I have recently been approached by OneOk to obtain a ROW for their upcoming Sterling III Pipeline. (16" NGL pipeline) I would like discuss with anyone the going rates as well as what conditions to consider in the agreement.
Their initial proposal was for $200/rod on approx. 100 rod length. This is across mostly pasture land parallel to 4 other existing pipelines.
I would appreciate any help on this matter.
This is on the GoHaynesvilleShale companion page. This should give some insight about what you need to consider. Of course things in Texas/Louisiana might be different
This is another good resource. Once on the page... scroll down a little and find an article on pipelines.
I have no idea what rates are today, but two years ago it was possible to get $500/rod. I don't know if you can get that now or not. Just remember, unless you own a huge piece of property, the company can always go around you if you get too greedy.
You want to negotiate the following big things (among many others):
1. One pipeline only
2. Rules by which the ROW ends when the pipeline is no longer used, or if the pipeline is never constructed.
3. Whether or not any surface structures are allowed
4. Time window for construction -- give them a year or two
5. Rules for construction (double ditching, no firearms, no hunting, cleanup, etc)
6. Require 1 month (or some such thing) notice before construction starts, so you can cut timber, remove anything that needs to be removed.
7. File a release when the ROW reverts back to you
8. Damage and indemnity clauses. You don't want to be sued when a worker gets hurt on site.
9. etc. etc. etc. The list goes on.
You get the point. It's worth it to pay an experienced attorney $500 to review the contract and provide you a good "Exhibit A" that will protect you.
I keep telling Skip that he needs to publish a book about all of this stuff.
Well, it seems to me, Henry, that you also have some serious insightful knowledge that us GHS members would certainly want to also read a book via your keyboard.
Seems to me.
Your honesty and helpfulness and sharing truly makes you one of the best on GHS, Henry.
You give me wwwwaaayyyy too much credit. I only know what I've learned from others on this site, or by experience in owning/leasing my land.
Well, maybe the operative phrasing & vetting is per your: ". . . experience in owning/leasing . . ." -- Henry.
Hey, with decades of work and proper management of your family's mineral estate, along with a sharp mind and a well-above average positive attitude -- many can learn from Mr. Henry, to put it mildly.
I was thinking this morning (that can be dangerous!). It seems to me that the pipeline company is basically wanting to buy the use of my property without having to pay any property taxes.
Assuming the life of a pipeline is 60 years I came up with the following figures:
They are basically saying that the property they are taking is worth $20,000 (100 rods at $200/rod). At the present tax rate that would put the annual tax at $388. Property taxes in this county have doubled over the last 15 years. If you carry that rate out for 60 years with escalating taxes that would come up to something like $47,000 in taxes alone over the life of the pipeline.
Do you think this argument has any merit?
I think you should ask yourself whether or not the pipeline will detract $20,000 from your property value. If so, maybe don't do it. If not, take the money and smile. You say they are wanting to "buy the use of my property." Well, yes and no. They get the use of your land, but you still get to use the land for most things -- you can graze animals on it, you can drive over it, you can hunt on it. You can choose to sell it the day after you get your $20k and never pay another penny in property tax.
And, you get your $20,000 up front. After 40% in taxes, you are left with $12k. Invest that at a conservative 5% return, and you have $224k in 60 years. That works for me. I love my pipeline. Well, not really, but I sure liked the money. You get the idea.....
I hope 5% is still a conservative return (LOL).
This is all very good information. Thanks JHH and Henry for sharing.
Has anyone else been approached by OneOk?