Shale Gas Law Weekly Review – March 23, 2016

The following information is an update of recent, local, state, national, and international legal developments relevant to shale gas:

Another Royalty Lawsuit Filed Against Chesapeake Energy Corp.

On March 8, 2015, a family who owns mineral rights in the Eagle Ford Shale Play brought an action against Chesapeake Energy Corp. for breach of contract in the Texas 343^rd District Court. Plaintiffs argued that Chesapeake Energy Corp. violated specific lease terms by failing to pay adequate royalties. More information on the case Dilworth v. Chesapeake Operating, LLC, et al. is available at docket no. M-16-0011-CV-C.

Pennsylvania Auditor General is Performing an Impact Fee Audit

On March 9, 2016, Pennsylvania Auditor General Eugene DePasquale announced that he would perform an audit of the Pennsylvania Public Utility Commission (PUC)’s administration and distribution of the impact fee revenue provided under Act 13 of 2012. In a news release, PA Auditor Eugene DePasquale declared that one of the audit’s main objectives is to determine whether the counties and municipalities have properly spent the money allocated under Act 13. The audit period started on February 14, 2012.

New Mexico Oil Conservation Division Orders the Closure of Disposal Wells in Southeast New Mexico

On March 9, 2016, the New Mexico State Land Office issued a Cease and Desist Order against Texas-based Company Siana Operating LLC alleging that the company’s drilling activities in Lea County caused environmental damages on state trust lands near the town of Eunice. In the meantime, the New Mexico Oil Conservation Division ordered Siana Operating LLC to shut down multiple wastewater injection wells close to the accident site until a hearing scheduled on March 31.

U.S. Army Corps of Engineers Announces Natural Gas Drilling Exclusion Zone in Northern Texas

On March 15, 2016, the U.S. Army Corps of Engineers announced that it decided to extend the natural gas drilling exclusion zone at Joe Pool Dam located in northern Texas. The Army Corps previously agreed on a 3,000-foot exclusion zone based on a study results but finally adopted a 4,000-foot exclusion zone after the release of an independent external peer review. The Army Corps added that they also would be working on mitigating the effects of induced seismicity “by limiting injection wells within five miles of Joe Pool Dam.”  

COGCC Orders the Closure of 40 Operating Wells in Southwest Colorado

On February 23, 2015, the Colorado Oil and Gas Conservation Commission (COGCC) issued a Cease and Desist Order against Hoshi Energy, LLC and Atom Petroleum, LLC, alleging that the companies illegally operated certain wells located in La Plata County, Colorado, by failing to pay insurance fees. This failure led to multiple surface operations, pumping and venting violations. As a result, an estimated 40 wells have been shut down. 

U.S. Department of Interior Cancels Oil and Gas Lease on Montana Tribal Lands

On March 17, 2015, Secretary of the Interior Sally Jewell announced that the Bureau of Land Management (BLM) has cancelled Solenex LLC’s right to develop oil and gas resources in the Badge-Two Medicine area located in the Lewis and Clark National Forest, Montana. In a Press Release, the U.S. Department of Interior declared that “the Solenex lease was improperly issued in violation of the National Environmental Policy Act and the National Historical Preservation Act.” The decision taken by Sally Jewell comes after approximately two years of litigation between Solenex LLC and the U.S. Department of Interior. More information on the case Solenex LLC v. Jewell et al. can be found at docket no. 1:13-cv-00993.

Canadian Study Finds Significant Unconventional Gas Reserves in the Liard Basin

In March 2016, five Canadian organizational entities released a study entitled “the Unconventional Gas Resources of Mississippian-Devonian Shales in the Liard Basin of British Columbia, the Northwest Territories, and Yukon.” The researchers found that “the ultimate potential for marketable unconventional gas in the Liard Basin is estimated to be very large, with expected volumes of 6 196 billion m³ (219 Tcf).”

Written by Chloe Marie - Research Fellow