Appendix — California v. Southland Royalty Co.
Supreme Court brief1978
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IN THE
Supreme Court of the Anited States
Ocroser Term, 1977
No. 76-1114
Cauirornia, et al., Petitioners
V.
SouTHLAND Roya.ty Company, et al.
No. 76-1133
Ex Paso Naturat Gas Company, Petitioner
" Vv
SouTHLAND Rovatry Company, et al.
No. 76-1587
FeperaL Power Commission, Petitioner
V.
SouTHLAND RoraALrr Company, et al.
On Writs of Certiorari to the United States
Court of Appeals for the Fifth Circuit
PETITIONS FOR WRITS OF CERTIORARI FILED
February 12 and 16 and May 12. 1977
CERTIORARI GRANTED JUNE 27, 1977
VOLUME! .
Pages 1-364
Supreme Court of the United States
OcToBEeR TERM, 1977
Nos. 76-1114 et al.
CALIFoRNIA, et al., Petitioners
v.
SovuTHLAND ROvALTY Company, et al.
On Writs of Certiorari to the United States
Court of Appeals for the Fifth Circuit
TABLE OF CONTENTS
VoLuuE I
Pages 1-364
Votume II
Pages 365-746
Record Appendix
Item Pagination Pagination
Relevant Docket Entries 1
Gulf Oil Corporation Application for
Certificate of Public Convenience and
Necessity, Docket No. G-7156, re-
ceived 11/30/54 ..... cc cccccccveee 636-643 2-8
Notice of Gulf Oil Corporation Ap-
lication for Certificate of Public
onvenience and Necessity, G-7156,
issued 4/19/56. 644-652 9-22
ii Table of Contents—Continued
Findings and Order Issuing Certifi-
cate of Public Convenience and Neces-
sity to Gulf Oil Corporation, Docket
No. G-7156, issued 5/28/56 ........
The documents listed below are from
Warren Petroleum Co., A Division of
Gulf Oil Corp. FPC Gas Rate Sched-
ule No. 43:
Residue Gas Purchase Agreement
Record
Appendix
Pagination Pagination
653-664 23-40
dated 1/26/51, filed 11/30/54 .... 539-565 40-64
Supplement No. 2, dated 10/30/53,
filed 11/30/56.
Supplement No. 5, Agreement,
dated 9/1/55, filed 5/34/56 ......
Supplement No. 7, Agreement
dated 12/15/56, filed 1/29/58
Amendatory ment, dated 10/
26/59, filed 11/30/59 ...........:
Supplement No. 17, Amendment
dated 4/17/72, filed 5/11/72 ......
Findings and Order Issuing Certifi-
eate of Public Convenience and Nec-
essity, G-13445, issued 2/24/58 .....
Warren Petroleum Co., A Division of
Gulf Oil Corp. FPC Gas Rate Sched-
ule No. 66:
Residue Gas Purchase Agreement,
dated 3/1/72 ......-.eeeeeeeeee
64-66
571-572 70-72
573-578 173-78
596-598 82-85
582-592 86-97
593-595 98-101
Table of Contents—Continued
Notice of Certificates of Public Con-
venience and Necessity Issued to Pro-
ducer Respondents Pursuant to Opin-
ion No. 662 and Designation of FPC
Gas Rate Schedules and Gas Rate
Schedule Supplements Accepted for
Filing, CI-72-760, issued 7/22/74 ...
El Paso Natural Gas Company Pe-
tition for Issuance of a Declaratory
Order, CP75-209, dated 1/17/75, re-
eee
Notice of Petition for a Declaratory
Order, issued 1/30/75 ............
El Paso Corrections to Petition, dated
1/30/75, received 2/3/75 ..........
Southern California Gas Company
Petition for Permission to Intervene,
dated 2/5/75, received 2/6/75 ......
Mobil Oil Corp. Petition for Leave to
— dated 2/7/75, received 27
Southwest Gas Corp. Petition for
Leave to Intervene, dated 2/12/78,
received 2/14/75 ..............0..
State of California Notice of Inter-
a dated 2/13/75, received 2/
1
Exxon Corporation Petition for
Leave to Intervene, dated 2/14/75,
e ̃ A
Texaco Inc. Petition for Leave to In-
— dated 2/13/75, received 2/18
Record
inn
Appendix
Pagination Pagination
599-612 102-116
117-191
192-195
196-197
198-201
202-205
206-210
211-212
213-216
217-219
iv Table of Contents—Continued
Record Appendix
Item Pagination Pagination
El Paso Supplement to Petition filed
1/20/75, dated 2/21/75, received 2/
1 80-82 220-224
Mitchell Energy Corp. Petition for
Leave to Intervene, dated 2/20/75,
received 2/25. 83-87 225-228
Pacifie Gas and Electric Co. Petition
to Intervene, dated 2/26/75, received
— 88.92 229-232
Exxon Corp. Answer to Petition for
Issuance of Declaratory Order and
Request for Briefing Schedule, dated
and received 3/3/75... 93-101 233-241
Mineral Interest Owners Petition to
Intervene and Answer to Petition for
Declaratory Order, dated and re-
coived e „„ „„ „„ 1 102-125 242-265
Corrections dated and received 3/5/
PV 126-127 266-268
Gulf Oil Corp. Petition to Intervene
and Response, dated 2/27/75, received
Dees 128-134 269-276
El Paso Answer to Petition filed last
above, dated 3/12/75, received 3/13/
CET 135-140 277-282
Mineral Interest Owners Answer to
Petition of Mitchell Energy Corp.
for Leave to Intervene, dated and re-
ceived 3/17/75 .. 1... eee eeecceees 141-146 283-288
Texaco Inc. Petition for Issuance of
a Declaratory Order, CI75-594, dated
4/7/15, received 4/8775 147-159 289-298
Notice of Petition for Declaratory
Order, issued 4/2277 160-161 298-300
Table of Contents—Continued v
Item Pagination — cornea
El Paso Motion for Briefing Schedule
and Answer to Petition of Texaco for
Issuance of a Declarato Order,
dated 4/23/75, received 4/25/75 .... 162-169 301-309
Texaco Ine. Motion to Consolidate
te dated 4/28/75, received
7 SE es eae ea a 170-172 310-311
El Paso Petition for Leave to Inter-
vene and Answer to filing last above,
dated 4/23/75, received 5/6/75 ..... 173-187 312-327
Mineral Interest Owners Response
Motion for Briefing Schedule, dated
and received 5/7/75 ............... 188-192 328-333
Mineral Interest Owners Petition to
Intervene, dated and received 5/12/75 193-198 334-338
Gulf Oil Corp. Petition to Inte
and Response to Petition of —
dated 5/9/75, received 5/12/75 ..... 199-210 339-349
Northwest Pipeline Petition to Inter-
vene, dated and received 5/14/75 .... 211-213 350-352
Phillips Petroleum Co. Petition to In-
tervene and dated 5/21/75
and received 5/27/75 ............. 214-220 353-357
Order Consolidating Proceedings
Granting Petitions to Intervene, and
Prescribing Schedule for Filing of
Briefs, issued 6/3/75 ............. 221-225 358-364
Votume II
Initial Briefs Filed:
Commission Staff ................ 238-253 365-382
State of California ................ 254-263 383-394
vi Table of Contents—Continued
Record Appendix
Item Pagination Pagination
Exxon Corporation 293-305 435-451
Gulf Oil Corporation 306-315 452-465
Mineral Interest Owners 316-340 466-492
Mitchell Energy Cor 341-345 493-498
Texaco Inne 346-353 499-507
Reply Briefs Filed:
Commission Staff 354-360 508-514
El Paso Natural Gas Co. .......... 361-376 515-536
Exxon Corporation 377-383 537-545
Mineral Interest Owners 384-404 546-567
Phillips Petroleum Corp. 405-407 568-570
Wr „„ „ 408-414 571-577
Southwest Gas Corp. Answer in Su
— of El Paso Brief, dated 67/3/15 -
received 6/25/75 ........0-e+0e045 415-418 578-5
Exxon Corporation Motion for Inclu-
sion of Protective Order, dated and
received 7/2 419-423 580-585
424-426 586-588
Gulf telegram supporting Exxon’s
motion, dated and received 7/7/75 ..
El Paso Answer to Exxon’s motion,
dated and received 7/10/75 ........ 428-433 590-594
Response to El Paso filing last
-r 5 .. 434-436 595-597
427 589
*
Table of Contents Continued vii
Record Appendix
Item Pagination Pagination
Opinion No. 737, Declaratory Opinion
and Order on Termination of Long-
Term Leases, issued 7/11/75 ....... 437-447 598-611
Texaco Inc. Applicaton for Rehear-
ing, dated 8/1/75, received 8/4/75 .. 448-452 612-615
Mineral Interest Owners Application
for Rehearing, dated and received 8/
. 11 453-501 616-674
Exxon Corporation Application for
Rehearing, dated and received 8/8/75 502-510 675-685
El Paso Application for Rehearing,
dated and received 8/11/75 ........ 511-516 686-691
Gulf Oil Corporation Application for
Rehearing, dated 8/8/75, received 8/
U— e 517-523 692-700
Mobil Oil Corp. Application for Re-
hearing, dated 8/11/75, received 8/
“!!. ³¹A ˙¹wꝛ- 1 524-530 701-707
Opinion No. 737-A, Opinion and Or-
der Denying Rehearing But Adopting
Per Curiam, issued 9/3/75 ........ 531-538 708-718
Mineral Interest Owners Application
for Rehearing of Limited ys ts of
Opinion No. 737-A, dated 10/2/75, re-
received 10/3/75 „„ „„ „„ „„ „ 613-623 719-729
Texaco Inc. Response to Application
filed last above, received 10/20/75 ... 624-629 730-734
Order Granting Rehearing for Pur-
of Further Consideration on
imited Issues Relating to Filing Re-
quirements, issued 10/31/75 ....... 630-631 735-737
viii Table of Contents Continued
Record Appendix
Item Pagination Pagination
Opinion No. 737-B, Opinion and Or-
der Granting Rehearing on Limited
Issue Relating to Filing Require-
ments, issued 12/18/75 ............ 632-635 738-743
Reference to the Opinion of the Court
of A ls for Fifth Circuit.
Da ber 13, 1976 .......... 744
Reference to the Judgment of the
Court of A Is for the Fifth Cir-
cuit. Dated ber 13, 1976 ...... 745
Order Granting Petitions for Writs
of Certiorari. Dated June 27, 1977 .. 746
IN THE
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
(Trrce Omirrep iy Printino)
Relevant Docket Entries
Ee December 13, 1976
Ee December 13, 1976
[636] UNITED STATES OF AMERICA
FEDERAL POWER COMMISSION
Docket No. G-7156
In the Matter of the Application for Certificate of
Public Convenience and Necessity by Gulf Oil
Corporation, an Independent Producer of Natural
Gas
Application
Gulf Oil Corporation hereby makes application un-
der — — to §7 of the Natural Gas Act for
a Certificate of Public Convenience and Necessity
with respect to the sale of natural gas herein specifi-
cally deseribed, and, in connection therewith, shows
the following:
1
Gulf Oil Corporation, hereinafter referred to as
„Applicant“, is a Pennsylvania corporation author-
ized to do business in the following states, to wit:
Arizona New Mexico
California New York )
Colorado North Carolina
Connecticut North Dakota
Delaware Oklahoma
Florida Oregon
Georgia Rhode Island
Idaho South Carolina
Kansas South Dakota
Maine Texas
2
637
[637]
Maryland Utah
Massachusetts Vermont
Minnesota Virginia
Missouri Washington
Montana West Virginia
Nebraska Wisconsin
New Hampshire Wyoming
New Jersey District of Columbia
2
No predecessor in interest of Applicant has, on or
since June 7, 1954, had any interest in, or made any
sale of, the natural gas covered by the contract which
is the subject of this application.
3
Until further notice, all correspondence or commu-
nications in regard to this Application may be ad-
dressed to Ralph O. Rhoades, Vice President, Gulf
Oil Corporation, P.O. Box 1166, Pittsburgh 30,
Pennsylvania.
4
A statement of the pertinent facts applicable to the
sale of gas for which a certificate is herein sought, is
as follows:
(a) Kind of gas (indicate one) —◻U◻I˙.ü dry gas, [] eas-
inghead gas, [X] residue gas
(b) Date of contract—January 26, 1951, as amended
(e) Name of purchaser of gas from Applicant—
El Paso Natural Gas Company
(d) Contract volumes M. C. F. (daily or annually ),
indicating pressure base—30,000 MCF per day
measured at 14.65 psia
3
[638] (e) Price on June 7, 1954, or commencement
date of gas deliveries—10¢ per MCF measured at
14.65 psia
(f) Term of contract—20 years
(g) Special conditions (if any)—Casinghead gas is
gathered, compressed, treated, processed, and de-
hydrated by Gulf Oil Corporation, and the resi-
due gas is delivered to the El Paso Natural Gas
Company at the tailgate of the Plant.
Said contract has this date been filed with the Com-
mission as a rate schedule and is incorporated by
reference. In connection with the gas sale referred to
above, Applicant would show the following:
(1) Source of the gas produced by Applicant:
Field: Dune, Edwards, Sand Hills McKnight,
Sand Hills Ordovician, Sand Hills Tubb,
University-Waddell Devonian, University-
Waddell Ellenburger, and Waddell
County or Parish: Crane County
State: Texas
Delivery Points: At outlet of lease separators
Source of gas purchased by Applicant, if any:
Field: Dune, Edwards, Sand Hills McKnight,
Sand Hills Ordovician, Sand Hills Tubb,
University-Waddell Devonian, University-
Waddell Ellenburger, and Waddell
County or Parish: Crane County
State: Texas
Delivery Points: At outlet of lease separators
Names of Sellers: American Liberty Oil Co.,
The Atlantic Refining Co., General American
4
Oil Co., Great Western Producers, Inc.,
Humble [639] Oil and Refining Co., Lario
Oil and Gas Co., Magnolia Petroleum Co.,
Ohio Oil Co., Phillips Petroleum Co., R. F.
Windfohr & The Ibex Co., Shell Oil Co.,
Skelly Oil Co., Samedan Oil Corp., and W. H.
Black Oil Co.
(n) (Strike one of the following:)
Gathering lines of Applicant connect its well
or wells to the delivery point or points referred
to above.
(m1) Applicant did not serve any communities with
natural gas on June 7, 1954 at wholesale or
retail.
(tv) Applicant serves no main line industrial custo-
mers with natural gas.
(v) Major pertinent properties or facilities, if any,
such as compressor stations, gasoline plants, de-
hydration plants, purification plants, and gas
storage projects:
(If any, describe briefly. If not state none.)
Gathering system, compressors, tieaters, processing
equipment, dehydration equipment, and other gaso-
line plant equipment used for processing casinghead
gas before the residue gas is delivered to the El Paso
Natural Gas Company.
[640] 5
Notice of this Application has been served by regis-
tered mail upon the agency or person below indicated
by an xk“ mark:
UI Oil and Gas Conservation Commission of the
State of Colorado
Denver, Colorado
U State Corporation Commission of the State of
Kansas
Topeka, Kansas
UI Montana Oil & Gas Conservation Commission
State Capitol
Helena, Montana
U Governor Robert B. Crosby
State of Nebraska
State Capitol
Lincoln, Nebraska
U Oil Conservation Commission
State of New Mexico
Santa Fe, New Mexico
U State Industrial Commission
State of North Dakota
Bismarck, North Dakota
U Oklahoma Corporation Commission
Capitol Office Building
Oklahoma City, Oklahoma
Railroad Commission
State of Texas
Tribune Building
Austin, Texas
UI Governor J. Bracken Lee
State of Utah
State Capitol
Salt Lake City, Utah
[641]
Department of Mines
State of West Virginia
State Capitol
Charleston, West Virginia
6
UI Oil & Gas Conservation Commission
State of Wyoming
State Capitol
Cheyenne, Wyoming
6
Applicant expressly reserves all of its rights and
remedies, legal, equitable and administrative, includ-
ing its Motion for Rehearing of Order 174-A filed
with this Commission on August 16, 1954, to question,
contest or oppose in any manner (i) the jurisdiction
of the Commission over this Applicant, its properties
and operations, including the sale of natural gas here-
in set out and any other sales which Applicant may
make, and (ii) the validity and reasonableness of
Order 174-A entered by this Commission in Docket
No. R-138 under the Constitution and statutes of the
United States, both in general and as applied to the
specific sale herein described; and neither this appli-
cation nor the sale of gas following the issuance of a
Certificate pursuant hereto shall estop, impair, or
prejudice the right of Applicant to pursue or assert
any such rights or remedies, or be construed or
treated as a waiver or admission of the Commission’s
jurisdiction over Applicant or of the validity or
reasonableness of its said Order.
Gur Or. Corporation
Original signed by
By M. Bayer
H. M. Bayer, Vice President
[642]
(VERIFICATION OMITTED IN PRINTING)
[644] UNITED STATES OF AMERICA
FEDERAL POWER COMMISSION
(Recetven Aprit 23, 1956)
In the Matters of
. Docket No. G-3275
Howard W. Fleet, et al.
Docket N@™*-4814 thru G-4819, incl.
M. F. Powers
Docket No. G-5191
John A. Barnett
Docket Nos. G-5218, G-5220 and G-5221
Big Chief Drilling Company
Docket Nos. G-5291 and G-5292
Havenstrite Oil Company of Texas
Docket No. G-5659
Shell Oil Company
Docket No. G-5993
Baker and Taylor Drilling Company
Docket No. G-6180
The Superior Oil Company
Docket Nos. G-6319, G-6321 thru G-6324, incl.
Amerada Petroleum Corporation
Docket Nos. G-6342, G-6346, G-6353 and G-6355
Continental Oil Company
Docket No. G-6378
HIGHWAY MAP SHOWING & PORTION OF
S| TEXAS, OKLAHOMA, & NEW MEXICO j
Scole = 50 Mites lappros)
2 Pha on Kerr-MeGee Oil Industries, Ine.
2 — etal Docket No. G. 640g
3 of Go Joseph I. O'Neil, Jr.
8 = 9
Docket Nos. G-6406 and G-6407
Southwestern Exploration Company
(a Co-partnership)
Docket No. G-6429
Bass & Vessels, et al.
Docket No. G-6608
Phillips Drilling Corporation
Docket Nos. G-6619, G-6620, G-6626 thru G-6656,
inel., G-6658 thru G-6664, incl., and G-6670
Sun Oil Company
Docket No. G-6825
Cabot Carbon Company
Docket No. 6950
Haneo Oil and Gas Company, Ltd.
Docket No. G-6994
Sue Reeder Turner
Docket Nos. G-7136 thru G-7141, incl., G-7143 thru
G-7145, inel., G-7147 thru G-7158, inel.
Gulf Oil Corporation
Docket No. G-7706
Fraley Gas Company
Docket No. G-7734
N. B. Hunt
Docket No. G-7738
Wiley Page
Docket No. G-7755
W. W. Lechner and R. E. Hubbard
Docket No. G-7761
G. B. Cree and H. E. Schwartz
10
—— 2
. 645
Docket No. G-7762
H. E. Schwartz, G. B. Cree and Southern
Production Company, Inc.
Docket No. G-7768
Harold Davidor and R. H. Davidor, d.b.a.
Davidor & Davidor
Docket Nos. G-7769 and G-7770
Late Oil Company
Docket No. G-7811
Orville H. Parker, et al.
Docket No. G-7812
Phil D. Phillips, et al.
Docket No. G-7813
Clayton A. Woofter, et al. Lease, Roy G. Hildreth,
et al., and Roy G. Hildreth, Agent
Docket No. G-7815
H. C. Grady, Jr. and J. W. Graham, Jr.
Docket Nos. G-7816 and G-7821
J. D. Caruthers
Docket No. G-7822
Lisbon Exploration Company, Ine.
[645 ] Docket No. G-7823
Maleo Refineries, Inc.
