MEIVfORANDUM IN SUPPORT OF PLAINTIFFS' MOTION … in... · After acquiring portions of the Hugoton Gathering System oVvned by Panhandle, Anadarko Petroleum made substantial improvements

FLEES ON GOOING COULSON amp KITCH LLC 125 North Market Suite 1600 PO Box 997 Wichita Kansas 67201-0997 Telephone (316) 267-7361

IN THE TWENTY -SIXTH JUDICIAL DISTRICT DISTRICT COURT STEVENS COUNTY KANSAS

GILBERT H COULTER and ) ELIZABETH S LEIGHNOR individually ) and as representative plaintiffs on behalf of ) persons or companies similarly situated )

) PlaintiiIs )

) vs ) Case No 98-CV-40

) ANADARKO PETROLEUM CORPORATION )

) Defendant )

MEIVfORANDUM IN SUPPORT OF PLAINTIFFS MOTION FOR PARTIAL SUMMARY JUDGMENT

[THIS MEMORANDUM AID THE APPENDICES THERETO

ARE FILED UNDER SEAL PURSUANT TO PARAGRAPH 8 OF THE STIPULATED PROTECTIVE ORDER

FILED HEREIN ON JUNE 4 1999]


11 r-shy

IN THE TWENTY -SIX1H JUDICIAL DISTRICT m DISTRICT COURT STEVENS COUNTY KANSAS o

GILBERT H COULTER and ) ELIZABETH S LEIGHN-OR individually ) and as representative plaintiffs on behalf of ) persons or companies similarly situated )

) Pla11tiffs )



) Defendant )

MEMORANDUM IN SUPPORT OF PLAINTIFFS MOTION FOR PARTIAL SUMMARY JUDGMENT

Plaintiffs submit this memorandum in support oftheir motion for partial summary judgment

against Defendant Based on the undisputed facts set forth below Plaintiffs submit that they are

entitled to a judgment prohibiting Defendant from deducting expenses which it is admittedly

incurring to produce compress gather and market the gas which it is selling into pools located on

interstate pipelines from royalty payments which it is making to members of the Plaintiff Class in

connection with such sales Plaintiffs also seek an order requiring Defendant to submit an

accounting to the Court which fully discloses and quantifies the amount of such deductions taken

from royalty payments made byDefendant to each Class Member during the period covered by this

pounduvvsuit

PLAINTIFFS STATEMENT OF UNCONTROVERTED FACTS

I The Hugoton Gathering System Gathers The Gas Involved In This Litigation

1 The members of the Plaintiff Class certified herein (sometimes referred to as

Plaintiffs) receive royalty payments on gas produced from wells COIll1ected to the Hugoton

Gathering System-insofar as and to the extent such wells are producing gas from above the base

ofthe Panoma Council Grove Field (Order on Class Certification August 23 2000 [Appendix AJ)l

2 Defendant Anadarko Petroleum Corporation (Anadarko Petroleum)2 holds title to

interests in oil and gas leases within the areal confines ofthe Kansas Hugoton Gas Field upon which

such wells are located (Defendants Answer and Counterclaims r 1 [Appendix B] Order on Class

Certification August 232000 [Appendix AD

3 Anadarko Gathering Company (Anadarko Gathering) a wholly-owned subsidiary

of Anadarko Petroleum holds title to the assets comprising the Hugoton Gathering System

(Deposition of Shawn D Young p 37 [Appendix C] Deposition Exhibit 1 at p 18 [Appendix D])

4 Anadarko Petroleum transfers title to the gas produced from the above-referenced

wells to a second wholly-owned subsidiary named Anadarko Energy Services Company (Anadarko

Energy)3 at meters located near such wells (Deposition Exhibit 1 at p 18 [Appendix D] and

Deposition Exhibit 12 [Appendix ED

I All deposition excerpts exhibits and other materials cited in support of the Statement of Uncontroverted Facts are contained in the Appendix of Cited Materials submitted herewith

2 Anadarko Petroleum Corporation was formed in 1985 Prior to thattime Panhandle Eastern had held title to the producing assets in an entity known as Anadarko Production Company For the next several years Panhandle continued to own and operate much ofthe gathering system to which such wells were connected (Deposition ofMichael M Ross p 20 [Appendix GJ Deposition Exhibit 1 atp 4 [Appendix D])

Anadarko Energy Services Company was previously known as Anadarko Trading Company

2

5 The Hugoton Gathering System consists ofthe facilities located between such meters

and certain laquoredelivery points for the gas identified in Paragraph 4 (Deposition Exhibit 11

[Appendix F]) The Hugoton Gathering System is depicted on Attachment A hereto (Deposition

Exhibit 2 [Appendix H])

6 The primarymiddot redelivery points for te gas identified in Paragraph 4 are at

interconnections Withpipelines which transport such gas outside the Hugoton Field In 1998 over

ninety-nine percent (99) of such gas was sold at or by means of such pipeline interconnections

(Anadarko Petroleum Corporations Supplemental Responses to Plaintiffs Second Set of

Interrogatories and Document Production Requests Exhibit B [Appendix rD Pa11handle Eastern

Pipeline Company (Panhandle) provides the principal interstate pipeline interconnection for such

gas at or near the inlet to the National Helium Plant which is located east of Liberal Kansas

(Deposition Exhibit 1 at p 18 nl7 [Appendix D])4

7 The facilities comprising the Hugoton Gathering System consist ofpiping ofvarious

sizes (the smallest of which is 2 inches in diameter and is sometimes made ofplastic) compressor

stations dehydrating equipment and separators or other equipment used to capture liquid

hydrocarbons which fallout ofthe gaseous stream (Deposition Exhibit 1 at p 20 [Appendix D]

Deposition of Douglas Graham pp 149 153 [Appendix J] Deposition Exhibit 67 [Appendix K]

Deposition ofMichael M Ross p 28 [Appendix GJ)

4 The great majority of the Anadarko gas that leaves the Hugoton field goes into the Panhandle Eastern line (Deposition of Douglas Graham p 44 [Appendix JJ) Anadarko has been contractually committed to deliver certain volumes to the National Helium Plant which is on the Panhandle pipeline (Ross Depo pp 138-140 [Appendix G]) In 1998 sales of gas for irrigation amounted to less than one percent of total sales for that year (Graham Depo p 203 [Appendix J])

3

8 Plaintiffs royalty payments are reduced by all charges which are assessed against

their accounts for the activities occurring on the Hugoton Gathering System (First Deposition ofJoe

Toups December 3 1999 pp 66 70 [Appendix L] Responses to Plaintiffs Second Set of

Interrogatories and Document Production Requests No1 [Appendix MD

II As the Hugoton Field Was Depleted Compression Was Added To The Gathering System To Lower Pressures In The Vicinity Of The Wells And Thereby Continue Producing The Gas

