the 'appraisal standards' of property values! How much is a 12 oz. bottle of water?...think about that.

3) How the LAND itself presently looks/appears - maybe took YEARS to get this 'LOOK'! ...You know - it seems to happen that G/O Co.'s seem to show x2 main sets of pictures - how it looks 'all torn up', but THEN how it MAGICALLY looks all 'pretty' again. NOT! - quite interesting! - HOW IS THAT? I guarantee you that SOME of these pictures are NOT of the 'same location'...and IF they are, that it may be *YEARS (8+) in between when the 'construction/tear up' of ground was done & the 'after picture' looking 'too nice for words'. *DON'T believe it, just doesn't seem to be 'right'.

***IF it is 'too good to be true, it probably IS!***Those pictures were probably taken about x10 years or so apart, quite possibly. PLUS, remember the trees...and then there's GRASS 'replacing' those trees. 'GRASS is NOT 'TREES'! *Dunsinane, Dunsinane! ***Don't sacrifice your FUTURE on the ALTER of the PRESENT.

Trees/Plants are like 'hair'. Hair grows from the roots, but plants grow from the tips...plants are NOT like you or I - nor kitties or doggies...we 'stop' growing; but TREE's & Plant's continue to grow EACH YEAR until they 'die'.... HOW does one 'replace' that? They can't! (not even with 'fast growing trees', like 'Poplars' ('junk trees'!) - they are messy & tend to attract lightening because they grow so quickly & tall. -- 'Quality Trees' - Oak, Maple, Beech, Cherry + take TIME. *Did you know that a Sugar Maple Tree can NOT be 'tapped' for sap until it is OVER 10" diameter (and THAT is the minimum!)...and that EACH YEAR the 'sap tap' must be moved to a DIFFERENT LOCATION'? YES. HOW long do you think it takes a Sugar Maple to get to a 10" caliper?...around 25 years +. *THINK about THAT. *IRREPLACEABLE* TIME! -- HOW does one COMPENSATE for THAT?...

3) Property Values - ***'Highest & Best USE'?...isn't THIS how 'appraisals' are best 'judged'?...WHAT happens to the 'highest & best use' IF you CAN'T USE the land for development - because of PIPELINES? - better get COMPENSATED, folks!...***your LAND is your GOLD!

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--- MIKE, HOW do you 'compensate' for an Artesian Well gone 'sour' on a piece of property? You can't, can you? How about good tasting WELL WATER? You all know that the Great Lakes are the #2 fresh water source of the ENTIRE planet, don't you? Did you know that GROUND WATER is the BIGGEST RESERVOIR - that 'IN THE GROUND' -- is held 90% of the EARTH'S fresh water supply?...and we TRAP the 'frack water CHEMICALS' IN THIS?!...and VALVOLINE 'shakes its finger' for wrongly disposing of ONE 'oil change' amount of fluid (?!), claiming that THAT CAN ***CONTAMINATE 1,000,000 (*ONE MILLION!!!)*** gallons of water! Amazing. ...so HOW do we deal with *FRACK CHEMICAL-LADEN WATER* that seeps & sits DEEP IN the ground - contaminated beyond any cleanliness & purity? TROUBLE.

*HOW does one 'compensate' for LAND value - once the MAIN VALUE has been 'stripped'?...PIPELINES potentially LIMIT 'future uses'. MANY things to consider, indeed.

As one light lights another, nor grows less - so nobleness enkindles nobleness. THINK! - DON'T 'sacrifice your FUTURE' on the ***ALTER of the PRESENT***. He who has the 'gold' makes the rules, but he who has the LAND & the WATER will eventually make ALL of the RULES!

***Never forget -- Esau sold his 'birthright' for a 'bowl of soup'...DON'T YOU go 'selling your LAND RIGHTS' & end up with ROTTEN WATER & DISTRESSED LAND! (and ruined & unusable land! - for anything BUT 'farming'!)

I agree with all that has been said.  It absolutely does not need to be me, but landowners should get experienced help who has seen these agreements and understands what can be negotiated, what the market is in PA, and what future consequences you must be aware of.  

What I see happening in western PA and Ohio is what happened early on in northeastern PA.   Everyone really should learn from the unfortunate mistakes of others and take the opportunity to draw from the base of knowledge that this is now available in PA.  We have already seen these landman salesman techniques and we need to make sure everyone is fully informed.  If you are informed and want to move forward that is completely your decision and the right decision for you.  

My concern is for the landowners who make decisions without understanding both current and future consequences.  The information is out there to see what happens when you sign a bad ROW or other agreement.  Landowners really need to draw from others' past experiences to benefit their current situation.  Please get experienced help, no matter who it may be, and remember the land agent's job is to get signatures as quickly as possible.

Doug Clark

Douglas, Esq., it Is unfortunate that land leases HAVE been signed...under 'duress' in some (MANY!) instances. THIS IS 'unchartered territory' concerning this DEEP WELL drilling.