Docket No. G-7824
Cree Oil, H. E. Schwartz and D. E. Williams
Docket No. G-7825
H. W. Klein
11
Docket No. G-7839 _ 8
Charles N. Compton Oil and Gas Co. — — the Commission and open for public in
Docket No. G-7840 A
ane | pplicants produce and sell natural gas for trans-
Seward Butch Martin Oil and Gas Co. portation in interstate commerce for resale, as indi-
Docket No. G-7841 cated below:
Blanton Oil and Gas Co. Docket No. G- Location of Field Buyer
Docket No. G-7842 3275 Denton Gasoline El Paso Natural Gas
H. C. Hall Oil and Gas Co. Plant Company
4814 thru 4817, Hugoton Field, Colorado Interstate Gas
Docket No. G-7843 incl., and 4819 Kearney County, Company ; Cities Service
Little Rough Oil and Gas Co. Kansas Gas Company ; Kansas-
| ‘ Nebraska Natural (ias
Docket No. G-7844 * Company
Ben Compton Oil and Gas Co. * 4818 Carthage Field, Texas Gas Transmission
Panola C ’ Cc i
Docket No. G-7851 — ounty orporat ion
Louis C. Quin, II. R. Wofford, Jr., and 5191 Spraberry Trend Texas Gas Products
Area, Midland and Corporation
Arthur F. Graf, Jr.
Glasscock Counties,
on ä 2 — — K
Docket No. G-7852 Texas
Goliad Corporation 5218, 5220, Chris Hunt, Hitch Colorado Interstate Gas
Docket No. G-808 and 5221 nn a — Company
Peerless Oil and Gas Company Keyes Field, Cimar-
ron County,
April 19, 1956 Oklahoma
Notice of Applications and Date of Hearing
Take notice that each of the above Applicants has
Pembrook Leases in Corporation
.
' 5291 and 5292 Anna Wells and Texas Gas Products
:
: Upton County, Texas
filed an application for a certificate of public con- 646
venience and necessity pursuant to Section 7 of the / 646]
Natural Gas Act, authorizing Applicants to render ) 5659 Tubb-Blinberry El Paso Natural Gas
services as hereinafter described, subject to the juris- eg — County, Company
dietion of the Commission, all as more fully repre-
sented in their respoetive applications which are on sn — 5 — —
12 13
„ 2
646
Docket No. G-
6180
6319
6342, 6346,
Loeation of Field
Canyon Largo Unit,
Rio Arriba County,
New Mexico
Ignacio Field,
La Plata County,
Colorado
Langlie-Mattix
Field, Lea County,
New Mexico
Fields in Lea
County, New Mexico
Eumont-Jalmat,
6353, and 6355 Arrow, Tubb, Blin-
6378
6429
berry, Monument,
McKee, and Langmat
Fields Lea County,
New Mexico
Keyes Field,
Cimarron County,
Oklahoma
Jack Herbert Field,
Upton County, Texas
Hugoton Field,
Haskell, Stanton,
and Seward Coun-
ties, Kansas
Greenwood Field,
Baca County, Colo-
rado, and Morton
County, Kansas
North Sun Field,
Starr County, Texas
Allison Unit Area,
San Juan County,
New Mexico, and
La Plata and
Archuleta Counties,
Colorado
14
Buyer
El Paso Natural Gas
Company
El Paso Natural Gas
Company
El Paso Natural Gas
Company
El Paso Natural Gas
Company
EI Paso Natural Gas
Company
Colorado Interstate Gas
El Paso Natural Gas
Company
Colorado Interstate Gas
Company ; Northern
Natural Gas Company
Colorado Interstate Gas
Company
—
Tennessee Gas Trans-
mission Company
El Paso Natural Gas
Company
Mission Valley Field,
Vietoria County,
La Gloria Field,
Jim Wells County,
Texas
Various Fields in
Starr County, Texas
Quinto Creek Field,
Jim Wells County,
Texas
Gyp Hill Field,
Brooks County,
Texas
Placedo Field,
Vietoria County,
Texas
15
Buyer
El Paso Natural Gas
Texas Gas Transmission
Corporation ; United Gas
Pipe Line Company ;
Texas Eastern Transmis-
sion Corporation ; Ten-
nessee Gas Transmission
Company ; Southern
Natural Gas Company
Transcontinental Gas
Pipe Line Corporation
Transcontinental Gas
Pipe Line Corporation
Transcontinental Gas
Pipe Line Corporation
Transcontinental Gas
Pipe Line Corporation
Transcontinental Gas
Pipe Line Corporation
Tennessee Gas Trans
mission Company
Tennessee Gas Trans-
mission Company
Tennessee Gas Trans-
mission Company
Tennessee Gas Trans-
mission Company
Docket No. G-
Docket No. G-
7137
Location of Field
Ileyser Field, Vie-
toria County, Texas
Colorado Interstate Gas
Company
EI Paso Natural Gas
Company
El Paso Natural Gas
(‘om pany
Lone Star Gas Company
7139
7140
7141
7143
714
7145
7147
7148
7149
7159
ton
7154
7155
7157
7158
El Paso Natural Gas
Phillips Petroleum
E! Paso Natural Gas
Company
El Paso Natural Gas
El Paso Natural Gas
Company
El Paso Natural Gas
650
Docket No. G-
7738
7755
7761
7762
1651
7811
7812
7813
7815
Location of Field
North Lansing Field,
Fast Panhandle
Field, Gray County,
Texas
West Panhandle
Field, Gray County,
Texas
North Whiteroek
Field, Noble County,
Oklahoma
Langmat Field, Lea
County, New Mexico
Eumont Field, Lea
County, New Mexico
Ilugoton Field,
Stevens County,
Kansas
Washington District,
Calhoun County,
West Virginia
Glenville District,
Kast Panhandle
Field, Gray County,
Texas
Buyer
Louisiana-Nevada
Transit Company
II. L. Hunt
Phillips Petroleum
Company
Cabot Carbon Company
Cities Service Gas
Company
El Paso Natural Gas
Company
El Paso Natural Gas
Company ; Phillips
Petroleum Company
Northern Natural Gas
Company
Godfrey L. Cabot, Ine.
Equitable Gas Company »
Warren Petroleum
Company
Docket No. G-
7816, 7821,
and 7822
7839 and 7844
7840
Location of Field
Lisbon Field, Lin-
coln and Claiborne
Parishes, Louisiana
West Panhandle
Field, Gray County,
Texas
Lisbon Field, Clai-
borne and Lineoln
Parishes, Louisiana
Sucker Creck Field,
Pike County,
Kentucky
Virgie Ficld, Pike
County, Kentucky
Wolfe Creek Field,
Martin Count,
Kentucky
Right Beaver Creek
Field, Knott County,
Kentucky
Johns Creek Field,
Floyd County,
Kentucky
South Porter Field,
Karnes County,
Texas
Live Oak County,
Texas
Langmat Pool, Lea
County, New Mexico
21
Buyer
Mississippi River uel
Corporation; Arkansys-
Louisiana Gas Company ;
II. W. Klein
El Paso Natural Gas
Company ; Shell Oil
Company ; Coltexo
Corporation
Cities Service Gas
Company
Arkansas-Louisiana Gas
Company
Kentucky West Virginia
Gas Company
United Fuel Gas
Company
United Fuel Gas
Company
Kentucky West Virginia
Gas Company
Kentucky West Virginia
Gas Company
United Gas Pipe Line
Company
Transeontinental Gas
Pipe Line Corporation
El Paso Natural Gas
Company
These matters should be heard on a consolidated
record and disposed of as promptly as possible under
the applicable rules and regulations and to that end:
Take further notice that, pursuant to the authority
contained in and subject to the jurisdiction conferred
upon the Federal Power Commission by Sections 7
and 15 of the Natural Gas Act, and the Commission’s
Rules of Practice and Procedure, a hearing will be
held on May 21, 1956, at 9:30 am. (EDST), in a
hearing room of the Federal Power Commission, 441
Street, N.W., Washington, D. C., concerning the
matters involved in and the issues presented by such
applications: Provided, however, That the Commis-
sion may, after a non-contested hearing, dispose of
the proceedings pursuant to the provisions of Section
1.30 (e) (J) or (e) (2) of the Commission’s Rules of
Practice and Procedure. Under the procedure herein
provided for, unless otherwise advised, it will be un-
necessary for Applicants to appear or be represented
at the hearing.
Protests or petitions to intervene may be filed with
the Federal Power Commission, Washington 25, D. C.,
in accordance with the Rules of Practice and Proce-
dure (18 CFR 1.8 or 1.10) on or before May 7, 1956.
Failure of any party to appear at and participate in
the hearing shall be construed as waiver of and con-
currence in omission herein of the intermediate de-
cision procedure in cases where a request therefor is
made.
/3/ Leon M. Fuquay
Secretary
„„
[653 ] UNITED STATES OF AMERICA
FEDERAL POWER COMMISSION
Before Jerome K. Kuykendall, Chairman; Claude
L. Draper, Commissioners: Seaborn I. Digby, Fred-
erick Stueck and William R. Connole.
In THE MATTERS OF
Docket No. G-3275
Howard W. Fleet, et al.
Docket Nos. G-4814 thru G-4819, inel.
M. F. Powers
Docket No. G-5191
John A. Barnett
Docket Nos. G-5218, G-5200 and G-5221
Big Chief Drilling Company
Docket Nos. G-5291 and G-5292
Havenstrite Oil Company of Texas
Docket No. G-5659
Shell Oil Company
Docket No. G-5993
Baker and Taylor Drilling Company
Docket Nos. G-6319, G-6321 thru G-6324, incl.
Docket No. G-6378
Kerr-MeGee Oil Industries, Inc.
Docket No. G-6393
Joseph I. O'Neil, Jr.
Docket Nos. G-6406 and G-6407
Southwestern Exploration Company
(a Co-partnership)
Docket No. G-6429
Bass & Vessels, et al.
Docket No. G-6608
Phillips Drilling Corporation
Docket Nos. G-6619, G-6620, G-6626 hru G-6640,
inel., G-6642 thru G-6656, incl., G-6658 thru G-6664,
inel., and G-6670
Sun Oil Company
Docket No. G-6825
Cabot Carbon Company
Docket No. 6950
Haneo Oil and Gas Company, Ltd.
Docket No. G-6994
Sue Reeder Turner
Docket Nos. G-7136 thru G-7141, inel., G-7143 thru
G-7145, inel., G-7147 thru G-7158, inel.
Gulf Oil Corporation
Docket No. G-7706
Fraley Gas Company
Docket No. G-7734
N. B. Hunt
Docket No. G-7738
Wiley Page
Docket No. G-7755
W. W. Lechner and R. E. Hubbard
32339 8
Docket No. 67761
G. B. Cree and H. E. Schwartz
Docket No. G-7762
H. E. Schwartz, G. B. Cree and Southern
Production Company, Ine.
Docket No. G-7768
Harold Davidor and R. H. Davidor, d.b.a.
Davidor & Davidor
Docket Nos. G-7769 and G-7770
Late Oil Company
Docket No. G-7811
Orville H. Parker, et al.
Docket No. G-7812
Phil D. Phillips, et al.
1654 Docket No. G-7813
Clayton A. Woofter, et al. Lease, Roy G. Hildreth,
et al., and Roy G. Hildreth, Agent
Docket No. G-7815
H. C. Grady, Jr., and J. R. Graham, Jr.
Docket Nos. G-7816 and G-7821
J. D. Caruthers
Docket No. G-7822
Lisbon Exploration Company, Ine.
Docket No. G-7823
Maleo Refineries, Ine.
Docket No. G-7824
Cree Oil, H. E. Schwartz and D. K. Williams
Docket No. G-7825
H. W. Klein
Docket No. G-7839
Charles N. Compton Oil and Gas Co.
Docket No. G-7840
Applicants produce and sell natural gas for trans-
portation in interstate commerce for resale, as indi-
cated below. Applicants are hereinafter referred to as
Seward Butch Martin Oil and Gas Co.
Docket No. G-7841
Blanton Oil and Gas Co.
Docket No. G-7842
H. C. Hall Oil and Gas Co.
Docket No. G-7843
Little Rough Oil and Gas Co.
Docket No. G-7844
Ben Compton Oil and Gas Co.
Docket No. G-7851
Louis C. Quin, H. R. Wofford, Jr., and
Arthur F. Graf, Jr.
Docket No. G-7852
Goliad Corporation
Docket No. G-8083
Peerless Oil and Gas Company
(Issued May 28, 1956)
Each of the above Applicants has filed an applica—
tion for a certificate of public convenience and neces-
sity pursuant to Section 7 of the Natural Gas Act,
authorizing Applicants to render services as herein-
after described, subject to the jurisdiction of the
Commission, all as more fully represented in their
respective applications which are on file with the
Commission and open for public inspection.
Applicant.
Docket No. G- Location of Field Buyer
3275 Denton Gasoline El Paso Natural Gas
Plant Company
4814 thru 4817, Hugoton Field, Colorado Interstate Gas
inel., and 4819 Kearney County, Company ; Cities Service
Kansas Gas Company ; Kansas-
Nebraska Natural Gas
Company
4818 Carthage Field, Texas Gas Transmission
Panola County, Corporation
Texas
1655
5191 Spraberry Trend Texas Gas Products
Area, Midland and Corporation
Glasscock Counties,
Texas
5218, 5220, Chris Hunt, Hitch Colorado Interstate Gas
and 5221 Gray, and Stanolind- Company
Wiggins Leases in
Keyes Field, Cimar-
ron County,
Oklahoma
5291 and 5292 Anna Wells and Texas Gas Products
Pembrook Leases in Corporation
Upton County, Texas
5659 Tubb-Blinberry El Paso Natural Gas
Field, Lea County, Company
New Mexico
5993 Acreage in Lea El Paso Natural Gas
County, New Mexico Company
Docket No. G-
6319
6393
[656]
Location of Field
Ignacio Field,
La Plata County,
Colorado
Langlie-Mattix
Field, Lea County,
New Mexico
Fields in Lea
County, New Mexico
Keyes Field,
Cimarron County,
Oklahoma
Jack Herbert Field,
Upton County, Texas
IIugoton Field,
Haskell, Stanton,
and Seward Coun-
ties, Kansas
Greenwood Field,
Baca County, Colo-
rado, and Morton
County, Kansas
North Sun Field,
Starr County, Texas
Allison Unit Area,
San Juan County,
New Mexico, and
La Plata and
Archuleta Counties,
Colorado
Buyer
El Paso Natural Gas
Company
El Paso Natural Gas
Company
El Paso Natural Gas
Company
Colorado Interstate Gas
EI Paso Natural Gas
Company
Colorado Interstate Gas
Company ; Northern
Natural Gas Company
Colorado Interstate Gas
Company
Tennessee Gas Trans-
mission Company
El Paso Natural Gas
Company
187
125
bes
Mission Valley Field,
La Gloria Field,
Jim Wells County,
Texas
Various Fields in
Starr County, Texas
Quinto Creek Field,
Jim Wells County,
Texas
N. Government
Wells Field, Duval
County, Texas
Brayton Field,
Nueces County,
Texas
(iyp Hill Field,
Brooks County,
Texas
Placedo Field,
Vietoria County,
Texas
Buyer
El Paso Natural Gas
Company
Texas Gas Transmission
Corporation ; United Gas
Pipe Line Company ;
Texas Eastern Transmis-
sion Corporation Ten-
nessee Gas Transmission
Company ; Southern
Natural Gas Company
Transcontinental Gas
Pipe Line Corporation
Transcontinental (as
Pipe Line Corporation
Transeontinental Gas
Pipe Line Corporation
Transeontinental Gas
Pipe Line Corporation
Transcontinental Gas
Pipe Line Corporation
Tennessee Gas Trans-
mission Company
Tennessee Gas Trans-
mission Company
Tennessee Gas Trans-
mission Company
Tennessee Gas Trans-
mission Company
Eumont Field, Lea
County, New Mexico
North Bay City and
North Markham
Fields, Matagorda
County, Texas
Keyes Field, Texas
County, Oklahoma
San Juan Basin, Rio
Arriba County,
New Mexico
Acreage in San Juan
County, New Mexico
Winnsboro Field.
Wood County, Texas
6588
Buyer
Texas Eastern Trans
mission (Corporation
El Paso Natural Gas
Company
Southern Natural Gas
Company
El Paso Natural Gas
Company
United Gas Pipe Line
Company
Permian Basin Pipe Line
(Company
Transcontinental Gas
Pipe Line Corporation
Colorado Interstate Gas
Company
El Paso Natural Gas
Company
El Paso Natural Gas
Lone Star Gas Company
7140
714¹
7143
7144
7145
[659]
7147
7148
7149
7150
7151
Docket No. G-
7152
7153
7154
7157
7155
Loeation of Field
Carson Field,
Gray County, Texas
Sweetie Peck Field,
Midland County,
Texas
S. Fullerton Field,
Andrews County,
Texas
Denton Field, Lea
County, New Mexico
Waddell, Edwards,
Sand Hills, t niver-
sity- Waddell, and
Dune Fields, Crane
County, Texas
Jaek Herbert (Penn)
Field, Upton County,
Texas
Arrowhead, Blinber-
ry, Brunson, Drink-
ard, Hair, S. Hair,
MeCormick. Paddock
and Penrose-Skelly
Fields, Lea County,
New Mexico
Fields in Wayne
County, West
Virginia
Fields in Lea
County, New Mexico
North Lansing Field,
Harrison County,
Texas
North Lansing Field,
Harrison County,
Texas
Buyer
Phillips Petroleum
Company
El Paso Natural Gas
Company
II Paso Natural Gas
Company
EI Paso Natural Gas
Company
Kl Paso Natural Gas
Company
Kl Paso Natural Gas
Company
Fi Paso Natural Gas
Company
United Fuel Gas
(Company
El Paso Natural Gas
(Company
Louisiana-Nevada
Transit Company
ih. I. Hunt
Docket No. G-
7761
7762
7768
7769
7770
7811
7812
7813
781 7821,
And 7822
7023
l tion of Field
Kast Panhandle
Field, Gray County,
Texas
West Panhandle
Field, Gray County,
Texas
North Whiterock
Field, Noble County,
Oklahoma
Langmat Field, Lea
County, New Mexico
Humont Field, Lea
(County, New Mexico
ITugoton Field,
Stevens County,
Kansas
Washington District,
Calhoun County,
West Virginia
Glenville District,
Gilmer County,
West Virginia
ast Panhandle
Field, Gray County,
Texas
Lishon Field. Lin-
coln Claiborne
Parishes, Louisiana
Ignacio Field, La
Plata County,
Colorado
Wasson Field,
Yoakum County,
Texas
Buyer
Phillips Petroleum
Company
Cabot Carbon Company
Cities Service Gas
Company
El Paso Natural Gas
Company
El Paso Natural Gas
Company ; Phillips
Petroleum Company
Northern Natural Gas
(‘ompany
(iodfrey I. Cabot, Ine.
P.quitable Gas Company
Warren Petrolenm
Company
Mississippi River Fuel
Corporation ; Arkansas-
Louisiana Gas Company;
H. W. Klein
El Paso Natural Gas
Company; Shell Oil
Company ; Coltexo
Corporation
661
Doeket No. G- Location of Field Buyer
7824 West Panhandle Cities Service Gas
Field, Gray County, Company
Texas
7825 Lisbon Field, Clai- Arkansas-Louisiana Gas
horne and Lincoln Company
Parishes, Louisiana
7839 and 7844 Sucker Creek Field, Kentucky West Virginia
Pike County, Gas Company
Kentucky
[661]
7840 Virgie Field, Pike United Fuel Gas
County, Kentueky Company
7841 Wolfe Creek Field. United Fuel Gas
Martin County, Company
Kentucky
7842 Right Beaver Creek Kentueky West Virginia
Field, Knott County, Gos Company
Kentucky
7843 Johns Creek Field, Kentucky West Virginia
Floyd County, Gas Company
Kentucky
7851 South Porter Field, United Gas Pipe Line
Karnes County, Company
Texas
7852 Live Oak County, Transeontinental Gas
| Texas Pipe Line Corporation
03 Langmat Pool, Lea Paso Natural Gas
County, New Mexico (‘ompany
Pursuant to due notice, a public hearing was held in
Washington, D.C., on May 21, 1956, respecting the mat-
ters involved in and the issues presented by the appli-
cation. No petition to intervene or protest to the grant-
ing of the application has been received. Staff counsel
moved orally at the hearing that the intermediate de-
cision procedure be omitted and the Commission render
a decision herein pursuant to Section 1.30 (e) (1) of
the Commission’s Rules of Practice and Procedure.
