Real Estate & Property Law

Gas Firm Seeks to Condemn 9,117 of Kansas Land

By Alan Ackerman

    Despite all of the publicity about Warren Buffet seeking to acquire an expansion of a gas storage field, the numerous writers about the recent acquisitions by Northern Natural Gas Company simply miss the issue at hand.  That far more than natural subsidiaries are becoming owned by Warren Buffet in and of itself should give no one cause for concern.  Someone has to own these utilities.  Therefore, what does get bought is the attempt to acquire property rights, namely the storage rights in gas, owned by the existing surface owners.  The valuation process is difficult, to say the least.  At the same time, the main purchasers of storage fields are utilities which have an overwhelming advantage in the eminent domain process against the landowners.  In this field, there are some substantial oil producers and one can expect  lengthy battles of the valuation issues.

Kansas City.com 

 The company is looking to get underground storage rights on the condemned property, and plans to drill observation wells on that property to check for migration of gas, Loeffler said.

The legal maneuvering for condemnation comes in the wake of a June decision by the Federal Energy Regulatory Commission that granted Northern Natural the authority to expand their Cunningham Storage Field in Kansas by an additional 12,320 acres. The facility stores gas in two underground formations now spanning about 28,000 acres.

But drilling companies that have put in the gas wells, and the landowners who get royalties off those wells, contend that there is native gas reserves underneath the property for which they should be compensated.

They have also won rulings in state courts that would allow landowners to keep the gas, even if it was originally in the storage facility, once it migrated more than a half mile away from the storage field and into areas under their land.

'We think it is the illegal confiscation of the minerals under this acreage because they circumvented the judicial system where they have been beat every time and went to the regulatory process — where they have tremendous lobbying power in Washington, D.C., because this company is owned by Warren Buffet,' said Todd Allam, president of VAL Energy, a Wichita firm with a block of oil and gas leases six miles from the storage field.

Full post as published by National Eminent Domain Blog on August 02, 2010 (boomark / email).