Experts offer advice to landowners regarding pipeline installments at Colorado Farm Show
January 26, 2018
GREELEY, COLO. — For some farmers and ranchers, partnering with the oil and gas industry was a way to supplement some of their lost profits.
However, as these companies try to build more partnerships with farmers and ranchers, caution and safeguards should be kept in mind. That was the theme of Maria Petrocco's discussion Jan. 24 at the Colorado Farm Show in Greeley, Colo.
Petrocco is an attorney based in Westminster, Colo., and has worked on a number of cases and contracts between the agriculture community and oil and gas companies.
When farmers and ranchers are discussing the logistics, one thing Petrocco stressed was that landowners do have the rights and say over specifics for the pipelines going through their property, and they need to remember that when negotiating contracts.
One critical area for some landowners is the location of the pipeline.
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When it comes to the placement, the oil and gas companies can be difficult, Petrocco said.
"It's rolling in the mud with them," she said.
She said landowners need to know that oil and gas companies will try to get more land than they need, and people need to make sure they're clear with what they're OK with and what they want to avoid. This is important, because once a deal is made, the easement area will be off-limits to the producer, unless agreed to beforehand.
For example, if a rancher allows a pipeline to go through a grazing area, it would be important to include a specification that allows their livestock to graze in that area.
Barney Hammond is the landman team lead for PDC Energy, and said landowners need to make sure they're looking at the proposed area carefully.
He warned if some producers don't look carefully enough and the pipeline goes through their center pivot, that will create a number of problems for the farmer, and once contracts are signed, there is no renegotiating.
"I tell people to get what they can negotiate," he said.
Landowners also need to be aware of second line rights. Hammond said PDC will ask for those rights because it's easier, but Petrocco said it's not necessary to agree to it.
Second line rights allows the pipeline companies to automatically put in a second pipeline, but it would more than likely mean the farmers wouldn't be compensated a second time. Petrocco's advice: Don't automatically allow it. If a company wants to put in a second pipeline, the company should compensate the landowner for the second pipeline.
THINGS TO WATCH OUT FOR
There were two red flags Petrocco brought up to landowners. One was to be cautious of compressor stations.
Actually, Petrocco warned producers to "run" if a company proposes to put one on your property. Compressor stations help push along natural gas, water and crude or refined oil. According to Hammond, most of these stations are on property the companies already own.
Another possible issue Petrocco has witnessed is companies trying to use existing pipeline easements from long ago. She said there was an issue with a company trying to claim an agreement from the early 1900s in Fort Lupton, Colo. She said it's a "trick" the companies use.
The best advice Petrocco and Hammond offered was to keep communication lines open.
"Stay in communication," Hammond said. "If you don't like the land person you're dealing with, ask for a new one." ❖
— Fox is a reporter for The Fence Post. She can be reached at firstname.lastname@example.org, (970) 392-4410 or on Twitter @FoxonaFarm.