Northern District of Texas Rejects Force Majeure Defense in Winter Storm Uri Natural Gas Supply Dispute
Judge Brantley Starr granted partial summary judgment to HF Sinclair in a Winter Storm Uri natural gas supply dispute, holding that NextEra Energy Marketing could not invoke force majeure despite a 57% drop in Oklahoma gas supply and prices jumping to 100-400 times pre-storm levels. The court found that Section 11.8 of the parties' contract precluded the force majeure defense as long as gas was "available and trading on the open market" and "readily transported"—conditions the court determined were satisfied even at extreme prices.
Background and Commercial Context
This dispute arises from a natural gas supply contract between HF Sinclair Refining & Marketing, LLC and NextEra Energy Marketing, LLC under which NextEra agreed to provide Sinclair with natural gas through the OGT Pool pipeline system in Oklahoma. When Winter Storm Uri struck, it severely disrupted the natural gas market throughout Oklahoma, causing supply to drop by approximately 57% and NextEra's baseload supply to decline by 37%. Simultaneously, prices skyrocketed to between 100 and 400 times pre-Uri levels. NextEra declared force majeure and failed to deliver gas to Sinclair for three days during the storm.
The Contractual Dispute
The parties' contract contained competing force majeure provisions that created tension in their application. Section 11.2 broadly defined force majeure to include "weather related events affecting an entire geographic region, such as low temperatures which cause freezing or failure of wells or lines of pipe." However, Section 11.8 contained critical limiting language introduced by a "notwithstanding" clause:
Notwithstanding Sections 11.2 and 11.3, in no event shall an interruption in, failure of, or unavailability of Gas from, Seller's normal sources of Gas supply be considered an event of Force Majeure under this Section 11 as long as Gas is available and trading on the open market at pools or hubs in the Buyer's market area and from which such Gas could be readily transported to Buyer's location.
The central question before the court was whether Section 11.8 precluded NextEra's force majeure defense when some gas—albeit at extreme prices—remained available and trading during the storm.
The Court's Ruling
Judge Brantley Starr determined that NextEra does not have a force majeure defense under the contract and that it has abandoned its other defenses. The court granted in part Sinclair's motion for summary judgment and denied in part NextEra's motion for summary judgment. The court reserved the question of damages until after briefing is concluded in accordance with the court's order on the motion to compel.
The parties had filed cross-motions for summary judgment largely disputing whether Section 11.8 prevents NextEra from declaring a force majeure event because some expensive gas was, in fact, trading on the open market during the time in question.