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In re BHP Billiton Petroleum Properties (N.A.), LP

Court of Appeals of Texas, Fourteenth District

December 12, 2017

IN RE BHP BILLITON PETROLEUM PROPERTIES (N.A.), LP AND BHP BILLITON PETROLEUM (TXLA OPERATING) COMPANY, Relators

         ORIGINAL PROCEEDING WRIT OF MANDAMUS 164th District Court Harris County, Texas Trial Court Cause No. 2015-42862

          Panel consists of Justices Boyce, Donovan, and Jewell.

          MEMORANDUM OPINION

          William J. Boyce Justice.

         Relators BHP Billiton Petroleum Properties (N.A.), LP and BHP Billiton Petroleum (TXLA Operating) Company (collectively, "BHP Billiton") ask this court to issue a writ of mandamus compelling the Honorable Alexandra Smoots-Thomas, presiding judge of the 164th District Court of Harris County, to (1) vacate an August 11, 2017 order denying their plea to the jurisdiction; (2) grant the plea to the jurisdiction; and (3) dismiss certain claims over which BHP Billiton contends the trial court has no jurisdiction. See Tex. Gov't Code Ann. § 22.221 (Vernon Supp. 2017); see also Tex. R. App. P. 52.

         We deny the petition.

         Background

         Real party in interest EF Non-Op LLC ("EF") is an oil and gas exploration and production company; it owns working interests in leases and wells in the White Kitchen and Martin Ranch prospects in the Eagle Ford Shale.

         BHP Billiton is a working interest owner and the operator of approximately 60 wells in which EF holds a working interest.

         As operator, BHP Billiton develops the leases by drilling and operating wells. BHP Billiton also arranges for disposition of the oil and gas produced by those wells. EF is charged with its proportionate share of expenses from these operations and receives its share of the oil and gas produced.

         An affiliate of BHP Billiton called BHP Billiton Petroleum (Eagle Ford Gathering), LLC ("Eagle Ford Gathering"), provides gas gathering, compression, and treatment services in the Hawkville area of the Eagle Ford Shale.

         Eagle Ford Gathering operates 568 miles of gathering pipelines, which transport gas from the wellheads to central delivery points where larger pipelines transport the gas to downstream sales points. BHP Billiton has contracted to have Eagle Ford Gathering perform gas gathering services. Because EF elected to transport its gas on Eagle Ford Gathering's pipeline, EF is charged a proportionate share of the gas gathering charges.

         EF sued and asserted that BHP Billiton breached obligations and duties arising under various joint operating agreements ("JOAs").[1] BHP Billiton alleged JOA breaches included those relating to "Gathering Issues, " a shorthand term used in this litigation to describe EF's contention that Eagle Ford Gathering charged more than 59 cents per mcf - an above-market rate - for gathering, treating, and transporting the gas to a central delivery point.

         BHP Billiton filed a plea to the jurisdiction asserting that EF first had to pursue its claim for "Gathering Issues" with the Texas Railroad Commission before EF could sue. BHP Billiton argued that the Commission has exclusive original jurisdiction over disputes concerning rates charged by gas utilities such as Eagle Ford Gathering because the Commission regulates rates and services under the Gas Utility Regulatory Act ("GURA"). See Tex. Util. Code Ann. § 102.001(a) (Vernon 2007). The trial court held a hearing on the plea to the jurisdiction and ordered EF to re-plead its claims regarding the Gathering Issues.

         In response to EF's seventh amended petition, BHP Billiton filed an amended and supplemental plea to the jurisdiction on the Gathering Issues. BHP contended that these issues relate to Eagle Ford Gathering's rates and services and, therefore, come within the Railroad Commission's exclusive jurisdiction. After holding a hearing on the plea to the jurisdiction on May 12, 2016, the trial court signed the order denying the plea to the jurisdiction on May 16, 2017.

         BHP Billiton asks this court to compel the trial court to (1) set aside its May 16, 2017 order denying the plea to the jurisdiction; (2) grant the plea to the jurisdiction; and (3) dismiss EF's claims related to the Gathering Issues.

         Standard ...


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