American Oil and Gas Reporter - December 2016 - 18

IndustryDigest
The Ohio decision stands somewhat
in contrast to those of two neighboringstate high courts. In August 2015, the
Kentucky Supreme Court held that costs
such as compression, gas treating and
transportation were deductible, but not
severance taxes (AOGR, October 2015,
pg. 135). In March 2010, the
Pennsylvania Supreme Court ruled that
post-production costs could be deducted
when determining the value of gas at
the wellhead under the state's
Guaranteed Minimum Royalty Act
(AOGR, April 2010, pg. 29). ❒

Appeals Court Rebuffs
Injunction Request For
Mancos Shale Drilling
DENVER-A federal court has
denied a request for a preliminary
injunction to block oil and gas drilling
in the Mancos Shale formation of the
San Juan Basin in New Mexico, the
Texas Independent Producers & Royalty
Owners Association says.
Ruling in Diné Citizens against
Ruining our Environment v. Jewell,
TIPRO says the U.S. Court of Appeals
for the 10th Circuit concluded the
plaintiffs failed to meet three of the four
legal requirements to secure an
injunction.

18 THE AMERICAN OIL & GAS REPORTER

Diné Citizens filed suit in March
2015, challenging 260 applications for
permits to drill in the Mancos Shale
play, and asking for an injunction to
prevent drilling on approved wells while
litigation was ongoing. The Navajo
Tribe group was joined by the San Juan
Citizens Alliance, WildEarth Guardians
and Natural Resources Defense Council
in the lawsuit against Interior Secretary
Sally Jewell and Neil Kornze, director
of the Bureau of Land Management.
After U.S. District Judge James
Browning rejected their injunction
request, ruling the plaintiffs had not
proved federal agencies failed to fully
examine the environmental impacts
(AOGR, September 2015, pg. 18), the
groups appealed.
The 10th Circuit Court agreed with
the lower court that the plaintiffs failed
to demonstrate a substantial likelihood
of success on the merits of their claims;
operators and the public were more
likely than them to suffer economic
harm; and public interest favored an
injunction, TIPRO says.
Among the arguments in their
appeal, court documents state the
plaintiffs claimed the district court erred
in concluding they had not
demonstrated a high probability for
their claims having merit, saying the
judge applied too high a standard of
"likelihood," and he should have

concluded new horizontal drilling and
fracturing technologies would lead to
more environmental harm than
anticipated in the 2003 resource
management plan that BLM used in
weighing the APDs.
The 10th Circuit Court rejected those
allegations, noting that as the district
court pointed out, the 2003 RMP
projected the impacts of 9,942 wells by
2015. Because only 3,860 wells were
drilled, overall impacts remained within
anticipated levels. The circuit court adds
that BLM considered the possibility of
increased air quality impacts in its
environmental assessments, and
concluded the approved drilling
activities would not cause a significant
increase in emissions. ❒

Texas RRC Amends
Inactive Well Deﬁnition
AUSTIN, TX.-The Texas Railroad
Commission in November eased the
definition of an inactive well subject to
plugging requirements, and modified its
rules regarding natural gas well
deliverability tests, according to the
Texas Independent Producers & Royalty
Owners Association.
TIPRO says the RRC amended
Statewide Rule 15 to change the
definition of an active oil well from one
that produces at least 10 barrels a month
for three consecutive months to
producing five barrels a month for three
consecutive months, or any amount for
12 consecutive months. Similarly,
TIPRO says, the definition of an active
gas well was changed from one that
produces a minimum of 100 Mcf a
month for three consecutive months to
producing 50 Mcf a month for three
consecutive months or 1 Mcf a month
for 12 months.
In addition, TIPRO says, the RRC
amended SWR 28 to allow an operator
to opt not to perform a gas well
deliverability text following the initial
test. In such a case, TIPRO explains, the
RRC will use the lesser of the initial
deliverability test or the well's
maximum daily production from the
previous 12 months to calculate the
well's production allowable.
Both amended rules were to be
published in the Dec. 2 Texas Register
and become effective, Jan. 1, TIPRO
says.
The association adds that the rule
American Oil and Gas Reporter - December 2016

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