The Commission finds:
(1) Applicant, an independent producer of nat-
ural gas, is engaged in the sale of natural gas
in interstate commerce for resale for ultimate
publie consumption, subject to the jurisdiction
of the Commission, and is, therefore, a ‘‘nat-
ural-gas company’’ within the meaning of the
Natural Gas Act.
(2) The sale of natural gas hereinbefore described,
as more fully described in the application, is
made in interstate commerce, subject to the
jurisdiction of the Commission, and such sale
by Applicant, together with the operation of
any facilities subject to the jurisdiction of the
Commission necessary therefor, is subject to
the requirements of subsections (c) and (e)
of Section 7 of the Natural Gas Act.
(3) Applicant is able and willing properly to do
the acts and to perform the service proposed
and to conform to the provisions of the Nat-
ural Gas Act, and the requirements, rules and
regulations of the Commission thereunder.
[662] (4) The sale of natural gas by Applicant, to-
gether with the construction and operation of
any facilities subject to the jurisdiction of the
Commission necessary therefor, is required
by the public convenience and necessity, and
a certificate therefor should be issued as here-
inafter ordered and conditioned.
36
(5) A request during the public hearing by Staff
Counsel for omission of the intermediate de-
cision procedure under Section 1.30 (e) of the
Commission’s Rules of Practice and Proce-
dure, was unopposed by any party of record
and, not having been denied by the Commis-
sion, is granted pursuant to Section 1.30 (e)
(1) of said Rules.
The Commission orders:
(A) A certificate of public convenience and neces-
sity be and is hereby issued, upon the terms
and conditions of this order, authorizing the
sale by Applicant of natural gas in interstate
commerce for resale, together with the opera-
tion of any facilities, subject to the jurisdic-
tion of the Commission, used for the sale of
natural gas in interstate commerce, as here-
inbefore described and as more fully de-
scribed in the application and exhibits in this
proceeding.
(B) The certificate issued herein shall be deemed
accepted and of full force and effect, unless
refused in writing and under oath by Appli-
cant within 30 days from issuance of this
order.
(C) The certificate is not transferable and shall be
effective only so long as Applicant continues
the acts or operations hereby authorized in
accordance with the provisions of the Nat-
ural Gas Act, and the applicable rules, regu-
lations and orders of the Commission.
37
(D) The grant of the certificate herein shall not be
construed as 2 waiver of the requirements of
Section 4 of the Natural Gas Act, or of See-
tion 154 of the Commission’s Rules and Reg-
ulations thereunder requiring the filing of
rate schedules for the service herein author-
ized, and is without prejudice to any findings
or orders which have been or may hereafter
be made by the Commission in any proceed-
ing now pending [663] or hereafter insti-
tuted by or against the Applicant. Further,
our action in this proceeding shall not fore-
close nor prejudice any future proceedings
or objection relating to the operation of any
price or related provision in the gas purchase
contracts herein involved.
By the Commission. Commissioner Digby concurring,
subject to the statement attached.
/s/ Leon M. Fvevay
Leon M. Fuquay
Secretary
[664] Dicsy, Commissioner, concurring:
I concur in the order granting a certificate of public
convenience and necessity to sell natural gas. I object
to any reference in the order concerning the issuance
of a certificate of public convenience and necessity for
the facilities of the independent producer or gatherer
of gas.
A certificate of public convenience and necessity is
neither required nor properly issued for construction
and operation of facilities of a producer or gatherer.
The action of a majority of this Commission issuing a
certificate for facilities is improper for it represents
an assertion of power denied to us by Congress.
We have recognized the absence of power over facili-
ties when, in Order No. 174 and Order No. 174-A, we
failed to provide any procedure whereby application
could be made for a certificate authorizing their con-
struction and operation. We did promulgate procedural
rules to enable filing of applications for certificates au-
thorizing a sale or transportation. There was not even
a suggestion that at some later time we would authorize
or require authorization for construction and operation
of facilities.
The action heretofore taken, insofar as it made no
provision with respect to facilities, was wholly con-
sistent with the declarations of the Supreme Court in
Federal Power Commission v. Panhandle Eastern Pipe
Line Company, 337 U.S. 498, 505; Colorado Interstate
Gas Co. v. Federal Power Commission, 324 U.S. 581,
598 ; Interstate Natural Gas Company v. Federal Power
Commission, 331 U.S. 682, 690-691, and Phillips Petro-
leum Company v. State of Wisconsin, 74 Sup. Ct. 794.
797-798. The language of the Court in these cases is
clear and unambiguous. In Federal Power Commission
v. Panhandle Eastern Pipe Line Company, supra, the
Court stated that the natural and clear meaning“ of
production or gathering contained in Section 1(h) of
the Act encompassed the producing properties and
gathering facilities of a natural-gas company.“ In
Colorado Interstate Gas Co. v. Federal Power Commis-
sion, supra, the Court stated that the production or
gathering exemption applies to the physical activities,
facilities and properties used in the production and
gathering of natural gas. In Interstate Natural Gas
Company v. Federal Power Commission, supra, the
Court stated that effect must be given to the exemption
of producing and gathering, and indicated clearly that
facilities, properties and activities of a producer and
gatherer were exempted. The Court, in Phillips Petro-
leum Company v. State of Wisconsin, supra, held only
that a sale in interstate commerce for resale was not
within the exemption of Section 1(b). The discussion
with respect to facilities and the recitation of the above-
cited cases represents clear recognition of the intended
Scope and effect of the exemption as regards facilities.
The issue to be resolved is whether the Natural Gas
Act requires that a certificate of public convenience
and necessity issue for construction and operation of
the facilities necessary to effect a sale by a producer or
gatherer in interstate commerce for resale. The issue
is not whether a sale of gas in interstate commerce for
resale can be made without facilities. It cannot be
doubted that facilities necessary to effect a sale of
natural gas in interstate commerce are facilities used
in interstate commerce. Recognition of this fact can-
not, however, create power in this Commission to issue,
much less to require, certificates authorizing construc-
tion and operation of such facilities.
15391
Residue Gas Purchase Agreement
Tuts AGREEMENT, made and entered into as of the
26th day of January, 1951, by and between Gur 0m.
CORPORATION, a Pennsylvania corporation, hereinafter
referred to as Seller“, and Et Paso NATURAL ‘tas
40
CoMPANY, a Delaware corporation, hereinafter referred
to as Buyer’”’.
WHUITNFESSETH:
W HEREAS, Seller owns and operates a natural gaso-
line extraction plant, located in Section 25, Block B-26,
Publie School Lands, Crane County, Texas, processing
easinghead gas produced in the area; and
Wuereas, Seller has available at the plant and ex-
pects to continue to have a quantity of surplus residue
gas not heing sold to others; and
Wuereas, Buyer desires to purchase such surplus
residue gas.
Now, THEREFORE, in consideration of the covenants
and agreements hereinafter set forth, Seller and Buyer
do hereby contract, covenant and agree with each other
as follows, to wit:
4540 ARTICLE I
DEFINITIONS
As used in this agreement, the following terms shall
have the meanings herein stated:
a. Gasoline Plant or Plant shall mean that natural
gasoline extraction plant, together with the necessary
related facilities for compression and treatment of gas,
located in Section 25, Block B-26, Public School Lands,
Crane County, Texas, owned and operated by Seller, as
such plant and related facilities may exist from time
to time, including any and all additions and alterations
thereto.
h. Casinghead Gas shall mean the gas issuing from
oil wells, whether produced from the same strata from
41
which oil is produced or from any other strata, or
whether recovered as a result of gas injection, and gas
vaporized from oil after production.
c. Residue Gas shall mean the gas which remains
after casinghead gas has been processed in the Gaso-
line Plant, less the varying amounts of gas required in
or consumed in the operation of the Plant.
d. Surplus Residue Gas shall mean the residue gas
in excess of the varying quantities required (1) for the
operation and development of Seller's properties in the
vicinity of said Plant, including but not by way of
limitation residue gas for gas injection purposes; (2)
to meet its obligations to its lessors under the terms of
its oil, gas and mineral [541] leases in the area in
which the Plant is located; (3) to meet its obligations
under the terms of its casinghead gas purchase con-
tracts relating to the Plant, ineluding but not by way
of limitation residue gas for gas injection purposes ;
(4) to supply fuel for the drilling of wells in the area
served by said Plant, although located on leases not
owned by Seller nor under easinghead gas purchase
contracts to Seller; (5) for fuel in the heating and
maintenance of Seller’s facilities, including the Plant
and camp and any additions and alterations thereto;
and (6) to meet Seller’s obligations under that certain
contract between Seller and Cabot Carbon Company,
dated August 18, 1949, and any extension or renewal
thereof, by virtue of which Seller has agreed to sell
to Cabot Carbon Company an average quantity of
Twenty Million (20,000,000) cubic feet“ of gas per day.
„ Pressure base sixteen and four-tenths (16.4) pounds per square
inch absolute.
42
. Day shall mean the period of 24 consecutive hours
beginning at 7:00 A.M. on one calendar day and end-
ing at 7:00 A.M. on the following calendar day.
f. Month shall mean a period commenci
‘ing at 7:00
A.M. on the first day of a calendar month and ending
at 7:00 A.M. on the first day of the following calendar
9. Year, except where expressly stated otherwise,
shall mean a period of 365 consecutive days beginning
at 7:00 A.M. on the day and year first above written or
en any anniversary thereof, provided that any such
year which contains a date of February 29 shall con-
sist of 366 consecutive days.
[542] K. Contract Volume shall mean seven mil
lion (7,000,000) cube feet of surplus residue gas per
— from the Gasoline Plant, unless and until the con-
ract volume is changed under the provisions of this
agreement. In case the term “contract volume“ is used
in relation to any period greater than a day, the num-
ber of cubic feet of gas constituting the contract vol-
ume as above defined shall be multiplied by the number
of days ineluded in such period.
ARTICLE II
Depic aTIon
Seller hereby dedicates to the i
; performance of its
obligations under this agreement and for the term
hereof all of Seller’s surplus residue gas as hereia
ARTICLE III
QUANTITY
Section 1. Until such time as Seller shall notify
Buyer in writing that Seller is in position to, and does
by such notice, effectively dedicate to the performance
of this agreement not less than seven twenty-sevenths
(7/27) of the total quantity of residue gas available
for sale from the Plant, Buyer shall purchase a por-
tion of the surplus residue gas from the Plant but shall
be under no obligation to purchase the full contract
volume of surplus residue gas hereunder. The amount
of surplus residue gas which Buyer shall purchase and
receive and Seller will sell and deliver hereunder will
vary from time to time and will depend upon operating
conditions [543] of Buyer, upon the quantity of gas
being purchased by Buyer from other sources, Buyer's
marketing requirements and other conditions pertinent
to Buyer's operations.
Section 2. Effective thirty (30) days after receipt
by Buyer from Seller of the notice provided for in
Section 1 of this Article III. the quantity of surplus
residue gas to be sold and delivered by Seller and pur-
chased and received by Buyer hereunder shall be gov-
erned by the provisions of Sections 3 to 8, inclusive, of
this Article IIT.
Section 3. Subject to the provisions of this agree-
ment, Seller agrees to sell and deliver and Buyer agrees
to purchase and receive or to pay for whether or not
received, commencing May 1, 1951 (delay due to force
majeure excepted), the contract volume from time to
time in effect hereunder, averaged annually, during
such annual periods as Seller has such volume of sur-
44
plus residue gas available for sale. Seller shall not be
required to deliver hereunder in any one day a volume
of gas in excess of one and one-tenth (1.1) times the
contract volume then in effect.
It is understood that Buyer may find it necessary
to adjust its purchases of gas hereunder from time to
time during each year to meet the fluctuating demands
of Buyer’s markets, but Buyer agrees to take and
Seller agrees to deliver gas hereunder as nearly as
practicable at uniform hourly and daily rates of flow.
The quantity of gas purchased by Buyer during the
preceding twelve (12) months period, or lesser period
in the case of the first such determination, shall be
[544] determined on July 1 of each year, and if such
quantity is found to be less than the contract volume
in effect during the preceding twelve (12) months pe-
riod, then the difference between the total quantity of
gas purchased and received during said period and the
total contract volume in effect during said period shall
be regarded as the ‘‘deficient volume or as “deficient
gas If on any July I it shall be determined that a
deficient volume of gas exists, then Buyer shall have
the right during the following twelve (12) months
period ending as of 7:00 A.M. on the next July 1, as
and if surplus residue gas is available during said
twelve (12) months period, to purchase and receive
over and above the contract volume then in effect a
volume of surplus residue gas not greater than the
deficient volume. Buyer al, pay for deficient gas so
taken at the weighted average price paid to Seller here-
under for gas taken during the twelve (12) months
period such deficiency occurred. Within thirty (30)
days after the end of the aforesaid twelve (12) months
period, Buyer shall y Seller for all such deficient
— — for during the twelve (12)
months period, at the weighted average price paid to
Seller hereunder for gas taken during the twelve (12)
months period such deficiency occurred.
In determining the amount which Buyer is obligated
to pay Seller for such deficient gas, there shall be
eredited against the price per one thousand (1000)
eubie feet which Buyer would otherwise be obligated to
pay hereunder the price received by Seller for any such
gas not taken by Buyer which Seller disposes of to any
other purchaser, up to but not in exeess of the price
per one thousand (1000) cubie feet in effect under
[545] this agreement; provided that any additional
expense incurred by Seller in the sale of such gas for
treating, compression and delivery, which is in excess
of the normal expense in the sale of gas to Buyer, shall
be deducted from the price received from such other
purehaser before crediting the amount thereof against
the price which Buyer would otherwise be obligated to
pay hereunder.
Section 4. Any volume of surplus residue gas from
said Gasoline Plant, which may from time to time be
taken by Buyer from Seller in excess of the contract
volume at the time in effect, shall be subject to all of the
terms and provisions of this agreement, and except for
gas taken to make up deficiencies as provided in Sec-
tion 3 above shall be paid for at the price then appli-
eable.
Section 5. In the event that on any day the deliveries
of surplus residue gas hy Seller hereunder are, by rea-
son of non-availability of gas or causes within the con-
trol of Seller or force majeure intervention, less than
the volume which Buyer is otherwise entitled to receive
hereunder on such day, then for purposes of determin-
ing the average daily volume of gas taken by Buyer
hereunder during the twelve (12) months period in
which such day occurs, there shall] be taken, in lieu of
the volume of gas (if any) actually delivered to Buyer
during such day, a volume equal to one and one-tenth
(1.1) times the contract volume at the time in effect
hereunder, or the quantity Buyer is ready and willing
to take, whichever quantity is the lesser.
Section 6. If, at any time or times during the term
of this agreement, Seller shall have or expect to have
available at the Plant an average daily volume of sur-
plus residue gas in [546] excess of the contract vol-
ume then in effect, Seller agrees that it will notify
Buyer of that fact, specifying the amount of such addi.
tional volume of gas, the time when the same will be
available for delivery, and the period during which
Seller expects such additional volume to be available.
Buyer agrees that it will purchase from Seller such
additional volume of gas to the extent that Buyer has
a market therefor and has facilities (exclusive of neces-
sary stand-by equipment) installed for receiving, trans-
porting and marketing such gas, the purchase thereof
by Buyer to commence not later than sixty (60) days
after the receipt by Buyer of such notice from Seller.
unless a later date is specified in such notice for the
commencement of deliveries of such additicgal vol-
umes; and upon such commencement date, the contract
volume previously in effect hereunder shall be in-
creased by an amount equal to the additional volume
47
of gas tendered by Seller which Buyer is able to accept
as aforesaid.
If Seller shall so notify Buyer of the availability or
prospective availability of additional volumes of sur-
plus residue gas from the Plant as in this Section 6
provided, and if Buyer at that time does not have a
market for such additional volumes or does not have
facilities installed to enable it to receive, transport and
market the same, then Buyer shall have the right to
elect, by notice served upon Seller within sixty (60)
days after the receipt by Buyer of said notice from
Seller, to purchase all or any part of such additional
volume of gas for which Buyer does not then have a
market or available facilities. If Buyer makes such
election, it will promptly upon service of said notice to
Seller proceed with all reasonable dispatch, if facilities
547] are needed, to acquire, construct, install or
otherwise provide for the facilities required to enable
Buyer to receive, transport and market the additional
volume of gas so elected to be purchased by it, or if a
market is needed, to acquire a market for said volume
of gas, and shall commence taking such additional vol-
ume from Seller as soon as said facilities are completed
or said market is obtained, as the case may be, but in
no event later than one (1) year after the date of
Buyer’s said notice. Upon the commencement of deliv-
eries of such additional volume of gas, or the expiration
of one (1) year from the giving of said notice, which-
ever is the earlier date, the contract volume previously
in effect hereunder shall be increased by the amount of
such additional volume of gas which Buyer shall have
elected to purchase as aforesaid, up io but not in excess
48
f
{
of the additional volume tendered in Seller’s notice
to Buyer as to the availability of such additional gas.
Section 7. If, at any time or times during the term
of this agreement, Seller shall have additional volumes
of surplus residue gas available for sale from the Plant,
and upon tender of such gas to Buyer, Buyer does not
have a market for such gas or does not have the neces-
sary facilities installed to receive, transport and mar-
ket such gas, and does not elect as hereinabove provided
to install said facilities or obtain a market to enable
it to purchase and receive said additional volume of
gas, then Seller shall be free to sell to others all or any
part of such additional volume which Buyer is not
obligated hereunder to purchase or does not elect to
purchase as hereinbefore provided, [548] but all such
sales to others shall be subject and subservient to the
rights of Buyer under this agreement.
Section 8. If at any time the average daily deliveries
of surplus residue gas by Seller to Buyer from the
Plant shall be reduced by as much as ten percent
(10% ) below the contract volume at the time in effect
hereunder for a period of five (5) months duration,
then Buyer at its option shall have the right to serve
notice on Seller reducing the contract volume at the
time in effect hereunder by such amount as Buyer shall
specify in said notice, up to but not exceeding such
deficiency in the aggregate average daily deliveries to
Buyer from said Plant during such period; and Buyer
shall have a like right on each successive occasion that
the average daily deliveries of surplus residue gas by
Seller to Buyer from the Plant are reduced by as much
as ten percent (10%) below the contract volume at the
49
time in effect hereunder for a period of five (5) months
duration.
ARTICLE IV
DELIVERY POINT AND PRESSURE
Section 1. The point of delivery for all gas sold and
purchased hereunder shall be at the inlet of the meter
station to be installed and operated by Buyer near the
property line on the discharge side of the Plant. Title
to all gas purchased and received hereunder shall pass
from Seller to Buyer at the point of delivery.
Section 2. All gas deliverable hereunder at said de-
livery point shall be delivered at the pressure necessary
[549] to enable said gas to enter Buyer’s pipe line
system, provided that Seller shall never be required to
deliver gas at a pressure greater than six hundred and
twenty-five pounds (625#) per square inch gauge.
ARTICLE V
QUALITY
Section 1. All gas delivered by Seller under the
terms of this agreement shall conform to the following
specifications:
a. Oxygen: The gas shall not at any time have an
oxygen content in excess of two-tenths (0.2) of one per-
cent (1%) by volume, and Seller shall make every rea-
sonable effort to keep the gas free of oxygen.
b. Liquids: The gas shall be free from hydrocarbons
in liquid form and shall be dehydrated to the extent
that it will contain not more than nine pounds (9#)
of water per one million (1,000,000) cubie feet of gas.
