Pipelines In Texas – How Landowners Without Minerals are Profiting from the Boom

by Tim Stinson

Many owners of mineral rights in Texas have become the recipients of hundreds of thousands—or even millions—of dollars as a result of the oil boom that has struck the state. With areas such as the Permian Basin and Eagle Ford Shale in Texas producing more oil than ever before, those who own mineral rights have often times been fortunate when it comes to cashing in on their rights.

However, those without mineral rights have benefited from the oil boom in numerous ways as well. Thousands of people within the state who simply own land have made huge profits through other means connected to oil and natural gas. One such way that landowners have become rich quick has been through profiting by the means of payouts for pipeline development in Texas.

Pipelines Companies Paying More than Ever Before

Pipelines In Texas – How Landowners Without Minerals are Profiting from the Boom In order to retrieve and transport oil and natural gas, pipeline, and lots of it, is needed in the Eagle Ford Shale and Permian Basin areas. As such, pipeline companies have been paying landowners for years for the rights to lay pipeline across the landowners’ property. As the oil boom continues to surge, though, pipeline companies are paying landowners more than ever before.

Take, for example, the 2014 case set in Johnson County in Texas, where Peregrine Pipeline Co. offered $80,000 to a landowner for the rights to lay pipeline across one mile of vacant land. When the landowner stated that he believed the price to be much too low, the case went to court. The outcome? The Johnson County jury agreed with the landowner—the price was too low. As a result, the landowner was awarded a higher offer, a much higher offer: $1.6 million, plus interest, to be exact.

But the example of Peregrine isn’t the only one in the state; juries awarded $650,000 in 2010 to a family in McMullen County, and nearly $800,000 to a family in Denton County in the same year.

Why the High Payouts?

Like any basic case of supply and demand, both landowners and pipeline companies in Texas have realized that the demand for land is worth more than it has ever been before. As the production of oil and natural gas continues to increase to almost unheard of rates, the oil and gas industry is struggling to lay pipelines quickly enough to keep up with the surge. As such, in order to operate as quickly and efficiently as possible, they’re offering big payouts to landowners. And if they don’t, the landowners are countering with higher offers, when understanding the value of their property. Plus, because of the high costs of going to court—both financially and in relation to time—pipeline companies are more and more willing to pay higher amounts to landowners to avoid a courtroom debacle.