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At the Well Weekly (v.10.30.2020)

Oil + Gas Update | CHK Can Reject Gas Purchase Agreement.

Natural gas prices climbed since our last report, with the NYMEX and Henry Hub exceeding $3/MMBtu and Appalachian prices closing back in on $2/MMBtu.

In pipeline news, environmental groups challenged Mountain Valley Pipeline as a threat to endangered fish species while Sunoco received another notice of violation for a relatively small spill along the Mariner East pipeline route.

In Appalachia, courts addressed various discovery and evidentiary issues in cases involving oil and gas companies while the PA Office of Open Records ordered the disclosure of correspondence about petrochemical plants and other infrastructure between oil and gas companies and the state's economic development agency.

In other regions, CHK succeeded in its bid to reject a gas purchase agreement as part of its restructuring efforts.

Here's your week in review...

Rig Counts, Spot Prices + Oil Prices

  • Rigs: National (+296); Marcellus (26); Utica/Point Pleasant (6)

  • Brent Crude: -$38.31/bbl

  • West Texas Intermediate: -$36.15/bbl

  • NYMEX: November 2020 @ +$3.291/MMBtu

  • Spot Prices: Henry Hub (+$3.06/MMBtu); Dominion South (+$1.88/MMBtu); Tenn. Zone 4 (+$1.70/MMBtu)

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

WOPL - Appalachia

  • Adelphia Project (Greater Philadelphia Region): FERC issued an order authorizing Adelphia to begin work on converting part of the existing pipeline.

  • Atlantic Sunrise (Northeastern PA to SE Pennsylvania): Nothing new to report.

  • Dakota Access (Northwest US): Nothing new to report.

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

  • Keystone Pipeline (Canada/US): Nothing new to report.

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

  • Mariner East (Western PA to Eastern PA): Sunoco Pipeline L.P. received its sixth violation since August for operations in Lebanon County on Oct. 21 after 200 gallons of drilling fluid entered Snitz Creek on Oct. 19.

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

  • Mountain Valley Pipeline (Northern WV to Southern Va. and NC): Enviro groups filed suit against MVP alleging that two endangered species of fish — the Roanoke logperch and the candy darter — could be pushed closer to extinction if a natural gas pipeline is allowed to invade their waters.

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

  • NFG (PA): 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.

  • Norther Supply Access Project (Appalachia to Gulf Coast): 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

  • PA Superior Court Reviews Collateral Order for Production of Tax Returns in Cabot Dragonetti Litigation. The Superior Court upheld an order for the production of tax documents of lawyers and individuals accused by Cabot of pursuing frivolous, vexatious litigation and wrongfully using civil proceedings, holding that the production of documents does not violate privacy rights of the lawyers and individuals particularly where the plaintiff requests punitive damages. Cabot Oil and Gas Corporation v. Speer, --- A.3d ---, No. 1926 MDA 2019, 2020 PA Super 258, 2020 WL 6266953 (Pa. Super. Oct. 26, 2020).

  • PA Office of Open Records Orders Disclosure of DCED Records Regarding Meetings with Gas and Pipeline Companies. The Pennsylvania Office of Open Records granted a request for documents addressed to the Pennsylvania Department of Community and Economic Development pursuant to the Right-to- Know Law (“RTKL”), 65 P.S. §§ 67.101 et seq., seeking records related to communications and meetings between the Department and ExxonMobil companies about potential petrochemical plants or pipelines. In re: Jennifer Clark v. DCED, Docket No: AP 2020-0678, 2020 WL 6290515 (Pa. Off. Open Rec. October 23, 2020).

  • Rig Company Ordered to Produce Docs in Fatality Case. A federal court in Pennsylvania ordered one of SWEPI’s contractors to produce multiple email threads, field service reports, and an internal memorandum in a rig-site fatality case, concluding after in camera review that the work-product doctrine did not prevent disclosure. Jones v. SWEPI L.P., --- F. Supp. 3d ---, No. 2:19-CV-00050, 2020 WL 6322815 (W.D. Pa. Oct. 28, 2020).

  • Third Circuit Says Expert Testimony about PPE and Safety Unnecessary to Prove FLSA Overtime Claims. The Third Circuit remanded a case after determining that the plaintiffs’ expert opinion excluded by the district court was unnecessary to prove plaintiffs' FLSA case alleging the right to receive payment for the time of “donning” and “doffing. Tyger v. Precision Drilling Corp., --- F.3d ---, No. 20-1070, 2020 WL 6268335 (3d Cir. Oct. 26, 2020).

Headlines & Holdings - Beyond Appalachia

  • CHK May Reject Gas Purchase Agreement with ETC. A federal bankruptcy court concluded that CHK may reject a gas purchase agreement with ETC under Section 365 of the Bankruptcy Code because “(i) the requisite intent is absent due to the parties’ implementation of an exclusive personal remedy in the event of a breach; (ii) the ETC Purchase Agreement does not touch and concern Chesapeake's real property interests; and (iii) the agreement lacks the required privity to establish a covenant running with the land under Texas law.” In re: Chesapeake Energy Corp., --- B.R. ---, No. 20-33233, 2020 WL 6325535 (Bankr. S.D. Tex. Oct. 28, 2020).

  • Oregon Supreme Court Limits Public Trust Doctrine. The Oregon Supreme Court resisted a request to interpret the public trust doctrine so as to impose broad fiduciary duties on the state, akin to the duties of private trustees, that would require the state to protect public trust resources from effects of greenhouse gas emissions and consequent climate change. Chernaik v. Brown, 367 Or. 143, 2020 WL 6193813 (Or. 2020).

  • Colo. Federal Court Denies Bid to Bust Pooling Order for Exceeding Size Limits in O+G Lease. A federal court in Colorado concluded that the Colorado Oil and Gas Conservation Commission's order pooling the plaintiff's lease into units exceeding size limitations in the parties' oil and gas lease did not render the plaintiff an unleased working interest owner, holding that although the order exceeded size limitations in the lease, the plaintiff never objected to the pooling order or sued for breach of the lease. Wolverine Energy Holdings, LLC v. Noble Energy, Inc. --- F. Supp. 3d ---, No. 120CV00905DDDSTV, 2020 WL 6292733 (D. Colo. Oct. 27, 2020).

  • Independent Contractor Rule Bars Recovery for Injuries at Rig Site. A federal court in Texas granted summary judgment in favor of an oil and gas company and its service provider, holding that neither company can be held liable for the plaintiff's negligence claims because of the "independent contractor" rule, the plaintiff has no independent negligence claims against them, the companies cannot be held vicariously liable for their respective subcontractors’ negligence, and the companies owed no independent duty to the plaintiff. Coleman v. BP Exploration & Production Inc., --- F. Supp. 3d ---, No. 3:19-CV-102, 2020 WL 6292491 (S.D. Tex. Oct. 27, 2020).

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