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At the Well Weekly (v.3.15.2019)

Oil + Gas Update - Commonwealth Court Holds that Oil + Gas Lease Transactions are Subject to State's Consumer Protection Law.

Natural gas prices dropped again since our last report alongside an uptick in oil prices and a somewhat steady rig count. In pipeline news, the Pennsylvania Attorney General empaneled a grand jury to investigate Mariner East construction activities while landowners asked SCOTUS to weigh in on decisions confirming Atlantic Sunrise's condemnation authority. In Appalachia court news, the Commonwealth Court held that oil and gas lease transactions are subject to challenge under the state's consumer protection law. In other regions, a court of appeals in Texas addressed obligations of working-interest co-tenants.

Here's your week in review...

Rig Counts, Spot Prices + Oil Prices

  • Rigs: National (-1026); Marcellus (65); Utica/Point Pleasant (14)

  • Brent Crude: +$67.00/bbl

  • West Texas Intermediate: +$57.36/bbl

  • NYMEX: April 2019 Contract @ -$2.82/MMBtu.

  • Spot Prices: Henry Hub (-$2.81/MMBtu); Dominion South (-$2.48/MMBtu); Tenn. Zone 4 (-$2.40/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 various pipeline projects in Appalachia:

  • Adelphia Project (Greater Philadelphia Region): Nothing new to report.

  • Atlantic Coast (W. Va. to Va. and NC): Nothing new to report.

  • Atlantic Sunrise (Northeastern PA to SE Pennsylvania): Pennsylvania landowners have asked the U.S. Supreme Court to hear challenges to federal court decisions that landowners say improperly allowed Atlantic Sunrise to access property without first arranging for just compensation.

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

  • Empire Pipeline (NY to PA): FERC approved Empire’s project to expand capacity and build new facilities.

  • Leidy South - Benton Loop Expansion (PA): Nothing new to report.

  • Mariner East (Western PA to Eastern PA): The Pennsylvania Attorney General confirmed that it has opened an investigation into Mariner East construction activities, following the Chester County D.A.’s decision to do the same.

  • Mountaineer XPress (WV): Nothing new to report.

  • Mountain Valley Pipeline (Northern WV to Southern Va. and NC): Roanoke County is accepting $500,000 in mitigation money from the Mountain Valley Pipeline to compensate for the project’s impact on historically significant areas around Bent Mountain.

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

  • NFG FM100 Project (NC PA to Transco): Nothing new to report.

  • Northern Access (NW PA to Western NY): Nothing new to report.

  • PennEast (PA to Central Jersey): PennEast responded to the Attorney General’s claim that the Third Circuit should stay the pending appeal over the pipeline company’s authority to condemn state property, arguing that the state’s protected land won’t be harmed by the company’s condemnation of state-owned property along the pipeline route.

  • Regional Energy Access (NE PA to PA/NJ): Nothing new to report.

  • Rover (OH, WV, PA to Michigan): A local judge concluded that Ohio's environmental agency waited too long to challenge Clean Water Act permits for the pipeline (see below for more details).

  • TransCanada Eastern Panhandle Project (PA to WV): Nothing new to report.

Headlines & Holdings - Appalachia

  • Commonwealth Court Says Oil and Gas Leasing Activities Subject to State’s Consumer Protection Law. In a case of first impression, the Commonwealth Court held that the Attorney General pleaded sufficient facts that production companies engaged in unlawful conduct during the leasing of subsurface oil and gas rights from private landowners in northeastern Pennsylvania as part of their joint venture such that the complaint stated viable claims against the defendants under the state’s Unfair Trade Practices and Consumer Protection Law. Anadarko Petroleum Corp. v. Commonwealth of Pennsylvania; --- A.3d ---, No. 58 C.D. 2018, 2019 WL 1211892 (Pa. Cmwlth., Mar. 15, 2019).

  • Commonwealth Court Holds that Well Operator Can Challenge Local UIC Ordinance Without Waiting for Federal Approvals. The Commonwealth Court rejected claims by a municipality that an underground injection well operator should wait until it receives federal permits before challenging a local ordinance that prohibits disposal wells within the municipality. In re: Appeal of Penneco Environmental Solutions LLC, --- A.3d ---, No. 931 CD 2018 (Pa. Cmwlth., March 8, 2019).

  • Federal Judge in Mich. Bars Evidence of Tort Violations During Rover Condemnation Proceedings. A federal judge in Michigan precluded evidence regarding tort violations resulting from Rover’s pipeline construction activities as outside the scope of damages that are relevant in condemnation proceedings. Rover Pipeline LLC v. 1.23 ACRES OF LAND, --- F. Supp. 3d ---, No. 17-10365, 2019 WL 1109944 (E.D. Mich., Mar. 11, 2019).

  • County Judge in Ohio Rejects Agency’s Attempts to Regulate Rover Pipeline Construction Activities. A county judge in Ohio concluded that the Ohio Environmental Protection Agency waived its right to regulate pipeline construction under the Clean Water Act because the state had a year to challenge permits and did not do so. Ohio v. Rover Pipeline, LLC, No. 2017-CV-02216 (Ohio C.P., March 12, 2019).

  • Fourth Circuit Rejects Coal Company Complaints about MVP’s Condemnation of Surface Easements. The Fourth Circuit held that Mountain Valley Pipeline is entitled to immediate possession of easements condemned for pipeline construction and rejected claims by coal owners attempting to introduce evidence of the effect of the pipeline on the coal estate, reasoning that once a pipeline has been authorized by the Federal Energy Regulatory Commission, the developer has “the sole power to define the extent of the taking,” a court cannot force it to take more, and any evidence related to the coal property that MVP did not seek to condemn would be irrelevant. Mountain Valley Pipeline, LLC v. W. Pocahontas Properties Ltd. P’ship, --- F.3d ---, No. 18-1329, 2019 WL 1140648 (4th Cir., Mar. 13, 2019).

  • Pipeline Company Settles for $3.7 Million in Unpaid Overtime under FLSA. A federal judge approved a pipeline consulting company’s consent order with the federal government in which the company agrees to pay $3.7 million for unpaid overtime violations under FLSA. Acosta v. Team Environmental LLC, No. 2:16-cv-03491 (S.D. W. Va., March 13, 2019).

Headlines & Holdings - Beyond Appalachia

  • Texas Appellate Court Addresses Obligations of Working-Interest Co-Tenants. A court of appeals in Texas concluded that a lease held by a working-interest co-tenant expired for lack of production and could not be maintained by production on the property pursuant to separate leases held by another working-interest co-tenant. Cimarex Energy Co. v. Anadarko Petroleum Corp., --- S.W.3d ---, No. 08-16-00353-CV, 2019 WL 1146790 (Tex. Ct. App., March 13, 2019).


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