Background and Commercial Context

This dispute arises from a natural gas supply arrangement between Kinder Morgan Texas Pipeline LLC and Kinder Morgan Tejas Pipeline LLC (collectively, Kinder Morgan) as supplier and Freeport LNG Marketing, LLC (Freeport) as purchaser. The parties operated under a 2018 Base Contract for the Sale and Purchase of Natural Gas using the North American Energy Standards Board (NAESB) form, modified by Special Provisions and governed as to specific transactions by Transaction Confirmations. Freeport converts purchased natural gas into liquified natural gas for export sale to various customers.

The Winter Storm Uri Events

In February 2021, during Winter Storm Uri, a dispute arose over Kinder Morgan's obligations under the parties' contract. Freeport had negotiated sell-back rights in the Transaction Confirmation, and when Kinder Morgan refused to honor certain repurchase obligations, the supplier claimed force majeure as an excuse for non-performance. The case proceeded to the 133rd District Court of Harris County, which granted summary judgment in favor of Kinder Morgan.

Force Majeure Provisions

The contract's force majeure provisions, as modified by the Special Provisions, provided that neither party shall be liable for failure to perform a Firm obligation to the extent such failure was caused by Force Majeure. Section 11.2 defined Force Majeure to include:

(ii) weather related events affecting an entire geographic region, such as low temperatures which cause freezing or failure of wells or lines of pipe; (iii) interruption and/or curtailment of Firm transportation and/or storage upstream or downstream of the Delivery Point; ... (v) governmental actions such as necessity for compliance with any court order, law, statute, ordinance, regulation, or policy having the effect of law promulgated by a governmental authority having jurisdiction

Critically, the contract excluded from force majeure protection circumstances involving economic hardship or the loss or failure of Seller's gas supply or depletion of reserves, except as specifically provided in Section 11.2.

The Court's Reversal

The Fourteenth Court of Appeals reversed the trial court's grant of summary judgment, finding in Freeport's favor that disputed issues of material fact remained. In its single issue on appeal, Freeport argued that the trial court erred in granting summary judgment based on force majeure because Kinder Morgan failed to prove causation or other qualifying force majeure events. The appellate court agreed, holding that Kinder Morgan had not established as a matter of law that the claimed force majeure events—weather conditions and governmental actions—actually caused its failure to perform under the contract. The case was remanded for further proceedings.