Justia Energy, Oil & Gas Law Opinion Summaries

Equinor Energy LP operated oil and gas wells in North Dakota and contracted with its affiliate for saltwater gathering services. Versa Energy, LLC, a non-operating working interest owner in these wells, alleged that Equinor overcharged for these services. Versa petitioned the North Dakota Industrial Commission to determine the proper costs, claiming Equinor violated state law by charging more than the "reasonable actual cost" of operation.The North Dakota Industrial Commission concluded it had jurisdiction to adjudicate the dispute and determined that Equinor's costs were improper. The Commission set the proper cost for saltwater gathering services at $0.35 per barrel. Equinor appealed to the District Court of McKenzie County, which affirmed the Commission's order.The North Dakota Supreme Court reviewed the case and concluded that the Commission lacked jurisdiction to adjudicate the dispute. The court held that the Commission's regulatory authority under N.D.C.C. § 38-08-04 does not extend to adjudicating private contractual disputes. Additionally, the court determined that saltwater gathering costs are post-production costs, which fall outside the scope of "operation of a well" under N.D.C.C. § 38-08-08(2). Therefore, the Commission did not have jurisdiction under this statute to determine the proper costs for saltwater gathering.The North Dakota Supreme Court reversed the district court's order and vacated the Commission's order. View "Equinor Energy v. NDIC" on Justia Law

Michigan Electric Transmission Company (METC) owns a high-voltage transmission line with Michigan Public Power Agency (MPPA) and Wolverine Power Supply Cooperative. The case concerns the ownership of new transmission facilities, or "network upgrades," connecting a new solar generation park to the transmission line. METC claims exclusive ownership based on existing agreements, while MPPA and Wolverine disagree.The Federal Energy Regulatory Commission (FERC) reviewed the case and found that no agreement conclusively determined ownership rights. FERC declined to decide the ownership question, leading METC to petition for review.The United States Court of Appeals for the District of Columbia Circuit reviewed the case. The court agreed with FERC's interpretation that the relevant agreements did not grant METC exclusive ownership of the network upgrades. The court found that the Styx-Murphy line qualifies as a "system" under the Transmission Owners Agreement (TOA), and since METC is not the sole owner, it cannot claim exclusive ownership. The court also found that the Styx-Murphy Agreements did not preclude MPPA and Wolverine from owning network upgrades.The court denied METC's petitions for review, upholding FERC's decision. View "Michigan Electric Transmission Company, LLC v. FERC" on Justia Law

In the oilfields of West Texas, a dispute arose over the ownership of "produced water," a byproduct of oil-and-gas production. COG Operating, LLC, a hydrocarbon lessee, claimed ownership of the produced water under its oil-and-gas leases, arguing that the right to produce oil and gas includes the right to handle and dispose of the resulting liquid waste. Cactus Water Services, LLC, a surface-estate lessee, countered that once hydrocarbons are separated, the remaining produced water belongs to the surface estate unless expressly conveyed otherwise.The trial court ruled in favor of COG, declaring that COG owns the produced water and has exclusive rights to its possession, custody, control, and disposition. The court of appeals affirmed this decision, holding that produced water is oil-and-gas waste that belongs to the mineral lessee, not groundwater that belongs to the surface estate. The court emphasized that the leases did not suggest an intent to reserve rights to oil-and-gas waste for the surface owner.The Supreme Court of Texas reviewed the case and affirmed the lower courts' decisions. The Court held that under Texas law, a conveyance of oil-and-gas rights includes the right to handle and dispose of produced water, which is considered oil-and-gas waste. The Court noted that produced water is inherently part of hydrocarbon production and must be managed by the operator. The Court rejected Cactus's argument that produced water should be treated as surface estate water, emphasizing that produced water is distinct from groundwater and is subject to specific regulatory requirements for waste disposal. The Court concluded that the leases conveyed the right to produced water to COG, and any reservation of rights to produced water by the surface owner must be expressly stated in the conveyance. View "CACTUS WATER SERVICES, LLC v. COG OPERATING, LLC" on Justia Law

The case involves Oklahoma Gas and Electric Company (OG&E) and CKenergy Electric Cooperative, Inc. (CKenergy) regarding the provision of retail electric service to two facilities located in CKenergy's certified territory. OG&E began providing service to these facilities in 2017 and 2018, respectively. CKenergy filed an application with the Oklahoma Corporation Commission (the Commission) in 2019, requesting that OG&E be enjoined from continuing to serve the facilities, arguing that OG&E was in violation of the Retail Energy Supplier Certified Territory Act (RESCTA). OG&E contended that it was allowed to serve the facilities under the one megawatt exception of RESCTA.The Commission found that the connected load for initial full operation did not meet or exceed 1,000 kW at either facility and enjoined OG&E from providing service. OG&E appealed the Commission's order. The Commission also issued an order granting OG&E's request for a stay upon posting a supersedeas bond, which CKenergy and the Oklahoma Association of Electric Cooperatives (OAEC) appealed.The Supreme Court of the State of Oklahoma reviewed the case de novo. The Court held that the term "connected load for initial full operation" in the one megawatt exception of RESCTA refers to the total nameplate values of all connected electrical equipment when full operation of the facility commences. The Court found that the Commission's interpretation ignored the plain language of the statute and was not sustained by law. It was undisputed that the connected load for each facility exceeded 1,000 kW when full operation commenced. Therefore, the one megawatt exception applied, and the Commission improperly enjoined OG&E from providing service. The Court reversed the Commission's order and deemed the appeal regarding the stay moot. View "OG&E Co. v. OKLAHOMA CORPORATION COMMISSION" on Justia Law

