Pipeline operators underusing potential pipeline rehabilitation

Article featured in the Week of January 11, 2010 issue

By David Howell, Senior Right-Of-Way Agent, International Right-Of-Way Association, Houston, TX

By selling recovered line pipe into the structural market instead of rehabilitating it for its own use, the pipeline industry is underusing a potentially valuable asset.

The cost of new 8.625-in. OD steel pipe runs as high as $25/ft. The same size and grade can be excavated for less than one-third the cost. This article examines the factors affecting potential recovery and rehabilitation of retired line pipe.

Background
An 8.625-in OD pipeline was laid in 1920 near Tulsa to transport crude oil from a new field to a tank farm 40 miles away. The field depleted within a few years, but in the late 1920s, the pipeline was recovered from Oklahoma and transported to the Permian basin in Texas to transport new crude oil to a tank farm.

Originally, pipelayers spread the line out in 20-ft sections kicked off of wagons pulled by teams of mules into a man-made ditch. Five-ft chain tongs and 48-in. pipe wrenches sufficiently tightened joints, individually screwed together at 20-ft intervals, to hold back up. This practice led to a pipe collar visible on the outside of the pipe showing a connection every 20 ft. The pipe often disconnected during attempts to recover it from the ditch in Oklahoma.

Oxyacetylene welds were strong enough by the late 1920s to keep the needed pressure on the pipeline for low-pressure crude transportation, though they were not as strong as the pipe wall. Such weld strength eliminated the need for two or three men with large pipe wrenches and chain tongs. Removal of the old collars and threads and beveling the surfaces facilitated the new oxyacetylene-weld jointing technique when the pipeline moved in 1928 from Oklahoma to Crane, Ward, and Winkler counties in Texas.

This pipeline went through three owners over time and was purchased for salvage in 2007. The fields and wells the pipe was intended to service had been depleted, and it was no longer viable as a pipeline where it was. A pipeline-recovery team removed the line and the operating company's marketing department found, despite a little wear, the pipeline retained the qualities of good Grade B steel. WT was intact and had little corrosion, making it suitable for transport of slurry from a copper mine in northern Mexico to the disposal site nearby. The owner plans to use it for as long as the mine is in operation.

An additional 30-mile section was shipped to Vietnam as a water transportation pipeline near what is now Ho Chi Minh City. It will probably be in use there for another 40 years.

Reuse rewards
Pipeline Equities in 2008 took up a 6.625-in. OD line in Central Louisiana in gas service for 9 years. The field was depleted and the landowner, using the land for timber, wanted the pipeline removed so he could use the right of way to plant more trees. PE took up the line and transported it to Certified Pipe Service Inc.'s Houston yard where workers cleaned out paraffin from the interior, straightened the joints where needed, and removed the fusion-bonded epoxy coating from their exteriors.

PE then beveled the ends and sent the pipe to a recoating yard. It is now in service as a gas transmission line in Oklahoma, saving the customers 30% off the cost of new pipe.

An 8.625-in. OD pipeline relaid in the 1950s near Amarillo, Tex., used one of the first electric-weld constructions. In service until 5 years ago, the pipe's coating remained well bonded and the pipe itself in excellent condition. A customer wants the pipe taken up with minimal or no damage to the coating. PE estimates 15% damage to coating, an amount economically replaceable in the field with patches, taking up the pipe in 60-ft sections to decrease the number of welds and limit trucking expenses. The customer plans to relay the line for low-pressure natural gas service in the Permian basin.

Another Texas gas producer and pipeline company has a policy in place to purchase idled or abandoned lines for takeup and removal to its own system. On four occasions in the past 3 years, the company has excavated, 8, 6, and 12-in. OD line pipe from dormant systems, rehabilitated the pipe, and relaid it.

Cost savings
A compelling reason to rehabilitate a pipeline is to get rid of the costs of keeping it in the ground. Miles of permanently idled pipeline are regularly patrolled by employees dedicated to the task. Other companies contract agents at even greater sums to answer "One Calls" or DOT calls flagging lines for construction or other identification purposes.

If the company maintains rights-of-way via mowing and general signage upkeep, the costs can be extraordinary. Judicial districts in many states assign ad valorem taxes, school taxes, county taxes, and state taxes to these properties. Theses taxes often go unquestioned and are paid accordingly. Incidental pipeline relocation expenses due to highway and subdivision expansion also seem to be simply passed off as a necessary cost of doing business.

Regulatory incentives
Pipeline operators have long abandoned retired equipment in place, seeking to reduce maintenance and care, taxes, and upkeep while maintaining ownership of idled pipelines. Federal and state lawmakers and regulators, however, wish to end this practice and clearly define requirements for abandoning or idling out-of-use pipelines. Idled pipelines pose potential hazards to landowners and land users. New real estate developments in congested areas often face pipeline relocation and identification issues, and landowners might be unaware of rights-of-way.

