โ Scribed by Shrader, Jeffrey G.
No coin nor oath required. For personal study only.
If the take-or-pay controversy were a baseball game, it probably would be time for the seventh-inning stretch. Although some cases remain unresolved and new decisions continue to be announced, the process of resolving the takeor-pay controversy is much closer to the end than it is to the beginning. Many factors indicate that the game is close to complete: Federal Energy Regulatory Commission regulations allowing crediting of transported volumes, commission proposals for pipeline passthrough of takeor-pay costs, court decisions that define the takeor-pay obligation, fundamental changes in gas markets, and a simple desire by many participants to finish the process.
Ernie Banks' familiar cry of "Let's play two," however, also describes the situation facing many producers as another round of controversy appears on the horizon. Just as the take-or-pay situation appears to be winding down, issues are surfacing involving balancing and other obligations among working interest owners, as well as the right of royalty owners to share in the proceeds of take-or-pay payments and contract buydown or buy-outs. Recent commission and court decisions foreshadow some of these concerns. This article will provide an update of some recent take-or-pay decisions and will briefly discuss some of these emerging producer concerns.
A decision of universal interest is the commis- sion's Order Ilismissing Complaints and Denying Petitions for Declaratory Order and Expedited Rulemaking, issued in A N R Pipeline Co. c! Wagner &L Brown, Docket Nos. GP-86-54-000, e f al. In this order, the commission finally addressed the question of whether take-or-pay payments violate maximum lawful price ceilings established
๐ SIMILAR VOLUMES
In previous columns, we reviewed the issues raised by take-or-pay litigation and preliminarily addressed two of the defenses raised by pipeline defendants, technical deliverability requirements and force majeure arguments. We continue this month with a discussion of two additional defenses, (1) prim