Oil + Gas Update - PADEP Proposes O+G Emission Regs, EPA Proposes Revised WOTUS Definition, and PennEast and Mariner East Get Wins.
Since our last report, oil prices climbed slightly alongside a flat rig count while natural gas prices dropped to around $4/MMBtu amidst reports of forthcoming mild temperatures. In pipeline news, PennEast received an important order confirming its right to immediate possession of easements along the pipeline route, an ALJ denied the petition to stop the operation of Sunoco's Mariner East lines, and Mountain Valley reported that its project should be about 70% complete by the end of the year despite a number of recent regulatory and litigation challenges. On the regulatory scene, PADEP discussed proposed regulations governing emissions from existing oil and gas sources while the Army Corps and EPA issued a revised rule designed to limit waters and wetlands subject to federal jurisdiction. In Appalachia court news, courts in Ohio have been active, tackling cases involving arbitration, royalty interests, and pipeline condemnation authority. In other news, the "strip-and-gore" doctrine made an appearance in a dispute over mineral rights in Texas while the Eighth Circuit confirmed that landowners failed to plead a fraud claim against Dakota Access.
Here's your week in review...
Rig Counts, Spot Prices + Oil Prices
Rigs: National (-1071); Marcellus (-56); Utica/Point Pleasant (+17)
Brent Crude: +$61.07/bbl
West Texas Intermediate: +$52.29/bbl
NYMEX: January 2019 Contract @ -$4.136/MMBtu.
Spot Prices: Henry Hub (-$4.20/MMBtu); Dominion South (-$3.97/MMBtu); Tenn. Zone 4 (-$3.99/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 Fourth Circuit revoked additional ACP permits (see more below).
Atlantic Sunrise (Northeastern PA to SE Pennsylvania): Nothing new to report.
Constitution (Northeastern PA to NY). Nothing new to report.
Leidy South - Benton Loop Expansion (PA): Williams held a town hall with a small number of people about the project expansion located in Jordan Township just south of Sullivan County, PA.
Mariner East (Western PA to Eastern PA): An administrative law judge denied a petition for emergency relief filed by residents in Delaware and Chester Counties in Pennsylvania requesting a shut down of the pipelines for public safety reasons, holding that the the challengers didn't meet their heavy burden of proving the pipeline is unsafe. PUC expresses concerns about corrosion throughout Mariner East I.
Mountain Valley Pipeline (Northern WV to Southern Va. and NC): Mountain Valley Pipeline should be about 70% complete by the end of 2018 despite regulatory and litigation challenges. Meanwhile, six environmental groups are seeking to intervene in FERC proceedings regarding Mountain Valley Pipeline’s Southgate project. Also, Virginia’s State Water Control Board voted to consider revoking a water certification issued to Mountain Valley Pipeline conditioned on “reasonable assurance” that streams and rivers would not be contaminated.
NEXUS (Ohio to Michigan): The Sixth Circuit affirmed an order granting condemnation authority and injunctive relief to Nexus Gas Transmission LLC to access properties in Ohio and proceed with pipeline construction (see below for more).
PennEast (PA to Central Jersey): A federal judge in New Jersey granted an application filed by PennEast Pipeline Co. for orders of condemnation and injunctive relief to allow the immediate possession of rights-of-way along the pipeline route (see below for more).
Rover (OH, WV, PA to Michigan): Nothing new to report.
Headlines & Holdings - Appalachia
DEP's Proposed Air Regulations for Existing Oil and Gas Sources. DEP’s Air Quality Technical Advisory Committee met on December 13, 2018, to discuss proposed regulations of air emissions from existing oil and gas sources. The draft regulations may be accessed here.
ALJ Denies Emergency Petition to Stop Mariner East Operations. The ALJ in the Mariner East PUC proceeding denied the petition for emergency relief filed by residents in Delaware and Chester Counties in Pennsylvania requesting a shutdown of the pipelines for public safety reasons, holding that the challengers didn't meet their heavy burden of proving the pipeline is unsafe. The PUC will review the ALJ’s decision. Flynn et al. v. Sunoco Pipeline, C-2018-3006116 (Pa. PUC) (pending).
Federal Court in NJ Confirms PennEast Condemnation Authority. A federal judge in New Jersey granted an application filed by PennEast Pipeline Co. for orders of condemnation and injunctive relief to allow the immediate possession of rights-of-way along the pipeline route in advance of paying just compensation to landowners. In re PennEast Pipeline Company, --- F. Supp. 3d ---, No. CV 18-1585, 2018 WL 6584894 (D.N.J. Dec. 14, 2018).
