If you operate wells, gas plants and similar facilities in populated areas, address your neighbors’ concerns. This could lead to increased costs and inconvenience in operations, but it might be cheaper in the long run. It sometimes isn’t enough to comply with laws and regulations if your activities are objectionable to your neighbors. In this case, a natural gas compressor station was a permanent nuisance.

Natural Gas Pipelinc Company v. Justiss

In Texas, an operation or facility is a “permanent nuisance” if a condition exists that substantially interferes with the use and enjoyment of an owner’s land by causing unreasonable discomfort or annoyance to persons of ordinary sensibilities and the conditions are sufficiently constant or regular that they their future impact can be reasonably evaluated. Foul odor, dust, noise, and bright lights have been held to be nuisances if they are sufficiently extreme.

Continue Reading Is Your Compressor Station a Nuisance?

What happens when the owner’s promise that it has conducted due diligence collides with the contractor’s fixed price obligation?  It’s time to replace the 60-year old pipeline you acquired years ago along with millions of dollars of other assets that you actually cared about.

Continue Reading The Burden of Due Diligence

The contract of sale for the property mentions that you, the seller, intend to reserve the hard minerals, but not the oil and gas beneath the property. The deed to close the transaction contains no reservation of anything.

Cornerstone Land, Ltd. v. Pierce 2010 WL 4243677 (Tex. App.—Waco 2010)

Shouldn’t the reservation in the contract of sale put the buyer on notice of the your intent to reserve the minerals? That’s what the buyer gargued to the court. But it doesn’t. The seller retained the hard minerals.

As title lawyers know, a purchaser is bound by every recital, reference and reservation contained in or fairly disclosed by any instrument which forms an essential link in the chain of title under which he claims. However, this court chose not to agree that the contract of sale was an essential link in the buyer’s chain of title. Rather, it was no link at all. When the deed was signed, the contract of sale was merged into the deed and thus, in essence disappeared.

This case reminds those of us who prepare contracts, and the others of us who intend to be bound by them, to slow down, read the document carefully, and be certain it says what we intend for it to say.

Cornerstone Land, Ltd. v. Pierce 2010 WL 4243677 (Tex. App.-Waco 2010).

 “It is better to stop a bad law than pass a good one.” Calvin Coolidge.

Is Washington listening to Silent Cal?

This post is about what the energy industry- oil and gas in particular – might expect from the Administration in its second term. Disclaimer: I don’t sponsor any of these predictions. The authors know more about these subjects than I do.

Let’s gaze into the crystal ball:

Carbon Tax

The National Center for Policy Analysis explains the perils of a carbon tax, predicting one will be proposed. Sterling Barnett acknowledges that there are benefits to a carbon tax that are a preferable to a cap and trade scheme: A carbon tax is transparent and it would be clear to everyone that it is money paid directly to the government, whereas a cap and trade scheme would be a disguised tax.

He concludes that a carbon tax is a bad idea because “there is never a good time for a bad tax.” A tax on something as important as energy, which he considers the “foundation of modern society”, would affect everyone in virtually every activity they undertake. Further, he considers a carbon tax to be highly regressive and hence a disproportionate burden on the poor.

NGL Exports

As the Department of Energy reviews the pros and cons of exporting US natural gas, The Wall Street Journal reports that large chemical companies who burn lots of natural gas oppose exporting energy in order to keep gas cheap, but oil and gas producers argue that exports are positive for the economy, the balance of trade, and other benefits.

Chemical companies are building new plants in the US to capitalize on our cheap energy, which in itself is a job creator. No one knows what the demand may eventually be and exports may enter economic growth in that way.

Daniel Yergin, for one, believes that there are shale fields yet to be tapped and concludes that exports would be a good thing. In the end, the WSJ says let the market decide.

Keystone Pipeline

The Natural Resources Defense Council thinks approval of the Keystone XL pipeline is a bad idea, arguing that the pipeline would kill more jobs than it creates by reducing investment in “the clean energy economy” and that the pipeline would transport dirty, high sulfur tar sands oil, which itself uses less amounts of energy and water to produce and clean up. They believe we need to do everything we can to avoid importing tar sands oil to the United States (The link above offers more reports and analysis from their point of view).

Business Insider reports that the pipeline will be approved, with a few tweaks in the route to avoid environmentally sensitive areas.

The Role of Fossil Fuels in the Obama Energy Policy

Platts reports that Jack Gerard, president of the American Petroleum Institute professes to be encouraged that about President Obama’s commitment to oil and gas development in campaign statements leading up to the election.  Huh?

According to Inside Climate News, the congressional lineup has changed with the defeat of several congressmen characterized by this group as opposed to “clean energy”. This is an indicator of continued pressure to be placed on the president to favor alternative energy sources. (Notice how the Heritage Foundation is “Right Wing” but the environmental groups are not “Left Wing”).

Taxes

From Reuters:  The IPAA and others expect a rough four years, from potential elimination of the intangible drilling cost deduction to increased regulation of CO2 emissions, which will affect coal and oil and gas producers. And this piece doesn’t mention potential regulations on fracking, which is on the agenda.

Looking to 2016

Here is an exclusive look at the early front-runner for the 2016 Republican nomination.

Regardless of your point of view, here is some wise musical advice.