Legal
Update Federal Judge dismisses Climate Lawsuit
In what may prove to be a precedent-setting decision, on June 25, 2018, U.S. District Judge William Alsup dismissed the climate liability lawsuit brought by the cities of Oakland and San Francisco against five oil companies. “We must weigh this positive: our industrial revolution and the development of our modern world has literally been fueled by oil and coal. Without these fuels, virtually all of our monumental progress would have been impossible. All of us have benefitted. Having reaped the benefit of that historic progress, would it really
be fair to now ignore our own responsibility in the use of fossil fuels and place the blame for global warming on those who supplied what we demanded?” Judge Alsup decided that Congress and the president are best suited to determine what to do about human greenhouse gas emissions from the use of fossil fuels, rather than cities, states or the judiciary being allowed to set U.S. domestic and international energy and climate policy, which would violate the division of powers set by the U.S. Constitution.
TEXAS
Murphy Exploration & Production Co.—USA v. Adams
On June 1, 2018, the Texas Supreme Court reversed the judgment of the court of appeals and issued a narrow 5-4 opinion interpreting an offset clause in a 2009 oil and gas lease. The majority holding was that the language “offset well” does not necessarily refer to a well to protect the leasehold against drainage, concluding that the clause referred to a well drilled anywhere on the leased premises that was drilled to a depth required by the lease. The four dissenting justices criticized the majority opinion for disregarding the common understanding of the meaning of “offset well” language as designed to protect the leasehold from drainage. Dissenters also noted that the Court’s interpretations essentially stripped the lessors of the leasehold protections the offset clause may have been designed to protect and rendered the word “offset”, as used in the lease, meaningless.
event a well is completed as a producer of oil and/or gas on land adjacent and contiguous to the leased premises, and within 467 feet of the premises covered by this lease, that Lessee herein is hereby obligated to, within 120 days after the completion date of the well or wells on the adjacent acreage, as follows: (1) to commence drilling operations on the leased acreage and thereafter continue the drilling of such off-set well or wells with due diligence3 to a depth adequate to test the same formation from which the well or wells are producing from on the adjacent acreage; or (2) pay the Lessor royalties as provided for in this lease as if an equivalent amount of production of oil and/or gas were being obtained from the off-set location on these leased premises as that which is being produced from the adjacent well or wells; or (3) release an amount of acreage sufficient to constitute a spacing unit equivalent in size to the spacing unit that would be allocated under the lease to such well or wells on
The lease contained the following provisions:
“It is hereby specifically agreed and stipulated that in the
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N a t i o n a l A s s o c i a t i o n o f D i v i s i o n O r d e r A n a l y s t s
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