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At the Well Weekly (v.5.17.2019)

Oil + Gas Update - PA Supreme Court Denies Appeal in Clash Between Local Zoning of Oil + Gas Wells and Environmental Rights.

Natural gas and oil prices remained relatively flat since our last report following another drop in the national rig count. The pipeline scene was relatively quiet except for fines assessed against MVP and more protests of the ACP. In Appalachia court news, the Pennsylvania Supreme Court denied allowance of appeal from a decision that rejected an environmental-rights challenge to a local zoning ordinance authorizing oil and gas wells in additional zones. In other regions, the North Dakota Supreme Court invalidated oil and gas leases for public lands that violated public notice requirements and a court of appeals in Texas broadly interpreted the phrase "oil and gas" in a pipeline easement to authorize transportation of refined petroleum products.

Here's your week in review...

Rig Counts, Spot Prices + Oil Prices

  • Rigs: National (-987); Marcellus (-60); Utica/Point Pleasant (+20)

  • Brent Crude: +$72.21/bbl

  • West Texas Intermediate: +$62.76/bbl

  • NYMEX: June 2019 Contract @ -­$2.601/MMBtu.

  • Spot Prices: Henry Hub (+$2.61/MMBtu); Dominion South (+$2.23/MMBtu); Tenn. Zone 4 (-$2.13/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): Local religious leaders took to the streets in protest of the ACP project.

  • 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): Mountain Valley Pipeline will pay $266,000 in fines for environmental issues along the pipeline route that date back to April 2018.

  • 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): Nothing new to report.

  • 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 Supreme Court Denies Allowance of Appeal of Decision Upholding Local Ordinance that allows Oil + Gas Wells. The Pennsylvania Supreme Court denied a petition for allowance of appeal from a Commonwealth Court decision rejecting a challenge to a local ordinance that allegedly did not go far enough to protect the environment under Article I, sec. 27 of the Pennsylvania Constitution by allowing oil and gas wells in additional zones within the municipality, reasoning that (among other things) (a) local governments are creatures of statute and cannot venture beyond their statutory authority to "do more" in order to satisfy the Environmental Rights Amendment in the state constitution; (b) the local ordinance when enacted already accounted for environmental protections as required by both the municipality's enabling statute and the constitution; and (c) the local government cannot duplicate that which the PADEP regulates in the name of environmental rights. Frederick v. Allegheny Township, No. 449 WAL 2018 (Pa., May 14, 2019).

  • Federal Judge in PA Denies Legislators’ Bid for Intervention in DRBC-Authority Case. A federal judge in the Middle District of Pennsylvania denied a motion by state senators to intervene in the ongoing litigation over DRBC’s authority to regulate oil and gas wells as “projects” under the compact and regulations. Wayne Land & Mineral Group v. Delaware River Basin Commission, No. 3:16-CV-00897, 2019 WL 2110515 (M.D. Pa., May 17, 2019).

  • Sixth Circuit Upholds Mining Permit Over Co-Tenant's Objection to Surface Use. The Sixth Circuit Court of Appeals upheld a surface-mining permit issued to one of two co-tenants in the surface estate who also owned all the underlying coal despite the objections of the surface-owner co-tenant, holding that the coal owner had the right to mine all the coal and did not need the consent of the surface-owner co-tenant to exercise that right in order to satisfy permit application requirements. M.L. Johnson Family Properties, LLC v. Bernhardt, --- F.3d ---, No. 18-5520, 2019 WL 2120955 (6th Cir., May 15, 2019).

Headlines & Holdings - Beyond Appalachia

  • ND Supreme Court Says County Violated Public Notice Requirements for Oil + Gas Leases Covering Public Lands. The Supreme Court of North Dakota concluded that a county failed to comply with the public advertising requirements for oil and gas leases of public land as required by state statute, rendering those leases void and rejecting the county's argument that the leases are "non-operative" and fall within the exception to public notice requirements because the leases do not expressly prohibit surface activities. The court remanded to determine whether laches barred the lessees' request to recover bonus payments for the leases. Twin City Technical LLC v. Williams County and Williams County Commission, --- N.W.2d ---, No. 20180264, 2019 WL 2135917 (N.D., May 16, 2019).

  • TX Appellate Court Holds that the Phrase "Oil or Gas" in Pipeline Easement Means Refined Petroleum Products. A court of appeals in Texas concluded that a pipeline easement’s right-of-way to transport "oil or gas" includes the right to transport refined petroleum products such as gasoline and diesel and is not limited to "crude petroleum." Texan Land & Cattle II, Ltd. v. Exxon Mobil Pipeline Company, --- S.W.3d ---, No. 14-18-00038-CV, 2019 WL 2144637 (Tex. App., May 16, 2019).


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