Pipeline companies will be required to remove pipelines if they are termed abandoned or if they are idled with demonstrated "intent to abandon" by lack of maintenance, removal of signage, failure to pay taxes due, etc. Regulators will require companies at least to identify dormant pipeline inventory and obtain permission from landowners before abandonment procedures of any sort.

Federal regulation remains pending, but at least one Texas legislator from Houston and another from the Fort Worth (Barnett shale) area will introduce a bill in an upcoming session of the state legislature requiring pipeline operators to notify landowners before abandonment and obtain permission from affected landowners.

Removal procedures
Reusing pipelines relies on good maintenance of the line while in the ground and care during removal. Excavation should be performed by competent and experienced pipeline-recovery personnel.

Taking up a pipeline uses many of the same procedures as laying it. A specially equipped track hoe with a custom half-moon shoe attached excavates the pipe (Fig. 1). The shoe generally fits the diameter of the pipe without sharp edges that could damage the exterior of the pipe. A good hoe operator with the right shoe can unearth good pipe, while a poor or inexperienced pipeline excavator can turn the pipe into junk.

A side boom can occasionally lift the pipe out of the ditch, but more often the pipe is cut in 100 to 200 ft sections and dragged out of the ditch by a bulldozer. Dragging out too long a length will cause the pipe to bow or bend. After removal, a bulldozer backfills the excavation ditch and dresses the right-of-way.

A cutter cuts the pipe at connections in 20, 30, 40, or 60 ft intervals, depending on where the welds lie (Fig. 2). Most truck trailers can carry 40-45 ft pipe sections . Either torch or saw can cut the pipe, depending on preferences of the supervisor and potential fire hazards.

A front-end loader can load the pipe on trucks for transport. A track hoe with special forks can also perform this task. Tracks work better on the right-of-way than tires. Two or three pieces of equipment per crew, proper supervision, and competent personnel can remove most pipelines.

Pipe rehabilitation
Most pipelines have some sort of coating. Removing it can occur either on site or at a cleaning yard. Responsible recovery crews have environmental certification and are educated to handle potentially hazardous coating waste. Checking the pipe for bends, bows, dents, and dings follows coating removal, as does confirmation of roundness and straightness.

Pipe separation separates the better pipe for shipment to customers or reuse from pipe that might need additional attention. Damages will occur no matter how competent an operator. The track hoe forks or shoe cant dent of ding the pipe during the removal process.

Intentionally bowed pipe needs to be straightened (Fig. 3). Customers want round, straight pipe, that is also more economical to load and transport. Reusing the pipe as line pipe requires beveling each end where the pipe was cut during removal (Fig. 4). Recovery crews may be able to rehabilitate excavated pipelines at the removal site with portable dedenters, pipe straighteners, and beveling machines.

Performing pipe rehabilitation on site reduces the expense of pipe handling to a minimum. If necessary, however, pipe service yards in various parts of the country have the expertise and equipment to handle most jobs. If pipe coating has not been damaged beyond repair, pipe can go directly to a coating facility or threading facility, depending on its intended use.

Landowner relations
Care and handling of the landowner whose property will be crossed while retrieving the pipe is even more important than care and handling of the pipe itself. A landowner can either help greatly or impede recovery. Most right-of-way contracts grant the pipeline owner rights of removal, repair, ingress, egress, and so forth. But no landowner actually wants you on his or her property, raising the importance of having a skilled, experienced right-of-way agent on the job.

The best method when the operator owns the easement is to return the right-of-way to the landowner at the operator's expense. The landowner would like to have clear unencumbered title to his property; granting him that will help move the process along. Once the exchange of dollars comes into the picture, it becomes the basis for everything, and it is only a question of how much the operator is going to pay.

Marketing
Tubular steel has many uses. Hundreds of thousands of tons/year enter the piling markets to shore up anything needing to be strengthened. Anything needing additional support along shorelines, piers for buildings, and bridge supports all use tubular steel derived from rehabilitated pipeline. Millions of tons went to China in the 1980-90s for use in the foundations of its extensive highway network.

More than 150 companies resell secondary and rehabilitated line pipe, each specializing in a particular area. One group of companies sells 25,000 ft/month of 16, 18, or 20-in. OD pipe as casing to oil and gas drilling contractors. Another 150,000 ft/month of 8.625 and 10.75-in. OD line enters the surface casing market for oil and gas operators.

Companies sell product to piling contractors and for use as culvert for roads and bridges. Still more retired pipe enters farm and ranch operations for use in corrals and cattle guards at gates.