9 A compressor is a mechanical device that simultaneously sucks up and blows out

gas thereby reducing pressure in the intake line upstream ofthe compressor and increasing pressure

in the discharge linedoyenllstream of the compressor (Ross Depo p 46 [Appendix GJ)

10 Panhandle built the first segment of the Hugoton Gathering System in 1930

(Deposition Exhibit 1 at p 12 [Appendix DJ Ross Depo p 25 [Appendix G])

11 Anadarkos personnel have admitted that as the reservoir has been depleted reservoir

pressures have declined and it has become necessary to add compression to lower pressures in the

vicinity ofthe wells so that the field will produce gas into the Hugoton Gathering System

A Well as a field matures it needs to have a lower pressure

Q What do you mean by that

A As the reservoir pressure declines it needs a lower pressure to produce into

Q Were you familiar with declining pressures in the Hugoton field

A Yes

Q Can you give us some parameters that you actually know about in terms of the decline in the field pressures

A No not really Im not a reservoir engineer

4

Q You just knew that there had been declines in the reservoir pressure

A Yes

Q Which was normal

A Right

Q That was a surprise to nobody is that right

A Thats a surprise to nobody

Q And as the field pressure fell in order to continue to produce gas they needed to add compression is that correct

A Well thats what a pipeline does

(Ross Depo pp 24-26 [Appendix G])

12 The first compressor placed on the Hugoton Gathering System is located at what is

known as the Hugoton Compressor Station The Hugoton Compressor Station was installed by

Panhandle on the eastern edge ofHugoton Kansas in 1945 (Deposition Exhibit 1 at p12 [Appendix

D] n 5 Ross Depo p 25 [Appendix G])

13 The Hugoton Gathering System now contains more than 150 compressors which are

operated in a manner that both lowers the pressures at the wellhead and raises the pressures at the

terminus of the system (Deposition Exhibit 1 at p 35 and Figure 2 [Appendix D] Ross Depo p

47 [Appendix GD Most ofthose compressors were installed by Anadarko Petroleum after it secured

control of the Hugoton Gathering System from Panhandle (Deposition Exhibit 69 [Appendix 11])

5

m Anadarko Petroleum Is Using The Gathering System To Produce Gas And Maximize The Recovery OfResenres

14 By the early 1990middots Anadarko Petroleum had became dissatisfied with the gathering

services being provided by Panhandle Eastern primarily because there was insufficient compression

as well as bottleneckss in the system which prevented the wells from producing at their optimum

rate In order to correct this situation Anadarko constructed a new gathering system to serve some

ofits wells utilized wellhead compression and commenced negotiations with Panhandle to acquire

those portions of the gathering systems which Anadarko itself had not yet replaced (Deposition

Exhibit 1 at pp 16-17 [Appendix D] Graham Depo pp 33 40 110 [Appendix 1] Ross Depo

p63 [Appendix GJ)

15 As stated in a report prepared by Anadarko employees at the time [a ]lthough

Panhandle Eastern has many compressor stations along its [gathering] system they do not provide

the wellheads with a low enough pressure to maximize production meet allowables or recover

accumulated underages (Deposition Exhibit 108 at p 2 [Appendix OJ)

16 Anadarkos personnel have testified that Panhandle was unwilling to make the

necessary investments to upgrade the Gathering System

A There were investments that needed to be made on the system that Panhandle was unwilling to make

Q What kinds of investments

A Generally in terms of lowering pressures

Q And are you talking about pressures Vlt1thin the gathering system

Increasing the size of the pipe or adding lines to the gathering system (line-looping) was also necessary to enhance production from the wells (Ross Depo pp 87-88 [Appendix GD

6

A Yes

Q And why was it important to Anadarko to have those pressures lowered

A Its the process ofoptimizing the use ofthat asset with regard to the production

Q Does it have a direct relationship to the production that you get out of a well

A It has a relationship in terms of being able to produce the wells to its capability

(Graham Depo pp 33-34 [Appendix 1])

Q And you understood that one of the considerations was how much production could be increased as a result of those improvements is that correct

A Yes


A The main premise of what we did was the fact that the level of service provided by the existing [Panhandle] system was not sufficient The pressures needed to be lowered and the question was whats the optimal way of doing that


17 After acquiring portions of the Hugoton Gathering System oVvned by Panhandle

Anadarko Petroleum made substantial improvements to that system mostly in the form ofadditional

compression for the express purpose of enabling it to produce more gas (Deposition Exhibit 1 at

pp 30-33 [Appendix D] Deposition Exhibit 69 [Appendix N])

18 When it gained control of the Gathering System Anadarko moved its wellhead

compressors onto the gathering lines so they could serve more than one well The purpose of such

compression was the same to enhance production from the leases by lowering the pressures into

7

which the wells were producing gas (Ross Depo pp 62-65 [Appendix GJ Deposition of Jerry

Smith pp 73-74 [Appendix PD In most cases after adding compression to the Hugoton Gathering

System Anadarko no longer needed wellhead compression (Ross Depo p 65 [Appendix GD

19 As its employees explained Anadarko uses the compression on the Hugoton

Gathering System to produce gas

Q Do you make any recommendations or requests regarding the operating pressures on that gathering system

A Yes

Q And why do you do that

A The pressure that the gathering system operates at has a direct effect on the production of our wells

Q Can you explain that to me

A The production of a well is directly proportional to the pressure difference between the reservoir pressure and whatever pressure that well is flowing into

Q And that would be the gathering system

A Possibly

Q What else would it be

A It could be the atmosphere

Q Does Anadarko have very many wells that are flowing to the atmosphere

A No

Q You are aware ofwhat the pressures are for example on the gathering system

A Yes

8

Q Because those impact tlle production ofthe wells

A Yes

(Young Depo pp 19-20 [Appendix C])

A We have been fairly aggressive at optimizing the [gathering] system and creating pressures that benefit the producers on the system

Q Benefit them because they can produce more gas

A Correct

(Graham Depo p 59 [Appendix JJ)

20 By using the compression located on the Gathering System Anadarko is also able to

maximize the amount ofreserves that can be economically recovered from its wells (Ross Depo

p 150 [Appendix GJ Graham Depo p 92 [Appendix J])

IV Anadarko Is Also Using The Gathering System To Market The Gas Produced from Its Wells

21 The composition of the gas produced into the Hugoton Gathering System does not

vary significantly from well to welL (Graham Depo pp 150-51 [Appendix 1])

22 The overwhelming maj ority ofsuch gas is marketed through and by means ofpools

located on interstate transmission pipelines primarily those owned by Panhandle Panhandle does

not levy any charges for placing the gas in such pools (Uncontroverted Facts if6 supra Graham

Depo pp 44 50-51 68 [Appendix J])

23 The pipelines publish tariffs which impose quality and condition specifications which

gas must meet before it can be transported on their systems (See eg Deposition Exhibit 37

[Appendix Q])

