Oil + Gas Update - Group Lacks Standing to Challenge FERC's Limited Approach to Evaluating Effects of Pipeline Projects on Climate.
Oil prices rebounded since our last report while natural gas prices remained relatively flat. The national rig count continued its decline, dropping another two units since last week, while the rig counts for the Marcellus and Utica remain relatively flat. In pipeline news, the D.C. Circuit avoided thorny questions about the extent of FERC's authority to review the effects that pipeline infrastructure projects have on GHG emissions. In Appalachia court news, the Commonwealth Court upheld a prison sentence imposed on a protestor who engaged in disruptive activity on Sunoco's pipeline easement after already being held in contempt. In other news, a federal court in New Mexico addressed the obligation to pay royalties on fuel gas while the Tenth Circuit partially reversed BLM's decision to grant permits for wells targeting the Mancos Shale in the San Juan Basin for failing to consider the cumulative effect of the wells on water resources.
Here's your week in review...
Rig Counts, Spot Prices + Oil Prices
Rigs: National (-988); Marcellus (+63); Utica/Point Pleasant (-17)
Brent Crude: +$71.76/bbl
West Texas Intermediate: +$62.52/bbl
NYMEX: June 2019 Contract @ -$2.610/MMBtu.
Spot Prices: Henry Hub (-$2.59/MMBtu); Dominion South (+$2.21/MMBtu); Tenn. Zone 4 (+$2.14/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): The CEO of Dominion Energy, sponsor of Atlantic Coast Pipeline, plans to take its case all the way to the U.S. Supreme Court, if necessary, to resume construction in Q3 2019. The Fourth Circuit heard argument on its December ruling that stayed authorizations of key permits issued by the US Fish & Wildlife Service to ACP.
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): Another protestor lands in hot water after he barricaded himself inside a section of the pipeline that MVP was nearly ready to place underground.
NEXUS (Ohio to Michigan): Nothing new to report.
NFG FM100 Project (NC PA to Transco): Nothing new to report.
Northeast Supply Enhancement Project (NY): Nothing new to report.
Northern Access (NW PA to Western NY): Nothing new to report.
PennEast (PA to Central Jersey): Bethlehem Township approved a right-of-way for PennEast giving the company the right to construct nearly 1,900 feet of pipeline to pass through the municipality.
Regional Energy Access (NE PA to PA/NJ): 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 Superior Court Upholds Surface Rights in Coal Case. The Pennsylvania Superior Court concluded that surface owners could not block a coal company’s right to construct a road to access coal facilities after negotiations between the company and the surface owner broke down, reasoning that surface rights exist without the additional agreement and enjoining the surface owners from preventing the company’s access rights. The Monongalia County Coal Company v. Weiss World L.P., --- A.3d ---, No. 962 WDA 2018, 2019 WL 2004042 (Pa. Super., May 7, 2019).
PA Commonwealth Court Upholds Mariner East Protestor’s Sentence for Contempt. The Commonwealth Court of Pennsylvania upheld a prison sentence imposed after a protester failed to comply with a preliminary injunction and subsequent contempt order that prevented her from interfering with Sunoco’s easement acquired by condemnation, noting that (during the contempt period) she stood in front of moving construction vehicles; ignited fires next to the pipeline construction fence; threw ground meat on workers; and baited the area with food to entice wild animals (including bears) to the construction site, and rejecting her argument that the trial court improperly categorized the civil contempt matter as indirect criminal contempt which resulted in an illegal and excessive prison sentence. In re: Sunoco Pipeline, L.P., Appeal of Ellen S. Gerhart, --- A.3d ---, No. 1561 C.D. 2018 (Pa. Cmwlth., May 8, 2019).
Headlines & Holdings - Beyond Appalachia
DC Circuit Holds that Group Lacked Standing to Challenge Pipeline Project While Avoiding Question of FERC’s Climate-Change Review Authority. The DC Circuit Court of Appeals held that an environmental group lacked “organizational” standing to challenge Dominion’s New Market expansion project and avoided requests by the group, states, and others to review FERC’s limited analysis of greenhouse gas emissions tied to natural gas infrastructure projects as part of its review authority. Otsego 2000 Inc. v. FERC, --- F.3d ---, No. 18-1188 (D.C. Cir., May 8, 2019).
NM Federal Court Rejects Lessees Bid to Skip Paying Royalties on Fuel Gas. A federal court in New Mexico denied a bid for summary judgment filed by a lessee claiming that it owed no royalties to lessors for fuel gas, holding that although the lessee was entitled to deduct the value of the fuel gas consumed as a post-production cost, it must still pay royalty on the wellhead value of the fuel gas consumed, and fact issues about that valuation precluded summary judgment. Anderson Living Tr. v. Energen Res. Corp., No. 13-CV-00909 WJ/CG, 2019 WL 1992910 (D.N.M., May 6, 2019).
Tenth Circuit Issued Mixed Decision on NEPA Challenge to Oil + Gas Permits issued by BLM for the Mancos Shale. The Tenth Circuit concluded that although the Bureau of Land Management properly considered certain aspects of applications to drill oil and gas wells targeting the Mancos Shale in the San Juan Basin in New Mexico, the agency had the obligation to consider cumulative impacts of future oil and gas wells in its environmental assessment and failed to weight the effects of water consumption for drilling in the proposed area. Dine Citizens Against Ruining Our Env't v. Bernhardt, No. 18-2089, 2019 WL 1999298 (10th Cir., May 7, 2019).
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