When severe winter weather disrupts natural gas deliveries, pipeline curtailments can lead to complex disputes over payment for gas supplied to pipelines exceeding the quantities scheduled for delivery to customers. Baker & O’Brien evaluated the parties’ conduct, pipeline communications, and the operational circumstances surrounding a disputed natural gas transaction. Our expert analysis and deposition testimony addressed the technical and operational issues, and the court resolved the dispute through summary judgment before trial.

Natural gas pipelines coordinate deliveries through a nomination, confirmation, and scheduling process. Shippers nominate quantities, and pipelines transport the scheduled volumes after completing the confirmation process. During periods of constrained capacity, pipelines may curtail nominated deliveries to downstream customers.

A severe winter storm disrupted natural gas supplies and deliveries to customers, including power plants. The resulting reduction in fuel availability contributed to widespread power outages. During the storm, a power plant arranged to purchase natural gas from a supplier for transport through a regulated pipeline.

Also during the winter storm, a pipeline compressor station that assists with transporting natural gas failed and was declared a force majeure event. As a result, the pipeline curtailed gas transportation to the power plant. In accordance with the pipeline’s instructions, the power plant accepted the reduced quantity. However, the supplier continued to provide the pipeline with the full pre-curtailment quantity.

After the storm, the supplier invoiced the power plant for the full quantity, including the gas that exceeded the curtailed schedule and was not delivered to the plant. The parties disputed the power plant’s obligation to pay for that gas.

Baker & O’Brien was engaged to evaluate the parties’ conduct during the natural gas nomination, confirmation, and scheduling process. Our analysis included reviewing communications and responsibilities between the buyer, seller, and pipeline. Our work also included evaluating the circumstances surrounding the compressor station failure and their relationship to the claimed force majeure event.

Baker & O’Brien prepared an expert report addressing the disputed natural gas transactions and related contractual and operational issues. We also provided deposition testimony in support of our opinions. The court ultimately resolved the dispute through summary judgment before trial.