# TX Railway and Eminent Domain....



## Vol (Jul 5, 2009)

From AgNews.

Regards, Mike

http://www.agweb.com/article/texas-central-railway-raises-concerns-on-use-of-eminent-domain-NAA-news-release/


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## ARD Farm (Jul 12, 2012)

Got the same thing here in Michigan with 2 pipelines crossing from the south to the northeast through neighboring counties. The landowners took the pipeline companies to court....and lost.


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## luke strawwalker (Jul 31, 2014)

Eminent domain has been a part of our government's laws basically since the beginning. Without it, the railroads and highways that have made this nation great would never have been built. Later it was extended to utilities like power lines and pipelines.

While the use of eminent domain for these types of endeavors for the "public good" has always been controversial, especially to those adversely impacted by them, having their land split or taken for these projects with "fair compensation" (which of course is open to interpretation), in large part it has been "necessary".

What is different NOW, is that "private companies" have been extended the powers of eminent domain, to varying degrees, in various states and locales... Now, I can see the "necessity" of the government saying "we need your land for a new highway" or even a pipeline company or power company getting the government's approval for a necessary project and having the GOVERNMENT say "we need your land for this or that..." Even a railway company getting the GOVERNMENT to say "we need this, so we're taking your land for XX dollars per acre". BUT, where I DON'T see it is when the COMPANY THEMSELVES have this right, and where it's something that has always been considered "commercial"... IOW, I TOTALLY disagree with the power of eminent domain being used to force someone off their land to build a "Wal Mart" or some other COMMERCIAL business that COULD BE DONE ANYWHERE.

THAT is the fundamental difference as I see it... a pipeline, railroad, power lines, etc. MUST be done on a contiguous strip of ground going from point A to point B... now there can be "modifications" to the route, but the fact remains that an UNINTERRUPTED STRIP OF LAND is required... and when you have to deal with hundreds or thousands of landowners, SOMEONE is going to "refuse" and stop the whole thing. That is why "eminent domain" exists-- to provide a legal mechanism to prevent a few "refusers" from blocking all progress, or holding it hostage for exhorbitant sums of money.

A "Wal Mart" on the other hand, can be built ANYWHERE... all they need is to buy some property. Might not be the property they REALLY wanted (the old axiom in real estate "location, location, location" comes to mind) and might not be as "convenient" for the customers or as "attractive" a location for the business, but still, such a commercial business can be built ANYWHERE, so IMHO eminent domain SHOULD NOT APPLY.

We had pipeline companies cross both our farms in the past several years. Fortunately the impact was minimal in both cases-- one runs parallel to the back fence of our farm on a 50 foot easement-- they even replanted grass once they were done, and cattle can graze it. Only restriction is no buildings can be placed on that easement... the other was going to run a similar 50 foot easement along our southern edge, right by the road, which would have adversely affected the "saleability" of the farm at some future time (this county is getting so "urbanized" and hostile to agriculture, that despite this farm being in our family for 113 years, I can see the "writing on the wall" and at SOME point, it will make more sense to sell it for development into subdivisions than continue to try to "fight progress" and keep it in agriculture... the gubmint basically is doing everything they can to foster this attitude as well-- they make it a FIGHT to keep one's ag exemptions, constantly raise property taxes to exhorbitant levels (because "new neighbors improve the value of the 'neighborhood', raising YOUR property values on farmland..." It stands to reason-- what will the gubmint make more tax money off of?? 90 acres of grass and cows with a couple mobile homes and a 100 year old farmhouse on it taxed at a reduced "ag rate", or a shiny new subdivision of $350,000 brick homes on half-acre lots taxed out the @ss... you do the math!) Fortunately, someone moved a house in across the road on the proposed pipeline route before they got their right-of-way, and they moved the proposed route across the middle of the farm, equidistant and perpendicular to both main county road and state highway frontages, and crossing under the drainage creek that cuts across our property and wouldn't be developable anyway...

I think that the use of eminent domain should be reigned in, back to the "traditional" use of it as it stood for the last couple hundred years... used only for projects for the public good that require a CONTINUOUS STRIP of land to accomplish (railroads, highways, power lines, pipelines) and NOT ALLOW it to be used for other "commercial projects" that can be built "anywhere", NOT requiring a long continuous strip of land... it should also require GOVERNMENT approval, if not an outright POPULAR VOTE to approve the project in the first place-- after all, if it's THAT valuable of a project, then it should have no problem gaining enough public support for a vote approving it!

