An Irreverent Look at Pipelines
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An Irreverent Look at Pipelines


This presentation is made solely for educational purposes and contains opinions of the presenter which are provided pursuant to the First Amendment of the United States Constitution. Neither Rodney M Patterson, nor any other contributor to this presentation provides legal advice about oil and gas matters or pipeline issues within the content of this presentation. This information is not intended to create and its receipt does not constitute a lawyer-client relationship. Viewers of this presentation should not act upon this information without seeking professional legal counsel.


Federal and State Regulations


Federal Regulations

  • 49 United States Code § 60101 et seq

  • Title 49 Code of Federal Regulations

  • Office of Pipeline Safety (OPS)

  • US Department of Transportation

  • Pipeline and Hazardous Materials Administration

  • (PHMA)


Federal Regulations

  • Interstate pipelines are regulated by Federal Law

  • regarding safety concerns which specifically includes location.

  • Under the legal theory of "regulatory preemption", regulation

  • on that issue by lower governments (state, county, city, municipal)

  • is prohibited.


Dateline: July 22, 2001

“The OPS is one of the smallest agencies in the federal

government. It has an operating budget of about $23 million

and 107 full-time employees.”

“Yet it is responsible for ensuring the safe and clean

operation of more than 2 million miles of pipeline in the

United States.”


State Regulations

  • The Texas Railroad Commission regulates safety, but does

  • not approve location.

  • Texas law is unsettled as to what extent local governments

  • can regulate pipeline location.


State Regulations

  • Through certification by OPS, the State of Texas regulates,

  • inspects and enforces all intrastate gas and liquid pipeline

  • safety requirements.

  • This work is performed by the Pipeline Safety Section, Gas

  • Services Division of the Texas Railroad Commission.

  • Texas RRC has primary jurisdiction of all persons owning or

  • operating pipelines in Texas.


Types of Pipelines


Where are the Pipelines?


The Pipeline Easement


“Look for words of grant.”


“grant, sell and convey”


“Look for words of grant.”

What is Being Granted?


What is Being Granted?


Paragraph 15—Warranty of Title

Lessor hereby warrants and agrees to

defend title to Lessee hereunder . . . .


Is ‘Paid Up’ a Good Thing?


“Paid Up” Means No Delay Rental


No Surface Use?


Paragraph 10—Surface Use Clause

. . . Lessee shall have the right of ingress and egress . . . .

. . . Including . . .

  • Geophysical Operations

  • Drilling of Wells

  • Construction and use of

    • Roads

    • Canals

    • Pipelines

    • Tanks

    • Water wells

  • Construction and use of

    • Disposal Wells

    • Injection wells

    • Pits

    • Electric, Telephone Lines

    • Power Stations

    • Other Facilities


The Granting Clause


Paragraph 1—The Granting Clause

--What is Being Leased


. . . along with all hydrocarbon and non hydrocarbon substances

produced in association therewith . . .


The term “gas” as used herein includes helium, carbon dioxide

and other commercial gases, as well as hydrocarbon gases.


Habendum Clause


Paragraph 2—The Habendum Clause

This lease, which is a “paid up” lease requiring no rentals, shall be in

force for a primary term of Three (3) years from the date hereof, and for

as long thereafter as oil or gas or other substances covered hereby are

produced in paying quantities from the leased premises or from lands

pooled therewith or this lease is otherwise maintained in effect

pursuant to the provisions hereof.


Paragraph 2—The Habendum Clause

This lease, which is a “paid up” lease requiring no rentals, shall be in

force for a primary term of Three (3) years from the date hereof, and for

as long thereafter as oil or gas or other substances covered hereby are

produced in paying quantities from the leased premises or from lands

pooled therewith or this lease is otherwise maintained in effect

pursuant to the provisions hereof.


primary term of Three (3) years


and

for so long thereafter as oil or gas or other

substances covered hereby are produced

in paying quantities


Royalty Clause


Paragraph 3—Royalty Clause

A percentage share of production, or the value

derived from production, paid from a producing well.

Ways to Measure Royalty:

  • Fair Market Value

Determined by looking at the market place.

  • Proceeds Realized

Determined by looking at what price Lessee sells for.


Paragraph 3—Royalty Clause

When and Where Is Royalty Measured?

  • At the wellhead

  • From sale thereof


For Oil

Paragraph 3—Royalty Clause in Sample Lease

For oil and other liquid hydrocarbons separated at Lessee’s separator facilities,

the royalty shall be Twenty Five Percent (25%) of such production, to be

delivered at Lessee’s option at the wellhead or to Lessor’s credit at the oil

Purchaser’s transportation facilities . . .


For Gas

Paragraph 3—Royalty Clause in Sample Lease

For gas . . . the royalty shall be Twenty Five Percent (25%) of the proceeds

realized by Lessee from the sale thereof, less a proportionate part of . . .

Taxes . . . and costs incurred by Lessee . . . . .

. . . provided that Lessee shall have the continuing right to purchase such

production at the prevailing wellhead market price . . . .


Bonus


Dateline: Arlington, December 4, 2007

$15,850.00


Dateline: Grapevine December 17, 2007

$3,000 (Offer by Chesapeake)


Fort Worth Business Press

Dateline: Meadowbrook, March 31, 2008

$25,000.00


Dateline: Arlington April 26, 2007

$26,500 (Offer by XTO)


Where Do We Go From Here?


  • Join Your Neighborhood Association

  • Practice the Art of Patience

  • Be Sure You’re Right, Then Go Ahead


What Should I Expect?


  • Watch Your Email and the Website for News

  • Request for Proposal Will Be Submitted

  • Friendly Cooperation with Other Neighborhood Associations

  • Will Occur

  • Oil Company Solicitations Will Occur

  • A Proposed Lease Will Be Drawn & Submitted

  • You Will Not Be Bound Until You Agree to Be Bound


Rodney M. Patterson

Attorney at Law

4200 South Hulen, Suite 415

Fort Worth, TX 76109

817-732-8200

www.rodpatterson.com


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