Justia Energy, Oil & Gas Law Opinion Summaries

Articles Posted in Real Estate & Property Law
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The federal district court for the District of North Dakota certified five questions regarding N.D.C.C. § 38-08-08(1) and North Dakota Industrial Commission pooling orders. The litigation before the federal court involved allocation of mineral royalties in the case of overlapping oil and gas spacing units. Allen and Arlen Dominek owned oil and gas interests in Williams County, North Dakota. In 2011, the North Dakota Industrial Commission pooled the interests in Section 13 on the Dominek property with the interests in Section 24 in a 1280-acre spacing unit (the “Underlying Spacing Unit”). In 2016, the Commission pooled the interests in Sections 11, 12, 13, and 14 in a 2560-acre spacing unit (the “Overlapping Spacing Unit). The "Weisz" well terminated in the southeast corner of Section 14. The Defendants (together “Equinor”) operated the Weisz well. The Domineks sued Equinor in federal district court to recover revenue proceeds from the Weisz well. The parties agreed production from the Weisz well should have been allocated equally to the four sections comprising the Overlapping Spacing Unit. Their disagreement was whether the 25% attributable to Section 13 should have been shared with the interest owners in Section 24 given those sections were pooled in the Underlying Spacing Unit. In response to the motions, the federal district court certified five questions to the North Dakota Court. Responding "no" to the first: whether language from N.D.C.C. § 38-08-08(1) required production from Section 13 to be allocated to Section 24, the Supreme Court declined to answer the remaining questions because it found they were based on an assumption that the Commission had jurisdiction to direct how production was allocated among mineral interest owners. "Questions concerning correlative rights and the Commission’s jurisdiction entail factual considerations. ... An undeveloped record exposes this Court 'to the danger of improvidently deciding issues and of not sufficiently contemplating ramifications of the opinion.'” View "Dominek, et al. v. Equinor Energy, et al." on Justia Law

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The 1985 “Manning Lease” granted the lessee rights to oil and gas on an approximately 100-acre tract of land in Bowling Green that is adjacent to a quarry. There is a long-expired one-year term, followed by a second term that conditions the maintenance of the leasehold interest on the production of oil or gas by the lessee. Bluegrass now owns the property. Believing that lessees were producing an insufficient quantity of oil to justify maintaining the lease, Bluegrass purported to terminate the lease and sought a declaration that the lease had terminated by its own terms while asserting several other related claims.The district court found that Bluegrass’s termination of the lease was improper and granted the lessees summary judgment. The Sixth Circuit reversed and remanded. There is a factual dispute regarding whether the lease terminated by its own terms. The trier of fact must determine if the lessee has produced oil in paying quantities after considering all the evidence. There is a material factual dispute about whether the lessee ceased producing oil for a period of time, and, if so, whether that period of time was unreasonable. View "Bluegrass Materials Co., LLC v. Freeman" on Justia Law

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J.T. Wilkinson and Evelyn Wilkinson acquired title to property located in Williams County, North Dakota. In 1958, the Wilkinson conveyed the property to the United States for construction and operation of the Garrison Dam and Reservoir, but they reserved the oil, gas and other minerals in and under their property. Plaintiffs are the Wilkinson’ successors in interest. Plaintiffs appealed a judgment dismissing their takings, conversion, unjust enrichment, civil conspiracy and 42 U.S.C. 1983 claims against the Board of University and School Lands (“Land Board”), Department of Water Resources, and Statoil Oil & Gas LP. In 2010 and 2011, the Land Board entered into four oil and gas leases with oil operators in Williams County. The Land Board received and retained bonus payments from the oil operators. In 2012, plaintiffs sued the Land Board and oil operators to quiet title to disputed mineral interests in the conveyed property. Among other things, plaintiffs argued the State effectuated a taking of their royalties, and the State was unjustly enriched while the royalties were held in escrow at the Bank of North Dakota because the Bank was asking as the agent for the Land Board. Finding that the trial court did not err in rendering judgment against plaintiffs, the North Dakota Supreme Court affirmed that court’s judgment. View "Wilkinson, et al. v. Bd. of University and School Lands of the State of N.D." on Justia Law

