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.
Landowner Royalties:
EQT Sues West Virginia for Changes to Flat-Rate Royalty Calculations
On April 12, 2018, EQT
Production Company (EQT) filed a lawsuit against the West Virginia Department of
Environmental Protection protesting changes to West Virginia’s minimum royalty
statute, W. Va. Code § 22-6-8. A new bill amending the statute was signed
into law in early March. The law now mandates that the minimum royalty must be
calculated based on “gross proceeds, free from any deductions for
post-production expenses, received at the first point of sale to an
unaffiliated third-party purchaser in an arm’s length transaction...” EQT
alleges that the statute infringes on their drilling rights under flat-rate
leases and violates the Contracts Clause and the Due Process Clause of the U.S.
Constitution. Additional information on the changes to West Virginia’s
legislation can be found in our recent Shale Law in the Spotlight article.
LNG Exports: Cove Point
Terminal Ships First Commercial Cargo
On April 16, 2018, the
Dominion Energy Cove Point LNG terminal in Lusby, Maryland, shipped its first
commercial cargo, according to LNG World News. The article states that the destination of the
LNG is unclear and that the cargo vessel is 91 percent full. Dominion Energy
received approval to commence service from the Federal Energy Regulatory
Commission on March 5th and entered commercial service on April 10th. The Cove Point facility can process 750 million standard cubic feet per
day of inlet feed gas from the Marcellus and Utica shale plays.
International
Development: Northern Territory of Australia Will Allow Hydraulic Fracturing
On April 18, 2018, the
Northern Territory Government of Australia announced
that hydraulic fracturing will be permitted within the Territory based on the
recommendations of the recently published, Scientific Inquiry into Hydraulic Fracturing
in the Northern Territory. The report recommends
against allowing hydraulic fracturing in “National Parks, Conservation Areas,
Indigenous Protected Areas, towns, residential and strategic assets, and areas
of high cultural, environmental or tourism value.” Chief Minister Michael Gunner
stated that by following the recommendations in the inquiry, they will be able
to protect the environment, cultures, and lifestyles, while residents will
benefit from new job creation.
Induced Seismicity:
Oklahoma Corporation Commission Orders Halt to Disposal Well Operations After
Earthquakes
On April 19, 2018, the Oklahoma Corporation Commission (OCC) issued a directive to halt disposal well operations in the Hennessey area following a 3.8 earthquake. Seven other disposal wells in the Arbuckle
formation have been directed to reduce daily volumes by 25 percent. In
addition, eight other wells in the area have been directed to reduce volumes to
“their last 60 day average.” According to the press release, disposal into the
Arbuckle formation creates “the largest potential risk for induced seismicity.”
Earlier this month, OCC issued disposal well reduction order after
a 4.6 magnitude earthquake in Garfield County.
Water Quality: DEP
Releases Oil and Gas Well Structural Soundness Data
On April 13, 2018, the
Pennsylvania Department of Environmental Protection (DEP) announced the release of the first four years of well structural soundness data collected by oil and gas well operators.
According to DEP, the data shows that most wells in Pennsylvania “are being
operated in a manner that greatly reduces the risk for groundwater impacts." Under the Mechanical Integrity Assessment Program, oil and gas well operators
are required to conduct quarterly inspections and submit data for one of the
inspections each year. A comprehensive analysis of the data for 2014, Explanation and Summary of Preliminary
Mechanical Integrity Assessment Dataset, suggests that less than 1 percent of operator observations
indicated integrity problems that could “allow gas to move outside the well footprint."
GHG Emissions: EPA
Releases Report on U.S. Greenhouse Gas Emissions
On
April 12, 2018, the U.S. Environmental Protection Agency (EPA) released the
report, Inventory of U.S.
Greenhouse Gas Emissions and Sinks: 1990-2016. The report estimates
the total greenhouse gas emissions from the United States, including carbon
dioxide, methane, nitrous oxide, and other flourine-containing halogenated
concentrations. The report is prepared to meet commitments under the United
Nations Framework Convention on Climate Change. According to the
researchers, U.S. emissions increased by 2.4 percent from 1990 to 2016 and
emissions decreased by 1.9 percent from 2015 to 2016. The researchers suggest
that this decrease in emissions could be due to the substitution of natural gas
for coal and warmer winter conditions which resulted in a decreased demand for
heating fuel.
"Shell sets out strategy for dealing with shift from fossil fuels" - Financial Times
"Regulators to consider revising natural gas flaring policy" - Bismark Tribune
"The oil bust forced more than 330 North American energy companies into bankruptcy, report says" - Houston Chron
"Five takeaways from StateImpact’s forum on gas royalties" - State Impact PA
"Shale Boom Creates New Petrochemical Hub" - Oil Price
"Is the U.S. Shale Boom Hitting a Bottleneck?" - The Wall Street Journal
Connect with us on Facebook! Every week we will post the CASL Ledger which details all our publications and activities from the week.
See our Global Shale Law Compendium and this week’s article, Shale Law Governance in Pennsylvania - Regulations from 2008 to 2010
Check out this week’s Shale Law in the Spotlight: Background of Recent West Virginia Legislation Addressing the Deduction of Post-Production Costs from Oil and Gas Royalties.
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