Other users need center posts and columns for fences, barns, and other buildings. Flag poles, bridge, and guardrail applications consume thousands of tons/year (Fig. 5). But unless scrap prices rise dramatically, this market should be the last resort for pipeline-recovery applications.

David Howell is principal of Pipeline Equities, conducting pipeline salvage and recovery as well as brokering and appraising pipelines. Howell is a designated senior right-of-way agent through the International Right of Way Association, holding environmental and acquisition-negotiation certifications. He earned a BA in political science at Texas A&M-Kingsville.

How to Recycle a Pipeline

In 1920, an 8 5/8" diameter pipeline was laid near Tulsa, Oklahoma for the transportation of crude oil from a new discovery field to a tank farm 40 miles away. The field had flush production or large amounts of crude initially, but was depleted within a few years. In the late 1920's, new fields were being discovered on a regular basis in the Permian Basin of Texas. This same pipeline was recovered from Oklahoma and transported to Texas to transport the new crude oil from the new wells to a tank farm.

When the pipeline was originally laid in Oklahoma, it was spread out in 20 foot sections kicked off of wagons pulled by teams of mules into a pre-made ditch. These individual joints were screwed together at these 20 foot intervals and tightened with chain tongs to hold "back up" and 48" pipe wrenches with a "cheater" or 3 foot extension of 2 1/2" outside diameter pipe on the end of the wrench. This would allow more than one person to tighten joints. The result was a pipe collar showing on the outside of the pipe indicating a connection every twenty feet of pipeline. When the pipeline was recovered in Oklahoma, the pipe often disconnected during attempts to pick up the pipe from the ditch.

Around the late 1920's, a stronger and simpler jointing method was introduced into pipeline industry. Acetylene welds were strong enough to keep the needed pressure on the pipeline for low-pressure crude transportation, though they were not as strong as the wall of the pipe itself. Acetylene welds eliminated the need for two or three men manhandling large pipe wrenches and chain tongs. When the pipeline was sent from Oklahoma to the Permian Basin of Texas to be re installed, the old collars and threads were cut off and beveled in order to facilitate the new acetylene weld jointing technique. The line was then re-laid in 1928 in Crane, Ward, and Winkler Counties in Texas. This pipeline later went through a succession of three owners for various reasons over time and was purchased for salvage purposes in 2007. The fields and wells this pipe was intended to service had been depleted, and the line was no longer viable as a pipeline in that particular location. The salvage or pipeline recovery team proceeded to remove the pipeline and the company's marketing department shortly found an application for the pipeline. It was found that despite a little wear, the pipeline had the qualities of good Grade B steel. The thickness of the wall of the pipe was intact and had very little corrosion. It was found to be suitable for transport of slurry from a copper mine to the disposal site nearby, but away from the mine. The Mexican company that owns the mine expects to use the slurry line for as long as the mine is in operation.

An additional 30-mile section of this line was recovered and shipped to Vietnam to be used as a water transportation pipeline near what is now Ho Chi Minh City. It will probably be used there for another forty years.

This steel pipeline that was manufactured at least 89 years ago has been through 4 incarnations. Eventually when the copper mine is depleted, this pipe will be recycled once again until one day it will end up as scrap to be molded into plate, sheet, and coils for another round of uses.

The pipe is simply steel in tubular form.

Rewards for Reuse
If these applications are noteworthy then the pipeline industry might think in terms of rehabilitation of this steel for their own use. The pipeline recovery industry resells into the structural market for the most part, but I believe this is under using a valuable asset.

In this era of high commodity costs, it seems imprudent and wasteful to not rehabilitate pipeline through recovery and recycling. The cost of new 8 5/8" diameter steel pipe to go into a pipeline can cost up to $25 per foot. That same size and grade can be excavated for less than a third of that cost. Why would a company not remove a pipeline that has outlasted its usefulness in one location and move it to another? Probably ignorance of the opportunity and inexperienced personnel is the reason. It doesn’t take a Ph.D. engineer to buy off the shelf or according to what the tubular salesman advises.

In 2008, our company took up a 6 5/8" diameter line in Central Louisiana that had been in gas service for nine years. The field depleted and the landowner who was using the land for timber wanted the pipeline removed so as to use the right of way to plant more trees. We took up the line, transported it to the CPS yard in Houston where workers cleaned the paraffin out of the interior of the pipe, straighten where needed and removed the fusion bond epoxy coating off of the exterior. We then beveled the ends and sent the pipe on to a recoating yard and it is now in service as a gas transmission line in Oklahoma. Even with all of these steps, the customer saved thirty per cent off of new pipe prices.