Environmental groups challenged the Bureau of Land Management’s (BLM) approval of the Willow Project, an oil and gas venture in Alaska's northern Arctic. BLM approved the project in 2023, allowing ConocoPhillips Alaska, Inc. to construct oil and gas infrastructure in the National Petroleum Reserve. BLM prepared a Supplemental Environmental Impact Statement (SEIS) after a 2021 remand by the district court, which required BLM to reassess its alternatives analysis. BLM insisted on a full field development standard to avoid piecemeal development, which led to the exclusion of certain environmentally protective alternatives.The United States District Court for the District of Alaska granted summary judgment in favor of BLM, dismissing the plaintiffs' claims under the National Environmental Policy Act (NEPA), the Alaska National Interest Lands Conservation Act (ANILCA), the Naval Petroleum Reserves Production Act (Reserves Act), and the Endangered Species Act (ESA). The district court found that BLM had rectified the errors identified in its 2021 order and that the alternatives analysis satisfied NEPA, the Reserves Act, and ANILCA. The court also held that the plaintiffs had standing but had not shown that the defendants violated the ESA.The United States Court of Appeals for the Ninth Circuit affirmed in part and reversed in part the district court’s decision. The court held that BLM did not abuse its discretion in using the full field development standard to avoid the risks of piecemeal development. However, BLM’s final approval of the project was arbitrary and capricious under the Administrative Procedure Act (APA) because it did not provide a reasoned explanation for potentially deviating from the full field development standard. The court also held that BLM’s assessment of downstream emissions complied with NEPA and that BLM did not act arbitrarily in selecting mitigation measures under the Reserves Act. The court found that BLM complied with ANILCA’s procedural requirements and that the ESA consultation was not arbitrary or capricious. The court remanded the NEPA claim without vacatur, allowing BLM to provide a reasoned explanation for its decision. View "SOVEREIGN INUPIAT FOR A LIVING ARCTIC V. UNITED STATES BUREAU OF LAND MANAGEMENT" on Justia Law

Kimball Wind, LLC operates a wind facility in Nebraska, generating electricity transmitted on a network owned by the Western Area Power Administration (WAPA). Before operations began, WAPA determined that a substation expansion was necessary to safely transmit the facility's electricity. WAPA offered to cover part of the expansion costs, requiring Kimball Wind to pay the rest. Kimball Wind agreed under protest, believing WAPA wrongfully made it responsible for most of the costs. Kimball Wind petitioned the Federal Energy Regulatory Commission (FERC) for an order directing WAPA to reimburse its contribution to the substation expansion.The Federal Energy Regulatory Commission determined that section 211A of the Federal Power Act does not provide for the relief sought by Kimball Wind. The Commission found that Kimball Wind did not seek an order for transmission services, which is the sole form of relief provided by section 211A. Kimball Wind then filed a request for rehearing, arguing that the order was internally inconsistent and unsupported by substantial evidence. The Commission denied the request for rehearing.The United States Court of Appeals for the District of Columbia Circuit reviewed the case. The court agreed with the Commission that section 211A does not authorize the Commission to issue an order directing WAPA to reimburse Kimball Wind for its contribution to the substation expansion. The court found that Kimball Wind did not seek an order for transmission services, the only type of order the Commission may issue under section 211A. Consequently, the court denied the petition for review. View "Kimball Wind, LLC v. FERC" on Justia Law

The case involves a class action lawsuit brought by Jacklin Romeo, Susan S. Rine, and Debra Snyder Miller against Antero Resources Corporation. The plaintiffs, who own oil and gas interests in Harrison County, West Virginia, allege that Antero breached the terms of their leases by failing to pay the full one-eighth royalty specified in the leases. They argue that Antero improperly deducted postproduction costs from the gross sale proceeds of the gas, contrary to West Virginia Supreme Court precedents in Wellman v. Energy Resources, Inc. and Estate of Tawney v. Columbia Natural Resources, L.L.C.The United States District Court for the Northern District of West Virginia, presided over by Chief Judge Thomas S. Kleeh, certified two questions to the Supreme Court of Appeals of West Virginia. The first question asked whether the requirements of Wellman and Estate of Tawney extend only to the "first available market" as opposed to the "point of sale" when the duty to market is implicated. The second question asked whether the marketable product rule extends beyond gas to require a lessee to pay royalties on natural gas liquids (NGLs) and, if so, whether lessors share in the cost of processing, manufacturing, and transporting the NGLs to sale.The Supreme Court of Appeals of West Virginia reaffirmed its previous rulings in Wellman and Estate of Tawney, holding that the requirements extend to the point of sale, not just to the first available market. The court also held that royalties are payable on NGLs, but absent express language in the lease, lessors do not share in the costs of processing, manufacturing, and transporting residue gas and NGLs to the point of sale. The court emphasized that any deductions for postproduction costs must be clearly and unambiguously stated in the lease agreements. View "Romeo v. Antero Resources Corporation" on Justia Law

