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In 1860, at the age of 60, Joseph Glidden invented barbed wire. He patented it the next year and sold the patent in 1876 to a company named Washburn and Moen, retaining a royalty that made him one of the richest men in the US.

220px-John_Warne_GatesJohn Warne Gates was born in Chicago in 1855. After several failed business, Gates became a salesman for Washburn and Moen. They gave him Texas as his sales territory. To show the benefits of barbed wire Gates set up a demonstration at the San Antonio Military Plaza. He built a barbed-wire pen and placed 100 head of cattle in the pen, who were run full speed into the fencing; the fence held. He sold lots of barbed wire for Washburn and Moen, then started his own successful wire business, which he later sold to JP Morgan’s US Steel. So he got in the steel business, forming Republic Steel, and invented a new process to purify iron called the open-hearth process.

In 1900, Patillo Higgins was drilling a well at a place called Spindletop, near Beaumont. He ran out of money, and Gates Gusher_at_Port_Arthur_Texas_1901eventually invested $590,000 into the project. On January 10, 1901 the well blew in and spewed 100,000 barrels of oil a day for nine days. The company Gates invested in, the Texas Company, which later became Texaco. Gates became its president.

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Last week the Supreme Court of North Dakota handed down its opinion in Northwest Landowners Association v. State of North Dakota, 2022 ND 150. The court struck down portions of a statute passed by the North Dakota Legislature, Senate Bill 2344, dealing with ownership rights to “pore space.” North Dakota law defines “pore space” as “a cavity or void, whether natural or artificially created, in a subsurface sedimentary stratum.” The purpose of the statute was to facilitate operators’ use of pore space for saltwater disposal and CO2 injection in tertiary recovery operations, and to deny landowners the right to compensation for such uses. But the language of the statute is much broader:

Notwithstanding any other provision of law, a person conducting unit operations for enhanced oil recovery, utilization of carbon dioxide for enhanced recovery of oil, gas, and other minerals, disposal operations, or any other operation authorized by the commission under this chapter may utilize subsurface geologic formations in the state for such operations or any other permissible purpose under this chapter. Any other provision of law may not be construed to entitle the owner of a subsurface geologic formation to prohibit or demand payment for the use of the subsurface geologic formation for unit operations for enhanced oil recovery, utilization of carbon dioxide for enhanced recovery of oil, gas, and other minerals, disposal operations, or any other operation conducted under this chapter. As used in this section, “subsurface geologic formation” means any cavity or void, whether natural or artificially created, in a subsurface sedimentary stratum.

North Dakota (unlike Texas) has a statute, the Damage Compensation Act, requiring that requiring a mineral developer to compensate the surface owner for “lost land value, lost use of and access to the surface owner’s land, and lost value of improvements caused by drilling operations.” N.D.C.C. sec. 38-11.1-04. Senate Bill 2344 amended the Damage Compensation Act to exclude “pore space” from its definition of “land.”

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The Inflation Reduction Act, passed by the Senate yesterday and on its way to passage in the House, contains carrots and sticks for reducing methane emissions in the oil and gas sector.

From Inside Climate News:

One of the least discussed, but potentially most significant, climate aspects of the proposed Inflation Reduction Act is a fee it would place on methane emissions from oil and gas operations. The bill would charge companies for methane that they leak or vent into the atmosphere, with the fee starting at $900 per ton in 2024 and increasing to $1500 per ton by 2026.

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I ran across an article recently in the Journal of the Texas Supreme Court Historical Society about James V Allred, who succeeded the infamous Miriam “Ma” Ferguson as Governor of Texas in 1935. The Article, “Texas Troubles: Governor Allred and His Rangers Defy Jim Crow,” by Jody Edward Ginn, Ph.D. (Executive Director of the Texas Rangers Heritage Center in Fredericksburg), is excerpted from his book East Texas Troubles: The Allred Rangers’ Cleanup of San Augustine. In it he chronicles Allred’s depoliticizing and professionalizing of the Texas Rangers (he fired all but three of Ma Ferguson’s five thousand Rangers) and his clean-up of San Augustine, at that time run by a criminal gang “who built their power exploiting Jim Crow limitations on African American Texans’ access to the courts,” with the help of his new Rangers. In three trials in 1935 and 1936, three all-white juries convicted members of the gang of felony crimes against African American victims, based exclusively on the testimony of black victims and witnesses and the Rangers’ investigations.

Reading about Jimmy Allred sparked a memory about a case our firm handled years ago, which I will relate momentarily. First, a little more about Allred.

James V (no period, that’s his name) Allred was born in Bowie, Texas in 1899, went to Rice, served in the Navy, and graduated from Cumberland University law school in Lebanon, Tennessee, in 1921. He served as Texas’ Attorney General 1931-34 and Governor 1934-39. He was a progressive Democrat in the model of Franklin Roosevelt. After his stint as Governor Allred served on the U.S. District Court for the Southern District of Texas, taking the bench at the age of forty. He resigned his judgeship in 1942 to pursue an unsuccessful run for the U.S. Senate, losing to Pappy Lee O’Daniel. Roosevelt nominated him for the Fifth Circuit Court of Appeals in 1942, but he was not confirmed. He was later again appointed as Judge for the Southern District in 1949, where he served until his death in 1959.

