Asked To Sign A Pipeline Easement? Read This First!
February 20, 2019
The oil and gas industries are doing well in the U.S. these days, so well that energy companies want to expand their pipelines to move these products to more and more places.
If you have received a pipeline easement offer from an energy company seeking permission to install their pipeline through your backyard, don’t sign that offer so fast.
There are a few important details hidden in the fine print of those contracts that might make you think twice.
What Is A Pipeline Easement Offer?
A pipeline easement offer is an offer made by an energy company seeking permission to install their oil pipeline through or at least across your property.
The companies offer monetary compensation to the property owner as well as additional funds for any property damage that might happen during the installation process in exchange for permission to lay the pipeline through your property.
To successfully lay the pipeline, an energy company must approach each property owner in the projected path of the line and gain permission to do so
Read The Fine Print - Be Sure To Understand It All
As benign as the idea of giving this permission may seem, it is essential that you read all of the fine print in your contract and understand exactly what you are giving in exchange for a few thousand dollars.
The need to be cautious in this case is no different than that when you are selling mineral rights to an energy company.
In terms of easements, the energy company could be getting a lot more from you than you are getting from them if the contract is not carefully inspected.
Ability to Access Any Time
In addition to gaining the ability to install the pipeline through your property, the contract may be written to allow the company to access the pipeline any time they need to in the future, which could mean disrupting your property again and you would have no control over when and how often they do so.
If your land is farmland, it could even affect how you are able to plant and farm the land after the line is installed.
Can Install Other Necessary Utilities
The company may also gain the ability to install other utilities along the pipeline at any time after striking deals with those companies who are also frequently seeking easement permission.
They may also sell their rights to other utility companies for much more than you are paid for the initial easement.
Reduces Property Value
Even more important, a pipeline running through your yard could considerably reduce the value of your property or make it unsuitable for certain uses, including your own planned usage.
Many times, the monetary offer up front is only a fraction of what the pipeline passing through your property could actually cost you.
Should You Sign An Easement Offer?
The decision to sign an easement offer should be made carefully, preferably with a knowledgeable oil and gas attorney to explain all the legal implications to you and negotiate on your behalf.
Some companies are willing to negotiate to limit what the property can actually be used for, when and how it can be accessed, higher compensation, and most importantly exclusive rights only.
Exclusive rights means the energy company does not have the ability to resell the easement to another utility company that could then come in and lay additional lines along the oil pipeline.
Use Caution with Easement Offers
The important message here is simply that whenever dealing with energy companies about pipeline easements, oil rights, gas rights, or similar concerns, it’s best to work with a professional who will work in your interest.
There is nothing wrong with accepting an easement offer as long as you understand what you are getting and what you are giving away in return before you sign on the dotted line!
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