Shale Law Weekly Review - April 27, 2020

Written by:

Sara Jenkins – Research Assistant 

Jackie Schweichler – Staff Attorney

Brennan Weintraub – Research Assistant

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

Production and Operation: Oklahoma Corporation Commission Approves Emergency Order Allowing Oil Producers to Shut-in Wells in Response to COVID-19

On April 22, 2020, the Oklahoma Corporation Commission announced approval of an emergency order allowing oil producers to shut-in or reduce production of oil wells for the prevention of waste.  The order was approved in response to a request from LPD Energy Company LLC seeking to prevent waste by stopping or reducing oil production without impacting the company’s lease agreement.  The request stated that due to a decline in demand and oversupply from COVID-19 circumstances, LPD is losing $200,000 per month by producing “economically challenged” wells.  At a hearing on April 17, 2020, the Commission heard testimony and made findings.  No objections to the requested relief were filed or received at the hearing.  The Commission’s Media Advisory stated that the order “gives those operators the freedom and flexibility they need to respond to market forces and decide what actions to take to survive.”

Water Quality: EPA Issues Final Rule Defining Waters of the United States

On April 21, 2020, the Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers issued a final rule regarding the definition of “waters of the United States” (WOTUS) under the Clean Water Act.  The rule is titled “The Navigable Waters Protection Rule: Definition of ‘Waters of the United States’” and replaces the previous 2015 WOTUS rule.  The new rule follows President Trump’s Executive Order 13778, which required review of the 2015 WOTUS rule to ensure navigable waters were kept pollution-free while also promoting economic growth.  Additionally, the Executive Order directed EPA to define “navigable waters” in a way that was consistent with Justice Scalia’s opinion in Rapanos v. United States, 547 U.S. 715 (2006).  The final rule’s interpretation of WOTUS includes: “territorial seas and traditional navigable waters; perennial and intermittent tributaries; . . .  certain lakes, ponds, and impoundments of jurisdictional waters; and [adjacent] wetlands.”  The final rule also defines waters that are considered “non-jurisdictional,” and as such are excluded from the definition of WOTUS.  The final rule will take effect on June 22, 2020.

Production and Operation: Government Accountability Office Finds Thousands of Approved Oil and Gas Drilling Permits Not Being Used

In March 2020, the U.S. Government Accountability Office (GAO) issued a report finding that thousands of the Bureau of Land Management’s (BLM) approved drilling permits were not in use. (p. 2).  The report is titled, Oil and Gas Permitting: Actions Needed to Improve BLM’s Review Process and Data System.  The report states that between 2014 and 2019, BLM approved 19,941 drilling permits for wells, out of which 9,991 permits were not being used.  Additionally, during the same time period, 2,628 applications for permits remained under review and 1,137 of the applications were denied by BLM.  GAO made three recommendations to BLM, suggesting that they develop a consistent and documented process for prioritizing permit applications and that BLM should formalize its data processing systems.  BLM only agreed with GAO’s third recommendation to “document and implement corrective actions for the data system based on lessons learned.” 

From the National Oil & Gas Law Experts:

George A. Bibikos, At the Well Weekly (Apr. 17, 2020)

Charles Sartain, Who Said What at the Railroad Commission Market Demand Prorationing Hearing? (Apr. 20, 2020)

Joshua Downer, Railroad Commission of Texas Declines to Order Prorationing – For Now (Apr. 22, 2020)

John McFarland, Proration at the Railroad Commission: Sitton’s Motion to Conditionally Order Texas Operators to Reduce Their Oil Production By 20% is Tabled (Apr. 21, 2020)

AGENCY PRESS RELEASES—STATE/FEDERAL

Pennsylvania Department of Energy Press Releases:

DEP Approves Permit for Underground Injection Well in Allegheny County (Apr. 20, 2020)

U.S. Department of Energy

Department of Energy Announces $28 Million to Develop Ultra-high Temperature Materials for Gas Turbine Applications (Apr. 21, 2020)

Department of Energy Announces $25 Million for Grid Management Systems and Risk Assessment Systems (Apr. 23, 2020)

Department of Energy Announces $131 Million for CCUS Technologies (Apr. 24, 2020)

U.S. Environmental Protection Agency

EPA and Federal Partners Commemorate 10-Year Anniversary of Deepwater Horizon Oil Spill (Apr. 20, 2020)

STATE ACTIONS—EXECUTIVE/LEGISLATIVE

Pennsylvania Executive Agencies—Actions and Notices: 

No actions Apr. 27, 2020. 

Pennsylvania Legislature:

No actions Apr. 20 - 27, 2020.

