Texas landowners take a rare stand against Big Oil
http://journalstar.com/news/national/texas-landowners-take-a-rare-s...
SUMNER, Texas — Oil has long lived in harmony with farmland and cattle across the Texas landscape, a symbiosis nurtured by generations and built on an unspoken honor code that allowed agriculture to thrive while oil was extracted.
Proud Texans long have welcomed the industry because of the cash it brings to sustain agriculture, but they also see its presence as part of their patriotic duty to help wean the United States off "foreign" oil. So the answer to companies that wanted to build pipelines has usually been simple: Yes.
Enter TransCanada.
As the company pursues construction of a 1,179-mile-long cross-country pipeline meant to bring Canadian tar sands oil to South Texas refineries, it's finding opposition in the unlikeliest of places: oil-friendly Texas, a state that has more pipelines snaking through the ground than any other.
In the minds of some landowners approached by TransCanada for land, the company has broken the code.
Nearly half the steel TransCanada is using is not American-made, and the company won't promise to use local workers exclusively; it can't guarantee the oil will remain in the United States. It has snatched land. Possibly most egregious: The company has behaved like an arrogant foreigner, unworthy of operating in Texas.
To fight back, insulted Texas landowners are filing and appealing dozens of lawsuits, threatening to further delay a project that already has encountered many obstacles. Others are allowing activists to go on their land to stage protests. Several have been arrested.
"We've fought wars for it. We stood our ground at the Alamo for it. There's a lot of reasons that Texans are very proud of their land and proud when you own land that you are the master of that land and you control that land," said Julia Trigg Crawford, who is fighting the condemnation of a parcel of her family's 650-acre Red'Arc Farm in Sumner, about 115 miles northeast of Dallas.
Oil and agriculture have lived in peace in part because a one-time payment from a pipeline company or monthly royalties from a production rig can help finance a ranch or farm that struggle today to turn a profit from agriculture. The oil giants also respected landowners' fierce Texas independence, even sometimes drilling in a different yard or rerouting a pipeline to ensure easy access to the minerals below.
TransCanada is different. For one, it has more often sought and received court permission to condemn land when property owners didn't agree to an easement.
"This is a foreign company," Crawford said. "Most people believe that as this product gets to the Houston area and is refined, it's probably then going to be shipped outside the United States. So if this product is not going to wind up as gasoline or diesel fuel in your vehicles or mine then what kind of energy independence is that creating for us?"
While using foreign steel for a U.S. pipeline and condemning land is not all that unusual, Keystone XL has been so controversial nationally — sparking protests in Washington, Nebraska and other states, and even getting a mention in the presidential debate on Tuesday — that it may have given Texans the push they needed to fight.
Activists have handcuffed themselves to machinery. A group has moved into a grove of trees on a TransCanada easement. A 78-year-old great-grandmother, Eleanor Fairchild, whose late husband worked in the oil industry, spent a night in jail after trespassing — along with actress Daryl Hannah of "Splash" fame — on land condemned on her 425-acre farm. On Monday, eight others were arrested for their protest activities.
TransCanada's pipeline, some landowners say, is more worrisome than those built by other companies because of the tar sands oil the company wants to transport. They point to an 800,000-gallon spill of mostly tar sands oil in Michigan's Kalamazoo River in 2010. It took Enbridge, the company that owns that pipeline, 17 hours to detect the rupture, and the cleanup still is incomplete.
With a pipeline, landowners give up control of the land for a one-time check, risking a spill that could contaminate their land or water for years. It's a risk many are willing to take in exchange for cash — to a point.
Some say the risk of a spill now is too high to cooperate. Others want guarantees TransCanada will take full responsibility for a spill.
Many just want respect.
Most pipeline projects in Texas have been completed with an average of 4 percent to 10 percent of condemned land. TransCanada, however, has condemned more than 100 of the 800 or so tracts — or about 12.5 percent — of the land it needed to complete a 485-mile portion of the pipeline that runs through Texas.
