Shale Gas Weekly Review – July 29, 2016

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

FERC Issues Draft Environmental Impact Statement for the Proposed PennEast Project

On July 22, 2016, the Federal Energy Regulatory Commission (FERC) issued a positive draft environmental impact statement for the proposed PennEast Project in eastern Pennsylvania and New Jersey. FERC determined that the proposed PennEast Project, consisting of approximately 118.8 miles of pipeline, would result in environmental impact; however, the impact could be lowered to “less-than-significant” levels by complying with FERC’s recommended measures of mitigation for this specific project. Comments can be submitted on this draft until September 12, 2016.

Environmental Hearing Board Rules there is Insufficient Testimony to show that the DEP Acted Contrary to Law

On July 7, 2016, the Commonwealth of Pennsylvania Environmental Hearing Board ruled that the appellant, United Refining, did not meet the burden of proof required in its appeal. United Refining challenged the issuance and renewal of a permit by the Department of Environmental Protection (DEP) that allowed drilling under United Refining Company’s property. The Board reasoned that the “although the Appellant raised legitimate concerns about the decision to allow drilling under an active oil and gas refinery . . . there was insufficient expert testimony to demonstrate actual risks associated with the drilling.” United Refining has 30 days to appeal the adjudication if it chooses to do so.

Report Finds that BLM’s Management of Flared Gas Emissions Falls Short

On July 21, 2016, the Government Accountability Office (GAO) released a report which indicates that BLM has frequently ignored its own guidance when approving venting and flaring requests. The GAO estimates that around 90% of the venting or flaring requests received by BLM in 2014 did not include required documentation. BLM approved around 70% of these requests and more than half of these approvals allowed the flaring to occur without royalties. There is also inconsistency among BLM’s field offices concerning how BLM guidance is applied. BLM has proposed changes to its regulations and the Department of the Interior expects to finalize these updates by the end of 2016.

Cuttings from Horizontal Drilling Test Wells Found to be Non-Hazardous

Researchers at West Virginia University have been studying the waste produced from hydraulic fracturing from its Marcellus Shale Energy and Environmental Laboratory (MSEEL). A press release issued July 20, 2016 stated that out of twelve drill cutting samples, all twelve passed the EPA’s toxicity test when BioBase 365 drilling mud was used. The cuttings were also within the Department of Transportation’s standards, meaning that they are safe for transporting on the highway. However, the landfills that the cuttings are transported to have regulations based on exposure levels.

Report Concludes that U.S. Pipeline Expansion Will Prevent Attainment of Climate Goals

A report released by twelve organizations on July 22, 2016 opines that there is no longer a need for a “bridge” to clean, renewable energy. The report states that the U.S. will not be able to meet climate targets if the 19 proposed pipeline projects are completed. According to the report, clean energy is already capable of replacing natural gas, and a climate test needs to be used before more pipeline production is approved.

Southern California Co. Faces Another Lawsuit for its Aliso Canyon Leak

On July 25, 2016, the attorneys for Los Angeles County filed suit in the Superior Court of the State of California in the County of Los Angeles, Central District against Southern California Co. for the 100,000 tons of methane released in the Aliso Canyon Leak. The plaintiffs seek to require Southern California Co. to install sub-surface safety shut-off valves on all of its gas wells to ensure another leak as significant as the one in Aliso Canyon does not occur again.

Six Groups File Suit against the National Park Service for Approving Oil Exploration in a South Florida Preserve

On July 27, 2016, six groups filed suit against the National Park Service (NPS) in the U.S. District Court for the Middle District of Florida. In the complaint, the plaintiffs contend that the NPS violated the Administrative Procedure Act (ACA), the National Environmental Policy Act (NEPA), and Park Service regulations when it approved “an extensive 3-D seismic geophysical exploration survey for oil and gas deposits” in the Big Cypress National Preserve. The plaintiffs claim that the defendants failed to fully analyze the environmental impacts of the seismic exploration in the Preserve and did not comply with the NPS’s own approval standards for oil and gas operations. Therefore, the plaintiffs request that the court declare NPS’s action to be in violation of the NEPA, the APA, and the Park Service regulations and vacate the action.

Bureau of Ocean Energy Management to Require More Financial Assurance Requirements

On July 14, 2016, the Bureau of Ocean Energy Management (BOEM) issued a press release outlining new financial requirements for offshore leases. With rising decommissioning costs in the Outer Continental Shelf (OCS), BOEM’s goal to shield taxpayers from the costs of deconstructing platforms and returning sites to their original condition. Offshore lessees will be required to show that they can fully cover the costs of decommissioning their offshore facilities, but BOEM is allowing for some flexibility in how this requirement is met.

United States’ First LNG Shipment to Spain Arrives at Terminal

On July 22, 2016, the LNG tanker Sestao Knutsen arrived at the Reganosa terminal at Ferrol’s Port, marking the first shipment of US LNG to Spain and the second shipment of US LNG to Europe altogether. Cheniere, which manages the Sabine Pass terminal that the LNG was shipped from, expects the United States to be among the world’s top LNG suppliers by 2020. In a press release, Reganosa speculates that Spain will be among the main importers of US liquefied natural gas because of the country’s superior regasification network and the location of Ferrol. 

Written by Chelsea Wilson and Jessica Deyoe - Research Assistants