Date: 08-22-2012

Case Style: ONEOK Gas Storage, LLC v. Hollie Etbauer

Case Number: CJ-2008-378

Judge: Phillip C. Corley

Court: District Court, Logan County, Oklahoma

Plaintiff's Attorney: Gale E. Cottingham, John D. Dale, David L. Kearney and Jeff L. Hirzel

Defendant's Attorney: C. Eric Shephard, Mark W. Stonecipher and Terry W. Tippens

Description: ONEOK Gas Storage, LLC sued Hollie Etbauer, Billing Etbauer, Trustees of the Hollie Etabuer Living Trust on an eminent domain theory seeking to acquired certain rights, title and interests in land owned by Defendants.

1. ONEOK Gas Storage, L.L.C. brings this action to condemn property owned by Hollie Etbauer and Billy Etbauer, Trustees of the Hollie Etbauer Living Trust dated August 9, 1994, and Billy Etbauer and Holly Etbauer, Trustees of the Billy Etbauer Living Trust dated August 9, 1994.

THE PARTIES

2. Plaintiff ONEOK Gas Storage, L.L.C. is authorized to transact business in the State of Oklahoma, with its principal place of business located in Tulsa County, Oklahoma. ONEOK Gas Storage, L.L.C. is a subsidiary of ONEOK, Inc., successor to Oklahoma Natural Gas Company. ONEOK Gas Storage, L.L.C. is engaged in the business of storing natural gas to maintain the supply of natural gas in the gas storage facility for its customers in Oklahoma. By virtue of the public nature of its business, and the Constitution and statutes of the State of Oklahoma, Plaintiff has been authorized to exercise the right of eminent domain in the appropriation and use of lands and rights-of-ways over properties necessary or required for its services.

3. Defendants Hollie Etbauer and Billy Etbauer, Trustees of the Hollie Etbauer Living Trust dated August 9, 1994, and Trustees of the Billy Etbauer Living Trust dated August 9, 1994, are residents of Logan County, Oklahoma.

4. Venue is proper in this Court pursuant to OKLA. STAT. ANN. tit. 12, § 139 because the property at issue is located in Logan County, Oklahoma.

FACTUAL BACKGROUND

5. ONEOK Gas Storage, L.L.C. currently operates an underground natural gas storage facility (the “Facility”) located in Kingfisher and Logan Counties, Oklahoma, under the following described property, to wit: lii the Bartlesville Sand formation underlying the South Half of the Southwest Quarter (S/2 SW/4) of Section 19, the South Half of the Southeast Quarter (S/2 5E14) of Section 19, the South Half of the Southwest Quarter (S/2 SW/4 of Section 20, the Southeast Quarter (SE/4) of Section 20, the South Half (S/2) of Section 21, the South Half (S/2) of Section 22, the Southwest Quarter (5W14) of Section 23, the Northwest Quarter (NW/4) of Section 26, the West Half of the Southwest Quarter (W/2 SW/4) of Section 26, all of Section 27, all of Section 28, all of Section 29, and all of Section 30, all located in Township 15 North, Range 4 West, Logan County, Oklahoma, and the South Half of the South Half (S/2 S/2) of Section 24, all of Section 25, all of Section 26, and all of Section 27, all located in Township 15 North, Range 5 West, Kingfisher County, Oklahoma.

(The foregoing property is hereafter referred to as the “Facility Area”.)

6. lii or about 1961, one of ONEOK Gas Storage, L.L.C. predecessors in interest, Oklahoma Natural Gas Company, acquired its interest in the Facility through certain leases, gas storage agreements, mineral deeds, easements and rights of way negotiated with owners of the surface and mineral interests in the Facility Area, and eondenmation of certain tracts also within the Facility Area.

