The area of most concern in Wyoming county at this time pertains to the need to increase infrastructure, most particularly "Gathering Pipeline" capacity.  The issues that were of concern to you as property owners when leasing your oil and gas rights, should be of equal or greater concern when negotiating a pipeline lease.

Understand that you are being asked to grant a right of way (ROW) / easement that will remain on your property forever unless you require that it terminate sooner or the pipeline company abandons it.  Your right to access your property wherever and however you wish may be forever impeded unless you require the pipeline company to engineer and bury it in such manner that it will provide unlimited access to it and crossing of it (by heavily loaded equipment, if necessary) at any point along its route.  Someday, you may want to build on a location on your property, you either need to ensure that you will be able to build paved driveway, road or even a paved parking area above the pipeline or be compensated  for not being able to do that.  Make it clear that you will not have to ask where or when you can cross any part of the ROW/ easement   Make it incumbent on the pipeline company to engineer it to meet your desires, and if at any future time they feel that the pipeline will not support your desired use, that they will be required to accommodate your desired use AT THEIR EXPENSE, IN A REASONABLE AMOUNT OF TIME.  If they can’t do that, then you should seek payment for a loss of that potential use. 

The ROW /easement should state the size and principal purpose of the pipeline (eg.16 inch natural gas or 20 inch petroleum products).  Statements like petroleum products and other substances should be stricken unless that is the primary purpose.  There are different hazards associated with each that will need to be addressed and you should consider the risk when trying to arrive at the appropriate level of reward.  Remember there is more to it than a 50 foot strip with no trees or buildings.

There are potential risks to your property's potential value that you must consider.  The attachment to this email contains excerpts from over 100 pages of information that was compiled for the Office of Pipeline Safety.  For the sake of brevity, some of the excerpts were taken out of context and combined with other excerpts on the same subject, however, in each case it was done so as to attempt to convey the entire content of the area covered.  The entire publication is available on line and the title is included incase you want some light reading.  By reading the attachment, you will know more about the potential risks than some of the landmen trying to get you to sign contracts.  One landman told me there was no danger of explosion since there is no oxygen in the pipeline.  Apparently, he forgot about the oxygen in the air around the pipeline.

Another potential impact on your property is from future government imposed setback restrictions.  Some localities have implemented restrictions on development along pipelines over and above the width of the ROW.  The federal government does not have the authority to impose those type restrictions, so it stipulates that interstate pipeline companies' transmission lines must be built to different standards in areas that have higher population densities.  In the military they use the term "acceptable collateral damage" when referring to those in an area that are considered expendable to achieve a desired result.  (How many innocent lives will it cost and is the objective worth it). 

In spite of what you may be told by a pipeline landman, there is no federal or state regulation that imposes the same level of safety restrictions on Gathering System Pipelines as there is on Interstate Transmission Lines.  In fact, in PA there is almost no authority governing the safety of unregulated gathering lines.  The following copy of the federal regulation governing natural gas pipeline safety, specifically exempts unregulated onshore gathering systems.  PA has not implemented any regulations to fill this gap.  In rural areas, such as the vast majority of the Wyoming Co., you, your family, your friends and neighbors, and your property near the pipeline are considered,  “Acceptable Collateral Damage.”  Your only protection will be afforded by the ROW / Easement contract.  The code of federal regulations (CFR) 49 part 192, deals with pipeline safety, below is an excerpt copied from it.

 192.1   What is the scope of this part?

(a) This part prescribes minimum safety requirements for pipeline facilities and the transportation of gas, including pipeline facilities and the transportation of gas within the limits of the outer continental shelf as that term is defined in the Outer Continental Shelf Lands Act (43 U.S.C. 1331).

(b) This part does not apply to—

(4) Onshore gathering of gas—

(i) Through a pipeline that operates at less than 0 psig (0 kPa);

(ii) Through a pipeline that is not a regulated onshore gathering line (as determined in §192.8); and

(iii) Within inlets of the Gulf of Mexico, except for the requirements in §192.612; or

Don’t let anyone tell you that the width of the ROW / Easement is sufficient protection for your property.  In Virginia a gas line explosion left a charred area over 1000' in diameter. 2 homes were completely destroyed, and numerous others were damaged.  The pipeline company paid damages and bought some of the damaged homes.  According to a property appraiser from the area, the pipeline company repaired and sold the homes for over 20% less than the appraised value.  When realtors do comparables prior to listing other properties, those prices show up.

 The standard lease will keep the landowner from building on the ROW, but will allow the gas company to construct or erect equipment and appurtenances as it deems necessary or convenient.  Do you want the noise that may be generated by some of the equipment typically found along pipelines?  Pipeline companies want to leave the pipeline in place when they abandon the line.  Before you allow that, you should realize that when the line is abandoned, the cathodic corrosion protection will cease.  Do you want the line and the possible pollutants contained therein (substances not thought to be problematic at this time), left on your property, to be disposed of at your expense?  Old fuel tanks that contain residue from government mandated additives are now designated hazardous, and landowners are having to pay for their cleanup.  Do you want that liability? 

