Oil and Gas Update - Commonwealth Court Schedules Briefing After Remand in Another Zoning Case Involving Oil and Gas Wells.
Since our last report, the NYMEX opened higher than last week but spot prices in Appalachia dipped a bit alongside lower oil prices and a slight drop in the rig counts. Pipeline projects continue to face litigation and regulatory challenges. In Appalachia court news, the Commonwealth Court is scheduled to hear another zoning case involving the intersection of oil and gas wells, local zoning, and the Pennsylvania Constitution's environmental rights provision while the U.S. Supreme Court lifted the stay for the climate change case brought by kids against the feds. In other news, a Texas appellate court resolved a dispute between a shipper and its common carrier regarding allocation of adjustments for moving NGLs to the shipper's designated consignees.
Here's your week in review...
Rig Counts, Spot Prices & Oil Prices
Rigs: National (-1067); Marcellus (-54); Utica/Point Pleasant (+20)
Brent Crude: -$73.13/bbl
West Texas Intermediate: -$63.66/bbl
NYMEX: November 2018 Contract expired @ +$3.185/MMBtu. December 2018 Contract opened +3.261/MMBtu.
Spot Prices: Henry Hub (-$3.29/MMBtu); Dominion South (-$2.69/MMBtu); Tenn. Zone 4 (-$2.66/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:
Atlantic Coast (W. Va. to Va. and NC): The project faces additional court challenges by local municipalities in Virginia. The Augusta County Zoning Board in Virginia denied a request for special-use approval of a storage facility in connection with the project. The company reports that regulatory hurdles upped the project cost but that key segments of the line should be operational in 2019 with full operation slated for 2020.
Atlantic Sunrise (Northeastern PA to SE Pennsylvania): Nothing new since our last report.
Constitution (Northeastern PA to NY): Nothing new since our last report.
Mariner East II (Western PA to Eastern PA): Nothing new since our last report.
Mountain Valley Pipeline (Northern WV to Southern Va.): Relatively quiet. Demonstrators gathered Tuesday outside the headquarters of Roanoke Gas Co. to question its involvement with the pipeline project.
NEXUS (Ohio to Michigan): FERC approved operation of compressor stations in Ohio subject to additional evidence of restoration progress before commencing service.
PennEast (PA to Central Jersey): Local government officials raised concerns during an approval process for wind turbines that the turbines are close to part of the PennEast Pipeline. The wind power developer plans to coordinate with PennEast.
Rover (OH, WV, PA to Michigan): FERC approved the company’s request to put the last two segments of its pipeline into service.
Headlines & Holdings - Appalachia
Commonwealth Court Poised to Hear Additional Arguments on Article I, Sec. 27, Local Ordinances in Another Zoning Case. The Commonwealth Court issued a briefing schedule in Delaware Riverkeeper Network v. Middlesex Township, R.E. Gas Development, No. 2609 CD 2015 (Pa. Cmwlth., June 7, 2017), vacated and remanded, 270 WAL 2017 (Pa., Aug. 3, 2018) The Commonwealth Court previously upheld a zoning ordinance that authorized oil/gas wells in residential/agricultural zones, but its decision predated the PA Supreme Court's PEDF decision on Article I sec. 27, and the Gorsline decision on local zoning ordinances. The Supreme Court vacated the Middlesex order and remanded for Commonwealth Court to review the case in light of PEDF and Gorsline. Briefing should close near the end of the year under the current schedule.
Federal Court Dismisses Lawsuit Against FERC for Lack of Jurisdiction. A federal judge dismissed a lawsuit filed in New Jersey federal court brought by the New Jersey Conservation Foundation against FERC regarding the PennEast Pipeline given that the D.C. Circuit or Third Circuit have jurisdiction under the Natural Gas Act regarding eminent domain orders and the organization’s claims were “interwoven” with a FERC eminent domain order regarding the pipeline project. New Jersey Conservation Foundation v. FERC, --- F. Supp. 3d ---, No. 3:17-cv-11991 (D. N.J., Oct. 30, 2018).
No Unconstitutional “Quick Take” by Pipeline Operator, Third Circuit Holds. The Third Circuit rejected arguments that a district court’s order granting an injunction to Transco following its condemnation of pipeline easements under the Natural Gas Act for the Atlantic Sunrise project violated separation of powers by effectively conferring “quick take” eminent domain authority reserved for the legislative branch of government, holding instead that the pipeline operator already went through the rigors of the condemnation process under the NGA to establish its condemnation rights and the injunction merely gave the pipeline operator possession rights consistent with that authority. Transcontinental Gas Pipe Line v. Permanent Easements for 2.14 Acres, --- F.3d. ---, No. 17-3075 (3rd Cir., Oct. 30, 2018).
WV Appeals Court Upholds Utility Commission Approval of Gas-Fired Plant. The West Virginia Supreme Court upheld an order of the state’s public service commission that approved the construction of a natural-gas fired power plant, concluding that the project will substantially and positively impact the state and local economies. Ohio Valley Jobs Alliance v. Public Service Commission of West Virginia, --- S.W.3d ---, No. 18-0249 (W. Va., Nov. 1, 2018) .
SCOTUS Lifts Temporary Stay of Climate Change Lawsuit Against the Feds. The Supreme Court issued an order denying the government’s request for a writ of mandamus to stop courts from entertaining a lawsuit brought by children against the federal government alleging the government’s failure to address climate change has deprived constitutional rights, concluding that the Ninth Circuit could still enter mandamus relief following trial such that the Supreme Court shouldn’t order that relief now. In re United States et al., No. 18A410 (U.S., Nov. 2, 2018).
Headlines & Holdings - Beyond Appalachia
Shipper Prevails Against Common Carrier in TX in Dispute Over NGL Cost Adjustments. An appellate court in Texas concluded that a common carrier had the obligation to deliver a volume of mixed NGLs to the consignee designated by the shipper equal to net volumes less adjustments pursuant to the common carrier’s tariff without any adjustment based on volume imbalances, and its failure to provide tariff notices for adjustments as required to discharge its obligations rendered summary judgment in its favor improper. Occidental Energy Marketing, Inc. v. West Texas LPG Pipeline L.P., --- S.W.3d ---, No. 14-17-00067-CV (Tex. App., Oct. 30, 2018).