7. By Order No. 46381 dated September 1, 1961, upon the application of Oklahoma Natural Gas Company, the Oklahoma Corporation Commission declared the Bartlesville Sand common source of supply to be a suitable reservoir for the injection, storage and withdrawal of gas by Oklahoma Natural Gas Company. Oklahoma Natural Gas Company was also authorized under the terms of Order No. 46381 to commence immediately the injection of gas into the Bartlesville Sand Formation as a storage reservoir under the following described lands:

Underlying the South Half of the Southwest Quarter (S/2 SW/4) of Section 19, the South Half of the Southeast Quarter (S/2 SE/4) of Section 19, the South Half of the Southwest Quarter (S/2 SW/4 of Section 20, the Southeast Quarter (SE/4) of Section 20, the South Half (S/2) of Section 21, the South Half (S/2) of Section 22, the Southwest Quarter (5W14) of Section 23, the Northwest Quarter (NW/4) of Section 26, the West Half of the Southwest Quarter (W/2 SW/4) of Section 26, all of Section 27, all of Section 28, all of Section 29, and all of Section 30, all located in Township 15 North, Range 4 West, Logan County, Oklahoma, and the South Half of the South Half (S/2 S/2) of Section 24, all of Section 25, all of Section 26, and all of Section 27, all located in Township 15 North, Range 5 West, Kingfisher County, Oklahoma. and to withdraw all such injected gas as it becomes necessary to serve the consumers of Oklahoma, or is otherwise needed by it in the conduct of its business. See Copy of Order No. 46381 attached hereto as Exhibit “A”.

8. The Facility is certified by the Oklahoma Corporation Commission (“0CC”) for use as a gas storage facility, pursuant to 52 O.S. § 36.4.

9. Hollie Etbauer and Billy Etbauer, Trustees of the Hollie Etbauer Living Trust dated August 9, 1994 are the fee owners of the following described surface tract more particularly described as: W/2 NE/4 & E12 NE/4 less and except a 10 acre tract more particularly described as follows: Beginning at the Southeast Corner of the Northeast Quarter (NE/4); thence North 89 degrees 56’40” West along the South line of said Northeast Quarter (NE/4) a distance of 1324.56 feet to the Southwest Corner of the East Half of the said Northeast Quarter (NE/4); Thence North 00 degrees 0245” East along the West line of said East Half a distance of 331.90’; Thence South 89 degrees 56’ 40” a distance of 1324.30 feet to a point on the East line of said Northeast Quarter (NE/4); Thence South 00 degrees 0000” East along said East line a distance of 331.90 feet to the point of beginning of Section 28, Township 15 North, Range 4 West, Logan County, Oklahoma,

(Etbauer Tract #1”) located within the Facility Area. As the fee owners of the surface tract, Defendants own the storage rights in the underlying formations.

10. Billy Etbauer and Hollie Etbauer, Trustees of the Billy Etbauer Living Trust dated August 9, 1994 are the fee owners of the following described surface tract more particularly described as: East Half (E/2) of the Southwest Quarter (SW/4) less and except the following tract: A tract of land in the East Half (E/2) of the Southwest Quarter (SW/4) described as follows:

From the Southwest Corner of said East Half (E/2) of the Southwest Quarter (SW/4); East a distance of 331.65 feet to the point of beginning; thence N 00 degrees 09’lO”E a distance of 1323.0 feet; thence East a distance of 331.65 feet; thence 5 00 degrees 0910W a distance of 1323.0 feet; thence West a distance of 331.65 feet to point of beginning and less and except a part of the Southwest Quarter (SW/4) described as follows: Beginning at the Southeast Corner of said Southwest Quarter (SW/4); thence West a distance of 663.30 feet; thence N 00 degrees 9’lO”E a distance of 1323.0 feet; thence East a distance of 663.30 feet; thence S 00 degrees 0910W a distance of 1323.00 feet to the point of beginning of Section 28, Township 15 North, Range 4 West, Logan County, Oklahoma, (Etbauer Tract #2”) located within the Facility Area. As the fee owners of the surface tract, Defendants own the storage rights in the underlying formations.

11. Prior owners of Etbauer Tracts #1 and #2 previously entered into gas storage leases and agreements with ONEOK Gas Storage, L.L.C. predecessor covering Etbauer Tracts #1 and #2, which leases will expire in the next 1 to 2 years.

12. Despite good faith efforts made by ONEOK Gas Storage, L.L.C. to negotiate for the purchase of a permanent easement for underground gas storage, Hollie Etbauer and Billy Etbauer, Trustees of the Hollie Etbauer Living Trust dated August 9, 1994, and Trustees of Billy Etbauer Living Trust dated August 9, 1994, have refUsed to grant an easement for underground gas storage on the property located within the Facility Area. Use of the Etbauer Tracts #1 and #2 are necessary and critical for the continued operation of the ONEOK Gas Storage, L.L.C. explicitly authorized by the 0CC.

