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32 THE RURAL VOICE
Agri law
Gas storage
compensation - a
new approach
By Paul Vogel
Increasing demand for natural gas in
North American markets is resulting in an
increased demand for underground
natural gas storage. As gas utilities look
to depleted oil and natural gas pools to
satisfy their underground storage
requirements, agricultural landowners
who have leased these storage rights and
continue to own the surface rights are
concerned about their entitlement to 'just
and equitable" compensation. What is
"just and equitable" compensation for
their storage rights and for the impacts of
storage facilities on the lives and
agricultural operations of these
landowners?
Approximately 160 landowners
belonging to the Lambton County Storage
Association (LCSA) and owning land in
Union Gas's Lambton County
underground storage pools have applied
to the Ontario Energy Board (OEB) for
determination of "just and equitable"
compensation. In their recently -filed
amended application, these landowners
are seeking "just and equitable"
compensation not only for their storage
rights but also for the impacts of
wellheads, pipeline infrastructure and
access roadways on their properties.
As far back as 1964, the OEB
determined that landowners who have
leased subsurface storage rights should be
entitled to compensation which takes into
consideration the "use and usefulness" of
storage. Despite the increasing usage of
natural gas, landowners have continued to
receive annual payments for their storage
rights under storage leases reflecting only
increases in costs of living but failing to
reflect the increased profitability of
underground gas storage operations.
LCSA landowners are requesting that the
OEB award them a royalty interest in
these increased profits. In addition, for
landowners without leases within existing
storage pools, these landowners are
requesting that the OEB require
acquisition of appropriate lease rights at
compensation equivalent to amounts
being paid for such rights to other storage
and commercial operators.
With respect to surface storage
facilities, LCSA landowners are
requesting that the OEB award them