50
c. Hydrogen Sulphide: The gas shall not contain
more than twen.y-five hundredths (25/100) of one (1)
grain of hydrogen sulphide per one hundred (100)
cubic feet.
d. Organic Sulphur: The gas shall not contain more
than five (5) grains of organic sulphur (mereaptans)
per one hundred (100) cubic feet.
e. Carbon Dioxide: The gas shall not have a carbon
dioxide content in excess of one percent (1%) by
volume.
[550] f. Dust, Gums, etc.: The gas shall be com-
mercially free of dust, gums and other solid matter.
g. Heating Value: From the date of commencement
of deliveries of gas hereunder until January 1, 1956,
the total gross heating value of the gas deliverable here-
under, to be paid for at the rates specified in Article
IX hereof, shall not be less than one thousand and
fifty (1050) British Thermal Units per cubie foot. If
the total gross heating value of the gas delivered in any
month prior to January 1, 1956, falls below one thou-
sand aud fifty (1050) British Thermal Units per cubic
foot, then the price payable by Buyer for such gas shall
be reduced by an amount determined by multiplying
the sum which would otherwise be payable hereunder
for such gas by a fraction, the numerator of which shall
be the deficiency in total British Thermal Units per
cubie foot below one thousand and fifty (1050) and the
denominator of which shall be one thousand and fifty
(1050). From and after January 1, 1956, the total gross
heating value of the gas deliverable hereunder, to be
paid for at the rates specified in Article LX hereof,
51
shall not be less than one thousand (1000) British
Thermal Units per cubic foot.
Section 2. Within the limits of the minimum heating
value specifications set forth above, Seller shall have
the right before delivery of gas to Buyer to remove
from the gas delivered hereunder any constituent
thereof other than methane, and shall have the right to
remove such [551] methane as is necessarily re-
moved from the gas in the process of removing other
constituents.
Section 3. Notwithstanding any other provision
hereof, if the total gross heating value of the gas de-
livered hereunder falls below one thousand (1000)
British Thermal Units per eubic foot, Buyer shall have
the right to refuse to accept further deliveries here-
under so long as the total gross heating value of the
gas remains below one thousand (1000) British Ther-
mal Units per cubic foot. Buyer shall also have the
right to refuse to accept any gas which at any time does
not meet any of the other specifications set forth in
this Article V.
ARTICLE VI
METERING
Section 1. Buyer, at its sole cost and expense, shall
install and maintain at the point of delivery hereunder
a standard type orifice meter or meters for measuring
the volume of all gas purchased by Buyer from the
Gasoline Plant, and Buyer shall cause said meters to
be read each day. The meters and other facilities so
installed at the point of delivery shall be constructed
and installed in accordance with the specifications pre-
52
scribed by Report No. 2 of the Gas Measurement Com-
mittee of the American Gas Association dated Maw 6,
1935, and appendix thereto.
Section 2. Said meters and all meter readings and
meter charts shall be accessible at all reasonable times
[552] to inspection and examination by Seller, but
the reading, calibration and adjustment of Buyer’s
meter and the changing of charts shall be done by
Buyer.
Section 3. Each such meter shall be calibrated at
least once each thirty (30) days by and at the expense
of Buyer, but in the presence of Seller’s representative.
Buyer shall give Seller notice of each such calibration
test in sufficient time to enable Seller to have its rep-
resentative present. If upon any such test the measur-
ing equipment is found to be no more than two percent
(2%) erroneous, previous readings of such equipment
shall be considered correct in computing the deliveries
of gas hereunder, but such equipment shall be adjusted
at once to read accurately. If upon any test the measur-
ing equipment shall be found to be inaccurate in the
aggregate by an amount exceeding two percent (2% )
at a reading corresponding to the average rate of flow
for the period since the last preceding test, then any
previous readings of such equipment shall be corrected
to zero error for any period which is known definitely
or agreed upon, but in case the period is not known
definitely or agreed upon, then for a period extending
back one-half (14) of the time elapsed since the date
of the last test. If for any reason any meter is out
of service or out of repair, so that the volume of gas
purchased cannot be ascertained or computed from the
reading thereof, the volume of gas purchased during
53
the period such meter is out of service or out of repair
[553] shall be estimated and agreed upon by the
parties hereto on the basis of the best data availabie,
using the first of the following methods which is
feasible: |
a. By using the registration of Seller’s check me-
ter, if installed and accurately registering ;
b. By correcting the error in Buyer’s meter, if
the percentage of error is ascertainable by cali-
bration test or mathematical calculation;
c. By estimating the volume of delivery, by using
as a basis the volumes delivered during preced-
ing periods under similar conditions when the
meter was registering accurately.
Section 4. Seller may install, maintain and operate
such check measuring equipment as it desires, provided
that such check meter and equipment shall be so in-
stalled as not to interfere with the operation of the
meters to be installed and maintained by Buyer at or
near the point of delivery, as provided in Section 1 of
this Article VI.
ARTICLE VII
Units or VoLUME
Section 1. The unit of volume for all purposes here-
under (except for computation of quality“ values
under the provisions of Article V) shall be one (1)
eubie foot at an [554] absolute pressure of fourteen
and sixty-five hundredths pounds (14.65) per square
— at a temperature of sixty (60) degrees Fahren-
eit.
Section 2. The unit of volume for the determination
of heating value under sub-paragraph g of Section 1 of
54
— — — — —
Article V hereof shall be the amount of gas, saturated
with water vapor, which would occupy a volume of one
(1) eubie foot at a temperature of sixty (60) degrees
Fahrenheit and under a pressure equivalent to thirty
(30) inches of mercury at thirty-two (32) degrees
Fahrenheit.
Section 3. The unit of volume for determination of
quality values under sub-paragraphs b, c and d of
Section 1 of Article V hereof shall be one (1) cubie
foot at a temperature of sixty (60) degrees Fahrenheit
and under a pressure equivalent to thirty (30) inches
of mercury at thirty-two (32) degrees Fahrenheit.
ARTICLE VIII
MEASUREMENT
Section 1. All measurement of gas hereunder shall
be in accordance with the recommendations for mea-
suring gas contained in Report No. 2 of the Gas Mea-
surement Committee of the American Gas Association
dated May 6, 1935, including the appendix thereto, ap-
plied in a practical and appropriate manner, and cor-
rection shall be made for deviation from Boyle’s Law.
Deviation from Boyle’s Law will be computed in ac-
cordance with Bulletin TS 461 of the California Nat-
ural Gasoline Association, 1947, or such other method
as the parties may hereafter agree upon.
[555] Section 2. For the purpose of measurement,
the average atmospheric (barometric) pressure shall
be assumed to be thirteen and two-tenths pounds
(13.2#) per square inch absolute, irrespective of the
actual elevation or location of the point of delivery
with respect to sea level or of variations in such baro-
metric pressure from time to time.
55
Section 3. The temperature of the gas flowing
through the meter or meters shall be determined by the
use of a recording thermometer of standard mannufac-
ture, installed by Buyer so that it may properly record
the temperature of the gas flowing through Buyer’s
meter or meters at the point of delivery. The arith-
metrical average of the twenty-four (24) hour record,
or of that portion of the twenty-four (24) hours dur-
ing which gas was passing if gas had not been passing
during the entire period, from the recording thermom-
eter shall be taken to be the gas temperature for the
day and shall be used to make proper corrections in
volume computations.
Section 4. The specific gravity of the gas delivered
hereunder shall be determined by the use of a record-
ing gravitometer to be installed, maintained and oper-
ated by Buyer at the point of delivery. The arithmeti-
cal average of the hourly specific gravity during each
twenty-four (24) hour period, or during that period
which gas was actually passing, shall be used to make
proper correction in volume computations.
[556] Section 5. The gross heating value of the gas
shall be determined by Buyer at intervals of three (3)
months or by means of recording calorimeters of the
Thomas type, at the option of Buyer.
ARTICLE IX
PRICE
Section 1. The price per one thousand (1000) cubic
feet to be paid by Buyer to Seller for all gas sold and
delivered hereunder shall be as follows:
a. For the first five (5) year period, beginning with
the initial date of delivery of gas hereunder, six point
six nine nine eight cents (6.6998¢).
b. For the second five (5) year period, seven point
five nine three one cents (7.5931¢).
c. For the third five (5) year period, eight point
four eight six four cents (8.4864¢).
d. For the fourth five (5) year period and so long as
this agreement is in effect, the weighted average price
per one thousand (1000) cubic feet, quality and pres-
sure considered, being paid at the commencement date
of such five (5) year period for all gas sold and deliv-
ered from all gasoline plants located within a radius of
two hundred and fifty (250) miles of the Town of An-
drews, Texas (exciuding, however, the following
counties in the State of Texas: Carson, Potter, Gray,
Wheeler, Hutchinson, Sherman, Hansford, and
Moore), exclusive of sales to Buyer, but not less than
nine point three seven nine seven cents (9.3797¢) per
one thousand (1000) cubic feet.
[557] Section 2. If, at any time or times subse-
quent to the date of this agreement and so long as gas
is delivered hereunder, there shall be in effect any
agreement between Buyer and any other party or
parties providing for the purchase of gas by Buyer at
a point located within a radius of two hundred and
fifty (250) miles of the Town of Andrews, Texas (ex-
cluding, however, the following counties in the State
of Texas: Carson, Potter, Gray, Wheeler, Hutchinson,
Sherman, Hansford, and Moore), at a price per one
thousand (1000) cubic feet higher than the price at the
same time payable by Buyer to Seller for gas hereun-
57
— —
der, Buyer shall forthwith notify Seller of such fact
and of the amount of such higher price, and thereupon
the price at the time payable to Seller for gas here-
under shall be immediately increased so that it will
equal the price payable at the same time under such
other agreement, and such higher price hereunder shall
continue in effect so long as, but only so long as, any
such higher price is payable for gas by Buyer under
any such other agreement. In determining whether the
price payable under any such other agreement is
‘“*higher”’ than the price payable to Seller hereunder,
due consideration shall be given to the provisions of
this agreement as compared with the provisions of such
other agreement as to quantity and quality of gas, de-
livery pressure, gathering and compressing arrange-
ments, provisions regarding measurement of gas in-
cluding deviation from Boyle’s Law, taxes payable on
or in respect of the gas delivered, and all other perti-
nent factors.
[558] ARTICLE X
BILLING
Section 1. On or before the tenth (10th) day of each
calendar month, Buyer shall render Seller a statement
showing the total volume of gas purchased during the
preceding calendar month, and on or before the twen-
tieth (20th) day of each calendar month, Buyer shall
tender Seller its check payable to Seller or order for
all such volumes so purchased. It is understood, how-
ever, that such statements and payments will be based
upon Buyer’s measurements and computations, and
that the receipt and acceptance thereof shall not bind
bind Seller or prevent Seller from correcting any er-
rors in any such statement or payment or any errors
in measurement or computation upon which such state-
ment or payment is based, until the expiration of one
(1) year after rendition of such statement. Buyer shall
be entitled to deduct from the amount due Seller all
taxes upon or in respect to the surplus residue gas de-
livered hereunder, which are required to be borne by
Seller under the provisions of Article XIV hereof, but
which are required by law or regulation to be paid by
Buyer. Seller shall account to and pay the royalty
owners having interest in the gas delivered hereunder.
Section 2. Upon the request of Seller, Buyer shall
furnish Seller with meter charts showing all volumes
measured in any calendar month. Seller shall return to
[559] Buyer all charts after they have been in-
spected, after which return the charts shall be kept on
file by buyer for the mutual use of both parties for a
period of six (6) years, and after expiration of said
period of six (6) years Buyer may destroy said charts.
ARTICLE XI
TITLE
Seller hereby warrants the title to the gas delivered
hereunder and that the same will be free from all liens
and adverse claims.
ARTICLE XII
RESPONSIBILITY
Buyer shall not be responsible for the gas deliver-
able hereunder and shall be held harmless against any
damage or injury caused thereby until same shall have
been delivered to Buyer at the delivery point specified
in Article IV hereof, after which delivery Buyer shall
be deemed in exclusive control and possession thereof
and responsible for and shall hold Seller harmless
against any injury or damage caused thereby.
ARTICLE XIII
Force MaJEURE
Section 1. Except for Buyer’s obligation to make
payments for gas delivered hereunder, neither party
[560] hereto shall be liable for any failure to per-
form the terms of this agreement when such failure is
due to force majeure“ as hereinafter defined. The
term force majeure“ as employed in this agreement
shall mean acts of God, strikes, lockouts or industrial
disturbances, civil disturbances, arrests and restraint
from rulers and people, interruptions by government
or court orders, present and future valid orders of any
regulatory body having proper jurisdiction, acts of the
puble enemy, wars, riots, blockades, insurrections, in-
ability to secure materials or labor, epidemics, land-
slides, lightning, earthquakes, fire, storms, floods, wash-
outs, explosions, breakage or accident to machinery or
lines of pipe, freezing of wells or pipe lines, inability
to obtain right of way, partial or entire failure of gas
supply, or any other cause, whether of the kind herein
enumerated or otherwise, not reasonably within the
control of the party claiming force majeure. Nothing
herein contained, however, shall be construed to require
either party to settle a strike against its will.
Section 2. It is understood that either ma
without liability to the other party, —5 — —
ations of its plants or pipe line system for the purpose
881
of making necessary alterations or repairs thereto, but
that such interruptions shall be for only such time as
may be reasonable. The party interrupting operations
shall give the other party reasonable notice, except in
case of emergency, of its intention so to interrupt op-
erations and of the [561] estimated time during which
no surplus residue gas will be taken or delivered, as
the case may be.
ARTICLE XIV
TAXES
Seller shall bear all taxes assessed upon or in re-
spect of the surplus residue gas delivered hereunder
up to the delivery thereof to Buyer, and Buyer shall
bear all taxes upon or in respect of such surplus resi-
due gas on and after such delivery; provided that
three-fourths (34) of any and all increases after the
date of execution of this agreement, in taxes of any
kind (except ad valorem taxes on properties and in-
come taxes) upon or with respect to the surplus residue
gas delivered hereunder up to the delivery thereof by
Seller to Buyer or upon the sale thereof by Seller to
Buyer, shall be borne by Buyer, and one-fourth (14)
shall be borne by Seller, regardless of whether the in-
crease results from an increase in the taxes now in ex-
istence or from the levy of new or additional taxes;
provided that Buyer shall not be obligated to bear that
part of any new or additional tax or taxes, which part
is based upon or measured by the natural gasoline or
other liquefied hydrocarbon content extracted from the
gas before its delivery to Buyer hereunder.
61
[562] ARTICLE XV
TERM
This agreement shall be effective from the date here-
of, and shall continue in force for a term of twenty
(20) years from the date of initial delivery of surplus
residue gas hereunder, and thereafter from year to
year until cancelled by either party upon written no-
tice given to the other party, not less than one hundred
and eighty (180) days prior to the expiration of said
twenty (20) years of any anniversary date thereof.
ARTICLE XVI
SUCCESSORS AND ASSIGNS
This agreement shall bind and benefit the parties
hereto and their respective successors and assigns, and
shall be a covenant running with the Gasoline Plant;
provided that no conveyance or transfer of any interest
of either party shall be binding upon the other party
until such other party has been furnished with written
notice and true copy of such conveyance or transfer;
provided, further, that either Buyer or Seller, or both,
may assign its right, title and interest in, to and by
virtue of this agreement, including any and all exten-
sions, renewals, amendments and supplements thereto,
to a trustee or trustees, individual or corporate, as se-
curity for bonds or [563] other obligations or se-
curities, without such trustee or trustees assuming or
becoming in any respect obligated to perform any of
the obligations of the assignor, and provided, further
if any such trustee be a corporation, then such trustee
may accept said assignment without its being reyuired
62
by the parties hereto to qualify to do business in the
State of Texas.
ARTICLE XVII
NOTICES
Section 1. Notices to be given hereunder shall be in
writing and shall be deemed sufficiently given and
served when and if deposited in the United States Mail,
postage prepaid and registered, addressed to Gulf Oil
Corporation, Post Office Box 1290, Fort Worth, Texas,
or to El Paso Natural Gas Company, Post Office Box
1492, El Paso, Texas, as the case may be, or to such
other address as either party shall respectively here-
after designate in writing.
Section 2. Routine communications, including
monthly statements and payments, shall be considered
as duly delivered when mailed, postage prepaid, by
either registered mail or ordinary first class mail.
[564] In Witness WuHereor, the parties hereto have
caused this agreement to be executed, in duplicate
originals, as of the day and year first above written.
Gur Or. CORPORATION
„Seller“
/s/ By H. M. Crata, Vice President
Attest:
/s/ H. M. CAU, Assistant Secretary
EL. Paso NATURAL Gas COMPANY
„Buyer“
/s/ By C. L. PERKINS,
Vice President
Attest:
/s/ A. C. Marre, Assistant Secretary
63
585
[565] (VINTIcATION OmITTED IN PRINTING)
1566]
EL PASO NATURAL GAS COMPANY
Tenth Floor Bassett Tower
El Paso, Texas
October 30, 1953
Gulf Oil Corporation
P. O. Drawer 1290
Fort Worth 1, Texas
Attention: Mr. Gordon H. Fisher
Re: Gulf Oil Corporation Waddell
Plant Residue Gas Contract
Gentlemen:
By letter dated October 19, 1953, Gulf Oil Corpora-
tion, hereinafter called Gulf“, advised El Paso Nat-
ural Gas Company, hereinafter called“ El Paso“, that
effective as of July 1, 1954, Gulf will dedicate the total
quantity of residue gas available for sale from its
Waddell, Crane County, Texas, gasoline plant to the
performance of that certain residue gas purchase
agreement dated January 26, 1951, between Gulf, as
Seller therein, and El Paso, as Buyer therein. Since El
Paso will have a market and facilities for such gas, the
same shall be covered by said residue gas purchase
agreement, and this letter will serve to evidence the
following amendments to said residue gas purchase
agreement, all of which shall become effecti
July 1, 1954: 2
64
1.
Subsection d. of Article 1 of said residue gas pur-
chase agreement shall be amended to be and read as
follows:
„Ad. Surplus Residue Gas shall mean the residue
gas in excess of the varying quantities required
(1)for the operation and development of Seller’s
properties in the vicinity of said Plant, including
but not by way of limitation residue gas for injec-
tion purposes; (2) to meet its obligations to its
lessors under the terms of its oil, gas and mineral
leases in the area in which the Plant is located;
(3) to meet its obligations under the terms of its
casinghead gas purchase contracts relating to the
Plant, including but not by way of limitation resi-
due gas for gas injection purposes; (4) to supply
fuel for the drilling of wells in the area served
by said [567] Plant, although located on leases
not owned by Seller nor under casinghead gas
purchase contracts to Seller; and (5) for fuel in
the heating and maintenance of Seller’s facilities,
including the Plant and Camp and any additions
and alterations thereto.”’
2.
Subsection h. of Article I of said residue gas pur-
chase agreement shall be amended to be and read as
follows:
‘th. Contract Volume shall mean thirty million
(30,000,000) cubie feet of surplus residue gas per
day from the Gasoline Plant, unless and until the
contract volume is changed under the provisions
65
of this agreement. In case the term contract vol-
ume’’ as used in relation to any period greater
than a day, the number of cubic feet of gas con-
stituting the contract volume as above defined shall
be multiplied by the number of days included in
such period.“
If the above correctly states Gulf’s understanding
concerning the matters covered herein, please indicate
Gulf’s agreement to the amendments above provided
by executing two of the enclosed copies of this letter
in the space provided below and returning the same to
El Paso, attention Mr. D. H. Tucker, Vice President.
