Oil and gas

Overview

Bates White’s experts have extensive analytical and operating experience in midstream and downstream fuel market segments. We offer clients our knowledge and expertise to support fuel procurement programs, assess potential market power issues, provide regulatory analysis and insight, provide due diligence support, help value fuel-related assets, and advise on risk management strategies and implementation. We have applied our skills to projects where we identified price indifference points and netback values for proposed LNG vaporization terminals, assessed damages related to market disputes, provided due diligence regarding fuel arrangements for electric generation facilities, negotiated pipeline transportation agreements, testified regarding market risks and procurement plans, and evaluated downstream market and margin potential in regulated and nonregulated end-use markets.

Transfer pricing and intercompany transactions

Bates White guides our oil and gas industry clients through every step of intercompany transactions, from planning and compliance to audit, controversy, and expert testimony. Bates White experts have conducted numerous transfer pricing studies for tax planning, documentation, and audits; past clients include large multinational companies involved in automotive manufacturing, medical products, computer software/hardware, industrial equipment, retail clothing, food products, tobacco, oil drilling services, package delivery services, shipping, and industrial products. Our deep experience in this area allows the multijurisdictional operations of our clients to keep in compliance and withstand the constant scrutiny of taxing authorities. For more information, see our Transfer Pricing and Tax Practice.

Fuel procurement support and evaluation

Bates White’s experts have developed and managed natural gas and fuel oil procurement plans, including auctions and RFPs, under a variety of supply configurations (e.g., AMAs, direct buys, long-term contracts, storage, etc.). We have evaluated and recommended combinations of transportation, storage, and fuel contracts that support the needs of LDCs, electric generators, and other end-use customers. We have used economic theory and econometrics to demonstrate that gasoline wholesalers were appropriately passing the volumetric temperature adjustment along the supply chain to retailers. From evaluating standard form fuel contracts to addressing complex financial issues such as the “debt equivalency” of long-term hedges, our professionals manage the fuel procurement process from concept to evaluation to providing regulatory support for clients’ plans.

Market power assessment

Bates White professionals combine antitrust expertise, a deep understanding of energy markets, and rigorous quantitative analysis to address questions regarding market power. We provide expert consulting and testimony to evaluate a wide range of situations where questions of competitive behavior might arise, such as transactions between regulated and unregulated affiliates, mergers and acquisitions, access to transportation systems and other constrained facilities, and market-based pricing. We advise clients on the economic, financial, and regulatory implications of mergers and acquisitions in energy markets, and we provide rigorous and defensible quantitative analyses of market power issues. We have extensive experience providing market monitoring on behalf of the FTC, as well as consulting services and expert testimony in proceedings before the Courts, FERC, and state public utility commissions.

Regulatory support

Bates White’s experts leverage their extensive energy market, financial, and litigation experience to address complex regulatory issues, including the design and evaluation of natural gas and oil procurement programs, the assessment of market structure, presence of market power, and the design of market mechanisms. We have provided testimony in market-based rate proceedings, rate cases, IRP dockets, and facility siting hearings. Our experts have also helped regulated companies and their customers design revenue requirement strategies using typical approaches (e.g., cost-of-service models, rate design, PBRs, benchmarking, etc.) and provided expert testimony on key economic drivers such as cost of capital, ROE, and depreciation. In addition, our experts have developed systems of accounts and implemented regulatory accounting systems in a number of countries that have restructured their energy industries.

Market assessment, due diligence, and asset valuation

Investment decisions and regulatory outcomes rely on well thought out assessments of potential markets and inherent risks. To help our clients in this regard, Bates White experts provide a solid understanding of potential markets and revenues, assessments of the costs of building infrastructure and delivering fuel, and evaluations of the risk of competitive alternatives. We also help clients understand their exposure to potential changes in, and between, fuel prices and transportation values. In addition, our experts have developed market assessments or valuations of natural gas and oil distribution companies, LNG vaporization terminals, interstate and intrastate natural gas pipelines and storage facilities, fuel supply contracts for electric generation facilities, and fuel procurement and hedging programs.

Trading and risk management

Wide swings in the price and value of natural gas, oil, and related transportation have triggered investigations, enforcement actions, and private disputes. Bates White’s experts are well-versed in the complexities of physical and financial energy markets, energy industry disputes, and state and federal regulatory issues and enforcement actions. We have analyzed the trading and risk management practices of a number of energy companies and designed risk management processes and compliance functions, including the definition of a risk management function, identification of business models (and related IT systems), and  methods of transferring risk-managed benefits to the utility’s customers. We have provided analyses and testimony in cases alleging market manipulation and fraudulent price reporting, class action litigation, and contract disputes and price reopeners.