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At the Well Weekly (v.11.1.2019)

Oil + Gas Update - PA Supremes Will Decide Applicability of State Consumer Protection Law to Oil + Gas Leasing.

The NYMEX and Henry Hub climbed slightly since our last report alongside flat index prices in Appalachia that haven't cracked $2/MMbtu for some time. In pipeline news, the PAPUC held hearings in the Mariner East case in which residents and opposition groups question the safety of the pipeline; PennEast urged the Third Circuit to reconsider its decision on the company's condemnation powers; and MVP project sponsors projected a 2020 completion date that carries with it a $5.5 billion price tag. In Appalachia court news, the Pennsylvania Supreme Court agreed to hear an appeal involving oil and gas leasing activities and the state's consumer protection statute.

Here's your week in review...

Rig Counts, Spot Prices + Oil Prices

  • Rigs: National (-822); Marcellus (-40); Utica/Point Pleasant (11)

  • Brent Crude: -$61.69/bbl

  • West Texas Intermediate: -$56.20/bbl

  • NYMEX: The November 2019 contract expired Tuesday @ ­+$2.597/MMBtu. The December 2019 contract opened at +­$2.691/MMBtu.

  • Spot Prices: Henry Hub (+$2.67/MMBtu); Dominion South (-$1.79MMBtu); Tenn. Zone 4 (-$1.75/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): Nothing new to report.

  • Atlantic Coast (W. Va. to Va. and NC): Race enters the debate over the Atlantic Coast Pipeline during oral argument in the Fourth Circuit regarding the legality of an air pollution permit the state board issued in January for a natural gas compressor station on the site of a former plantation where the forebears of residents worked as slaves.

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

  • 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): The PAPUC’s administrative law judge held hearings in a case in which numerous individuals, local governments, and environmental groups claim Mariner East poses a threat to the health and safety of the communities in which the pipeline is located. On the heels of the hearing, a third sinkhole developed along the construction route of the Mariner East pipeline. In related news, the company's response to a butane leak at the Marcus Hook facility met the state DEP's approval.

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

  • Mountain Valley Pipeline (Northern WV to Southern Va. and NC): MVP project sponsors pushed back the projected completion date for the pipeline to late 2020 and increased the estimated cost to as much as $5.5 billion.

  • 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): PennEast Pipeline urged the Third Circuit for reargument on its decision that the pipeline operator has no authority under the Natural Gas Act to condemn state-owned property, arguing that the decision upends settled law and urging the court, at a minimum, to let FERC weigh in on the issue.

  • 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 Supremes Accept Appeal Involving Oil + Gas Leasing and Consumer Protection Law. The Pennsylvania Supreme Court granted a petition for allowance of appeal in a case of first impression in which the Commonwealth Court held that the Attorney General pleaded sufficient facts that production companies engaged in unlawful conduct during the leasing of subsurface oil and gas rights from private landowners in northeastern Pennsylvania as part of their joint venture such that the complaint stated viable claims against the defendants under the state’s Unfair Trade Practices and Consumer Protection Law. The case is Anadarko Petroleum Corp. v. Commonwealth of Pennsylvania; --- A.3d ---, No. 58 C.D. 2018, 2019 WL 1211892 (Pa. Cmwlth., Mar. 15, 2019).

  • PA Court Orders Double Payment of Royalties. The Superior Court held that a lessee had the obligation to pay the plaintiffs their share of royalties held in suspense plus their share of royalties improperly paid to another royalty owner, resulting in a double payment of the same royalties to different owners, despite the lessee’s claims that its obligation ended when it released the suspense amounts, reasoning that the lessee had the obligation to pay the plaintiffs and plaintiffs have no obligation to chase the other royalty owners with whom they have no privity of contract. Hildebrand v. EQT Prod. Co., --- A.3d ---, No. 1524 WDA 2018, 2019 WL 4864078 (Pa. Super., Oct. 2, 2019).

  • Commonwealth Court Denies Zoning Exemption for Public Utilities in Sunoco Pipeline Case. The Commonwealth Court reviewed a local ordinance and concluded that it did not create a new exemption from local zoning requirements for certain structures and buildings associated with public utility projects (such as Sunoco’s), holding instead that the ordinance defined the existing statutory exemption and concluding that the municipality could create an express exemption but did not do so in this ordinance. Lorenzen v. W. Cornwall Twp. Zoning Hearing Bd., --- A.3d ---, No. 851 C.D. 2018, 2019 WL 5405314, at *7 (Pa. Cmwlth., Oct. 23, 2019).

  • PA Superior Court Upholds Conviction of Oil + Gas Company Fraudster. The Superior Court of Pennsylvania upheld a conviction for criminal fraud based on evidence that the defendant duped investors about the profitability of his new oil and gas service company and made off with investment proceeds without ever communicating back to the investors. Commonwealth v. Campbell, --- A.3d ---, No. 2076 MDA 2018, 2019 WL 5581551 (Pa. Super., Oct. 29, 2019).


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