9

24 When it emerges from the ground the gas which Anadarko Petroleum produces from

wells connected to the Hugoton Gathering System does not meetthe following specifications

A Water

(1) Because water is entrained in the gaseous stream when it is produced the Hugoton Gathering System is what is knovvn as a wet system (Ross Depo p 90 [Appendix G])

(2) The gas emerging from such wells attached to the Hugoton Gathering System fails to satisfy the specification in the Panhandle tariff that prohibits it from containing more than seven pounds of water vapor per Mmcf (Ross Depo p 206 [Appendix GJ)

(3) The gaseous stream is dehydrated by means ofequipment located on the Hugoton Gathering System (Graham Depo pp 151 153 [Appendix J] Ross Depo p 89 [Appendix GJ)

(4) Compressors typically use a scrubber system to remove free water from the gaseous stream at the wellhead or on the gathering system (Young Depo p 63 [Appendix C])

B Liq uid hydrocarbons

(1) The gas produced by Anadarko Petroleum contains liquid hydrocarbons when it leaves the wellhead (Graham Depo p 149 [Appendix JJ)

(2) The Panhandle tariff requires that the gas produced by Anadarko Petroleum be free of liquid hydrocarbons (Deposition Exhibit 3 7 at A000416 [Appendix Q])

(3) Liquid hydrocarbons fall out of the gaseous stream into traps at various points along the Hugoton Gathering System6 (Graham Depo p 149 [Appendix J] Young Depo p 63 [Appendix C] Ross Depo pp 92-95 [Appendix G])

Anadarko Petroleum pays royalty only on liquids which fall out ofthe gas stream prior to the point at which it enters the Hugoton Gathering System It does not pay royalty on liquids which are removed from the gas stream while it is in the Hugoton Gathering System or at the National Helium Plant (Ross Depo p 93 [Appendix GJ) Plaintiffs are not asserting a claim in this action for underpayment ofroyalty with respect to the sale ofliquids~

10

(4) All ofthe gas which enters transmission pipelines offofthe Hugoton Gathering System has liquid hydrocarbons extracted from it (Ross Depo pp 29-30 [Appendix GJ Graham Depo p 25 [Appendix 1])

C Pressure

(1) When it emerges from the ground the pressure of the gas produced by Anadarko Petroleum is below that required to enter the Panhandle transmission pipeline (Graham Depo pp 41 [Appendix J])

(2) The Panhandle tariff requires the pressure of such gas to be raised to the level necessary to enter the pipeline (Deposition Exhibit 37 at A000444 [Appendix Q])

(3) The Hugoton Gathering System provides part of the compression necessary to increase the pressure of the gas to gain entry into the transmission pipeline (See eg Deposition Exhibit 1 at Figure 2 [Appendix D] Graham Depo pp 71-73 (Appendix J))

25 Once the gas produced by AnadarkoPetroleum from wells attached to the Hugoton

Gathering System has been compressed dehydrated and stripped of liquids to the extent necessary

to enter the interstate pipeline system it becomes a commodity which is fungible with all other gas

in the system thereby enabling it to be sold in and by means of pools on the basis of its heating

value and nothing else (Graham Depo pp 46-48 [AppendixJ]) After the gas enters a transmission

pipelineit is impossible to determine the ultimate destination ofany particular molecule (Graham

Depo p 48 [Appendix J])

XIV When Accounting To Its Royalty Owners Anadarko Creates An Artificial Distinction Between The Same Activities Based On Whether They OccurOn or OffThe Gathering System

26 Anadarko Petroleum owns and operates compressors and other facilities such as

liquid hydrocarbon separators installed upstream of the meters where the gas enters the Hugoton

Gathering System (Deposition of Jon D Brown p 87 [Appendix RD

11

27 Anadarko Gathering owns and operates compressors and other facilities such as

separators and dehydrators installed downstream of the same meters (Young Depo pp 52-53

[Appendix C] Ross Depo pp 59-61 [Appendix G])

28 Both wellhead compressors and compressors located on the Hugoton Gathering

System are used to enhance production ofgas from Anadarko Petroleums wells (Young Depo pp

17-18 [Appendix C) see also Uncontroverted Facts 13-20 supra) There are compressors on

the gathering system that serve only one well (Deposition ofMarkReinhardt p 29 [Appendix S]

Ross Depo p 183 [Appendix G]) but its always more efficient to put [compression] on the

gathering system than at the wellhead (Ross Depo p 64 [Appendix GJ)

29 Separation ofliquids (both water and liquid hydrocarbons) occurs both near the well

and on the Hugoton Gathering System (See Uncontroverted Facts ~24 supra) Facilities used to

catch water and liquid hydrocarbons before the gas enters the Gathering System are necessary to

separate those free liquids from the gaseous phase for sale into the pipeline as the pipeline quality

specifications require that no free liquids pass into the pipeline (Anadarko Petroleum Corporations

Supplemental Responses to Plaintiffs Second Set of Interrogatories and Document Production

Requests No7 [Appendix T])

30 Although the function of these facilities is the same regardless of whether they are

located on or offthe Hugoton Gathering System Anadarko Petroleum does not charge the accounts

of any of its royalty owners with any of the expenses associated with such activities that occur on

the lease orprior to entry ofthe gas into the Hugoton Gathering System However Plaintiffs royalty

payments are reduced by expenses associated with such activities that occur on the Hugoton

Gathering System itself (Brown Depo pp 87-89 [Appendix R] Second Deposition ofJoe Toups

May 172000 p 7 [Appendix U])

12

VI During The Period That Anadarko Was Selling Most Oflts Gas To Panhandle At The Wellhead It Did Not Deduct Any Gathering Expenses From Its Royalty Payments

31 Before the late 1980s Anadarko Petroleum sold most ofits gas to Panhandle near the

well bore (Brown Depo p18 [Appendix RD Under this arrangement Panhandle owned and

operated the gathering system and the charge recovered by Panhandle from its customers included

the cost ofproduction gathering and transmission ofgas from the point ofreceipt to the point

of delivery (Deposition Exhibit 1 at 15 [Appendix D] [emphasis added]) No portion of the

expenses charged by Panhandle to its customers was assessed against the accounts of Anadarko

Petroleums royalty owners (Brown Depo pp 18-19 [Appendix RJ)

VII Anadarko Is Now Deducting The Above-Described Gathering Expenses

32 Sometime after Panhandle ceased purchasing gas from Anadarko Petroleum

Anadarko Petroleum began assessing the accounts of its royalty with a pro-rata share ofthe above-

described gathering costs (Brown Depo p 30 [Appendix R])

33 The expenses that are assessed against the accounts of the Plaintiff Class are

computed in accordance with the terms of the Hugoton Gathering Agreement which Anadarko

established with its subsidiary Anadarko Gathering These expenses consist ofthe gathering fee and

a fuel adjustment (First Toups Depo pp 66 70 [Appendix L])

