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At the Well Weekly (v.11.9.2018)

Oil + Gas Update - Elections and Energy Issues, Climate Change Lawsuits, and Dinosaur Fossils.


In a busy week following our last report, the Republicans lost the U.S. House on election day but kept the U.S. Senate while natural gas prices climbed despite a drop in oil prices. FERC issued approvals for several pipeline projects in the Appalachian region while the courts continue to issue orders that halt construction efforts for other projects. In Appalachia court news, the Commonwealth Court issued another decision on zoning and environmental rights, an Ohio appellate court weighed in on the rights of co-owners to lease bonus payments, and a NY court rejected condemnation rights for pipeline operators that lack all state certifications. In other regions, Colorado voters rejected 2,500-foot setbacks for oil and gas wells, dinosaur fossils qualify as "minerals" in Montana and therefore belong to the owner of the mineral estate, climate change suits continue to make headlines, and Florida voters banned offshore drilling.


Here's your week in review...


Rig Counts, Spot Prices + Oil Prices


  • Rigs: National (+1081); Marcellus (+56); Utica/Point Pleasant (-19)


  • Brent Crude: -$69.48 /bbl


  • West Texas Intermediate: -$59.85/bbl


  • NYMEX: December 2018 Contract +3.555 /MMBtu.


  • Spot Prices: Henry Hub (+$3.51/MMBtu); Dominion South (+$3.30 /MMBtu); Tenn. Zone 4 (+$3.37/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): A federal court of appeals halted further construction pending an appeal involving an Army Corps permit. The Virgin environmental air quality board pushed back the timeline for approval of an air compressor station in Buckingham County.


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


  • Constitution (Northeastern PA to NY): FERC granted Williams an additional two years to obtain necessary approvals to build the Constitution Pipeline.


  • Mariner East 2 (Western PA to Eastern PA): Sunoco reports that Mariner East 2 should be operational by the end of the year.


  • Mountain Valley Pipeline (Northern WV to Southern Va.): Protestors remain in the MVP path in Elliston Va. as winter approaches. MVP asked FERC for authorization to build the MVP Southgate project, a proposed interstate natural gas transmission pipeline designed to provide natural gas to meet increasing residential and commercial demand in central North Carolina.


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


  • PennEast (PA to Central Jersey): A federal judge has deferred ruling on the PennEast Pipeline’s eminent domain authority until further review of recent decisions by the Third Circuit Court of Appeals that upheld the right of another pipeline company to condemn private land to build the Atlantic Sunrise.


  • Rover (OH, WV, PA to Michigan): FERC approved the start of natural gas service on the final laterals for the Rover Pipeline project.


Headlines & Holdings - Appalachia


  • Ohio Appellate Court Rejects to One-Half Bonus Payment for O+G Lease. An appellate court in Ohio concluded that neither the one-half owner of the mineral estate nor the lessee owed half of the bonus payment to the other one-half owner of the oil and gas, concluding that the payment of bonus to the one-half owner did not constitute a conversion or unjust enrichment. Thompson v. Custer, --- N.E.3d ---, 2018 Ohio 4476 (Ohio App. Ct., Nov. 5, 2018).


  • Climate Change Recusal Battle Gets Ugly. A NY judge accused the NY Attorney General’s office of gamesmanship following the AG's request for recusal from the securities fraud suit against ExxonMobil for failing to inform investors about the effects of climate change. People v. Exxon Mobil Corp., No. 452044/2018 (N.Y. App. Ct.) (pending).


  • Commonwealth Court Rejects “Environmental Rights” Challenge to Wastewater Storage at Oil and Gas Well Site. The Commonwealth Court rejected a challenge to zoning approvals for oil and gas well sites based on allegations that wastewater is “toxic” and its storage violates environmental rights under Article I, sec. 27 of the Pennsylvania Constitution. Protect PT v. Penn Township Zoning Hearing Board, No. 3942 C.D. 2018 (Pa. Cmwlth., Nov. 8, 2018).


  • Fourth Circuit Pauses Atlantic Coast Pipeline Construction Pending Review of Water Permit in W. Va. The Fourth Circuit Court of Appeals issued a one-line order staying proceedings involving an Army Corps. permit for the pipeline project. Sierra Club v. Army Corps of Engineers, No. 18-2273 (4th Cir., Nov. 7, 2018).


  • NY Appellate Court Says No Condemnation Rights for Pipeline Operator. A NY court of appeals concluded that a pipeline company with condemnation rights cannot expropriate privately-owned land when the underlying project cannot be lawfully constructed for lack of a qualifying certificate under the state’s condemnation law because the project did not have a water quality certification from the state of New York. Matter of National Fuel Gas Supply Corp. v. Schueckler, --- N.E.3d ---, No. 725 CA 17-02021 (N.Y. App. Div., Nov. 9, 2018).


Headlines & Holdings - Beyond Appalachia


  • Colorado Voters Reject New Setbacks for Oil and Gas Wells. The Colorado electorate voted down propositions that would require well setbacks of 2,500 feet from occupied buildings and other protective areas.


  • TX Federal Judge Denies Exxon Bid for Reconsideration of Investor Class Action. A federal district judge denied Exxon's reconsideration motion following a decision that kept alive a class action lawsuit for securities fraud brought by investors alleging the company withheld negative information about climate change. Ramirez Jr. v. Exxon Mobil Corp., --- F. Supp. 3d ---, No. 16-03111 (N.D. Tex. Nov. 5, 2018).


  • Dinosaur Fossils Part of Mineral Estate Under Montana Law. The Ninth Circuit Court of Appeals concluded that the definition of "minerals" includes dinosaur fossils and belong to the owner of the mineral estate. Mary Murray v. Bej Minerals, LLC, --- F.3d ---, No. 16-35506 (9th Cir., Nov. 6, 2018).


  • Kids' Climate Change Trial on Hold. Following SCOTUS's recent involvement, the Ninth Circuit Court of Appeals stayed the trial of a lawsuit against the federal government for pushing policies that don't protect future generations from the negative effects of climate change pending review of the government's petition for a writ of mandamus. In re: USA v. U.S. District Court for the District of Oregon (9th Cir.) (pending).


  • Florida Voters Ban Offshore Drilling. The Florida electorate voted t amend the state's constitution to ban offshore drilling.