Landowners Stand Ground Against Chesapeake and Put Pipeline Project on Hold

From Business Journal Daily:

One thousand feet, a landowner and now a U.S. District Court stand in the way of Chesapeake Energy Corp.’s plan to connect a finished Carroll County well with a proposed $900 million network of pipelines, processing plants and compressors under development in eastern Ohio.

“They’re bullying us,” Joseph Coniglio says of Chesapeake, the second-largest natural gas producer in the United States. Coniglio, his wife, Christine, and his brother Frank own 570 acres that straddle Carroll and Columbiana counties near Kensington, an area that’s emerged as the most productive source of natural gas liquids from the Utica shale.

It’s also the area where a former subsidiary of Chesapeake, Chesapeake Midstream Partners L.P., now owned by Global Infrastructure Partners, and M3 Midstream/Momentum are looking to construct a massive natural gas processor that’s part of the $900 million infrastructure project.

“All we’re doing is just standing up for our rights,” Coniglio states.

On July 9, a Carroll County Common Pleas Court issued a temporary restraining order that halts for 14 days the construction of a pipeline across 1,000 feet of Coniglio’s property, which leads to a completed well on his land. Without this connection, the well can’t pump natural gas to compressor stations, and then to larger lines where it’s transported to processing plants across the country.

Coniglio says his lease stipulates that neither Chesapeake nor any of its subsidiaries or contractors has the right to build a pipeline without the consent of the landowner. In 2008, the Coniglios signed a lease covering 63 acres with Anschutz Exploration Corp., and that lease was then assigned to Chesapeake.

He also contends that a subsequent surface use agreement is not only invalid, but contains a provision that prohibits Chesapeake from constructing a pipeline to its well. “That surface use agreement does not give them the right to do a pipeline,” Coniglio asserts.

Notwithstanding, Chesapeake’s pipeline contractor, CBC Services Inc., started unloading pipe at the site July 8, a Sunday. Coniglio then alerted his attorneys, who on Monday requested and were granted the temporary restraining order. That afternoon, the sheriff presented the contractors with the court order and the company complied.

The case has since been moved to U.S. District Court in Akron because CBC Services argues that value placed on the project exceeds $500,000, and that the company could lose investments, revenues that “far exceed $75,000,” according to court papers.

On July 12, about 1,000 feet of pipe were placed across a curved driveway leading to the well pad. The pipeline would then tie into another section under construction across Mecca Road on land owned by another party.

The sticking point, Coniglio says, is the absence of a separate agreement signed with Chesapeake regarding the construction of a pipeline. Often, pipeline leases are signed in addition to initial lease agreements that cover royalties and bonus payments, and some landowners in Carroll County have received as much as $15 a foot in exchange for their easement rights to pave the way for pipeline construction.

“If Chesapeake wants to make us an offer, let’s see it,” Coniglio says. “We’re open. We’re not trying to stop the pipeline or progress. But we will not do it for nothing.”

Chesapeake contends it has every right to construct a pipeline through Coniglio’s property, according to documents filed in Carroll County Common Pleas Court. Chesapeake alleges that the Coniglios’ claims for relief are “barred by the provisions of the oil and gas lease and the surface use agreement between plaintiffs and Chesapeake.”

Read the rest of the article here.

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