Welcome to the second issue of The Energy Law Advisor. While the Newsletter is still
in its infancy, we are delighted by the positive response we have received from the Institute of Energy Law's membership and grateful for your assistance. This assistance has been vital to our ongoing efforts to create a newsletter worthy of the Institute, and
one which will continue to improve over the coming issues. On behalf of the Editorial Board, I would like to thank the membership for its support, and also to wish everyone
a Happy Holiday Season.

Best regards,
Brit T. Brown

Payment Made to Royalty Owners in Global Settlement of Crude Oil Posted Price
Litigation Found to Be a One-Time Bonus or Premium and Not Additional Proceeds from Past Production
Submitted by Mark D. Christiansen, Crowe & Dunlevy

The underlying facts in the case of State of Oklahoma ex rel. Oklahoma Tax Commission v. Sun Company, Inc. (R&M), 78 O.B.J. 1658 and 2146 (Okla. App. 2007 - #103,776) (Not for Publication), as described by the Oklahoma Court of Appeals in its opinion, involved Sun's participation in a global settlement of a series of consolidated lawsuits in various states (referred to collectively as "MDL-1206," and also as the "crude oil posted price litigation"). The plaintiffs in the lawsuits complained that the payment of royalties by the defendants on the basis of crude oil "posted prices" (which were alleged to be non-reflective of fair market value at the lease) had resulted in royalty underpayments. The defendants denied the claims and asserted that royalties had been paid on the full and proper values for the oil..

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MDL Formed to Address “Hot Gas” Complaint

Plaintiffs groups from over twenty states (and Guam) recently filed a Consolidated Amended Complaint in the U.S. District Court for the District of Kansas after being consolidated into a Multi-District Litigation proceeding formed to address the issue of fuel expansion in warm weather (dubbed the “hot gas” lawsuits). The basic idea is that as the temperature of gasoline rises, the volume of a gallon of gasoline expands, causing drivers to get fewer miles out of a tank of gas.

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Court Requires MMS to Address Environmental Impact of Future Exploration and Development Activities Before Extending Oil & Gas Leases

The final appeals process of League for Coastal Protection v. Norton ended in October 2007. The case, originating in the Northern District of California, involved the extension of 36 oil and gas leases off the central coast of California by the Mineral Management Service (“MMS”).

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Exxon Mobil Corporation v. Alabama Department of Conservation and Natural, et al

This case began as a contract dispute between Exxon and the Alabama Department of Conservation and Natural Resources ("DCNR") regarding the interpretation of the royalty provisions of the State's 1981 lease form covering properties in three producing areas in Mobile Bay, Alabama. The principal disputes involved (1) the gas valuation point for royalty purposes, and (2) whether the lease form permitted free use of gas as fuel.

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Supreme Court to Review Exxon Valdez Verdict

Eighteen years after the infamous Exxon Valdez oil spill, the Supreme Court granted review of the punitive damages award against Exxon Mobil in the resulting lawsuit.

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Alaska Enacts Tax Increase on Oil Industry

Declaring “the time where the state takes back its sovereignty,” Alaska lawmakers recently approved a tax increase that raises the base tax rates on oil companies’ profits and imposes stricter credits and deductions for correlating operating expenses. The legislation, which is supported by Governor Palin, was the primary topic of a special legislative session.

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5th Annual Law of LNG Conference
September 2008 | Houston, Texas