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At the Well Weekly (v.1.17.2020)

Oil + Gas Update - Ninth Circuit Says Kids Lack Standing to Sue Feds Over Climate Change.

Natural gas prices slid again since our last report with analysts anticipating a peak at no more than $2.50/MMBtu in 2020 (and then only in the colder months) despite an uptick in the national rig count and a steady oil price. In pipeline news, DEP levied another hefty fine in connection with the Mariner East project while local officials sued to halt construction activities around county-owned property. In Appalachia court news, the Proctors live to fight another day after Commonwealth Court denied summary judgment in their fight with the Commonwealth over oil and gas rights. In other news, the Ninth Circuit issued a landmark decision dismissing the kids' climate change case against the federal government for lack of standing despite sweeping statements in the majority and dissenting opinions about the negative effects and imminent threats of climate change.

Here's the week in review...

Rig Counts, Spot Prices + Oil Prices

  • Rigs: National (+796); Marcellus (41); Utica/Point Pleasant (10)

  • Brent Crude: -$64.85/bbl

  • West Texas Intermediate: -$58.58/bbl

  • NYMEX: February 2020 @ -$2.120/MMBtu.

  • Spot Prices: Henry Hub (-$1.98/MMBtu); Dominion South (+$1.79/MMBtu); Tenn. Zone 4 (+$1.83/MMBtu)

("+" or "-" or blank denotes increase, decrease, or flat. )

WOPL - Appalachia

In our new section, WOPL ("waiting on pipelines"), we provide the latest news on the status of various pipeline projects in Appalachia:

  • Adelphia Project (Greater Philadelphia Region): The pipeline operator submitted E&S permit applications that DEP published for public comment.

  • Atlantic Coast (W. Va. to Va. and NC): Opponents filed their opposition briefs in SCOTUS (see below for more details).

  • Atlantic Sunrise (Northeastern PA to SE Pennsylvania): The Atlantic Sunrise appeal in the DC Circuit is the springboard for opponents of FERC's practice of tolling its review while project construction proceeds (see below for more details).

  • Constitution (Northeastern PA to NY): Nothing new to report.

  • Empire Pipeline (NY to PA): Nothing new to report.

  • Leidy South - Benton Loop Expansion (PA): Nothing new to report.

  • Mariner East (Western PA to Eastern PA): DEP fined ETP another $2 million for violations along the Mariner East lines. Meanwhile, the Chester County Commissioners filed a complaint requesting an injunction to stop construction on the project in two county-owned locations, including around the Chester County Library in Exton.

  • Mountaineer XPress (WV): Nothing new to report.

  • Mountain Valley Pipeline (Northern WV to Southern Va. and NC): Nothing new to report.

  • NEXUS (Ohio to Michigan): Nothing new to report.

  • NFG FM100 Project (NC PA to Transco): Nothing new to report.

  • Northeast Supply Enhancement Project (NJ/NY): Nothing new to report.

  • Northern Access (NW PA to Western NY): Nothing new to report.

  • PennEast (PA to Central Jersey): Nothing new to report.

  • Regional Energy Access (NE PA to PA/NJ): Nothing new to report.

  • Revolution Pipeline (PA): Nothing new to report.

  • Rover (OH, WV, PA to Michigan): Nothing new to report.

  • TransCanada Eastern Panhandle Project (PA to WV): Nothing new to report.

Headlines & Holdings - Appalachia

  • Opponents Challenge FERC Procedures in Atlantic Sunrise Appeal. Environmental groups argued in an appeal involving approvals for the Atlantic Sunrise Pipeline that FERC’s practice of tolling its review period while projects commence and continue violates due process.

  • Respondents Fire Back in ACP SCOTUS Fight. Opponents of the Atlantic Coast Pipeline project filed their briefs in the U.S. Supreme Court in an appeal challenging the Forest Service’s ability to grant easements over and under the Appalachian Trail, arguing that the Forest Service lacks authority to do so under the Mineral Leasing Act given that the trail resides in the National Parks System.

  • Commonwealth Court Says Fact Issues Preclude Summary Judgment in Proctor Battle with Game Commission. The Commonwealth Court denied the Game Commission’s bid for summary judgment against the Proctor Heirs who the Game Commission contended had lost title to their oil and gas rights by “title wash,” holding instead that fact issues (such as whether anyone reported a severance of the surface and subsurface estate or whether an agent of the buyer redeemed the tax sale) precluded such a conclusion. Commonwealth of Pennsylvania, Pennsylvania Game Comm'n v. Thomas E. Proctor Heirs Tr. & the Margaret O.F. Proctor Tr., --- A.3d ---, No. 493 M.D. 2017, 2020 WL 256984 (Pa. Cmwlth. Jan. 16, 2020).

