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At the Well Weekly (v.2.5.2021)

Oil + Gas Update | SCOTUS Takes PennEast Pipeline Case.

Natural gas spot prices hit two-month highs since our last report before faltering slightly at the week's end, though analysts predict that prices will hold steady or climb over the next few weeks due to colder-than-normal temperatures across the country and in the northeast. Likewise, oil prices climbed slightly alongside an increase in the national rig count. In pipeline news, the U.S. Supreme Court granted certiorari in the PennEast Pipeline case while Mountain Valley Pipeline continues to face obstacles. In other regions, a Texas court of appeals says an Oklahoma-based company must resolve its gas-gathering dispute in the Lonestar state while the Fifth Circuit grappled with thorny lien priority issues.

Here's your week in review:

Rig Counts, Spot Prices + Oil Prices

  • Rigs: National (+392); Marcellus (30); Utica/Point Pleasant (+7)

  • Brent Crude: +$59.34/bbl

  • West Texas Intermediate: +$56.85/bbl

  • NYMEX: March 2021 @ +$2.789/MMBtu

  • Spot Prices: Henry Hub (+$2.91/MMBtu); Dominion South (+$2.72/MMBtu); Tenn. Zone 4 (+$2.65/MMBtu)

WOPL - Appalachia

  • Mountain Valley Pipeline. Various environmental groups challenged three FERC orders authorizing Mountain Valley Pipeline to resume operations while the WV DEP issued a proposed consent order that would obligate MVP to pay a $303,706 fine for violations of erosion and sediment control regulations in the state.

Headlines & Holdings - Appalachia

  • SCOTUS Agrees to Review PennEast Pipeline Case. The Supreme Court will decide whether a certificated pipeline company under the Natural Gas Act may condemn property in which a state holds interests despite Eleventh Amendment immunity from suits against states in federal court. The Court added an issue – whether the Third Circuit properly exercised jurisdiction over the appeal. The Solicitor General for the United States argued during certiorari briefing that New Jersey’s challenge to PennEast's rights under the Natural Gas Act is essentially a challenge to a FERC order such that the appeal belongs in the D.C. Circuit, not the Third Circuit. The Biden Administration’s DOJ declined to comment on whether it planned to change its stance in the PennEast Pipeline case now that SCOTUS granted certiorari but the expectation is that the DOJ will continue to back the pipeline’s cause given that DOJ is defending the supremacy of federal power under the Natural Gas Act.

Headlines & Holdings - Beyond Appalachia

  • Texas has Jurisdiction over Okla. Co.'s Gathering Agreement Dispute. A court of appeals in Texas said a dispute over a gas gathering agreement belongs in Texas courts because it has nothing to do with Oklahoma despite the location of gas in that state, holding that an Oklahoma-based company's contacts in Texas determines jurisdiction over the contract dispute. Calyx Energy III, LLC v. Enerfin Res. I Ltd., --- S.W.3d ---, No. 14-19-00790-CV, 2021 WL 330195 (Tex. App. Feb. 2, 2021).

  • Oil Producer's Statutory Lien has Priority over Bank's Perfected Security Interest. The Fifth Circuit held that, under Delaware law, a bank's properly perfected security interest in assets of a debtor had priority over an oil producers' unfiled, unperfected security interests in oil proceeds but the bank's security interest did not have priority over a statutory lien granted to the producer/debtor under the Oklahoma Lien Act. In re: First River Energy, --- F.3d ---, No. 19-50646, 2021 WL 358168 (5th Cir. Feb. 3, 2021).

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