Interesting thought - MANY individuals DID perhaps 'sign' (as they maybe PREVIOUSLY had - to 'make the $$$ to PAY their property taxes?...), thinking that they wouldn't get 'drilled', because they hadn't before. NOW one lady that replied to one of my writings *actually said that the G/O Co.'s* DID 'know'/plan' what is happening now - ***YEARS AGO (since 1950's...?). Wouldn't that be deemed as 'intentional NON-disclosure' - and their INTENTIONALLY NOT disclosing to the 'landowner' (*essentially their 'partner') WHAT ***DEEP SHALE AREAS*** were being sought as well as WHAT was going to be taking place in acquiring these desired materials - deceitful? There WAS malicious intent & purpose to conceal & hide TRUE INTENTIONS OF the G/O Co.'s. I find it very cloaked. At least with Apple - you KNOW WHY they aren't going to 'spill their beans' of proprietary knowledge. The confusing matter here is 'intent' (the G/O Co.'s HAD PURPOSE & INTENT in this 'land grab') & CONCEALMENT 'affecting' an individual's PROPERTY'. People seem to 'accept/understand' Halliburton's 'PROPRIETARY KNOWLEDGE of FRACK CHEMICAL's (do they? -OR- do they 'just HAVE tO 'take it?!!!)...do YOU *'accept' this, sir?

***I PROPOSED that the 'G/O land-lease' limitations should be maintained - BUT limited to a 'drilling depth' of 1,200' (twelve hundred feet)...AND that the G/O Co. that DID 'sign' the lease DOES have *FIRST RIGHT of REFUSAL* to engage & then enter into a NEW LAND CONTRACT for the 'DEEP WELL' drilling depths of Marcellus +.... I can go on & on. I truly believe that individuals were 'horribly deceived/schiested - because the 'KNOWLEDGE of TRUE INTENT' by various G/O Co.'s was KEPT HIDDEN by the G/O Land Lease Agents - individuals WHO are ***REPRESENTATIVES of the VERY G/O Co.'s themselves. (I find the G/O Co.'s TRY to 'claim/say' that the LANDOWNER is at FAULT for 'falling' for any landleaseman's 'lies'. - WRONG! ***LAND LEASE INDIVIDUALS are ***DIRECT REPRESENTATIVES of the G/O Co.!

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You, sir - can 'untangle' better than most - the very 'webs of deceipt' that are being ATTEMPTED to be pawned off as being 'the norm/accepted protocol concerning INDIVIDUAL LANDOWNER RIGHTS. DECEIPT is WRONG. ***These LANDOWNERS are smart. They were dealt with in a 'slight of hand' manner that is from days of old. You must be able to 'get a better handle' on what has been BLATANTLY DECEIVED. God be with these fellow Americans - many farmers probably AMERICAN SOLDIERS, too!!! ***For SHAME!

As one light lights another, nor grows less - so nobleness enkindles nobleness. Right is Right & wrong is wrong.

It's not just ROW agreements, their are seismic and other exploratory agreements that the landowners need to watch for.  I agree that the ROW are dangerous and more troublesome than the exploratory agreements, but landowners need to review both carefully.  ROW agreements are usually forever and only provide a one time fee.  It is amazing how many of these calls we field and clients we advise on these types of agreements, as well as those who have "sellers remorse". Now that the land grab is almost over, the ROW agreement grab is next; it can have some of more dangers than the lease itself. 

So what are the top five problems with the agreements that you've seen?

I gave our copy to our lawyer.  We were advised not to sign.  He is in the process of negotiating for another client.  He said it was too vague and we would be in trouble with the current wording.

There is a good sample Pipeline agreement you can download an use to compare with what has been presented to you. Go to www.alov.us they have a pipeline ROW agreement that appears to have a lot of the language necessary to protect the landowner. I'm not an attorney or in no way recomending this is the agreement you should use but its a good reference tool.

No one should ever sign anything from an O & G without having it reviewed by an attorney.....not even an acknowledgement letter........except for your bonus and royalty checks. And even be sure those come without some clause attached!

What are the current amounts per linear foot that people are getting for pipeline ROW?

There are really a lot of variables that make it impossible to set a "standard rate".  Whether the company has rights under your Gas Lease to lay the proposed pipeline is a very important initial factor that will typically limit compensation flexibility.  However, you need to fully understand whether the company actually has the right to run the lines, or whether their rights are limited.  There is a lot of misrepresentation by landmen in this area.  

I could write for for a very long time on this issue.  With that said, the generic range is $15-$60 per linear foot depending on the company involved and type of line requested.  However, I have personally seen landowners get hundreds of dollars per foot in certain situations.  Almost every negotiation presents a different set of circumstance, and many negotiations are vastly different.  The landowner needs to understand what their leverage is in their particular case.  

If you get a Pipeline ROW offer the first thing you need to do is fully understand the offer, what your leverage is in your situation, and whether you have the ability to say "no".  Also, you need to understand the scope of potential future activity.  Again, I could write for days on this topic.  You really need to be fully informed and understand your specific leverage and options.  These are generally contracts for life and beyond so complete understanding and quality information is critical to making the right decision.

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