Monday, June 19, 2017

Shale Law Weekly Review - June 19, 2017

Written by Torin Miller - Research Assistant

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

Oil and Gas Operations: Pennsylvania Commonwealth Court Rules That Well Under Oil Refinery Is Not ‘Abnormally Dangerous’
On June 12, 2017, the Pennsylvania Commonwealth Court ruled that a permit issued by the Pennsylvania Department of Environmental Protection (DEP) is valid under the law even where the permit would allow the drilling of a well underneath an oil refinery. The Warren, Pennsylvania, refinery objected to the well, citing concerns of large fires or explosions, as well as the potential for leakage from old oil wells on the site. The court held that “hydraulic fracturing is not an abnormally dangerous activity under Pennsylvania law,” and that the permit is thus valid and legal.

Production Reports: Ohio Shale Gas Production Rises While Oil Falls
On June 9, 2017, the Ohio Department of Natural Resources (ODNR) issued its first-quarter production report for 2017. In comparison to the first-quarter report from 2016, this quarter’s natural gas production is up 12.86% while oil production is down 28.82%. Of the 1,613 unconventional wells listed in the report, 1,560 were producing gas or oil this quarter with an average oil production of 2,503 barrels and an average natural gas production of 238,411 Mcf.

Economic Development: Report Cites $50 Billion Investment in Ohio’s Marcellus and Utica Shale Formations in Recent Years
A May 2017 report released by Cleveland State University found that an estimated $50.4 billion was invested in Ohio’s Marcellus and Utica upstream, midstream and downstream markets between 2011 and 2016. Upstream investments constituted $38.8 billion of total investments, with the largest portion of that being attributed to investments in undeveloped land and drilling. Chesapeake Exploration LLC had nearly three times as many wells drilled, being drilled, and producing in that time period than the nearest upstream company.

Pipelines: Public Hearing Focuses On Ohio Pipeline Safety Issues
On June 15, 2017, the Ohio Power Siting Board (OPSB) held a public hearing regarding a 13-mile Hamilton County natural gas pipeline proposed by Duke Energy, according to a media report. According to the report, more than a 100 citizens attended the hearing with the majority citing safety concerns from the construction of a pipeline in a highly-populated area. The OPSB ultimately will make the decision on whether Duke Energy may proceed with the $86-112 million project.

Methane Emissions: EPA Delays Methane Emission Standards By Two Years
On June 13, 2017, the United States Environmental Protection Agency (EPA) issued a press release proposing a two-year delay of the New Source Performance Standards set by the EPA in 2016. The proposal comes a week after the EPA issued a 90-day delay. Specifically, the two-year stay affects “fugitive emissions, pneumatic pump and professional engineer certification requirements in the rule while the agency reconsiders issues associated with these requirements.” The Bureau of Land Management (BLM) is also following suit in delaying the implementation of requirements, according to a media report.

Pipelines: Judge Says Dakota Access Pipeline Needs New Environmental Impact Assessment
On June 14, 2017, the United States District Court for the District of Columbia ruled that the United States Army Corps of Engineers “did not adequately consider the impacts of an oil spill on fishing rights, hunting rights, or environmental justice, or the degree to which the pipeline’s effects are likely to be highly controversial.” The court noted, “To remedy those violations, the Corps will have to reconsider those sections of its environmental analysis upon remand by the Court.” However, the court also noted that whether the pipeline must cease to operate presently is a separate question to be determined in the near future.  

Public Lands: BLM Generates $4.7 Million In Oil And Gas Leases
On June 14, 2017, the United States Bureau of Land Management (BLM) issued a press release announcing that it had leased a combined 87 parcels in three states totaling nearly 68,000 acres and over $4.7 million. Proceeds from the sale, which included parcels in Colorado, Oklahoma and Texas, will be distributed among the three states and the federal government. “These oil and gas lease sales go a long way toward fueling America’s economy and supporting good-paying energy sector jobs,” BLM Acting Director Michael D. Nedd said in the release.

Water Quality: Wyoming Officials To Appear In Pavillion Water Contamination Litigation
On June 14, 2017, the United States District Court for the District of Wyoming ruled that Jerimiah Rieman, former energy advisor to Wyoming Governor Matt Mead, could be deposed in a case “that alleges a natural gas company's operations contaminated the drinking water of a Wyoming family,” according to a media report. This litigation follows an extensive investigation into potential water contamination in the Pavillion area. In November 2011, the United States Environmental Protection Agency (EPA) published a draft report stating that “inorganic and organic constituents associated with hydraulic fracturing have contaminated ground water at and below the depth used for domestic water supply” and that “gas production activities have likely enhanced gas migration at and below depths used for domestic water supply and to domestic wells in the area of investigation.” However, the EPA never finalized their report. On June 20, 2013, the State of Wyoming announced it would continue the Pavillion investigation, and it subsequently found that no connection between Encana’s operations and the contamination existed. Mr. Rieman facilitated the transfer of the investigation from the EPA to the state of Wyoming.

Natural Gas Production: North Dakota Reports Record Production in April
The North Dakota Industrial Commission (NDIC) released its latest production report on June 13, 2017. The report shows that a record number of 13,717 wells were producing gas in April 2017. Of these wells, about 86% were producing from unconventional plays, and gas production reached an all-time high of 1,836,308 MCF/day.

Wildlife: Report Finds that Overlap Between Energy Development and Grouse Habitat Is Not Significant
On June 9, 2017, Backcountry Hunters and Anglers released a report analyzing the overlap between key habitat areas of sage-grouse and areas of existing and potential energy development throughout the western United States. The report concludes that there is only a 4% overlap between key habitat and “existing coal and oil and gas leases on federal lands.” Additionally, “[t]he majority of federal lands within the [key habitat] have zero to low assumed potential for oil and gas development based on existing data sources.” Further, the report concluded that “[t]he majority of federal lands and minerals identified as assumed medium or high development potential for oil and gas are located outside of the [key habitat].”

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