  • NY AG Accepts Defeat in Exxon Shareholder/Climate Change Suit. The NY Attorney General will not appeal a trial judge’s decision dismissing a lawsuit alleging that Exxon defrauded investors about the negative effects of climate change, spinning the loss as a win for keeping the climate change debate alive.

Headlines & Holdings - Beyond Appalachia

  • Wash. Supreme Court Shuts Down Agency Attempt to Regulate Non-emitters of GHG. The Washington Supreme Court invalidated a rule that purported to regulate emitters of greenhouse gases and non-emitters of greenhouse gases whose products downstream might cause greenhouse gas emissions, holding that the agency lacked statutory authority to regulate non-emitters even if the agency believed it would help alleviate the effects of climate change. Ass'n of Washington Bus. v. Dep’t of Ecology, --- P.3d ---, No. 95885-8, 2020 WL 240321 (Wash. Jan. 16, 2020).

  • Ninth Circuit Dismisses Kids’ Climate Change Case for Lack of Standing. In a case in which kids and a representative of future generations sued the Federal Government for its part in supporting a fossil fuel energy system that creates climate change and threatens the existence of the Earth, the Ninth Circuit concluded that although the kids stated cognizable injuries caused by the feds, the courts cannot redress those injuries, reasoning that the kids’ clams are ones that the political branches of the government must address and resolve. The dissent argued that climate change threatens the very existence of the United States such that the courts have the authority to do something about it. Juliana v. United States, --- F.3d ---, No. 18-36082, 2020 WL 254149 (9th Cir. Jan. 17, 2020).

  • Alaska Federal Court Denies Bid to Bust Winter Exploration Plan. The federal court in Alaska denied requests from the Native Village of Nuiqsut and several non-profit organizations to reject BLM's environmental analysis of ConocoPhillips' 2018-2019 winter exploration plan, rejecting arguments under the Administrative Procedure Act and concluding that BLM's review of alternatives to the plan satisfied environmental review requirements. Native Vill. of Nuiqsut v. Bureau of Land Mgmt., --- F. Supp. 3d ---, No. 3:19-CV-00056-SLG, 2020 WL 113495 (D. Alaska Jan. 9, 2020).

  • DC District Court Upholds FOIA Compromise for Access to Pipeline Info. Following a FOIA request for landowner information along a pipeline route, the D.C. District Court OK’d disclosure of landowners' initials and street names (but not precise addresses) as suggested by the FERC and rejecting the requester’s claim that more details would ensure that the project sponsor notifies all affected landowners. Niskanen Center v. FERC, --- F. Supp. 3d ---, No. CV 19-125 (JEB), 2020 WL 224515 (D.D.C. Jan. 15, 2020).

  • Mayor Group Says Colorado Climate Change Case Belongs in State Court. A group of mayors argued in their amicus brief that the Tenth Circuit should uphold a decision that rejected a bid by major oil companies to remove climate change claims to federal court.

  • Exxon Accuses Mass. AG of Timing her Suit to Coincide with NY Lawsuit. Exxon suggested Massachusetts Attorney General Maura Healey timed the launch of her lawsuit accusing the oil company of deceiving investors and consumers about business risks from climate change to coincide with the climate fraud trial in New York. The intended effect of such a move may have backfired since the NY AG’s suit failed.

  • Enerplus Scores Refund of ORRI. The Eighth Circuit upheld an award of almost $3 million in overpaid overrides plus costs and fees after Enerplus demonstrated it overpaid the ORRI holder as part of a settlement. Enerplus Res. (USA) Corp. v. Wilkinson, --- F.3d ---, No. 17-3708, 2020 WL 209576 (8th Cir. Jan. 14, 2020).

  • TX Appellate Court Upholds Dismissal of Accounting Claim. A court of appeals in Texas denied claims that a mortgage company held leasehold or reversionary interests in a production unit, concluding instead that the plaintiff only held a royalty interest, the unit operator had no obligation to afford an un-leased co-tenant an opportunity to ratify prior leases terminated via foreclosure, and the royalty owner had no right to an accounting on a working-interest basis. Samson Exploration, LLC v. T.W. Moak, --- S.W.3d ---, No. 09-18-00463-CV, 2020 WL 238538 (Tex. App. Jan. 16, 2020).

  • Texas Appellate Court Tackles ORRI Burdens. Interpreting an ORRI arrangement, a court of appeals in Texas held that a well operator did not owe overrides on production from a horizontal well producing from certain zones expressly excluded by the parties' ORRI assignment and related agreements. Jones Energy, Inc. v. Pima Oil & Gas, L.L.C., --- S.W.3d ---, No. 07-17-00456-CV, 2020 WL 253340 (Tex. App. Jan. 16, 2020).

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