Justia Energy, Oil & Gas Law Opinion Summaries

This case stemmed from the explosion and sinking of Transocean's Deepwater Horizon in April 2010. At issue were the obligations of Transocean's primary and excess-liability insurers to cover BP's pollution-related liabilities deriving from the ensuing oil spill in the Gulf of Mexico. Because the court, applying Texas law, found that the umbrella policies between the Insurers and Transocean did not impose any relevant limitation upon the extent to which BP was an additional insured, and because the additional insured provision in the Drilling Contract was separate from and additional to the indemnity provisions therein, the court found BP was entitled to coverage under each of Transocean's policies as an additional insured as a matter of law. The court reversed the judgment of the district court and remanded the case. View "In Re: Deepwater Horizon" on Justia Law

Wabash is a power generation cooperative. Northeastern purchases electricity from Wabash and resells it. In 1977, they entered into a contract: Northeastern agreed to purchase electricity from Wabash for 40 years at rates to be set by the Wabash board of directors “[s]ubject to the approval of the Public Service Commission of Indiana.” Revised rates would not be effective unless approved by the “applicable regulatory authorities,” and the federal Rural Electrification Administration. In 2012 Northeastern sought a state court declaratory judgment that Wabash breached the contract by taking action in 2004 that had the effect of transferring regulation of its rates from the Indiana Commission to the Federal Energy Regulatory Commission. Wabash removed the case under 28 U.S.C. § 1441(a), arguing that the claim arises under the Federal Power Act, 16 U.S.C. 791a. The district court denied remand and granted a preliminary injunction. The Seventh Circuit vacated, holding that federal courts lack subject matter jurisdiction. Northeastern’s claim is limited to construction of the contract and does not necessarily raise a question of federal law. While Northeastern may eventually use a favorable state court judgment to seek permission to terminate its obligations under the tariff filed with FERC,that cannot be achieved in this suit View "NE Rural Elec. Membership Corp. v. Wabash Valley Power Assoc." on Justia Law

Lehigh appealed the district court's award of damages to plaintiffs under the Petroleum Marketing Practices Act (PMPA), 15 U.S.C. 2801-2841. At issue was whether a franchisor could be held under the PMPA for failing to provide notice to a "trial franchisee" prior to termination of its franchise. The court held that the PMPA provided a right of action, both to "full" and "trial" franchisees, when a franchisor failed properly to notify it prior to terminating the franchise. The court also concluded that the district court did not abuse its discretion in awarding plaintiffs compensatory damages, punitive damages, attorney's fees and costs, and interest. View "Jimico Enterprises, Inc. v. Lehigh Gas Corp." on Justia Law

This case involved a dispute between a natural gas clearinghouse, Dynegy, and two separate entities that managed refinery plants, Ergon Refining and Ergon-WV. Dynegy and Ergon Refining appealed the district court's holding that Dynegy had no contractual duty to Ergon Refining to attempt to secure replacement gas after declaring force majeure in response to hurricane damage, but did have such a duty to Ergon-WV under a separate contract. Although the district court mistakenly concluded that the Ergon Refining contract was ambiguous, it nevertheless correctly used extrinsic evidence to determine the parties' understanding of the contract's "reasonable dispatch" clause. The district court erred, however, in concluding that the Ergon-WV contract unambiguously required Dynegy to attempt to secure replacement gas. Therefore, the court held that neither contract required Dynegy to attempt to secure replacement gas during the force majeure period and affirmed the district court's ruling on the Ergon Refining contract and reversed with respect to the Ergon-WV contract. View "Ergon-West Virginia, Inc. v. Dynegy Marketing & Trade" on Justia Law

Ida-Therm, LLC appealed the grant of summary judgment in favor of Bedrock Geothermal, LLC, which held that a reservation of "all the oil, gas, and minerals, in, on, or under the surface of [deeded] lands," in a 1946 warranty deed included the geothermal resources underlying the property. The district court determined that the Deed's mineral reservation severed the mineral estate from the surface estate, and that geothermal resources were included in the scope of the mineral estate. Because the Supreme Court found that the term "mineral" was ambiguous with respect to the deed in question, and because ambiguous grants in deeds are construed against the grantor, the Court construed the grant in favor of Ida-Therm and reversed the district court. View "Ida-Therm v. Bedrock Geothermal" on Justia Law