An 8 5/8" diameter pipeline was re laid in during the 1950's in the Panhandle of Texas near Amarillo. The pipe was of A.O. Smith manufacture and used one of the first electric weld type construction before today's ERW type construction. We don't know where the pipe came from originally, but it was in service until five years ago in its second life. The coating is well bonded, and the pipe is in excellent condition. It has been maintained in an ideal manner. A customer has contacted us regarding taking up the pipe in such a way that we do not damage the coating or at least only minimal damage. We estimate fifteen per cent damage to coating, and it is determined that that amount can be economically replaced in the field with patches. We will take up the pipe in sixty foot sections to decrease the number of welds and cut back on the trucking expense. The customer plans to relay the line for low pressure natural gas service in the Permian Basin area of Texas.

Still another Texas gas producer and pipeline company has made it a company policy to purchase idled or abandoned lines from others for the purpose of take up and removal to another location in their own system. On four occasions in the past three years, the company has excavated, 8", 6" and 12" line pipe from dormant systems, rehabilitated the pipe, and re laid the pipe in a more economically advantageous area.

Cost Savings Incentives
A most compelling reason for rehabilitation of a pipeline is to get rid of the costs of keeping it in the ground. Few companies are aware of the real costs associated with maintaining an idled pipeline. There are miles of pipeline that are idle and will never be used again, but are regularly patrolled by personnel kept on the payroll and dedicated to that specific task. Others companies pay contract agents even greater sums to answer "One Calls" or DOT calls for the purpose of flagging lines for construction or other identification purposes.

If the company still maintains these rights of way via mowing and general signage upkeep, the costs can be extraordinary. In many states there are judicial districts that assign ad valorem taxes, school taxes, county taxes, and state taxes to these properties. In most operations, people are not aware of these costs, as it does not fall into their job description. The many taxes involved go unquestioned and are paid accordingly. In addition, the incidental pipeline relocation expenses due to highway and subdivision expansion seem to be passed off as necessary costs of doing business.

Regulatory Incentives
A long standing practice of pipeline companies has been "in place abandonment". It is simply a way of reducing responsibility for maintenance and care, taxes, and upkeep while still maintaining ownership of idled pipelines. While this is a positive practice for pipeline operators, federal and state lawmakers and regulators are seeking to end the practice and clearly define the requirements for abandoning or idling these out of use pipelines. Idled pipelines pose potential hazards to landowners and land users. New developments in congested areas often face relocation and identification issues. An even bigger issue is the awareness of rights by landowners who own property where lines are located.

In the future, pipeline companies will be required to remove pipelines if they are termed "abandoned" or if they are idled and show "intent to abandon" due to cessation of usage, lack of maintenance, removal of signage, failure to pay or reducing taxes due to lack of use, etc. At the very least, companies will be required to identify dormant pipeline inventory and obtain permission from landowners prior to abandonment procedures of any sort.

It is not known when new regulations will be instituted on the federal level, however, at least one Texas legislator from Houston and another from the Fort Worth (Barnett Shale) area will introduce a bill in the next session of the legislature requiring pipeline operators to notify landowners prior to abandonment and obtain permission from the affected landowners.

Procedures for Removal
Reuse of pipelines relies on good maintenance of the line while in the ground and good care during removal. There is an art to the excavation process or at the very least; the work should be performed by competent and experienced pipeline recovery personnel.

Taking up a pipeline uses much the same procedures as laying it. A specially equipped track hoe is used with a custom shoe attached instead of forks on the hoe to excavate the pipe. Generally, this "shoe" is fashioned to fit the diameter of the pipe without sharp edges on the inside in order to keep from dinging or damaging the exterior of the pipe. This is probably the key part of the entire process. A good hoe operator with the right shoe can unearth good pipe while a poor or inexperienced pipeline excavator can turn the pipe into total junk.

Occasionally a side boom can be used to lift the pipe out of the ditch, but more often the pipe is cut in 100 to 200 foot sections and dragged out of the ditch by a dozer. Dragging out too long a length will cause the pipe to bow or bend. After the pipe is removed, a dozer is used to backfill the excavation ditch and dress up the right of way. A cutter cuts the pipe at the connections in 20, 30, 40, or 60 foot intervals depending on where the welds exist. The best way is to cut the pipe in 40 to 45 foot sections as most truck trailers can carry these lengths. The cutting can be done by torch or by saw depending on the preferences of the supervisor as well as the fire hazards that might be involved. A front-end loader can be utilized to load the pipe on trucks for transport. Alternatively, special forks can be mounted on the track hoe to load the trucks instead of having to engage a front-end loader on location. Sometimes the loader is not efficient due to its rubber tires. Tracks work best on the right of way. Most pipelines can be removed with two or three pieces of equipment per crew with proper supervision and competent personnel.

Pipe Rehabilitation
Most pipelines have some sort of coating. If proper procedures are undertaken, the coatings can be removed on location or the removed pipeline can be transported to a cleaning yard. Responsible recovery crews are environmentally certified and educated to handle coating waste in case the coating turns out to be hazardous.

