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I cut the per rod price for a pipeline row on purpose!

To cut the price on purpose sounds counter-intuitive.  But hear me out.

A pipeline company contacts my client to cross their property, approximately 550', or 33 1/3 rods.

I asked to see a plat of their route.  It was only 3.5 miles.

My client retained a strip of land, as a right of way corridor, from the chemical plants all the way to the river, many years ago - and sold the rest of their surface.

Going rate for rights of way in my area are around $1100 per rod.  The last row on this property was laid 4 years ago and we charged $675 per rod.

So I talked to the pipeline company and told them that if they re-routed the line and put it on us as much as possible, we would make it worth their while.

So they re-routed.   I reduced the going rate in half and ended up with 6850' or 415.15 rods.

I will leave it to you to do the math, but it is about $200k to the good.  And, in my case, my fee is always absorbed by the pipeline company.

The moral of this story is to do what everybody always says to do.  Get as much information as possible and look for opportunities to increase your stake.

Best,

Buddy Cotten

Mineral Manager

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Comment by Bigfoot on November 23, 2017 at 9:25am

Thanks again for your great posts.  I have one that is definitely different than this one; but, is still in the ball park of pipelines.  Since it is a little wordy, I wrote it up in Word first and was going to attach it; but, couldn't figure out how to attach it.  

Before reading and answering this, it is a given that if a person does the right thing up front, most problems never exist.    Here goes!

Pipeline Responsibility

11-22-2017 

There is very little if any drilling or even leasing going on in our area right now; but, we do have some equipment and issues left behind when most everyone pulled up stakes.  I’m sure we can think of a number of good talking points here; but, I have one specific point that I would like to hear different points of view on.

My issue is as follows:

  1.  A well or a group of wells are drilled and there is enough gas production to put in a pipeline from the well or even the field.  This line may be short or it may string across multiple properties for miles before it ties into a main trunk line. 
  2. A year or two goes by and the gas lift pressure basically dies out and the pipelines are just left sitting there with nothing flowing through them.
  3. Some pipeline right-of-way lease agreements are designated as “Permanent” so the property owner that has one of these lines running through his/her place is evidently stuck with that strangle hold forever.
  4. Some surface owners had good sense enough or were persistent enough to not allow one of these lines across their property without some wording that returns the pipeline and right-of-way back to the surface owner once the line is dead or has not had any flow for a period of time.  Two years seems to be a good starting point.  There are lots of issues as to how the land/surface owner verifies that period of time; but, for now let’s just say the pipeline company has acknowledged that the line is no longer flowing gas and hasn’t for the two year period of time.
  5. Lots of communications takes place between the pipeline company and the surface owner and probably an attorney.  The line is "isolated" and all surface piping is removed, now the right-of way and line is returned to the surface owner.
  6. Two more years have now passed and the surface owner needs to clean up the place, do some bulldozing to clear some big trees, as well as fencing where the pipeline is still in the ground.   I might add here that few if any pipelines are ever removed and for the most part, they are not even pigged or flushed even though they may have been returned to the surface owner.
  7.  The Dig “Hot line”, 811 is called; but, who is responsible for the old dead line that still has residual oil or residue in the line, the original pipeline company or the surface owner that probably has no understanding about the pipeline ?


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