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The underlying dispute before the North Dakota Supreme Court in this case concerned two competing oil and gas leases. In 2006, Ritter, Laber and Associates, Inc. was part of a joint venture that was locating mineral owners and leasing their interests. Eugene and Carol Hanson entered into a lease agreement with Ritter ("EOG lease") and a "Side Letter Agreement" was executed at the same time, allowing Ritter to “exercise its option” to lease the minerals. If Ritter chose not to exercise the option, Ritter was required to “immediately release [the Hansons] from any further obligation.” The EOG Lease was not immediately recorded. In April 2007, Eugene and Carol Hanson executed a warranty deed to their son and daughter-in-law, Kelly and Denise Hanson, which included the minerals in question and was recorded. The deed reserved a 50% life estate in the minerals. In May 2007, Ritter recorded a “Memorandum of Oil and Gas Lease Option” that referenced the EOG Lease. In July 2007, Ritter recorded the EOG Lease and sent Eugene and Carol Hanson a letter stating it “has elected to exercise its option to lease.” In August 2007, Ritter’s partner sent the couple a check for roughly $37,000 “as total consideration for your Paid up Oil and Gas Lease dated December 20, 2006.” In September 2007, Ritter assigned the EOG Lease, along with a batch of other leases, to EOG. The assignment was recorded. In December 2007, Ritter obtained an oil and gas lease from Kelly and Denise Hanson listing the tracts in question ("Northern Lease"). It was recorded in January 2008 and assigned to Northern in June 2008. Northern filed suit seeking a declaration of what it owned. The court determined the transaction between Eugene and Carol Hanson and Ritter created an option to lease, Denise and Kelly Hanson had no notice of the option, and they took title to the minerals free of it. The court entered a partial judgment determining “the EOG Lease is not valid and subsisting insofar as it conflicts with the Northern Lease.” EOG Resources, Inc. appealed and Northern cross appealed, arguing the court erred when it declined to grant additional relief after its title determination. The Supreme Court held the district court erred when it quieted title in Northern. Judgment was reversed and the matter remanded for further proceedings. View "Northern Oil & Gas v. EOG Resources, et al." on Justia Law

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In 2017, Plaintiff discovered a crude oil leak on its property. Despite 15 years of remediation efforts, the leak persists and the cause of the leak remains unknown. Plaintiff filed a claim with Defendant insurance company under a commercial general liability policy. However, the policy contains a "total pollution exclusion endorsement" which removes coverage for various events related to "pollution."Initially, the insurer agreed to cover Plaintiff's loses, but later denied the claim. In January 2017, Plaintiff filed this lawsuit in state court seeking: (1) coverage for past and future expenses it incurred in cleaning up the spill; (2) coverage for defense costs in connection with the Lawsuit; and (3) damages, penalties, and attorney fees. The insurer removed the case to federal court and the district court determined that the total pollution exclusion barred coverage.The Fifth Circuit affirmed, explaining "the absolute pollution exclusion in Liberty Mutual’s policy unambiguously excludes coverage ... related to 'clean up' or 'remov[al]' of the crude oil, as well as for any 'property damage’ which would not have occurred in whole or part but for the . . . release or escape” of the crude oil." View "Central Crude v. Liberty Mutual Ins" on Justia Law

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The Supreme Court reversed the judgment of the district court ruling that North Silo Resources, LLC, the mineral lessee in this case, did not have standing to quiet title or to claim breach of its lease and that North Silo's mineral lease encumbered fifty percent of the mineral estate, holding that the district court erred as to both issues.North Silo brought an action seeking a declaratory judgment and to quiet title in certain minerals underlying property located in Laramie County and bringing a breach of lease claim against the mineral owner. The district court concluded (1) North Silo did not have standing to quiet title or to claim breach of its lease; and (2) North Silo's mineral lease encumbered only fifty percent of the mineral estate. The Supreme Court reversed, holding (1) North Silo had standing to quiet title and to assert a claim for breach of lease; and (2) North Silo's lease encumbered 100 percent of the mineral estate. View "North Silo Resources, LLC v. Deselms" on Justia Law