Very truly yours,
EL Paso NATURAL Gas CoMPANY
/s/ By D. H. Tucker, Vice President
ACCEPTED AND AGREED To:
Gur Or CoRPORATION
/s/ By: G. U. Fisuer, Attorney-in-Fact
1568]
Agreement
(Recetvep May 23, 1956)
Tus AGREEMENT, made and entered into as of the
Ist day of September, 1955, by and between EL. Paso
NaturaL Gas Company, a Delaware corporation, with
offices in El Paso, Texas, hereinafter referred to as
„EI Paso“, and Gulf Oil Corporation, a Pennsylvania
corporation, with an office in Fort Worth, Texas, here-
inafter called Gulf“,
WITNESSETH :
Wuenreas, heretofore under date of January 26,
1951, El Paso and Gulf entered into an agreement, sub-
sequently amended from time to time, providing for
the sale by Gulf to El Paso and the purchase by El
Paso from Gulf of certain residue gas available from
Gulf’s Waddell Plant, located in Crane County, Texas,
and
Wuereas, Gulf has available at said Waddell Plant
volumes of gas in excess of the volumes now provided
in the residue agreement, and Gulf desires to sell to
El Paso and El Paso desires to purchase from Gulf
such additional gas;
Now, THEREFORE, El Paso and Gulf agree as follows:
It is recognized that, in order for El Paso to re-
ceive delivery of the quantities of gas provided for
in the residue agreement, as the residue agreement is
amended and supplemented by this agreement, it will
be necessary for El Paso to make application to the
Federal Power Commission for a Certificate of Public
67
Convenience and [569] Necessity authorizing the con-
struction of additional facilities to take delivery of the
gas. El Paso shall proceed with due diligence and dis-
patch in an attempt to obtain such a certificate. If such
a certificate is obtained by El Paso in form acceptable
to it, El Paso shall then proceed with due diligence and
dispatch to construct the necessary facilities in order
to enable it to perform its obligation under the residue
agreement, as the residue agreement is amended and
supplemented by this instrument. The date when such
facilities shall have been completed and placed in op-
eration is hereinafter called the effective date“.
2.
If, at the expiration of one(1) year from the date of
this agreement, El Paso shall not have obtained from
the Federal Power Commission a Certificate of Public
Convenience and Necessity in form acceptable to it cov-
ering the construction of its facilities contemplated
hereunder, this agreement shall terminate at such time,
and neither party hereto shall have any further lia-
bility to the other.
3.
On the effective late Subsection h. of Article T of
said residue gas purchase agreement shall be amended
to thereafter and read as follows:
. Contract Volume shall mean forty million
(40,000,000) cubie feet of surplus residue gas per
day from the Gasoline Plant, unless and until the
contract volume is changed under the provisions
of this agreement. In case the term ‘contract
68
570
[570] volume’ as used in relation to any period
greater than a day, the number of cubic feet of gas
constituting the contract volume as above defined
shall be multiplied by the number of days ineluded
in such period.“
4.
As hereby amended and supplemented, the residue
gas purchase agreement dated January 26, 1951, shall
remain in full force and effect.
In TestrMony WHEREOF, this instrument is executed
on this 17th day of October, 1955.
Ex Paso NATURAL Gas COMPANY
/s/ By D. II. Tucker
Vice President
Gur Ou. CorPOGATION
/s/ Iegible -. -- ---- -- -- -- --
Vice President
ATTEST :
/s/ V. M. PLUMMER
Ass’t. Secretary
ATTEST :
/s/ B. M. Crate
Ass’t. Secretary
571
[571]
Agreement
(RECEIVED January 29, 1958)
THIS AGREEMENT, made and entered into as of the
15th day of December, 1956, by and between EL Paso
NaTuraL Gas Company, a Delaware corporation, with
offices in El Paso, Texas, hereinafter referred to as El
Paso“, and Gut Ou. CorPoraTION, a Pennsylvania
corporation, with an office in Fort Worth, Texas, here-
inafter called Gulf“,
WITNESSETH :
WHereas, heretofore under date of J anuary 26,
1951, El Paso and Gulf entered into an agreement, sub-
sequently amended from time to time, providing for
the sale by Gulf to El Paso and the purchase by El
Paso from Gulf of certain residue gas available from
Gulf’s Waddell Plant, located in Crane County, Texas,
and
WuHereas, Gulf has available at said Waddell Plant
volumes of gas in excess of the volumes now provided
in the residue agreement, and Gulf desires to sell to
El Paso and El Paso desires to purchase from Gulf
such additional gas;
Now, THEREFORE, El Paso and Gulf agree as follows:
1,
It is recognized that, in order for El Paso to receive
delivery of the quantities of gas provided for in the
residue agreement, as the residue agreement is amend-
ed and supplemented by this agreement, it will be
70
necessary for El Paso to make application to the Fed-
eral Power Commission for a Certificate of Public
Convenience and Necessity authorizing the construe-
tion of additional facilities to take delivery of the gas.
El Paso shall proceed with due diligence and dispatch
in an attempt to obtain such a certificate. If such a
certificate is obtained by El Paso in form acceptable
to it, El Paso shall then proceed with due diligence and
dispatch to construct the necessary facilities in order
to enable it to perform its obligation under the resi-
due agreement, as the residue amendment is amended
and [572] supplemented by this instrument. The date
when such facilities shall have been completed and
placed in operation is hereinafter called the effective
date.
2.
If, at the expiration of one (1) year from the date
of this agreement, El Paso shall not have obtained f rom
the Federal Power Commission a Certificate of Public
Convenience and Necessity in form acceptance to it
covering the construction of its facilities contemplated
hereunder, this agreement shall terminate at such time,
and neither party hereto shall have any further lia-
bility to the other.
3.
On the effective date Subsection h. of Article I of
said residue gas purchase agreement shall be amended
to thereafter be and read as follows:
h. Contract Volume shall mean eighty million
000,000) eubie feet of surplus residue gas per
sn from the Gasoline Plant, unless and until the
71
contract volume is changed under the provisions of
this agreement. In case the term ‘contract volume’
is used in relation to any period greater than a
day, the number of cubic feet of gas constituting
the contract volume as above defined shall be mul-
tiplied by the number of days included in such
period.
4.
As hereby amended and supplemented, the residue
gas purchase agreement dated January 26, 1951, shall
remain in full force and effect.
Ex Paso NATURAL Gas CoMPANy
/s/ By D. H. Tucker
Vice President
Gur Ou. CoRPoRATION
/s/ By H. M. Bayer
Vice President
ATTEST :
/s/ V. M. PLuMMeER
Ass’t. Secretary
[573]
Amendatory Agreement
This Amendatory Agreement made and entered
into as of the 26th day of October, 1959, by and be-
tween El, Paso NATURAL Gas Company, a Delaware
corporation with an office in El Paso, Texas, herein-
after referred to as El Paso“, and Warren Perro-
LEUM CorporaTION with an office in Tulsa, Oklahoma,
hereinafter referred to as “‘Warren”’,
WHITNFSSETH:
Wurn s, El Paso and Gulf Oil Corporation are
parties to a certain Gas Purchase Agreement dated
January 26, 1951, as amended, covering the sale of
Residue gas by Gulf as Seller“, to El Paso as
„Buxer“ from the Waddell Plant located in Crane
County, Texas, which contract as amended is herein-
after referred to as the Waddell Contract“, and
Wuereas, Warren Petroleum Corporation has ac—
quired the interest from Gulf Oil Corporation in said
Waddell Contract, and
Wuereas, the Waddell Contract contains a Fa-
vored Nations“ clause, and
Whereas, El Paso desires to eliminate such Fa-
vored Nations“ clause for the purpose of stabilizing
its gas purchase prices in the Permian Basin area
of West Texas and Southeastern New Mexico, and
Wrereas, it is recognized that the continuance of
the life of said Waddell Plant and the continuance of
supplies of residue gas for delivery therefrom under
said Waddell Contract as hereby being supplemented
73
and amended will be dependent upon the renewal
[574] of existing Casinghead Gas Contracts and the
obtaining of additional Casinghead Gas Contracts;
and it is recognized by the parties that, in order for
Warren to make such renewals and obtain such new
contracts, the prices received by it for gas under said
Waddell Contract as hereby supplemented and
amended must be such that it will be competitive
with other present and prospective Casinghead Gas
purehasers ;
Now, THEREFORE, El Paso and Warren agree as
follows:
Effective as of January 1, 1960, the Waddell Con-
tract shall be amended as follows:
A. There is hereby added to Article II of said
Waddell Contract the following unnumbered para-
graph as follows:
As a part of the consideration of this agreement,
Seller agrees diligently and continually to undertake
to renew the existing Casinghead Gas Contracts serv-
ing said Waddell Plant as such contracts expire and
to obtain new contracts on supplies of gas available
to said plant not previously contracted to Seller;
provided that Seller shall not be required to obtain
any new Casinghead Gas Contracts or renew any
existing Casinghead Gas Contracts covering gas which,
in its judgment, will be uneconomical for it to gather
and process in said Waddell Plant.’’
B. Article IX shall be deleted in its entirety and
the following substituted therefor:
74
“ARTICLE IX
Prick
Section 1. The price to be paid by Buyer to Seller
per one thousand (1,000) cubic feet for all gas sold
hereunder shall be as follows:
[575] (a) For the period from January 1, 1960,
until August 1, 1964, seventeen cents (17¢).
(b) For the five (5) year perod beginning August
1, 1964, eighteen cents (18¢).
(e) For the five (5) year period beginning August
1, 1969, and for each succeeding five (5) year period
thereafter, the price for gas shall be increased one
cent (Ie) per one thousand (1,000) cubie feet over
the price in effect during the preceding five (5) year
period.
Section 2. Seller shall have the right, at its option,
to require a redetermination of the prices provided
for in subparagraph (c) of Section 1 of this article.
If Seller shall desire to exercise such option Seller
shall give Buyer written notice of such desire not
earlier than one hundred eighty (180) days nor later
than one hundred twenty (120) days prior to August
1, 1969. If Seller shall make such request representa-
tives of Buyer and Seller shall promptly meet and
attempt to determine the price to be paid for the
gas to be delivered under the provisions of this
agreement foi each of the five (5) year periods re-
ferred to in said subparagraph (c). The price for
each such five (5) year period so determined at
such time, or determined by arbitration as provided
in Article XVIII hereof, shall represent, in the best
575
judgment of the parties making such determination,
the probable fair market price for such gas at the
beginning of each such period, but in no event shall
the price for any such period be less than the price
provided in said subparagraph (c). In making such
determination consideration shall be given to all
[576] pertinent factors.“
O, The following Article XVIII, Arbitration, shall
be added:
“ARTICLE XVIII
ARBITRATION
If after negotiations pursuant to the provisions of
Section 2 of Article IX Buyer and Seller shall be
unable to agree on said prices, the same shall be
determined by arbitration in the following manner:
Buyer shall appoint one arbitrator and Seller shall
appoint one arbitrator and the two arbitrators so
appointed shall select a third arbitrator. If either
Buyer or Seller shall fail to appoint an arbitrator
within ten (10) days after a request for such ap-
pointment is made by the other party in writing, or
if the two arbitrators so appointed shall fail within
ten (10) days after the appointment of the second
of them to agree on a third arbitrator, the arbitrator
or arbitrators necessary to complete a board of three
arbitrators shall be appointed upon application by
either party therefor by the United States District
Judge, senior in point of service, of a Federal Ju-
dicial District in which some part of the property
covered by this agreement is situated. In the event
such judge shall fail or refuse to act, then either
party hereto may request the American Arbitration
76
577
Association to select the arbitrator or arbitrators to
complete the board of three. After three arbitrators
are appointed pursuant to the foregoing provisions
of this article they shall meet, hear the parties with
respect to the matter of said prices, and arrive at a
determination of said prices, Any determination
agreed to in writing by at least two of said arbitra-
tors shall be final and binding on [577] the parties
hereto, subject to the provisions of Section 2 of Arti-
cle IX. All arbitrators appointed pursuant to this
article shall be individuals experienced in the oil
and gas industry and competent to pass on the matter
of said prices. The fees and expenses of the arbitra-
tors shall be borne equally by the parties hereto.”
D. Article XV, Term“, is hereby amended so
that the portion thereof reading from the date of
initial delivery of surplus residue gas hereunder“',
is deleted, and the words from January 1, 1960,“
substituted therefor.
E. It is agreed that the tax reimbursement provi-
sions of Article XIV of the Waddell Contract are
effective as to all increases in taxes specified oecur-
ring from and after January 1, 1950.
F. It is recognized that this Amendatory Agree-
ment, when properly executed and filed with the
Federal Power Commission, will become a supple-
ment to Seller’s Rate Schedule No. 43 on file with
said Commission, and Seller agrees to make such
filings. Seller further agrees to furnish Buyer copies
of all Federal Power Commission filings made pur-
suant hereto, and shall furnish Buyer copies of all
77
orders, communications, ete., that Seller may receive
from the Commission with respect thereto.
Except as herein specifically supplemented and
amended, all [578] other terms of the Waddell
Contract shall remain in full force and effect.
In Witness Wnuereor, the parties hereto have
caused this agreement to be executed in duplicate
originals, on this day and year first above written.
Ext Paso NATURAL Gas Company
By /s/ D. H. Tucker
D. H. Tucker
Vice President
WARREN PETROLEUM CORPORATION
By /s/ (Illegible)
President
ATTEST :
„ (Illegible)
Assistant Secretary
ATTEST :
, Don M. Marrock
Secretary
579
! Amendment of Residue Gas Purchase Agreement
THis AGREEMENT, made and entered into as of the
17th day of April, 1972, by and between Ex Paso
Natura. Gas Company, a Delaware corporation, here-
inafter called Buyer,“ and WARN PerrTROLEUM
Company, A Division or Gurt Ou. Corporation, here-
inafter called Seller,“
WIHUITNESSETH :
Wuereas, Buyer and Seller are parties to that cer-
tain Residue Gas Purchase Contract dated January
26, 1951, covering the sale of surplus residue gas by
Seller to Buyer from the Waddell Gasoline Plant,
Crane County, Texas, which said contract, as hereto-
fore amended and supplemented, is hereinafter re—
ferred to as the ‘Waddell Plant Contract“; and
WuHereas, the Waddell Plant Contract is in full
force and effect; and
Wuereas, Buyer and Seller now desire to further
amend the Waddell Plant Contract in the particulars
hereinafter set forth:
Now, THEREFORE, in consideration of the premises
and of the mutual covenants and agreements herein
contained, Buyer and Seller agree as follows:
1.
Effective as of the date hereof, the Waddell Plant
Contract shall be amended as follows:
A. Section 2 of Article IX., Price, shall be de-
leted in its entirety and the following substituted
therefor.
79
[580] ‘Section 2. If the Federal Power Commis-
sion, or any successor governmental authority
[581] C. Article XVIII, Arbitration,“ shall be
deleted in its entirety and be of no further force or
having jurisdiction in the premises, shall at any effect.
time hereafter prescribe a rate for the purchase 2.
and sale of gas of a similar quality in the area As herein specifically supplemented and amended,
in which Seller’s said Plant is situated higher the Waddell Plant Contract shall remain in full force
than the price herein provided to be paid, then and effect in accordance with its terms.
the price to be paid by Buyer to Seller for sur- : g
wrod gene tad gas hereunder shall be increased In WITNESS Wuerror, the — 9 2
effective as of the date such higher rate is pre- caused this agreement to be 3 gull — N
seribed to equal such higher rate; provided, how- originals on this day and year first above written.
ever, that Buyer shall have the right, at its ‘*Buyer”’
option, to intervene in any rate proceeding held ;'
to give consideration to any rate higher than 2
those provided for herein, to oppose therein any By /s/ A. M. Derrick
such higher rate, and in the event such higher A. M. Derrick
rate is prescribed, to seek relief therefrom in Asst. Vice President
any regulatory agency or any court having juris- geln
diction, but such relief, if obtained, shall not ,
result in a price hereunder which is less than WarREN PrrroLeuM CoMPANY,
the price set out in this article. Whenever the A Drviston or Gtr On. Corporation
provisions of this Section 2 effectuate an increase By /s/ L. W. MILLER
in price, such increased price shall thereupon be ; Vice President
substituted for and become the applicable con- ATTEST:
tract price hereunder and shall thereafter be „ (Ilegible)
subject to the same future periodic increases in
Assistant Secretary
the contract price as provided in Section 1 of
this Article.“ ATTEST:
S Brian E. HarRpen
B. The phrase from January 1, 1960” appearing Assistant Secretary
in the first paragraph of Article XV. Term,“ shall
be deleted in its entirety and the phrase from Janu-
ary 1. 19727 substituted therefor.
596 UNITED STATES OF AMERICA
FEDERAL POWER COMMISSION
Before Commissioners: Jerome K. Kuykendall, Chair-
man; Frederick Stueck, William R. Connolo and
Arthur Kline.
Docket No. G-13445
In the Matter of
GuLFr Or CoRPORATION
(Issued February 24, 1958)
On October 14, 1957, Gulf Oil Corporation (Appli-
cant), an independent producer of natural gas, filed
in Docket No. G-13445 an application pursuant to
Section 7(c) of the Natural Gas Act for a certificate
vf public convenience and necessity authorizing the
sale of an additional 40,000 Mef of residue natural
gas per day to El Paso Natural Gas Company from
er 's Waddell Gasoline Plant in Crane County,
exas.
It appears that additional capacity at Waddell
Plant will become operative in January 1958, making
this additiona! supply available.
Temporary authorization to make the additional
sale of natural gas as requested in this proceeding
— granted to Gulf Oil Corporation on January 2,
; Pursuant to due notice, a public hearing was held
in Washington, D.C., on February 13, 1958, respect-
82
ing the matters involved in and the issues presented
by this application. No petition to intervene or pro-
test to the granting of the application has been re-
ceived. Staff counsel moved orally at the hearing that
the intermediate decision procedure be omitted and
that the Commission render a decision herein pur-
suant to Section 1.30 (¢)(1) of the Commission’s
Rules of Practice and Procedure.
The Commission finds:
(1) Gulf Oil Corporation, an independent producer
of natural gas, is engaged in the sale of natural gas
in interstate commerce for resale for ultimate public
consumption, subject to the jurisdiction of the Com-
mission, and is, therefore, a natural-gas company!“
within the meaning of the Natural Gas Act.
(2) The sale of natural gas hereinbefore described,
as more fully [597] described in the application
herein, will be made in interstate commerce, subject
to the jurisdiction of the Commission, and such sale
by Applicant, together with the construction and
operation of any facilities subject to the jurisdiction
of the Commission necessary therefor, is subject to
the requirements of subsections (e) and (e) of Sec-
tion 7 of the Natural Gas Act.
(3) Applicant is able and willing properly to do
the acts and to perform the service proposed and to
conform to the provisions of the Natural Gas Act and
the requirements, rules and regulations of the Com-
mission thereunder.
(4) The sale of natural gas by Applicant, together
with the construction and operation of any facilities
83
subject to the jurisdiction of the Commission neces-
sary therefor, is required by the publie convenience
and necessity, and a certificate therefor should be
issued as hereinafter ordered and conditioned.
(5) A request during the public hearing by staff
counsel for omission of the intermediate decision pro-
cedure was unopposed by any party of record and,
not having been denied by the Commission, is granted
pursuant to Section 1.30 (e) (1) of the Commission’s
Rules of Practice and Procedure.
The Commission orders:
(A) A certificate of public convenience and neces-
sity be and the same is hereby issued, upon the terms
and conditions of this order, authorizing the sale by
Gulf Oil Corporation of natural gas in interstate
commerce for resale, together with the construction
and operation of any facilities subject to the juris-
diction of the Commission used for the sale of natural
gas in interstate commerce, as hereinbefore described
and as more fully described in the application and
exhibits in this proceeding.
(B) The certificate issued herein shall be deemed
accepted and of full force and effect unless refused
in writing and under oath by Applicant within 30
days of the date of issuance of this order.
