Monday, June 4, 2018

Shale Law Weekly Review - June 4, 2018

Written by:
Brennan Weintraub - Research Assistant
Jackie 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: Ohio EPA Releases Storm Water General Permit Draft
On May 21, 2018, the Ohio EPA released a draft permit for public comment that would regulate prevention plans for storm water pollution related to horizontal drilling. The regulations contained in the draft would not be affected by related federal exemptions and would only cover construction that would affect five acres or more. The permit requires the developer to provide a Horizontal Directional Drilling Contingency Plan. The plan must include monitoring and notification procedures, a list of key personnel, corrective action plans, drilling fluid additives and contingency plans.

Pipelines: FERC Gives Rover Permission to Begin Full Service on Second Mainline
On May 31, 2018, the Federal Energy Regulatory Commission (FERC) approved the beginning of full service on Rover’s second mainline, which is scheduled to be completed in late July. The pipeline will carry natural gas from the Utica and Marcellus Shales through Ohio to other parts of the country and Canada. In May 2017,  FERC ordered construction to be suspended after 2 million gallons of drilling fluid was released in wetlands near the construction. The current approval was granted after FERC determined that Rover was in compliance with environmental conditions based on ongoing inspections. According to FERC, restoration and rehabilitation of the affected area is over 90% complete and is expected to be finalized by the end of July 2018.  

Municipal Regulation: PA Supreme Court Invalidates Conditional Use Approval for Well Located in Residential – Agricultural Zoning District
On June 1, 2018, the Pennsylvania Supreme Court ruled that a conditional use had been improperly approved for a shale gas well that was proposed for a Residential-Agricultural zoning district.  (Gorsline v. Board of Supervisors of Fairfield Township v. Inflection Energy, J-13-2017).  The zoning ordinance in question neither expressly authorized nor prohibited the drilling of gas wells.  Thus, the drilling company was required to obtain conditional use approval by establishing that drilling was “similar to and compatible with” other uses in the R-A zoning district.  The court ruled that the company failed in this burden, rejecting the argument that gas wells constitute a “public service.”  The court specifically stated that its opinion “should not be misconstrued as an indication that oil and gas development is never permitted in residential/agricultural districts...”  To properly authorize gas development, municipalities must amend their zoning ordinances to specifically address development in residential/agricultural districts or ensure that the evidentiary record supports any conditional use approvals.  

Production and Operation: Energy Information Administration Releases Natural Gas Monthly Report
On May 31, 2018, the Energy Information Administration (EIA) released their monthly natural gas report using data from March 2018. According to EIA, natural gas production increased by 11.2% from 71.6 Bcf/day in March 2017 to 79.6 Bcf/day in March 2018.  The daily rate of production was the highest for any month since EIA began to track production in 1973. Natural gas consumption levels in 2018 were 9.1% higher than 2017, including increases in residential, commercial, industrial, and electric power deliveries. Natural gas imports decreased by 3.9% and exports increased by 5.5%. The increase in natural gas exports is largely attributed to exports of liquefied natural gas, which has more than doubled since March 2017.

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