Justia Energy, Oil & Gas Law Opinion Summaries

A natural gas pipeline company replaced three aging compressor units along its pipeline, which transports gas from Canada to the Pacific Northwest. The replacements used newer, higher-capacity compressors, but the company initially installed controls to limit their output to match the old units. After completing the replacements, the company sought federal approval to expand pipeline capacity by removing those restrictions and making other upgrades, securing long-term contracts for the added capacity with new customers. The company excluded the cost of the earlier compressor replacements from the expansion’s cost estimate, assuming those costs would remain allocated to existing customers.The Federal Energy Regulatory Commission (FERC) approved the compressor replacements under its automatic authorization regulation, finding no further environmental review was needed. Later, FERC issued a certificate for the expansion project under the Natural Gas Act, after preparing an environmental impact statement (EIS) as required by the National Environmental Policy Act (NEPA). FERC declined to treat the compressor replacements as part of the expansion for environmental or rate-setting purposes and denied the company’s request for a “predetermination” that expansion costs could be rolled into existing rates in future proceedings. Multiple parties, including two states and environmental groups, sought rehearing and then judicial review, challenging FERC’s decisions on environmental review, rate allocation, and public need.The United States Court of Appeals for the Fifth Circuit reviewed the consolidated petitions. The court held that the pipeline company had standing and its claims were ripe. On the merits, the court found FERC’s decisions were not arbitrary or capricious. FERC reasonably excluded the compressor replacements from the expansion’s environmental and rate analysis, applied its established policies for rate-setting and public need, and provided sufficient environmental review under NEPA. The court denied all petitions for review. View "Gas Transmission Northwest v. Federal Energy Regulatory Commission" on Justia Law

Fieldwood Energy LLC, an oil and gas company, contracted with Island Operating Company, Inc. (IOC) through a Master Services Contract (MSC) to provide workers for oil and gas production services on offshore platforms in the Gulf of Mexico. The MSC defined the work as “Lease Operators,” and a subsequent work order requested “A Operators” to perform tasks such as compliance testing and equipment checks on the platforms. The contract required Fieldwood to provide marine transportation for workers and equipment, which it did by hiring Offshore Oil Services, Inc. (OOSI) to transport IOC employees, including Tyrone Felix, to the platforms. Felix was injured while disembarking from OOSI’s vessel, the M/V Anna M, and subsequently made a claim against OOSI.OOSI filed a complaint for exoneration or limitation of liability in the United States District Court for the Eastern District of Louisiana. OOSI also sought indemnification from IOC under the MSC’s indemnity provision. IOC moved for summary judgment, arguing that Louisiana law, specifically the Louisiana Oilfield Anti-Indemnity Act (LOAIA), rendered the indemnity provision unenforceable. The district court agreed, finding that the MSC was not a maritime contract because vessels were not expected to play a substantial role in the contract’s performance, and thus Louisiana law applied. The court granted summary judgment for IOC on indemnity and insurance coverage, and later on defense costs after OOSI settled with Felix.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the district court’s summary judgment de novo. The Fifth Circuit held that the MSC was not a maritime contract because neither its terms nor the parties’ expectations contemplated that vessels would play a substantial role in the contract’s completion. As a result, Louisiana law applied, and the LOAIA barred enforcement of the indemnity provision. The Fifth Circuit affirmed the district court’s summary judgment in favor of IOC. View "Offshore Oil Services, Inc. v. Island Operating Co." on Justia Law

A predecessor of BP America Production Company obtained an offshore oil and gas lease from the United States in 1983. Chevron U.S.A. Inc. later acquired the lease and assigned it to Linder Oil Company, retaining certain deep operating rights. Linder Oil assumed all decommissioning obligations and indemnified Chevron. Linder Oil then assigned its interest to Reserves Management and Destin Resources, who later conveyed interests to Sojitz Energy Venture. Sojitz eventually transferred its interests back, and Linder Oil released Sojitz from decommissioning obligations. The Bureau of Ocean Energy Management required Linder Oil to provide performance bonds, which Lexon Insurance Company issued. After Linder Oil and related entities filed for bankruptcy and failed to complete decommissioning, the government called the bonds, and Lexon paid over $11 million. Chevron and Sojitz completed the decommissioning work, and Lexon sought reimbursement from them and BP America.The United States District Court for the Southern District of Texas reviewed cross-motions for summary judgment based on stipulated facts. The magistrate judge recommended summary judgment for the defendants, finding Lexon was not entitled to reimbursement under theories of subrogation, contribution, or unjust enrichment, primarily because Louisiana law did not support Lexon’s claims. The district judge adopted this recommendation and dismissed Lexon’s claims.The United States Court of Appeals for the Fifth Circuit affirmed the district court’s dismissal. The Fifth Circuit held that federal law, including 31 U.S.C. § 9309, did not provide Lexon with a right to subrogation against the defendants, and that any gap in federal law was properly filled by Louisiana law, which did not entitle Lexon to subrogation, contribution, or unjust enrichment recovery under the circumstances. The court concluded that Lexon had no recourse against the defendants as required by Louisiana law and that any enrichment of the defendants was contractually justified. View "Lexon Insurance v. Chevron U.S.A." 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

