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At the Well Weekly (v.4.17.2020)

Oil + Gas Update - Pennsylvania Supreme Court Agrees to Hear Oil + Gas Lease-Expiration Case.

The rig count dropped another 73 units since our last report, down 48% from last year at this time, while oil and gas prices fared no better. In pipeline news, SCOTUS asked New Jersey to respond to PennEast's cert petition, which usually means at least one Justice is poised to grant the request, while a federal court's decision on an Army Corps nationwide permit spells disruption for other pipeline projects that rely on those approvals. In Appalachia, the Pennsylvania Supreme Court is positioned to address various issues in a lease-expiration case the high court agreed to hear.

Here's the week in review...

Rig Counts, Spot Prices + Oil Prices

  • Rigs: National (-529); Marcellus (-35); Utica/Point Pleasant (9)

  • Brent Crude: -$28.08/bbl

  • West Texas Intermediate -$18.27/bbl

  • NYMEX: May 2020 @ -$1.598/MMBtu

  • Spot Prices: Henry Hub (-$1.64/MMBtu); Dominion South (-$1.42/MMBtu); Tenn. Zone 4 (-$1.39/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): Nothing new to report.

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

  • Empire Pipeline (NY to PA): Nothing new to report.

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

  • Mariner East (Western PA to Eastern PA): Nothing new to report.

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

  • Mountain Valley Pipeline (Northern WV to Southern Va. and NC): Nothing new to report.

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

  • NFG (PA): The PA Department of Environmental Protection is inviting public comments on proposed Section 401 Water Quality Certification for a National Fuel Gas pipeline project crossing Cameron, Clearfield, Clinton, Elk, McKean and Potter counties.

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

  • Northeast Supply Enhancement Project (NJ/NY): Nothing new to report.

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

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

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

  • Revolution Pipeline (PA): Nothing new to report.

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

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

Headlines & Holdings - Appalachia

  • PA Supremes Agree to Hear Lease Expiration Case. The Pennsylvania Supreme Court granted allowance of appeal in SLT Holdings v. Mitch-Well, No. 6 WAP 2020, a case in which a lessee lost/abandoned its lease for lack of production in paying quantities, failure to pay shut-ins, implied covenant issues, and failure to meet a drilling commitment. The petitioner has raised issues regarding the good-faith standard in Jedlicka and the court specifically requests a discussion on “Federal Jacobs” and abandonment issues.

  • SCOTUS Directs NJ to Answer Cert Petition. The Supreme Court asked the state of New Jersey to respond to PennEast’s cert petition. That usually signals at least one Justice would vote in favor of granting the petition.

  • Ohio Federal Court Restrains Sale of Mineral Interest. A federal court in Ohio restrained landowners from conveying their mineral interests to anyone other than the purchaser, holding that the purchaser made the case for an injunction and the landowners can’t back out of this deal to pursue a better offer they received before closing. Recon Natural Resources, LLC v. Cook, --- F. Supp. 3d ---, No. 5:20-CV-0733, 2020 WL 1862669 (N.D. Ohio Apr. 14, 2020).

  • Kentucky Appellate Court Upholds Oil and Gas Lease Expiration Holding. An appellate court in Kentucky held that a lease expired after ten years passed without the lessee engaging in anything to secure production and rejecting testimony from the lessee that gas from a farm tap from the wells satisfies production in paying quantities.Crisp v. Blackridge Appalachian Land, LLC, --- S.W.3d ---, No. 2019-CA-000991-MR, 2020 WL 1898371 (Ky. Ct. App. Apr. 17, 2020).

  • Mariner East Securities Action Stays in PA. A federal judge denied a bid to transfer a securities class action against Sunoco to Texas, reasoning that the two cases aren’t so similar that would compel the court to reject the plaintiffs’ choice of forum. Allegheny County Employees’ Retirement System v. Energy Transfer LP, --- F. Supp. ---, No. CV 20-200, 2020 WL 1888950 (E.D. Pa. Apr. 16, 2020).

  • Riverkeeper Loses Bid to Require Permit that is Not Required by Any Agency.A federal judge in Philadelphia rejected the Riverkeeper’s demand to impose a “pointless requirement” on Sunoco to obtain a federal permit that EPA would not issue because the company secured the state-law equivalent permit.Delaware Riverkeeper Network v. Sunoco Pipeline LP, --- F. Supp. 3d ---, No. CV 18-2447, 2020 WL 1888954 (E.D. Pa. Apr. 16, 2020).

Headlines & Holdings - Beyond Appalachia

  • Rejection of Keystone Pipeline Nationwide Permit for ESA Non-Compliance Spells Danger for More Pipeline Projects. The U.S. District Court for the District of Montana tossed a nationwide permit the Army Corps of Engineers uses to approve water crossings for projects throughout the county, concluding that the agency hadn’t properly considered impacts on endangered species. The judge enjoined the permit nationwide such that the Army Corps can’t approve other projects under the streamlined process it typically uses for pipelines.

  • Montana Federal Court Rejects "Failure to Act" Claim against PHMSA. A federal court in Montana concluded that PHMSA's promulgation of rules to satisfy annual inspection requirements did not constitute a "failure to act" even if the court or others believed the agency should do more. Wildearth Guardians v. Chao, --- F. Supp. 3d ---, No. CV-18-110-GF-BMM, 2020 WL 1875472 (D. Mont. Apr. 15, 2020).

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