- 7 -
1989. See Southwest Kansas Royalty Owners Association v. Kansas
Corporation Commn., 769 P.2d 1 (Kan. 1989).
FERC also had regulatory control over the production and
sale of old natural gas from the Hugoton field. During June 1986
FERC issued Order 451, 51 Fed. Reg. 22168 (June 18, 1986) (FERC
Order 451), which permitted, but did not require, gas pipelines
and producers to renegotiate the price of old natural gas with
the purchase price not to exceed $2.57 per Mcf. FERC Order 451
was hotly contested. The Court of Appeals for the Fifth Circuit
in Mobil Oil Exploration & Producing Southeast, Inc. v. FERC, 885
F.2d 209 (5th Cir. 1989), struck down FERC Order 451 as exceeding
FERC's authority. During 1991, however, the Supreme Court upheld
FERC Order 451 in Mobil Oil Exploration & Producing Southeast,
Inc. v. United Distribution Cos., 498 U.S. 211 (1991).
During 1986, pursuant to FERC Order 451, petitioner and KN
Energy renegotiated the purchase price for petitioner's
production of old natural gas from the Hugoton field. Subject to
a judicial determination of the validity of FERC Order 451,
petitioner and KN Energy established a 1987 price of $1.40 per
Mcf. In addition, KN Energy agreed to reimburse petitioner, in
full, for the production and property taxes on petitioner's
Hugoton production. The increased revenues that petitioner
expected to receive from the renegotiated gas sales were, of
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011