Co-author Rusty Tucker

In Hlavinka v. HSC Pipeline P’ship, LLC, a Texas court denied a pipeline company’s claim that it is a common carrier with the power of eminent domain.

The Hlavinkas own 15,000+acres in Brazoria County. HSC owns pipeline systems in Texas. HSC’s manager Enterprise Products applied to the Railroad Commission for a permit to operate a new 44-mile long pipeline for the transportation of products including polymer grade propylene. The parties were unable to agree on terms for an easement across four tracts of land.

HSC filed a condemnation suit. The Hlavinkas challenged HSC’s eminent domain power asserting that the pipeline was not for public use and propylene is not crude oil. As a result, they alleged, HSC is not a common carrier and thus does not have authority to condemn private property. HSC filed a motion for partial summary judgment to establish its right to condemn as a matter of law.

The trial court excluded testimony of Terrance Hlavinka related to damages and valuation of the easement. Ultimately, the trial court awarded HSC a permanent 30-foot pipeline easement and a temporary workspace easement, and awarded the Hlavinkas $132,293.36. These were the questions on appeal:

Is HSC a common carrier? Continue Reading Status as a Common Carrier Denied by a Texas Court

Co-author Rusty Tucker

In Mayo Found. For Med. Educ. & Research v. BP Am. Prod. Co. a United States District Court considered the circumstances under which a lessor can withold its consent to assign an oil and gas lease.

The provision 

A lease from Barbara Lips* to Alpar Resources included Section 157 and other lands.  Paragraph 7 reserved to Lips an absolute veto right over any assignment of Alpar’s interest in the Lease.

An amendment to the lease replaced the original Paragraph 7 with this less-restrictive clause:

“The rights and obligations of the Lessee hereunder are not assignable or transferable in any respect by it, except upon the written approval of [Mayo], which approval shall not be unreasonably withheld.” Continue Reading Texas Court Evaluates Consent to Assign an Oil and Gas Lease

As the US continues to be more successful in reducing CO2 emissions than the parties to the Paris Climate Accord, those who would do the St. Vitus dance on the grave of the domestic oil and gas industry should consider the risks posed by the alternatives. Here are thoughts from some who know better than I (Read the sources yourself for details):

It won’t help.

Dutch economist Bjorn Lomborg agrees that climate change is real, man-made, and something to be dealt with smartly. He contends that California forest fires are not caused by climate change, but rather by bad state fires supression policy. Any realistic climate solution will achieve next to nothing. Even if the entire United States were to cut all of its emissions tomorrow and for the rest of the century, temperatures would still climb just 3/10ths of 1°F.

And China added 40 gigawats of coal-fired energy in 2019.

At the risk of being redundant, it won’t help.

Solar is costly.

According to a pro-solar site, Electricity from solar energy is five to 11 times more expensive to produce than from coal, hydro and nuclear sources. The problems are cost of technology, lack of efficiency of solar cells, and installation and maintenance costs. Technological advances could overcome these limitations but it will take decades.

Wind energy generates waste and other disadvantages …

It will cost $24 billion to dispose of 60,000 turbines currently used in the United States. Over the next 20 years the US alone could have to dispose of 720,000 tons of blade waste material. And enormous air and water pollution will occur in faraway countries where the mining, processing and manufacturing are done.

… and is toxic

According to Principia Scientific, Toxic and useless wind turbine blades can’t be recycled, and the volume will quadruple over the next 15 years as blades reach their 15-to-20 year lifespan. Wherever it goes, we know it won’t be to West Coast and Northeast metropolises.

The burden will fall on rural and poor communities.

Despite promises that the permitting process is not stacked against rural communities, a 340 MW wind project was okayed in western New York despite objections from the three counties that will be affected. The project will include 117 turbines each standing 600 feet high and will gobble up 30,000 acres. So says Robert Bryce in Forbes. I say get used to it.

Hydrogen is not the answer. 

For a number of reasons, its physical properties are incompatible with the requirements of the energy market. (Warning: This Watts Up WIth That! piece begins as a political rant but mellows out into a discussion of science.)

China will win, children will lose.

According to Jude Clemente in Forbes, the US is fully dependent on foreign countries for 14 of the 35 rare earth minerals the Administration considers to be critical to alternative energy development.  This will result in the transfer of trillions of dollars of wealth to China and further increase US dependence on the Chinese.

