Justia Energy, Oil & Gas Law Opinion Summaries

Environmental contamination from Shell Western Exploration and Production, Inc. and Shell Oil Company's operations was discovered in Hobbs. Residents near the area brought a toxic tort action against Shell for personal injury damages, alleging the contaminants cause their autoimmune disorders. Plaintiffs challenged the district court's exclusion of the scientific evidence and expert testimony they offered in support of their theory, and they challenged the grant of partial summary judgment in favor of Shell. After review, the Supreme Court concluded the district court applied an incorrect standard of admissibility in its evidentiary rulings, and that plaintiffs' causation evidence should have been admitted. Because summary judgment to Shell's culpability for autoimmune disorders was granted because of this improper exclusion, the Supreme Court reversed and remanded for further proceedings. View "Acosta v. Shell W. Expl. & Prod., Inc." on Justia Law

The dispute in this case centered on the ownership of subsurface mineral rights to coal-rich land located in Musselshell County. Plaintiffs filed this action against Musselshell County to quiet title to the property. The district court granted summary judgment in favor of the County and awarded costs but not attorney fees. Plaintiffs appealed, and the County cross-appealed. The Supreme Court affirmed, holding (1) the district court did not err in concluding that the pertinent statute of limitations barred Plaintiffs’ quiet title action; and (2) the district court did not abuse its discretion in denying the County its attorney fees. View "Bergum v. Musselshell County" on Justia Law

Four oil and gas leases were assigned in one instrument. At issue in this case was how to calculate a production payment reserved in the assignment of the four leaseholds. When two of the leases terminated, the payor asserted that the production payment should be reduced to reflect the loss of the underlying mineral-lease interests. The payee responded by asserting that the production payment burdened the four leases jointly and that the assignment included authorization to adjust the payment. The trial court construed the assignment as allowing for the production payment’s adjustment based on the expiration of an underlying lease. The court of appeals reversed, concluding that the production payment could not be reduced because the assignment failed to include “express language providing for a piecemeal reduction of the production payment.” The Supreme Court reversed, holding that the trial court rendered the correct judgment in this case. View "Apache Deepwater, LLC v. McDaniel Partners, Ltd." on Justia Law

Hapag‐Lloyd filed an Interpleader Complaint and moved ex parte for an anti‐suit injunction under 28 U.S.C. 2361. The district court granted the motion and enjoined named defendants. The court concluded that adjudication of Hapag‐Lloyd’s obligation to pay for the fuel bunkers at issue involves inextricably intertwined claims, and interpleader jurisdiction is proper under the broad and remedial nature of 28 U.S.C. 1335. The court also concluded that by initiating an interpleader concerning certain in rem claims and posting adequate security for those claims, Hapag‐Lloyd consented to the district court’s jurisdiction over its interests, which is sufficient to confer jurisdiction. However, the court remanded to the district court with instructions to enter an order that eliminates or retains the foreign scope of the injunction, with specific determinations applying the test in China Trade & Dev. Corp. v. M.V. Choong Yong. View "Hapag-Lloyd Aktiengesellschaft v. U.S. Oil Trading LLC" on Justia Law

The successors to the interest of the Grynberg Petroleum Company appealed a trial court's conclusion that Grynberg wrongfully deducted certain costs from gas royalties paid to Tyronne Kittleson, as trustee of the Tyronne B. Kittleson Real Estate and Oil Trust ("Kittleson"), under a lease between the parties. The royalty clause of the lease at issue here contained a "no deductions" clause. The gas produced from the well on the leased premises was a sour gas with little to no market value. Grynberg does not operate the gas-producing well. The well is operated by Missouri River Royalty Corporation under a joint operating agreement with Grynberg. Missouri River entered into agreements for third parties to gather and process the gas. After the gas and liquids were processed and sold, Grynberg calculated Kittleson's royalty using the work-back method. Under the work-back method, market value of the gas at the well is calculated by deducting post-production costs incurred in making the sour gas a marketable product from the plant tailgate proceeds. Grynberg paid Kittleson by subtracting post-production costs from the sales price Grynberg received for the processed gas. In 2005, Kittleson sued Grynberg, claiming that under the "no deductions" language in the royalty clause of the lease, Grynberg was prohibited from deducting the costs of processing the sour gas from Kittleson's royalty. Kittleson alleged Grynberg began wrongfully deducting post-production costs from Kittleson's royalties in 1997. Grynberg denied liability, claiming the royalties paid to Kittleson did not violate the terms of the lease. Grynberg argues the district court erred in its interpretation of the lease. Grynberg argues the lease allows it to subtract post-production costs from Kittleson's royalty. After review, the North Dakota Supreme Court affirmed, concluding the district court correctly interpreted the lease, the amount of damages was not clearly erroneous, and the correct statute of limitations was applied. View "Kittleson v. Grynberg Petroleum Company" on Justia Law

