Natural Gas Procurement and Financing

Hunton Andrews Kurth lawyers provide advice on natural gas procurement for many types of clients, ranging from municipalities and gas distribution companies to gas marketers, independent power producers and other large end users. We counsel clients in the selection or evaluation of fuel supplies and related contractual arrangements, particularly as those arrangements affect financings and real estate transactions. Our lawyers have worked on a number of cutting-edge bond financings of gas prepayment transactions for long-term firm gas deliveries on behalf of a public corporation wanting to ensure its constituents long-term supplies at stable prices. We have been consulted on natural gas and other fuel procurement matters related to electric generating facilities—including the largest natural gas-fired cogeneration project in North America—working closely with our structured finance and commercial lawyers. In addition, our lawyers have advised on gas procurement contracting for a wide variety of manufacturing plants. As the sophistication of gas purchase strategies has grown, the antitrust laws have loomed larger, and our lawyers have played important roles in cases testing the application of the antitrust laws to various segments of the gas industry in addition to guiding transactions through the Hart-Scott-Rodino review process and other antitrust counseling.

Hunton Andrews Kurth has served as bond counsel in connection with transactions financing the purchase of multi-year supplies of natural gas. Additionally, the firm has served as counsel to the credit enhancer for municipal bonds used to purchase long-term supply contracts for natural gas and natural gas mineral rights. In connection with the undertakings, the firm has analyzed the private activity and arbitrage issues that arise and has assisted in the structuring of the hedging arrangements typically utilized. The Internal Revenue Service has recently issued final regulations specifically addressing the tax-exempt financing of long term natural gas supplies. We are currently working as bond counsel on a transaction utilizing the new regulations.

LNG and LPG

Our experience extends beyond the confines of traditional gas projects. We have assisted in the negotiation and documentation of rate and tariff provisions for import and supply contracts for a major Liquefied Natural Gas (LNG) terminal in Virginia on behalf of an investor-owned utility. We have also advised clients on acquisition of a combined cycle gas-fired co-generation plant involving LNG and Liquefied Petroleum Gas (LPG) terminals, storage tanks, and desalination facilities and on the regulatory implications of transporting gas on-shore from an off-shore ship-mounted LNG regasification facility. Our LNG experience also includes advising foreign governments and government-owned utilities on the development and financing of LPG/LNG power projects and storage facilities and the negotiation of related agreements.

Natural Gas Pipelines

Regulatory proceedings involving natural gas pipelines are a principal focus of our natural gas practice, and we actively represent our clients before both federal and state regulatory authorities. Our lawyers have represented natural gas pipeline companies with respect to the construction of new pipelines serving gas-fired generators, assisting with environmental permitting, tariff development and the establishment of transportation rates. We were involved in the restructuring proceedings of numerous interstate pipelines and the more recent policy initiatives at FERC. Our experience representing interstate natural gas pipeline clients has allowed us to be pioneers, as showcased by our filings for open-access tariffs being used as industry templates. Our lawyers have also successfully represented applicants in utility mergers, which included gas pipeline ownership rights, gas distribution systems and transportation contracts.

Our lawyers also represent oil pipelines in environmental and safety matters. A description of our oil pipeline practice can be found on our website under Pipeline Practice.

Distribution and Marketing Companies

Our lawyers have participated in FERC proceedings on behalf of natural gas distribution companies, marketers, and major gas end users in a variety of matters related to gas pipeline transportation, including the allocation of millions of dollars in above-market gas costs (i.e., “stranded costs”), new interstate gas supply projects and the pricing of services for expansion shippers. At the state level, we have represented distribution companies in complex rate proceedings and a variety of other regulatory proceedings involving quality of service issues, retail access programs, pipeline construction activities, state permitting activities and pipeline safety.

Exploration, Production, Gathering and Processing

Our lawyers have negotiated and drafted a variety of agreements related to the exploration and development of gas reserves, gas processing facilities and gas storage fields as well as transportation agreements for oil, gas and other fuels. We have drafted the production sharing agreements and partnership agreements for numerous exploration and development limited partnerships in the US and have also advised clients negotiating oil and gas leasing, operating and drilling agreements. Our practice has also prosecuted several of the leading cases that have delineated the scope of the Natural Gas Act’s production and gathering exemption over the past quarter century. Our clients include most of the independent midstream natural gas companies that gather, process, treat and deliver natural gas to the inter- and intrastate pipeline grids. We also represent developers and buyers of landfill gas projects.

Litigation and Legislation

Our work on behalf of our natural gas and oil pipeline clients often involves litigation in the state and federal courts, and lawyers practicing in the natural gas area are consequently experienced in many elements of trial and appellate court litigation. Some of our work has a legislative dimension and, as a result, we are experienced in public policy advocacy before Congress and a number of state legislatures. Our firm was instrumental in helping to repeal the restrictions contained in the federal Powerplant and Industrial Fuel Use Act and in obtaining state legislation permitting the construction of a new gas pipeline in environmentally sensitive areas. We also follow new legislative initiatives in Congress on behalf of utility industry groups, including national gas-fired generators.

International Restructuring and Privatization

Internationally, Hunton Andrews Kurth has been engaged in a variety of natural gas and oil matters. We regularly assist governments and their agencies, including government-owned corporations, that seek to reform (or create) regulatory systems and advise them on the legal, commercial and financial issues pertaining to infrastructure development and privatization projects. For example, our lawyers represent the government of Tanzania in all phases of the development of a major gas-to-electricity project, which includes the construction of gas production, processing and pipeline facilities, and have developed proposed regulations for Pakistan’s natural gas sector. Similarly, we have represented governments and developers in natural gas transactions in the United Kingdom, Hungary, Croatia, Poland and Lithuania. In Bolivia, Colombia, Mexico, Brazil and Argentina, we have assisted power project developers with the development and financing of gas-fired power projects. The firm has advised lenders on gas pipeline construction and fuel supply issues in Brazil and Argentina. In Ukraine, we advised the Government on legislative initiatives (including a draft Production Sharing Agreement Law) and on streamlining administrative permitting processes designed to attract foreign private investment in coal bed methane extraction. We also advised the Government of Ukraine on the marketing capacity of the Odessa-Brody oil pipeline.

We also work regularly with international lending institutions such as the World Bank and the Inter-American Development Bank, and commercial lenders. Our lawyers have provided advice on the institutional and financial restructuring of the Jordanian oil, natural gas and power industries, and have been involved in a number of gas and electric projects under the auspices of the World Bank. We also represented a consortium on all aspects of bidding to develop and own a major gas pipeline project in Mexico. Subsequently, our lawyers represented one of the project’s equity owners in all aspects of project development and financing. In our work on all of these matters, we have taken full advantage of the range of regulatory, financial, commercial, dispute resolution, and governmental relations experience that Hunton Andrews Kurth possesses.