Texas has had it's share of idiotic "grand plans" over the past decade or so, most of them under supposedly "conservative" Republican governors who should know better... The idiotic "Trans Texas Corridor" proposal for a mega-freeway/pipeline/powerline/railroad corridor of mammoth proportions that would cut across the state like a scythe was the most egregious example... thankfully that project was shot down. Another was the various "high speed rail" proposals that keep cropping up, of which this latest Japanese effort is just the most recent, after the shelving of plans to build a high speed rail complex running from Houston to San Antonio to Dallas and back to Houston... I would argue the usefulness of such an expensive project merely to shuttle businessmen back and forth... it won't be useful for the MAJORITY of traffic currently traveling by highway between these cities, that being COMMERCIAL TRUCK FREIGHT, and tourists/travelers pulling their campers and boats to recreation sites, or "going to see Aunt Emma" somewhere along the route... This isn't the northeast with the "megalopolis" of closely connected cities with millions of people and hundreds of thousands of commuters and business people shuffling back and forth between them for various business interests...

At any rate, IF there was a demonstrated need and IF the public approves of such a project, then I think it should be a REQUIREMENT that the project be designed in such a way to minimize the impacts on the local communities... INCLUDING FARMERS. It should be REQUIRED that they MUST provide access for the movement of large agricultural equipment (and construction equipment for that matter) every FIVE MILES (at most, where required) so that folks can access their land or properties they operate on "the other side of the tracks" without excessive inconvenience... overpasses/underpasses are easy enough to construct...

When the pipelines crossed our property, neighbors sued the pipeline company to stop it... they were overruled and case dismissed... This is historical precedent, and the courts are NOT going to overturn that precedent, for the simple reason that it would open too big a can of worms for the future... BUT, the courts (and the people) CAN and SHOULD require that "takings" under eminent domain be LIMITED and SENSIBLE and KEPT TO A MINIMUM.

You can't stop progress, but we CAN make it make more sense!

Later! OL JR


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## Tx Jim (Jun 30, 2014)

Dang Luke if I typed a reply that long the tip of my typing finger would be bleeding!!!!!!!!!!!! LOL


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## ARD Farm (Jul 12, 2012)

Sort of like an oil lease in a way.


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## luke strawwalker (Jul 31, 2014)

ARD Farm said:


> Sort of like an oil lease in a way.


Interesting you mention that...

I've seen folks refuse to lease their place for oil... doesn't slow the oil companies down a bit....

Nowdays with fracking and directional drilling, they can be drawing oil from over a MILE AWAY from where the rig actually is located on the surface, and figuring 3-5 miles down... So basically folks that won't lease are just turning down FREE MONEY, because they're pumping the oil out from under your place anyway...

Later! OL JR


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## somedevildawg (Jun 20, 2011)

luke strawwalker said:


> Interesting you mention that...
> 
> I've seen folks refuse to lease their place for oil... doesn't slow the oil companies down a bit....
> 
> ...


I've often wondered about the use of directional drilling to access adjacent property owners oil.....how does that work, if you have the mineral/oil rights, how can it be ok for someone to access it just because you can't see it? Seems strange....


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## Mike120 (May 4, 2009)

somedevildawg said:


> I've often wondered about the use of directional drilling to access adjacent property owners oil.....how does that work, if you have the mineral/oil rights, how can it be ok for someone to access it just because you can't see it? Seems strange....


Sometimes (like where I was in Iraq) it's often easier and cheaper to get to the target with the drill bit than it is to move the rig and try to drill vertical. Especially when the surface isn't horizontal. With a multi-well pad you just skid the rig over and drill another one. It just depends on how deep and how far away the target is......it's the amount of angle you need that presents the problem. A couple of miles of drill string is pretty cheap compared to moving the rig, downtime, building roads, flowlines, etc.


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## somedevildawg (Jun 20, 2011)

Mike120 said:


> Sometimes (like where I was in Iraq) it's often easier and cheaper to get to the target with the drill bit than it is to move the rig and try to drill vertical. Especially when the surface isn't horizontal. With a multi-well pad you just skid the rig over and drill another one. It just depends on how deep and how far away the target is......it's the amount of angle you need that presents the problem. A couple of miles of drill string is pretty cheap compared to moving the rig, downtime, building roads, flowlines, etc.


How do they handle the property rights of the adjacent landowner Mike?
Even without directional drilling, the reservoir of oil probably extends into the adjacent owners land, how do they handle those types of situations, or do they ever present themselves.....