Many of the lawsuits in Texas are about TransCanada's "common carrier" status. This allows companies building projects benefiting the public to condemn private property. The Texas Supreme Court recently ruled if a landowner challenges a condemnation, the company must prove its project is for the public good.
Crawford, whose family has denied other pipelines access to their land, argues that since TransCanada's pipeline will have only one access point — or a place where oil can get into the pipe — at a hub in Cushing, Okla., it does not qualify for the status, which requires the pipeline be accessible in Texas.
"This is not about the money," said Crawford, who notes that TransCanada's final offer of $20,000 amounts to less than $1 a day over 60 years, less time than her family has been on the land. "This is about the right of a landowner to control what happens on their land."
David Dodson, a TransCanada spokesman in Houston, said the company has agreements with 60,000 landowners in North America, hundreds of them in Texas. Many have been reached easily, he said. The problems in Texas, he believes, may just be a sign of the times.
"These days, anyone who attempts to build a linear infrastructure project, Texas, wherever it is, it doesn't matter, is facing increased opposition," Dodson said.
David Holland's 3,850-acre rice farm and ranch in southeast Jefferson County is littered with nearly 50 pipelines. In the five years since he was first approached by TransCanada, he said he has signed contracts with two other companies. He insists he would do the same for TransCanada — if they offered him fair value for his 10.5 acres.
Until now, Holland said, he and other landowners had given pipeline companies a roughly 20 percent discount because it was cheaper than fighting Big Oil. TransCanada offered him more than $400,000 for his land. But that, he said, was about $200 less for every 16.5 feet than he had previously received. After Holland declined, the court allowed TransCanada to take the land for $13 for every 16.5 feet — totaling slightly more than $20,000.
"Every landowner in the state is furious at them," he said.
Some landowners have reached agreements without a problem. Henry Duncan, whose 200-acre farm is across the road from the Crawford's, wouldn't say how much TransCanada paid, but feels he was fairly compensated for his 7 acres. He does wish they would use American-made steel for the pipe and hire local workers. He, too, feels they bullied landowners, but is realistic.
Pipeline money helps keep his 100 head of cattle roaming the pastures. It could help him and his wife as they age.
"To be quite honest, I'd like to see another one come through because they pay good," Duncan said
Views: 870
Replies to This Discussion
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Permalink Reply by robert minton on -
Eminent domain, or condemnation, allows for construction of powerlines, railways, roadways, and yes, even pipe lines. Without powerlines, railways, roadways, and pipe lines,. the farmer has no electricity , transportation to market, or fuel and water for his farm operation.
Necessity for the above is viewed differently by different people, or "whose ox is being gored". Beauty is in the eye of the beholder--I personally don't care for Picasso or Salvadore Dali!
The great majority of the civilized world likes electricity, roads to drive on and to transport over, railways to ship freight over, fuel for manufacturing and personal comfort and use, and water for drinking and household uses.
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Permalink Reply by Krkyoldhag on
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Its worrisome..the issues set forth here.
Pretty much I am against condemning private property. I know it is necessary for public good in some cases. However, it is a land grab method that has been abused more often then not.
I even question the seizing of the PA farm land for a shrine where the 9/11 flight went down. A memorial can be placed anywhere and does not have to be cut from private property.
This XL thing...its different from other pipeline we have encountered here in Texas. Most are benign, underground, out of sight. This thing is huge and raised up off surface. Its unsightly and it limits access from one point to other..On a 90 acre tract it could cut owner off from his own land.
What is that worth to an owner? If its on your family farm...maybe no price is enough. If its Texas scrub, maybe its a windfall for land owner. But who decides this?
Canada is just a breath away from being Britain. Our last war with them was only 100 years ago...they do things differently there. Maybe it is ok up in the North country, they way they can deal...but this is Texas.
