Northern Natural Gas Co. v. L.D. Drilling, Inc.

Northern Natural Gas Company (Northern) (plaintiff) operated an underground natural-gas storage facility called the Cunningham Storage Field (the field). The Federal Energy Regulatory Commission (FERC) certified the field for natural-gas storage in 1978, and Northern obtained subsequent certificates in 2008 and 2010 to extend the field’s boundaries. The FERC certificates gave Northern a power of eminent domain over the field. Northern realized that the volume of gas it was injecting into the field was greater than the volume of gas withdrawn, which suggested that gas was migrating out of the field. Northern brought actions against LD Drilling, Inc., and other entities that were producing gas north of the field (collectively, the producers) (defendants), alleging that the producers’ activities were drawing the gas away. Northern then brought a proceeding in federal district court under the Natural Gas Act to condemn 9,200 acres of land in the vicinity of the field, including some of the 2010 extension area. The district court appointed a three-person commission to determine an appropriate condemnation award. The commission’s recommended award included the value of storage gas in and under the affected land as of the date of the taking, which all parties agreed was March 30, 2012. The award also included the value of lost future production of that gas. The district court entered a judgment requiring Northern to pay the producers and other affected landowners the amount recommended by the commission, plus interest. All parties appealed. The appellate court considered whether the award should have included the value of the storage gas in and under the 2010 extension area on the taking date and the value of the lost future production of the gas.