Pipeline Explosion in Robertson County, TX

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We are big proponents of the pipeline projects here in West Virginia.  We need them in order to utilize the massive volumes of gas that we have.  However, pipelines come with some amount of risk.  Everyone who has a gas pipeline near them needs to know what could happen.

In Robertson County, TX, a pipeline ruptured and then exploded last Saturday.  A man and his son were hunting within 100 yards of the rupture.  They are lucky to be alive.

If you live close to a pipeline, you should have a contingency plan for what to do if it ruptures.

New Pipeline Projects in West Virginia

Gas Pipelines in Columbia

I was going to write up something about these new pipeline projects, but the folks over at Kallanish Energy already put together a good summary.

The Utica Access project is only five miles long and will come online at the end of 2016.  It will only move 205 million cubic feet per day and only down in Kanawha County, so it won’t impact production and royalty amounts much, if at all.

The WB Xpress will be an interesting project to watch, as it will move 1.3 billion cubic feet per day and will open in 2018.  There will be quite a few other project opening in 2018 as well.  2017 could be a very interesting year for West Virginia mineral and royalty owners whose rights aren’t leased.

Stonewall Gathering Pipeline Finished!

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Great news for West Virginia royalty and mineral owners!  The Stonewall Gathering project is complete and pumping gas out of the Marcellus Shale area.  It takes gas from Doddridge, Harrison, and Lewis counties and transports it to Braxton County where it connects with an existing Columbia Gas pipeline.  That pipeline takes the gas out of state.

It’s a big pipeline, at 36 inches in diameter, and is currently moving about 700 MMcf/day.  It’s highest capacity is expected to be 1.4 billion cubic feet of gas per day.  If it’s like other pipelines, it could probably be pushed a bit higher with some additional compressors.

The most pressing need in the Marcellus shale and Utica shale area is for take away capacity.  There is so much gas in the region that there simply aren’t enough pipelines to transport it all to market.  Consequently, pipeline companies can name their price to transport the gas, and they take a huge chunk of the value of the gas.  When all is said and done, Marcellus shale gas has been netting West Virginia producers more than a dollar less than what gas sells for at Henry Hub.

With more pipelines, the “differential” between Henry Hub and the Marcellus/Utica region will decrease.  That means more money in royalty owners’ and lessors’ pockets.  The Stonewall Gathering pipeline itself will not make a large difference.  Combined with other projects that should be completed in the next few years, though, we will start to see better royalty payments.

Pipeline Negotiation Stories

Ford Turner at the Reading Eagle, a Pennsylvania newspaper, put together a pretty nice article which illustrates how different attitudes can bring different results in negotiating with a pipeline company.  In writing the story, he interviewed a number of people from his community about their experiences with putting together a deal with the pipeline.  Each person had a different experience.

If you have been approached by someone who represents the Atlantic Coast Pipeline or the Mountain Valley Pipeline, you should definitely take a few minutes to read the article.

Pipeline Internal Workings

Gas Pipelines in ColumbiaHere is an interesting article about a pipeline that has seen better days but may also have better days ahead.  We’re not so interested in the pipeline itself as much as we’re interested in the details of how pipelines work.  If you’d like to start your education about pipelines, this article is a good one for you.

The ACP Is Now Taking Easements

The Atlantic Coast Pipeline is now offering to buy easements from landowners in Upshur County, West Virginia.  The easement includes a 75 foot permanent right of way and a 50 foot temporary right of way.  They are offering $42 per foot, which is the old standard of $1.00 per inch per foot.

The ACP is a 42 inch pipeline which originates in Doddridge County and passes through Lewis, Upshur, Randolph, and Pocahontas counties in West Virginia.  If you think you might be on the route, you can go to Dominion’s Atlantic Coast Pipeline map page.  There are several different types of maps there that you can play with.  Most people on the route have been approached with an offer at this point, but I spoke today with a client whose neighbor should be on the route but hasn’t yet been approached by a landmanAtlantic Coast Pipeline in West Virginia.

The ACP is going to have FERC approval, meaning it will have eminent domain powers.  The ACP will do their best to put together a deal with a landowner instead of going in front of the courts, though, for two good reasons.  One, it’s cheaper to just deal with the landowner.  Two, the rights they get in a court order are usually more limited than what they can negotiate with a typical landowner.

