Gas firm wants land condemned
A Nebraska company moved Monday to condemn more than 9,100 acres of land in south-central Kansas, marking the culmination of a decade in legal battles between property owners and a firm owned by billionaire Warren Buffett.
Omaha-based Northern Natural Gas Co. filed a lawsuit in U.S. District Court in Wichita, arguing that taking the property is "in the public interest and necessity" in order to contain gas migrating from its underground storage. It is also seeking a court order to shut down all gas wells within the expansion area.
The filing is the first step under the power of eminent domain to take land from unwilling sellers in Pratt, Kingman and Reno counties. At least 173 property owners hold some interest in the 40 tracts targeted in the filing.
"All they want is condemnation. They don't want to try to work it out with us," said Dorothy Trinkle, one of the leaders of a landowner group formed to oppose the takeover. "They just want to take it. This is a group of very angry landowners out here. We don't want to give it up. It is their fault it is leaking."
Northern Natural Gas spokesman Mike Loeffler said the goal is to stop drilling by third-party natural gas producers, who the company contends have been essentially siphoning off their stored gas supplies by changing the geological pressure. The company believes that the drilling has sucked gas away from what had been a stabilized storage field.
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 Federal Energy Regulatory Commission in June granted Northern Natural the authority to expand its Cunningham Storage Field in Kansas by 12,320 acres. The field stores gas in two underground formations 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 native gas reserves lie beneath 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 field, once it migrated more than a half mile away 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 Buffett," said Todd Allam, president of VAL Energy, a Wichita firm with a block of oil and gas leases six miles from the storage field.
Northern Natural is a subsidiary of MidAmerican Energy Holdings Co., which in turn is a subsidiary of Buffett's Berkshire Hathaway Inc.
The ruling by the Federal Energy Regulatory Commission, an independent agency that regulates the interstate transmission of natural gas, oil and electricity, noted that there was native gas under the land that the federal lawsuit seeks to condemn that would need to be compensated, Allam said.
Northern Natural's goal is to acquire all the land through good faith negotiations, Loeffler said.
"Under the condemnation, there is going to be a pretty good court battle to determine fair value to the landowners and the operators of existing production," Allam said.
This story was originally published July 20, 2010 at 12:00 AM with the headline "Gas firm wants land condemned."