Colorado, Wyoming, and North Dakota Oil and Gas Regulatory Update

Transcription

1 Colorado, Wyoming, and North Dakota Oil and Gas Regulatory Update This webcast will begin promptly at 12:00 PM Eastern Follow Steptoe & Johnson on ALSO FIND US ON Steptoe & Johnson PLLC. All Rights Reserved.

2 Today s Presenters David R. Little Of Counsel Denver, CO david.little@steptoe johnson.com (303) Ghislaine G. Torres Bruner Of Counsel Denver, CO ghislaine.bruner@steptoe johnson.com (303)

3 Introduction Our Clients Commitments: Safety First; Protect Public Health, Safety and Welfare Technology Leads to New Opportunities Regulators Respond with More Regulations Commodity Price Changes Case Law and Legislation Slower Evolution

4 Preemption Regulators Federal, State, and Local North Dakota [Black Gold, 2016 ND 30 (2016)] Wyoming [2015 WOGCC Setback Rules] Colorado Preemption Case Study History of State and Local Regulation Cases Pending before the Supreme Court Longmont et al. v. COGA et al., 2015SC667 Fort Collins v. COGA, 2015SC668

5 Local Government Working with Local Governments and Local Residents Practical Considerations Social License to Operate v. Code Requirements Greeley, Colorado case study Voss v. Lundvall Brothers, Inc., 830 P.2d 1061 (Colo. 1992) involved Greeley Multi Well Pads

6 Ballot Initiatives and Governor s Task Force Reaction in Colorado to Preemption and Increased Oil and Gas Development Prior Legislation and COGCC Rulemakings 2014 Election and Local Government Bans Governor's Task Force Follow Up to Task Force Why Are We Where We Are?

7 Case Studies Recent Permitting and Operations Case Studies Greeley, Colorado Planning Commission Denied Approval of Pad Meeting the Code Satisfying Neighbors Tipping Points City Council Overturned Planning Commission Erie, Colorado Anadarko s School Site Encana Operations

8 Rulemaking on Recommendation 17 and 20 Effective Date March 16, 2015 Summary of Rulemaking Practical Considerations

9 Air Quality BLM Flaring Regulations Colorado Colorado Department of Health and the Environment Colorado Air Quality Control Commission Regulations, Regulation 7, 5 CCR Colorado Oil and Gas Conservation Commission Rule 912, Notice to Operators

10 Air Quality North Dakota North Dakota Industrial Commission Order North Dakota Field Office s October 14, 2015 Revised Decision Record Wyoming Wyoming, Nonattainment Area Regulations Ch. 8 (June 2015)

11 Case Law Updates Relationships with Mineral Owners Royalty Deductions Colorado: Lindauer v. William Prod. RMT Co., 2016 COA 39 (Colo. App. Mar. 10, 2016). Post market transportation costs need not meet the enhancement test to be deductible. North Dakota: Kittleson v. Grynberg Petroleum Co., 2016 ND 44 (N.D. Feb. 22, 2016). At the well rule permits either work back or netback methods to calculate market value and royalty. Wyoming: Nucor, Inc. v. Petrohawk Energy Corp., 2015 WL (D. Wyo. Nov. 12, 2015). Applying Wyoming Royalty Payment Act.

12 Case Law Updates Lease Issues North Dakota: Northern Oil and Gas, Inc. v. Moen, 808 F.3d 373 (8 th Cir. 2015). Pugh clause must be clear and explicit to be enforced under North Dakota law. North Dakota: Fleck v. Missouri River Royalty Corp., 2015 ND 287, 872 N.W.2d 329 (N.D. 2015). Principles of lease interpretation; Production means production in paying quantities; and In assessing production in paying quantities, a court must assess whether the well yielded a profit over operating costs over a reasonable period of time and whether a reasonable and prudent operator would continue to operate the well in the same manner.

13 Case Law Updates Deed Interpretation Colorado: Owens v. Tergeson, 2015 COA 164, 363 P.3d 826 (Colo. App. 2015). Both a granting clause and a habendum clause may help define the interest conveyed; discussing due diligence required to locate parties for quiet title action. Colorado: Sandstrom v. Solen, 2016 WL (Colo. App. Feb. 25, 2016). Tax deed issued without diligent inquiry by treasurer was void. North Dakota: EOG Resources, Inc. v. Soo Line Railroad Co., 2015 ND 187, 867 N.W.2d 308 (N.D. 2015). Granting clause controls the interest the grantor conveys to the grantee; Habendum clause may limit the interest granted; and A deed that conveys a right of way or limits the use of a parcel generally indicates an intent to convey an easement.

