Good morning; here's what the Oilman has for you today:

• Texas Landowners Sue Big Oil

• Utilities Sell Wind, Solar To Upgrade Grid... for Wind, Solar

• Upcoming Oil and Gas events

• Tweet of the Day

Texas Landowners Sue Big Oil

A number of landowners in a Texas county are suing BP and Devon Energy for underpayment of royalties.

It’s a legal battle that has been going on for over a decade, and a new lawsuit has become its latest chapter.

The outcome could change the rules on royalties in the shale patch.

$100 million in unpaid royalties plus interest

That’s the sum that the plaintiffs from DeWitt County are seeking from Devon and a BP subsidiary.

Their argument is that 16 years ago when they signed land leases with the companies, the latter basically took advantage of them.

Well, who could have thought a business might be anything less than saintly honest?

Anyway, at the time, the companies themselves didn’t know the true potential of the Eagle Ford, which is where those leases are.

That’s understandable and not exactly punishable.

What leaves a bad taste is the claim that Devon and BP deducted their customers’ costs from landowners’ royalties.

As a result, the landowners got lower royalties, but the customers got cheaper oil and gas, boosting Devon’s and BP’s profits.

Not cool, Big Oil.

An overhaul of royalty schemes in the making?

Possibly. The Supreme Court of Texas rules in favor of landowners.

It said that BP and Devon had not honored the agreements they’d struck with the landowners in DeWitt County 16 years ago.

The implications of that ruling and whatever becomes of the latest suit might change the way royalties are calculated.

And it could wreak havoc on the industry.

The Texas Oil and Gas Association warned about it in May.

It said the Supreme Court should reconsider its ruling or risk a wave of litigation.

Yes, it sucks, but maybe big oil players should have thought about that earlier.

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Utilities Sell Wind, Solar To Upgrade Grid... for Wind, Solar

Several power utilities are selling their wind and solar projects in order to make some money to upgrade the grid.

The upgrade of the grid is necessary to accommodate the growing fleet of wind and solar installations.

Obviously, even power utilities can’t have their wind and solar and “eat it”.

The grid upgrade nightmare of the transition

Utilities will need to spend tens of billions in building more transmission lines, substations, and any other infrastructure that carries electricity from A to B.

Wind and solar are the challenges because, with them, production is much farther from consumption than gas, coal, and nuclear.

So that means lots of new transmissions. And that means billions of dollars.

Duke Energy, American Electric Power, and Consolidated Edison are going about it smartly.

They are using the momentum of the renewable investment craze to sell their wind and solar assets at a good profit.

And then, they will use that profit to upgrade the grid and make some more money off the new owners of those wind and solar assets.

I’d say this is a pretty sound business strategy. Unfortunately...

...the upgrade is never happening

We need to build tens of thousands of miles in new transmission lines.

In a few years.

This is physically impossible even if there were enough qualified professionals to do it.

And there aren’t.

There’s a linemen shortage in the U.S.

And there are a lot of people who don’t want new transmission lines over their heads.

These people are blocking new projects.

It’s a symphony of bad planning and impossible execution.

Upcoming Oil & Gas Events

• July 19-20: 2023 Independent Petroleum Association of New Mexico Annual Meeting

• July 20: Bakken Classic Fishing Derby

• July 28: SOOGA Annual Industry Boat Ride, Valley Gem, Marietta, OH

Around the Global Patch

🇸🇪 NATO welcomes Sweden, Turkey's roadblock cleared.
🇨🇳 Overlooked oil boom in China.
🇨🇦 Regulator's order trans mountain's community impact monitoring.

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