Think about it...just this week the court ruled in favor of some cheerleaders in a podunk town putting up Biblical verses on banners. I don't think that ruling would have flown in any other state other then maybe Louisiana right not. Oh and I noted that those cheer leaders wear little out fits that are not skimpy and suggestive of a Burlesques line. Too many of our schools teams copy the skimpy Dallas Cowboy outfits.
So ... Canada needs to get with the program..and realize that Texas is yet another country ...and that some Texans still question the benefits of statehood and think new citizens should have to know the constitution.
Show Texans that the XL is a good thing for state, concede to use local labor and materials, and be nice when you approach them.
That doesn't seem like too much to demand now does it?And this pipeline ain't a road, water supply, railway or even a power line...its a pipe to transport oil from one country thru USA and out.
Why didn't they go across Canada to Atlantic and out from there? No refineries ...Why didn't they go out to Pacific to West? Same thing. Texas welcomes refineries..and they are here...so again..we got it they don't, deal fair Canada.
It will be built we all know that. But eminent domain sticks in the craw of a lot of people. So far as Picasso...its ugly to my eye too but sure wish I had picked up a few back in 50's when had chance to get them cheap...just saying..ugly things (like pipelines) can make you some money..But it should be MY choice as to how much money it makes me...if my land is involved.
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Permalink Reply by Todd Hackney on -
This thing is huge and raised up off surface.
It is a buried pipeline. It is not placed above ground except a few points like a pump station.
Texas pump station locations can be found at:
http://www.transcanada.com/docs/Key_Projects/Gulf-Coast-Project-Tex...
The burying of the line can be confirmed at:
http://www.transcanada.com/docs/Key_Projects/gcp-pipeline-construct...
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Permalink Reply by Krkyoldhag on
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If you are correct that this line is buried I stand corrected.
I have seen the Alaskan above ground pipeline and "assumed" without factual backup.
It doesn't modify my concerns about use of eminent domain.
So far as fair market price..a rod around Dallas /Fort Worth and a rod in a West Texas barren section would be far different.
Sorry sometimes my opinions get away from me.
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Permalink Reply by Skip Peel - Mineral Consultant on
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Keystone XL: Pipe Dreams - businessweek.com
The Lazarus of political dramas known as Keystone XL gained new life yet again this week (February 17, 2012) as Senate Republicans introduced an amendment to force approval of a $7 billion, 1,750-mile, Alberta-to-Texas oil pipeline, and environmentalists generated 800,000 letters to the Senate in two days opposing it.
A quick review: In November, President Obama sent TransCanada, the Calgary-based oil services company that planned to build the pipeline, back to the drawing board when he rejected the proposed route through Nebraska, where the pipe would lie inches above an aquifer that sustains the Great Plains. Then in December, Republicans in Congress required the President to make a final decision within 30 days so they could portray him as a job-killer; he obliged, denying the permit in January. This week’s Senate amendment and its corollary in the House—a measure tied to offshore drilling in the Atlantic Ocean that passed with a vote of 237-187 on Feb. 17—are attempts to override the President’s ruling.
As skilled as opponents were in defeating the pipeline, which seemed a sure thing as recently as September, pro-pipeline commentators and their allies in Congress have proven equally adept at making the case for it. The pipeline’s champions argue it will create jobs, slash domestic gas prices, and reduce dependence on oil from the Middle East.
Just how realistic are these claims?
Clearly, the construction of the pipe, most of it below ground, will be a huge undertaking. The estimated number of people it will employ in the process, however, has fluctuated wildly, with TransCanada raising the number from 3,500, to 4,200, to 20,000 temporary positions and suggesting the line will employ several hundred on an on-going basis. The U.S. State Department, which made its own assessment because the pipeline crosses the U.S.-Canada border, estimates the line will create just 20 permanent jobs. One advantage of a pipeline, after all, is that it’s automated.
