Judge Fines Environmental Attorneys $52,000 for ‘Frivolous’ Injection Well Suit

fracking-drilling-oil-gas-wellA federal judge has ordered a pair of attorneys for an environmental group to pay $52,000 in legal fees to an energy company because, the judge said, they filed a “frivolous” legal challenge to a fracking waste injection well in Pennsylvania, according to a report by StateImpact, a reporting project of NPR member stations.

“U.S. Magistrate Judge Susan Paradise Baxter of the Western District of Pennsylvania ruled the attorneys, Thomas Linzey and Elizabeth Dunne, should pay part of Pennsylvania General Energy’s (PGE) legal fees for advancing a “discredited” legal argument that had already been defeated in prior decisions,” writes reporter Reid Frazier. “In addition to the fine, the judge referred Linzey to the state Supreme Court Disciplinary Board for additional discipline.”

In her opinion, Baxter wrote:

The continued pursuit of frivolous claims and defenses, despite Linzey’s first-hand knowledge of their insufficiency, and the refusal to retract each upon reasonable request, substantially and inappropriately prolonged this litigation, and required the Court and PGE to expend significant time and resources eliminating these baseless claims.

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Noble, CNX Settle Legal Dispute With Marcellus Midstream Sale

Noble Energy Inc. reached an agreement on Dec. 15 with CNX Resources Corp. to sell its Marcellus midstream assets, quickly resolving a lingering legal dispute between the two companies, reports Oil & Gas Investor.

Emily Patsy writes that CNX Resources will acquire Noble’s 50 percent interest in CONE Gathering LLC, which owns the general partner of CONE Midstream Partners LP, for $305 million cash. The agreement calls for Noble to keeps 21.7 million common limited partner units in CONE Midstream with plans to divest them over the next few years, according to a company press release.

“As a result of the transaction with CNX, Noble terminated its prior agreement to divest its entire Marcellus midstream holdings to Wheeling Creek Midstream LLC, a portfolio company of Quantum Energy Partners, for $765 million,” according to the report. “That particular deal came under fire when CNX, which holds a 50% interest in CONE Gathering, filed a suit to enjoin Noble’s transaction with Wheeling Creek.”

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FERC Puts Cloud Over Certain Oil Pipeline Marketing Affiliate Transactions

Elevated pipelineIn an unexpected shake up in the oil pipeline industry, the Federal Energy Regulatory Commission recently declined to approve an oil pipeline’s proposal to have its marketing affiliate obtain its pipeline capacity at full price and then resell the space at a discount, a practice that is currently widespread in the industry, according to a report published by Dorsey & Whitney LLP.

According to pleadings in Magellan Midstream Partners, L.P., Magellan filed a petition for declaratory order requesting the Commission declare its proposal to establish a marketing affiliate to buy, sell, and ship crude oil on Magellan’s pipeline system lawful under the Interstate Commerce Act.

“The proposed marketing affiliate would pay Magellan’s shipping rates filed with FERC, even if the affiliate resold the capacity at an economic loss—where the price differential between the origin and destination markets is less than the filed tariff rates. Magellan said that even though the affiliated company would lose money on the transaction, the integrated company would make money overall and would be able to attract more crude oil shippers. Magellan argued that due to the prevalence of these transactions in the oil pipeline industry, it was at a disadvantage in attracting oil pipeline shippers because it could only offer transportation services at its filed tariff rate,” according to the article.

FERC’s ruling declining to approved the proposal will likely cause oil pipelines to review their current marketing affiliate contracts and will impact how marketing affiliates do business in the future.

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A Twist in Oil Patch Arbitration

Delegating a $12 million arbitration to accountants rather than lawyers in Apache v. YPF SA was the right call, writes Charles Sartain in the Gray Reed Energy & the Law blog. The problem was in the procedures and protections for a party believing the accountants got it wrong.

Sartain provides background: “Apache sold its entire business in Argentina to YPF for $700 million. The Sale and Purchase Agreement allowed for adjustments to the consideration based on a variety of factors. The parties traded accounting statements, and a dispute arose over a ‘Lock Box Working Capital’ amount and ‘Leakage.’ YPF contended that Apache owed $12 million.”