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## luke strawwalker (Jul 31, 2014)

somedevildawg said:


> I've often wondered about the use of directional drilling to access adjacent property owners oil.....how does that work, if you have the mineral/oil rights, how can it be ok for someone to access it just because you can't see it? Seems strange....


Well, when my grandmother passed, she left half the mineral rights to my Dad, and half to my *estranged* aunt... He signed the lease on the mineral rights, she refused.

The oil company didn't have a problem with that... they said they could "work around it"...

I guess they have legal means to "work around" such intransigence... Perhaps they can use the argument that since only about 25%-30% of the oil that is actually present in the rock is actually extractable, that the "instransigent person's half" is still left in the ground...

I really don't know how it works, but basically it's just passing over free money. The oil is getting drilled eventually, one way or the other... LOL

BTW, she finally "took the money" awhile later...

Later! OL JR


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## luke strawwalker (Jul 31, 2014)

somedevildawg said:


> How do they handle the property rights of the adjacent landowner Mike?
> Even without directional drilling, the reservoir of oil probably extends into the adjacent owners land, how do they handle those types of situations, or do they ever present themselves.....


Not sure how it is elsewhere, but in Texas, basically land ownership endows two possible rights-- surface rights, ie the right to own and do with as one pleases with the surface of the land, and mineral rights, ie, the ownership of EVERYTHING beneath the surface of the land, essentially from the surface to the center of the earth, more or less... LOL

Mineral rights trump surface rights... In the past, mineral rights were usually sold with the land, or at least half the mineral rights passed with the land when it was sold to the new owners. Nowdays, very little of the mineral rights are usually passed on to the new owner when the land is sold... some are, a lot more aren't. What I mean by mineral rights trumping surface rights is, that IF the landowner DOESN'T want to allow oil drilling or any other activity on their property, but the holder of the mineral rights DOES, then the rights of the mineral rights holder takes precedence, and the surface rights owner (landowner) CANNOT stop the drilling or mining operations. Of course they DO have to be properly compensated for damages to their operation, crops, land use, etc.

Basically, under the Texas Railroad Commission rules (which govern oil drilling-- go figure), the oil companies have to assemble a "pool" of oil leases in order to drill a given number of wells... typically several hundred acres. We are currently "pooled" with a number of other landowners/mineral rights owners on surrounding farms. Across the road from us is another pool... Now, with directional drilling, it's possible to drill into a formation at least a mile from the surface site of the bore hole and rig... I saw a program where they're drilling under the Artic Ocean from drill sites a little behind the beach, and they're drawing oil from over a mile offshore at the bottom of the hole with directional drilling. Most of the wells they're drilling in the Eagle Ford Shale in our area are directionally drilled and then fracked. There's no well site on our farm, but there is right behind it, so I'm sure they're tapped into whatever formations lie under our farm.

Basically, everybody in the "pool" gets paid proportional to their share of the mineral rights percentage-wise from the royalties of the sold minerals... (oil, gas, etc), regardless of WHOSE land it actually lies under...

Back in the early 80's when they drilled gas wells on our farm here, we were pooled with my grandmother's sister Peg and her nutjob husband Jim... now, as it so happened, they decided to drill on Jim's farm first... they hit a pretty good gas well, and it sure chapped ol' Jim's butt when we were getting the EXACT SAME gas check every month that *he* was getting-- he griped to NO END about it, "that gas is under *MY* place-- I should get ALL the money!!!"

Course, within a couple years, his gas well played out... they drilled four more on OUR farm, three of which were producing wells, and he got the exact same check WE got for well over a decade... and in the early days, those were some pretty nice checks indeed... Course, there was NO whining about the check he got when it was coming from under OUR land... nor did we complain, as that's the way the system works...

Now, if something is actually coming from under "the neighbor's place" and they're not in the pool, oh well, tough luck... that's how the ball bounces... I suppose if they wanted to sue, they'd have to PROVE that the reservoir/formation was actually under their place, and that the borehole/fracturing was actually withdrawing minerals from the formation under their property... of course I don't think that would actually have much chance of happening... and besides, if the geologists thought that the formation was actually under THEIR property, they would have leased their property in the first place, unless they were just trying to be "obstructionist", in which case, as the oil company told my Dad when he said my aunt would refuse to lease "her half" of the minerals under our farm, "that's not a problem"...

