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Underground gas pipelines could limit future development in Denton County

Landowners profited, but drilling boom could have consequences

06:57 PM CST on Saturday, December 29, 2007

By JAY PARSONS / The Dallas Morning News
jparsons@dallasnews.com

Driving through southwestern Denton County, the vast prairie lands look prime for development. A few miles south, there's Texas Motor Speedway and the massive Alliance transportation hub. To the east, upscale subdivisions.

Denton County's thinly populated western side should be next. But below the farms and ranches is a vast spider web of natural gas pipelines that could greatly restrict surface development and cost untold tax revenues for cities and schools.

"It's going to stop them [developers]," said William Harrison, who owns about 100 acres with five gas wells in the defunct town of Stony. "All [landowners] think about is getting the gas in and the gas out. I doubt if they even know how many ways the gas lines run out here."

Landowners here have profited handsomely from the natural gas drilling boom. As of September, Denton County had 2,156 gas wells – more than double the number in Tarrant County.

But there are long-term consequences. Developers can't build above pipelines, which can eliminate 10- to 50-foot-wide swaths for development.

"With all these gas wells, it changes the future development of this region," Denton County Commissioner Andy Eads said. "How do you fit a neighborhood in here and who wants to build into it? It'll be a very interesting development pattern."

Rural areas like this face a different set of challenges than Tarrant County and other more developed regions above the Barnett Shale. In developed or developing areas, gas companies must find enough open space to drill before connecting pipelines.

But gas companies have beaten developers to the land in western Denton County and neighboring Wise County, putting the burden on developers to work around them. In some cases, developers have to fight to pave streets above pipes and struggle to maneuver sewer and water lines around them.

Several gas companies did not return calls for comment. In a statement, Atmos Energy said it tries to minimize the impact for landowners.

Denton County maps show an incongruent maze of pipelines that likely wipes out some prime real estate as candidates for major, tax-rich commercial developments. Local officials worry that the pipelines could force developers to break up large parcels into smaller tracts, which tend to draw less-profitable subdivisions and strip retail.

In Northlake, Mayor Peter Dewing said a commercial development along State Highway 114 is on hold until the developer can talk an energy company into relocating a gas line. Mr. Dewing said he worries that the pipelines could ward off more commercial development.

"If it's strictly residential, it will cripple the city," Mr. Dewing said. "You can mess up a piece of property or set it up properly so it can be utilized in the future for another purpose."

Mr. Dewing noted one positive: Pipelines will keep a lot of the surface green.

Much of the problem stems from landowners unconcerned about future development. Many large property owners tend to think about leaving an inheritance – not about preparing the property for development.

"We try to take care of our own," said Juanell Smith, 77, who with her husband owns 113 acres near Ponder that includes six gas wells. "We're just too old to worry about this too much."

The couple plans to split the property between their two children but doubts they'll be able to do much with it.

"They'll never want to develop it because it's covered up with gas wells, pipelines and water lines," Ms. Smith said. "There's hardly room for a house to be built."

Energy companies build two types of pipelines: transmission lines and distribution lines. Transmission lines transfer natural gas from wells to the energy company's plant. Their lifetime lasts as long as the wells, which could be more than 30 years for a productive well. Distribution lines, which are more permanent, deliver gas from the plant to customers.

Gas companies have authority similar to eminent domain to build pipelines. They can put lines almost anywhere, but they have to pay impact fees to surface property owners.

Mr. Dewing is preparing an information packet to educate landowners on working with gas companies. He wants to show landowners that poorly positioned pipelines underground could deflate the surface value.

An informed landowner can try to steer the gas company along a property line or a road – minimizing the surface impact – by demanding higher impact fees for lines crossing through the property.

"If you can show them a value that's less by running line through a fence line rather than a middle of the property, [gas companies] don't want to spend a whole lot of time screwing around with it," said John Walsh, president of TIG Real Estate Services Inc., a commercial and industrial developer.

"You hear horror stories in some of these rural lands when people come in and get their land split," Mr. Walsh said. "The development of those properties can be greatly impacted by where you put a pipeline. If it causes them to lose value on their property, that's a problem."

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