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Landman giving some 'take it or leave it' offers
Some landmen are getting aggressive and telling property owners they can “take or leave” offers for right-of-way access for pipelines.
There have been calls about the offers coming for a few weeks, said Alan Wenger, an oil and gas attorney with Harrington, Hoppe & Mitchell Ltd. in Youngstown.
“A few of the landmen are being too aggressive,” he said. “They’re telling people to take the offer, it’s the best they’re going to get, or they’ll get [land rights] anyway through eminent domain.”
Although overaggressive conduct isn’t acceptable and shouldn’t be condoned by landmen, it does sometimes happen, said Don Fischbach, chairman of the Energy Group for Calfee, Halter & Griswold, a Cleveland law firm.
He believes there’s a difference between the role of a landman and a broker. It’s a broker’s job to simply negotiate deals with property owners, as opposed to a landman who generally selects what land will be leased, in what areas, and how much will be paid. There are some landmen in Ohio handling all of those roles, but generally the larger companies hire brokers, often from out of state, to negotiate deals.
“These brokers are trying to lease acres as efficiently and economically as possible,” Fischbach said. “Some of them might get a little too caught up in being mission-oriented.”
Another issue is people often have made up their minds about oil and gas development and are unfriendly to brokers, or false-price rumors cause conflict, he said.
“If a third party hears from someone that they’re getting $115 a foot and a landman offers them $15, the [property owner] is going to run them out on a rail,” Fischbach said. “The landman is confused because nobody in the area has gotten more than $15 a foot, but the [property owner] doesn’t have any way of knowing that.”
The key for property owners is to get help for these negotiations if they have questions and work with someone who understands the industry, Fischbach said.
One of the issues with the tactic being used is some pipeline projects have eminent-domain rights while the majority do not, Wenger said.
Sunoco has a natural-gas pipeline that travels through at least Canfield, Boardman and Poland townships. The company is trying to add a 12-inch parallel line to the existing one and could use eminent domain, he said. The Sunoco pipeline has been in the Valley since at least the 1940s.
“But the company is trying not to and negotiating with landowners for a larger right of way,” Wenger said.
State Sen. Joe Schiavoni of Boardman, D-33rd, said he has heard similar complaints about landmen trying to use “strong-arm tactics.”
The state needs to help protect people’s property rights and make sure they are not taken advantage of, he said.
“The expansion of the oil and gas industry has been great. It’s meant more jobs, and some people have been made instant millionaires,” Schiavoni said.
But if people don’t want their land to be used, they should have that right, he said.
“It’s one of the issues we need to deal with down in Columbus,” Schiavoni said.
Residents should ask any landman who says the company has eminent-domain rights for a copy of its certificate from the Federal Energy Regulatory Commission or the Public Utilities Commission, Wenger said.
At this point, companies are trying to gain access to as much property as they can, leasing access for $10 to $15 a foot to provide options for pipeline development. Property owners who hold out and whose property is really important for a route could receive between $40 and $50 a foot, Wenger said.
During this point in the development process, infrastructure such as pipelines is key to moving forward in production, Fischbach said. Because routes can be redirected, small property owners typically don’t have “a lot of leverage,” he said.
The industry pays more based on the level of disruption, and for pipelines, there typically are about 60 days of disruption, Fischbach said.