In Texas, and in much of the rest of the country, an oil and gas lease makes use of several different kinds of pipelines. When you are the recipient of a request for a pipeline easement, the kind of pipeline to be installed in that easement makes a night and day difference in how you negotiate the easement.
I recently spoke at a National Business Institute telephone seminar about the negotiation of pipeline easements. NBI provides “on-demand” CLE for attorneys and they have many excellent seminars on a wide variety of legal topics. You can access the audio of the seminar here, or you can register to take the seminar for CLE credit here.
The word “pipeline” can mean a variety of things, because there are several different types of pipelines. First, there are flow lines, which are lines from the well to other equipment on the well site, such as a tank or a heater-treater. Flow lines are located entirely within the well site area. The authorization for these lines is generally contained within the oil and gas lease itself. These lines are not regulated by either federal or state agencies.
Next, there are gathering lines. These are pipelines that transport the produced oil or gas from the wellhead or from a tank to a larger intrastate or interstate transmission line. Like flow lines, these lines are not regulated by any federal or state agency. The authorization for these lines is often found in the oil and gas lease. Hopefully, if the authorization for these lines arises from your oil and gas lease, the lease does not contain a blanket easement for all gathering lines. In cases in which you have substantial bargaining leverage, the location and construction details of these lines should be dealt with specifically, whether in the oil and gas lease or by means of a separate agreement, and the written consent of the mineral owner and landowner to the location of any above ground equipment, the route of the line and some of the construction details (such as depth of the line), should be required.
The most important thing to remember about gathering lines is that they are private lines that use private easements. The grantee of the easement for these lines is generally the operator of a well or wells on your property or property pooled with your property or on contiguous or even noncontiguous property owned by others. The easement for gathering lines is subject to negotiation, just as in any other real estate transaction. The well operator needs to get its oil or gas to market, or to a processing facility and then to market. The landowner, if the landowner is also a royalty owner, also wants the oil or gas to get to market, or they will not get paid royalties. However, even if not a royalty owner, if the landowner is a good steward of their land, they will want to be careful as to the routing of the pipeline, reclamation efforts after construction, depth requirements that are consistent with irrigation equipment, prevention of erosion, possible noise abatement in the case of certain above ground equipment (such as a gas compressor), and numerous other issues. The easement agreement is the place where an accommodation is hammered out with both parties’ goals in mind.
Finally, oil and gas (almost always for gas and sometimes for oil) is often transported through large, usually high-pressure, transmission lines that take the product from a gathering line or storage tank to a processing plant or a distribution center. Intrastate lines in Texas are regulated by the Texas Railroad Commission (“RRC”). Interstate lines are regulated by the U. S. Department of Transportation, Pipeline and Hazardous Materials Safety Administration (“PHMSA”). Many of these lines call themselves “common carrier” pipelines. That designation is significant because only common carrier pipelines can use eminent domain to acquire pipeline easements.
There is a lot to know when you are approached by a company who wants a pipeline easement across your land. You may find that a pipeline attorney representing you in the negotiation will get you a lot better deal than if you do it yourself. My office represents only landowners, surface owners and royalty owners, and never represents oil or pipeline companies. I am experienced in pipeline negotiations and would be glad to talk to you about your property anytime.