Tuesday, February 6, 2018

Shale Law Weekly Review - February 6, 2018

Written by:
Jacqueline Schweichler - Education Programs Coordinator

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

State Regulation: Pennsylvania DEP Announces New Funding for Additional Staff
On January 26, 2018, Governor Wolf and the Pennsylvania Department of Environmental Protection (DEP) announced a plan to allocate $2.5 million in the 2018-19 fiscal year for additional staffing. In the press release, DEP stated that over the past ten years DEP staff was reduced by 43% which has caused a significant backlog and an increased wait time for permits. The purpose of the plan is to “reduce permit backlogs, modernize permitting processes, and better utilize technology to improve both oversight and efficiency.” Some of the new initiatives include expanding the e-permitting system, creating a new analytics program, releasing new review processes for permits, and supporting legislation for extended permit terms.

Production and Operation: Pennsylvania DEP Launches Initiative to Plug Abandoned Oil and Gas Wells
On January 30, 2018, the Pennsylvania Department of Environmental Protection (DEP) announced a new initiative that encourages private-sector groups to participate in the program to cap abandoned oil and gas wells within the state. DEP is offering liability protection for private parties assisting in the program. According to DEP, there are thousands of abandoned wells in Pennsylvania that constitute health, safety, and environmental hazards. The program is being offered under the Environmental Good Samaritan Act of 1999 which “protects groups and individuals who volunteer to implement qualifying environmental remediation projects from civil and environmental liability.” The program does not provide immunity for damage caused by reckless or grossly negligent acts or omissions.

Crude Oil by Rail: Washington Governor Denies Oil-by-Rail Terminal in Vancouver
On January 29, 2018, Washington Governor, Jay Inslee, announced the decision to reject a permit for the new oil-by-rail terminal at the Port of Vancouver. The 360,000 barrel-per-day terminal was proposed by the Tesoro-Savage Joint Venture. The Energy Facility Site Evaluation Council (Council) evaluated the project and recommended in November 2017 that the permit be denied. The governor’s decision to deny the permit was based on several issues including “seismic risks, the inability to sufficiently mitigate oil spill risks, and the potential safety risks of a fire or explosion.” Tesoro Savage will have 30 days to appeal the permit denial.

PA Impact Fee: Pennsylvania Independent Fiscal Office Releases Impact Fee Estimate
On January 31, 2018, Pennsylvania Independent Fiscal Office (IFO) released their 2017 Impact Fee Estimate. The impact fee in Pennsylvania is imposed on unconventional wells and the proceeds are distributed to local governments and state agencies. The proceeds are used for infrastructure, emergency services, and environmental initiatives. IFO estimates an impact fee collection of $219.4 million for 2017, which constitutes a $46 million increase from 2016.

LNG Exports: Maryland Cove Point LNG Facility Begins Production
On January 31, 2018, Dominion Energy’s Cove Point LNG Export Project began producing liquefied natural gas at its Maryland facility. Construction of the facility began in October 2014 and final export approval was granted by the Federal Energy Regulatory Commission in November 2017. Cove Point is located on the Chesapeake bay in Lusby, Maryland. The project cost $4 billion and will process approximately 750 million cubic feet per day of inlet feed gas. The natural gas for the facility will be sourced from the Marcellus and Utica Shale Plays.

National Energy Policy: BLM Releases Memorandum on Oil and Gas Leasing Policy
On January 31, 2018, the U.S. Bureau of Land Management (BLM) released an Instruction Memorandum setting out a new policy to streamline the oil and natural gas drilling process  on federal lands. The policy encourages the simplifying and streamlining of land use planning, lease parcel review, lease sales and lease issuance. Under the new policy, BLM will no longer use a rotating lease sale schedule. The new policy also rescinds the use of Master Leasing Plans and sets a time frame for parcel review of lease sales to be no longer than 6 months. These changes and the memorandum, Updating Oil and Gas Leasing Reform - Land Use Planning and Lease Parcel Reviews can be found on the BLM’s website.

Induced Seismicity: Study Suggests Increase in Seismicity in Oklahoma Due to Wastewater Injection
On February 1, 2018, research published in Science, found that the increase in seismicity in Oklahoma is likely due to wastewater injection. The study found that “injection depth relative to crystalline basement most strongly correlates with seismic moment release.” The depth of the wastewater injection combined with the volume of liquid created the greatest seismic effect. The researchers recommend limiting the depth of wastewater injection to reduce the effects of induced seismicity in Oklahoma. The study is entitled, Oklahoma’s Induced Seismicity Strongly Linked to Wastewater Injection Depth.

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