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Panel sides with gas firm in Kansas condemnation

Published on NewsOK Modified: August 27, 2014 at 6:56 pm •  Published: August 27, 2014

WICHITA, Kan. (AP) — A court-appointed panel of petroleum engineering experts has mostly sided with Omaha-based Northern Natural Gas on what the company should pay for condemning more than 9,200 acres in southern Kansas near its underground storage facility.

U.S. District Judge Monti Belot on Wednesday gave the parties until Sept. 16 to file objections to the recommendations in the panel's 85-page report to the court.

The three-member commission's unanimous findings, filed Tuesday, stem from 19 days of trial testimony held between April and June. It was charged with determining the "just compensation" for the rights to a geological formation underlying the condemned land owed to gas producers and owners surrounding the company's Cunningham Storage Field.

Northern concluded, and it was undisputed at trial, that gas was leaking out of the storage field across a lengthy fault that was originally thought to form a physical barrier to gas migration across its northern boundary, according to the report.

All told, the panel is recommending the company pay $7.3 million for storage rights and for gas underlying the land, far below the more than $100 million property owners wanted. In addition, it recommended the company pay $5,000 for each of the eight wells in the expansion area, rather than the $400,000 for each one like the producers were demanding.

It is unclear how many owners still have a property interest in the affected parcels, but the company's amended complaint filed in 2011 cited more than 200 parties to the lawsuit. The commission determines the values, but it is up to the judge to then decide how to split the compensation among all of its interest owners.

The long trial was marked by conflicting testimony by experts for the company and experts for affected property owners in Pratt, Kingman and Reno counties. Ultimately, the report shows the panel relied mostly on the figures compiled by the company's experts in reaching its findings — particularly on key items like estimating how much natural gas was present and how much storage gas had migrated under the condemned land. The panel also concluded that so little, if any, natural gas was underlying most of the tracts that it was not economically recoverable.

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