Monday, April 2, 2018

Shale Law Weekly Review - April 2, 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.

Water Quality: Pennsylvania Supreme Court Rules Against Imposition of Additional Fines by DEP for Ongoing Pollution
On March 28, 2018, the Pennsylvania Supreme Court held that penalties for violations of the Clean Streams Law apply only to contamination that occurs from the original release of a pollutant and not for subsequent days when that pollutant remains in the waterway. (EQT Production Co. v. DEP, No. 6 MAP 2017). The court determined that it was “most reasonable to conclude the Legislature was focused on protecting the waters of the Commonwealth with reference to the places of initial entry.” The case revolves around fines issued by the Department of Environmental Protection (DEP) against EQT Production Company.  DEP issued a fine that included penalties for each day that the pollution remained in Pennsylvania waters. EQT argued that the Clean Streams Law only authorizes penalties for the initial waste violation.

Pipelines: DEP Halts Drilling Operations for Mariner East II at Two Sites After Spills
On March 26, and 30, 2018, the Pennsylvania Department of Environmental Protection (DEP) issued two notices of violation to Sunoco for drilling fluid spills associated with the Mariner East 2 Pipeline Project. Both incidents involved less than one gallon of drilling fluid that was released into wetlands qualifying as waters of the Commonwealth. The drilling fluids in this case constitute Industrial Waste and discharge; therefore, the spills violate the Clean Streams Law. The first spill occurred in Huntingdon County on March 23, 2018, and the second spill occurred in Perry County on March 29, 2018. Sunoco may not restart drilling operations for either site until DEP has given its approval.

Bankruptcy: Bankruptcy Court Approves Plan for Philadelphia Energy Solutions
On March 26, 2018, the U.S. Bankruptcy Court for the District of Delaware approved the bankruptcy plan for Philadelphia Energy Solutions (PES). According to The Inquirer, PES was forced to engage in bankruptcy proceedings due to the high cost of renewable energy credits. As the largest oil refining complex, PES operates two domestic refineries which process 335,000 barrels of crude oil per day. PES is owned by The Carlyle Group and is a subsidiary of Energy Transfer Partners, L.P.

Landowner Royalties: West Virginia No Longer Allows Post Production Deductions from Royalty Payments
On March 9, 2018, West Virginia Governor Jim Justice signed into law a new bill that will not allow for the issuance of a well permit unless the operator certifies that minimum royalty obligations have been satisfied.  Senate Bill 360 amends W. Va. Code §22-6-8, which generally prohibits the issuance of permits with flat well royalty leases unless the permit is accompanied by an affidavit certifying a specified minimum payment to the lessor. Originally, the law required that the lessor would be granted at least a one-eight interest of the total amount of the interest at the wellhead. Senate Bill 360 amends the law so that a new permit will be invalid unless the royalty is not less than one-eighth of the gross proceeds with no post-production cost deductions.

Pipelines: Virginia Approves Two Permits for Mountain Valley Pipeline
On March 26, 2018, the Virginia Department of Environmental Quality (DEQ) approved Erosion and Sediment Control and Stormwater Management Plans for Mountain Valley Pipeline, LLC (MVP). DEQ’s approval authorizes MVP to begin “land disturbing activities.” The Mountain Valley Pipeline will carry natural gas from the Marcellus and Utica shale plays to markets in the Mid and South Atlantic regions of the U.S. The pipeline is over 300 miles long and will provide up to two Bcf of gas per day. According to Argus, this new approval means MVP may now begin full construction in the state.  

Methane Emissions: Report Recommends Increased Collection of Methane Emissions Data
On March 27, 2018, the National Academies of Science, Engineering, and Medicine (NASEM) released a report that examines various approaches to measuring, monitoring, and developing methane emissions. Research for the report was conducted by the Committee on Anthropogenic Methane Emissions in the United States. The purpose of the report is to assist in the development of improved methane emissions inventories that are more accurate and verifiable.  The Committee examined emissions from cattle farms as well as petroleum and natural gas facilities. The report is entitled, Improving Characterization of Anthropogenic Methane Emissions in the United States, and can be found on the NASEM website.

International Development: Australian Territory Presents Final Report on Hydraulic Fracturing
On March 27, 2018, the Independent Scientific Inquiry into Hydraulic Fracturing on Onshore Unconventional Reservoirs in the Northern Territory (Inquiry) presented their final report to the Northern Territory Government. The Inquiry was established after the Northern Territory Government announced a moratorium on onshore hydraulic fracturing. The purpose of the report, Scientific Inquiry into Hydraulic Fracturing in the Northern Territory, is to identify and examine “the environmental, social, cultural, and economic risks associated with hydraulic fracturing for onshore shale gas in the NT, and to make recommendations to mitigate those risks...” The report includes a list of recommendations for regulatory reforms and actions that could be taken to mitigate any negative effects of hydraulic fracturing.

Induced Seismicity: Southern Methodist University Publishes Research on Geohazards Associated with Human Activity
On March 16, 2018, researchers from the Southern Methodist University of Dallas published a report on the relationship between human activity and geohazards. The researchers examined West Texas’ Permian Basin using satellite radar imaging. They conclude that oil and gas production activities have a “negative impact on the ground surface and infrastructures, including possible induced seismicity.” The researchers suggest that proactive, detailed, and continuous monitoring of oil and gas operations is essential for human safety, preservation of property, and for the growth of the energy industry. The study is entitled Association Between Localized Geohazards in West Texas and Human Activities, Recognized by Sentinel-1A/B Satellite Radar Imagery.

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