Category Archives: Pipelines

Economic Impact of Atlantic Coast Pipeline

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Dollar SignThere’s a new study out by the Southern Environmental Law Center that says the economic impact of the Atlantic Coast Pipeline will not be as great as Dominion’s study indicated it would be.  SELC’s study points to a variety of flaws and assumptions used in Dominion’s study.  You can read the report in it’s entirety here.

Both studies look at the overall impact of the pipeline, not just to localized areas.  We think that the ACP will have an enormous economic impact in West Virginia.  There simply isn’t enough pipeline capacity to carry away all the natural gas that West Virginia is capable of producing.  Gas producers are paying $1.00 per MCF to transport their gas.  When gas prices are under $3.00 per MCF, that’s a pretty substantial amount of money.  Producers have to make money at under $2.00 per MCF.  Their profit margins at those prices are awfully thin.  Adding pipeline capacity will cut the price of transportation some.  When they’re making more money, gas producers will take more leases and drill more wells.  That’s good for West Virginia property and mineral owners.

Whether the ACP will have a huge economic impact or a slightly less huge economic impact is not extremely important for West Virginia royalty and mineral owners.  The ACP will reduce the cost to transport gas and increase the amount of gas produced.  If we’re smart about it, we can make sure some of the resulting profits end up in the hands of West Virginia surface owners on the pipeline route, and in the hands of West Virginia mineral owners in the production area.

We’re waiting for landmen to start making offers on the pipeline route.  When they do we’ll be helping property owners negotiate the best possible deal for their surface rights and helping them get protections for the rest of their property.  Give us a call when the landman comes knocking.  We can hardly wait to start negotiating with them.

Pipeline Right of Way Negotiations

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In early 2014 we had a client request help negotiating a pipeline right of way.  The right of way was short, quite a bit shorter than 1000 feet, and the pipeline wasn’t large, only twelve inches.  But the property was important to our client, who wanted it to be protected from unexpected use and abuse.

We negotiated for months.  The location of the right of way never changed, but some important details did.  Our client wanted to get rights to free gas from a well that was on the property, wanted to terrace the right of way to make it more useful for cultivation, and wanted to have the company push dirt across a waterway to create a pond.

As we negotiated, it became clear that the company would be unable to terrace the right of way because state law required that the right of way be returned to it’s original contours.  The company was also unwilling to push dirt anywhere outside the confines of the right of way due to liability issues.  The company was also unwilling to provide free gas as they had started making payments in lieu of free gas, as was provided for in the original oil and gas lease.

Because we had asked for a number of reasonable things, and the company kept saying no to them, the company eventually agreed to fence in the right of way.

Additionally, we were able to get a clause saying that if the pipeline wasn’t used for three years that the right of way would revert back to our client.  We were also able to limit the company to just one pipeline instead of giving them the option for a second pipeline at their pleasure.  Additionally, the company had requested the right to use all existing and future roads on the property for access to the right of way.  We were able to get that removed.

The company also agreed to more than double the amount of money it had originally offered to pay for the right of way.

After a while, the company decided that fencing the right of way was going to be too much of a hassle, and too expensive for them, and asked that our client take a lump-sum payment in lieu of building a fence.  Our client got a couple of bids and decided to take the money as it was significantly more than what the materials would cost.

In the end, our client was paid three times what the company had originally offered to pay for the right of way, and the property was protected from overuse by the company.

We got to that point by asking for far more than we expected to ever get from the company.  The addendum we send to landmen when we start to negotiate is lengthy and comprehensive, and lets them know we are experienced and knowledgeable.  In short, the landman knows we won’t accept an agreement that gives up all control of the land to the company.  As a result, we start off negotiations in a position of strength.  Negotiations are balanced, and our clients get a much better deal than they otherwise would.

If you want help with a pipeline right of way, give us a call at the office.  We’ll be glad to help you.

 

Three West Virginia Pipelines, or One?

