Natural Gas Landowner vs. Energy Company
Turning Down the Heat
The Challenge. Energy Company and Landowners were unable to agree on the fair market value for underground storage use (the lease was old and did not provide explicitly for storage rights), so Energy Company filed a condemnation action. Landowner then filed a counterclaim for past due rent and trespass claiming that, for decades, Energy Company had been using Landowners’ property to store gas without compensating them.
Overcoming the Challenge. After a short joint session, I spent quite a bit of time with Landowners privately. I wanted to get to know them a bit, to understand what was driving their positions, and to begin to develop trust. As we talked, it became clear that Landowners had grown to distrust Energy Company, and if the case were to resolve, it would be important for these self-described “Davids” to feel they “won” and not believe they were “giving in” to what they viewed as the “Goliath” of the situation.
It also became clear that Landowners’ valuation was based in large part on their understanding of what nearby landowners had been paid. Energy Company insisted Landowners were misinformed and, to eliminate that barrier, Energy Company made a call to get the specifics about other landowners, and authorized me to share that information to Landowners. More progress ensued.
Landowners stood up and started putting on their coats when informed that Energy Company was $60,000 lower than their last number, and saying it had no more authority. I asked them not to leave yet. I explained that, if they could get Energy Company to increase its offer by $10,000, that would truly be a “victory” because it would be more than they would likely be able to recover through litigation.
The Result. After taking time to reflect and confer, Landowners agreed to take a sum within $15,000 of what Energy Company offered. That move led to Energy Company “sweetening the pot.” Through additional negotiations, both sides were able to bridge the gap.