After the coating is removed, the pipe is checked for bends, bows, dents, and dings. Roundness and straightness is also to be ascertained. Pipe should be separated at this stage to determine the better pipe that might be ready to ship to a customer or that might need additional attention. No matter how competent an operator might be, damages will occur, and externally the pipe can be dented or dinged with the track hoe forks or shoe during the removal process.

Sometimes the pipe could be bowed intentionally when laying and need to be straightened. Customers want round and straight pipe, and it is much more economical to load and transport straight pipe. Beveling of each end where the pipe was cut during removal is necessary if the pipe is to be re used as line pipe. Some pipeline recovery crews may be able to rehabilitate excavated pipelines at the removal site by using portable de-denters, pipe straighteners, beveling machines. It is best to reduce the trucking and handling of the pipe as much as possible and perform pipe rehabilitation on-site. Otherwise, there are pipe service yards in various parts of the country that have the expertise and equipment to handle most jobs. If the pipe coating has not been severely damaged beyond repair, the pipe will go directly to a coating facility or threading facilities depending on the intended use for the excavated pipe.

Landowner Relations and Right of Way Agents
Perhaps the most significant part of the process is the care and handling of the landowner on whose property you are going across while retrieving the pipe. A landowner is in a position to help greatly or deal a lot of misery. By the terms of most right of way contracts, the pipeline owner has the right to remove, repair, ingress, egress, and so forth; however, no landowner wants you on their property in any way for any reason. It is important that a skilled, experienced right of way agent be on the job. Today's farmers, ranchers, and landowners are sophisticated and smart, and a good negotiator can save a lot of heartache. These are not the same people who sold the right of way fifty years ago for a dollar a rod. They have Blackberries and can Google an answer as fast as your teenager.

The best method when you own the easement is to return the right of way back to the landowner at your expense. This is music to the property owners' ears, and in return, they will probably bring coffee to the job site and open the gates for you while you pass through. Seriously, I have found this to be the best method for dealing with landowners. They would like to have clear unencumbered title to their property and to "clear the title at the courthouse" will generally provide smiles. The gift of a joint or two of pipe along the way for culvert use to a farmer or rancher always promotes good relations. Try to avoid the use of money to get the job done. When the exchange of dollars comes into the picture, then it becomes the basis for everything, and it is only a question of how much you are going to pay. Again, that is why a good right of way agent is important.

Marketing the Product
The uses for tubular forms of steel are many. Hundreds of thousands of tons annually go to the piling markets to shore up anything that needs to be strengthened. For example, anything that needs additional support along shorelines, piers for buildings, and bridge supports all utilize tubular steel derived from rehabilitated pipeline. Millions of tons went to China in the Eighties and Nineties for use in the foundations of their extensive highway network.

There are more than 150 companies that resell secondary and rehabilitated line pipe to the ultimate customer. Each of these entities specializes in their local market or in the area of specialization they have chosen. There is a group of companies that only sell 16", 18", or 20" pipe for casing oil and gas well drilling contractors setting pipe in "mouse holes" or "rat holes". This application alone consumes more than 25,000 feet per month of these sizes in the U. S.

Another 150,000 feet per month of 8 5/8" and 10 3/4" line pipe are used each month in surface casing applications for oil and gas operators. Surface casing protects shallow water sands in initial drilling operations onshore. There are companies that sell product to piling contractors and others that sell pipe for culvert for roads and bridges. Still more is used in farm and ranch operations for corrals and cattle guards at gates. Other users need center posts and columns for fences, barns and other buildings. Flag poles, bridge, and guardrail applications consume thousands of tons annually. Our company recently shipped 4800 linear feet of 80 year old pipe to a zoo to be used as a retaining wall to protect elephants in their habitat. Hundreds of other uses exist for steel in tubular form. Unless prices get exceedingly high, scrap is the last resort for pipeline recovery applications.

Conclusion
Much more could be written regarding the salvage or recovery of pipelines. The process for recovery, the coping with EPA and OSHA, different weights, grades and diameters of pipe could be covered in much more detail. In addition, there are methods and procedures for rehabilitation of pipe in service yards as well as on site or portable operations and which is best. Pipelines can be recovered by companies on a contract or custom basis or they can be sold "as is where is" to recovery operators.

For additional information on this subject visit the author's website at www.pipelineequities.com or email a request for a complimentary copy of the Pipeline Recovery Manual to davidhowell@pipelineequities.com.

Who Owns Abandoned Pipelines?

