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Northern Natural Gas Co. v. Approximately 9117 Acres in Pratt

United States District Court, Tenth Circuit

December 27, 2013




Before the court are the following:

Northern’s Motion in Limine to Exclude 2010 Simulation and Memorandum in Support (Docs. 734, 735); Defendants’ Responses (Docs. 741, 742, 746, 748); and Northern’s Reply (Doc. 754));
Northern’s Motion in Limine on Use of Trans Pac Litigation Materials and Memorandum in Support (Docs. 736, 737); Defendants’ Responses (Docs. 749, 751, 752, 753); and Northern’s Reply (Doc. 757); and
Defendant L.D. Drilling’s Motion in Limine and Motion for leave to File Daubert Motion (Doc. 738); Northern’s Response (Doc. 744); and Defendant’s Reply (Doc. 755).

I. Northern Motion in Limine to Exclude 2010 Simulation.

Northern worked on a computerized gas migration model, referred to as “the 2010 simulation, ” intending to use it in Northern’s 2009 FERC application.[1] Northern created the model by inputting data into a leased software program called “Eclipse.” Northern says the model was never completed and was abandoned in 2010. It now moves for an order prohibiting use of the 2010 simulation at trial, citing the following reasons: the simulation is not based on facts similar to known conditions (i.e., it does not include data for the known fracture porosity of the 2010 Extension Area); it uses incomplete and inaccurate facts (including what Northern says are artificially assumed concentrations of native gas to simulate migration pathways in the Extension Area); it did not generate results consistent with known conditions (such as rapid gas movement through observed fractures in the upper Viola formation); and it does not comply with standard reservoir engineering practices. Additionally Northern argues the simulation does not “fit” the relevant scientific issues, in part because it was abandoned in May 2010 and does not incorporate significant data acquired thereafter.[2]

Defendants, meanwhile, contend Northern is attempting to exclude the 2010 simulation because its results contradicted Northern’s experts and Northern’s prior representations. Defendants argue the model shows that storage gas migrated to the Extension Area before defendants began producing in that area and then leveled off after defendants began producing, all contrary to Northern’s current theory of migration. Defendants argue the 2010 simulation is admissible at least to impeach Northern witness Randal Brush, who worked on the simulation. Defendants further assert that their own experts may rely on the 2010 simulation pursuant to Rule 703 of the Federal Rules of Evidence. They note that if experts would reasonably rely upon such data in forming an opinion, the data itself need not be admissible for the expert’s opinion to be admitted. Finally, defendants argue Northern’s motion is premature because defendants’ experts have not yet explained how they will use the model.

The 2010 simulation is potentially relevant for impeachment purposes. To the extent Northern’s experts offer opinions at trial that differ from results (preliminary or otherwise) obtained under the 2010 simulation, defendants may be entitled to ask the witnesses why there is a difference and why Northern abandoned the model. The witnesses can offer the explanations cited above – e.g., incomplete data, invalid assumptions, or results at variance from known conditions. But ultimately it will be up to the Commission to consider whether results from the 2010 simulation are relevant and whether they contradict Northern’s current position or otherwise undermine the credibility of its witnesses. The Commission may find that results from the model are so unreliable or limited as to say virtually nothing about the witnesses’ current opinions, or it may conclude that the results cast substantial doubt on the witnesses’ present testimony. The Commission is better suited than the court to assess the significance of how various assumptions or limited data effect the reliability of a gas migration model. It rests within the sound discretion of the Commission to decide how much evidence relating to the 2010 simulation is relevant and what weight, if any, it should be given.

As for whether defendants may offer evidence of the 2010 simulation through their own experts, the court concludes for the reasons discussed infra in Section III that any challenge to the scientific reliability of any expert opinion based on the 2010 simulation should be raised in the first instance before the Commission.

II. Northern’s Motion to Exclude Trans Pac Litigation Materials.

To a substantial degree, this motion duplicates the points and authorities raised and responded to in the motion to exclude the 2010 simulation. It may be that this sort of excess briefing impresses the clients; it does not impress the court.

Northern seeks an order prohibiting use of materials from the Trans Pac litigation[3] as substantive evidence at trial. Although conceding that expert reports and testimony from the Trans Pac case may be properly used to impeach its experts at trial, Northern argues such material cannot be introduced as substantive evidence because it is hearsay. It argues the experts who authored the reports in Trans Pac are not “unavailable” within the meaning of Federal Rule of Evidence 804 because defendants made no effort to depose them or obtain their presence at trial. Additionally, it contends the prior statements of these experts cannot be attributed to Northern under Rule 801(d)(2). Finally, it argues the Trans Pac expert opinions are now unreliable – because they do not take into account the past eight years of accumulated data about the storage field – and that their admission would result in unfair prejudice.[4]

Both sides agree the Trans Pac material can be properly used for impeachment purposes. In light of this, the parties’ extensive dispute about whether the materials can also be used as substantive evidence seems to the court to be an expensive academic exercise without much significance. Be that as it may, the court will not prohibit the Commission from considering these materials as evidence. Defendants have made a preliminary showing that the Netherland, Sewell expert opinions from the Trans Pac case qualify as non-hearsay under Fed.R.Evid. 801(d)(2). That rule allows a statement to be offered against a party if it is one that ...

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