The gas price argument rests on the bump in supply the Keystone XL will bring to market. Keystone XL would deliver around 830,000 barrels a day. Not all of that would be used in the U.S., however: The pipeline delivers to a tariff-free zone, so there’s a financial incentive to export at least some of this oil. This is especially true because area refineries are primed to produce diesel, for which there’s less stateside demand. But let’s say two-thirds of the capacity—half a million barrels a day—of Keystone oil stays in the U.S. That’s a convenient estimate on which to gauge the impact of Keystone oil, because it’s the supply increase the U.S. Energy Information Administration, which provides independent data on energy markets, expected in a recent study of the expiration of offshore drilling bans. In 2008, it studied what 500,000 barrels more per day would save consumers at the pump: 3¢ a gallon.
The point is not that the Keystone XL won’t deliver on the economic claims made for it, but that it’s highly probable the gains will be modest for consumers, while carrying significant financial risks, as we previously explored.
Meanwhile, those opposed to the pipeline—including environmental groups that sent all those e-mails to Congress—might want to put their energies instead into passing fuel economy legislation. The mileage upgrade for cars and trucks that Obama proposed last July would displace 11.6 percent of current consumption by 2025. (This upgrade is already technically feasible.) After 2025, the new fuel economy standards could well reduce consumption by 4 million barrels a day—nearly five times the capacity of the Keystone XL—and more than we get from OPEC.
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Permalink Reply by blackjackjackson on
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skip,
thanks. it seems to validate the texas people who don't want it. it brings no jobs and the oil is just going to be exported, so america will make very little?
i really am pulling for the tms in central louisiana. i think there will be more drilling if the keystone does not come thru. i am torn w/ my own greed.
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Permalink Reply by Skip Peel - Mineral Consultant on
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TMS greed is okay, blackjack. Go right ahead. LOL! I think the Keystone XL has value as part of an expansion in pipeline infrastructure that connects new production to existing refining capacities. I also think the project gets far too much political spin and that few average citizens understand the facts. There are benefits just not of the scope pushed by advocates. As long as it is constructed and operated to reasonable standards it's just another pipeline. IMO,the larger question is that of the pros and cons of producing oil sands.
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Permalink Reply by Todd Hackney on
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The Trans-Alaska Pipeline is elevated for part of it's length to keep the heat from melting the permafrost. 380 miles of the 800 mile the Alaskan Pipeline is buried.
http://www.alyeska-pipe.com/TAPS/PipelineFacts
The above ground portion is what most people think about, since that is the part people take pictures of.
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Permalink Reply by Bacon on
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$13 a rod seems, umm, low. Any lawyers care to comment? If the LO has received $400ish a rod in the past, wouldn't that set "fair market value" for the property?
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Permalink Reply by Dion Warr, CPL on
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Bacon:
Not a lawyer, but as a landman who has worked right-of-way where condemnation had been used previously, that's not atypical for the et award for a condemnation to be low.
Companies usually first try to establish fair market value. One indicator would be "going rate" established by prior acquisition activity for like and kind facilities. Another would be assessed value, which tends to value property somewhat lower unless the assessor is proactive about reappraisals or a recent transaction has taken place. Yet another would be current appraised value Adjustments to these figures are then weighed according to impact to the property, the primary use of the property, etc. Damages are generally not taken into the calculation of the offer.
After the negotiation period has ended and a final offer made, the owner is faced with a choice: go to court or settle. The court will take into account the history of the negotiations, offers made, and offers accepted, as well as the above factors (although courts will usually consider the assessed value with greater weight than the others, which in many cases is the lowest of the first three methods).
As long as the carrier has followed protocols, the landowner will lose with rare exception. The carrier will take rights appropriate to conduct its operations, and the owner's award will be adjusted for all allowable costs for prosecuting the condemnation proceeding, which usually leaves a devastatingly small fraction of the total compensation for the taking.
