Shale Gas Weekly Review – July 14, 2016

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

Pennsylvania Senate Votes to Approve Bill that could undo Parts of the Proposed Chapter 78a Regulations

On July 11, 2016, the Pennsylvania Senate voted to approve an amendment to SB 1229 that would undo parts of the pending Chapter 78a regulations for unconventional wells. The amendment approved to SB 1229 by the Senate would undo parts of the Chapter 78a regulations for waste disposal reporting, drilling site restoration, and on-site water storage standards. SB 1229 is currently in the House of Representatives for review. Additionally, the Chapter 78a regulations are currently under review at the Attorney General’s office.

Senate Bill Would Limit Pennsylvania Methane Rules

On June 20, 2016, Senate Bill 1327 was referred to the Pennsylvania Senate Environmental Resources and Energy Committee. If enacted, the bill would block the Environmental Quality Board from imposing stricter methane rules than those of the Environmental Protection Agency. In a memo, Senator Guy Reschenthaler, the prime sponsor of the bill, expressed his concern that more stringent regulations would be a “competitive economic disadvantage” for Pennsylvania.

DOT Issues Proposed Rule on Oil Spill Response Plans

On June 13, 2016, the Department of Transportation issued a draft proposed rule with stricter oil spill response plan (OSRP) requirements. The proposed rule requires emergency planning by train operators carrying 20 or more tank cars in a row loaded with crude, in addition to train operators carrying a total of 35 or more loaded tank cars of crude. Moreover, the proposed rule requires railroads to inform the state and tribal emergency response commissions of high-hazard flammable train operations in order to improve transparency and community preparedness.

The Department of the Interior Releases Final Rule for Offshore Drilling in the Arctic

On July 7, 2016, the Department of the Interior (DOI) issued a final rule outlining new drilling requirements for the Arctic Outer Shelf (Arctic OCS). The purpose of the rule is to promote safe, efficient exploratory drilling while protecting the environment and traditions and resources of Alaska Natives. The rule imposes regulations requiring operators to plan for risks so that they might avoid them, or at least lessen their impact. For instance, the rule dictates that operators keep relief rigs nearby in order to drill a relief well if one is needed.

U.S. Court of Appeals for the Tenth Circuit Vacates Preliminary Injunction

On July 13, 2016, the U.S. Court of Appeals for the Tenth Circuit issued an order with no opinion to vacate the preliminary injunction ordered on September 30, 2015 that blocked the implementation of the BLM’s rule on hydraulic fracturing while the rule was challenged for legality. Although the injunction was rendered inoperable by the U.S. District Court for the District of Wyoming in a decision on July 21, 2016 that stated the BLM did not have the authority to regulate hydraulic fracturing, the Interior Department and environmental intervenors appealed the decision to overturn the procedural precedent created by the injunction.

CU Study Concludes that Hydraulic Fracturing is not the Cause of Methane Migration

On July 11, 2016, University of Colorado (CU) published a study, which concluded that “wellbore barrier failure, not high-volume hydraulic fracturing in horizontal wells, is the main cause of thermogenic stray gas migration” in Denver-Julesburg Basin of Colorado. The study was based on an archive of data from 1988 to 2014, which contained information on 924 sampled wells in the basin, 42 of which contained thermogenic methane.

Oregon State Researchers Retract PAH Study

On June 29, 2016, researchers from Oregon State University retracted a study entitled “Impact of Natural Gas Extraction on PAH Levels in Ambient Air.” The retracted study claimed that emission levels of polycyclic aromatic hydrocarbons (PAHs) from hydraulic fracturing exceeded the EPA’s “acceptable risk level.” The retraction was due to incorrect calculations, which altered some of the study’s conclusions when corrected.

UK Committee on Climate Change Releases Report on Greenhouse Gas Emissions Resulting from Hydraulic Fracturing

On July 7, 2016, the UK Committee on Climate Change (CCC) published a report entitled “The compatibility of UK onshore petroleum with meeting the UK’s carbon budgets.” The report concludes that the widespread use of hydraulic fracturing to exploit shale gas must be closely regulated in order to conform to UK climate goals. The report outlines three tests that, according to the CCC, need to be met for hydraulic fracturing to comport with these goals: (1) strict emissions limits, (2) the replacement of imported gas with domestically produced gas rather than increased consumption, and (3) reductions in emissions elsewhere to counteract the additional shale gas production emissions and stay within carbon budgets.  

EIA’s Latest Short-Term Energy Outlook Predicts that the Sabine Pass LNG Terminal will Bring a Fundamental Shift in the Second Half of 2017

On July 12, 2016, the U.S. Energy Information Administration (EIA) released a Short-Term Energy Outlook (STEO), which predicted that the United States will be a net natural gas exporter starting in the second half of 2017. Specifically, the STEO predicts the startup of Cheniere’s Sabine Pass LNG liquefaction plant in Louisiana, which began in February 2016, will average 1.3 Bcf/d in 2017 in exports. Additionally, the EIA predicts that the natural gas pipeline exports to Mexico will continue to rise based on Mexico’s electric power sector’s increasing demand. The EIA expects that this increase in exports will cause a decrease in imports, thus, transforming the United States into a net exporter of natural gas.

Finland Receives First LNG Cargo at Terminal in Pori

On July 10, 2016, Finland received its first cargo shipment of LNG aboard Coral Energy at the Gasum’s subsidiary Skangas LNG terminal in Pori, according to a Skangas news release. The LNG terminal is scheduled to be completed in August 2016, and the first commercial deliveries of LNG to customers are set to begin in September 2016.

Dunkerque LNG Terminal Receives its First Shipment of LNG

The arrival of the Madrid Spirit, the tanker on which the LNG was shipped, was announced in a press release issued July 8, 2016. There are plans for a second tanker to arrive in the first half of August and the Dunkerque terminal should be ready for commercial operations by the end of September. 

Written by Chelsea Wilson and Jessica Deyoe - Research Assistants