Replies to This Discussion

Permalink Reply by Big Daddy, bcnr on April 26, 2009 at 17:05

I thought so too Braveheart if done right. As long as companies don't ride rough shod over landowners to get the system in place. One thing I did notice while down there recently was a never ending stream of tankers. Collecting condensate and saltwater. Less trucks would make living near wells a bit easier to take. The way I see it, the companies could save a ton of money in fuel costs. The downside is some drivers may find themselves without a job. Perhaps they could be involved with the recycling operation or delivering freshwater to well sites.

Now the big question: Can the companies pool their resources to make this system work efficiently being that the business is so competitive and secrecy is the name of the game? So far, the only company I know of planning to put a system in is Exco. Anyone heard of anyone else?

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Permalink Reply by Randy on April 26, 2009 at 18:01

Cannie, a couple of things pop up at me. Will PVC pipe be fine for you? Do you do any agricultural work? Make sure you have an agreement in place for what will happen should they release saltwater on your property. Compensation should not be limited to the value of the land. You'll hear all kinds of different opinions on what saltwater will do, but I wouldn't want it draining on my land...

I'd try to get the same compensation as they would pay me for a gas line. This will save them a bunch of money over time. I don't think anybody can really tell you what you should get monetarily, get what makes you happy.

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Permalink Reply by Two Dogs, Pirate on April 26, 2009 at 18:22

Plastic or composite tubing is the way to go with salt water. Think about what SW does to metal pipes.

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Permalink Reply by lanadan Ds3 on April 26, 2009 at 21:38

As I have posted some time ago in another discussion, I had ('bout 3-4 months ago) a short conversation with a guy who was heading up a survey crew surveying for a pipeline right-of-way. This line was to run across DeSoto Parish into somewhere in Red River Parish. This line was to carry saltwater. Don't know anything else about this, however.

BTW: Neighbor landowner was paid $275 a rod (16.5 ft) + $2,500 an acre for a 30' ROW (for a gas feeder line) to run the length of his 80 ac. Nice "pocket change", eh?

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Permalink Reply by Big Daddy, bcnr on April 27, 2009 at 14:35

Lanadan, Randy and 2 Dogs, Personally PVC is fine with me. Polyethylene (PE) is a better but slightly more expensive. I don't live on the property but I still would not want a SW spill on the land. I am told these lines will run parallel to the existing gathering lines in the ditch on the access roads.

As far as compensation, I would like to see the same compensation as a gas gathering line as well. Currently they have offered considerably less. The last pipeline request was handled by an attorney and out of it came a very nice agreement. Perhaps the landman needs to see it.

BTW Lanadan, I have heard of even higher rod prices recently. But this was for a HS gathering line. They must be a premium.

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Permalink Reply by Big Daddy, bcnr on July 5, 2009 at 9:28

UPDATE: I've recently learned of companies needing larger saltwater gathering lines (12"). Lots of environmental concerns here; at least for me. Not much grows after a brine bath. Anyone else been contacted?

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Permalink Reply by sesport on July 5, 2009 at 20:16

Cannie - re. environmental concerns

Here's an API document that I ran across & saved on managing produced water releases. Might help to know what the companies are to do in order to draft & negotiate terms. (this takes awhile to download)

http://www.api.org/aboutoilgas/sectors/explore/upload/4758.pdf

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Permalink Reply by Big Daddy, bcnr on July 6, 2009 at 3:05

Thanks Sesport! This guide gives one enough info to be dangerous. It will be my primer to understanding saltwater spills. The only other thing to understand is all the mystery compounds (frac fluids) sometimes found in saltwater.

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Permalink Reply by Mac Davis on July 5, 2009 at 13:54

Concerns about any pipeline:

How much loss of your property do you suffer? Is there going to be a swath of land where trees can't be planted? How often are they going to need to come back and dig up the pipe to work on it? Can you plant trees or do landscaping or gardening in the area? Do you have an area where you can't build a house or building? Can you build a road across the path of the pipeline?

Will they pay rent, or a one-time fee?