Dow Construction, L.L.C. leased property within a forced pooled drilling unit operated by BPX Operating Company. Dow received proceeds from the unit but disputed the deduction of post-production costs by BPX. Dow sought a judgment to recover these costs, while BPX sought dismissal and summary judgment on various grounds.The United States District Court for the Western District of Louisiana held that Dow had standing to sue and that the Louisiana doctrine of negotiorum gestio allowed operators to recover post-production costs. The court also ruled that the forced-pooling statute’s forfeiture provision included post-production costs and that claims under this statute were subject to a ten-year prescriptive period. BPX's motions to dismiss and for summary judgment were partially granted and denied, leading to an interlocutory appeal.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court affirmed the district court’s interpretation that La. Rev. Stat. § 30:10(A)(3) applies to mineral interest owners unleased by the operator. However, it vacated the district court’s ruling that negotiorum gestio allows operators to recover post-production costs, following a Louisiana Supreme Court decision in Self v. BPX Operating Co. The court affirmed that post-production costs are included within the forfeiture provision of La. Rev. Stat. § 30:103.2. Finally, the court reversed the district court’s finding on the prescriptive period, holding that claims under § 30:103.2 are subject to a one-year prescriptive period, not ten years.The case was remanded for further proceedings consistent with these findings. View "Dow Construction v. BPX Operating Co." on Justia Law

The case involves Francis Kaess, who owns mineral interests in land in Pleasants County, West Virginia, subject to an oil and gas lease with BB Land, LLC. The lease provides for in-kind royalties, meaning Kaess is entitled to a portion of the physical oil and gas produced. However, Kaess did not take his share in-kind, and BB Land sold his share and deducted postproduction costs from his royalties.The United States District Court for the Northern District of West Virginia reviewed the case and denied BB Land's motion for summary judgment on the issue of improper deductions. The court found that the requirements for deducting postproduction costs, as established in Wellman v. Energy Resources, Inc. and Estate of Tawney v. Columbia Natural Resources, LLC, apply to in-kind leases. BB Land then sought to certify questions to the Supreme Court of Appeals of West Virginia.The Supreme Court of Appeals of West Virginia reviewed the certified questions. The court reaffirmed the principles established in Wellman and Estate of Tawney, which require that any deductions for postproduction costs must be expressly stated in the lease, identify specific deductions, and indicate the method of calculating these deductions. The court held that these requirements also apply to leases with in-kind royalty provisions.The court concluded that there is an implied duty to market the minerals in oil and gas leases with in-kind royalty provisions. If the lessor does not take their share in-kind, the lessee must market and sell the lessor's share along with their own and pay the lessor a royalty based on the gross proceeds received at the first point of sale to an unaffiliated third-party purchaser, free from any deductions for postproduction expenses. The court answered both certified questions in the affirmative. View "Kaess v. BB Land, LLC" on Justia Law

A man was injured while working on a man-made island in the Beaufort Sea, which served as an oil and gas drill site. In February, he drove a forklift down a ramp to unload cargo from a sled on the frozen sea. A colleague followed in a wheel loader, lost control, and collided with the sled and the forklift, crushing the man's leg. The man sued the companies owning and operating the island, alleging coverage under the Longshoreman and Harbor Workers’ Compensation Act (LHWCA) and maritime tort jurisdiction.The Superior Court of Alaska dismissed the man's LHWCA claims as unripe and ruled that the accident did not meet the two-prong test for maritime tort jurisdiction. The court found that the accident lacked the potential to disrupt maritime commerce and did not have a substantial relationship to traditional maritime activities. The court also concluded that the Alaska Worker’s Compensation Act (AWCA) barred the man from pursuing state law claims against the companies.The Supreme Court of Alaska reviewed the case. It held that the superior court properly dismissed the LHWCA-related claims, as eligibility for LHWCA benefits does not automatically establish maritime tort jurisdiction, and the LHWCA does not preempt the AWCA. However, the Supreme Court found that the superior court erred in its analysis of the maritime nexus prong. The accident had the potential to disrupt maritime commerce and bore a substantial relationship to traditional maritime activities, such as unloading cargo.The Supreme Court of Alaska reversed the superior court’s dismissal of the maritime tort claims and remanded the case for further proceedings to determine whether the accident met the locus prong of the maritime jurisdiction test. View "Beckwith v. ENI Petroleum US, LLC" on Justia Law