We are getting inquiries about providing access across our property for gas collection pipelines connecting new fields in Eastern Ohio, Belmont County.
What is going rate being realized there and elsewhere?
We are seeing a one time initial offer of $20.00 per linear foot plus damage to timber payment. Is this fair or under market?
Any tips on successful negotiation? There is potential for significant hardwood timber to be in pathway
Dear Mr. Smith,
There are a lot of moving parts to your question. The two most major that come to mind are: (1) is their a lease producing on your surface from the wells from which gas is being gathered and (2) how is your property located from the gathering system to the transportation or sales line?
Answers:
1. No wells have been sunk at this time, none are scheduled this year to the best of my knowledge. this easement request is seperate from the below ground rights lease.
2. This is planning for a collection pipeline running across property. Other details of the collection wells or connections are not known at this time.
Anyone have lessons learned on getting fair market value for lumber loss from an easement agreement and calculating future Timber income?
Once the easement is established usually only limited crop use and no lumber growth is allowed on the easement from the surface owner. At an average of 50 feet wide (25' each side of the center line) that can add up to large parcel of limited use acreage for the length of agreement whcih seems to be quite long, up to 99 years? Thus any future land sale value is impacted along with loss to heirs in the case of productivity.
All is negotiable but the land owner should be aware and factor it in?
Anyone have experience with these types of clauses?
Dear Mr. Smith,
You might be in a good position if you are holding the key to their access to the sales line. You will want to be thinking in terms of a term right of way, that is renewable for additional money.
As far as timber goes, future loss is reasonable if the trees are planted as a plantation for timber harvest. If not, you can either (1) my preference - state in the agreement itself the timber damage for certain trees measured at DBH. For example for 4-6"DBH, softwood, $100 per tree. or (2) have a forester of your choosing come in after the fact and give a timber loss estimate, that he PL company pays for.
If a hot tap is needed on your property, you will lose acreage for surface facilities - perhaps compressor, metering, etc and a road to get to the tap. I googled hot tap video and this is a good visual:
http://www.youtube.com/watch?v=GXtBLjoirfs
As I said before there are a lot of moving pieces to a pipeline negotiation -- all of which cannot be addressed in a forum such as this. Collective negotiation can pay dividends. When assistance in this type is requested in this type of transaction, I do suggest that a negotiation co-op is put in place.
Thanks Buddy, ver sound advice, direction and insights. Appreciate your time on the subject. I am working on a conservative formula for loss, collecting variables, futures sale assumtions and forecasts, when I have something as a workable draft I will post so others can review and point to weaknesses or missing data.
Basically: Area (per acre),
wood type (by species),
est % of each grade,
est. full growth volume (planting vs natural), Survivability %,
est board feet (Doyle scale)
past sales $ trend per category (Based on State or Region data) w/ % increase/ decrease (adjust for inflation)
then forecast at 5 yr intervals.
?. Some ratio would need to be added to achieve a high & low threshold for a negotiated band width.
Obviously not exact but a fair cost modeling approach to establish baselines