Red Jacket Oil & Gas Co. v. United Fuel Gas Co.

58 F. Supp. 397, 1943 U.S. Dist. LEXIS 1677
CourtDistrict Court, S.D. West Virginia
DecidedOctober 16, 1943
DocketNo. 3494
StatusPublished
Cited by1 cases

This text of 58 F. Supp. 397 (Red Jacket Oil & Gas Co. v. United Fuel Gas Co.) is published on Counsel Stack Legal Research, covering District Court, S.D. West Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Red Jacket Oil & Gas Co. v. United Fuel Gas Co., 58 F. Supp. 397, 1943 U.S. Dist. LEXIS 1677 (S.D.W. Va. 1943).

Opinion

MOORE, District Judge.

This suit in equity was begun on September 17, 1935. At that time the plaintiff (herein called “Red Jacket”) filed a bill of complaint against the defendant (herein called “Fuel”) alleging numerous violations of a gas sales agreement made between the parties on July 27, 1929. It prayed for an accounting for damages alleged to have been caused by Fuel and for an injunction against alleged continuing violations of the agreement.

Fuel is a large producer, buyer, transporter, and seller of natural gas, operating wells and transportation lines in the MingoWayne gas district of West Virginia and elsewhere. Red Jacket is lessee of lands in this district, on which it operated fifteen gas wells, most of which are still producing gas.

The term of the gas sales agreement was five years from its date “and so much longer thereafter as gas may be produced from said leased premises in marketable quantities.” Red Jacket agreed to sell, and Fuel agreed to buy, the gas produced from the premises leased by Red Jacket at a price of 12 cents per thousand cubic feet (hereinafter abbreviated to “mcf.”)

Fuel owned and operated a 16-inch line known as Line V, which extended approximately east and west from Chapmanville in Logan County to Kermit in Mingo County. At the latter place Fuel maintained a large compressor station by means of which the pressure of the gas in Line V was regulated at will. Fuel also owned a 6-inch receiving line known as the Jude Branch Line, extending northward and westward from Line V for a distance of about ten miles. The Jude Branch Line received gas from twenty-four or more of Fuel’s gas wells and also received the casing head gas from nineteen oil wells owned by Fuel known as the Slick Rock wells, which will be later discussed. This gas was delivered into Line V. By the terms of the gas sales agreement, Fuel agreed to construct an 8-inch line which would connect with Line V and extend through the main properties leased by Red Jacket so as to receive the gas from Red Jacket’s wells. This 8-inch line was constructed shortly thereafter and was known as the Kirk Branch Line. It joined Line V at a point about three miles from the point of intersection of the Jude Branch Line with Line V, and between that point and the compressor station at Kermit. All of Red Jacket’s gas wells were connected with the Kirk Branch Line, as were also nine of Fuel’s wells and several wells operated by Southeastern Fuel Company and by Frank Yates, the product of which wells was purchased by Fuel.

It is not necessary to quote the gas sales agreement in full. The paragraphs which Fuel is-alleged to have violated are the following :

“Third: The lands embraced in Seller’s lease hereinbefore referred to, and covered [399]*399by this contract, lie within what is known as the Mingo and Wayne Counties, West Virginia, gas fields, and comprise a part of those fields. Said fields shall, for the purpose of this agreement, be known as the Mingo-Wayne Gas District, and it is contemplated and agreed by and between the parties hereto, that so long as this agreement remains in force, all gas delivered into Buyer’s lines, from said district including that produced by Buyer from lands on properties owned or controlled by it, shall be delivered and accepted under equivalent conditions and on equal terms, with reference to all important factors such as head or line pressure against which Seller’s gas or other gas from said district is delivered, and the means by which gas is introduced or forced into Buyer’s receiving lines. That is to say, that Seller shall at no time be discriminated against, or placed at a disadvantage, actually or relatively, as compared with any other producer of gas in said district, including the Buyer, making deliveries of gas into Buyer’s receiving line or lines, by being required to deliver its gas to Buyer against a higher pressure or against any discrimination whatsoever; nor shall Buyer allow other producers in said district to force their gas into Buyer’s receiving line or lines by Compressors, Boosters, Pumps or other artificial means; nor shall the Buyer force gas produced by it into its own lines, by such means, unless employed in such manner as to work equally and fully to the aid and advantage of the Seller. It is agreed and understood, however, that Buyer may, at its option, erect or acquire, and maintain and operate, a Booster station in said district, through which Seller’s gas and all other gas (including that produced by Buyer) received by Buyer from said district, shall pass on equal terms and under like conditions as to pressure, into Buyer’s receiving lines.”
“Fourth: It is mutually agreed between the parties hereto, that during the continuance of this contract Buyer will, during the winter months, beginning November 1st and ending April 30th of each year, accept, receive and pay for all of the gas which Seller is able to deliver and does deliver into Buyer’s receiving line or lines in accordance with the terms of this contract; but during the summer months, beginning May 1st and ending October 31st, Buyer shall only be required to take only one-third of the volume of gas that was taken during the preceding six months; and it is further understood and agreed that the said volume to be so taken in said six summer months may be taken throughout each and every day, by partially closing gates and other similar means to reduce the flow to the required capacity, or it may be taken by using the well or wells one-third of the time during such summer months, or in any other manner, so that the required quantity of gas be taken. It is agreed that in the event the pressure of gas from Seller’s gathering lines becomes so high as to endanger Buyer’s lines, .then Buyer may choke back the gas to a point of safety.”

Fuel answered, denying all material charges contained in the bill of complaint. The case was referred to a Special Master to take evidence and to report his findings of fact and conclusions of law as to all questions in controversy, including the amount of damages, if any, sustained by Red Jacket. A great volume of testimony comprising nearly 2,500 pages was taken, 75 exhibits were filed by Red Jacket, and 46 by Fuel. The Master completed his report on July 10, 1942. Thereafter, suggestions were filed by both parties in accordance with Federal Rules of Civil Procedure, rule 53(e) (5), 28 U.S.C.A. following section 723c. The Master then prepared a supplemental report, in which the suggestions were considered, but the original findings were substantially adhered to. After the filing of the Master’s original and supplemental reports, both parties objected to certain parts of the report. These objections were heard and considered by the court with the help both of oral argument and exhaustive briefs. The case is now to be decided upon the objections of the parties to the Master’s report.

Red Jacket in its bill of complaint alleged the following acts and omissions on the part of Fuel, which Red Jacket claimed were violations of the sales agreement:

1. That Fuel did not permit Red Jacket to deliver gas during the summer months in quantities proportionate to the quantities which Fuel marketed from its own wells; the contention being that since Fuel marketed from its own wells during the summer months more than one-third as much gas as it marketed from its wells during the winter months, Red Jacket’s summer deliveries should have been increased proportionately.

2.

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Related

Red Jacket Oil & Gas Co. v. United Fuel Gas Co.
146 F.2d 645 (Fourth Circuit, 1944)

Cite This Page — Counsel Stack

Bluebook (online)
58 F. Supp. 397, 1943 U.S. Dist. LEXIS 1677, Counsel Stack Legal Research, https://law.counselstack.com/opinion/red-jacket-oil-gas-co-v-united-fuel-gas-co-wvsd-1943.