The parties submitted the dispute to KPMG, which found that Apache owned $98. million. Apache challenged the finding.

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Now That FERC Is Back In Action, Will It Keep Pace With States on Energy Storage?

While the Federal Energy Regulatory Commission continues its investigation of the notice of proposed rulemaking on deployment of energy storage, state mandates and incentives will likely unfold ahead of federal rules moving toward a more organized market for energy storage, according to a post by Morgan, Lewis & Bockius.

Levi McAllister and Brooke E. McGlinn write:

State action is robust, and state regulatory authorities are routinely emerging as thought leaders in energy storage initiatives. As a result of these initiatives, storage developments continue and electric utilities pursue storage resource procurements. Such procurements raise a host of issues and considerations with which electric utilities must grapple, and those issues could be addressed (in part, at least) through federal action that is uniformly applicable. Nevertheless, FERC action in energy storage remains largely absent.

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An Overview of Recent Production Deduction Cases

Courts in several states recently have addressed questions about post-production cost deductions in petroleum production, according to an on-demand webcast from Steptoe & Johnson.

In this webcast, Andrew S. Graham reviews the state of the play in the Appalachian Basin, as well as other oil and gas producing states, on the source of the deduction problem and where the states stand on this notoriously thorny issue.

Among the topics for discussion:

  • What does the Leggett case mean for West Virginia producers in light of Tawney?
  • Why did the Supreme Court of Ohio decide to not decide a case on post-production deductions?
  • Has the marketable product rule reached a high-water mark in Colorado?

Watch the on-demand webinar.

 

 

 




A Renewable-Energy Champion Is Suing His Scientific Critics

Stanford professor Mark Jacobson has sued a prominent energy researcher and the National Academy of Sciences for defamation over a sharply-worded rebuttal of his work, shifting a heated scientific debate over renewable energy out of the journals and into the courts, according to the MIT Technology Review.

The suit demands a retraction of a June paper in the Proceedings of the National Academy of Sciences.

“Jacobson seeks more than $10 million in damages from both the paper’s publisher and its lead author, Christopher Clack, who is chief executive of Vibrant Clean Energy and a former NOAA researcher,” according to the article.

Clack and 20 other researchers responded in a publication that Jacobson’s paper “contained modeling errors and implausible assumptions that could distort public policy and spending decisions.”

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Hydraulic Fracture Related Damage Claim: Federal Court Addresses Application of Consent and Release Agreement

fracking-drilling-oil-gas-wellA U.S. District Court recently addressed issues associated with a producing vertical well’s claim for damages related to another company’s subsequent installation of a horizontal well, reports Walter G. Wright for Mitchell, Williams, Selig, Gates & Woodyard.

Specifically, the court addressed whether various damage claims were waived by the execution of a consent and release agreement.

Wright explains that the defendant cited the second paragraph in the agreement in support of its assertion for the waiver of most damages. In contrast, the plaintiff cited the last sentence of the first paragraph for the proposition that it was not restricted in its ability to “seek relief.”

The court found the agreement to be ambiguous because of this inconsistency and contradiction and found that the terms should be construed against the defendant, who drafted the agreement.

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On-Demand: Impacts of Tightening Natural Gas Market on Procurement Strategy

Ecova has posted an on-demand webinar reviewing the top takeaways from third quarter of 2017.

The webinar also covers potential short- and long-term impacts of a tighter natural gas supply and demand balance heading into this upcoming winter.

Other energy and natural gas market trends covered include:

  • Upcoming winter, gas and storage vs historical averages
  • Associated risks with less gas supply heading into winter
  • Working risk tolerance into procurement strategy

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Oil Majors Face Lawsuits on Climate Change Issues

Two major Californian cities — San Francisco and Oakland — have filed lawsuits against five oil and energy super majors September, according to Zacks Equity Research.

The cities have taken legal action against Chevron Corp., ConocoPhillips, Royal Dutch Shell plc, ExxonMobil Corp. and BP p.l.c.

“The companies have been accused of causing an adverse impact on the climate, resulting in global warming. The plaintiffs hold these fossil fuel companies accountable for rising sea levels, changing landscapes, higher global temperatures and increased risk of storms and droughts,” Zacks reports.

The plaintiffs allege that the defendants continue to produce and market products that contribute to climate change and rising sea levels.