34 The fuel adjustment is applied to reflect the natural gas that is necessarily burned

in order to fuel compressors (Anadarko Petroleum Corporations Supplemental Responses to

Plaintiffs Second Set ofInterrogatories and Document Production Requests No2 [Appendix rD

35 Since at least 1996 Anadarko Petroleum has used the following method to calculate

royalties to Plaintiffs It starts with the Panhandle Eastern Index price for Texas Oldahoma

13

(mainline) and deducts therefrom the gathering fee and fuel adjustment applicable to each well on

the Hugoton Gathering System which are set forth in the Gathering Agreement between Anadarko

Petroleum and Anadarko Gathering or other gathering rates subsequently provided by Anadarko

Gathering or the marketing department ofAnadarko Petroleum (Brown Depo pp 30-3161107

[Appendix RD

36 The deductions described in Paragraph 35 are not shown on the monthly royalty

remittance statements sent to members of the Plaintiff Class (Brown Depo p 43 [Appendix RD

Instead the monthly royalty remittance statements show what is denominated as the Gross Value

ofthe gas Such number is actually the net amount which remains after application ofthe gathering

fee and fuel deduction (Deposition Exhibit l33 [Appendix YD

37 In the agreement it established with its subsidiary Anadarko does not divide or

allocate the gathering fee among any of the expenses such as compression or dehydration which

itcharges to the accounts ofits royalty owners Instead Anadarko established a bundled fee for such

activities (Deposition Exhibit 11 [Appendix Fl) Such fee as well as the fuel adjustment deduction

are adjusted on the basis of the level of service being provided Le the greater the pressure

reduction provided to a well on the gathering system the higher the gathering rate and the fuel

deductions become (Graham Depo p 70 [Appendix J] Anadarko Petroleum Corporations


Requests No4 [Appendix In

38 The average amounts of the gathering fees deducted from royalty payments to the

Plaintiff Class have been as follows

A For 1995 (commencing October 1 1995) an average of 196 cents per MMBtu (Brown Depo p 74 [Appendix R])

_--_ _----------- shy

14

---------_

B For 1996 an average of261 cents per MMBtu (Brown Depo pp 76-77 [Appendix RD

C For 1997 an average of 389 cents per MMBtu (Brown Depo p 77 [Appendix R])

D For 1998 (through September 1998) an average of 424 cents per MMBtu (Brown Depo pp 77-78 [Appendix RD

ARGUMENT AND AUTHORITIES

I KANSAS LAW PROHIBITS LESSEES FROM

DEDUCTING COMPRESSION EXPENSES

F or more than 45 years natural producers inKansas have known that they cannot deduct

compression expenses from their royalty payments Under the holdings in Gilmore v Superior Oil

Co 192 Kan 388 388 P2d 602 (1964) and Schupbach v Continental Oil Co 193 Kan 401 394

P2d 1 (1964) it does not matter whether the compression occurs on or 0 ff the leased premises-the

producer must bear such expenses in their entirety Five years ago after reviewing its prior

decisions the Kansas Supreme Court expressly reaffirmed that Kansas does not permit deductions

for compressioncosts Sternberger v Marathon Oil Ca 257 Kan 315 341 894 P2d 788805

(1995)

Vlben accounting to its royalty owners Anadarko employs an artificial distinction between

compression and other activities which it performs on the lease premises (or prior to the entry ofthe

gas into the gathering system) and the same activities which are performed on the gathering system

itself it charges royalty owners for the latter but not the former As Gilmore Schupbach and

Sternberger clearly hold compression is not deductible under Kansas law regardless ofwhere the

15

~-------------------------

compressor is located As the undisputed facts in this case clearly demonstrate such holdings are

supported by common sense Anadarko has used compression on the lease premises and on the

gathering system to produce gas Basing the deductibility of such compression on where it occurs

would invite a producer to manipulate the placement of its compressors so as to impose such costs

on its royalty owners

Because it is undisputed that royalty payments received by members ofthe Plaintiff Class are

being (and have been) reduced by compression costs including deductions for compressor fuel

jUdgment should be entered against Anadarko as a matter ofKansas law prohibiting such deductions

and requiring Anadarko to account for and refund all such deductions previously charged to such

royalty accounts

II At4ADARKO BEARS THE RISKS ASSOCIATED

WITH REDUCED RESERVOIR PRESSURES

As stated by the Oklahoma Supreme Court [o]ne of the risks borne by the lessee in

exploring for gas is that the gas will be low pressure Wood v TXO Production Corp 854 P 2d

880 882 (Okla 1992) As Anadarkos employees have admitted within the ambit of such risk is

the knowledge that as reservoir pressures decline over time compression will be needed to produce

the gas

As a natural gas reservoir is depleted there is a continual and gradual diminution in reservoir pressure and as this pressure declines it becomes increasingly difficult for the gas at wellhead pressures to buck the main transmission pipe line pressures as they approach equilibrium In order to alleviate this problem gas compressors are constructed at substantial costs and employed either on the lease or off the leased premises to boost the gas pressures

16

Richard B Altman and Charles S Lindberg Oil and Gas Non-Operating Oil and Gas Interests

Liability for Post-Production Costs and Expenses 25 OKLA L REv 363 364 (1972) (footnotes

omitted)

In Duke Energy Natural Gas Corp v Commissioner oInternal Revenue 172 F3 d 1255 (1oth

Cir 1999) the Tenth Circuit explained how lessees use gathering systems to produce gas

Within the industry and in the functional and contractual relationship between producers and nonproducer gathering system owners Dukes gathering systems are literally used by producers for gas production in a number of different ways First gathering systems maintain the correct and necessary amount of system pressure without which the gas could not flow from the well to the processing plant or transmission pipeline As the parties agree producers would not be able to produce natural gas in the absence of an adequately designed gathering system (record citation omitted)

172 F 3d at 1258

In this case when the previous owner of the gathering system (Panhandle Eastern) failed to

maintain the correct and necessary amount of system pressure needed to cause the gas to flow out

of the wells as reservoir pressures in the Hugoton Field were declining Anadarko took a series of

steps which included acquiring and upgrading a substantial portion of Panhandles system

constructing new gathering lines installing wellhead compressors and placing compression on the

gathering lines These steps were all taken for the express purpose ofenabling Anadarko to produce

the gas upon which it is paying royalties to the Plaintiff Class

In Kansas as in other states the act of producing gas which the producer is expressly

required to perform at its sole expense in order to keep the lease in effect under the habendum clause

has not been completed until the gas has been brought to the surface in a captive state and thereafter

put to some economic use thereby generating royalties See eg Pray v Premier Petroleum Inc

17

233 Kan 351 662 P2d 255 (1983) Garcia v King 139 Tex 578 164 SW2d 509 (1942)

(production in paying quantities requires marketing of oil or gas at a profit) Town oTome Land

