Natural gas spot prices dipped at the close of 2016 following a much-needed spike while the rig count and oil prices continued their steady climb in week one of 2017. In other news, the Pennsylvania Department of Environmental Protection concluded an audit of its expedited review procedures for earthmoving general permits and signaled that fewer applications will qualify for faster approvals while the Texas Supreme Court held that a CO2 pipeline served the public and qualified as a common carrier for purposes of eminent domain. Here’s your first roundup for 2017:
The Rig Count
- The national rig count is up at 665. (Source: BakerHughes).
- The rig count in the Marcellus is flat at 40. (Source: BakerHughes).
- The rig count in the Utica is up at 21. (Source: BakerHughes).
- The Henry Hub natural gas spot price is down at $3.48/MMBtu as of 12/22/2016. (Source: EIA).
- In the Marcellus and Utica region, spot prices are mixed as of 12/22/2016. At Dominion South in northwestern Pennsylvania, spot prices are down at $3.02/MMBtu. On Transco’s Leidy Line in northern Pennsylvania, spot prices are up at $2.90/MMBtu. (Source: EIA).
- Oil prices are up at $57.22/bbl as of 1/6/2017. (Source: WSJ).
Developments in Appalachia
- PADEP Signals Rollback of Expedited Review for ESCGP-2 Applications for Oil and Gas Operations. Following a yearlong audit, PADEP signaled its intent to roll back the availability of the expedited review procedures for earthmoving permits for oil and gas operations (the “ESCGP-2”), stating that many applications fell short of administrative and technical criteria needed to qualify for a 14-day review and approval period and that PADEP should do a better job of establishing statewide objective criteria for deciding whether applications qualify for expedited review standards or not. A copy of the report may be accessed here.
- Old Tax Sale of “Mineral Rights” includes Oil and Gas Rights Despite Dunham Rule, PA Superior Court Holds. The Superior Court concluded that a landowner acquired the oil and gas rights by tax sale in 1932 and could lease them over the objection of a competing landowner claiming title to the oil and gas, holding that “mineral rights” included oil and gas rights for purposes of a tax sale despite the state’s “Dunham Rule” (which says that the word “minerals” in a private conveyance generally does not include “oil and gas”). Cornwall Mountain Investments, L.P. v. Thomas E. Proctor Heirs Trust, — A.3d —, No. 1706 MDA 2015, 2016 WL 7387869 (Pa. Super., December 21, 2016).
- Superior Court Denies Wife’s Claim to Value of Oil and Gas Rights as Part of Marital Estate. A panel of the Superior Court upheld a trial court’s decision to deny a wife’s claim to future revenue from oil and gas rights, holding that laches barred her claim and that in any event she failed to propound evidence to support her claim other than the speculative value of future revenues from any oil and gas leases. Detillo v. Huzdovich, — A.3d —, Nos. 941 and 993 WDA 2015, 2016 WL 7381019 (Pa. Super., December 20, 2016).
Developments Beyond Appalachia
- Oklahoma Federal Court Denies Bid to Dismiss Dispute Over Termination of Farm Tap Rights. A federal judge in Oklahoma denied a motion to dismiss an action alleging that a lessee improperly cut off farm tap rights, concluding that the lessor pled enough to state claims that lessee’s reasons for shutting down the farm tap rights constituted fraud and a breach of the parties’ oil and gas lease. Robert E. Lee, Jr. v. ConocoPhillips Company, — F. Supp. 3d —, No. CIV-14-1391-D, 2016 WL 7496143 (W.D. Okla., Dec. 30, 2016).
- Utah Federal Court Orders BLM to Take Action on Applications for Permits to Drill. A federal court in Utah ordered that the Bureau of Land Management take action on ten completed applications for permits to drill (“ADPs”) as required by 30 U.S.C. § 226(p)(2) after BLM failed to notify the applicant that it received the ADPs and thereafter sat on applications well past the 30-day review period but stopped short of directing how BLM should act on those ADPs. EnerVest Ltd. v. Jewell, — F. Supp. 3d —, No. 2:16-CV-01256-DN, 2016 WL 7496116 (D. Utah, Dec. 30, 2016).
- Tenth Circuit Awards Attorneys Fees in Longstanding Natural Gas Royalties Litigation under False Claims Act. The Tenth Circuit upheld attorney-fee awards under a twenty-year-old case raising frivolous claims for violations of the False Claims Act for improper measurement and payment of royalties on production from leases on federal and Indian lands, holding that the FCA’s fee-shifting provision dictated an award in favor of the natural gas companies but reversed that portion of the fee award attributable to the plaintiff’s first appeal from the order dismissing the FCA claims. In re: Natural Gas Royalties Qui Tam Litigation, — F.3d —, No. 15-8054, 2017 WL 35710 (10th Cir., Jan. 4, 2017).
- TX Supremes Say CO2 Pipeline Serves the Public and Qualifies for Common Carrier Status for Purposes of Eminent Domain Authority. The Supreme Court of Texas held that a CO2 pipeline operator demonstrated a reasonable probability that its pipeline would serve “the public” and therefore qualified for common-carrier status for purposes of eminent domain authority based on a contract with a third party to carry carbon dioxide following construction and on the line’s proximity to large industrial users of carbon dioxide. Denbury Green Pipeline-Texas, LLC, v. Texas Rice Land Partners, Ltd., — S.W.3d —, No. 15-0225, 2017 WL 65470 (Tex., Jan. 6, 2017).