This means that you will have a chance to negotiate for a good deal.  You can get a better price for your property, but more importantly you can also get much better terms.  The ACPs easement agreement isn’t as comprehensive as the Mountain Valley Pipeline’s, but it still needs some important changes.

Make sure the easement can’t be moved without your approval.  You don’t want to grant them an easement based off a landman’s verbal assurances or even a preliminary map.  The location has to be clearly marked and any changes must be made in writing.

Make sure you can use the easement for whatever you want so long as it doesn’t interfere with the pipeline’s safe function.  The easement states nearly the opposite, limiting your ability to use the easement to a number of specific items.

Make sure that if the easement is no longer being used by them that it reverts back to you.  As written, the easement agreement is permanent, even if the pipeline is no longer being used.  You probably won’t see the day the pipeline stops carrying gas, but your grandkids might, and they’ll thank you for your foresight.

Make sure they pay you a lot more than they’ve offered.  The new standard in West Virginia is $2.00 per inch per foot, but if you get onto some online forums you’ll find people who are talking about getting $4.00-$5.00 per inch per foot, which would equal $168-$210 per foot for a 42 inch pipeline.  While we haven’t seen those number materialize yet (it’s all just speculation) we’d like to see better than $1 per inch per foot.

There are a number of other things you might want to ask for, including the right to cross the pipeline with heavy equipment, a specific type of fence around the easement, special treatment for timber, avoiding certain areas of your property, gates in specific locations, limits to their ability to use your existing roads, and a prohibition against their workers hunting, fishing, camping, or doing any other activities on your land.

We are putting together a group to negotiate with the ACP.  You can join and leave any time you want.  With a large number of landowners we can get more concessions, including more money, from the ACP.  Call if you would like to be part of it.  304-473-1403.

 

Oil and Gas is Alive and Well in West Virginia

Things have been picking up here at this office, indicating that oil and gas activity is picking up in West Virginia.  This article at the Exponent Telegram tells why.  To sum up, the current pipeline projects are going to be able to take a lot of gas out of the area, and will increase demand for the gas that’s still in the ground.

We’re awfully busy so we don’t have a lot of time to blog right now, but we thought we’d put this out there.

West Virginia Landowners Win Court Case Against Mountain Valley Pipeline

Judge Irons in Monroe County, WV ruled yesterday that the surveyors that the Mountain Valley Pipeline has been sending out do not have the ability to enter your land without permission.  The will be considered trespassers.

I think this is exactly what West Virginia law says, and I think the judge got it exactly right.

Read more about it here.

The Appalachian Gas Oversupply: Over Soon?

The biggest problem for gas developers, and consequently royalty owners, here in West Virginia has been the lack of pipeline infrastructure to transport the gas to market.  The Marcellus shale development has been so fast that it was impossible for pipeline companies to keep up.  Either that or they just didn’t think ahead far enough.  Either way, midway through 2015 we need pipelines in a bad way.  Hope is on the horizon, however.

This article over at SeekingAlpha is practically a list of pipelines and completion dates.  Conspicuously absent are the Mountain Valley Pipeline and the Atlantic Coast Pipeline, but those won’t even start construction until next year.

The article points out that pipelines are about to start coming online, and that will drive the cost of transportation down.  As the cost of transportation goes down, the profit to producers is going to go up.

West Virginia mineral owners can expect to see an uptick in production, so their royalty checks should get bigger.  Those who aren’t leased can expect to see leasing start back up, too.

The next few years will see increased transportation capacity, so mineral ownership should only get better and better from here on out.

Well Pad Pipeline Rutpures, Burns, but Doesn’t Explode

Danger SybmolWe’re not sure how this happens, but a new pipeline at a drilling site in Tyler County, West Virginia, burst and burned.  News reports say that the pipe didn’t explode.  That’s a little odd.  So is the fact that it’s a rather new pipe.  The usual reason given for pipeline ruptures is that the pipe corroded and failed.

The fire occurred at the Jay-Bee’s Gorby pad in Big Run to the east of Middlebourne.Big Run, Tyler County, WV

We’re all for oil and gas development, but we don’t pretend that there are no risks.  You’ve got to go into this kind of thing with your eyes wide open and ask questions.  Do some research.  Don’t make snap decisions.  Sleep on it at least once.  You’ll be glad you did.  That way when a truck meets you coming around a narrow blind curve, a hill slips, a pipeline bursts, the well is flared off, the compressor station noise keeps you up at night, or there’s natural gas filling your hollow, you can at least say you thought about it.