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A recent Texas Supreme Court decision on pipeline eminent domain, Hlavinka v. HSC Pipeline:

The Hlavinka family own some 13,000 acres in Brazoria County, Texas, situated near the Texas Gulf Coast directly between refinery and industrial centers. The family originally acquired this land because there are multiple existing pipelines crossing the property, for the opportunity to make money granting additional pipeline easements. At the time of trial, the land had about twenty-five pipeline easements on it, including at least two the family negotiated with other pipeline companies in recent, arms’ length transactions; the family received $3.45 million for one pipeline easement and $2 million from other pipeline companies in private sales.

In 2016, HSC reached out the Hlavinkas about acquiring an easement. After the Hlavinkas rejected HSC’s offer, HSC initiated condemnation proceedings. HSC sought to condemn a total of 6.41 acres of the Hlavinkas’ property for an easement 30 feet wide and about 1.8 miles long. The Hlavinkas sought dismissal of HSC’s suit, challenging its power to exercise common-carrier eminent domain authority.

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I just watched a hearing of the House Science and Technology Committee on efforts to reduce methane emissions from the US oil and gas industry. Four experts testified: Dr. David Lyon from Environmental Defense Fund, Riley Duren with Carbon Mapper, Dr. Brian Anderson, director of the National Environmental Technology Laboratory, par of the Department of Energy, and Dr. Greg Rieker, professor at the University of Colorado and founder of LongPath Technologies.

Some interesting highlights:

  • Methane emissions have accounted for about half of global temperature rise since the beginning of the industrial revolution.
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Four interesting recent cases on oil and gas issues:

Energy Transfer Fuel v. 660 North Freeway, 2021 WL 1569702

Energy Transfer owns an easement across North Freeway’s property in Fort Worth. The easement provided that the owner “hereby reserves the right to use the land in any manner that will not prevent or interfere with the exercise by [the easement holder] of its rights, privileges and easements hereunder, provided, however, that OWNER shall not construct or permit to be constructed any house, building or structure of any kind whatsoever on the easement.”

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The Texas Supreme Court handed down its opinion in Mitchell v. MAP Resources, Inc., setting aside a default judgment in a tax foreclosure suit granted more than 16 years ago, on the ground that the defendant’s due process rights were violated when she was served by posting notice on the courthouse door.

Mitchell is the result of one of many tax foreclosure cases brought by taxing districts to collect delinquent taxes on royalty interests. In the late 1990s an attorney and two mineral buyers got together and proposed to taxing districts that they would handle tax foreclosure suits for delinquent taxes on royalty interests for them. The tax foreclosure suits named hundreds of defendants in a single suit, who were all served by posting notice of the suit at the courthouse. Texas law allows notice of suit by posting or publication where the plaintiff has tried diligently to locate the defendant and has been unable to do so. The two mineral buyers, Joe Hughes and Duke Edwards, searched the tax records for owners with delinquent taxes, and the lawyer proposed to represent the taxing districts in foreclosing the tax liens on those owners’ interests. The lawyer’s fee was paid out of the proceeds from the sheriff sale of the royalty interests foreclosed on. Hughes and Edwards were hired to try to locate the delinquent royalty owners so they could be served with the tax suit. For those they could not locate, they provided testimony in the foreclosure suit that they diligently looked for the missing owners and were unable to find them, so the court could authorize service by posting. Hughes and Edwards received an “abstractor’s fee” for each “unlocateable” owner for whom they searched, also paid out the proceeds of the sheriff sale. At the sheriff sale, Duke and Edwards bid on and purchased some of the royalty interests sold.

In Mitchell, the lawyer, representing the Pecos-Barstow-Toyah Independent School District, Reeves County Hospital District, and Reeves County, sued some 500 owners of more than 1600 mineral interests totaling tens of thousands of acres in Pecos County, in a single suit to collect delinquent property taxes on those mineral interests. The lawyer later filed an affidavit seeking court permission to serve the defendants by posting on the courthouse door. He swore that the names or residences of the listed defendants were unknown and could not be ascertained after diligent inquiry. For those defendants who had an address listed with the appraisal district, he swore that citation was issued to those defendants at those addresses. The court authorized notice by posting; the notice required the named defendants to answer within 42 days. The court appointed an attorney ad litem to represent the interests of the defendants who were served by posting.

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A great article appears in the March Section Report of the Oil, Gas and Energy Resources Law section report, by Jacqueline Weaver, Professor Emeritus, University of Houston Law Center: “The Railroad Commission’s New Duties to Keep Texans Warm: Winter Storm Uri Forces Change.” Here are some excerpts:

The throughput of dry gas production from Permian Basin processing plants dropped 85% from early February to February 18, [2021] and two-thirds of the gas processing plants in the Permian Basin had outages. The natural gas industry blamed electricity suppliers for cutting off power to them when they most needed it; power generators blamed the gas industry for failing to supply gas to them. Many natural gas providers had not filed a short form with ERCOT, the grid operator for most of Texas, that would have exempted them from electric outages during emergencies. The Railroad commission seemed unaware of this form and exemption process. Clearly, the natural gas and electricity sectors needed to communicate and coordinate more closely. In the ERCOT system, natural gas provides about half of all electricity generation.

According to an FERC-NERC Staff Report on Storm Uri:

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