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Litigating Climate Change: An Overview of Suits Against the Oil and Gas Industry

The Institute for Energy Law will present a webinar discussing the various climate change-based lawsuits and current trends in climate change litigation.

The event will be Wednesday, Oct. 18, 2017, at 1 p.m. EDT / 10 a.m. PDT. Information about MCLE credit and fees can be found on the registration site.

The institute is a part of the Center for American and International Law.

“Over the past few years, government entities and non-governmental organizations have moved the debate over climate change from the court of public opinion and into the courtroom,” according to the institute. “Oil and gas companies have been one of the bigger targets for such suits, where plaintiffs have alleged that the companies are responsible for rising sea levels and that they have failed to warn about the potential impacts of greenhouse gas emissions.”

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Energy Contract Lawsuits Expected to Jump in Harvey’s Wake

Lawyers expect a spate of force majeure contract lawsuits after Hurricane Harvey tore through Southeast Texas and parts of Louisiana last month, paralyzing a fifth of U.S. fuel output and pushing some oil production offline, Reuters reports.

“Many chemical and refinery plants along the U.S. Gulf Coast have already restarted operations or are beginning to ramp up after damage by Harvey,” writes Bryan Sims. “Once they do, customers may insist on reviewing contractual terms with their energy industry suppliers for the product they did not receive while plants were shuttered.”

He quotes Jessica Crutcher, an attorney for Houston law firm Mayer Brown:

“Every force majeure clause is different, especially when you’re dealing with heavily negotiated contracts in the energy sector.”

 

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Trump Administration Working Toward Renewed Drilling in Arctic National Wildlife Refuge

The Trump administration is quietly moving to allow energy exploration in the Arctic National Wildlife Refuge for the first time in more than 30 years, according to documents obtained by The Washington Post, with a draft rule that would lay the groundwork for drilling.

“Congress has sole authority to determine whether oil and gas drilling can take place within the refuge’s 19.6 million acres,” reports Juliet Eilperin for The Post. “But seismic studies represent a necessary first step, and Interior Department officials are modifying a 1980s regulation to permit them.”

Environmentalists and some of Alaska’s native tribes have fought against exploration in the ANWR for years, but state politicians and many Republicans in Washington have pressed to extract the billions of barrels of oil lying beneath the refuge’s coastal plain, Eilperin writes.

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Despite EPA’s Insistence, Clean Power Plan Remains ‘The Law Of The Land,’ Democratic State Officials Insist

The battle over the Clean Power Plan has intensified as Democratic state officials are publicly locking horns with Scott Pruitt, the head of the U.S. Environmental Protection Agency, over the legal advice that he has given to states that oppose the Obama-era carbon-cutting plan, reports Forbes.

Ken Silverstein explains that in March Pruitt wrote a letter in which he advised the states that they do not have to meet the deadlines set by the Clean Power Plan that aims to cut CO2 emissions by 32% by 2030, from a 2005 baseline. But 14 state attorneys general disagree, saying the regulation remains in effect unless the courts would rule otherwise.

“The country is well on its to way to achieving the desired outcome of the regulation: carbon emissions in this country have dropped from 6.13 billion metric tons in 2007 to 5.35 billion metric tons last year because natural gas is replacing coal-fired generation,” writes Silverstein.

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Liability in the Oil and Gas Fields: The Gap Between Your Company and Its Employees

Oil wellsTexas courts have continued to evaluate the nature and extent of liability that property owners have for the acts of independent petroleum contractors, points out Marcy Rothman in Kane Russell Coleman Logan’s Energy Law Today blog.

She explains that a new opinion from the Eastland Court of Appeals is highly relevant for owners, operators, and drillers.

The Texas Supreme Court specifically held that the plain language of the Liability for Acts of Independent Contractors statute in the Texas Civil Practice & Remedies Code protects only the property owner, not its employees.

Boiling the Eastland court’s decision to its most practical terms, when it comes to claims for negligent hiring, companies are subject to claims that they knew or should have known that the contractors were not competent, Rothman writes.

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How Oil & Gas Technology Investments Help Executives Secure Project Payback

The fall in oil prices has driven energy executives to focus on reducing production costs, according to Schneider Electric. However, are the benefits accrued from this price-influenced cost cutting only temporary or can they be made permanent and sustainable?