Article featured in October 2009 Vol. 236 No. 10 issue

By David Howell, Senior Right-Of-Way Agent, International Right-Of-Way Association, Houston, TX

Salvaging Steel

I recently received a call from a landowner on whose land a pipeline was buried. On this particular tract of land in Central Texas, the pipeline in question was only 300 feet in length. The right-of-way, or easement, was no longer mowed or otherwise maintained. Signs along the right-of-way were down or in disarray.

The landowner had done some detective work and found through the Texas Railroad Commission (TRRC) Pipeline Safety Office that the line had in fact been abandoned and in the past had been used as part of a 60-mile and longer crude line for a major pipeline company. He persisted and made contact with someone at the pipeline company who acknowledged ownership of the line even though it was deemed abandoned by state regulatory authorities. The landowner explained that he wanted to ascertain the idleness or abandonment of the pipeline because he had plans to build on that parcel, and the pipeline presence would interfere somewhat with, or at least complicate, the building process. The pipeline company indicated they would look into the matter. An environmental subcontractor then called the landowner with the pipeline company's solution. The subcontractor had been instructed by the pipeline company to remove the pipeline if the landowner was willing to pay for the $51,000 expense of removal. The landowner then asked me what I would charge to do the same job and I told him $1,000 to $1,500 as it looked to be about a day's worth of work.

Unfortunately, the landowner was not able to hire our company because the abandoned pipeline was still the property of the pipeline company. The issue was ownership. The pipeline company claimed ownership, but did not assume responsibility for maintenance or removal of the pipeline. For some reason, the pipeline company determined that the landowner ought to be responsible for removal expenses and that a qualified environmental company of their choosing ought to be used for the removal. Why was this? Was there an unknown environmental hazard?

A dictionary definition for abandonment means to "give up entirely." Defined in terms of federal regulations, abandonment means "permanently removed from service." In federal pipeline safety jargon, an abandoned pipeline is a pipeline that is "physically separated from its source of gas and is no longer maintained," or in another federal agency glossary, "no longer connected to the system and is no longer maintained. The pipeline can be abandoned in place, by removal, or sold." In still another set of federal guidelines, abandoned property means "a property that, because of its general disrepair or lack of activity, a reasonable person could believe that there is intent on the part of the current owners to surrender their rights to the property." All of these definitions apply to gas and hazardous liquid pipelines that are interstate and fall under federal jurisdiction.

However, there are no guidelines for abandoned crude oil pipelines that fall under the jurisdiction of the Interstate Commerce Commission, and, presumably, the agencies that have succeeded to that federal agency's role since it was abolished in 1995, as common carriers.

At the state level, there are no abandonment guidelines or definitions for intrastate gas, liquids, or oil pipelines, and there are no abandonment guidelines or definitions for intrastate oil or gas gathering systems. Any mention of abandonment of pipeline procedures follows federal guidelines of disconnecting from active gas service and purging of any hazardous substance.

Individual state guidelines generally follow federal guidelines if they have any guidelines at all. (Texas is one of the few that addresses the issue whatsoever.) However, the federal government has no guidelines, criteria, or regulations to determine ownership of abandoned pipelines.

The pipeline in Central Texas was an oil pipeline, so if it were abandoned responsibly, it would have been purged of any hazardous substance as suggested, but not necessarily mandated, by Texas guidelines. Again, why would an environmental company need to be involved in the take up process? Are there other issues that the pipeline owner did not disclose?

On further investigation, the landowner in Texas found other areas where the same line had been cut and removed, and the pipeline company continued to own the easement, but obviously did not feel a responsibility to maintain the right-of-way or to "give up entirely" the right-of-way easement to the landowner. The Texas landowner now has a pipeline to nowhere.

Searching For Abandoned Pipelines
Out of use, uneconomic and abandoned pipelines are not on the priority list of any business development or asset manager. They simply don't provide substantial profit outlook, and they are generally identified as liabilities. That said, most gatekeepers of this sector in a pipeline company simply sweep the issue aside and do not address it. The reasons for this include:

* Possible environmental problems,
* Possible opportunity for future use,
* No company policy regarding this kind of property,
* Ignorance of potential profits, and
* Ignorance of potential liabilities.

The search for abandoned pipelines often begins when a landowner or other interested party notes that a pipeline easement is not being maintained and starts asking questions. Very few states keep track of abandoned pipelines. The Federal Energy Regulatory Commission (FERC) publishes and approves guidelines for abandoning pipelines, but does not continue oversight after the pipeline has been abandoned and abandonment criteria have been met.

In searching for abandoned pipelines to purchase or otherwise obtain, the firm, Pipeline Equities, will check its own database and old pipeline maps from the archives of defunct pipeline companies as well as any geologic and land owner maps showing oil and gas wells and leases.