Grantv Ringle Development Co 56 NM 101240 P2d 850 (1950) (recognizing that in order to

hold a lease in effect under the habendum class the lessee at its own expense had t~e obligation

to compress the gas to pipeline pressure) Venting gas to the atmosphere does not constitute

production Greer v Salmon 82 NM 245479 P2d 294299 (1970) (lease terminated for non

production when because of a leak in the flow line substantial quantities of gas flowed from the

well but thereafter escaped to the atmosphere)

Under the law Anadarko must bear the risk and -LI- ofproducing even when faced

with declining reservoir pressures Because Anadarko is deducting expenses which it is incurring

to produce the gas in the first instance the Plaintiff Class is entitled to the entry ofjudgment in its

favor against Anadarko prohibiting such deductions and requiring Anadarko to account for and

refund all such deductions previously charged to the Plaintiffs accounts

III ANADARKO MUST ALSO BEAR THE EXPENSES

IT INCURS To MAKE THE GAS MARKETABLE

In Sternberger the Kansas Supreme Court stated that n(t)he lessee under an oil and gas lease

has the duty to produce a marketable product and the lessee alone bears the expense in making the

product marketable 1I 257 Kan at 315 Syi ~ 2 894 P 2d at 791 Similarly in Gilmore the Court

quoted with approval the following passage from Professor Merrills treatise

If it is the lessees obligation to market the product it seems necessarily to follow that his is the task also to prepare it for market if it is unmerchantable in its natural form No part of the costs of marketing or ofpreparation for sale is chargeable to the lessor

18

192 Kan at393 388 P2d at 607 (quoting MAURICE MERRILL COVENANTS IMPLIED IN OIL AND GAS

LEASES sect 85 at 214 (2d ed 1940) As this passage suggests the law has long viewed marketable

and merchantable as synonymous terms See eg Eaton v Blackburn 49 Or 22 88 P 303 304

(1907)

When a lessee completes the act of production by selling the gas in a commercial context

it has engaged in the sale ofgoods Kansas Municipal Gas Agency v Vesta Energy Co 843 FSupp

1401 1407 (D Kan 1994) KN Energy Inc v Great Western Sugar Co 698 P2d 769 (Colo

1985) cert denied 472 US 1022 (1985) Prenalta Corp v Colorado Interstate Gas Co 944 F2d

677687 (10th CiL 1991) (Gas purchase contracts are contracts fo the sale of goods and are

governed by Article 2 ofthe Uniform Commercial Code)

For many decades the gas industry has routinely engaged in the practice ofcommingling gas

from a variety of sources in a web ofinterconnected transmission pipelines which serve established

geographic markets As is the case in this litigation when a producer has placed the gas in a

condition suitable for transportation in such a pipeline the gas itselfbecomes fungible ie any unit

is by nature or usage of trade the equivalent of any other like unit KSA 84-1-201

Under KSA 84-2-314 fungible natural gas is merchantable only ifit can (a) pass without

objection in the trade under the contract description (b) is of fair and average quality within the

description as natural gas ( c) is fit for the ordinary purposes for which such goods are used and

(d) run[s] within the variations permitted by the agreement of even kind quality and quantity

within each unit and among all units involved II Official Comment 8 to KSA 84-2-314 states that

goods such as gas purchased for resale to the ultimate consumer are merchantable only ifthey are

honestly resalable in the normal course ofbusiness because they are what they purport to be See

19

TJ Stevenson amp Co Inc v 81193 Bags ofFlour 629 F2d 338351 (5th Cir 1980) See also Cary

v McIntyre 7 Colo 173 176-77 2 P 916 918 (1884) (description of goods in a contract as

lumber invokes requirement that they be in merchantable condition)

Before the adoption of the UCC and the construction of the interstate pipeline system

flmerchantablealready had a definite meaning insofar as gas was concerned

We do not think gas can be said to be merchantable within the meaning of this contract merely because it will burn and is capable of producing light and heat and can be sold and used for that purpose The term quoted usually carries an implication of quality-that the article to which it is applied conforms to ordinary and reasonable standards-that it is substantially ofthe average grade or value of similar goods sold in the same market

Ely v Wichita Natural Gas Co 99 Kan 236246-47161 P 649 653 (1916) adhered to on reh g

100 Kan 441 165 P 284 (1917) (emphasis added)7

As a result ofthe extension ofthe interstate transmission pipeline system to most parts ofthe

United States which thereby both creat[ed] and expand[ed] the market for gas 3 KlJNTZ

A TREATISE ON THE LAW OF OIL AND GAS sect 402 (1989 amp 2000 Supp) gas markets are now

typically described and evaluated in terms of the geographical areas served by a transmission

pipeline See Alternatives to Traditional Cost-of-Service Ratemakingfor Natural Gas Pipelines 70

FERC ~ 61139 (1995)

7 In early gas supply contracts the purchaser often utilized the term merchantable to describe the goods being sold See eg Landon v Public Utilities Commission ofKansas 245 F 950 (DKan 1917) revd 249 US 236 (1919) vacated 249 US 590 (1919) Hutchinson Gas amp Fuel Co v Wichita Natural Gas Co 267 F 35 (8th Cir 1920) Landon v Court ofIndustrial Relations 269 F 423 (DKan 1920) Ashland Oil amp Refining Co v Cities Service Gas Co 462 F2d 204 206 (10th Cir 1972) (1948 contract provided that Cities is engaged in the purchase ofnatural gas for sale at wholesale to distributors in towns and communities in various parts ofthe country and that it must have a supply ofmerchantable natural gas sufficient over a long period oftime to meet the demands ofits customers in the widely distributed markets)

20

the

Vhen the price of natural gas dedicated to interstate commerce was being regulated the

regulatory authorities focused their attention on what was required to place the gas in condition

suitable for the markets served by the interstate pipelines When describing such requirements the

FPC and FERC echoed what was being said by industry participants-that raw gas became

marketable when it was placed in a condition that met the requirements (1 specifications) of the

interstate pipeline through which it had to be transported to reach the market where it could be

consumed See eg Initial Rates For Future Sales oNatural Gas For All Areas 46 FPC 68 79

(1971)8

Consistent with history the Oklahoma Supreme Court has 11111

conduct in question as field activities tl necessary to prepare the gas for market

It is common knowledge that raw or unprocessed gas usually undergoes certain field processes necessary to create a marketable product These field activities may include but are not limited to separation dehydration compression and treatment to remove impurities [T]he costs for compression dehydration and gathering are not chargeable to [lessors] because such processes are necessary to make the product marketable under the implied covenant to market