This interlocutory appeal stemmed from litigation concerning a contract dispute among Williams Transport, LLC (Williams Transport), Driver Pipeline Company, Inc. (Driver Pipeline), Buckley Equipment Services, Inc. (Buckley Equipment), and other unnamed defendants. Based on an arbitration clause in the contract, Driver Pipeline filed a motion to compel arbitration. The trial court denied the motion to compel arbitration as well as a subsequent motion for reconsideration. Driver Pipeline filed a petition for interlocutory appeal, which the Supreme Court accepted as a notice of appeal. Finding no error by the trial court in denying Driver Pipeline's motion to compel arbitration, the Supreme Court affirmed. View "Driver Pipeline Company, Inc., Buckley Equipment Services, Inc. v. Williams Transport, LLC" on Justia Law

The plaintiffs (collectively "Tellus") alleged that they owned the "shallow gas" rights in a tract of land known as the Bilbo A Lease. While ownership of the shallow gas was disputed, all parties agreed that the defendants (collectively "TPIC") owned the gas rights below 8,000 feet and the oil rights in both the shallow and deep zones. In 2004, Tellus sued TPIC, alleging that it had produced Tellus's shallow gas through one if its wells known as the A-1 well. After much pretrial litigation and a two-month jury trial, the trial judge declared that the plaintiffs were the rightful owners and submitted the plaintiffs' conversion and negligence claims to a jury. The jury returned a general verdict in favor of the defendants, and both sides appealed. Finding no reason to reverse, the Supreme Court affirmed the jury verdict and the trial court's declaratory judgment. View "Tellus Operating Group, LLC, v. Texas Petroleum Investment Co." on Justia Law

Chesapeake Exploration entered into an agreement to purchase deep rights held by Peak Energy in certain oil and gas leases in the Haynesville Shale formation at a certain price. Peak Energy filed a complaint against Chesapeake Exploration after Chesapeake Exploration refused to honor its commitment when the price of natural gas plummeted several months after the agreement. Chesapeake Exploration argued that the agreement was unenforceable under the Texas statute of frauds, fatally indefinite, and that Peak Energy had failed to tender performance. The court held that the district court did not err in its instructions to its expert, or in holding that the agreement was enforceable under the statute of frauds; in finding that Peak Energy was willing and able to tender performance of the agreement; and in calculating damages. Accordingly, the court affirmed the judgment. View "Coe, et al v. Chesapeake Exploration, L.L.C., et al" on Justia Law

This appeal arose from a related case currently pending in a United Kingdom Litigation, which arose from contractual disputes related to the exploration, development, and operation of oil blocks in Kurdistan, Iraq. On appeal, plaintiff argued that the district court erred by granting a motion to quash certain discovery subpoenas before plaintiff had an opportunity to respond in opposition and by not providing any reasons on the record for its decision. The court vacated the district court's order and remanded with instructions to allow plaintiff a reasonable period to respond to the motion and, thereafter, to provide written or oral reasons for the basis of its ruling. Otherwise, the district court was fully empowered to resolve these discovery disputes in a manner not inconsistent with this opinion. View "Texas Keystone, Inc. v. Prime Natural Resources, Inc., et al." on Justia Law

This case involved the duties and standard of care of an oil and gas operator under an exculpatory clause in a joint operating agreement (JOA). Based on language in the exculpatory clause in the JOA, the trial court instructed the jury to find that to find a breach of the JOA the operator's conduct must have risen to the level of gross negligence or willful misconduct. The jury found the operator, Petitioner, breached his duties under the JOA to the working interest owners. The court of appeals affirmed, holding (1) the gross negligence and willful misconduct instruction should not have been included in the charge because the case centered around a breach of contract; but (2) there was legally sufficient evidence to support the jury's findings that Petitioner breached his duty as operator when measured against the elements of breach of contract. The Supreme Court reversed, holding (1) the exculpatory clause in the JOA established the standard for the claims against Petitioner; and (2) there was legally insufficient evidence that Petitioner was grossly negligent or acted with willful misconduct. View "Reeder v. Wood County Energy, LLC" on Justia Law