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A new record payment for a pipeline right of way?

  • 8 Replies
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Rockdale

  • 6128
A new record payment for a pipeline right of way?
« on: February 12, 2018, 04:06:19 PM »
In today's Marcellus Drilling News is an article dealing with an agreement just struck between the builders of the PennEast natural gas pipeline and the Bethlehem Water Authority.  According to the article, the contract calls for a payment of 1.7 million dollars to traverse some 4 miles of right of way through the Water Authority land.  Which if accurate would come to around 80 dollars per running foot.  The Bethlehem Water Authority owns well over 20,000 acres in the south portion of the Poconos and has been utilizing that land for a long time, producing on it some extremely high quality water that is good in every respect.  Which is all the more reason for them to not jeopardize their system if they felt any real threat to it from a pipeline.  If nothing else, there is a very long tradition of water management in Bethlehem. The original Moravian settlement built the very first municipal water works in the British colonies before the Revolution, and the ruins of that structure still stand near Monocacy Creek on the north side of Bethlehem as part of the Moravian Historic District.  It's of interest to note that on another portion of the Bethlehem Water Authority property that there is a proposal to put up 37 wind powered generators, a plan which has now been cut back to 28 generators in the face of ferocious opposition from home owners near that proposed project.

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Wax

  • 6311
Re: A new record payment for a pipeline right of way?
« Reply #1 on: February 13, 2018, 12:49:22 AM »
Rock, I am not sure it would be a record. The Laser line paid about $60.00 per pipe a foot  and a substantial  annual payment (maybe $3.00 a foot with cost of living increases). It also has a term limit in years (guess 30 ) than paid again. After all that expense it was sold for more than 13 times, what it cost to build.

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Rockdale

  • 6128
Re: A new record payment for a pipeline right of way?
« Reply #2 on: February 13, 2018, 09:24:32 AM »
Rock, I am not sure it would be a record. The Laser line paid about $60.00 per pipe a foot  and a substantial  annual payment (maybe $3.00 a foot with cost of living increases). It also has a term limit in years (guess 30 ) than paid again. After all that expense it was sold for more than 13 times, what it cost to build.
>>>> Wax, then it would appear that the Bethlehem Water Authority payment per foot for right of way wouldn't be the best so far and the Laser agreement would keep that honor.  Reading further on the Bethlehem Water deal it is also the case that the 80 dollars or so isn't paid all at once, but is paid out over 25 years, with about 20% down and further annual payments to follow.  At least now land owners can point to bench marks set in their attempt to get fair compensation for a right of great value.  As you mention, even with the very considerable expense of building a gas pipeline, they still can be extremely profitable businesses to operate.  As regulated monopolies natural gas pipelines are always wrangling with the regulatory agencies as to what is a fair price for their services as well as a fair profit margin.  Reading an article yesterday I came across a statement that the normal allowance for a pipeline company's equity in their investment is around 14% a year.  A lot of businesses and private individuals would be very happy to make 14% on most anything.

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shinobi

  • 4201
Re: A new record payment for a pipeline right of way?
« Reply #3 on: February 13, 2018, 09:53:01 AM »
From a landowner standpoint, IMO no ROW agreement without an inflation escalator is very impressive.  These rights of way last a very, very long time.  The buying power of the American dollar is markedly shrinking.  And with us facing over $20T just in current debt, that shrinkage will only accelerate.

Consider the fifty year example:

What cost $1 in 1967, in 2017 costs $7.46 because of inflation

I believe these upcoming fifty years will be much worse.



   

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Wax

  • 6311
Re: A new record payment for a pipeline right of way?
« Reply #4 on: February 13, 2018, 02:24:00 PM »
The Laser Pipeline is a 20 year agreement, dated 2010. All the info and than some can be found on this site.

http://www.naturalgasforums.com/smf/index.php?topic=5070.825

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Rockdale

  • 6128
Re: A new record payment for a pipeline right of way?
« Reply #5 on: February 13, 2018, 04:44:02 PM »
Wax, having read the postings from years ago thanks to your research, it is quite apparent that while the Bethlehem Water Authority pipeline agreement is better than most, it isn't as good as the one between the rural land owners and Laser.  Either option 1 or 2 gave a better overall return, and doesn't appear to run indefinitely.  And what is impressive also is that unlike the Bethlehem water authority, which is a well established organization of many years standing run by professionals, the land owners negotiating with Laser probably had no experience in these matters before they had to deal with them.  A truly amazing number of people read that agreement on this site, and it's best not to say how exactly Donegal managed to get a hold of the document which sparked so much interest.

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Wax

  • 6311
Re: A new record payment for a pipeline right of way?
« Reply #6 on: February 13, 2018, 09:02:25 PM »
Rock, that as really the first pipeline, build for maecellus gas. Laser started out as a obnoxious company, that threatened landowners with E.D. before they had any right to use it. But they pretty much got the entire route in Pa for peanuts. It was the NY landowners that formed a coalition and demanded a good deal. After Lasers efforts failed, with the PUC to gain FERC status, they had conceded to the NY coalition and got a good deal. They were so strong, they demanded the Pa landowners get a similar, one time payment per foot. I do not believe, they got the annual payment or a 20-year contract.
The group in NY all stuck together and despite Laser trying to go around members ! Regardless of the new route they choose, those landowners told Laser they were with the coalition.
The Bluestone pipeline was the second line out of the marcellus. I was involved with a coalition that demanded the Laser lease terms. Despite having 50% of the route, they got around every member, and some members quit the coalition. Bluestones first offer was $8.00 a foot and got 25% to sign. Second offer was $15.00  and got another 15%. Than they up their offer to $30.00 and completed the route. By no means did they build a direct route but got it done. Unfortunately the Pa landowners, did not stay together, to share in worth's of a natural gas pipeline. You really have to give that NY group credit. They did not care, if it was them or their neighbors that got the deal, but that it would be a good lease.     

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Rockdale

  • 6128
Re: A new record payment for a pipeline right of way?
« Reply #7 on: February 13, 2018, 09:37:24 PM »
Wax, when the time comes for the history of the early days of the Marcellus/Utica to be written,  people who will emerge as the unsung heroes were those who helped their neighbors while also helping themselves to get a better deal in all respects for the land owners.  Landmark events were the activity of the Friendsville Group when it came to leases, the coalition of land owners around Deposit, New York, the right of way owners you've mentioned above dealing with pipelines, and countless others.  Those were jobs for professionals that amateurs had to undertake, and I'm sure that many who did so must have regretted getting themselves into so difficult a situation.

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donegal

  • 4989
Re: A new record payment for a pipeline right of way?
« Reply #8 on: February 15, 2018, 02:22:18 PM »
Thanks Wax for postin' the link so folks can find & review the Laser Pipeline ROW Agreement. If they don't read that history lesson then how they gonna' know what can be done if'n they find themselves in a similar situation?  I know ONE thing.......the landman sure ain't gonna' tell 'em.

I had some PM's sayin' it was hard for them to find the link to the  New York State  recorded Laser ROW Agreement inside the thread, so I freshened the Laser thread up with a  post includin' a link to the  document.

http://www.naturalgasforums.com/smf/index.php?topic=5070.msg300306#msg300306




Donegal
We finally scuttled the Exxon Valdez (for the second time in her life), and turned in at the boatyard the ol'  gray Bismarck before she sank too..  Now I'm Captain of the most beautifulest boat ever, the "HMS HOOD", a 2012 stealth black AWD V-8 Chrysler 300.