13. Pursuant to 66 OS. 1991 § 51-60, 27 O.S. 1991 § 7, and 520.S. § 36.3, ONEOK Gas Storage, L.L.C. is entitled to exercise the power of eminent domain to condemn and acquire the Etbauer Tracts #1 and #2 if an agreement cannot be reached between the parties for ONEOK Gas Storage, L.L.C. acquisition of the property.

14. This is also attached hereto a copy of the determination of necessity signed by Roger Thorpe for ONEOK Gas Storage, L.L.C. and other supporting documentation related to the necessity for acquiring a permanent easement therefore for underground gas storage and such other facilities across said lands and premises, said determination of necessity being marked Exhibit “C” and by reference made a part of this Petition.

PRAYER

WHEREFORE, Plaintiff ONEOK Gas Storage, L.L.C. respectfully requests the Court to:

1. Appoint three disinterested freeholders of Logan County as Commissioners, who are not interested in any like question, to inspect Etbauer Tract #1 and Etbauer Tract #2 above described for a determination of the value of the easements taken by Plaintiff herein and any damage to the remaining lands suffered by Defendants as a result of this condemnation, and to forthwith make their report in writing to the Clerk of this Court, setting forth the amount payable by Plaintiff as damages to said lands, all as provided by Article II, § 24 of the Oklahoma Constitution, and by 66 O.S. § 53; and

2. Grant any and all other relief that is just and equitable.

ORDER APPOINTING COMMISSIONERS

This matter came on to be heard this 13th day of February, 2009, upon the petition of Plaintiff herein for an order of the Court determining that Plaintiff has the power of eminent domain and that the Subject Property is necessary for Plaintiffs lawful purposes; allowing the condemnation by Plaintiff of an easement for operation of a gas storage reservoir under the Subject Property (“underground gas storage easement”); and for the appointment of commissioners to inspect said property and premises and to assess the damage to the owners thereof by reason of the taking by Plaintiff of such underground gas storage easement.

The Plaintiff appeared by its attorneys David L. Kearney of Gable & Gotwals and Jeff L. Hirzel. Defendants Holly Etbauer and Billy Etbauer, Trustees of the Hollie Etbauer Living Trust Dated August 9, 1994, and Trustees of the Billy Etbauer Living Trust Dated August 9, 1994 appeared by and through their attorney, Mar L I did noLappear Lappoarod pro sc. The undersigned Judge, having examined said petition and the files in this cause, and having heard statements of counsel in connection therewith and being well and frIly advised in the premises and upon the consideration thereof, finds that due and legal notice of the pendency of these proceedings has been served upon the Defendants more than ten days prior to this date as provided by law and finds that the Plaintiff is an entity engaged in the business of storing natural gas to maintain the supply of natural gas in the gas storage facility for its customers in Oklahoma pursuant to OkIa. Stat. tit. 52, § 36.3 and has been granted by the State of Oklahoma the right of eminent domain in connection with the acquisition of a permanent easement for underground gas storage as authorized under Okla. Stat. tit. 52, § 36.4 and Okla. Stat. tit. 27, § 7; and further finds that it is necessary for the Plaintiff to obtain a permanent easement for such underground gas storage under the Subject Property, all as described in the Plaintiff’s Petition and set forth on the exhibits to said Petition. The Court fui-ther finds that the Plaintiff has made a prior good faith effort to secure an easement for underground gas storage from the Defendants by purchase, but has been unsuccessful in such effort, and that commissioners should be appointed by the Court as prayed for by the Plaintiff

IT IS THEREFORE ORDERED, ADJUDGED AND DECREED by the Court that

1. Jan Goodyear;

2. Dawna Elmore; and

3. Lorie Nail;

three (3) disinterested freeholders of Logan County, Oklahoma, be and hereby are appointed as commissioners in this cause and proceeding and are hereby directed to inspect forthwith the Subject Property and premises described in Plaintiffs Petition and consider, consistent with the instruction of this Court, the injury and damage which the Defendants, as the owners of the Subject Property, have sustained or will sustain by reason of Plaintiffs acquisition of such permanent easement for underground gas storage in, under, and across the Subject Property. Commissioners are further directed to make their report in writing to the Clerk of this Court assessing the amount of the damages sustained by Defendants by reason of such taking, such assessment and report to be made in compliance with the Instructions to Commissioners issued by this Court in this cause, said report to be made to the Clerk within ten days of the date that such commissioners take their oath of office, unless further time is granted by this Court.