Those of you that signed Wyoming County Landowner leases, negotiated indemnification that continues after the contract terminates, insurance protections, bonding requirements, default recourse, surface damage payments, dispute resolution methodology, contact and coordination requirements,  the right to audit, copy, and review  operating records,  reclamation to original condition and contours at termination, and other stipulations such as the requirement for the Lessee to take into consideration the best interest of the landowner.  Those protections are required in a lease where the Bureau of Oil and Gas Management covers the actual drilling (operations) and the required safety of it.  They are in an agreement where you will hopefully receive significant monthly payments. Why would you not require similar protection, plus safety of operation requirements in an agreement that may only offer a onetime payment that, up to this point, does not reflect the potential financial consequences?  Nobody but you knows if or how you will restrict your activity near the pipeline, due to your concern for the safety of your loved ones.  And only you should determine what that loss of use is worth. 

Pipeline companies have said that they want to negotiate with individual landowners because each has unique wants and needs.  While that is true, it is also true that each individual (with maybe a couple hours of research, at best) is at a negotiating disadvantage, because the individual is negotiating with a company’s legal, financial, operations and administration departments through a representative that has years of accumulated knowledge and experience.  For the most part, the contracts that have been signed so far are evidence of that fact.  How many individuals even know what a “smart pig” is, let alone how it may help protect their loved ones. Do you know that to decrease the risk of collateral damage  in more densely populated areas, the government requires, among other things, periodic corrosion inspections and pressures in pipelines to be kept at a lower percent of the “Structural Maximum Yield Strength” (SMYS) of the pipe.  Pipelines have to be designed and built to allow the inspections and increase SMYS.  Those modifications, that decrease risk of injuries or deaths by decreasing the probability of incidents per mile, are costly. 

It’s been said that a company can not afford to implement additional operational safety measures because 1) their revenues are fixed by the government, or 2) shippers, not pipeline companies, determine the rates for transporting gas.  First, the government does not set rates for gathering systems and at a public hearing on 22 April 2010, the Public Utilities Commission stated several times that they do not intend to set rates even if given the authority to govern certain aspects of gathering systems.  Next, shippers may determine the rates only when there are cheaper alternatives (excess pipeline capacity) or when they are willing to shut in production.  The reason that these lines are being built is that there is no capacity.  According to published studies, ROW /Easement acquisition costs are the smallest percent of the cost to build a pipeline, averaging 4-7% of the cost of the pipeline,depending on the type and size of the pipeline.

It's true that pipeline construction projects are capital intensive and to entice investors companies must show the long term viability of a project, but granting a ROW /easement for an indeterminate period of time (for a one time payment) is akin to selling your land and all it's potential uses but continuing to pay the taxes.

Since 1992, when FERC required interstate pipeline companies to unbundle (separate) their sales and transportation services and to provide open-access transportation services there have been numerous changes in the regulatory climate and the marketplace for pipeline capacity.  As a result, shippers have, on average, delayed committing to and shortened the contracts for transporting natural gas.  The result has caused the interstate pipeline companies to apply for rate increases more frequently.  

The pipelines proposed for Wyoming County are gathering pipelines and as such the rates that they can charge are what the market will bear.  Is the market capable of paying appropriate levels of compensation to landowners to acquire ROW’s in our area, most definitely.  Consider that producers pay up to a couple dollars to ship gas to this part of the country.  That gas goes through ROW’s that had to be paid for and compressors that keep boosting the pressure to get it here.  Now consider that a 20” line at max allowable operating pressure (MAOP) of 1400 psi and mid-point pressure of 600 psi, extending 18 miles downstream from a compressor station is capable of carrying 747 million cubic feet (MMcf) per day.

 Gas companies pay for capacity on a pipeline (whether it is by decatherm (MMbtu) or Mcf,   1Mcf is approximately 1MMbtu).   Each penny per Mcf paid on the line above equals $7470 per day, each dime is $74,700 per day.  Each penny per Mcf on the line above equals $415 per mile per day, $151,475 per mile per year.  A gas company operating a line like the one above has been offering a onetime payment of $15 /foot for ROW plus $1500/acre for damage.  For a 50 foot ROW that equates to $15 X 5280’ =$79,200 plus (50’ X 5280’)divided by 43560’ = 6.06 acre X $1500 = $9,091    TOTALING $88,291 PER MILE, YOUR ENTIRE PAYMENT FOR THE LIFE OF THE LINE.

If the company receives only 1 penny per Mcf of the capacity of the line, your payment represents 5.8% of the revenue produced by the line over 10 years.  Since ROW costs typically are 4-7% of the construction cost of the pipeline, one could conclude that construction costs of the pipeline will be paid off in 10 years at 1 penny per Mcf of pipeline capacity.