Later! OL JR 

Later! OL JR


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## IH 1586 (Oct 16, 2014)

luke strawwalker said:


> Not sure how it is elsewhere, but in Texas, basically land ownership endows two possible rights-- surface rights, ie the right to own and do with as one pleases with the surface of the land, and mineral rights, ie, the ownership of EVERYTHING beneath the surface of the land, essentially from the surface to the center of the earth, more or less... LOL
> 
> Mineral rights trump surface rights... In the past, mineral rights were usually sold with the land, or at least half the mineral rights passed with the land when it was sold to the new owners. Nowdays, very little of the mineral rights are usually passed on to the new owner when the land is sold... some are, a lot more aren't. What I mean by mineral rights trumping surface rights is, that IF the landowner DOESN'T want to allow oil drilling or any other activity on their property, but the holder of the mineral rights DOES, then the rights of the mineral rights holder takes precedence, and the surface rights owner (landowner) CANNOT stop the drilling or mining operations. Of course they DO have to be properly compensated for damages to their operation, crops, land use, etc.
> 
> ...


That's the way it is here for gas wells. If you lease and there is a well drilled on the property, everybody within a certain area gets a percentage of that well. I believe it is also based on how much land, such as the well could be drilled on your property but your neighbor leases his land and owns the land all around you, he will get a bigger check than you do.


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## Mike120 (May 4, 2009)

somedevildawg said:


> How do they handle the property rights of the adjacent landowner Mike?
> Even without directional drilling, the reservoir of oil probably extends into the adjacent owners land, how do they handle those types of situations, or do they ever present themselves.....


JR pretty well described it for Texas but there are twists and turns no matter where you are. Surface/subsurface rights are different in every State. Over the years, most of the projects I was involved with were typically offshore or overseas. It's much easier when you lease subsurface rights from the government. In Iraq I had ~200 sq km that I had to stay within.

Typically an area of interest, anywhere in the world, is first covered by a seismic survey. A seismic survey is conducted by creating a shock wave - a seismic wave - on the surface of the ground along a predetermined line, using an energy source. The seismic wave travels into the earth, is reflected by subsurface formations, and returns to the surface where it is recorded by geophones - similar to microphones. The seismic waves are created either by small explosive charges set off in shallow holes ("shot holes") or by large vehicles equipped with heave plates that vibrate on the ground. As a kid, we used to get at least one new water well and some fences every time the seismic crews came through. The data obtained from the survey is very valuable, and protected from disclosure so it constitutes a trade secret. Seismic data is licensed, bought and sold by seismic survey companies, brokers and exploration companies.

Companies buy the data, process it with computers (data from one 3D survey may take six months or more and cost hundreds of thousands of dollars), the resulting processed data is interpreted by the geophysicists or geologists and no two experts will interpret data identically. Geology is still a very subjective science. Sitting through a subsurface review is the closest thing I can imagine to "Plato's cave" and I try to avoid them whenever possible.....my very left-brained engineering mentality has difficulty with the "flights of fancy" and overly optimistic guessing.

Once they THINK they know where the oil is, they turn loose the Landmen. These are a crazed pack of snake-oil salesmen that visit the landowners above (or around) the "lake of oil" to get surface rights to drill, and the subsurface owners to buy the mineral rights. Once the land and mineral rights are acquired, it goes on from there. Pretty much as long as you don't disturb a surface land owner, or take someone else's minerals, you can drill under someone's property and they'll never know it. Depending on how deep the target is, the angled part of the well going under your property could easily be a mile or more deep. The deepest I've been involved with was ~22,000'. The Deepwater horizon was ~35,000'. The deeper you go the hotter it is, and the more pressure you have to deal with when you get it to the surface. Personally, I prefer production facilities, refineries and chemical plants....they all pretty much follow the classical laws of physics and I have to deal with fewer lunatics.


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## Mike120 (May 4, 2009)

somedevildawg said:


> How do they handle the property rights of the adjacent landowner Mike?
> Even without directional drilling, the reservoir of oil probably extends into the adjacent owners land, how do they handle those types of situations, or do they ever present themselves.....


I forgot to deal with the reservoir....this is the short version (again, depends on the location). If I have a vertical well on my property where I am taking the oil in the reservoir beneath my property and part of the reservoir underneath your property drains into it, you're out of luck. You can drill your own well if you like but you don't have any rights to the oil coming out of my well unless you can prove it's your oil which is damn difficult to do. This is the source of many fun and games in the business.

Typically if a resource is beneath two or more "blocks", the block leaseholders will get together and "unitize" the resource. Unitization is a combination of 2 or more leases for joint exploration or development of a common resource under the terms of a Unit Agreement and a Unit Operating Agreement. This has the advantage of minimizing the number of wells and facilities needed for proper development. Keep in mind that an area may have different unconnected resources in various locations and different depths, so these are pretty specific agreements.


