Recent Posts

Written by
about Pipelines
on October 2, 2014

Pipeline Boring

Can a pipeline be installed on my land without disturbing the surface?

Sometimes a pipeline company runs into something that they can’t excavate above-ground, such as a wetland, a driveway, a public road, or an area known to contain endangered species (the EPA and the ODNR take wetlands very seriously in the State of Ohio). In such a situation, the pipeline company won’t be able to dig a trench, so instead they will bore underneath the area.

What’s the difference between above-ground installation (trenching) and below-ground installation (boring)?

Trenching is referred to as ‘open cutting’ the property. I love this term because it sounds exactly like what it is: an open cut running across your land.…

Written by
about Pipelines

Pipeline Right-of-Way Width

Why does a pipeline company need fifty to one hundred feet of width to install their pipeline?

It depends on how many lines the company is installing and what size the pipeline(s) are. Modern safety standards require that lines be buried in their own ditch. The pipeline company likes to leave two to five feet between each line (this varies depending on the width of the lines, the products within the lines, and pressure). This allows them to access each line via backhoe or Track Hoe without endangering the next line over. So if your Right-of-Way (“ROW”) allows for four or five pipelines the occupied space can easily be twenty-five feet even for lines that are only twelve inches wide [(four, 12” lines = four feet) + (five feet of space between each line = 20 feet) = twenty-four feet of occupied space].…

Written by
about Pipelines

Pipeline Installation Process

Execution and Surveying

After pipeline paperwork is signed, the pipeline company will first survey your property. Oftentimes the pipeline company uses an ‘estimated linear feet’ (length of the Right-of-Way [“ROW”] on your property) within their documents because they don’t want to spend money on a survey until they know that you are committed to them. The survey will tell them exactly how long the ROW is on your property. It will also tell you exactly what you will be paid. During the survey the pipeline company should flag the full extent of the ROW. This will include any temporary workspace (they do not typically flag the temporary workspace separately).…

Written by
about Taxes
on September 17, 2014

Tax Treatment of Right-of-Way Payments for Shale Leases

Over the last few years many landowners have begun receiving cash bonus payments for land leases related to the Marcellus and Utica Shale boom. In our work with clients in the Marcellus and Utica Shale regions, we have seen a recent uptick in landowners receiving offers to sign “pipeline right-of-way” agreements, as the need for pipelines has escalated due to the increasing maturity of the industry.

The payment for this right-of-way is considered an easement. The tax treatment of easements may result in income, a reduction in basis of all or part of the land, or both. The amount a landowner receives for granting an easement is generally considered to be a sale of an interest in real property.…

Written by
about Drilling and Producing + Leases
on June 11, 2014

Free Gas Issues

Many oil and gas leases provide the lessor with free gas.  This provision was fairly common in older leases, but has disappeared to a large extent for newer leases tailored to shale gas wells.  Here is a list of frequently asked questions and concerns about landowners exercising their right to free gas under an oil and gas lease:

Who is entitled to free gas?

You may be entitled to free gas if the oil and gas lease affecting your land contains a free gas clause, and if no other houses already use it.  Read your lease carefully, and look for free gas language. …

Written by
about Ownership and Transfers + Pipelines
on May 27, 2014

Eminent Domain, Condemnation, Appropriation and Takings: A Company Is Cramming a Pipeline that I Don’t Want Down my Throat

The above terms are frequently misused by both landowners and industry insiders. While their specific meanings are often misunderstood, the situation presented is usually as follows: “a pipeline company is trying to force me to have a pipeline that I don’t want.”

This issue is generally covered by the umbrella term of “eminent domain.” Eminent domain is the government’s power to take your property. The government derives their ability to take your property from the Fifth Amendment to the United States Constitution, “nor shall private property be taken for public use, without just compensation.” In lay terms this means that if the government pays you appropriately, they may take your property for public use.

Fracking Bans and Eminent Domain

As shale drilling increases across the country, fracking bans do, too.  In New York, for example, more than 50 municipalities have issued moratoriums or even outright bans on fracking.  Many Ohio municipalities have followed suit.  A lawsuit addressing this issue is currently pending before the Ohio Supreme Court: Munroe Falls vs. Beck Energy.

Are municipal fracking bans legal?

This question is still being settled by Ohio courts.  We all know that municipalities are empowered to issue and enforce zoning laws that restrict the use of one’s property.  But does the power to zone also permit them to ban an industrial process like fracking? …

Written by
about Drilling and Producing
on March 17, 2014

Forced Pooling – Trends, Benefits and Detriments

Recently I wrote about Ohio’s mechanisms for forcing unleased mineral owners into a drilling unit.  Oil and gas producers have increasingly started to rely on these mechanisms to drill  horizontal wells to the Utica / Point Pleasant shale formation in eastern Ohio.  These same laws require transparency for these procedures, and as part of a public records request, I obtained several recent orders approving the forced unitization of unleased mineral owners in various parts of Ohio.   I was hoping that I could gain some insight on the issue of whether a landowner is better off signing a proposed lease or being forced into a drilling unit under the applicable statute. …