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Gas Pipelines in Columbia

Here’s an article with some food for thought.

The gist of it is, there are three proposed pipelines that run through West Virginia which originate in the same general area and end in the same general area.  It makes a lot of sense to run all three pipelines on the same right of way.  The only thing is, nobody is thinking of doing that.  FERC is the only governmental entity that has the power to approve/disapprove of any of these projects, and it doesn’t appear to be thinking of them together.  The companies have their own interests, and don’t seem to think that working together will benefit them.  So running the pipelines along the same route is just not likely to happen.

While having three separate pipeline routes benefits this firm, as there will be more agreements to negotiate, we also don’t see the point of using up more land than necessary.  This is an idea that has merit, and there should be a conversation about it.

By the way, here’s a link to more information about the Appalachian Connector project.

Additionally, the Mountaineer Xpress Pipeline will be running through roughly the same areas, as will the

EDIT: It was pointed out to me that this article appeared to be unfinished.  I came back to look, and sure enough, it ended as you see it above.  Guess I must have hit Publish when I meant to hit Save Draft.

I suspect that I was thinking of checking the maps to see exactly where the Mountaineer Xpress and the Rover pipelines ran.  Both are farther north and farther west than the Atlantic Coast and the Mountain Valley.

This article was intended to express support for the idea of running both the ACP and the MVP along the same routes up to a certain point.  I still think that would have been a great idea.  It would have required the ACP and MVP to team up.  The FERC actually doesn’t have the authority to look at these pipeline together unless they are presented to the FERC together as one project.  They don’t connect, they’re not the same company or sister organizations, and they pull gas from slightly different areas and deliver gas from slightly different areas.  It’s quite unfortunate that it couldn’t have been done.  It would have been efficient, and I like efficiency.  It would have had a smaller impact on the environment, and even though I don’t consider myself an environmentalist, there’s no sense cutting two swaths through the mountains when one will do.

Mountaineer Xpress Pipeline

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Columbia Gas Pipeline Group has announced two pipeline projects, one of which will be called the Mountaineer Xpress Pipeline (MXP) and appears to start in Marshall County, WV.  The MXP will be part of a larger pipeline construction project intended to transport gas from the Marcellus and Utica Shales to the Gulf of Mexico.  This is great for us, as one of the issues plaguing oil and gas development in West Virginia is a lack of infrastructure to take the gas to market.

The MXP will transport gas from areas in and around the northern panhandle of West Virginia down to Kentucky. These are the best maps we could find so far.

MXP Map

MXP Map 02

They’re obviously lacking in detail, but we can at least get an idea of where the pipeline is going to run through West Virginia.  Interestingly, one of the Supply Areas of Interest is to the east of the wet/dry gas line.  Upshur, Barbour, Tucker, and Randolph counties are all included.  There’s precious little going on in those counties right now.  Maybe it’s going to pick up as this project picks up.  We’d like to see that.

We ran across an interesting post on a small local news web site called the Hur Herald.  David Hedges did some good research to pick up what’s going on over in his neck of the woods in relation to this pipeline.

Williams Pipeline Bursts in Pennsylvania

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Broken Pipe

There’s another pipeline that burst.  This time up in Lycoming County, Pennsylvania.  Interestingly, this one didn’t explode, it just broke and spewed natural gas into the air.  The breakage was powerful enough to be felt for some distance when it happened, though.  It’s a 24″ diameter pipe, and one of three that run on the same right of way.  100 or so homes were evacuated.  People a couple miles away said they could smell the gas.  It appears the other two pipelines were not affected.

 

Stonewall Gas Gathering Pipeline Project

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Gas Pipeline PipesThe Stonewall Gas Gathering Pipeline has been in the works for a while, and if you drive around certain parts of West Virginia you’ll see stacks of big green pipe sitting just off the highway.  For some time, trucks have been bringing pipes in.  Just today I saw trucks taking pipes away.  I’m assuming that means that they are starting to lay pipe in the ground.

