Source: http://ks.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20140305_0000393.DKS.htm/qx
Timestamp: 2019-04-21 03:02:16+00:00

Document:
APPROXIMATELY 9117 ACRES IN PRATT, KINGMAN, AND RENO COUNTIES, KANSAS, AND AS FURTHER DESCRIBED HEREIN; TRACT NO. 1062710 CONTAINING 80.00 ACRES MORE OR LESS, LOCATED IN KINGMAN COUNTY, KANSAS, AND AS FURTHER DESCRIBED HEREIN; ET AL., Defendants.
Northern’s Second Motion for Partial Summary Judgment (Docs. 677, 678); Producer-Defendants Response and Cross-Motion for Partial Summary Judgment (Docs. 699, 700) and joinder by other defendants (Docs. 701, 702); Northern’s combined Response and Reply (Doc. 715); and Defendants’ Reply (Docs. 731, 732).
Northern brought this condemnation action pursuant to the Natural Gas Act, 15 U.S.C. § 717f(h), to acquire additional acreage for use in its underground natural gas storage field near Cunningham, Kansas. Since the late 1970’s, Northern has operated an underground natural gas storage facility in south-central Kansas known as the Cunningham Storage Field. The facility uses a large natural underground reservoir that was substantially depleted following decades of native gas production from the reservoir. Pursuant to authority granted by the Federal Energy Regulatory Commission (FERC), Northern’s operation involves transporting natural gas produced elsewhere to the field and injecting it into the reservoir. The gas can then be withdrawn in periods of high demand and transported to out-of-state markets. Such injected “storage gas” may have a different chemical composition than the “native” gas naturally found in the area. See K.S.A. § 55-1201(c) (“‘native gas’ shall mean gas which has not been previously withdrawn from the earth”; “storage gas” is not defined by Kansas statute).
Northern’s original certificate from FERC allowed it to acquire and store gas in an underground area covering more than 26, 000 acres. Northern began to suspect at least by the 1990’s that its storage gas was migrating out of the field and was being produced by nearby gas well operators. After litigating (and losing) several lawsuits, Northern returned to FERC and sought authority to acquire additional acreage for use as a buffer zone for the storage field. In 2008 it was granted a certificate to condemn an additional 1, 760 acres. In 2010 it was granted a certificate to condemn an additional 12, 320 acres. This latter “2010 Extension Area” is the subject of the instant condemnation. Northern obtained voluntary storage lease rights in about 30% of the 2010 Extension Area; it is proceeding with condemnation of rights in the remainder of the Extension Area.
The motions before the court deal with storage gas that migrated into the 2010 Extension Area as of March 30, 2012, the “date of taking” of that area by Northern. Specifically, the motions seek a determination of whether Northern must pay just compensation for the taking of migrated storage gas in the 2010 Extension Area. There is no dispute that the defendant landowners (or their assignees) are entitled to just compensation for any economically recoverable native gas that was under their property on the date of taking.
Northern argues the Kansas Underground Gas Storage Act, K.S.A. § 55-1201 et seq. (hereinafter the “Storage Act”), requires it to pay only for native gas in the 2010 Extension Area. It further contends that under Union Gas System, Inc. v. Carnahan, 245 Kan. 80, 774 P.2d 962 (1989), title to any storage gas in the Extension Area reverted to Northern (or “re-vested”) once Northern obtained the 2010 FERC certificate. Northern contends defendants held a fee simple determinable interest in any migrated storage gas, and that their interest terminated under Kansas law once Northern obtained the FERC certificate. Northern thus argues it does not have to pay just compensation for storage gas in the Extension Area.
Defendants respond that under Kansas law, including the Supreme Court’s ruling in Northern Natural Gas Co. v. ONEOK Field Svcs. Co., 296 Kan. 906, 296 P.3d 1106 (2013), Northern lost title to any storage gas that migrated to the Extension Area. By virtue of the “ownership in place” theory of Kansas oil and gas law, defendants contend any migrated storage gas became their property once it entered the Extension Area. They assert that the FERC certificate had no effect on their title and that Northern must pay just compensation for the taking of their rights in storage gas as of the date of taking.
Northern is a natural gas company as defined by the Natural Gas Act (NGA), 15 U.S.C. § 717. Northern owns and operates the underground natural gas storage field known as the Cunningham Storage Field in Reno, Kingman and Pratt counties, Kansas, pursuant to a series of certificates of public convenience and necessity from FERC.
This acreage is referred to as the 2008 Extension Area.
Some of the natural gas at issue in these cross-motions for summary judgment is storage gas that migrated more than one section beyond any section containing the pre-condemnation boundaries of the Cunningham Storage Field. The Producer-Defendants (L.D.Drilling, Nash, Val and Five Star) operate wells in the 2010 Extension Area that are more than a section beyond any section containing the boundaries of the Cunningham Storage Field as those boundaries stood immediately prior to the June 2, 2010 FERC order.

References: § 717
 § 55
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 § 717