Condemnation is not uncommon in large linear projects; the shocking discrepancy between accepted offers and net awards given to owners that lose in condemnation proceedings make for press fodder. Here, it's the percentage of tracts condemned that is the story. What happens in the negotiation phase is crucial as to landowners' greatest chance for higher compensation - if that negotiation period is short due to outright rejection by the owner, that owner does himself little good in a condemnation proceeding. If the carrier cuts that period short by being perceived as brusque and firm in their negotiations ("hardball") that's usually when the percentage of condemnations go up. If that percentage and number of complaints increase dramatically enough, the Public Service Commission or applicable regulatory body will sometimes investigate and examine what practices and procedures are being used and possibly suggest alternate routes, but generally if the route was already vetted and approved, no major route changes will occur.
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Permalink Reply by Dion Warr, CPL on
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Sesport:
The accepted "use" of eminent domain as a practical matter has meandered greatly from the original concept as contemplated by the Founding Fathers, in my view. Then again, I doubt that they envisioned mass capital projects undertaken by or constructed by private entities as they exist today.
The nearest construct that would have existed at that time would have been those concessions and grants awarded to the trading companies in the 17th and 18th centuries. Notwithstanding individual concessions and grants awarded by the sovereign, all other title to the land and its resources resided with the sovereign goverment (mostly monarchies) which claimed its territorial lands and defended from claims of other sovereign governments - the sovereign could thus make claim, assess taxes, rents or tribute (royalties come out of this concept), or reclaim lands to be allocated and reappropriated as it saw fit or as conditions warranted. The Founders came to an agreement in the concept of private ownership, with allowances for the government to be able to take land for public use, but guaranteed just compensation. Depending upon how "public use" and "just compensation" have been defined over the years has accordingly informed the public and the judiciary as to acceptable use of eminent domain.
One thing is for certain - the standard "good and benefit of all" has never been the standard for a taking, even under the Fifth Amendment - It is a virtually impossible standard - not to be picky, but if a taking was "for the benefit of all", the landowner would have no reason to resist the taking.
Again, in my view, Kelo was the low watermark (at least in recent memory) as far as the standard to be met for a taking. The "public use" standard was defined to be met by "promotion of economic development" and "increased tax revenue". However, the ruling left open what appears to have been a longstanding concept of defining what constituted a "just taking" to the states, which reemphasized the importance of defining same under the individuals states' constitutions and laws.
So based upon that standard, each individual state, through its constitution, laws, jurisprudence and regulatory precedent have created their own standard. I don't believe whether domestic materials were used in the construction of the infrastructure has ever been used in determining a validity of "public use" - I think you're injecting more emotionally stirring and tangential information than what is required here. But would probably be more informing would be a determination of the "common carrier" status of Transcanada or its US affiliate (which is the issue on point in the Denbury case currently being litigated in TX).
So overall, I would say that your first statement is not the standard (and never has been). The second statement only would gain traction if and only if the carrier guaranteed that none of its transported product would be sold domestically (haven't seen that yet) - the fact is that this product will have to be refined and processed somewhere, likely an E TX oil refinery (or more than one) - the use of non-domestically sourced materials for construction is a red herring for purposes of determination of rights to condemn. Thus the conclusion is faulty, because the rationale is built upon faulty foundations.
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Permalink Reply by GoshDarn on
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ses:
Yep, and this is still "foreign" oil, in that American money will be exported to Canada to pay for this imported commodity. In other words, this is not "domestic" U.S. of A. oil. It's Maple Leaf oil.
So, when I'm asked what I think about this, I always say that I favor "domestic" oil leasing/drilling, and I also favor keeping the U.S.A.'s money in the U.S., i.e., not sending more of our hard-earned cash to another country (even if it is our good friends the Canadians).
Of course, this is a very subjective call on my part since I have mineral holdings in La. land (which produces "U.S. of A." oil) and NG (which means I want a fair price for my oil and natural gas).
Disclaimer: And yes, I know that oil isn't priced per the domestic market, being as it's priced per the global market. True.
And yes, I know that NG is priced per the domestic market, and not priced per its true international value.
True.
Call me self-serving. But most folks are.
GD
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