What Happens When A Natural Gas Storage Lease Expires?
For whatever reason, years ago, it was apparently thought among both gas storage companies and landowners that the need for gas storage would be something that only would occur for 20 or 30 years. Many gas storage companies and landowners frequently entered into leases in which a depleted reservoir would be utilized for gas storage until permanent gas storage facilities were built elsewhere.
The reality is that there is substantial demand for gas storage that has increased over the years. This is the very reason why gas storage applications continue at both FERC and many States.
Many of the term leases now are expiring. Each lease has its own need for specific re-negotiation. In the alternative, gas storage companies likely will seek utility commission approval needed to condemn the properties. The eminent domain process offers its own difficulties. Yet, landowners should recognize that they need to be fairly treated in the valuable property interest maintained for natural gas storage.