(C) This certificate is not transferable and shall
be effective only so long as Applicant continues the
acts or operations hereby authorized in accordance
with the provisions of the Natural Gas Act and the
applicable rules, regulations and orders of the Com-
mission.
84
(D) The grant of the certifieate herein shall not
be construed as a waiver of the requirements of Sec-
tion 4 of the Natural Gas Act or of Section 154 of
the Commission's Regulations thereunder requiring
the filing [598] of rate schedules for the service
herein authorized; and is without prejudice to any
findings or orders which have been or may hereafter
be made by the Commission in any proceeding now
pending or hereafter instituted by or against the
Applicant. Further, our action in this proceeding
shall not foreclose nor prejudice any future proceed-
ings or objections relating to the operation of any
price or related provision in the gas purchase con-
tract herein involved.
By the Commission
/s/ Josern II. Gurrive
Joseph H. Gutride,
Secretary
*_* *
ttt ee eee sees eee eee see sessel
— „
[583]
Residue Gas Purchase Agreement
THis AGREEMENT, made and entered into as of the
Ist day of March, 1972, by and between Kt. Paso
Natura. Gas Company, a Delaware corporation,
hereinafter called Buyer,“ and Warren PerrRoLeumM
Company, A Division of Gulf Oil Corporation, here-
inafter called Seller,“
WHITNESSETH :
Wuereas, Seller owns and operates the Waddell
Gasoline Plant located in Crane County, Texas, which
plant is hereinafter referred to in this agreement as
the ** Waddell Plant“ or the said Plant’’; and
Wurms, Seller sells and delivers to Buyer and
Iuyer purchases and receives from Seller volumes
of surplus residue gas from said Plant pursuant to
the terms and provisions of that certain Residue Gas
Purchase Agreement between Seller and Buyer dated
January 26, 1951, which agreement, together with all
amendments thereto, is hereinafter referred to in this
agreement as the Waddell Plant Residue Gas Pur-
chase Agreement“; and
Whereas, in order to assure a continuing supply
of ra®& gas to the Waddell Plant for processing there-
in and the delivery to Buyer of the resultant volumes
of surplus residue gas attributable thereto, Seller, in
eontemplation of this agreement, has either entered
into or will enter into certain new Waddell Plant
Producer Supply Gas Purchase Contracts and con-
templates that it will, by virtue of this agreement,
be able to renew or extend certain other [584] of
87
its Waddell Plant Producer Supply Gas Purchase
Contracts and to acquire additional new Waddell
Viant Producer Supply Gas Purchase Contracts; and
Wuereas, Buyer and Seller have agreed on the
purehase and sale of the aforesaid resultant volumes
of surplus residue gas under the terms and provi-
sions of this agreement ;
Now, THEREFORE, in consideration of the premises
and of the mutual covenants and agreements herein
contained, Buyer and Seller agree as follows:
ARTICLE I
ApoptTion By REFERENCE
To the extent not in variance with the terms and
provisions of this agreement, all terms and provi-
sions of the Waddell Plant Residue Gas Purchase
Agreement are hereby adopted by reference, insofar
as such terms and provisions pertain to the delivery
by Seller and receipt by Buyer of volumes of sur-
plus residue gas hereunder from said Plant with
the same effect as though copied herein at this point.
ARTICLE II
(GJOVERN MENTAL AUTHORIZATIONS
Section 1. Buyer represents that it holds a Certifi-
cate of Public Convenience and Necessity issued by
the Federal Power Commission (or otherwise has
the necessary authority) covering the construction,
ownership, and operation of the facilities necessary
in order for Buyer to perform its obligations under
the provisions of this agreement. Promptly after
the date of this agreement and [585] from time to
time thereafter as may be necessary, Seller shall
make such applications and filings to and with the
Federal Power Commission as may be required on
the part of Seller in order to procure such Certifi-
cate of Publie Convenience and Necessity and other
approvals as may be necessary in order for Seller
to effect delivery of surplus residue gas under the
provisions of this agreement or to otherwise perform
its obligations hereunder. Seller further agrees to
firnish to Buyer copies of all such filings and copies
of all orders that Seller may receive from such Com-
mission with respect to the sale of surplus residue
gas hereunder.
Section 2. In the event Seller shall not have re-
ceived and accepted the Certificate of Public Con-
venience and Necessity referred to in Section 1 of this
Article within a period of ninety (90) days from the
date of filing of its application therefor, then either
Buyer or Seller may at any time thereafter while
such condition continues, give written notice to the
other party that it desires to terminate this agree-
ment. If any such notice is given, this agreement
shall terminate thirty (30) days after the date on
which such notice is given, unless at the end of such
thirty (30) day period Seller shall have received and
accepted said Certificate of Publie Convenience and
Necessity. If this agreement shall terminate pursu-
ant to the provisions of this Section, neither Buyer
nor Seller shall thereafter have any further liability
under this agreement to the other.
Section 3. If Seller shall receive and accept the
Certificate of Public Convenience and Necessity re-
ferred to in Section 1 [586] of this Article prior
to any termination of this agreement pursuant to
the provisions of Section 2 of this Article, it shall
so notify Buyer and first deliveries of surplus resi-
due gas shall commence hereunder on the date Seller
shall have tendered surplus residue gas for sale to
Buyer hereunder.
ARTICLE III
COMMITMENT
Seller represents that, in contemplation of this
agreement and in furtherance of its continuing en-
deavors to deliver volumes of surplus gas to Buyer
from said Plant, Seller has either entered into or
will enter into certain new Waddell Plant Producer
Supply Gas Purchase Contracts and contemplates that
it will renew or extend certain other of its existing
Waddell Plant Producer Supply Gas Purchase Con-
tracts and that it will acquire additional new Wad-
dell Plant Producer Supply Gas Purchase Contracts.
Accordingly, Seller hereby commits to the perform-
ance of its obligations under this agreement all vol-
umes of surplus residue gas attributable to raw gas
delivered to and processed in said Plant from the
raw gas sources set forth in Exhibit A“ hereto
under such renewed, extended and new Waddell
Plant Producer Supply Gas Purchase Contracts and
as may be set forth in said Exhibit A“ as subse-
quently amended in the manner hereinafter provided.
Said commitment shall also include all volumes of
surplus residue gas attributable to raw gas delivered
to and processed in said Plant from those properties
owned by Gulf Oil Corporation (Gulf), as may be
90
set forth in said Exhibit“ A“ as subsequently amend-
ed in the manner hereinafter provided, which [587]
are developed by Gulf from and after the date of
this agreement, provided that Seller shall have the
right to at any time limit any further such commit-
ments by subjecting such commitments to an agree-
ment with Buyer of similar content and purpose
hereof. The applicable Waddell Plant field gas me-
tering stations and numbers assigned thereto by
which such raw gas is measured and subsequently
delivered to said Plant for processing as of the date
of this agreement are described on Exhibit A“
hereto. Seller shall have the continuing right from
time to time and at any time to amend said Exhibit
„A“ by giving Buyer written noice of its desire to
so amend, specifying in such notice those Waddell
Plant field gas metering stations and numbers as-
signed thereto along with other data consistent with
the requirements of said Exhibit A“ applicable
to any new and/or renegotiated Waddell Plant Pro-
ducer Supply Gas Purchase Contracts entered into
by Seller subsequent to the date of this agreement,
or those field metering stations and numbers assigned
thereto along with such other required data appli-
cable to raw gas from properties owned and devel-
oped by Gulm as aforesaid. Upon receipt of any such
notice by Buyer, said Exhibit A“ shall be deemed
amended accordingly.
91
ARTICLE IV
Resipve Gas ALLOCATION
Computation of the volumes of surplus residue
gas delivered to Buyer from the Waddell Plant un-
der this agreement and the volumes of surplus resi-
due gas delivered to Buyer from said Plant under
the Waddell Plant Residue Gas Purchase Agreement
requires an allocation of the combined surplus resi-
due gas stream delivered to Buyer from [588] said
Plant. It is agreed that the volumes of surplus resi-
due gas delivered to Buyer by Seller from said Plant
under this agreement and under the Waddell Plant
Residue Gas Purchase Agreement, as well as any
future agreements of similar content and purpose,
shall be determined in accordance with the alloca-
tion procedures set forth in Exhibit B“ hereto at-
tached and made a part hereof. Alteration of or ad-
dition to these procedures may become desirable dur-
ing the term hereof. However, no such alterations
or additions shall be effective except as mutually
agreed between the parties.
ARTICLE V
PRICE
Section 1. The price to be paid by Buyer to Seller
per one thousand (1,000) cubie feet of surplus resi-
due gas sold and delivered from said Plant under
this agreement shall be as follows:
(a) For the period commencing on the date
of first delivery of residue gas hereunder and
continuing until January 1, 1973, thirty cents
(30¢).
92
(b) For the one (1) year period commencing
January 1, 1973, and continuing until January
1, 1974, thirty-one cents (31¢).
(e) For the next one (1) year period and for
each succeeding one (1) year period thereafter,
the price to be paid by Buyer to Seller shall be
increased one cent (Ie) over the price herein
provided to be paid during the preceding one
(1) year period,
In the event the average total gross heating value
each month of [589] surplus residue gas shall be
either more or less than one thousand (1,000 British
thermal units per cubic foot, then the price otherwise
payable pursuant to either (a), (b), or (e) above for
surplus residue gas shall be either increased or re-
duced. Such reduced or increased price shall be de-
termined by multiplying the price otherwise payable
pursuant to either (a), (b), or (e) above by a frae-
tion, the numerator of which is the actual total gross
heating value of such gas, expressed in British ther-
mal units per cubie foot, and the denominator of
which is one thousand (1,000). The actual total gross
heating value of surplus residue gas, measured at the
point of delivery hereunder, shall be determined each
month. The unit of volume for the determination
of such total gross heating value shall be the amount
of gas, on a dry basis, which would oceupy a volume
of one (1) eubie foot at a temperature of sixty (60)
degrees Fahrenheit and under a pressure equivalent
to thirty (30) inches of mereury at thirty-two (32)
degrees Fahrenheit.
Section 2. If the Federal Power Commission, or
any successor governmental authority having juris-
diction in the premises, shall at any time hereafter
prescribe a rate for the purchase and sale of gas of
a similar quality in the area in which Seller’s said
Plant is situated higher than the price herein pro-
vided to be paid, then the price to be paid by Buyer
to Seller for surplus residue gas hereunder shall be
inereased effective as of the date such higher rate
is prescribed to equal such higher rate; provided,
however, that Buyer shall have the right, at its op-
tion, to intervene in any rate proceeding held to
give consideration to any rate higher than those
[590] provided for herein, to oppose therein any
such higher rate, and in the event such higher rate
is preseribed, to seek relief therefrom in any regu-
latory agency or any court having jurisdiction, but
such relief, if obtained, shall not result in a price
hereunder which is less than the price set out in this
article. Whenever the provisions of this Section 2
effectuate an increase in price, such increased price
shall thereupon be substituted for and become the
applicable coutract price hereunder and shall there-
after be subject to the same future periodic increases
in the contract price as provided in Section 1 of this
article.
ARTICLE VI
TERM
This agreement shall become effective as of the
date hereof and, unless sooner terminated in accord-
anee with the provisions of Article II hereof, shall
remain in force and effect for a term ending January
1, 1987.
94
In WITNESS WHEREOF, the parties hereto have
caused this agreement to be executed in duplicate
originals as of the day and year first above written.
„Burn“
El. Paso NATURAL Gas Company
By /s/ A. M. Derrick
A. M. Derrick
Asst. Vice President
‘*SELLER”’
WarrREN Perro_eum COMPANY,
A Dtviston or Gur On. Corporatiox
By s L. W. Men
Vice President
ATTEST:
„ (INegible)
Assistant Secretary
ATTEST :
„ Brian E. Harpven
Assistant Secretary
591
[591]
Exhibit “A”
(Attached to Residue Gas Purchase Agreement
of March 1, 1972, between Warren Petroleum
Company, a Division of Gulf Oil Corporation,
and El Paso Natural Gas Company)
WADDELL PLANT
Meter
Station Lease Lease Lease
Number Operator Name Description
64-769 Amoco Prod. Co. J. MeGee ‘‘A’’ All See. i,
Bik. 32, PSL
Crane County, Texas
(New contract dated 2-7-72. Replaces old contract dated 9-27-66.
Firm term of new contract is for period of ten years beyond firm
term of old contract).
64-640 Amoco Prod. Co. University SW /4 Sec. 3, Blk. 31
AH“ University Land
Crane County, Texas
(New contract dated 2-7-72. Replaces old contract dated 9-6-56.
Firm term of new contract is for period of ten years beyond firm
term of old contract).
64-774 Gulf Oil Corp. State EC“ NE/4 See. 4, Blk. 30,
University Lands
State EI“ NW/4 Sec. 3, Bik. 30,
University Lands
64-772 Gulf Oil Corp. State ED“ SW/4 & W/2 SE/4
See. 3, Blk. 30,
University Lands
64-700 Gulf Oil Corp. State EE“ SE/4 Sec. 9, Bik. 30,
University Lands
Meter
Station Lease Lease Lease
Number Operator Name Description
64-467} Gulf Oil Corp. State EF“ N/2 See. 10, Blk. 30,
] University Lands
64-699]
64-698] Gulf Oil Corp. State EG 8/2 See. 10, Blk. 30
] University Lands
64-466]
64-700A Gulf Oil Corp. State EA SW /4 Sec. 9, Bik. 30
University Lands
Crane County, Texas
(New contract as to Amoco Prod. Co.’s 50% interest in above leases
dated 2-7-72. Replaces old contract dated 4-24-63. Firm term of
new contract is for period of ten years beyond firm term of old
contract).
[592]
64-617 Gulf Oil Corp. McKnight- SW/4 SW/4 & 8/2
Crowley (below NW/4 SW/4 & S/2
a depth of NE/4 SW4 & NE/4
3,800 feet) NE/4 SW/4 & N/2
SE/4SW/4&SW/4
SE/4 SW/4 See. 10,
Bik. B-21
Publie School Land
Crane County, Texas
(New contract as to W. H. Black, et al, 50% interest in above lease
dated 2-7-72. Replaces old contract dated 9-6-56. Firm term of new
contract is for period of ten years beyond firm term of old contract).
64-705 W. Ridley J. H. Edwards N/2NW/4&S/2
Wheeler Estate NE/4 Sec. 19,
Blk. B-17
Public School Land
Crane County, Texas
(New contract as to 71.875% interest dated 2-23-72. Replaces old
contract dated 4-20-64. Firm term of new contract is for period of
ten years beyond firm term of old contract).
97
[593]
Exhibit B“
(Attached To Residue Gas Purchase Agreement
Dated As Of March 1, 1972, Between El Paso
Natural Gas Company And Warren Petroleum
Company, A Division Of Gulf Oil Corporation.)
ReEsIpuE Gas ALLOCATION PROCEDURE
The volume of ‘‘residue gas remaining’’ from the
gas delivered to Seller’s gas processing plant from
each lease connected thereto shall be determined by
(1) multiplying the volume of such gas delivered
from such lease by the applicable theoretical percent-
age as shown in the following table, the result being
the ‘theoretical volume of residue gas remaining“
from the gas delivered from such lease, (2) dividing
the ‘‘total actual volume of residue gas remaining“
(determined in the manner hereinafter provided)
from all gas delivered to said plant by the total ‘‘the-
oretical volume of residue gas remaining“ from all
gas delivered to said plant (the latter being the sum
of the theoretical volumes for all leases from which
gas is delivered to said plant) and expressing the
results in percentage, and (3) multiplying the ‘‘the-
oretical volume of residue gas remaining’’ from such
lease by said last mentioned percentage. The total
actual volume of residue gas remaining“ from all
gas delivered to said plant as used herein shall mean
that volume of residue gas remaining, after the ex-
traction of liquefiable hydrocarbons, from all gas
processed in said plant, less the volume of residue
gas necessary for plant operation. Said ‘‘total actual
volume of residue gas remaining“ shall be measured
98
by suitable orifice meters of standard make to be in-
stalled and kept in repair by Seller at the various
points where the gas is delivered to producers and
to purchasers (if not measured by purchasers) and
to flare. It is provided, however, that Seller shall not
be required to measure deliveries [594] of small
quantities of gas which would not, in Seller’s judg-
ment, justify a meter installation; and the volumes
of such deliveries shall he estimated by Seller in ac-
cordance with methods followed generally in the nat-
ural gasoline industry.
The volume of residue gas available for sale from
the gas delivered from each lease shall be the re-
mainder obtained by subtracting the volume, deter-
mined either by estimate or measurement, that Seller
delivered to such lease for lease operations from the
volume of residue gas remaining.“ The volume of
residue gas sold hereunder and attributable to gas
purchased by Seller from the leases described in
Exhibit A“ shall be deemed to be that proportion-
ate part of the total volume of residue gas sold from
said plant by Seller to Buyer which the total volume
of residue gas available for sale from said leases
deseribed in said Exhibit A“ bears to the total vol-
ume of residue gas available for sale from all gas
delivered to Seller for processing in such plant.
