In Kenai Landing, Inc. v. Cook Inlet Natural Gas Storage Alaska, LLC.,[1] the supreme court held that an oil and gas lessor does not have the right to compensation for gas developed in pressuring a gas storage facility. Cook Inlet Natural Gas Storage Alaska (CINGSA) leases the Sterling C Reservoir and must maintain a certain level of pressure within the reservoir to store gas for higher demand periods. Owning the land above the reservoir, Kenai Landing, Inc. sought compensation for newly discovered gas within the reservoir and CINGSA sought a condemnation action for an easement to the reservoir. While both parties agreed Kenai Landing, Inc. was due compensation for storage of gas, Kenai Landing Inc. sought compensation for the new gas discovered as the owner of the land above the lease. The supreme court affirmed the superior court’s conclusion that Kenai Landing, Inc. was not entitled to compensation for the newly discovered native gas. A landowner is only entitled to the value of the land at the time it is taken. The gas was not present under the lease at the time it was conveyed, it developed after CINGSA began the project. Thus, the supreme court affirmed the lower court’s decision that a lessor does not have the right to compensation for newly discovered gas which develops from the use of the land.
[1] 441 P.3d 954 (Alaska 2019).
