Monday, July 3, 2017

Shale Law Weekly Review - July 3, 2017

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.
Regulations: EPA Proposing Rule to Rescind the Clean Water Rule
In June 27, 2017 news release, the Environmental Protection Agency (EPA) and the Army Corp of Engineers proposed a rule rescinding the Clean Water Rule. EPA Administrator Scott Pruitt said that with this proposal, "[The EPA] are taking significant action to return power to the states and provide regulatory certainty to our nation's farmers and businesses." Administrator Pruitt also said, "This is the first step in the two-step process to redefine 'waters of the U.S.' and we are committed to moving through this re-evaluation to quickly provide regulatory certainty, in a way that is thoughtful, transparent and collaborative with other agencies and the public." The news release states that the proposed rule would be a recodification of the regulatory language in place prior to the 2015 Clean Water Rule. The EPA says the new rule, “will not change current practice with respect to how the definition applies.” This action follows an executive order issued by President Donald Trump in February 2017 asking the EPA to review the Clean Water Rule. Litigation: Fifteen States intend to file suit against the EPA
On June 29, 2017, the Attorney Generals of fifteen states, including Pennsylvania, sent a letter to EPA Administrator Scott Pruitt of their intent to sue if the EPA does not remedy the proposal to complete methane emission guidelines for existing sources required by Section 111(d) of the Clean Air Act. The letter states that, “[the] EPA Failed to Perform Its Non-Discretionary Duty to Establish Emissions Guidelines,” and “[the] EPA Has Unreasonably Delayed Establishing Emissions Guidelines.” The state officials in the letter said they would be willing to solve this matter without litigation, but if the standards of Section 111(d) are not met then they intend to file suit in United States District Court.

Pipelines: Ohio Hosts the Fourth Most Natural Gas Pipelines in the Country
In June 2017, API released a report analyzing the natural gas industry in each state. According to a Columbus Business First media report, one trade group calculates that Ohio is home to the fourth most natural gas pipelines in the country. With regards to gathering lines, Ohio follows Texas, Oklahoma, and Pennsylvania. Columbus Business First stated that companies spent $4.2 billion on gathering lines in 2015. Ohio also has 9,796 miles of larger lines transmitting natural gas across state lines, ranking it seventh in the country according to API and ICF who conducted a study on natural gas system data.
Environmental Impact Study: Study on the Induced Seismicity caused by Hydraulic Fracturing
On June 9, 2017, a team of researchers from the University of Alberta released a study on induced seismicity related to hydrocarbon production. The study found that generally increased fluid injection could affect the seismicity in an area. Researchers found that in most of the areas involved in the study, increased seismicity occurred locally but not statewide, despite 8-16 fold increases in some areas. One notable exception was Oklahoma, the study found that the disposal of saltwater in the hydraulic fracturing process has a 85% correlation to increased seismicity. The study found that there are multiple factors that can affect the seismicity in an area including: “(i) the near-surface tectonic background rate, (ii) the existence of critically stressed and favorably oriented faults, which must be hydraulically connected to injection wells, (iii) the orientation and magnitudes of the in situ stress field, combined with (iv) the injection volumes and implemented depletion strategies.”

Security: Oil and Gas Companies Could be Vulnerable to Cyber Attacks
On June 27, 2017, Russian Oil and Gas company Rosneft was hit with a large scale cyberattack. This attack is an example of the risks laid out by the Deloitte Center for Energy Solutions report released June 26, 2017, on how to combat cyber security risk in the oil and gas industry. The report says that the main factor contributing to cyber risk is that most companies industrial control systems (ICS) were not designed to be connected but have been networked through the digitization of operating processes. Deloitte gives suggestions to companies to help combat these cyber risks, telling companies to build a unified program that “creates an ICS environment that is secure, vigilant, and resilient.” Companies can do this by implementing programs such as cyber security awareness training, access controls for systems, increased network security, and better incident response policies.
Regulations: Ireland Passes a Bill Banning Onshore Hydraulic Fracturing
On June 28, 2017, the Irish Seanad passed Petroleum and Other Minerals Development (Prohibition of Onshore Hydraulic Fracturing) Bill 2016. The bill bans any state agency to authorized any permit, license, or lease for the exploration or production of shale gas in Ireland. According to a Irish Times media report, this is the first Private Member drafted bill to be passed by the  Oireachtas. The bill passed after a public consultation earlier this year, which received 8,000 submissions in favor of the ban and only one opposed, according to the Irish Times.

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