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## deadmoose (Oct 30, 2011)

Thanks for the education gentlemen.


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## Bonfire (Oct 21, 2012)

Mike120 said:


> I forgot to deal with the reservoir....this is the short version (again, depends on the location). If I have a vertical well on my property where I am taking the oil in the reservoir beneath my property and part of the reservoir underneath your property drains into it, you're out of luck. You can drill your own well if you like but you don't have any rights to the oil coming out of my well unless you can prove it's your oil which is damn difficult to do. This is the source of many fun and games in the business.
> 
> Typically if a resource is beneath two or more "blocks", the block leaseholders will get together and "unitize" the resource. Unitization is a combination of 2 or more leases for joint exploration or development of a common resource under the terms of a Unit Agreement and a Unit Operating Agreement. This has the advantage of minimizing the number of wells and facilities needed for proper development. Keep in mind that an area may have different unconnected resources in various locations and different depths, so these are pretty specific agreements.


Would you refer to these blocks as "spacings"? Like an 80 acre or 160 or 320 acre spacing? All mineral rights owners in that spacing receives a royalty payment irregardless of were the actual hole is located in that spacing?


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## Mike120 (May 4, 2009)

Bonfire said:


> Would you refer to these blocks as "spacings"? Like an 80 acre or 160 or 320 acre spacing? All mineral rights owners in that spacing receives a royalty payment irregardless of were the actual hole is located in that spacing?


I've heard the term but I'm not familiar with that compensation concept. It sounds like a practical approach though. As I said previously, most of my field development experience is offshore and foreign and I view landmen and drilling as a "necessary evil" to getting the oil and gas out of the ground. I'm much more interested in the surface facilities because I enjoy the engineering and construction aspects of the business.


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## Bonfire (Oct 21, 2012)

Mike120 said:


> I've heard the term but I'm not familiar with that compensation concept. It sounds like a practical approach though. As I said previously, most of my field development experience is offshore and foreign and I view landmen and drilling as a "necessary evil" to getting the oil and gas out of the ground. I'm much more interested in the surface facilities because I enjoy the engineering and construction aspects of the business.


So then, if you don't mind, how does a separator on location work. How does the NG get separated and dumped into a pipeline and salt water and crude go to each of their storage? Is it the pressure coming up out of the ground that forces the NG into the pipeline? Is there a pump station somewhere pulling NG off of many different wells in the area into the system?


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## Mike120 (May 4, 2009)

Bonfire said:


> So then, if you don't mind, how does a separator on location work. How does the NG get separated and dumped into a pipeline and salt water and crude go to each of their storage? Is it the pressure coming up out of the ground that forces the NG into the pipeline? Is there a pump station somewhere pulling NG off of many different wells in the area into the system?


The simple answer is gravity and time. When the well fluids come in the inlet, the fluid hits a plate called the inlet diverter, this reduction of momentum creates a gross separation of liquid and vapor and the fluid falls into the separator vessel. The time the fluid is resident in the vessel is determined by flow rate and vessel size but it doesn't take very long and gravity takes over. Water goes to the bottom, oil floats on top of the water and the gas collects above the oil. Typically there are baffles and a weir and the fluid levels are controlled by level controllers and dump valves. The oil spills over the weir, collects, is measured by a level controller, and is removed through the oil dump valve. The water level on the bottom is controlled by the oil/water interface controller and removed through the water dump valve. The gas collects on top and goes out the mist extractor through a pressure safety valve that maintains the design pressure of the separator.

There is a lot more to it but most of the design parameters revolve around the characteristics of the well fluids, the reservoir, the amount of real estate you've got to work with and the environment you're in. At the end of the day though it's pretty simple.....just gravity and residency time.

In the field you are mainly concerned with pulling out the water so you don't have to transport it in the pipeline. It usually goes into tanks that are emptied by trucks and it's often re-injected back into the formation or in a disposal well. The oil goes into a tank, through shipping pumps with the re-injected gas and then into the pipeline. The gas used to be flared (burned) but that's considered environmentally nasty. Now it's usually dealt with at a central production facility where it's used as fuel to power additional oil/gas cleanup equipment and, if there is a lot, another sales product. The reservoir pressure is typically used to re-inject the gas, otherwise you need a compressor to do it. There is a lot of engineering required to make the overall process as efficient as possible. Pressure= Energy and the trick, like any other business, is to get as much as you can out of what you've got. Hopefully this makes sense........


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