Friday, July 22, 2016

Shale Gas Weekly Review – July 22, 2016

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

Independent Fiscal Office Expects Impact Fee Collections to Continue Declining in 2016
On July 15, 2016 the Pennsylvania Independent Fiscal Office (IFO) released a research brief entitled “Impact Fee Update and 2016 Outlook.” Impact fees collected by the Commonwealth are distributed among various programs throughout Pennsylvania, including local governments, environmental initiatives, and emergency services. These impact fee revenues decreased by $35.8 million in 2015 and, according to the IFO, this downward trend is likely to continue. All three scenarios presented by the IFO for 2016 show a decline in impact fee collections. In the first scenario, the current trend continues and the IFO predicts that impact fee revenues will decrease by $15.2 million. If there is an increase in drilling, the best case scenario, the estimated loss decreases to $5.4 million. In the worst case scenario, where there is a reduction in the fee schedule and the current trend regarding new wells continues, the IFO predicts that impact fee collections will decrease by $56.5 million.

Pennsylvania DEP Unveils Updated Version of its Interactive Mapping Tool for Oil and Gas Wells
In July 2016, the Pennsylvania Department of Environmental Protection (DEP) unveiled an updated interactive mapping tool for viewing conventional and unconventional oil and gas wells in Pennsylvania. Both non-producing and producing wells can be viewed on the updated map based on information the DEP has access to from permit applications, reports submitted by well operators, or authorization requests.
Stonehenge Appalachia LLC Agrees to $1.5 Million Penalty for DEP Violations
In a news release issued July 18, 2016, the Department of Environmental Protection announced that it entered into a Consent Order and Agreement with Stonehenge Appalachia. Stonehenge agreed to pay $1.5 million in civil penalties for environmental damage that the DEP attributed to the company. The environmental damage includes, according to the DEP, allowing sediment discharge to continue unchecked, causing a landslide and filling two wetlands, and contaminating Pennsylvania waters through directional drilling activities.

Study Looks at Connection Between Asthma and Natural Gas Development
In a study published July 18, 2016, researchers concluded that an association exists between asthma exacerbations and unconventional natural gas development (UNGD). The study included three types of exacerbations: new asthma medication orders (mild), emergency room visits (moderate), and hospitalization (severe). All three types of exacerbations were found to be more likely occur in patients residing near the highest levels of UNGD activity. The study stops short of concluding that the UNGD activity causes exacerbations, noting only an association exists between the two.

Texas Study Examines Correlation Between Seismicity Development and Earthquakes
On July 17, 2016, a study  called “Ellenburger Wastewater Injection and Seismicity in North Texas” was released in an online version of Physics of the Earth and Planetary Interiors. This study is a compilation and assessment of approximately 24,000 injection volume and pressure measurements for the Ellenburger Formation in Northern Texas. In this study, the authors concluded that there is “not only correlation but causation: lower formation compressibility and higher pressures generally develop at the same time and location where earthquakes occurred” in the Ellenburg Formation. Additionally, the authors used this data to develop preliminary forecasts for the Ellenburger Formation where seismicity will continue or develop and concluded that additional data would be required to predict and prevent seismic hazard more efficiently.
U.S. House of Representatives Votes on U.S. Department of Interior Appropriation Bill
On July 14, 2016, the U.S. House of Representatives voted 231 to 196 to pass HB 5538, a 2017 fiscal appropriations bill from the U.S. Department of the Interior. The bill is now in the U.S. Senate awaiting a vote. In its current form, provisions of HB 5538 would deny funds to implement and enforce several proposed federal regulations against the oil and gas industry.
Volume of Natural Gas Traded in U.S. Increases for the First Time Since 2011
In May, Cornerstone Research released a report regarding 2015 FERC Form 552 submissions. In 2015, the overall trading volume of natural gas increased by 4.1%, ending the downward trend that persisted from 2011 to 2014. Production of natural gas in the United States rose by 5% and the EIA predicts that it will continue to increase until 2040, with consumption increasing more slowly.

PHMSA Issues an Amended Corrective Action Order to Texas Eastern Transmission LP
On July 19, 2016, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued an Amended Corrective Action Order to Spectra Energy’s subsidiary Texas Eastern Transmission LP. This order followed an initial investigation by PHMSA into Texas Eastern Transmission LP’s natural gas pipeline, Line 27, that exploded on April 29, 2016, near Delmont, Pennsylvania. The preliminary investigation found that a pipeline that runs parallel to Line 27 “has shown a pattern of external corrosion with characteristics similar to the conditions that caused the failure on Line 27.” The amended corrective action order outlines fourteen mandatory corrective actions that Texas Eastern Transmission LP must make or the company will face civil penalties for failure to comply.

TransCanada Displays Commitment to Energy East Pipeline Project
On July 14, 2016, TransCanada signed a memorandum of understanding (MOU) with four labor unions, evidencing the company’s commitment to completing the Energy East Pipeline and employing over 14,000 Canadians during the nine years it will take to complete. The Energy East Pipeline will transport oil across Canada to the country’s eastern refineries.

Written by Chelsea Wilson and Jessica Deyoe - Research Assistants 

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