Examination by Buyer of the records kept by
Seller respecting such gas allocation shall be permit-
ted by Seller at any and all reasonable hours. All
statements rendered by Buyer to Seller during any
ealendar year shall be conclusively presumed to be
true and correct after 24 months following the end
of any such calendar year unless within such 24
month period Buyer takes written exception thereto
and makes claim on Seller for adjustment. Failure
[595]
. of Cas ad Gas ining as Residue After Fxtraction of Gasoline
on the part of Buyer to make claim on Seller for Wer rr . —
1 esta ; tent to Determined Periodically As Provided In Seller's Cas Purchase Contracts
adjustment within such period shall . blish the By Field Compression Test Or Charcoal Test Mace In Accordance With The Official Code 0: lhe
correctness thereof and preclude the filing of excep- — iat Sting jatural Gas For Gesoline Content,
tions thereto or making of claims for adjustment SEM CPM ECPM E CPM CPM open
thereof. +00 93.60 2.00 72.90 4.00 54.30 6.00 38.30 8.00 25.10 10.00 13.70 12.00 3.50
05 93.10 2.05 72.45 4.05 53.85 6.05 37.90 8.05 24.80 10.05 13.36 12.05 3.25
+10 92.60 2.10 72.00 . 10 53.40 6.10 37.50 8.10 24.50 10.10 13.00 12.10 3.00
„ 92.10 2.15 71.50. 4.15 52.95 6.15 37.20 8.15 26.25 10.15 12.75 12.15 2.75
% 91.50 2.20 71.00 4.20 52.50 6.20 . 8.20 24.00 10,20 12.50 12.20 2.50
. % 2.25 70.50 . 4.25 52.15 6.25 36.55 8.25 23.65 10.28 12.25 12.25 2.30
30 90.50 2.20 70.10 4.30 51.80 6.30 36.20 8.30 23.30 10.30 12.00 12.30 2.10
+35 90.05 2.35 69.60 4.35 51.30 6.35 35.80 6.35 22.95 10.35 11.75 12.35 1.85
40 89.60 2.460 69.10 4,40 50.80 6.40 35.40 8,40 22.60 10.40 11.50 12.60 1.60
. 0% 2.45 68.65 4.45 30.4% 6.45 35.10 8.45 22.30 10,43 11.25 12.45 1.40
+30 88.40 2.50 68.20 4.50 50.00 6.50 34.80 8.30 22.00 10.50 11.00 12.50 1.20
+35 67.85 2.55 67.70 4.55 49.65 6.55 34.45 8.55 21.70 10.55 10.75 12.55 80
60 87.30 2.60 67.20 4.60 49.30 6.60 34.10 8.60 21.40 10.60 10.50 12.60 60
63 86.20 2.65 . % 4.65 48.85 6.65 33.80 8.65 21.10 10.65 10.25 12.65 35
70 86.30 2.70 66.20 * 4.70 48.40 * 6.70 33.50 8.70 20.80 10.70 10.00 12.70 „10
2 85.75 2.75 68.75 4.75 47.95 6775 33.15 8.75 20.55 10.75 9.75
~80 85.20 2.80 65.30 4.80 47.50 6.80 32.80 8.80 20.30 10.80 9.50
+85 84.70 2.85 64.90 4.85 47.15 6.85 32.50 8.85 20.05 10.85 9.25
* «90 84.20 2.90 64.50 4.90 46.80 6.90 32.20 8.90 19.80 10.90 9.00
} 83.65 2.95 63.95 4.95 46.35 6.95 31.85 68.95 19.50 - 10.95 8.75-
83.10 3.00 63.40 5.00 45.99 7.00 31.50 9.00 19.20 11.00 8.50
21.05 62.50 3.05 62.95 5.05 45.50 7.05 31.15 9.05 18.85 11.05 8.25
1.10 81.90 3.10 62.50 5.10 45.10 7.10 30.80 9.10 18.50 . 11.10 8.00
2.15 81.40 3.15 62.00 5.15 44.75 7.15 30.50 9.15 18.20 11.15 7.70
1.20 80.90 3.20 61.50 5.20 44.20 7.20 30.20 9.20 17.90 11.20 7.40
1.25 80.40 3.25 61. 3.25 43.85 7.25 29.85 9.25 17.60 11.25 7.20
1.30 79.90 3.3060.50 5.30 43.50 7.30 29.50 9.30 17.30 11.30 7.00
1.35 79.45 3.5 60.15 5.35 43.05 7.35 29.25 9.35 17.05 11.35 6.75
1.4% 79.50 3.40 59.80 5.40 42.60 7.40 29.00 9.40 16.80 11.40 6.50
1.65 78.50 3.4 59.30 5.45 42.25 7.45 28.65 9.45 16.50 11.45 6.25
1.50 78.00 3.50 58.80 5.50 41.90 7.50 28.30 9.50 16.20 11.50 6.00
1.55 77.50 3.55 58.35 5.55 61.55. 7.55 28.00° 9.55 16.00 11.55 5.80
1.60 77.00 3.60 57.90 3.60 41.20 7.60 27.70 9.60 15.80 11.60 5.60
2.65 76.50 3.65 57.40 3.65 40.80 7.65 27.30 9.65 15.50 11.65 5.35
1.70 76.00 3.70 56.90 3.70 60. 4 7.70 26.90 9.70 15.20 11.70 3.10
1.2 75.50 3.75 56.55 5.75 40.15 7.75 26.70. 9.75 16.95 11.75 6.85
1.80 75.00 3.80 56.20 5.80 39.90 7.80 26.50 9.80 16.70 11.80 4.60
1.85 24.50 3.85 35.75 5.85 39.50 7.85 26.20 9.85 14.45 11.85 4.35
1.90 74.00 3.90 55.30 5.90 39.10 7.90 25.990 9.90 14.20 11.90 4.10
1.95 73.45 3.95 56.80 5.95 38.70 7.95 25.50 9.95 13.95 11.95 3.80
3-3
100
[599]
UNITED STATES OF AMERICA
FEDERAL POWER COMMISSION
Notice of Certificates of Public Convenience and Necessity Issued
to Producer Respondents Pursuant to Opinion No. 662 and
Designation of FPC Gas Rate Schedules and Gas Rate Sched-
ule Supplements Accepted for Filling
(July 22, 1974)
By Opinion No. 662 and order issued August 7, 1973.
in Docket No. AR70-1 (Phase 1), mimeo, p. 20, para-
graph (J), the Commission issued certificates of public
convenience and necessity to producer respondents
based upon applications pending on the effective date
of the opinion.' The opinion did not further identify
the particular producer respondents or the dockets in
which the applications had been filed. In order that the
applicants might be advised of the disposition of their
applications there is affixed as Appendix hereto a de-
finitive list of the affected applications.
The applicants have filed FPC gas rate schedules or
supplements to rate schedules on file with the Commis-
sion proposing to initiate, add, delete, or succeed in
part to natural gas service in interstate commerce.
The statutory hearing for those certificate applications, for
sales in the Permian Basin, which had been noticed and for which
the period for filling protests or interventions had expired prior
to August 7, 1973, is considered to have been held when Opinion
No. 662 and order were acted on by the Commission and perma-
nent certification of such applications was accomplished by order-
ing paragraph (J) thereof. Those applications which either had
not been noticed prior to August 7, 1973, or for which the notice
period had not yet expired do not fall within the purview of
Opinion No. 664’s statutory hearing and have been issued sep-
arately or will be considered in the future.
102
Those FPC gas rate schedules or rate schedule supple-
ments are now or have heretofore been accepted for
— 1 * designated as indicated in the Appendix
KENNETH F. Pluun
Secretary
103
[600]
. DOCKETS IN WHTCH CERTIFICATES WERE ISSUED PURSUANT TO OPINION HO. 66
1
226 9
[ee
‘Appendix
a „.
1 ty dolore sereege |
*
„
— . 7 * 7
7
is
2% ” .
—
„ *
. oe
„
t
rr
G-11560
c
585
sohte Petroleum .
Company (Operator),
st cl.
cu Ctetes — 011
Company
932
Sorthern Watural Gas
Company (North Eunice San
Andres Gas Pool, Lea County,
New Mexico) ia” *
Trensvesterr Pipeline 5
Company (Bluitc Gasoline
* $-25-72 beet, Toosevele — é
ca —* Kew Mexico) * $ 1
0 Northern Katurel Cas : ; . * 2
ones cA, tas . (Dove Creek and - Agree. .
un 10 Velrex Fields, Irion 4-21-72 49
926-72 5 ,and Schleicher * ter 7-17-72 2 49 jl to 26
' ; ' Tense) | : , 2 1 * 7.1.
‘se . . * 1 4 oF” 1 4 f° oe
* . Korthern Noturel en: 9 521.
* „ we (Las fer les ones 3- 1-73 ° ” 29
— 28 enn rion Count Texas) ffective Date: . . :
F n . ‘ 1 Date of Initial :
. . * — Delivery) 2 , 7
* 7 Gulf 011 Corporation gnswestern Pipeline ter Agree. 1-25- 73) 373 | 9
> (Operator), et al. Company (“orshen Bayer 8 0
4-16-73 . ° Ellenburger Field, Reeves — ‘
2/: County, Texos) ah Pee 7
Freezer [Cicies Service Oil etre Gas Pipeline
. Cc -. [Company (Operator), of Acerica (Bluitt 24
15-72 1 00 Gasoline Pleat, Roosevelt . 55 0
a. County, New Mexico) : am u
r 550 Exxon Corporation El Paso Natural Cos Company “ Contract 11-3-52 386 -
20 (Cooper Jal — Lea County, « Agree. I- 1-61 | 3846 1
114.64 , . New — ° * 2
8 »
0 * DS 9 N * ° .
* * * *
* ¢ Py
* *
— * *
/ - * 0 * *
5 PY 89 * *
“* ae *
2 1 . * . ‘
*
.
*
*
— *
© * .*
9 .
“4 * .
N .
9 * . .
* * ‘ 9
‘
*
—
V. “where ng eilective date is bern, the rate schedule filing hes herecotore — sccuptes. |
>
104
ese being deleted is being added to another contract with the same . 10 Cocket ho. 17-665.
1601]
“+ #@#
* *
601
* 7 2 24 N = ee + . —— E
mer mene DOCKETS IN WHICH CERTIFICATES WERE ISSUED PURSUANT 70 OPINION NO. 662
mon
| Appendix
. > ee.
; * 8 *
500% e „ fe 1 „e 4 bg . eet. @ = Tote teccsagion
3 5442 5 c — „rene * Bi, . 1 = Partial tuccesston . .
+ Goon Ge’ „55 te, t% : 8 *
. — a 7 ¢ i
0 4 OF oie *
N- EE
ci166-1 „„
“€ 2 . 0
7-16-72 oer
Dice 5
. 70 5 ayes » Fn
va “i 1 * 72 „„
2 * „ * *
8166-1 „ Ine.
„ 2
+ „
4 1
fe
’
1
n
er.
a? *
* SOs
7
* *
3
77
2
4 ‘
1 :
* 0
*
Company (West Wehs Field, © 4
Reeves — =, 2 ,
— Gos”
;
Morthere | ed Cas” 5 75 ee x
:
Canyon Sand) Fields, Tos @
— ag Ar Countios, Texas)
500
Letter 11-18-71 | sal „
letter «5-15-72 | Si] 8
Amend . 3 21 144
4-25-72 311 10
7-11-72 $i
_ 1-13-72 51
Letter
Letter
602
1602
95 , oe . * „ ee
. ＋ ne
n I UNION CERTIFICATES WERE ISSUC0 PURSUANT TO OPINION WO, ½ ü ios?
1 een n
——— Corcten * —2—— — ° €- Stet ——— * *
. ; 692 2 Gehene serenge — * „ „„
men 9 —Q 5 — — . 3
„ * ah. —
: 5 a N 75 59 7 . “3° 212 257 v3
. * * * * * * * * .
ern
& eee Ges, Ine. . | Gasoline and ‘ce © fe „ “ter ae You.
10-)0-6 ‘ Sineletr 011 * * 5 „ s 3 „ 9 °. 5 1
, : W. es ee
* 5 (rern Field ee — 1 — 17 Py s! * *
. 0 eee. Texas) ” Bet of * Se 0 0
9 4 ’ 9 0 Ria ‘-e* - 7 4 — 3. . 32 „ yew GE.
.] Transwestern ~:~ + | Contract ee, * *
91% 7 = é . — 2 Texas) . * "ashe" „ 5 * aad ”
‘ ’ „ 0 * es 1 de * 1 . ity 0
ene. Exxon Corporation Korthera Meturel Cae „ [Contract 10-14-69 en .
. " 27 * (Pikes Penk 7114, * 9 1 9 2 * 5 „
1112-62 . . 79 + Texas) „ Be st „r
* A ry 1 . a * 4. . * 4
i- de tee eee . | El Paso Meturel Gas Company e —
„ |Compeny 5 Plast, e „un | oes
1677 129 „ Temes) | Oy ar th® 6% 4h 44 — 3
1 * 1 „ * I. at ° * * . = e * seg 712 * * *** 7 *
. * 5 * = * 1 9 « . 1 ee * 80 3 * ¢ : 2
‘ * 0 . 12 4 ; ae 9 „ *
1 0 * ** 0 1 * — * 12.5 * 2. * ge 5. 2 „ *
4 0 ~ 4 N „ . . & 750 1 “, 14 9
P * 7 . . *. * nee 57
1 * of . „ 9 oe! 1 75 ee * "4
* * * . <' 9 * * ** „„ 89 *e * * 6
* * ae ~~ Ve ° * 90 * 0 1 8 0 * * * * 1 * 7 ve 4
. * 5 1 * * * 2 = * 4 at * * . 9 * 95 .
* ‘ 7 * 9 0 * * 1 * 1 7
. ve * * Pod oe 4 9 P "fe ‘ote, a . * /
. 9 „ "os 2 9 „ * ie N ° * * . » °
he 20 20 * a . ot P ee 8
1 ple 0 oe we . 7 7959 9 0 —_
.* * * 9 8 . 3 *
* 9 0 a 2 Te ‘« 9 0 2 | .
* . 9 . . * „ 0 © * ay . ° * 51. , i .
e 4 © „ © „„ „ N of 1 8 . * ° „.
* 89 0 1 * a 0 * 1 „ 6 a . A 3
. eo * . 4 . . : ‘ * 1 05 4 Se | . . * n 7
9 -* *
0 ‘ l 1 * * *
9 * oom “e — — *
106
1603]
. U
. *
.*
*
*
* q *
.
*
‘
*
.
Company (Cotton Drew Field
Eddy County, Hew Mexico) —
e's * agg
*
* 2
7 *
2.
*
‘ L
1
. *
3 5
w=
ov
107
1604
Appendix
4 9 v
,
aa , * “tT odes
0 „ eee Boreree 2 5 i. .
—— „r — 31e
* 3 .
22 & 7 ‘ 4 2
4 ae -
172-426 asse et
4 |Teust .
1-13-72 ;
€172-302|Varren Petroleus
A
2-22-72
8
6-23-72
172-387
“8 gases
7
*
.
**
.
Ts ow 0
re
M Authortzatton does not inelude renewsls end extensions of plant supply edntracts
Deen tes not Corminated, Under Opinion to. 639 applicant is
Plane serpy Cuntract util the eld gas supply contract expires,
108
not entitled to the
new nae colling wate for tesidve ras attributable te row ges purchased wader a new
-_
A : a
3-17-72 N * 72
172-590] Pri llips Petroleun £1 Peso Natural Cas ſesstreet Ni- | 497] «=
. pany . Company (Coldemith Plant, se . ‘
ote esa. . beter County, Texas) + *, oo. 22 5
a) . „„ fee * oe . ..
etn-zenletities Peeroleun fel Peso Meturel dee Jeontrect” 3-1-72 | aoe] --
— * y (perator, fees (fun Plant, Lea n . , . .
9 al. County, New Mexico) | * 1
Perf , 22 „ oe gd 5 * .
a * 8 U 0 * 2 S
. “ts 1 . 1 °
2° -—"
2 5
1 7 i o *
9 8 5 *
0 . 2
> : — —
1605
“~
— DOCKETS IM WHICH CERTIFICATES WERE ISSUED PURSUANT TO OFINTON BO. 622
* . 0
1 * — 0 . 0
2 : 7 fe *
256. 502 .
02 N „ . * .
Appendix
7. DDr
> 65 „ te „„ „„
es & . es
7 „ 446 „„
*y „ .
* 11
Ff
i
8
* *
*
3
J
* *
° 1
I
2 —
4
15
f
i «|
if
2
*
d 1
Renn — * —
„
; 9
— — 8
*
© eo ty
9 * . „ . *
9 ; 2 2
* * .
a 10 * 2. 75 * 4 0
* . 8 9 „99060 * * .
* ~~ 0
7 © ‘te ; oy Sa" ee vs a*
. 8 m 5. ** * *
* * ~~ . ° A o * .
92 7 „ * P
. * * a’ * 89 *
. 0 5 * 828 0 ° 0 .
5 7 * 9 * . U N
_ 9 „* „ ee .
* . * * *
892 i . * .
109
606
1606
—— DOCKETS iu WICH CERTIFICATES WERE ISSUED PURSUANT TO OPLAION . 6%
t
© „
—— —
1 99
erte eee.
1 —
DDr
[607]
Appendix :
© + eerteent te bet ere
— 2 verenge
*.
4 2 DOCKETS IN WHICH CERTIFICATES WERE ISSUED PURSUANT TO OPINION W. 662 .
a *
* ‘+ .
9 20 t- Voted ber eeee: on
al = Partial 4
—ů —
ad
fore eee
„
172-398
a 7
320-7
0172-63
4
4-372
172-685
A
—
3-1-7
172
„
21-7
— 5-7
54-74
8172-27095
—
31172
6172-708
*
$-1-72
cre:-7be
2
- 9-71
7 1 -¹
Wartet ee a Le
fore] — Wenaton + ‘Poon
Gulf oll Corporation | El Paso Natural Gas Company Contract 1-68-72 | 435
. . (North Puckett (tes) „ 8
Field, Pecos County, Texas) ; ; *
wt O11 Company Rorthers Watural Gas Contract 3-3-9 71
. : (Zistnore (Devonian) 0 » & . :
* Fie 0 Pecos County, Texa «) * . — * *
Warren Petroleun El Paso Katurel Gas Company | Contract 3-1-72 @
Compeny,A Division (Tatus Casoline Plant, Lea ‘| Letter Agree. 5-16-72 61
of Gulf O11 County, New Mexico) . . a
Corporation (Operator) f Se ae ‘oy : '
‘* 0 * .
Werven retro leu El Peso Natural Cas Company * Contract 3-1-72 62
Cormany, A Division of (Caliche Gasoline Plant, Lea 5 goose :
Gulf O11 Corporation | County, New Mexico) ree —
(Operator) . . NN 8 1
Warren Petroleum El Paso ture! Gas Company * Contract 31-7 63
Compeny, A Division (Monument Gasoline Plent, : ‘+ oe :
of Gulf O11 Corpore- | Lea County, New Mexico) 3
tioa (Operator) ‘ . »* ;
‘| Warren Petrelews ° El Paso Natural Gas Company Contrect 3-1-72 64
„ A Diviston (Saunders Gasoline Plant, Letter Agree. n 64
of Gulf O11 Corporatiohles County, New Mexico) . 0
Cerstet) 2 14
3 * „„ me **
* 65 * e
. 1 99 1 °
* * ‘ .
111
[608]
“@%-«
asses DOCKETS IW MMICH CERTIFLCATES WERE ISSUED PURSUANT TO OPIKION WO, 662
ue | do tis Appetdix 12 5
—— | „„ ** @ = 99 44“
889882 9 te „„
112
————
eon om —— — 2 * 2 N W
Beene %%.
% | Warren Petroleus ‘Peso Katural Gas Company „Un 54
= Coopeny, A Division (Buntee Grsoline Plant, Lee Letter Agree, 5-16-72 si; 1
150 of Gulf O11 Corpora County, New — 25 te ’
5 (Operator) K 5 ;
1 27 , 0 25 * ' ‘ * * * i
'€172-760 | Werren Petroleus 1 Peso keturet Cas * wect 3+1-72 66141
, A — A Diviston of |(Waddel Gasoline Plant, Agree.5-16-72 | 66 1
$-22-7 Gulf oli Corporation Texas) 15 ed -
8 (Operato~* oe * 5
1-31 . * 5
172-762 | Skelly O41 Company Naturel Cas cee fee „u- | 262 | «=
oy (Operator) . tee _ les County, Agree. 3-15-72 262 |. 1
1h. 22672 1 N een „% A
ein- uit O12 Corporation mm Pipeline eber E- | 496 | we
a” ' ** (Rock Tank Morrow Field F _ *
5-24-12 y < ; New Mexico) * „.
einem | Skelly O11 cee Paso Natural Cas Company Ln | 263 |
. a (Operator) 2 Plate, lee County, 8 * e 9
$-24-7 n E * 0 „ ne. 16
11-22-72 . ore 1. ¥ 2 F. 5
rw Exxon Corpotet ton Peso Natural Gas Company * 6-28-72 son | —
7 * Cr@bourne Field, te ge” * *
en „ . le County, Texas) eh 1.
CL72-854 | Skelly O11 Company 1 Paso Natural Cas Company © 6-20-72 --
_A_. | @perator), et al. t Vealnoor Pleat, Howard * ny
6-23-72 ° . 9 . .
. = 1 7 0 9 ’
7 5 .
; N ' *
17 ta.
M ture,
[609]
-~We
2 DOCKETS IM WHICH CERTIFICATES WERE ISSUED PURSUANT TO OPIMIOK NO. 662
2 ———ñͥ 22 Recsenaten
—— Me P nens rr
oe — . 5 — 2 mere bat a
. Oot ieee , N 1 — —
ein- inéntal 1 Tranewestern Fipeline ~*~... | Contrect ~S-i-72 | 379| <<
: a *. 0 7 * Company (ral jamer Aree _* 2 1 *
7-7-72 » & *%e, « Lea County, hew j „
3-72-73 . fo ot “*«, . 7 8 07
CI7%22 | Pennzot] Company Transvestern Pipeline [@onerect 6-19-72) S86] a=
A oH at Company (Acreaze in ‘a. »% ;
1-10-72 25 Eddy County, New Mexico) . 7
€173-23 | Pennzot! Company | Transwestern Pipeline - [Contract 76-72 | 36) «se
A ** * * Corpany (ac in . . aon
7-12-72 . — Eddy County, New Mexico) . 7. .
cin | Belco Petroleus Netural Gas Pipeline 12 © 62-72 | a]
A Corporation, et al. Company of America ,
7-12-72 ＋ (anes Area, Eddy = ; F
0 „ 7 County . Mexico) » «6 ‘ 9 0 .
