Transwestern Pipeline Company v. Corinne Grace was a hearing before the Federal Energy Regulatory Commission (FERC) on May 25, 1990.
Transwestern Pipeline (a subsidiary of Enron at that time)[1][2] claimed that Grace, an independent oil and gas operator, had a well that was misclassified by the New Mexico Oil Conservation Division (NM OCD) as what is called a stripper well under §108 (Ceiling Price for Stripper Well Natural Gas) of the Natural Gas Policy Act of 1978 (NGPA).
Section 108 of the NGPA gave a price ceiling for stripper well natural gas.
This result is also consistent with the pricing scheme established in the NGPA because the section 102 ceiling price, which applies to gas from new onshore reservoirs which did not produce before April 20, 1977, was intended to reward producers for incurring the risks involved in exploring for new sources of gas.
Since producers who drill in the pool know that if they drill to a certain depth that they will encounter the Morrow Formation, with the possibility of multiple pay zones, they do not bear as great a risk as other producers.The Federal Energy Regulatory Commission agree that the State of New Mexico Oil and Gas Commission was correct in its application of allowing NGPA Section 108 pricing to take place as well as to deny Section 102 pricing.