Monday, March 19, 2018

Shale Law Weekly Review - March 19, 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.

Pipelines: PA DEP Schedules Hearings for Falcon Ethane Pipeline
On March 9, 2018, the Pennsylvania Department of Environmental Protection (DEP) announced a schedule of public hearings on permits submitted by Shell Pipeline Company for the Falcon Ethane Pipeline. The proposed pipeline will begin in Washington County and travel through Allegheny and Beaver Counties before ending in Potter Township, Beaver County. DEP will hold hearings on Shell’s water obstruction and encroachment, and earth disturbance permit applications. The hearings will be held in Beaver, Washington, and Allegheny Counties on April 3rd, 4th, and 5th, respectively.

Landowner Royalties: West Virginia Governor Signs Law Allowing Drilling When Majority of Royalty Owners Consent
On March 9, 2018, West Virginia Governor Jim Justice signed into law bill 4268 which allows oil and gas companies to drill on property where at least three fourths of the royalty interest owners have consented to development. The purpose of the new law is to provide an exception to trespass in order to encourage development of oil and gas resources. The law applies where there are seven or more royalty owners and the drilling operator has made reasonable efforts to negotiate with all owners. Nonconsenting owners may receive a pro rata share of production royalties while profits for unknown or unlocatable owners will be deposited in a fund in the State Treasury. The law will go into effect on July 1, 2018.

Pipelines: Court of Appeals Denies New York’s Petition for Review of Millennium Pipeline
On March 12, 2018, the U.S. Court of Appeals for the Second Circuit denied the New York State Department of Environmental Conservation’s (New York) petition for review in the lawsuit involving the Millennium Pipeline. In September 2017, the Federal Energy Regulatory Commission (FERC) issued a Declaratory Order finding that New York waived its right to issue a water quality certification by failing to act within the one-year deadline. New York brought this appeal after FERC denied its request for rehearing. New York argued that it did not waive its authority for the water quality certification and that FERC does not have jurisdiction over the Millennium Pipeline. The Court of Appeals disagreed, holding that New York’s authority was waived and that FERC has jurisdiction under the Natural Gas Act.

Pipelines: West Virginia Orders Rover Pipeline to Halt Construction
On March 5, 2018, the West Virginia Department of Environmental Protection (WVDEP) ordered Rover Pipeline LLC (Rover) to cease and desist in further construction and development of the Rover Pipeline. Rover Pipeline will transport 3.25 Bcf/day natural gas from the Marcellus and Utica shales to markets across the United States and Canada, including the Midwest, East Coast, and Gulf Coast. WVDEP stated that Rover failed to have all erosion control devices in place and, therefore, it was not in compliance with the Storm Water Pollution Prevention Plan. In addition, WVDEP found trash and construction debris partially buried on site. Rover also failed to take steps to prevent sediment liquid discharge and off-site deposits were found during inspections. Rover has 20 days to submit a corrective action plan to achieve compliance.  

Pipelines: Bayou Bridge Pipeline is Permitted to Continue Construction
On March 15, 2018, the U.S. Court of Appeals for the Fifth Circuit issued a stay of the preliminary injunction that had halted construction of the Bayou Bridge Pipeline project (Atchafalaya Basinkeeper, et al., vs. U.S. Army Corps of Engineers, 18-30257). The court stated that Bayou Bridge Pipeline, LLC is likely to succeed on the merits of its claim. As such, construction of the 163 mile pipeline expansion may continue. The Bayou Bridge Pipeline will carry crude oil from Lake Charles, Louisiana, to St. James, Louisiana in a 24-inch pipe. Construction of the pipeline was stopped on February 27, 2018 by the U.S. District Court for the Middle District of Louisiana.

Production and Operation: Pennsylvania Independent Fiscal Office Releases Natural Gas Production Report
On March 5, 2018, the Pennsylvania Independent Fiscal Office (IFO) released the Natural Gas Production Report for the fourth quarter of 2017. According to the report, total natural gas production volume increased from 1,273 Bcf in 2016 to 1,399 Bcf in 2017. The number of producing wells in 2017 also increased by 9.9%, from 7,180 in 2016 to 7,891 in 2017.  Two thirds of production occurred in four counties – Susquehanna, Washington, Bradford, and Greene. Production in Susquehanna increased from 1,210 Bcf in 2016 to 1,304 Bcf in 2017. Pennsylvania ranked second in gross production from all well types in 2017 with 5,458 Bcf, following Texas with 7,932 Bcf.

Production and Operation: Ohio Oil & Gas Association Releases Annual Report
In March 2018, the Ohio Oil and Gas Association released its annual Debrosse Memorial Report. The report shows that Ohio produced 1,717 Bcf of unconventional gas and 52 Bcf conventional gas in 2017, compared to 1,389 Bcf and 52 Bcf in 2016, respectively. Overall, natural gas production in Ohio increased by 23% in 2017. Meanwhile, oil production in Ohio decreased by 6% from 17.5 million barrels of unconventional oil in 2016 to 16.5 million barrels in 2017. While the number of permits issued in 2017 increased from 561 to 931, the number of well completions decreased from 620 to 449. The majority of well completions were located in Belmont County, with 121 horizontal wells.

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