NEW PHILADELPHIA — How much extra should a landowner charge and should a separate lease be created each time new pipe is installed leading to or from an oil and gas well? These are burning questions considering the oil and gas companies will soon need to transport their products for marketing.
These questions were answered and other helpful information was given during a Gas and Oil talk recently held in New Philadelphia that was organized by the Ohio Farm Bureau. Speakers included Dale Arnold, director of energy, utility, and local government policy for the OFB, and Joe Bachman, Tuscarawas County engineer.
According to Arnold, factors to consider when establishing payment for additional pipeline to be installed include the length of the pipe, and the width of the pipe, including total acreage to be effected, either temporarily or permanently, plus the impact this installation will have on future use of the land. A separate lease should also be created for each additional pipeline. For those who are in a drilling unit or pool, find out where the pipeline will be placed. The pipe may go across some people’s property and not others.
“Talk to your county auditor, then get a market value price, in dollars per acre, from a realtor,” said Arnold. “You must also consider loss of value, such as loss of timber production, loss of nursery stock, loss of crop production and replacement costs for feeding livestock, and loss due to compaction of the land, plus any costs to correct it. The value of guardianship (landowners watching over the pipeline) should also be factored in, along with the cost of personal attorney fees, consultants, surveys, filing fees, etc. Also, talk to your banker and ask if it will change the value of your land to have pipe running through your property.”
Plug all this information into a spreadsheet to come up with a cost, and divide that by the number of feet to get a dollar amount per foot. “The cost will probably be different from the dollar-per-foot price originally thrown out at you,” Arnold assured.
Bachman noted Tuscarawas County requires pipes to be placed 60 inches deep, and this should be put in the lease. In some cases, Arnold said, he has even seen “so-called” temporary pipes laying across the top of the ground. And, he said, temporary pipes can be in place for decades. Bachman also pointed out Ohio EPA rules apply when pipes are running across streams, and phone numbers are required to be posted on the pipelines, in case of emergency, which should also be included in the lease.
“Easements last forever and a day. So do temporary water pipes. So, these should be handled on a separate lease,” said Arnold. “Intra-state pipeline will be put in by national gas and oil companies and you will see a tremendous amount of development, all to be either installed or updated. Having access to good legal counsel is key. Also, when ditches are created to install larger pipes, they are in a “v” shape and are not just a slit in the ground. That’s why the companies need an 80-foot right-of-way. Your land will be changed. So, legal counsel will help protect you.”
In conclusion, Arnold advised, “Take your time. Negotiate on good faith. Consider the use of the property, and remember — everything is negotiable.”