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In an issue of first impression for the Louisiana Supreme Court, was what prescriptive period, if any, was applicable to a citizen suit for injunctive relief pursuant to LSA-R.S. 30:16 suit. Justin Tureau instituted a citizen suit pursuant to LSA-R.S. 30:16, alleging that defendants drilled and operated numerous oil and gas wells on his property, or on adjacent property, as well as constructed and used unlined earthen pits. Specifically, Tureau alleged that said unlined pits were either never closed, or were not closed in conformance with environmental rules and regulations, including Statewide Order 29-B, L.A.C. 43:XIX.101, et seq, which, among other things, requires the registration and closure of existing unlined oilfield pits, as well as the remediation of various enumerated contaminants in the soil to certain minimum standards. The Supreme Court held that a LSA-R.S. 30:16 citizen suit was not subject to liberative prescription. The Court further found that, insofar as the petition alleges that defendants violated conservation laws, rules, regulations, or orders, the allegations were sufficient to defeat an exception of no cause of action. The Court therefore affirmed the appeals court ruling, which overruled defendants’ exceptions of prescription, overruled the exceptions of no cause of action, and remanded this case for further proceedings. View "Louisiana v. Pilcher" on Justia Law

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The Supreme Court affirmed the judgment of the district court granting summary judgment for Leonard Schleder and declaring him the owner of the mineral rights at issue in this case, holding that the district court did not err or abuse its discretion.Specifically, the Supreme Court held that the district court (1) correctly interpreted the warranty deed language to reserve to Schleder all his mineral interests in the property; (2) properly considered the chain of title in interpreting the language of the unambiguous warranty deed; and (3) did not err in determining that estoppel by deed did not apply to prevent Schleder from asserting title to the mineral interests. View "Dellit v. Schleder" on Justia Law

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The Supreme Court affirmed the judgment the district court denying TEP Rocky Mountain LLC's (TEP RM) motion to dismiss this action, granting summary judgment to Record TJ Ranch Limited Partnership (TJ Ranch) on several issues, and ruling that TEP RM had breached the parties' agreements, holding that there was no error.TJ Ranch brought this action seeking payment under a surface use and damage agreement governing oil and gas development and production of ranch lands. TEP RM filed a motion to dismiss for lack of personal jurisdiction, which the district court denied. The court ultimately concluded that TJ Ranch was entitled to payment. The Supreme Court affirmed, holding that the district court (1) correctly exercised personal jurisdiction over TEP RM; (2) did not clearly err in its findings; and (3) did not abuse its discretion in denying TEP RM's motions to stay. View "TEP Rocky Mountain LLC v. Record TJ Ranch Limited Partnership" on Justia Law

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Finite owns 90.9% of Orient #1, an abandoned Illinois coal mine; the other 9.1% belongs to Royal. In 2004, Keyrock's predecessor acquired an interest in Orient #1 to extract coal mine methane from its section of the property, drilled wells, and, in 2007, obtained a vacuum permit from the Illinois Department of Natural Resources. Finite discovered the pump’s use in 2018 after a test revealed that coal mine methane had been drained extensively from Orient #1. Finite unsuccessfully petitioned the Department for compulsory unitization of the parties’ properties, to require Keyrock to share its methane production with Finite.Finite sued, alleging conversion, trespass, accounting, and common law unitization, and sought to enjoin the use of a vacuum pump. The district court granted the defendants summary judgment, finding that, under the rule of capture (gas that migrates is subject to recovery and possession by the holder of the gas estate on the property to which the gas migrates), the methane could not be owned until extracted regardless of whether extraction occurred by means of a vacuum pump. Finite’s claims hinged on ownership, so the rule of capture foreclosed Finite’s claims.The Seventh Circuit affirmed. Absent illegality, the Department’s issuance of the permit suggests that the use of the vacuum pump to extract methane did not violate Finite’s correlative rights (imposing a duty on owners not to waste natural resources intentionally or negligently as to injure their neighbor).. View "Finite Resources, Ltd. v. DTE Methane Resources, LLC" on Justia Law