1. On the 1ST day of June, 2009, the undersigned Commissioners appeared before this Court and took the oath prescribed by law, and, having been instructed by the Court, proceeded as instructed with respect to the land involved herein, which land was identified in the Instructions to Commissioners.

2. We determine the total amount of damages to the Subject Property for the taking of the easement for an underground gas storage reservoir under said property to be $64,125.00.

Both parties filed requests for jury trial on the issue of damages.

Outcome: NOW on this 22nd day of August, 2012, there comes on for hearing before the Court the Joint Motion of Plaintiff, ONEOK Gas Storage, L.L.C. (“ONEOK”) and Defendants, Hollie Etbauer and Billy Etbauer, Trustees of the Hollie Etbauer Living Trust dated August 9, 1994 (“Hollie Trust”) and Trustees of the Billy Etbauer Living Trust dated August 9, 1994 (“Billy Trust”) (collectively, the “Defendants”), for an Order Confirming Report of Commissioners and Vesting Title in Plaintiff (the “Motion”). The Court, after reviewing the Motion, examining the files and records in this cause, being frilly advised in the premises, and, upon the parties’ agreement to the entry of this order, as evidenced by their counsel’s signatures below, finds and concludes as follows:1

1. On January 19, 2010, the Commissioners appointed in this case fulfilled their obligations and made their return in this cause as evidenced by the filing of the Second Amended Report of Commissioners (the “Report of Commissioners”).

2. The Hollie Trust is the fee owner of the following described surface tract more particularly described as:

W/2 NE/4 & E/2 NE/4 less and except a 10 acre tract more particularly described as follows: Beginning at the Southeast Corner of the Northeast Quarter (NE/4); thence North 89 degrees 5640” West along the South line of said Northeast Quarter (NE/4) a distance of 1324.56 feet to the Southwest Corner of the East Half of the said Northeast Quarter (NE/4); Thence North 00 degrees 0245” East along the West line of said East Half a distance of 331.90; Thence South 89 degrees 56 ‘40” a distance of 1324.30 feet to a point on the East line of said Northeast Quarter (NE/4); Thence South 00 degrees 00 00” East along said East line a distance of 331.90 feet to the point of beginning of Section 28, Township 15 North, Range 4 West, Logan County, Oklahoma; containing 150 acres, more or less (the “Etbauer Tract #1”) located within the Facility Area.

3. The Billie Trust is the fee owner of the following described surface tract more particularly described as:

East Half (E/2) of the Southwest Quarter (SW/4) less and except the following tract: A tract of land in the East Half (E/2) of the Southwest Quarter (SW/4) described as follows: From the Southwest Corner of said East Half (E/2) of the Southwest Quarter (SW/4); East a distance of 331.65 feet to the point of beginning; thence N 00 degrees 09 10”E a distance of 1323.0 feet; thence East a distance of 331.65 feet; thence S 00 degrees 09 lO”W a distance of 1323.0 feet; thence West a distance of 331.65 feet to point of beginning, and less and except a part of the Southwest Quarter (SW/4) described as follows: Beginning at the Southeast Corner of said Southwest Quarter (SW/4); thence West a distance of 663.30 feet; thence N 00 degrees 9’lO”E a distance of 1323.0 feet; thence East a distance of 663.30 feet; thence 5 00 degrees 091 0”W a distance of 1323.00 feet to the point of beginning of Section 28, Township 15 North, Range 4 West, Logan County, Oklahoma, containing 49.79 acres, more or less (the “Etbauer Tract #2”) located within the Facility Area.

4. The Billy Trust is the fee owner of the following described surface more particularly described as:

West Half (W12) of the Southwest Quarter (SE/4), Section 28, Township 15 North, Range 4 West, Logan County, Oklahoma; containing 80 acres, more or less (the “Etbauer Tract #3”) located within the Facility Area.