Mark Mills in National Review agrees. And chldren in African countries  will pay the price.

It won’t be a sustainable utopia.

Tilak Doshi in Forbes asserts that rigorous economic analyses of the hidden costs of solar and wind counter claims that wind and solar power are already competitive with gas and coal power plants.

RIP HOF’ers Lou Brock, Whitey Ford, Bob Gibson, Al Kaline, Joe Morgan, Tom Seaver …

Co-author Rusty Tucker

The threat: You, the operator, are operating unprofitable wells where monthly costs exceed or barely equal revenues, making money on the fixed COPAS overhead charges. Your non-operators are going into the economic hole and they don’t like it.

Yesterday we presented options for the non–operator to stop the financial bleeding. Today we anticipate responses available to the operator.

Yesterday’s caveats still apply. Continue Reading My Operator is Making Money … Part 2, The Operator’s Response

Co-author Rusty Tucker

With the plunge in commodity prices many formerly profitable wells are now in the red, and we don’t know for how long. This is causing non-operators to question the bona fides of the operations … and of the operator, and to search for a way out of their obligations.

The challenge: The operator is operating unprofitable wells where monthly costs exceed or barely equal revenues, making money on fixed COPAS overhead charges, and non-operators are going into the economic hole.  What can the non–operator do to stop the financial bleeding? Continue Reading My Operator is Making Money on the Well and I’m Not. What Can I Do? Part 1.

Co-author Rusty Tucker

Jatex Oil & Gas, L.P. v. Nadel & Gussman Permian, L.L.C. presents several teachable moments:

  • The Texas Property Owner Rule does not allow a non-expert to testify on matters requiring expert testimony.
  • The operator may pay proceeds from a well to the lender to whom the working interest owner made a collateral assignment of net revenues from the well.
  • A claim for failure to act as a reasonbly prudent operator for failing to comply with an operating agreement is a contract claim, not a tort claim.

Continue Reading Lessons from an Operating Agreement Dispute

Gas flaring, especially in the Permian and the Eagle Ford, is coming in hot these days at the Texas Railroad Commission. Presented here are viewpoints from several stakeholders in the discussion. My comments are summaries. For a fuller understanding please read the reports for yourself.

The players are in general agreement on several points:

  • There needs to be an end to routine gas flaring.
  • Texas flares a lot of gas: About as much annually as all of its residential users combined, or maybe as much as the seven largest cities, or maybe Houston. It depends on who’s talking. Values vary but in the Permian it ranges from $450 Million to $750 Million.
  • Progress is being made, plenty for some, not enough for others.

The Texas Methane and Flaring Coalition

These seven trade associations and 40 operators are members of the Railroad Commission’s Blue Ribbon Task Force for Oil Economic Recovery. Their positon, among others:

  • More detailed data submissions from operators will result in more effective operational and regulatory decisions that will reduce flaring.
  • A proposed flaring matrix (see the report) identifies situations where flaring is necessary and makes recommendations for the application of Rule 32 that will result in overall flaring reductions because of the shortened time frame for administrative approvals.
  • Methane emissions from oil and gas systems are down 23 percent since 1990.
  • Texas flaring intensity is well below that of comparable countries according to the World Bank.

Continue Reading How Will the Texas Railroad Commission Address Gas Flaring?

Co-author Rusty Tucker

San Miguel Electric Coop is a Texas nonprofit electric cooperative that owns and operates a power plant that supplies electricity to 38 Texas counties. After a four-week absence, they return to these pages, this time in DCP Sand Hills Pipeline, LLC v. San Miguel Elec. Coop., Inc. Read on to learn about the “paramount importance doctrine”.
Continue Reading Lignite Lease Prevails Over Pipeline Easement

A fellow walks into a bar in New Orleans. “What’ll it be?” “A Corona and two Hurricanes,” says he. “Here you go. That’ll be $20.20.”

Co-author Rusty Tucker

Now, on to operations in hurricane-free New Mexico. Lessons from BEPCO, L.P. v. RMTDC Operations, LLC d/b/a Total Energy Services:

  • Hire a good company man and trust him
  • Get a good expert for trial
  • Prep your witnesses well for deposition and trial

Continue Reading Company Man Wins MSA Dispute