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Oil and Gas Update

Production

Pennsylvania Appellate Court Decides "Rule of Capture" Does Not Preclude Liability From Trespass Due To Hydraulic Fracturing

In a decision which may have severe consequences on oil and gas operations not only in Pennsylvania, but nationwide, the Superior Court of Pennsylvania held on April 2, 2018, in Briggs. v. Southwestern Energy Production Company, 2018 PA Super 79 (Apr. 2, 2018) that the “rule of capture” would not preclude liability for trespass of oil and gas operations due to hydraulic fracturing.

 

The rule of…

Gas Producer Sues WVDEP for Declaration that “Flat Rate Statute” Unconstitutionally Impairs Flat Rate Gas Leases

Historically, oil and gas leases have been of two types— those with flat rates and those with production-based royalties. In the “flat rate” leases, the lessees agreed to pay a flat annual fee to lessors for the right to extract oil and gas without regard to whether any mineral was extracted or the amount extracted. In the production-based leases, the lessees agreed to pay a percentage of the…

Supreme Court of Ohio Declines to Recognize Implied Covenant to Explore Further

In Alford v. Collins-McGregor Operating Co., 2018-Ohio-8, the Supreme Court of Ohio decided that Ohio does not recognize an implied covenant to explore further, separate and apart from the implied covenant of reasonable development. In Alford, the Appellants were landowners and lessors of an oil and gas lease with Appellees. The lease was held by the production of a single well drilled to the…

Ohio's 7th District Court of Appeals Issues Opinions on Deed Interpretation - Adopts Duhig Rule

The 7th District Court of appeals was busy interpreting deeds in December. The Court issued four opinions involving the interpretation of purported mineral reservations in various conveyances in four separate decisions: Talbot v. Ward, 2017-Ohio-9213, Mcauley v. Brooker, 2017-Ohio-9222, Rubel v. Johnson, 2017-Ohio-9221, and Porterfield v. Bruner Land Company, Inc., 2017-Ohio-9045. While deed…

Sixth Circuit stays NEXUS pipeline construction in Green, Ohio pending review of Ohio EPA’s CWA §401 certification

On November 22, 2017, in one of many ongoing challenges to pipeline construction, a three-judge panel of the United States Court of Appeals for the Sixth Circuit (“Sixth Circuit”), in a 2-1 decision, granted an emergency stay of pipeline construction within the city of Green, Ohio (“Green”) pending a decision on the merits of Green’s petition seeking review of the Clean Water Act (“CWA”) §401…

Northern District of Ohio Addresses Royalty Issue in Lutz Opinion

Issues regarding the deduction of post-production costs from royalty payments to landowners were recently addressed by a Memorandum Opinion and Order filed in Lutz v. Chesapeake Appalachia, LLC, Case No. 4:09-cv-2256-SL, United States District Court, Northern District of Ohio, Eastern Division.

Lutz has a long procedural history and involved somewhat novel questions under Ohio law. The Northern…

FERC Sidesteps New York’s Denial of CWA §401 Certification Giving Go-Ahead to Millennium Pipeline Company Spur

For any company desiring to construct a natural gas pipeline, all roads lead to FERC.” Millennium Pipeline Company, L.L.C. v. Seggos, 860 F.3d 696, 698 (D.C. Cir. 2017).

In a significant and already controversial decision issued in mid-September, the Federal Energy Regulatory Commission (“FERC”) granted approval for Millennium Pipeline Company L.L.C. (“Millennium”)…

Sierra Club Links Up with Libertarian Landowners in Continued Opposition to Gas Development

Opponents of natural gas development do not have the resources to challenge individual well permits in the Marcellus and related shale gas basins. Instead, they understand that the future of the industry depends on assembling the rights to draw gas from fractionated ownership and on the ability to attract higher prices by building transmission pipelines to carry the gas to new markets.  So, the…

Virginia Supreme Court Largely Affirms Right of Pipeline to Conduct Property Surveys and Examinations without Landowner Approval

The Virginia Supreme Court issued two opinions on July 13, 2017, addressing the rights of pipelines to survey property without landowner permission. In the first, Chaffins v. Atlantic Coast Pipeline, LLC, the Court considered what constitutes adequate prior notice by a pipeline company to gain access for surveys and property evaluation in the absence of landowner approval. In the second, Palmer…

California Plaintiffs Seek to Address Climate Change Via State Tort Suits

On July 17, 2017, the governments of California’s Marin and San Meteo counties, as well as the city of Imperial Beach, filed three separate complaints in California Superior Court in their respective counties against 37 oil, gas, and coal companies. We have previously written about similar suits filed by citizen groups, states, and cities in federal court here.

Although most of these suits…

Pennsylvania Court Rules that DEP Applied Wrong Standard in Requiring Compressor Station and Natural Gas Well Pad to Aggregate Air Emissions for Permitting Purposes

In a decision issued on June 2, 2017, a Pennsylvania court disagreed with the conclusions of the Department of Environmental Protection (DEP) and the Environmental Hearing Board (EHB) that a compressor station and natural gas well pad owned and operated by two separate business entities should be considered a single source of air emissions regulated by a single air permit simply because they…

 

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