I was with you guys before and you didn’t have anything to at that time. You mentioned you were working on it. What options are available through Levelset for companies that lease equipment for oil & gas pipeline jobs?
Jun 3, 2019
That's a great question, it can be very difficult to determine what type of protection is available on certain types of projects, and how to be best positioned for timely payment.
Some states, in addition to the general protection of mechanics liens (construction liens) have provided additional types of liens specifically related to oil and gas work. North Dakota is one of these states - and sets out "Well or Pipeline Construction Liens" in Chapter 35-24 of state statutes. These liens are created for the benefit of parties providing work or materials in the drilling or operating of an oil or gas well, or for the construction or repair of a pipeline. The lien attaches to the leasehold interest of the well/pipeline, the fixtures of the owners of the leasehold, the wells and the oil or gas produced from the wells, and the pipeline and fixtures itself.
In order to claim an oil or gas pipeline line, the potential claimant must file a lien statement in the county in which the well or pipeline (or any part thereof) is located. The lien must contain certain information, such as: "the amount claimed and the items thereof, the dates on which labor was performed or material or services furnished, the name of the owner of the leasehold or pipeline, if known, the name of the claimant and the claimant's mailing address, a description of the leasehold or pipeline, and if the claimant is a [subcontractor], the name of the person for whom the labor was immediately performed or the material or services were immediately furnished."
The lien must be filed within 6 months of the claimant's last furnishing labor or materials to the project.
It is important to note, however, that to the extent the work done is related to the construction of a (permanent) improvement to the property, a general mechanics lien may also be applicable. So, whether a mechanics lien affords protection to a party performing work on a well or pipeline depends on the nature of the work being done for the specific project.
And, an astute observer will note that the filing and form requirements for an oil/gas pipeline lien, and a "general" mechanics lien are basically identical. So, while Levelset does not have any specific plans to introduce a "North Dakota Oil and Gas Well or Pipeline Lien" as a product template, it is likely that a mechanics lien form, with potentially some modification to the title or statutory cite (if any) would be sufficient to be an oil/gas pipeline line, or could be sufficient on its own as a mechanics lien with no modification.
While pipeline work may be lienable, under general mechanics lien provisions, there may be some practical considerations if the work performed spanned over multiple parcels of property or through multiple counties. Additionally, a mechanics lien attaching to the leasehold interest of the party making the improvement is good, but does not extend to the production of the oil/gas well or pipeline itself.
As a take-away:
1. A mechanics lien can be filed through the Levelset system, and such a lien may be sufficient to secure and prompt payment on a pipeline project;
2. A mechanics lien template can be downloaded, and with a few simple modifications, can be "turned into" an oil/gas pipeline lien - which may (but not necessarily) be more directly effective in some situations.