It is necessary to know as much information as possible about an abandoned pipeline because most pipeline companies will say any out of use line is only temporarily idled, even if has been out of use for 20 years. I have asked about the presence or availability of abandoned lines at several companies, and the answer is almost always, "No, we don't have any." Even when I have evidence of a company owning 3,000 miles of abandoned lines, I have received the same response. There seems to be a reluctance to talk about abandoned pipelines, even if you can find someone with any knowledge about them. I have found that in major companies that utilize pipelines, there are just not that many policies for dealing with these issues.

One company I was dealing with was prompted to actually order an inventory to determine what pipelines they really had. When I made an offer to buy the abandoned and out of use pipelines, the company replied that they did not have a policy regarding the disposition of these properties. They did hire interns and produced an inventory of the idled or abandoned lines. Once they found out what their inventory consisted of, they had to determine what their policy for these idled pipelines would be. The policy determination, in this case, was the same as it had always been and is with most companies - leave them alone, and do nothing. This is the existing policy for many major pipeline companies.

Why? There are no advocates within the structure of most companies. Business development officers don't want to bother with what might be determined to be liabilities. Operations does not have the time or the inclination. Environmental does not have the authority, and--by now--right-of-way departments are outsourced. No one really cares. Abandoned or idled pipelines are out of sight and out of mind.

Fixtures
An interesting aspect of this and other cases is the "fixture" nature of the pipeline. According to attorneys, if the pipeline company has given up the easement via formal recording back to the landowner, then the pipeline company would also be "giving up entirely" the ownership of the pipeline which has become a fixture to the easement. Attorneys say legal opinions have stated that pipelines and appurtenances to pipelines are part of the package of, or fixtures to, the easements they are on. Somewhat like a toilet, sink, and bathtub belong to a bathroom. The fixtures stay, and if the easement reverts to a landowner, then the pipeline reverts as well.

More often than not, this transfer is never done on a formal basis and the ownership remains in the name of the original grantor (the pipeline company) until someone takes the initiative to clear it up. It would probably take a court order in each (county) jurisdiction.

Right-Of-Way Agreements
Ultimately, ownership is determined, first, by contract. That is to say that the original right-of-way agreement or contract is the law. Attorneys say other legal developments have determined that abandonment by giving up entirely can be accomplished if it can be determined that "intent to abandon" is present or "cessation of usage" is evident. Presence of either of these conditions may change ownership of the pipeline and easement despite the language of the original contract. Again, this change in ownership might require a court order in each jurisdiction.

These agreements or contracts between grantor (landowner) and grantee (pipeline owner) generally have the following four parts, but agreements over 50 years old only contain the first three part:

1. Amount of compensation.
2. Description of the right-of-way or the description of the land the pipeline traverses. An example of a description from an agreement written in Texas in 1927 states, "...through the following described lands situate in Crane County and State of Texas, to-wit: across Sections 7-8-13-12-11 & 20 in Block B-21 Public School Lands and across Sections 19-20-28 & 29 in Block B-26 Public School Lands."
3. Rights of the grantee. In this same 1927 Texas agreement, the boilerplate language that was used (and which is still the mainstay language of right-of-way agreements today) would state that the landowner hereby grants the pipeline company "... the right-of-way to lay, maintain, operate and remove a pipe line for the transportation of oil and gas, and to erect, maintain, operate and remove a telegraph or telephone line, together with the right of ingress and egress, on, over and through the following described lands situate..."
4. Term of the contract. This is a more recent addition to right-of-way agreements and is usually "ten years," "upon cessation of usage," or "within twenty four months after cessation of usage." In the case of the 1927 Texas agreement, the absence of a specified term gives the grantee/pipeline owner the rights to the easement and pipe line in perpetuity. Many old right-of-way agreements were unintentionally written in perpetuity without a termination date.

A pipeline right-of-way is really no different than any other kind of easement, and therein lies some interesting comparisons and--in some cases precedent--for extinguishing or canceling agreements, even ones that were written to have a perpetual term.

Abandoning Pipelines

Why the language of abandonment in the regulations? The simple explanation: the pipeline company is no longer responsible for taking care of the pipeline according to regulations as if it were an active viable pipeline. That means pipeline companies no longer have to worry about regulatory fly bys to verify if the right-of-way can be seen from the air.

The Texas Railroad Commission is responsible for fly-bys in Texas and ceases fly-by activity when a pipeline is designated as abandoned. Once a pipeline is designated as abandoned, pipeline owners and operators no longer incur the expense of maintaining easements with expensive mowing and caretaking. And, they no longer have to paint posts and put up new signs to mark the pipeline. All of these responsibilities are expensive and time consuming.

Another huge bonus for abandoning a pipeline is reduction of taxes or total elimination of ad valorem, school, county and other jurisdictional levies. Generally speaking, taxes are almost non existent for abandoned pipelines. But still, if a landowner wants to claim the pipeline on his or her property, the pipeline company will likely claim it is their property and explain that the pipeline is only "idled" as opposed to a "given up entirely" type of abandonment.

