Skip to Main Content

Energy Litigation & International Arbitration

Economic analysis or critique of damage claims requires expertise in economic theory and the use of appropriate statistical, econometric, and other data-intensive techniques. We have significant experience in the analysis of damages in contract litigation matters and are familiar with different vintages of natural gas contracts, having analyzed such contracts in a wide variety of settings over the past two decades.Economic quantification or critique of damage claims requires a solid understanding of the relevant natural gas or oil market as well as expertise in economic theory and the use of appropriate statistical, econometric, and other data-intensive techniques. We have significant experience in the analysis of damages in energy litigation matters, having analyzed such contracts in a wide variety of settings over the past twenty-five years.

Engagements
REPRESENTATIVE ENGAGEMENTS

Below is a list of representative engagements for our Energy Litigation & International Arbitration practice.

Evaluation of the pricing of related-party mitigation sales by a producer

A buyer had a crude oil supply agreement with a national oil company for approximately 100,000 barrels per day (bpd). The agreement permitted the buyer to refuse delivery of contract volumes, but allowed the producer to recover from the buyer penalties equal to the difference between the contract price and the mitigation sales price. The national oil company sold volumes to an affiliated refiner. The buyer alleged that the sale to this affiliate occurred at prices below the fair spot market price. The Brattle Group was retained by the purchaser to provide expert testimony in a confidential arbitration evaluating whether the affiliate sales were priced with a reasonable locational and quality price differential relative to key benchmark crudes.

Breach of natural gas contract

In a jury trial in federal court, we testified on behalf of Amerada Hess as to the appropriate damage theory and amount of damages for the breach of a natural gas supply contract between a gas producer and marketer (Hess). The jury returned a verdict that adopted our damage estimate. On appeal, the federal appeals court affirmed the jury verdict and cited our damage theory for its consistency with legal principles associated with the “anticipatory repudiation” of long-term contracts.

Damages from termination of a natural gas pipeline contract

We submitted an expert report that estimated the damages to a pipeline company resulting from the termination of a long-term pipeline contract. We analyzed the revenues the pipeline would have received from the shipper had the contract not been terminated as well as the opportunities the pipeline had to mitigate by re-selling the pipeline capacity to other shippers. We also recommended appropriate discount rates to use for future damages given the risk associated with the future cash flows under the contract.

Chevron-Sunoco unfair oil pipeline lease

In a dispute between the owners of an oil pipeline in Texas, we submitted an expert report on behalf of Chevron Pipe Line Company, which calculated the damages that resulted from the majority owner of the pipeline entering into a pipeline lease with a subsidiary at a below-market lease price. Our report analyzed the demand for oil pipeline transportation services in Texas and the prices obtained for oil pipeline transportation service on new oil pipeline projects serving the Gulf Coast market. This analysis informed our opinion of a fair lease rate that could have been achieved by an independent owner of the pipeline.

International natural gas arbitration

We have provided expert witness testimony in over 15 arbitration proceedings for both buyers and sellers of natural gas seeking to adjust the price of gas sold under long-term gas supply agreements.  Our engagements have covered both pipeline gas and LNG, and typically involve an analysis of the changes in the relevant natural gas markets that warranted a revision to the contract price. We also calculated the value of gas based on various measured and guided by the legal interpretation of the gas supply contract. While most of these arbitrations have involved European gas markets, we have also advised on gas pricing disputes in Asia, Australia and the United States. We also advise buyers and sellers before and during the negotiations as they aim to reach a new price agreement without referring the matter to arbitration.

Australian natural gas price review arbitration

The Brattle Group reviewed over seventy-five natural gas contracts in South and East Australia, and developed a database of price and non-price terms comparable to the contract under review. We used this database to determine whether there had been a statistically significant change in gas prices in Australia over a 10-year period and to recommend an appropriate price for the contract under review. We also demonstrated the flaws in the regression analysis performed by the opposing witness.

Experts
Publications
News & Knowledge