Oil and Gas Lawyer Blog

Published on: December 16, 2015

Texas Railroad Commission Candidates

The filing deadline is now past, and eight Republicans, three Democrats and a Libertarian have said they will run for a seat on the Texas Railroad Commission to replace David Porter, who unexpectedly decided not to run for re-election. Here’s the lineup:

Gary Gates, Republican. Gates is a wealthy real estate developer and rancher from Rosenberg and a social conservative. He spent more than $1 million of his own money in an unsuccessful effort to take Comptroller Glenn Hegar’s former senate seat, losing to Lois Kolkhors in a special election – the fourth time he failed to win an election for the Texas legislature.
John Greytok, Republican. He’s a lawyer and registered lobbyist and an early supporter of Ted Cruz. He wants the RRC to lead the charge against the Obama administration’s environmental policies.

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Published on: December 10, 2015

Exploration Company Bankruptcies

By John McFarland

The price downturn has finally pushed exploration companies to resort to bankruptcy. According to The Dune, the following companies have filed for bankruptcy protection:

RAAM Global Energy

Endeavour International Corp.

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Published on: December 9, 2015

Class Actions Against Chesapeake in Pennsylvania

By John McFarland

Lawyers have filed a new class action against Chesapeake in Pennsylvania. The suit is against Chesapeake Energy and Chesapeake Marketing, filed in the US District Court for the Middle District of Pennsylvania. The plaintiffs also filed a demand for arbitration with the American Arbitration Association against Chesapeake Appalachia, LLC. According to the arbitration demand, title to Chesapeake’s leases in Pennsylvania is held by Chesapeake Appalachia, and many of those leases contain arbitration clauses requiring the lessor to arbitrate its claims. The complainants make the arbitration demand on behalf of all royalty owners in Pennsylvania who have leases with arbitration clauses.

The suit and the arbitration demand make similar claims, that Chesapeake through its affiliated companies “(1) paid the royalties on less than the revenue paid by the buyer, (2) paid no royalty on the proceeds of derivative contracts, (3) deducted costs incurred after [Chesapeake] no longer held title to the gas, (4) deducted gathering costs that were inflated through collusion and self-dealing with Access Midstream Partners, L.P., (5) deducted transportation costs that were fraudulent in their amounts, (6) deducted marketing fees that were never incurred, and (7) calculated the royalties on some of the gas without determining either the price paid or the costs deducted.”

The plaintiffs are represented by Caroselli Beachler McTiernan & Coleman, LLC in Pittsburgh and Robert C. Sanders, of Upper Marlboro, Maryland.

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Published on: November 30, 2015

OPEC and Oil Prices

By John McFarland

Oil prices are much in the news, especially in Texas. As oil prices continue to decline, the effect on Texas’ economy is settling in. And with all the talk of oil prices, OPEC is again the focus of much news coverage. What will OPEC do? How much does OPEC really control oil prices? What effect are the low prices having in the OPEC countries themselves?

Here are some interesting websites about OPEC:

OPEC’s own website. It publishes a monthly report, available online, in English.

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Published on: November 20, 2015

Oklahoma Keeps Rockin’

By John McFarland

Oklahoma oil and gas regulators are scrambling to deal with increasing seismic activity. The Oklahoma Corporation Commission ordered six wastewater disposal wells shut down after the state’s strongest earthquake since 2011, a magnitude-4.7 quake near Cherokee, close to the Kansas border. The quake was felt from Dallas to Kansas City. A second 4.0- quake was centered near Crescent, close to Oklahoma City. There were a total of eight earthquakes. The Commission also ordered the owners of 23 other wells to reduce injection rates by 25 to 50 percent.

Oklahoma regulators have now conceded that earthquakes there are caused by disposal wells, after much earlier debate. Oklahoma is now the most seismically active area of the country. The state has had more than 790 quakes of magnitude 3 or greater this year, compared to 585 last year.

Cherokee is in Alfalfa County, where 225 million barrels of waste water was disposed of last year, more than 10 times what was injected in 2010. It sits over the Mississippi Lime, an oil play that requires disposal of 10 barrels of water for every barrel of oil produced.

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Published on: November 16, 2015

Amicus Briefs Support Royalty Owners in Chesapeake v. Hyder

By John McFarland

Three amicus briefs have been filed in support of the Hyders, opposing Chesapeake’s motion for rehearing of the Texas Supreme Court’s decision in Chesapeake v. Hyder.

An amicus brief was filed by the City of Fort Worth and others who have filed suits against Chesapeake and Total to recover additional royalties on production in the Barnett Shale area: City of Fort Worth Amicus Brief

An amicus brief was filed by a group of royalty owners represented by Dan McDonald, a Fort Worth attorney who has filed 430 separate suits against Chesapeake, representing more than 20,900 royalty owners in Johnson and Tarrant Counties: Barnett Shale Royalty Owners Amicus Brief

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Published on: November 12, 2015

Permian Production Up, Eagle Ford Production Down

By John McFarland

From Fuelfix:

New federal data shows that the Energy Department expects drillers in the Permian Basin to push oil production in the shale play above 2 million barrels per day for the first time ever this November.

The U.S. Energy Information Administration’s monthly Drilling Productivity Report released Monday, which covers seven of the biggest shale plays in the country, projects production in the Permian to jump by 17,000 bpd this month. That increase would bring the play above the 2 million bpd mark. In December, the EIA expects the play to grow again by 11,000 bpd.

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Published on: November 9, 2015

More Interesting Data from EIA

By John McFarland

These two graphics from the Energy Information Administration (click to enlarge):

The first shows increased re-fracking of existing wells, and reduction in time needed to drill a horizontal well:

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The second shows how production has held up, despite decreased drilling activity:

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Published on: November 5, 2015

World’s Largest LNG-Powered Container Ship

By John McFarland

From the Energy Information Administration:

The General Dynamics shipyard in San Diego delivered the world’s first liquefied natural gas (LNG) powered containership to TOTE Maritime on October 16. The 764-foot long Isla Bella is the first of the Marlin class, a new class of container ship built in the United States, making it Jones Act-qualified for shipments between U.S. ports. The ship was built by the National Steel and Shipbuilding Company, a division of General Dynamics.

(Click to enlarge)

Delivered nearly two months ahead of schedule, the Isla Bella will operate out of Jacksonville, Florida, providing service to and from San Juan, Puerto Rico. The second ship of the class, the Perla del Caribe, will be delivered in early 2016 and will service the same trade route. These ships join a small group of LNG-powered ships, which currently number fewer than 100, excluding LNG tankers, according to data from DNV GL Maritime. They are the first in the largest category of vessels–container ships, numbering in the tens-of-thousands–to be built with dual-fuel propulsion intent on employing LNG as the primary fuel.

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Published on: November 2, 2015

Eartquake Near Cushing Oklahoma

By John McFarland

Recent earthquakes near Cushing, Oklahoma have caused a seismic shift in the state’s response to induced quakes in that state. The reason – Cushing is a major hub in the U.S. for storage and shipments of crude. Below is a snapshot of some of the giant storage tanks just outside the town (click to enlarge):

Some of these tanks are large enough to hold a Boeing 747. Cushing’s storage can hold more than 10 million barrels of oil; it is the largest commercial storage depot in the U.S.

A flurry of quakes have recently hit near Cushing. On October 10, a quake measuring 4.5 on the Richter scale hit about three miles from the town. Scientists have linked increased seismic activity in Oklahoma to increased waste water injection. 3.3 billion barrels of waste water were injected under Oklahoma from 2011 through 2013.

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