8 Numerous regulatory decisions refer to what has always had to be done to raw gas to place it in merchantable or marketable condition after severance from the ground See eg Harper Oil Company 17 FPC 803896 (1957) (construction and operation of separators scrubbers drips gathering facilities and compressors was necessary to effect delivery of gas in marketable condition [emphasis added]) Western Natural Gas Company 23 FPC 332 336-37 (1960) (EI Paso operated gathering and treatment facilities necessary to convert raw gas into merchantable gas [emphasis added]) Mobil Oil Exploration amp Producing Southeast 46 FERC 61014 (1989) (Raw gas [is] then brought to an onshore processing facility for extraction of hydrogen sulfide and carbon dioxide to bring the to merchantable pipeline quality levels [emphasis added]) Northwest Pipeline Corp 51 FERC -r 61212 (1990) (blending or treatment ofAmocos low-BTU gas required to reach the merchantable quality level [emphasis added]) Pacific Offshore Pipeline Co 64 FERC 61167 (1993) ([The pipeline] is transporting sour gas not of pipeline quality to its plant for processing and treating to make it of merchantable quality for distribution to SoCal [emphasis added]) Sea Robin Pipeline v FERe 127 FJd 365367 (5th Cir 1997) (gathering dehydration and NGL extraction are necessary to meet the merchantable natural gas quality standards of downstream transmission pipelines [emphasis added])

21

Mittelstaedtv Santa Fe Minerals 954 P2d 1203 1208 (Okla 1998) (emphasis added) (quoting

TXO Production Corp v State ex reI Commissioners othe Land Office 903 P2d 259263 (1994)

See also eg Shoshone Indian Tribe v Hodel 903 F2d 784 (loth Cit 1990) (holding that booster

compression that increased gas flow pressure to the level necessary to pass through the pipeline and

ultimately to the purchaser of the gas performed Ita marketing function)

The Tenth Circuit has reached the same conclusion

the transformation of raw gas into residue gas which requires gas to be gathered and moved from wellhead to processing plant is generally a necessary part of the production of natural gas as a marketable commodity

Duke Energy Natural Gas Corp v Commissioner ofIntemal Revenue 172 F3d 1255 1258 (loth

Cir 1999) (emphasis added)

Similarly in Garman v ConocQ Inc 886 P2d 652660 (Colo 1994) which is cited with

approval in Sternberger 257 Kan at 331 894 P2d at 800 the Colorado Supreme Court observed

that [c ]ompression may be required to create sufficient pressure for the gas to enter a purchasers

pipeline 886P2d at 654 and then quoted the following passage from J Clayton La Grone

Calculating the Landowners Royalty 28 ROCKY MTN MIN L INST 803 809 (1983)

Vlhen the reservoir pressure is not sufficient to force natural gas produced from a well into a pipeline which is itself under pressure it is necessary to increase the pressure of the gas after it comes to the surface in order for it to be marketable

886 P2d at 654 n 2 (emphasis added)

In order for the gas involved in this case to be marketed by means of interconnections with

interstate pipelines such as Panhandle it must be compressed dehydrated and stripped of free

liquids Under Kansas law Anadarko is obligated to bear all such expenses The Plaintiff Class is

22

entitled to the entry ofjudgment against Anadarko requiring Anadarko to account for and refund

all deductions which it has taken for the purpose of making the gas marketable

IV A1IiADARKO Is WRONGFULLY DEDUCTING GATHERING EXPENSES

In Sternberger the Court expressly recognized that gathering is a production cost 257

Kan at 331 894 P2d at 800 In so doing the Court distinguished gathering from the

transportation ofgas after it has been placed in marketable condition Id This distinction has long

been recognized in the industry itself where it is commonly understood that [gJathering includes

those acts necessary to prepare gas for transmission and consumption both from a volume and

quality standpoint John C Jacobs Problems Incident to the Marketing olGas 5 INST ON OIL

amp GAS L amp TAXN 271273 (1954) In contrast transportation begins when the gathering process

has been completed and consists solely of moving gas usually in large volumes and at high

pressure from the outlet of the gathering facilities to the distribution facilities9 by means of a

market or transmission pipeline Id

The result in Sternberger hinged upon the proper characterization of the line amortization

charges being assessed against royalty ovners by the producer If the activity performed by such

facilities was Ilgathering it was not deductible If on the other hand such activity constituted

transportation it was deductible In examining this distinction the Court observed that gathering

is usually accompanied or characterized by activities such as compression and dehydration 257 Kan

at 331 894 P2d at 799-800 Under the facts presented in Sternberger because the gas at issue

9 The distribution facilities are the means by which the gas is taken from the transmission line and distributed to end-users such as residences office buildings and factories

23

flowed without compression dehydration or liquid separation directly from the wellhead to (and

into) the transmission pipeline the Court concluded the deductions made by [the producer] are

properly characterized as transportation rather than gathering or other production costs II 257 Kan

at 331 In contrast the gas at issue here will not even flow out of the well without compression

Moreover dehydration removal ofnatural gas liquids and further compression are necessary before

the gas at issue can enter the interstate transmission pipeline See Mittlestaedt 954 P 2d atl209 (We

stated in Oklahoma gathering is a cost ofproduction ie to make a marketable product and

is not a cost allocated to a royalty interest Our conclusion that dehydration was a nonshy

allocated cost rested upon similar grounds)

The Hugoton Gathering System has all the characteristics of a gathering system It has

compression dehydration and separation facilities Kansas law does not permit II gathering charges

to be imposed against royalty payments The Plaintiff Class is entitled to the entry of judgment

against Anadarko requiring Anadarko to account for and refund all such gathering charges

CONCLUSION

The Plaintiff Class is entitled to the entry ofjudgment against Anadarko prohibiting it from

deducting expenses which it is incurring to produce and gather the gas and place it in marketable

condition All ofthe expenses being deducted by Anadarko fall into one or more ofthese categories

Anadarko should be required to file an accounting with the Court in which it identifies the amount

ofsuch deductions charged to the account ofeach member ofthe Plaintiff Class and to deposit such

24

amounts plus prejudgment interest into the registry of the Court so that proper and timely

distribution thereof can be made in accordance with further orders of the Court

Respectfully submitted

BY_--ri~c U34

ampJJ-eQ6ry 09674 harles Millsap 09692

David G Seely 11397 125 North Market 16th Floor Wichita Kansas 67202 Telephone (316) 267-7361 FAX (316) 267-1754

-and-

Bernard E Nordling Erick Nordling KRAMER NORDLING amp NORDLING LLC 209 East Sixth Street Hugoton Kansas 67951 Telephone (316) 544-4333

Attorneys for Plaintiffs and Plaintiff Class

25

CERTIFICATE OF SERVICE

I certify that on January 122001 a copy of this MEMORANDUM IN SUPPORT OF PLAINTIFFS MOTION FOR PARTIAL SUMMARY JUDGlVIENT was hand delivered to

Robert J OConnor David E Bengston MORRISON amp HECKER

600 Commerce Balk Center 150 N Main Street Wichita Kansas 67202-1320

and placed in the United States mail in Wichita Kansas first class postage prepaid addressed to