5. The Hollie Trust is the fee owner of the following described surface tract more particularly described as:

A part of the Southwest Quarter (SW/4) beginning at the Southeast Corner of said Southwest Quarter (SW/4); thence West a distance of 663.30 feet; thence N 00 degrees 9’ 1O”E a distance of 1323.0 feet; thence East a distance of 663.30 feet; thence 5 00 degrees 09’ l0”W a distance of 1323.00 feet to the point of beginning of Section 28, Township 15 North, Range 4 West, Logan County, Oklahoma; containing 20.14 acres, more or less (the “Etbauer Tract #4”) located within the Facility Area.

6. As the fee owners of the Etbauer Tracts #1, #2, #3 and #4, the Hollie Trust and Billy Trust own the storage rights in the underlying formations, including the formation called the Bartlesville Sand formation.

7. The Report of Commissioners assessed injury and just compensation due the Defendants as the fee owners of the Etbauer Tracts #1, #2, #3, and #4 in the amount of $128,220.08 (the “Commissioners’ Award”).

8. ONEOK deposited the Commissioners’ Award with the Court on or about June 18, 2010.

9. Defendants, as the fee owners of the Etbauer Tracts #1, #2, #3 and #4, are entitled to the Commissioners’ Award.


10. ONEOK and Defendants both filed demands for jury trial; however, both parties have agreed to the Commissioners’ Award as ‘just compensation” for the subject taking. On or about May 3, 2012, Defendants withdrew and received the Commissioners’ Award from the registry of the Court.

11. The Appointment, Oath, and Report of Commissioners are in proper form and are hereby approved.

12. Pursuant to OKLA. STAT. tit. 66 § 5 1-60, OKLA. STAT. tit. 27 § 7 and OKLA. STAT. tit. 52 § 36.3, ONEOK is vested with the power of eminent domain, has properly exercised said power and is entitled to take and acquire the property and rights as are more fully described in ONEOK’s Second Amended Petition, filed herein on January 8,2010.

13. ONEOK has the right to have and obtain a permanent underground gas storage easement under the Etbauer Tracts #1, #2, #3 and #4 for the sole purpose of establishing and operating a gas storage reservoir by injecting natural gas, synthetic gas, gaseous vapors, or condensate (hereinafter referred to as “gas”), into the geological stratum or strata called the Bartlesville Sand formation for as long as such formation is used as a gas storage, and ONEOK shall have the right to store gas in such reservoir and retain title to gas injected into such storage as its personal property.

14. It is necessary that ONEOK shall have the exclusive right to use and enjoy that part of the subsurface of the Etbauer Tracts #1, #2, #3 and #4 called the Bartlesville Sand formation as a permanent underground gas storage reservoir.

15. Defendants shall have and retain the full right to use and enjoy said property and premises subject only to the easement rights acquired by ONEOK in this proceeding.

IT IS THEREFORE ORDERED, ADJUDGED, AND DECREED that the Appointment, Oath and Report of Commissioners filed herein are in proper form and shall be and are hereby approved in all respects.

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that ONEOK has the right of eminent domain, pursuant to OKLA. STAT. tit. 66 § 51-60, OKLA. STAT. tit. 27 § 7 and OKLA. STAT. tit. 52 § 36.3, and ONEOK shall be and is hereby granted a permanent underground gas storage easement under the Etbauer Tracts #1, #2, #3 and #4 for the sole purpose of establishing and operating a gas storage reservoir under the Etbauer Tracts #1, #2, #3 and #4 by injecting natural gas, synthetic gas, gaseous vapors, or condensate (hereinafter referred to as “gas”), into the geological stratum or strata called the Bartlesville Sand formation for as long as such formation is used as a gas storage, and ONEOK shall have the right to store gas in such reservoir and retain title to gas injected into such storage as its personal property.

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that ONEOK shall have and is hereby granted the exclusive right to use and enjoy that part of the subsurface of the Etbauer Tracts #1, #2, #3 and #4 called the Bartlesville Sand formation as a permanent underground gas storage reservoir.

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendants shall have and retain the hill right to use and enjoy said property and premises subject only to the easement rights acquired by ONEOK in this proceeding.

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendants have received the Commissioners’ Award and that the same shall be and is all of the “just compensation” that is due and owing Defendants on account of this condemnation action.

IT IS SO ORDERED.

Plaintiff's Experts:

Defendant's Experts:

Comments: