Nielson-True Partnership, True Oil Company, Tax Matters Partner - Page 12

                                                    - 12 -12                                                      
             local authority's recommendation became final.9  Finally,                                            
             judicial review was available under NGPA section 503, but only in                                    
             the event that FERC remanded or reversed the local authority's                                       
             recommendation.  15 U.S.C. sec. 3413(b)(4).                                                          
                    For purposes of obtaining the gas price incentives, the                                       
             four-step process outlined above is mandatory and not severable                                      
             or elective.  A well owner may not qualify merely by producing                                       
             from a well located in a field that has been determined to be a                                      
             tight formation.  In addition to a field determination, the well                                     
             owner must obtain a determination that each well produces tight                                      
             formation gas.  See, e.g., Enserch Exploration, Inc. v. FERC, 887                                    
             F.2d 81, 82 (5th Cir. 1989); FERC Order No. 479, issued July 29,                                     
             1987, 52 Fed. Reg. 29003 (Aug. 5, 1987).                                                             
                    Regulations under the NGPA indicate that the Wattenberg "J"                                   
             Sand formation had been finally determined to contain tight                                          
             formation gas.  See 18 C.F.R. sec. 271.703(d)(11) (1988).  The                                       
             Wattenberg "J" field is located north and east of Denver and                                         
             underlies approximately 703,000 acres situated within four                                           
             different counties.   See 18 C.F.R. sec. 271.703(d)(11)(i).                                          
             Accordingly, it is a relatively large area within which many                                         
             wells may be situated.  The parties do not dispute and the case                                      
             law supports the principle that to be entitled to the price                                          

                    9 See Ecee, Inc. v. FERC, 645 F.2d 339, 345-353 (5th Cir.                                     
             1981), for a discussion of the statutory division of                                                 
             responsibilities between the Commission and the local authority.                                     

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