In the case of our friend in Central Texas, he can have the easement returned, but not the pipeline fixture. He must pay the price of a pipeline company approved contractor with environmental supervision standing by in order to make his own land usable. This was not the way it was supposed to be. So, abandonment of pipelines can mean many things to many people.

During the course of allowing an idled, abandoned, or out of service pipeline to deteriorate, other changes occur as a result of the lack of care and maintenance. Easements are allowed to grow up and out. Trees sprout and grass grows. Neighbors and landowners begin encroachment activity and the problems are compounded. When it is evident that a pipeline right-of-way is not being maintained, the signal goes out that no one cares, and encroachment begins. Structures are built, and seemingly squatters' rights are the rule of the day on ill-maintained rights of way.

The business of some salvage companies is the removal and recycling of out of use pipelines. For the most part, pipeline companies are not interested in the business of recycling as they have determined that there are too many environmental risks to allow shallow pocket pipeline recovery companies the run of a right-of-way. The safest bet is to let it lie rather than take a chance that a pipeline recovery company might uncover some surprises that no one wants to deal with.

The call our company received from the Texas landowner is only one example. We field an average of three calls per week from property owners seeking a way to get rid of a piece of pipeline that is interfering with a construction or excavation project. Other calls involve inquiries about restoring easements that are clouding title.

Court Determination

The following are a number of factors a court or jurisdiction might consider in determining whether an easement or right-of-way (including the buried pipeline) has been canceled, extinguished and thus effectually reverted to the landowner:

1. Whether the line is merely idle or is completely abandoned.
2. The length of time the line has been idled or abandoned.
3. Whether the grantee company continues to maintain, test and /or patrol the line.
4. Whether the company continues to show the line and/or the easement as an asset in its records and/or continues to pay taxes on the line and/or the easement.
5. Whether there are other lines in the same easement which have not been idle or abandoned.
6. Whether the company has constructed or acquired new lines on other routes which make the idle or abandoned line and the easement in which it runs unnecessary.
7. Whether the company has idled or abandoned the facilities at either end of the line thereby making it unlikely that the line would be returned to service.
8. Whether it is cost prohibitive to return the line to service.
9. Whether the company has released or abandoned other segments of the easement thereby making it impossible to use the line or a replacement line at some future time.
10. The company plans for future use of the line or replacement line in the same easement or corridor.

Conclusion
The grantee company's obligation to release an easement containing an idle pipeline upon the request from a landowner will first depend on the specific provisions of the contract or instrument granting the easement. This instrument is almost always the right-of-way agreement. If that contract or instrument does not specify a term or condition for reversion of the easement, then it will depend on whether the landowner can establish that the purpose for which the easement was granted has ceased or that the grantee company can no longer use the easement for its intended purpose.

The reality is that most landowners are not going to go to the expense and time to prove this. The pipeline companies know this and quietly deal with incidents one at a time with special attention given to larger parcel owners along the right-of-way. The idea that a landowner with a quarter-mile section of pipeline on his property is going to file suit against a major pipeline company is unlikely. However, if the landowner is desperate to sell that property or needs to build on the land, he or she will seek a remedy somewhere.

Be warned, pipeline operators: there are too many hungry plaintiff's lawyers and tree huggers out there. In addition there are many landowners that are weary of warehousing obsolete pipelines for pipeline companies. I should note here that this new Congress and new administration in Washington really do not like us very much. And that is on a federal level. On the state level in Texas, a bill will be introduced in the coming legislative session that will require pipeline companies to get permission from each landowner before abandoning a pipeline on their property. In addition, the companies will have to account for all dormant pipelines that have previously been idled or abandoned. This type of legislation might signal the end to the practice of "in place" abandonment of pipelines.

If we really don't like federal and state regulations, why not be proactive and clean up our mess before we get called in?

The central Texas rancher continued in his attempts to have the pipeline company remove the 330 foot pipeline segment from his property. He did get a concession of a price reduction from $51,000 to $37,000 for the take up by the environmental company approved by the pipeline operator. At this point he went to a lawyer who did some research and found that most pipelines of that vintage were coated with a material that contained asbestos. The lawyer found a case regarding an abandoned jet fuel pipeline with asbestos coating near a townsite in Maine. A local court determined that the line did cause contamination under the townsite and possibly was a problem for the local water supply and the health of future generations. The attorney for the Texas rancher noted that the pipeline in question was located over the Edwards Aquifer in Central Texas for a 40-mile stretch. In place abandonment of pipelines is no longer an option.

For case law, Code of Federal Regulation, and other references for this article, send an email request to davidhowell@pipelineequities.com.