- ‘ 225 ‘ . ‘ *
crear Propane Northern katural Gas Company Contract 10-27-65 21, -
a Cas ton (Devidson ares, Amendment = 5-19-66 | 21 1
* (euce. to Delta Crockett County, Texas) Amend ent 5-30-66 21 2
-- | | Orit Company, et sg Amendvent . 11-30-70) 21] .3
1441 8 20 » > An ‘ Agreement © = 6-22-72 21 ‘4
* 2 7 . 1 * a * 0 Aeg went N72 21 5
173-85 | Suburden Propane Northern Natural Gas Company Release Agree. 4
SD + | Ges Corporation l f 4-6-73 2 6
6-25-73. , ¢ ot ((Davidwon Ranch 0 (Effective bete
89 ; Wee eh. Crockett County, ) Date of Comission
€173-99 | PREDIips Pecrolews "| EL Paso Natural Gas Company — 2
4 * 7 Je A and Drag 5 ' 3
8-10-72 Leases, Eddy County, New Mexico) | «
g 5 “of, K 7 *
7 5 2 Dee a
4/ Mo certificate deletion fil — boing deleted te being added tb snother
Docket ko. C1/3-127. -
113
610
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— „ 2 0 Crockett County, Texas)
;
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Sale scrwage is being deleted tres Docket Ko. CI73-85.
114
611
1611]
* : : °
* 9 . * 2 *
nn WHICH CERTIFICATES WERE ISSUED PURSUANT TO OFTWION . 662
_ . . . ~~ © * N 7 at
. 9 8 5 9 0 9 . —
odd = «* - .
3 —— . —— 821
1.6 . «wi. „„
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= —
1 0
0 59 „ * . *
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£/ Subject acreage is being deleted from Docket Mo. C164-708.
115
612
612]
ga
a
* *
8 1 — 8
: — | —— ——ä— ond Leneties
Rg —
5 cult . ti Peso Natural Cas Company (Rojo “mm ] --.
= Rg Ay oy cabal les South (El lenden ger) 2
7 Field, Pecos County, Texas) ere
3-7 . ; * “a | 6
; 8 “i 5
25 p — 0
— 7
as |“ s
Rorthern Xetural aie
Company (Senora 27 1
Send) Field, Sete 21.2
— 1
northern Natural
Field, 20 i-
— Meturst | @i-
| Queyer Ranch Ares, Sutton 1
County, Texas) * 2
> 5 5 8 . 4 1 9 a
: 2 ais 4 * 12 20 1 7 .
* . . * * oa
.
116
11
UNITED STATES OF AMERICA
BEFORE THE
FEDERAL POWER COMMISSION
Docket No. CP75-209
EIL. Paso NATURAL Gas Company
Petition of El Paso Natural Gas Company
for Issuance of a Declaratory Order
Ext Paso NATURAL, Gas Company („El Paso“),
pursuant to Section 1.7 (e) of the Commission’s Rules
of Practice and Procedure, hereby petitions for the
prompt issuance of a declaratory order resolving the
following questions:
(i) Given the fact that, according to Texas law,
a certain 50-year fixed term lease automatically
terminates on July 14, 1975, and the mineral rights
thereunder revert to the reversionary interest own-
ers, must Gulf Oil Corporatiou and other lessees
under said certain 50-year fixed term lease, who
have been selling gas produced from said lease on
a percentage-type basis to Warren Petroleum Cor-
poration for resale in interstate commerce, obtain
abandonment authorization pursuant to Section
7(b) of the Natural Gas Act (‘‘Act’’) and Section
154.91 of the Commission’s Regulations Under the
Natural Gas Act in order to cease such sales to El
Paso and effectuate the transfer by reversion to
Exxon Corporation, Southland Royalty Company,
and other reversionary interest owners of the min-
eral rights under said certain 50-year fixed term
lease ?
117
(ii) Given the facts set forth in (i), without
prior Commission authorization, may Exxon Cor-
poration, Southland Royalty Company, and other
reversionary interests divert natural gas from its
present movement in interstate commerce to de-
livery and sale in intrastate commerce!
(iii) Given the facts set forth in (i), without
prior Commission authorization, may Warren
Petroleum Corporation reduce its sales in inter-
state commerce of residue natural gas to El Paso,
the present level of which is attributable in part
to production from the lease in question ?
[2] In support hereof, El Paso respectfully states:
I.
The names, titles, and mailing addresses of those
persons to whom correspondence and communications
concerning this matter are to be addressed are as:
follows:
Mr. Walter G. Henderson
Assistant Vice President
El Paso Natural Gas Company
Post Office Box 1492
El Paso, Texas 79978
Mr. Robert N. Harbor
El Paso Natural Gas Company
310 Suffridge Building
1775 K Street, N. W.
Washington, D. C. 20426
The exact legal name of El Paso is El Paso Natural
Gas Company. It is a corporation duly organized and
118
existing under the laws of the State of Delaware,
having its principal place of business located in El
Paso, Texas. El Paso is a wholly-owned subsidiary of
The El Paso Company, which is also a corporation duly
‘organized and existing under the laws of the State of
Delaware having its principal place of business located
in Houston, Texas. El Paso is authorized to conduct
business as a foreign corporation in the States of
Alaska, Arizona, Arkansas, Colorado, Idaho, Kansas,
Louisiana, Montana, Nevada, New Mexico, New York,
North Dakota, Oklahoma, Oregan, Texas, Utah, Wash-
ington, and Wyoming.
II.
El Paso is a natural-gas company“ engaged in the
business of producing, purchasing, transporting, and
selling natural gas to distribution companies and other
pipeline companies for resale and to industries and
others for direct consumption. El Paso’s interstate
pipeline system extends from the Permian Basin area
of west Texas and southeast New Mexico, the Texas-
Oklahoma Panhandle area, the San Juan Basin of
northwest New Mexico and southwest Colorado, and
the Four Corners area of the States of Arizona, New
Mexico, Utah, and Colorado, through one or more of
the States of Texas, New Mexico, Utah, Colorado, and
Arizona, to points of termination at the boundary be-
tween the States of California and Arizona near
Blythe, California, and Topock, Arizona, and to a point
of termination at the boundary between the States of
Arizona and Nevada near Big Bend, Arizona. El Paso
also owns and operates an intrastate pipeline system,
situated in the State of Texas, which serves consumers
119
in the El Paso, Texas, area and fuel requirements at
certain of El Paso’s plants and stations on its inter-
state system. The gas which is the subject hereof goes
into El Paso’s interstate system.
[3] III.
On July 14, 1925, Gulf Production Company, the
corporate predecessor of Gulf Oil Corporation, as les-
see, executed a 50-year fixed term oil and gas lease with
W. N. Waddell, et al., lessors.“ Said oil and gas lease
and amendment thereto dated March 16, 1926, are here-
inafter referred to as the 50-year fixed term lease”’.
According to El Paso’s information and belief, the
current lessees under the 50-year fixed term lease are:
(1) Gulf Oil Corporation, a corporation duly incor-
porated under the laws of the State of Pennsylvania
and authorized to transact business within the State
of Texas, (2) B.W.P., Ine., a corporation duly incor-
porated under the laws of the State of Texas, (3)
Highland Production Company, Inc., a corporation
duly incorporated under the laws of the State of Texas,
(4) W. Nelson Rees, an individual who resides in
Odessa, Ector County, Texas, (5) G. Dillard Anderson,
Jr., an individual who resides in Midland, Midland
County, Texas, (6) V. L. De Bolt, an individual who
‘A true conformed copy of this oil and gas lease, recorded in
Volume 10, pp. 397-400 of the Deeds Records of Crane County,
Texas, is attached hereto as Exhibit A and made a part hereof.
An amendment to this oil and gas lease dated March 16, 1926,
recorded in Volume 12, pp. 205-206, of the Deed records of Crane
County, Texas, was executed by the same parties, covering certain
lands in Crane County, Texas, as described therein. A true copy of
this amendment is attached hereto as Exhibit ‘‘B’’ and made 4
part hereof.
120
4
resides in Odessa, Ector County, Texas, and (7) John
L. Harlan, Trustee, an individual who resides in either
El Paso, El Paso County, or Monahans, Ward County,
Texas. Gulf Oil Corporation and its predecessor, Gulf
Production Company, are hereinafter referred to as
„Gulf“. All said lessees including Gulf are herein-
after referred to as Gulf, et a.“ Also according to El
Paso’s information and belief, the reversionary inter-
est rights to the oil, gas, and other minerals produced
from the acreage covered by the 50-year fixed term
lease are now owned, held, or claimed by Exxon Com-
pany, U.S. A., a division of Exxon Corporation, by
Southland Royalty Company, and by numerous indi-
viduals and corporations, as listed in Exhibit O and
made a part hereof. Exxon Corporation and its division
Exxon Company, U.S.A. are hereinafter referred to
as „Exxon“. Southland Royalty Company is herein-
after referred to as Southland“, All said owners as
listed in Exhibit C“ ineluding Exxon and Southland
are hereinafter referred to as Exxon, et al.“
By the terms of the 50-year fixed term lease, Gulf
obtained the exclusive right of exploiting 45,771 acres
of land in Crane County, Texas, and producing oil and
gas therefrom. Upon execution of the lease, Gulf com—
menced drilling operations on the land and has con-
tinuously conducted operations thereupon to the pres-
ent date. At the present [4] time Gulf is operating
approximately 925 producing oil and gas wells on the
land.
By the terms of the 50-year fixed term lease, the
leasehold estate expires fifty years after date of execu-
tion, which is July 14, 1975. Gulf, et al. sought to ex-
tend the termination date of the 50-year fixed term
121
lease by either 4,661 or 4,286 days on the grounds that
they are entitled to such additional days of production
because of delays and interruptions arising out of their
compliance with regulatory orders of the Texas Rail-
road Commission. The Supreme Court of Texas re-
solved the issue in Gulf Oil Corporation v. Southland
Royalty, 496 S. W. 2d 547 (1973),’ by holding that the
expiration date of the lease was not extended and the
leasehold interest of Gulf, et al. shall therefore expire
on July 14, 1975. The mineral rights, including the
rights to natural gas production, by Texas law shall
therefore revert to the reversionary mineral interest
owners, Exxon, et al., on July 14, 1974.
IV.
On January 26, 1954, El Paso, as buyer, and Gulf,
as seller, executed a residue gas purchase agreement by
which El Paso agreed to buy surplus residue gas from
Gulf's natural gasoline extraction plant in Crane
County, Texas, called the Waddell Gasoline Plant.’
On March 1, 1972, El Paso and Warren entered into
an additional residue gas purchase agreement assuring
El Paso of a continuing supply of quantities of residue
A true copy of the decision of the Supreme Court of Texas in
Gulf Oil Corporation v. Southland Royalty, 496 8. W. 2d 547
(1973), is attached hereto as Exhibit D' and made a part hereof.
The Waddell Gasoline Plant is located in Section 25, Block B-26
Publie School Lands, Crane County, Texas.
On November 1, 1957, Gulf conveyed all of its interest in the
Waddell Gasoline Plant to Gulf's wholly-owned subsidiary, Warren
Petroleum Corporation ( Warren). On November 1, 1957, Gulf
also assigned to Warren the residue gas purchase agreement dated
January 26, 1951. On December 31, 1971, Warren was merged
into Gulf and now operates as a division of Gulf.
gas from the Waddell Gasoline Plant. These residue
gas purchase agreements, and subsequent amendments
thereto, constitute Warren’s FPC Gas Rate Schedule
Nos. 43 and 46, respectively.* El Paso takes delivery
[5] of such surplus residue gas into its pipeline system
at the outset at the Waddell Gasoline Plant and trans-
ports it through its jurisdictional facilities for subse-
quent resale in interstate commerce.’ El Paso pur-
chases, transports, and resells approximately 60 MMef
of such surplus residue gas daily.“
Of the surplus residue gas purchased by El Paso at
the outlet of the Waddell Plant, Warren has informed
El Paso that approximately 25 MMef daily is attribut-
able to production from wells on land leased by Gulf,
et al. pursuant to the 50-year fixed term lease. Gulf,
et al. make percentage-type sales to Warren of casing-
head gas produced from the acreage covered by the 50-
year fixed term lease. As explained above, the mineral
rights, including rights to casinghead gas, presently
*The Commission granted certificates of public convenience and
necessity authorizing the sale of residue gas to El Paso from the
Waddell Gasoline lant pursuant to Warren's Rate Schedule Nos.
43 and 66 at Docket No. G-19445, 19 F.P.C. 1151 (1958) and
Docket No, CI72-760 (issued July 22, 1974).
* At the following docket numbers, the Commission grant! El
Paso certificates of publie convenience and necessity for the con-
struction and operation of pipeline and compression favilities
needed to transmit gas from the Waddell Gasoline Plant: G-1629,
10 F. P. C. 644 (1951); G-2371, 13 F... 1008 (1954); G-10499,
16 F. P. C. 1354 (1956) and G-12580, 19 F.. C. 393 (1958).
* By the residue gas purchase agreement dated January 26, 1951,
Paso was entitled to purchase up to 7 MMef of surplus residue
gas each day. By subsequent amendments, El Paso presently has
ee Se Sa eae aoe
leased to Gulf pursuant to the 50-year fixed term lease
revert to the reversionary interest owners, Exxon, et al.
on July 14, 1975.
El Paso has become aware that certain of the re-
versionary interest owners comprising a portion of
Exxon, et al. are soliciting proposals for the purchase
of their shares of natural gas produced after July 14,
1975, from the various lands and leases presently leased
to Gulf, et al. pursuant to the 50-year fixed term lease.
El Paso did not receive such solicitations itself but it
has obtained a copy of Exxon’s solicitation to Odessa
Natural Corporation (‘‘Odessa’’),’ dated October 1,
1974. and a copy of Southland’s solicitation to Odessa
dated November 18, 1974, wherein Southland advises
Odessa that Southland, Warren Wright, and Penn
(comprising a portion of Exxon, et al.) collectively
own 80 percent of the 50-year fixed term lease gas and
are considering its sale.
[6] By letter dated October 10, 1974, El Paso in-
formed Exxon that El Paso is aware of Exxon’s solici-
tation proposal and shall consider what position El
Paso deems necessary to preserve its interest in said
gas." Concurrently, El Paso sent to Southland a copy
of El Paso’s said letter to Exxon and informed South-
’ Odessa is an intrastate pipeline affiliate of El Paso.
„A true copy of this solicitation letter is attached hereto as Ex-
hibit E and made a part hereof.
A true copy of this solicitation letter is attached hereto as Ex-
hibit ‘‘F’’ and made a part hereof.
A true copy of this letter is attached herto as Exhibit G“
and made a part hereof.
124
land that the contents of said letter apply equally to
Southland’s share of gas.“ *
V.
It can be surmised from both Exxon's and South-
land’s solicitation offers to Odessa, an intrastate buyer
and carrier of natural gas, and Exxon’s and South-
land’s failure to make such offers to El Paso, an inter-
state pipeline, and from the commonly known large
differential in prices between intrastate and interstate
purchases of natural gas in west Texas” that both
Exxon and Southland intend to sell only to an intra-
state buyer of gas,“ thereby diverting said gas from its
present movement in interstate commerce to move-
ment in intrastate commerce.
Because the surplus residue gas in question is pres-
ently flowing in interstate commerce through El Paso’s
interstate pipeline system for resale, and is therefore
"A true copy of this letter is attached hereto as Exhibit HI“
and made a part hereof.
Natural gas intended for transportation and resale in inter-
state commerce cannot be sold at a rate higher than the national
area rate of 51¢ per Mef plus Btu adjustment and taxes, which is
the rate which became effective under Opinion Nos. 699 and 699-H
on and after January 1, 1975, for certain classes f new gas
sales. Gas intended for transportation and resale in intrastate com-
meree, however, is currently selling in the vicinity of Crane
County, Texas, at a rate of $1.30 per Mef.
Besides Odessa, Lo Vaca Gathering Company and Lone Star
Gas Company are intrastate gas transmission companies which
own and operate pipelines in the immediate vicinity of the Waddell
Gasoline Plant. In addition, Pioneer Natural Gas Company and
Texas Utility Fuel Company purchase gas in Crane County, T
for use solely within the State of Texas. „
125
subject to the jurisdiction of the Commission, El Paso
questions whether Exxon, ct al. are free to divert such
gas to intrastate commerce without prior clarification
of the questions raised herein; namely: First, must
Gulf, et al. obtain abandonment authorization pur-
suant to Section 7(b) of the Act and Section 154.91 (e)
of the Regulations in order to effectuate the transfer
by reversion to Exxon, et al. of the mineral rights un-
der the 50-year fixed [7] term lease? Second, must
Exxon, et al. obtain prior Commission authorization,
particularly abandonment authorization pursuant to
Section 7(b), before they may divert sales of surplus
residue gas from interstate commerce to intrastate
commerce?" Finally, must Warren obtain prior Com-
In Perry R. Bass, 48 F. P. C. 1269 (1972), a producer (Bass)
pursuant to terms of a farmout agreement with Shell Oil Company
(**Shell’’) exercised his option to convert his overriding roylaty
interest into a 50 percent working interest. Although Shell had
been selling all of the natural gas produced from a well to El
Paso for resale in interstate commerce, the producer after convert.
ing his overriding royalty interest into a working interest sought
to sell his 50 percent share of the production to Natural Gas Pipe
Line Company (‘‘Natural’’) also for resale in interstate commerce,
El Paso petitioned to the Commission for a declaratory order on
the issue of whether Bass without abandonment authorization
pursuant to Section 700) could divert his 50 percent share of the
gas from interstate transmission and resale in interstate commerce
by El Paso, By its order issued December 8, 1972, the Commis-
sion decided that Bass’ prior royalty interest did not make him
a seller of natural gas in interstate commerce for resale nor did
his conversion from a royalty interest to a working interest ; there-
fore, the producer was free to sell his share of the gas to Natural.
The Commission in Perry R. Bass did not address itself to the
issues raised here. In particular, the Commision did not address
itself to whether a party in the position of Gulf (ie, a prior work.
ing interest owner) must obtain abandonment authorization before
the lessor may back in to the working interest, Moreover, the
factual situation is so different in this case, when the entire output
126
mission authorization before Warren may divert sales
of residue gas attributable to casinghead gas produced
under the 50-year fixed term lease from El Paso when
EI Paso transports and resells said gas in interstate
commerce.
It is well established that once natural is i-
cated to interstate commerce it cannot be A cd
interstate commerce without abandonment authoriza-
tion pursuant to Section 7(b) of the Act.“ and it is
also well established that natural gas is dedicated to
interstate commerce, not by contractual arrangements
pertaining to it, but by the physical movement of the
Ris. In the instant case, natural gas, [S the produe-
tion of which will revert to Exxon, ef al. on July 14,
1974, is presently moving in interstate commerce
through El Paso’s interstate pipeline system. There-
fore, such gas should not be removed from interstate
commerce without prior Commission clarificati
—— 1 clarification of
VI.
Wherefore, for the foregoing reasons, El Paso Nat-
ural Gas Company hereby respectfully petitions for
issuance of declaratory order resolving th i
. , ving the following
(i) Given the fact that, according to Texas law,
a certain 50-year fixed term lease automatically
terminates on July 14, 1975, and the mineral rights
of the wells is proposed to be diverted to intrast
a ‘ ate commerce,
that the Perry R. Bass decision should not be controlling on —
issue raised herein by El Paso.
Sunray Mid-Continent Oil Co. v. FPC, 364 U.S. 137 (1960).
California v. Lo Vaca Gathering Co., 397 U.S. 366 (1965).
127
thereunder revert to the reversionary interest own- [9]
om, nt Cut — ——ͤ—ę ae G. Seott Cuming
under said certain 50-year fixed term lease, Senior
have been selling gas produced from said lease on Haris 5. Wong mndeat and General Counsel
a percentage-type basis to Warren Petroleum Co
This text is long and has been trimmed here. Open the source document for the complete record.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.