Monday, September 12, 2016

Shale Gas Weekly Review - September 12, 2016

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

Resolution Passed by Wilmot Township as Protest to Royalty Deductions
Wilmot Township, Pennsylvania passed a resolution on September 6, 2016 to discontinue production from oil and gas wells in the county where the landowner is not guaranteed at least one-eighth of the royalty. The resolution states that some landowners have received nothing in their royalty checks while others have a negative balance from excessive deductions. As reported by NGI’s Shale Daily, the ordinance was passed to protest the high post-productions costs that were being deducted from royalty checks.

Department of Justice Announces Refusal to Approve the Dakota Access Pipeline
The Department of Justice issued a joint statement with the Department of the Army and the Department of the Interior on September 9, 2016 regarding the contentious construction of the Dakota Access pipeline. The department stated that authorization for the construction of the pipeline will be prohibited on Corps land that borders Lake Oahe. This announcement follows on the heels of a federal court ruling that refused to grant an injunction to the Standing Rock Sioux Tribe against the U.S. Army Corps of Engineers. The federal judge held that the plaintiffs did not sufficiently demonstrate that damage could be prevented by enjoining the Corps permitting of the pipeline.

California Judge Rules Against BLM Approval of Drilling Plan
On September 6, 2016 a ruling was issued by California Judge Michael Fitzgerald that overturned the Bureau of Land Management’s management plan for federal land. The case was brought by the Center for Biological Diversity and Los Padres Forestwatch. The plaintiffs claimed that BLM did not submit a sufficient environmental impact statement because they failed to adequately address the environmental impact of hydraulic fracturing. The court held that the BLM now must prepare a supplemental EIS to examine the environmental impact.

Oklahoma Earthquake Magnitude Increased to 5.8 and Regulators Close Disposal Wells
On September 3, 2016 Oklahoma experienced its largest recorded earthquake with a 5.8 magnitude near Pawnee, Oklahoma. The earthquake was initially reported as a 5.6 but further analysis by the U.S. Geological Survey determined the earthquake to be even greater.  In response, the Oklahoma Corporation Commission implemented an immediate directive to close down disposal wells in the area. The Oil and Gas Conservation Division published a letter they sent to owners of injection wells within the earthquake zone to notify them of the mandatory closure.

New Dominion Oil Company Sued for Oklahoma Earthquake Damage by Its Insurer
A New York District Judge issued a ruling on September 7, 2016 refusing to abstain from hearing a case against the oil company accused of being a cause of the recent Oklahoma earthquake. New Dominion LLC is the oil company being sued by several individuals for damage caused by the September 3rd earthquake. New Dominion sought indemnification from Lloyd's of London which insures the company against environmental liability. Lloyd’s, however, argued that it should not have to pay for these damages since an earthquake is not a “pollution condition.” New Dominion initiated the case in Oklahoma District Court and Lloyd motioned to transfer the case to a district court in New York. The district judge ruled that the forum selection clause in the insurance contract gave the New York court personal jurisdiction over the company.

New Oil and Gas Resource Play Discovered in West Texas

Apache Corporation announced September 7, 2016 the discovery of “Alpine High,” a resource play located in Reeves County, Texas. The new play may have reserves of three billion barrels of oil and 75 Tcf of natural gas. Currently, Apache has secured over 300,000 acres and has already drilled 19 wells.

Written by Jacqueline Schweichler - Education Programs Coordinator

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