Dan Diepenbrock MILLER amp DlEPENBROCK PA 150 Plaza Drive P O Box 2677 Liberal Kansas 67905-2677

J Kyle McClain Associate General Counsel Anadarko Petroleum Corporation 17001 Northchase Drive P O Box 1330 Houston Texas 77251-1330

26

FLEESON GOOING COULSON amp KITCH LLC 125 North Market Suite 1600 PO Box 997 Wichita Kansas 67201-0997 Telephone (316) 267-7361

IN THE TWENTY-SIXTH JUDICIAL DISTRICT DISTRICT COURT STEVENS COUNTY KANSAS


) Plaintiffs )

) vs ) Case No 98-CV -40


) Defendant )

APPENDIX OF CITED lVIATERIALS

Order of Class Certification A

Defendants Answer and Counterclaims bull B

Excerpts from Deposition ofShavro D Young C

Excerpts from Deposition Exhibit 1 D

Deposition Exhibit 12 E

Deposition Exhibit 11 F

Excerpts from Deposition ofMichael M Ross G

Deposition Exhibit 2 H

Anadarko Petroleum Corporations Supplemental Responses to Plaintiffs Second Set of Interrogatories and Document Production Requests Exhibit B I

Excerpts from Deposition ofDouglas Graham J

Deposition Exhibit 67 K

Excerpts from First Deposition of Joe Toups (December 3 1999) L

Responses to Plaintiffs Second Set ofInterrogatories and Document Production Requests No1 M

Deposition Exhibit 69 N

Deposition Exhibit 108 0

Excerpts from Deposition ofJerry Smith P

Excerpts from Deposition Exhibit 37 Q

Excerpts from Deposition ofJon D Bro11 R

Excerpts from Deposition ofMark Reinhardt S

Anadarko Petroleum Corporations Supplemental Responses to Plaintiffs Second Set ofInterrogatories and Document Production Requests T

Excepts from Second Deposition of Joe Toups (May 17 2000) U

Deposition Exhibit 133 V

2


11 r-shy

IN THE TWENTY -SIX1H JUDICIAL DISTRICT m DISTRICT COURT STEVENS COUNTY KANSAS o

GILBERT H COULTER and ) ELIZABETH S LEIGHN-OR individually ) and as representative plaintiffs on behalf of ) persons or companies similarly situated )

) Pla11tiffs )



) Defendant )

MEMORANDUM IN SUPPORT OF PLAINTIFFS MOTION FOR PARTIAL SUMMARY JUDGMENT

Plaintiffs submit this memorandum in support oftheir motion for partial summary judgment

against Defendant Based on the undisputed facts set forth below Plaintiffs submit that they are

entitled to a judgment prohibiting Defendant from deducting expenses which it is admittedly

incurring to produce compress gather and market the gas which it is selling into pools located on

interstate pipelines from royalty payments which it is making to members of the Plaintiff Class in

connection with such sales Plaintiffs also seek an order requiring Defendant to submit an

accounting to the Court which fully discloses and quantifies the amount of such deductions taken

from royalty payments made byDefendant to each Class Member during the period covered by this

pounduvvsuit





















2




















3


















A Yes



4


A Yes

Q Which was normal

A Right















5









p63 [Appendix GJ)












6

A Yes







A Yes











7







A Yes






A Possibly




A No


A Yes

8


A Yes




A Correct














[Appendix Q])

9



A Water










10


C Pressure















11
























12






















13





[Appendix RD


















_--_ _----------- shy

14

---------_














(1995)






15

~-------------------------










royalty accounts







the gas


16



omitted)




172 F 3d at 1258












17





















18




(1907)



















19














FERC ~ 61139 (1995)


20

the








(1971)8





21




















22





















23














CONCLUSION






24




BY_--ri~c U34



-and-



25








26




) Plaintiffs )



) Defendant )
























2





















2




















3


















A Yes



4


A Yes

Q Which was normal

A Right















5









p63 [Appendix GJ)












6

A Yes







A Yes











7







A Yes






A Possibly




A No


A Yes

8


A Yes




A Correct














[Appendix Q])

9



A Water










10


C Pressure















11
























12






















13





[Appendix RD


















_--_ _----------- shy

14

---------_














(1995)






15

~-------------------------










royalty accounts







the gas


16



omitted)




172 F 3d at 1258












17





















18




(1907)



















19














FERC ~ 61139 (1995)


20

the








(1971)8





21




















22





















23














CONCLUSION






24




BY_--ri~c U34



-and-



25








26




) Plaintiffs )



) Defendant )
























2




















3


















A Yes



4


A Yes

Q Which was normal

A Right















5









p63 [Appendix GJ)












6

A Yes







A Yes











7







A Yes






A Possibly




A No


A Yes

8


A Yes




A Correct














[Appendix Q])

9



A Water










10


C Pressure















11
























12






















13





[Appendix RD


















_--_ _----------- shy

14

---------_














(1995)






15

~-------------------------










royalty accounts







the gas


16



omitted)




172 F 3d at 1258












17





















18




(1907)



















19














FERC ~ 61139 (1995)


20

the








(1971)8





21




















22





















23














CONCLUSION






24




BY_--ri~c U34



-and-



25








26




) Plaintiffs )



) Defendant )
























2


















A Yes



4


A Yes

Q Which was normal

A Right















5









p63 [Appendix GJ)












6

A Yes







A Yes











7







A Yes






A Possibly




A No


A Yes

8


A Yes




A Correct














[Appendix Q])

9



A Water










10


C Pressure















11
























12






















13





[Appendix RD


















_--_ _----------- shy

14

---------_














(1995)






15

~-------------------------










royalty accounts







the gas


16



omitted)




172 F 3d at 1258












17





















18




(1907)



















19














FERC ~ 61139 (1995)


20

the








(1971)8





21




















22





















23














CONCLUSION






24




BY_--ri~c U34



-and-



25








26




) Plaintiffs )



) Defendant )
























2


A Yes

Q Which was normal

A Right















5









p63 [Appendix GJ)












6

A Yes







A Yes











7







A Yes






A Possibly




A No


A Yes

8


A Yes




A Correct














[Appendix Q])

9



A Water










10


C Pressure















11
























12






















13





[Appendix RD


















_--_ _----------- shy

14

---------_














(1995)






15

~-------------------------










royalty accounts







the gas


16



omitted)




172 F 3d at 1258












17





















18




(1907)



















19














FERC ~ 61139 (1995)


20

the








(1971)8





21




















22





















23














CONCLUSION






24




BY_--ri~c U34



-and-



25








26




) Plaintiffs )



) Defendant )
























2









p63 [Appendix GJ)












6

A Yes







A Yes











7







A Yes






A Possibly




A No


A Yes

8


A Yes




A Correct














[Appendix Q])