An interlocutory appeal came before the Supreme Court, involving an issue of the “stream-of-commerce” doctrine of personal jurisdiction. Defendant Total Petrochemicals & Refining USA, Inc. (TPRI) challenged a superior court decision denying its motion to dismiss, for lack of personal jurisdiction, plaintiff State of Vermont’s complaint. The State alleged that TPRI, along with twenty-eight other defendants, contaminated the waters of the state by introducing into those waters a gas additive called methyl tertiary butyl ether (MTBE). Finding no reversible error, the Supreme Court affirmed. View "Vermont v. Atlantic Richfield Company" on Justia Law

Plaintiff filed suit against his former employer, Energy Northwest, alleging claims of retaliation in violation of the Energy Reorganization Act, 42 U.S.C. 5851. The whistleblower retaliation provision of the Act protects energy workers who report or otherwise act upon safety concerns. In this case, plaintiff's single expression of a difference of opinion about the “Charlie” designation of one existing internal condition report lacks a sufficient nexus to a concrete, ongoing safety concern. Therefore, the court concluded that the district court properly granted summary judgment for Energy Northwest because plaintiff's conduct falls outside the scope of the Act's protection. Accordingly, the court affirmed the judgment. View "Sanders v. Energy Northwest" on Justia Law

In general, an overriding royalty on oil and gas production must bear its share of postproduction costs unless the parties agree otherwise. The Hyder family leased 948 mineral acres to Chespeake Exploration, LLC. The Hyders and Chesapeake agreed that the overriding royalty in the parties’ lease was free of production costs but disputed whether it was also free of postproduction costs. The trial court rendered judgment for the Hyders, awarding them postproduction costs that Chesapeake wrongfully deducted from their overriding royalty. The court of appeals affirmed. The Supreme Court affirmed, holding that the parties’ lease clearly freed the overriding royalty of postproduction costs. View "Chesapeake Exploration, LLC v. Hyder" on Justia Law

In 2008, the Railroad Commission of Texas issued orders to plug a number of inactive offshore wells operated in the Gulf of Mexico. Gulf Energy Exploration Corporation was the lessee of the offshore area that included one of wells subject to the plugging order. The Commission and Gulf Energy reached an agreement that the Commissioner would delay plugging this well. A few months later Gulf Energy discovered that the well was plugged. Gulf Energy sued the Commission with legislative permission. The jury returned a favorable verdict on Gulf Energy’s negligence and breach-of-contract claims. The court of appeals affirmed. The Supreme Court reversed, holding (1) the trial court erred in refusing to submit a jury question on a statutory good-faith defense; and (2) a question of fact existed as to whether the Commission and Gulf Energy entered into a binding contract before the well was plugged. Remanded for a new trial. View "R.R. Comm’n of Texas v. Gulf Energy Exploration Corp." on Justia Law

Morgen Farm and Ranch, Inc., which owned surface rights to certain property, leased oil and gas rights on a portion of its property to a corporation. The corporation later assigned its interest in the lease to Interstate Explorations, LLC, which drilled and completed a well on the Morgen property. Interstate later filed suit against Morgen requesting a declaration that Morgen had wrongfully denied an easement necessary for installing a power line to operate the well. Morgen counterclaimed that Interstate had damaged the surface of the property by spilling hydrocarbons. Interstate moved to dismiss Morgen’s counterclaims for lack of subject matter jurisdiction, asserting that Morgen had failed to exhaust its administrative remedies before initiating legal action for damages. The district court denied Interstate’s motion to dismiss, concluding that a surface owner is not required to exhaust an administrative remedy under the Surface Damage Act before litigating a damage claim in the courts. The Supreme Court affirmed, holding that the district court correctly denied Interstate’s motion to dismiss Morgen’s counterclaims. View "Interstate Explorations, LLC v. Morgen Farm & Ranch, Inc." on Justia Law