Trinity Energy Services, L.L.C. ("Trinity Energy") and Southeast Directional Drilling, L.L.C. ("Southeast Drilling") were involved in a subcontract for constructing natural gas pipelines. Disputes arose over liability for "stand-by costs" incurred during construction delays. The parties agreed to arbitration, where a panel awarded Southeast Drilling $1,662,000 in stand-by costs from Trinity Energy. Trinity Energy petitioned to vacate the arbitration award, but the district court denied the petition and confirmed the award. Trinity Energy then appealed.The United States District Court for the Northern District of Texas initially denied Trinity Energy's petition to vacate the arbitration award and granted Southeast Drilling's motion to confirm it. Trinity Energy appealed this decision, but the appeal was dismissed as interlocutory by the United States Court of Appeals for the Fifth Circuit. Subsequently, the district court granted Southeast Drilling's cross-motion to confirm the arbitration award, leading to Trinity Energy's timely appeal.The United States Court of Appeals for the Fifth Circuit reviewed the district court's order de novo and emphasized the narrow and deferential standard of review for arbitration awards. The court found that the arbitration panel had construed the subcontract and based its decision on its terms, thus not exceeding its authority under 9 U.S.C. § 10(a)(4). The court also rejected Trinity Energy's argument that the panel manifestly disregarded Texas law, noting that "manifest disregard of the law" is not a valid ground for vacatur under the Federal Arbitration Act. Consequently, the Fifth Circuit affirmed the district court's judgment confirming the arbitration award. Southeast Drilling's request for sanctions against Trinity Energy was denied due to procedural deficiencies. View "Trinity Energy Services v. SE Directional Drilling" on Justia Law

The Bureau of Ocean Energy Management (BOEM) adopted a rule requiring current lessees of offshore drilling facilities in the Gulf of Mexico to obtain financial assurance bonds to cover potential future decommissioning liabilities. Several states and industry groups sued to vacate the rule, arguing it imposed undue financial burdens. The American Petroleum Institute (API), representing a broad range of oil and gas companies, sought to intervene in defense of the rule, claiming its members had unique interests in upholding it.The United States District Court for the Western District of Louisiana denied API's motion to intervene. The court found the motion procedurally defective because API did not attach a proposed answer to its motion, as required by local rules. Substantively, the court concluded that API failed to demonstrate that BOEM would inadequately represent its interests, a necessary showing for intervention as of right. The court also denied permissive intervention, suggesting that API could present its unique perspective through an amicus brief instead.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court affirmed the district court's denial of API's motion to intervene. It held that API did not overcome the presumption that BOEM adequately represented its interests, as API failed to show any specific adversity of interest or actions by BOEM that were contrary to API's interests. The court also found no abuse of discretion in the district court's denial of permissive intervention, agreeing that API could effectively present its views as an amicus curiae. Thus, the district court's order denying intervention was affirmed. View "Louisiana v. Burgum" on Justia Law

Talos ERT, L.L.C. (Talos) hired DLS, L.L.C. (DLS) to remove corroded piping from an oil-and-gas platform off the Louisiana coast. During the project, a 129-pound pipe fell and struck Walter Jackson, a DLS employee, resulting in his death. Jackson’s widow, Vantrece Jackson, and his son, Y.J., represented by his mother, Anika Warner, sued Talos for wrongful death. The suits were consolidated, and the case proceeded to trial.The jury found Talos 88% at fault for Jackson’s death and awarded significant damages to both plaintiffs. Y.J. was awarded $120,000 in special damages and $20,000,000 in general damages. Mrs. Jackson was awarded $987,930 in special damages and $6,600,000 in general damages. Talos filed a renewed motion for judgment as a matter of law (JMOL) and alternatively moved for a new trial or remittitur. The district court denied the JMOL and new trial motions but granted a partial remittitur, reducing Y.J.’s general damages to $4,360,708.59 and Mrs. Jackson’s to $5,104,226.22. Plaintiffs declined a new trial on damages.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court affirmed the district court’s denial of Talos’s renewed JMOL motion, finding sufficient evidence to support both theories of liability: vicarious liability and independent negligence. The court also upheld the denial of a new trial on liability, noting the jury’s verdict was supported by the evidence.Regarding damages, the court found no abuse of discretion in the district court’s application of the maximum recovery rule for Y.J.’s award, using a factually similar case, Rachal v. Brouillette. However, the court vacated Mrs. Jackson’s general damages award and remanded for redetermination of remittitur, as the district court’s comparison case, Zimko v. American Cyanamid, was not factually similar. The court found no plain error in the alleged prejudicial statements made by Plaintiffs’ counsel during the trial. View "Warner v. Talos ERT" on Justia Law