14 Case Law Updates Surface Access Issues BLM: Entek GRB, LLC v. Stull Ranches, LLC, 113 F. Supp.3d 113 (D. Colo. 2015). Following appeal, construing access across federal unit lands. Wyoming: Denbury Onshore, LLC v. Christensen, 101 F. Supp. 3d 1147 (D. Wyo. 2015). Plain language of Unit Agreement did not evidence consent to use of all of surface owners lands; Discussing Wyoming Split Estate Act.

15 Case Law Updates Contracts with Surface Owners Wyoming: Pennaco Energy, Inc. v. Sorenson, 2016 WY 34 (Wyo. Mar. 11, 2016). SUA was contractual and was not a covenant running with the land; when a duty is delegated, the delegant remains liable; and otherwise, every solvent person could obtain freedom from debts by delegating to the insolvent. Wyoming: Pennaco Energy, Inc. v. KD Company, LLC, 2015 WY 152, 363 P.2d 18 (Wyo. 2015). Same holding as Pennaco Energy, Inc. v. Sorenson, 2016 WY 34 (Wyo. Mar. 11, 2016)

16 Case Law Updates Contracts with Other Oil and Gas Companies and Contractors Colorado: Rocky Mountain Exploration, Inc. v. Davis Graham & Stubbs LLP, 2016 COA 33 (Colo. App. Mar. 10, 2016). Boilerplate matters in case involving successive PSA, AMI, and JOA. Wyoming: Basic Energy Services, L.P. v. Petroleum Resource Mgt., 2015 WY 22, 343 P.3d 783 (Wyo. 2015). Addressing issues relating to agents, respondeat superior and independent contractors. Wyoming: Windsor Energy Group, L.L.C. v. Noble Energy, Inc., 2014 WY 96, 330 P.3d 285 (Wyo. 2014). Laches. Wyoming: Black Diamond Energy, Inc. v. Encana Oil and Gas (USA) Inc., 2014 WY 64, 326 P.,3d 904 (Wyo. 2014). Farmout agreements.

17 Case Law Updates Hard Times Issues Colorado: Youngquist Bros. Oil & Gas, Inc. v. ICAO, 2016 COA 31 (Colo. App. Feb. 25, 2016). Employer, who did not do business in Colorado but recruited Colorado residents to work in North Dakota was subject to Colorado s workers compensation laws. Colorado: Kinder Morgan CO2 Co., LLP v. Montezuma County Board of County Commissioners, No. 15SC595 (Colo. Feb. 29, 2016). Certiorari granted to determine if court of appeals correctly concluded that a county may retroactively assess property taxes on the value of oil and gas leaseholds omitted due to the underreporting of the selling price or the quantity of oil and gas sold. Colorado: Leonhart v. Tri Energy Asset Management, Inc., (June 26, 2015) (unreported). Land services company not required to pay unemployment benefits to independent land professional.

18 Case Law Updates Hard Times Issues (continued) North Dakota: Border Resources, LLC v. Irish Oil & Gas, Inc., 2015 ND 238, 869 N.W.2d 758 (N.D. 2015). After oil and gas company terminated landman s authority to take leases on its behalf, no fiduciary duty existed which prevented landman from thereafter acquiring leases in the prospect area without first submitting the leases to the oil and gas company. North Dakota: Macquarie Bank Limited v. Knickel, 793 F.3d 926 (8 th Cir. 2015). Credit agreement did not obligate borrower to renew oil and gas leases; breach of oral promise to renew oil and leases did not amount to fraud or deceit; lender misappropriated seismic data, geologic maps and reserve reports which qualified as trade secrets under North Dakota law.

19 Conclusion Greater interest in more regulation Increase in litigation People are interested in what they own and whether they are paid correctly The effects of commodity price Thank you

20 Q&A Questions?

21 THANK YOU! David R. Little Of Counsel Denver, CO johnson.com (303) Ghislaine G. Torres Bruner Of Counsel Denver, CO johnson.com (303)

22 April Energy Webcast Triple Threat Due Diligence Pitfalls for the Buyer, Seller, and Financier April 21, 2016 Be on the lookout for your invitation!

23 Material Disclaimer These materials are public information and have been prepared solely for educational purposes. These materials reflect only the personal views of the authors and are not individualized legal advice. It is understood that each case and/or matter is fact specific, and that the appropriate solution in any case and/or matter will vary. Therefore, these materials may or may not be relevant to any particular situation. Thus, the authors and Steptoe & Johnson PLLC cannot be bound either philosophically or as representatives of their various present and future clients to the comments expressed in these materials. The presentation of these materials does not establish any form of attorney client relationship with the authors or Steptoe & Johnson PLLC. While every attempt was made to ensure that these materials are accurate, errors or omissions may be contained therein, for which any liability is disclaimed.