9



A Water










10


C Pressure















11
























12






















13





[Appendix RD


















_--_ _----------- shy

14

---------_














(1995)






15

~-------------------------










royalty accounts







the gas


16



omitted)




172 F 3d at 1258












17





















18




(1907)



















19














FERC ~ 61139 (1995)


20

the








(1971)8





21




















22





















23














CONCLUSION






24




BY_--ri~c U34



-and-



25








26




) Plaintiffs )



) Defendant )
























2

A Yes







A Yes











7







A Yes






A Possibly




A No


A Yes

8


A Yes




A Correct














[Appendix Q])

9



A Water










10


C Pressure















11
























12






















13





[Appendix RD


















_--_ _----------- shy

14

---------_














(1995)






15

~-------------------------










royalty accounts







the gas


16



omitted)




172 F 3d at 1258












17





















18




(1907)



















19














FERC ~ 61139 (1995)


20

the








(1971)8





21




















22





















23














CONCLUSION






24




BY_--ri~c U34



-and-



25








26




) Plaintiffs )



) Defendant )
























2







A Yes






A Possibly




A No


A Yes

8


A Yes




A Correct














[Appendix Q])

9



A Water










10


C Pressure















11
























12






















13





[Appendix RD


















_--_ _----------- shy

14

---------_














(1995)






15

~-------------------------










royalty accounts







the gas


16



omitted)




172 F 3d at 1258












17





















18




(1907)



















19














FERC ~ 61139 (1995)


20

the








(1971)8





21




















22





















23














CONCLUSION






24




BY_--ri~c U34



-and-



25








26




) Plaintiffs )



) Defendant )
























2


A Yes




A Correct














[Appendix Q])

9



A Water










10


C Pressure















11
























12






















13





[Appendix RD


















_--_ _----------- shy

14

---------_














(1995)






15

~-------------------------










royalty accounts







the gas


16



omitted)




172 F 3d at 1258












17





















18




(1907)



















19














FERC ~ 61139 (1995)


20

the








(1971)8





21




















22





















23














CONCLUSION






24




BY_--ri~c U34



-and-



25








26




) Plaintiffs )



) Defendant )
























2



A Water










10


C Pressure















11
























12






















13





[Appendix RD


















_--_ _----------- shy

14

---------_














(1995)






15

~-------------------------










royalty accounts







the gas


16



omitted)




172 F 3d at 1258












17





















18




(1907)



















19














FERC ~ 61139 (1995)


20

the








(1971)8





21




















22





















23














CONCLUSION






24




BY_--ri~c U34



-and-



25








26




) Plaintiffs )



) Defendant )
























2


C Pressure















11
























12






















13





[Appendix RD


















_--_ _----------- shy

14

---------_














(1995)






15

~-------------------------










royalty accounts







the gas


16



omitted)




172 F 3d at 1258












17





















18




(1907)



















19














FERC ~ 61139 (1995)


20

the








(1971)8





21




















22





















23














CONCLUSION






24




BY_--ri~c U34



-and-



25








26




) Plaintiffs )



) Defendant )
























2
























12






















13





[Appendix RD


















_--_ _----------- shy

14

---------_














(1995)






15

~-------------------------










royalty accounts







the gas


16



omitted)




172 F 3d at 1258












17





















18




(1907)



















19














FERC ~ 61139 (1995)


20

the








(1971)8





21




















22





















23














CONCLUSION






24




BY_--ri~c U34



-and-



25








26




) Plaintiffs )



) Defendant )
























2






















13





[Appendix RD


















_--_ _----------- shy

14

---------_














(1995)






15

~-------------------------










royalty accounts







the gas


16



omitted)




172 F 3d at 1258












17





















18




(1907)



















19














FERC ~ 61139 (1995)


20

the








(1971)8





21




















22





















23














CONCLUSION






24




BY_--ri~c U34



-and-



25








26




) Plaintiffs )



) Defendant )
























2





[Appendix RD


















_--_ _----------- shy

14

---------_














(1995)






15

~-------------------------










royalty accounts







the gas


16



omitted)




172 F 3d at 1258












17





















18




(1907)



















19














FERC ~ 61139 (1995)


20

the








(1971)8





21




















22





















23














CONCLUSION






24




BY_--ri~c U34



-and-



25








26




) Plaintiffs )



) Defendant )
























2














(1995)






15

~-------------------------










royalty accounts







the gas


16



omitted)




172 F 3d at 1258












17





















18




(1907)



















19














FERC ~ 61139 (1995)


20

the








(1971)8





21




















22





















23














CONCLUSION






24




BY_--ri~c U34



-and-



25








26




) Plaintiffs )



) Defendant )
























2

~-------------------------










royalty accounts







the gas


16



omitted)




172 F 3d at 1258












17





















18




(1907)



















19














FERC ~ 61139 (1995)


20

the








(1971)8





21




















22





















23














CONCLUSION






24




BY_--ri~c U34



-and-



25








26




) Plaintiffs )



) Defendant )
























2



omitted)




172 F 3d at 1258












17





















18




(1907)



















19














FERC ~ 61139 (1995)


20

the








(1971)8





21




















22





















23














CONCLUSION






24




BY_--ri~c U34



-and-



25








26




) Plaintiffs )



) Defendant )
























2





















18




(1907)



















19














FERC ~ 61139 (1995)


20

the








(1971)8





21




















22





















23














CONCLUSION






24




BY_--ri~c U34



-and-



25








26




) Plaintiffs )



) Defendant )
























2




(1907)



















19














FERC ~ 61139 (1995)


20

the








(1971)8





21




















22





















23














CONCLUSION






24




BY_--ri~c U34



-and-



25








26




) Plaintiffs )



) Defendant )
























2














FERC ~ 61139 (1995)


20

the








(1971)8





21




















22





















23














CONCLUSION






24




BY_--ri~c U34



-and-



25








26




) Plaintiffs )



) Defendant )
























2

the








(1971)8





21




















22





















23














CONCLUSION






24




BY_--ri~c U34



-and-



25








26




) Plaintiffs )



) Defendant )
























2




















22





















23














CONCLUSION






24




BY_--ri~c U34



-and-



25








26




) Plaintiffs )



) Defendant )
























2





















23














CONCLUSION






24




BY_--ri~c U34



-and-



25








26




) Plaintiffs )



) Defendant )
























2














CONCLUSION






24




BY_--ri~c U34



-and-



25








26




) Plaintiffs )



) Defendant )
























2




BY_--ri~c U34



-and-



25








26




) Plaintiffs )



) Defendant )
























2








26




) Plaintiffs )



) Defendant )
























2




) Plaintiffs )



) Defendant )
























2















2

Documents

MEIVfORANDUM IN SUPPORT OF PLAINTIFFS' MOTION … in... · After acquiring portions of the Hugoton Gathering System oVvned by Panhandle, Anadarko Petroleum made substantial improvements