Sixth Circuit Orders Arbitration in Dispute over O+G Lease Bonus Payment in Ohio. The U.S. Court of Appeals for the Sixth Circuit concluded that an arbitration agreement in an oil and gas lease with an unlimited arbitration provision compelled arbitration of a dispute over whether the lessee owed a signing bonus after confirmation of good title, remanding for an order compelling arbitration and a determination over whether the agreement allows class-wide arbitration. Rogers v. SWEPI LP, --- Fed. Appx. ---, No. 18-3229, 2018 WL 6444014 (6th Cir. Dec. 10, 2018).
Sixth Circuit OK’s NEXUS Condemnation Authority for Ohio Portion of Pipeline. The Sixth Circuit affirmed an order granting condemnation authority and injunctive relief to Nexus Gas Transmission LLC to access properties in Ohio and proceed with pipeline construction, reasoning in part that, without the order and injunctive relief, the company would face delays and additional costs. Nexus Gas Transmission v. City of Green, --- Fed. Appx. ---, No. 18-3325, 2018 WL 6437431 (6th Cir. December 7, 2018).
Ohio Appellate Court Holds that Court of Claims Lacks Jurisdiction over Well Operator’s Declaratory Judgment Action. An Ohio appellate court concluded that a well operator’s declaratory judgment claim against Ohio’s regulatory commission regarding certain regulatory payments belongs in court rather than the state’s court of claims to recover damages from the government. Wood v. Div. of Oil & Gas Resources Mgt., --- N.E.3d ---, 2018 Ohio 4968, No. 18AP-470 (Ohio Ct. App. December 11, 2018).
Fourth Circuit Rejects USFS Authorizations for Atlantic Coast Pipeline. The Fourth Circuit rejected authorizations granted by the U.S. Forest Service to Atlantic Coast Pipeline to cross national forests because the authorizations did not adequately protect trees. CowPasture River Pres. Ass'n v. Forest Serv., --- F.3d ---, No. 18-1144, 2018 WL 6538240 (4th Cir. Dec. 13, 2018).
Ohio Appellate Court Says Royalty Interest Referenced in Deed Preserves the Interest. A court of appeals in Ohio held that, under Ohio’s Marketable Title Act, a deed with a reference to a royalty interest is sufficient to preserve the royalty interest even if the deed does not specify the volume or page number in which the interest is filed of record or the date on which the holder retained the interest. Blackstone v. Moore, --- N.E.3d ---, No. 2017-1639, 2018 Ohio 4959 (6th Cir. Dec. 13, 2018).
Headlines & Holdings - Beyond Appalachia
EPA and Army Corps Propose WOTUS Rule Replacement. The EPA and the Corps introduced a replacement of the WOTUS rule to clarify which waterways in the country are subject to Clean Water Act jurisdiction. Click here for more.
Federal Court in Illinois Confirms Condemnation Authority for Pipeline Project. A federal judge in Illinois issued an order granting a preliminary injunction to a pipeline company to take immediate possession of property to begin construction of a 65-mile natural gas pipeline designed to serve regional markets. Spire STL Pipeline, LLC v. Turman, --- F. Supp. 3d ---, No. 3:18-CV-1502, 2018 WL 6523087 (S.D. Ill. Dec. 12, 2018).
Eighth Circuit Denies Landowner Fraud Suit Against Dakota Access. The Eighth Circuit Court of Appeals concluded that landowner claims against Dakota Access filed under a state statute prohibiting unfair trade practices in acquiring land or easements for the pipeline facilities sounded in fraud such that the complaints fell short of more demanding pleading rules. Olin v. Dakota Access, LLC, --- F.3d ---, No. 17-3418, 2018 WL 6538242 (8th Cir. Dec. 13, 2018).
TX Court of Appeals Confirms Title to Adjoining Tract Under "Strip-and-Gore" Doctrine. A court of appeals in Texas concluded that under the strip-and-gore doctrine - used by courts to determine a grantor's intent to convey adjoining tracts not mentioned in a deed - applied to the mineral interests in a 30-acre strip of adjoining land such that the grantor conveyed to the grantee that strip along with the expressly described acreage in the deed, reasoning that, contrary to the grantor's claims, the doctrine applies regardless of any ambiguity in the deed and regardless of the size of the adjoining tract. Green v. Chesapeake Exploration, L.L.C., --- S.W.3d ---, No. 02-17-00405-CV, 2018 WL 6565790 (Tx. App. Ct. Dec. 13, 2018).