Oil + Gas Update - The New Year Starts Off Quietly.
Happy new year. Oil prices increased slightly since our last report while the national rig count dropped a bit. Pipeline projects in the region continue to face regulatory and litigation challenges that are likely to continue this year. Courts in Appalachia were relatively quiet during a short week while courts in other regions tackled policy exclusions for hydraulic fracturing activities, royalty class action issues, and climate change lawsuits.
Here's your week in review...
Rig Counts, Spot Prices + Oil Prices
Rigs: National (-1075); Marcellus (57); Utica/Point Pleasant (17)
Brent Crude: +$57.11/bbl
West Texas Intermediate: -$47.98/bbl
NYMEX: January 2019 Contract @ -$3.726/MMBtu.
Spot Prices: Henry Hub (-$3.56/MMBtu); Dominion South (-$3.22/MMBtu); Tenn. Zone 4 (-$3.28/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 pipeline projects in Appalachia:
Adelphia Project (Greater Philadelphia Region): Adelphia received an environmental assessment from FERC and a recommendation that the certificate include a finding of no significant environmental impact. The project will convert 50 of the 84 miles of existing pipe from oil to natural gas.
Atlantic Coast (W. Va. to Va. and NC): A Virginia state board is set to meet today to decide on the last permit needed for the 600-mile long project. Meanwhile, a federal court of appeals denied a request to expedite proceedings ahead of the time during which the company must fell trees despite the company's arguments that further delays could cost $20 million per week and up to 3,000 full-time jobs in WV and NC.
Atlantic Sunrise (Northeastern PA to SE Pennsylvania): Nothing new to report.
Constitution (Northeastern PA to NY). Nothing new to report.
Leidy South - Benton Loop Expansion (PA): Nothing new to report.
Mariner East (Western PA to Eastern PA): The Chester County District Attorney’s office appointed a special prosecutor in the Sunoco pipeline investigation.
Mountain Valley Pipeline (Northern WV to Southern Va. and NC): A federal judge is poised to rule on whether protestors in trees along the pipeline route need to climb down.
NEXUS (Ohio to Michigan): Nothing new to report.
PennEast (PA to Central Jersey): The NJ Attorney General is challenging a prior order that gave PennEast the right to condemn state-owned property for the pipeline route, invoking Eleventh Amendment immunity from suits against states in federal court notwithstanding FERC's order of condemnation as upheld by the federal court.
Rover (OH, WV, PA to Michigan): Nothing new to report.
TransCanada Eastern Panhandle Project (PA to WV): Maryland’s Board of Public Works voted against an easement for the pipeline company’s Panhandle Project.
Headlines & Holdings - Appalachia
PA Appellate Court Holds that Landowners Cannot Obtain Prescriptive Easement Against the Commonwealth. The Commonwealth Court dismissed a claim by an environmental organization in part because it claimed the group could obtain a prescriptive easement over state-owned property; the court reasoned that because claims of adverse possession do not lie against the Commonwealth and the establishment of prescriptive easements is analogous to the establishment of title to land by adverse possession, prescriptive easements cannot be maintained against Commonwealth property. Rachel Carson Trails Conservancy, Inc. v. Dep't of Conservation & Nat. Res. of Commonwealth, --- A.3d ---, No. 77 M.D. 2018, 2018 WL 6836111 (Pa. Cmwlth., Dec. 31, 2018).
Headlines & Holdings - Beyond Appalachia
Ninth Circuit Agrees to Hear Interlocutory Appeal in Kids' Climate Change Case. A majority panel of the Ninth Circuit concluded that the district court properly certified an interlocutory order for immediate review in a climate change case brought by children against the U.S. government, holding that the novel issues in the case are appropriate for an interlocutory appeal that ultimately may materially advance the resolution of the entire case. Juliana v. United States, No. 18-80176 (9th Cir. 2018) (pending).
Court Thwarts Attempt to Moot Royalty/PPC Class Action. A federal court in New Mexico denied a bid to moot out a royalty class action alleging improper royalty and post-production cost calculations, concluding that although the lessee agreed that leases did not authorize certain deductions there was no certainty about how the lessee would treat future post-production costs or calculate future royalty payments. Ulibarri v. Southland Royalty Co., LLC, --- F. Supp. 3d ---, No. 1:16-CV-215-RB-JHR, 2019 WL 78781 (D.N.M., Jan. 2, 2019).
ND Federal Court Denies Coverage Under Hydraulic Fracturing Exclusion. A federal court in North Dakota concluded that a policy exclusion for injury or damage caused by hydraulic fracturing activities relieved the insurer from covering losses resulting from injuries incurred during frac activities. Great W. Cas. Co. v. XTO Energy, Inc., --- F. Supp. 3d ---, No. 1:16-CV-387, 2019 WL 96300 (D.N.D. Jan. 3, 2019).