Eric Koenig of Schneider Electric will present will discuss that question during a webinar Oct. 3, 2017, at 9 a.m. CDT.

“Experience evidences the link between influence over costs and project stage. Each specific project lifecycle phase – from conception and front-end design to daily operations-incorporates specific solutions for maximizing profitability,” according to the invitation to the webcast. “Engineering and integration technologies designed to optimize existing architectures, increase production efficiency, and improve safety performance are currently available and are powerful tools for succeeding in today’s challenging marketplace. This webcast will explore how Oil & Gas companies can reinvent their control engineering processes, and leverage these tools to sustain and improve project delivery payback and operational efficiencies.”

During this session explore how to:

– Get up to 20% on CapEx and up to 25% on OpEx savings with a new power distribution approach
– Get up to 14% on CapEx and up to 9% on OpEx with an integrated process, power and safety management
– Implement virtual reality training simulators to secure higher uptime operations and to accelerate the training of Millennian new employees.
– Correct potential errors at earlier stages of the project with engineering simulation tools.

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FERC is Back and Faces a Full Plate of Electricity Issues

FERCWith two new commissioners confirmed by the Senate and sworn in, FERC’s seven-month period without a quorum is over and it can get back to business, reports Covington & Burling on its Inside Energy & Environment blog.

He writes that two more nominations are now before the Senate with a hearing scheduled for Sept. 7. Them the agency should be at full strength within the next few months and ready to take on important policy issues.

“There are quite a few critical generic electricity policy initiatives already teed up and awaiting Commission action. Together, the initiatives address fundamental issues spanning a broad range of FERC’s electricity authorities,” according to Peterson.

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Could State Subsidies for Renewable Energy Face Legal Challenges?

Renewable energy - windmills - laptopIn a Maryland case, the U.S. Supreme Court rejected the state’s effort to offer incentives for new gas fired power plants, ruling that the subsidies impermissibly encroached on the Federal Energy Regulatory Commission’s authority under the Federal Power Act, writes Hugh E. Hilliard, a senior counsel with O’Melveny & Myers. But the Court left open the broader issue of whether states have the power to offer other forms of energy incentives.

“Now several cases before the courts are raising just that question, with potentially far-reaching implications for nuclear and renewable energy, although recent decisions in those cases have upheld state subsidies that are not directly tethered to sales of electric energy at wholesale, which are subject to FERC’s exclusive jurisdiction,” according to Hilliard.

He writes that the latest developments in federal courts indicate that state subsidies for renewable energy, including renewable-energy portfolio standards and mandated procurement programs, are safe from challenges, at least for now.

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BLM Proposes Rescission of 2015 Hydraulic Fracturing Rule

The Bureau of Land Management has announced its recommendation that the hydraulic fracturing rule from 2015 entitled, “Oil and Gas; Hydraulic Fracturing on Federal and Indian Lands,” be rescinded, reports Fox Rothschild in its Energy Law Today blog.

Melissa J. Lyon explains that in 2015 the BLM had issued regulations that attempted to regulate oil and gas development on federal and tribal lands by focusing on wellbore construction, chemical disclosures and water management.

But litigation kept the final rule from going into effect. Then U.S. District Court Judge Skavdahl ruled that the BLM does not have the authority to enforce the 2015 hydraulic fracturing rule.

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Quick Legal Appeal in the Works for Illinois Zero-Emissions Credit Ruling

An immediate legal appeal was in the works after a federal judge upheld Illinois’ controversial zero-emissions credit program aimed at providing millions of dollars of taxpayer-funded subsidies to keep two money-losing Exelon nuclear plants from closing, reports Platts.

Nuclear generators in other states also are seeking legislative and administrative support to help plants compete against cheaper gas and renewables in a low wholesale power price environment, explains Bob Matyi.

“Chicago-based Exelon, the nation’s largest nuclear generator, won the first round of the legal battle Friday when Judge Manish Shah of the US District Court for the Northern District of Illinois in Chicago dismissed a lawsuit filed late last year by a competitive power group that includes Calpine, Dynegy, NRG Energy and the Electric Power Supply Association,” according to Matyi.

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