Landman contacted us, want to place pipeline on our property and a lease

Good Morning everyone,

Does anyone know what is considered to be a fair price/offer per acre for oil company to place pipe across our land. The land man also wants us to sign a 20 year lease for $25,000 a year, 2 years paid up front.   Appreciate any information you can contribute.

Thanks,

GERB

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What parish are you located? Is the pipeline for wells where you own an interest or don't own an interest? A pipeline should more than likely be paid for on a $ per rod basis (1 rod = 16.5 feet), not on an acreage basis.

My land is located in Desoto Parish, Logansport, LA.  Yes, I do own interest in wells on my property. I just want to be knowledable before meeting with landman about his offer. I am attempting to obtain as much information as possibe to recognize a good offer vs a not so good offer. 

$25,000 per year for 20 years....for a pipeline?   is it oil or gas... what size... the length of the pipeline... in Texas or Louisiana.... (where) open land... forest land... residential?  I've never heard of a deal like that... but it is interesting.   thanks

Forest land. Not sure of the length of the pipeline of if it is oil or gas. It is in Louisiana, Desoto Parish area.  I will get more information and add more details. 

What is the length of land that the pipeline will cover?  What is the diameter of the pipeline?  Is the pipeline oil or gas?  I always thought pipelines were a one-time payment, up front, so I am surprised that the company would want to pay an annual fee.  Does the pipeline go right through the middle of your property, or is it on the perimeter?  a

Gaylila B:

Need a little bit more to go on here.  The annual rental would seem to indicate / correspond to some sort of surface facility or possible large pad site that would be placed on the property.  Pipeline has historically been paid as a one-time payment easement based upon roddage, and are as good as long as the pipeline is in use (not abandoned), but in more recent times paid in a price per acre format (since not all ROW widths are the same, some have converted units of area over units of length for payment calculation).  That said, easements are still generally paid once and are more or less perpetual (again, subject to use / nonuse provisions commonly negotiated in the grant).  Permanent surface facilities are generally just purchased.

Surface locations of short-term to moderate duration (1-30 years) seems to best fit what you've stated.  This could be any number of things - pipe yard, meter and/or marketing point, small compressor station (e.g., gathering station / midstream, not transmission), saltwater disposal injection site - these are just possibilities of functions that could be in connection with operations of a product or materials line or system.

What are the stated / permitted uses for this area?  Broad provisions provide for broad use - once signed, the lessee can do anything reasonably in connection with their stated activities and use and simply maintain their rights by payments.  Short to moderate term leases can allow for automatic renewal terms simply by paying the stated amount.

Circling around to your first sentence (and treating this as "they want pipeline ROW rights AND a 20 year lease") - fair market value would need to be reasonably determined (as to going rate, number and diameter of line(s), width of the temporary and permanent ROW).  If your grantee is a registered DOT common carrier or LA intrastate transporter, they have rights of eminent domain or condemnation (right of expropriation in LA), which would give them the right to come through if you ask for something outlandish or say "NO", so this is important.

Bottom line - lots to unpack here besides just money.

Thank you for your response. 

Perhaps you have already made a deal but Gayila B made a good point concerning the ability of a company to access your land through court order regardless of your permission.  As the wells are already in place on your land they can do that.  In which case they will give you a generic market rate or worse case scenario nothing at all.  So just don't alienate them and play nice.  It would be good if you could do some comparison shopping as to what others have done.  You might have the landsman give you some information providing he is above board.  The state of Louisiana is very pro-energy development and their legal rulings prove it.  Hard to balance out being nice and being a chump but the oil  people will walk away from dealing with you and find alternatives.  I have been there.  

take the offer before your neighbor does

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