Do they bury the pipe deep enough that you don't have to worry about digging it up accidentally? Do they restore the land surface properly? Do they smooth it out, lay down some sod, but you're on your own when it washes away, sinks down, leaving a scar, and the grass dies?

Are they going to actually respond if there's a minor leak? Are they going to admit it's their fault if your trees start dying? Are you going to have to sue them at great expense to get them to do anything.

Does the lease give them rights to add more pipelines later?

Do they have to complete the work at some specific time or can they do it whenever they get around to it?

Do they pay you immediately, or when they decide to lay the pipeline?

If you try to sell the house later, are the potential buyers going to be concerned about the pipeline?

Terms to consider

Is the company offering a hard commitment to pay or is it a commitment on you, but no commitment on them?

If they want you to commit, but they won't pay or commit till later, demand a certain non-refundable payment immediately, the remainder by a certain date, or the agreement is terminated. (As Warren Buffet says, nobody gets a free option.)

Construction must be finished by a certain date or lease is terminated, no payment will be refunded.

No rights to add more pipelines or increase the size of the pipeline, etc.

No rights to run anything other than salt water in the pipeline.

A limited time to use the pipeline. i.e. must be decommissioned after 10, 20 years.

Payment for any additional expenses related to the pipeline in the future.

Restoring the surface to original conditions, including settling, erosion, etc. after completion, and maintaining original conditions after completion or any maintenance.

Payments for any damage from leakage. Leaks repaired by a certain time period. Lessor will pay for a commercial third party repairs damage to landscape or property if not fixed within xx days of notification.

Width and location of area to be used for pipeline, any restriction such as tree planting, building locations, roads, depth of pipe, plowing, etc.

I wonder if anyone's ever got a "well guarantee." i.e. if your well gets contaminated with salt water or chemicals, the lessor has to pay for a new well, or community water. You don't have to prove the pipeline or well did it.

Yes, I know you'll probably have a hard time getting these terms, but they're worth thinking about.

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Permalink Reply by Big Daddy, bcnr on July 5, 2009 at 14:23

Mac, very well done! I have faced all those issues on previous pipeline agreements. I'm not sure what you do for a living, but I can guess. That issue that has me most concerned is the environmental issue. Saltwater spills and main hits have the potential to be a larger situation to handle than a natural gas pipeline mishap. With a saltwater spill, unless I'm wrong, the remediation procedures are significantly greater. i.e. soil removal and replacement, groundwater testing.

Until now, the only people that had to deal with these issues were those who have SWD wells on their property. I'm all for recycling saltwater to use for frac and other needs for the HS wells as it lessens the impact on the areas groundwater supplies. But it would be prudent to do as much research on the process and have a good OG attorney to add some strong environmental lanuage to any agreement.

While on the subject Mac, what are your thoughts on annual rents vs. one-time payment? I've only been involved with one-time deals. When are annual rents involved? Line valves, compressor stations and other surface structures?

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Permalink Reply by Mac Davis on July 5, 2009 at 15:27

Thanks for the complements, but I'm not involved in the oil/gas industry other than as a landowner, plus what I've read, mostly on this site. Thanks, Keith and other shalers. (And KB, especially.)

I've got a good grip (I think) of general engineering and legal concepts.

I'm just speculating on rents vs. one-time payments. I sort of doubt rents happen very often.

I've always thought that almost any legal agreement should have a time limit. I've seen so many things where some agreement made 50 or 100 years ago is dogging a company or property owner when conditions have changed so much over the years that the original agreement makes no sense any more.

I don't know how bad the saltwater remediation issues are. If it's just the salt, that would seem to be a "ruined well" problem, but the salt in the soil would seem to be fixable by irrigation or just waiting for the natural rainfall to flush it out. (Plus tree replacement or compensation.) I don't know how nasty and dangerous the other things that might be in salt water are.

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Permalink Reply by Big Daddy, bcnr on July 5, 2009 at 15:41

Thanks for your insight Mac! As for not working in the business, I'd still feel sorry for a rookie landman knocking on your door ;-) I too owe a debt of gratitude from a lot of fellow shalers.

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