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At the Well Weekly (v.11.23.2018)

Oil + Gas Update - Pennsylvania Supreme Court Agrees to Hear Appeal Involving the Rule of Capture and Trespass-by-Fracture Claims.

In a short week following our last report, gas prices held around $4/MMBtu alongside a flat rig count and falling oil prices. Some pipeline projects in Appalachia face protests and other challenges, including a new challenge to Mariner East before Pennsylvania's pipeline regulatory agency seeking an emergency order to cease operations. In Appalachia court news, the Pennsylvania Supreme Court granted discretionary review of a decision by the intermediate appellate court that declined to hold that the rule of capture bars so-called trespass-by-frac claims for money damages for drainage of un-leased tracts caused by neighboring operations. In other news, the Oregon federal judge presiding over the so-called "Kids Climate Change" suit says the case pending a decision from the Ninth Circuit on the government's bid for dismissal.

Here's your week in review...

Rig Counts, Spot Prices + Oil Prices

  • Rigs: National (-1079); Marcellus (58); Utica/Point Pleasant (17)

  • Brent Crude: -$60.72/bbl

  • West Texas Intermediate: -$52.11/bbl

  • NYMEX: December 2018 Contract -$4.035/MMBtu.

  • Spot Prices: Henry Hub (-$4.05 /MMBtu); Dominion South (-$4.03/MMBtu); Tenn. Zone 4 (-$4.20/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): ACP faced various issues last week including a protest by horseback, pressure from residents near the ACP compressor station in Virginia, and questions from NC's top environmental officials about the ACP Southgate extension. Meanwhile, the Army Corps suspended activities as the pipeline sponsor's request pending a Fourth Circuit appeal involving the pipeline's water permit.

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

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

  • Mariner East 2 (Western PA to Eastern PA): Residents in Chester and Delaware Counties filed a petition with the Pennsylvania Public Utility Commission seeking an emergency order to stop Sunoco from operating the Mariner East pipelines, alleging the company failed to give the public enough information about risks associated with the pipeline's operations.

  • Mountain Valley Pipeline (Northern WV to Southern Va.): MVP faced a protest from a man (later arrested) who climbed 20 feet and locked himself to equipment along the pipeline route in protest of the project. The appeal by environmental groups over FERC's authorization for the pipeline project remains pending.

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

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

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

Headlines & Holdings - Appalachia

  • PA Supremes Agree to Address Rule of Capture/Trespass by Fracture. The Pennsylvania Supreme Court granted allowance of appeal on the following question: "Does the rule of capture apply to oil and gas produced from wells that were completed using hydraulic fracturing and preclude trespass liability for allegedly draining oil or gas from under nearby property, where the well is drilled solely on and beneath the driller's own property and the hydraulic fracturing fluids are injected solely on or beneath the driller's own property?”

  • Ohio Appeals Court Says Oil/Gas Lease Expired Following Lack of Production for Three Years. A court of appeals in Ohio held that an oil and gas lease expired for lack of production during a three-year period predating acquisition of the lease by the defendant production company even though production ensued following the acquisition and plaintiff landowners accepted royalty payments. Victor v. Big Sky Energy, Inc., --- N.E.3d ---, No. 2017-A-0045, 2018 Ohio 4666 (Ohio Ct. App., Nov. 19, 2018).

  • PA Superior Court Holds that Heirs Entitled to Life Estates in Royalty Payments. The Superior Court of Pennsylvania reversed an order directing the executor of an estate to convey title and interest in mineral, oil, and gas rights to all beneficiaries equally in fee simple and held that the executor received fee simple title to the property, including the underlying oil and gas rights, while two other beneficiaries each received a life estate in royalty payments. In re: Estate of Leroy Bryan, No. 1498 WDA 2017, 2018 WL 6058730 (Pa. Super., Nov. 20, 2018).

Headlines & Holdings - Beyond Appalachia

  • Oregon Judge in Climate Change Case Stays Proceedings Pending Ninth Circuit Ruling. A federal judge in Oregon stayed the lawsuit filed by children alleging the federal government violated constitutional rights by failing to take steps to mitigate the effects of climate change, holding that the court should await a pending interlocutory appeal filed by the government in the Ninth Circuit alleging the case should be dismissed. Juliana et al. v. USA et al., No. 6:15-cv-01517 (D. Oregon, November 21, 2018) (pending).


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