Doug is in full “rant mode” and attacks the Tioga County Pipeline Agreements being offered to property owners. Given the history of natural gas infrastructure development in Pennsylvania we have the opportunity to learn from the mistakes of others and negotiate strong Pipeline Right-of-Way Agreements. Doug explains how his experience in working on pipeline agreements involving over 60 different pipeline companies across Pennsylvania allowed him to effectively represent and educate his pipeline clients.
Doug explains Pipeline “Option” Agreements and what an “Option” Agreement means to the landowner. Typically Doug’s clients enter into Pipeline Agreements with no more than a 2 year, or in rare cases, 3 year option terms. Tioga County Landowners are now being presented Pipeline “Option” Agreements for 5 year option terms. Doug voices his strong opinion that landowners must avoid 5 year options. 5 years is simply too much time to give a pipeline company to decide if they are going to exercise the option and ultimately install pipelines. Property owners considering a Pipeline Agreement at this time must also ask themselves whether now is the right time to enter into a Pipeline Agreement for low compensation. Remember, today’s low natural gas prices have taken a heavy toll on the budgets of gas and pipeline companies. Quite simply, they are making less money and they currently have cut their acquisition budgets for pipelines and gas leases.
Of course a pipeline company would love to acquire a 5 year option term for a very low upfront commitment and for low future payments should the company decide to exercise their option in the future. Pipeline and gas companies are masters at convincing landowenrs that the companies have no money because of the current gas prices but that this is the right time for the landowners to sign pipeline agreement or gas lease. Immediately landowners must ask whey they should sign any agreement today for relatively low compensation given the current state of the natural gas market. However, the more important question is why sign today for relatively low compensation AND give the pipeline company 5 years to decide if they even want to use the agreement? Why not wait to see if if there are better opportunities in the future when the natural gas prices rise? If the company wants 5 years to decide if they are going to use your pipeline agreement, then what is the hurry to sign today? These pipeline questions and many more pipeline issues are discussed throughout this episode of All Things Marcellus with attorney Doug Clark.