Written by Richard Neal- Research Assistant
The following information is an update of recent local, state, national, and international legal developments relevant to shale gas.
Public Lands: Pennsylvania Supreme Court Interprets Environmental Rights Amendment
On June 20, 2017, the Pennsylvania Supreme Court reaffirmed the view, first expressed in the Court’s plurality decision in Robinson Township v. Commonwealth (2013), that the state’s Environmental Rights Amendment should be given a more expansive construction than has been accorded to the Amendment previously by the courts. In Pennsylvania Environmental Defense Foundation v. Commonwealth (PEDF), the Court struck down amendments made to the state’s Fiscal Code which transferred all but up to $50 million a year in royalty money from oil and gas leases on state lands from the Pennsylvania Department of Conservation and Natural Resources to the state’s general fund, because those funds were not used for the conservation or maintenance of public natural resources. For more information on this case, see the recent Shale Law in the Spotlight on our blog.
Mergers & Acquisitions: EQT and Rice Energy Enter into $8.2-Billion Merger Deal
On June 19, 2017, the Pittsburgh based company EQT Corp. and Canonsburg, PA based company Rice Energy Inc., announced they entered into a definitive merger agreement valued at approximately $6.7 billion, including $1.5 billion in net debt and preferred equity. The acquisition from Rice Energy Inc. is for acreage that runs contiguous with land that EQT Corp. owns, making the total acreage owned by EQT Corp approximately 1 million total net acres in the Marcellus. The deal also includes Rice Energy’s midstream assets, including 92% interest in Rice Midstream GP Holdings LP and 28% of the limited partner interests in Rice Midstream Partners LP. Steve Schlotterbeck, EQT president and chief executive officer, commented, "This transaction brings together two of the top Marcellus and Utica producers to form a natural gas operating position that will be unmatched in the industry.”
Economic Impacts: TAMEST Releases Study Looking at Effects of the Shale Industry in Texas
On June 19, 2017, The Academy of Medicine, Engineering, and Science of Texas released a report, concluding that while the shale oil boom has caused economic growth, it also has caused earthquakes, degraded natural resources, overwhelmed small communities, and boosted the frequency and severity of traffic collisions. The report said that increased traffic caused by the shale boom is an issue stating, “The accelerated damage of pavement structures along secondary state highways and local roads has been estimated at $1.5 to $2.0 billion per year. Costs to the trucking industry are also significant. A preliminary evaluation of the cost in the form of additional vehicle damage and lower operating speeds estimated the cost at $1.5 to $3.5 billion per year.” The report also concluded that increased traffic volumes have caused an increase in the frequency and severity of traffic crash incidents, especially those involving trucks.
Production Reporting: Drilling Numbers Rebound in Ohio During First Quarter
On June 7, 2017, Ohio Department of Natural Resources updated the quarterly shale production numbers for the first quarter of 2017. According to a Columbus Business First report, energy companies in eastern Ohio produced a total of 372 billion cubic feet of natural gas in Q1 of 2017. The shale producers in the Utica shale, specifically in eastern Ohio, have increased production by approximately 13 percent from the prior year quarter.
Public Lands: DOI Secretary Zinke Testifies Before Senate Committee
On June 20, 2017, at a hearing before the Senate Energy Committee, Interior Secretary Ryan Zinke was questioned about the Obama era methane rule and the Trump administration's proposed rewrite to this rule. Secretary Zinke told the Committee that it was his intention to enforce the parts of the methane rule that have already taken effect. According to an Associated Press article, Secretary Zinke when asked about flaring of excess methane said, “It’s a public asset we’re flaring, and we need to incentivize it so it’s used and not wasted.” Secretary Zinke said, “‘My intention, so you know, is to rewrite the rule’ without imposing ‘undue costs’ on industry.”
International: Pakistan Establishes Shale Gas and Oil Center
On June 20, 2017, Pakistan’s Ministry of Petroleum and Natural Resources established the Shale Gas and Oil Center to promote exploration and production of their shale resources. In a study by the USAID and EIA in September 2015, Pakistan’s shale reserves were estimated at 188 trillion cubic feet of shale gas and 56 billion barrels of shale oil located in the lower and middle regions of the Indus Basin. A media report stated that sources in the Ministry of Petroleum and Natural Resources planned to create pilot programs within the country to determine the cost of extracting shale gas and oil from these regions.
International: France To Halt the Granting of Oil and Gas Exploration Licenses
On June 23, 2017, in an interview with BFMTV, a french news outlet, Minster of Ecological and Solidarity Transition Nicolas Hulot said that the government of France will not be issuing any new licenses for exploration of hydrocarbons. President Macron campaigned on a pledge to address climate change and energy issues. Minister Hulot said this is the first step in completing that pledge in an effort to halt all hydrocarbon exploration in French territories.
“Newly formed Tri-State Infrastructure Council studies gaps in regional infrastructure” - The Stream
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Check out this week’s Shale Law in the Spotlight: Pennsylvania Supreme Court Takes Expansive View of State Environmental Rights Amendment, Strikes Down Use of Oil and Gas Revenue for Non-Conservation Purposes
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