This article from last week says that the pipeline should be completed by the end of this year.  It will take gas away from the Doddridge and Harrison county areas and put it into an interstate pipeline down in Braxton County.  Hopefully this will ease some of the congestion we’ve got around these parts, and hopefully the cost to transport gas out of here will ease up some.  If it does, some royalty owners will be looking at bigger checks.

Why We Need Pipelines

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Gas Pipeline Construction West Virginia

Somewhat Reasonable, the Heartland Institute’s blog, has an excellent post which shows just why the pipeline projects which are criss-crossing West Virginia right now are so important.

To sum it up, lack of pipeline capacity hurts the price of gas in the Marcellus shale region, which means lower royalty payments to owners; and lack of pipeline capacity means that more oil is being moved by rail, with more spills as a result.

We agree that pipelines are necessary.  We want pipelines.  We just want people to know what they’re getting in to when they agree to a pipeline crossing their property.  Informed property owners will make better decisions and be happier with the results than uninformed property owners.  Informed property owners may refuse a pipeline across their property.  That’s their right.  Either way, it needs to be an informed decision, not a knee-jerk reaction.

Pipelines and Compressor Stations: How to Live with the Noise

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Compressor Station

When we talk with people about pipelines we make sure to discuss noise.  Most people don’t realize that there could be a lot of noise associated with a pipeline.  The pipeline itself won’t make noise, but the associated machinery could.  The gas needs to be compressed for transportation, and if you’ve signed a pipeline agreement you may have given them the right to put a compressor on your property, too.  Compressors make a lot of noise.

As you could see in that video, a lot can be done to muffle the sound of the compressor station.  Make sure when you negotiate for pipeline or compressor station rights of way that you address the noise issue.  You’ll be sorry if you don’t.

 

Pipelines and Eminent Domain in West Virginia

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BullyIt appears that an oil and gas company is trying to push landowners around a bit, again.  The Mountain Valley Pipeline (MVP) sent workers out to survey the proposed route of the pipeline, but some landowners have turned the surveyors away.  Those landowners have gotten letters from MVP threatening legal action if they didn’t allow the surveyors onto their property.  Some of those landowners have checked with attorneys (not this one) and decided that MVP doesn’t have any basis for legal action.

The MVP cited West Virginia’s eminent domain statutes, which are located at 54-1-1 et. seq. of the West Virginia code.  The trouble is, the company seems to have misrepresented the law in its letter to landowners.

While there is apparently a lot of grey area in West Virginia’s code, and I haven’t seen a copy of the letters that were sent out, it’s still upsetting that an oil and gas company can feel like it can get away with these kinds of tactics.  This is the kind of thing that gives lawyers a bad name.  Sure, you’re supposed to represent your client zealously.  But you’re not supposed to bully, harass, and take advantage of people either.

There is a better way.  It costs more initially, but saves money in the long run.  Hire a landman who knows how to work with people.  Pay people a little money.  Ask them where they think a pipeline would best be run on their property.  Go around tracts if you need to.  It’s hard work, but it’s worth it.

Kentucky Pipeline Project Doesn’t Get Eminent Domain (for now)

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no-eminent-domainThe Bluegrass Pipeline has been trying to use eminent domain in Kentucky.  The Court of Appeals said they couldn’t.  Read about it here.

The Kentucky Supreme Court has not heard the case yet, so the final decision could be different.  However, when both the Circuit Court and the Appeals Court agree, you’re less likely to find that the Supreme Court makes a different decision.  It’s not conclusive, but it’s indicative.

West Virginians who are concerned about the Atlantic Coast Pipeline and the Mountain Valley Pipeline (and a few other projects) should take note of this decision.  Kentucky’s eminent domain laws are a little different from ours, but the language of the decision sounds like language I could see a West Virginia court drafting to explain our eminent domain laws and their interpretation.  For those of us who are not fans of how eminent domain is being abused, this is good news.