Monday, August 26, 2019

Shale Law Weekly Review - August 26, 2019

Written by:
Sara Jenkins - Research Assistant
Jackie Schweichler - Staff Attorney

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

Pipelines: Court of Appeals Rejects Challenge to Water Discharge Permit for Atlantic Sunrise Pipeline 
On August 15, 2019, the U.S. Court of Appeals for the Third Circuit denied a petition to review Pennsylvania’s Department of Environmental Protection’s approval of a hydrostatic testing permit for the Atlantic Sunrise pipeline (Delaware Riverkeeper Network v. Sec’y Pennsylvania Dep’t of Envtl. Prot., No. 17-3299).  As described by the court, hydrostatic testing is a “process by which water is pumped into pipes to check them for strength or leaks.”  A hydrostatic testing permit was granted to Transcontinental Gas Pipe Line Company, operator of the Atlantic Sunrise pipeline, and allows the company to discharge the water used for testing the pipes.  Petitioners asserted their own petition was not ripe for decision as the DEP action must be first reviewed by the Environmental Hearing Board. Petitioners also argued that the process to obtain the permit violated regulatory and statutory requirements. The court rejected both of these arguments, finding that the petition was ripe for decision, and that it “fail[ed] on the merits.”

Pipelines: Federal Court Dismisses Request by Columbia Gas to Acquire Land for Pipeline Project
On August 22, 2019, the U.S. District Court for the District of Maryland issued a written Order dismissing a Complaint in Condemnation issued by Columbia Gas Transmission, LLC (Columbia) Columbia filed suit on May 16, 2019, against the State of Maryland, Department of Natural Resources (Columbia Gas Transmission, LLC. v. 0.12 Acres of Land, et al., 1:19-cv-01444-GLR). Columbia sought to acquire by condemnation 0.12 acres of land in Washington County, Maryland to construct a portion of pipeline that would stretch from Fulton County, Pennsylvania to Morgan County, West Virginia. Columbia argued that the Federal Energy Regulatory Commission (FERC) had granted a certificate of public convenience and necessity for the project. According to Columbia, the FERC certificate explicitly stated that Columbia could use eminent domain to acquire easements for the project.  The court concluded, however, that the condemnation claim was barred by the Eleventh Amendment to the U.S. Constitution.

LNG Exports: July Sets Record for Natural Gas Deliveries to LNG Export Facilities
On August 19, 2019, the U.S. Energy Information Administration (EIA) released a report detailing the amount of natural gas deliveries to U.S. liquefied natural gas (LNG) facilities. The report showed a record high volume of incoming gas for the month of July 2019, “averaging 6.0 billion cubic feet per day” (Bcf/d). According to the report, natural gas delivered by pipelines to Mexico and to U.S. LNG export facilities was 30% higher from January to July 2019, than it was during the same time period last year. EIA expects LNG exports to continue to rise in June and July 2019, estimating 4.8 Bcf/d and 5.2 Bcf/d. According to the report, the United States has a current LNG export capacity of  5.4 Bcf/d with  four export terminals and nine liquefaction trains.

Taxation / Public Lands: Legislative Revenue Report Shows Increase in New Mexico’s Oil and Gas Rent and Royalties
On August 2, 2019, the State of New Mexico’s Legislative Finance Committee released their General Fund Revenue Tracking Report detailing revenue collected from several areas, including the oil and gas industry. The report, which presents data through April 2019, shows an overall year-over-year growth in both “mineral production taxes” and “rent and royalties.” More specifically, New Mexico saw a 5.9% year-over-year growth in mineral production taxes, including an oil and gas school tax, oil conservation tax, and natural gas processors tax. The largest increase in year-over-year growth was in rent and royalties, increasing by 129.4%, and including a bonus payment for federal land leases. Mineral production taxes rose $23.2 million as compared to the same time in 2018, with rent and royalties increasing by $651.1 million. The report states that for 2019, there is currently $273.5 million over the revenue forecast “due to strong revenues from gross receipts taxes and oil and gas production royalties.”

Water Use: Study Concludes Conventional Oil and Gas Production Has Greater Impact on Water Resources Than Hydraulic Fracturing 
On June 10, 2019, Groundwater published an Issue Paper which concluded that conventional oil and gas production has a greater impact on water resources than unconventional methods of extraction such as hydraulic fracturing. The paper titled, Conventional oil - The Forgotten Part of the Water-Energy Nexus, was conducted by the University of Arizona and the University of Saskatchewan. The paper examines the “volume of produced and injected water, changes to subsurface pressure regimes, and potential contamination pathways of conventional oil production” and compares it to hydraulic fracturing. The paper concluded that a net gain of water in subsurface reservoirs came primarily from enhanced oil recovery and saltwater disposal, with less than 5% coming from hydraulic fracturing. Additionally, large water injections used in enhanced oil recovery and saltwater disposal “will lead to longer distance transport of solutes or contaminants” compared to hydraulic fracturing.

From the National Oil & Gas Law Experts:
Charles Sartain, Bankruptcy Ruling Sides With Oil Field Realities, (August 21, 2019)

Pennsylvania Actions and Notices: 
Board of Coal Mine Safety

Reclamation Committee of the Mining and Reclamation Advisory Board

Pennsylvania Energy Development Authority

Environmental Hearing Board 

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