In 2017, Baker Hughes Saudi Arabia Co., Ltd. (Baker Hughes) and Dynamic Industries Saudi Arabia, Ltd. (Dynamic) entered into a subcontract for an oil-and-gas project in Saudi Arabia. The subcontract included provisions for resolving disputes through arbitration, with Dynamic having the option to demand arbitration in Saudi Arabia. If Dynamic did not demand arbitration in Saudi Arabia, either party could initiate arbitration under the rules of the Dubai International Financial Centre’s joint partnership with the London Court of International Arbitration (DIFC-LCIA). In 2021, the United Arab Emirates abolished the DIFC-LCIA and created a new arbitral institution. A contract dispute arose, and Baker Hughes sued in state court, which was then removed to federal court. Dynamic moved to dismiss for forum non conveniens or to compel arbitration under Schedule E of the subcontract. The district court denied Dynamic’s motion, stating that the designated forum no longer existed, making the forum-selection clause unenforceable.The United States District Court for the Eastern District of Louisiana reviewed the case and denied Dynamic’s motion to dismiss or compel arbitration, reasoning that the DIFC-LCIA no longer existed, thus invalidating the forum-selection clause.The United States Court of Appeals for the Fifth Circuit reviewed the case and held that the district court erred in refusing to compel arbitration. The appellate court found that the subcontract’s Schedule E designated only the rules of arbitration, not a specific forum. Even if the DIFC-LCIA was considered the designated forum, the court concluded that the forum-selection clause was not integral to the subcontract. The court reversed the district court’s decision and remanded the case for further proceedings, instructing the district court to consider whether the DIFC-LCIA rules could be applied by another available forum, such as the LCIA, DIAC, or a forum in Saudi Arabia, and to compel arbitration accordingly. The court also partially granted and denied Baker Hughes’s motion to strike portions of Dynamic’s reply brief. View "Baker Hughes v. Dynamic Industries" on Justia Law

The City of New Orleans filed a lawsuit against several pipeline operators and Entergy New Orleans LLC, alleging that their oil and gas production and transportation activities caused damage to the City's coastal zone. The City claimed that Entergy allowed its pipeline canals to widen and erode, threatening the City's storm buffer. The lawsuit was filed under Louisiana’s State and Local Coastal Resources Management Act of 1978 (SLCRMA).The defendants removed the case to federal court, arguing that Entergy, the only in-state defendant, was improperly joined to defeat diversity jurisdiction. Entergy consented to the removal and argued that it was exempt from SLCRMA’s permit requirements because its activities commenced before the statute's effective date. The City moved to remand the case to state court, but the United States District Court for the Eastern District of Louisiana denied the motion, dismissed Entergy as a party, and stayed the case pending appeal.The United States Court of Appeals for the Fifth Circuit reviewed the case and affirmed the district court's judgment. The appellate court held that Entergy was improperly joined because its activities were exempt under SLCRMA’s Historical-Use Exception, which applies to uses legally commenced before the statute's effective date. The court found no reasonable basis for the City to recover against Entergy, thus disregarding Entergy's citizenship and establishing complete diversity among the parties. The court also rejected the City's argument that it was merely a nominal party representing Louisiana, concluding that the City filed the suit on its own behalf and stood to benefit from a favorable ruling. Consequently, the appellate court affirmed the district court's denial of the City's motion to remand. View "New Orleans City v. Aspect Energy" on Justia Law

At issue in this appeal was the computation of economic losses arising out of the BP oil spill and based on the BP Settlement Agreement. The district court approved a policy adopted by the Claims Administrator (Policy 495) that consists of five methodologies to calculate claimant compensation: one Annual Variable Margin Methodology (AVMM) and four Industry-Specific Methodologies (ISMs). The Fifth Circuit held that the AVMM was consistent with the text of the Settlement Agreement, but that the four ISMs were not. The district court erred in approving the ISMs because they required the Claims Administrator to move, smooth, or otherwise reallocate revenue in violation of the Settlement Agreement. However, the ISMs, also required the Claims Administrator to match all unmatched profit and loss statements. Accordingly, the court affirmed as to the AVMM, reversed as to the ISMs, and remanded for further proceedings. View "In re: Deepwater Horizon" on Justia Law