FEDERAL ACTIONS—EXECUTIVE/LEGISLATIVE

Federal Executive Agencies—Actions and Notices: 

Energy Department

85 FR 23013 “Epcilon LNG LLC; Application for Long-Term, Multi-Contract Authorization to Export Domestically Produced Natural Gas Through Mexico to Non-Free Trade Agreement Countries After Liquefaction to Liquefied Natural Gas” Notice (Apr. 24, 2020)

85 FR 23014 “Sabine Pass Liquefaction, LLC; Application for Blanket Authorization to Export Previously Imported Liquefied Natural Gas to Non-Free Trade Agreement Countries on a Short-Term Basis” Notice (Apr. 24, 2020)

Federal Energy Regulatory Commission 

85 FR 22730 “Port Arthur LNG Phase II, LLC, PALNG Common Facilities Company, LLC; Notice of Schedule for Environmental Review of the Port Arthur LNG Expansion Project” Notice (Apr. 23, 2020)

85 FR 22730 “Guardian Pipeline LLC; Notice of Request Under Blanket Authorization” Notice (Apr. 23, 2020)

85 FR 22733 “Black Marlin Pipeline LLC; Notice of Filing” Notice (Apr. 23, 2020)

85 FR 23017 “Dakota Natural Gas, LLC; Notice of Application” Notice (Apr. 24, 2020)

Land Management Bureau

85 FR 22750 “Notice of Proposed Reinstatement of Terminated Oil and Gas Lease COC-77358, Colorado” Notice (Apr. 23, 2020)

85 FR 22750 “Notice of Proposed Reinstatement of Terminated Oil and Gas Lease COC-77272, Colorado” Notice (Apr. 23, 2020)

House Energy and Commerce Committee Actions:

No new actions Apr. 20–27, 2020.

Senate Energy and Natural Resources Committee Actions: 

No new actions Apr. 20–27, 2020.

Follow us on Twitter at PSU Ag & Shale Law (@AgShaleLaw) to receive ShaleLaw HotLinks:
“Keystone XL Hits Another Snag in Court,” Rigzone

“Oil Price Crashes into Negative Territory for the First Time in History Amid Pandemic,” Reuters

“Oil Drilling, Fracking Could Drop Another 60%,” Energywire

“‘A Big Deal:’ Keystone XL Ruling Could Threaten Other Pipelines,” Energywire

“U.S. Natgas Trading at Premium Over Oil After Crude Price Collapse,” Reuters

“Why Marcellus Shale Stocks Are Lifting, While Other Basins See Drop,” Pittsburgh Business Times

“Satellites Find Highest U.S. Methane Emissions Ever Recorded,” Energywire

“Bankruptcy Looms Over U.S. Energy Industry, From Oil Fields to Pipelines,” Reuters

“Historic Oil Rout Poised to Bust Shale,” Rigzone

“Halliburton Books $1.1 Billion Charge, Slashes Spending by 50%,” Reuters

Connect with us on Facebook! Every week we will post the CASL Ledger which details all our publications and activities from the week.

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Check out the February Agricultural Law Brief ! Each month we compile the most significant legal developments in agriculture. If you’d like to receive this update via email, check out our website and subscribe!

Shale Law Weekly Review - March 5, 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.

Induced Seismicity: Oklahoma Changes Drilling Protocol to Address Seismicity

On February 27, 2018, the Oklahoma Corporation Commission (OCC) issued a new protocol in order to address induced seismicity resulting from oil and gas development. OCC protocol now requires that all operators conducting hydraulic fracturing activities must use a seismic array to see real-time seismicity readings. The protocol decreases the earthquake magnitude (ML) levels where operators must take action from 2.5ML to 2.0ML. In addition, operators will be required to pause activities for 6 hours when seismicity reaches 2.5ML, instead of the previously required 3.0ML.

Pipelines: Virginia District Court Grants Atlantic Coast Pipeline Access to Land for Tree Felling

On February 28, 2018, the U.S. District Court for the Western District of Virginia granted the Atlantic Coast Pipeline, LLC’s (ACP) motions for summary judgment in several cases involving landowner disputes over easements. Defendants in the case are landowners of properties in Virginia where construction of the Atlantic Coast Pipeline is planned. APC filed motions for summary judgment after failing to obtain easements with these landowners. ACP argues that they need immediate possession of the parcels so that tree felling will be completed by mid-March in order to comply with the Migratory Bird Act. The court is allowing ACP immediate access to the properties but is requiring ACP to post a security bond so that landowners will be fully compensated subject to a final determination of value.

Pipelines: Court Orders Construction of Bayou Bridge Pipeline Expansion to Cease

On February 27, 2018, the U.S. District Court for the Middle District of Louisiana granted a motion for preliminary injunction, effectively halting construction of the Bayou Bridge Pipeline project (Atchafalaya Basinkeeper, et al., v. U.S. Army Corps of Engineers, 18-23-SDD-EWD). The project is a 163 mile expansion of existing pipeline that will run from Lake Charles, Louisiana, to St. James, Louisiana. The project will consist of a 24-inch pipe and transport crude oil. Opponents to the project argue that construction of the pipeline will damage century old trees and valuable cypress forest swamp as well as the overall ecology of the Basin. The court granted the order to prevent “further irreparable harm until this matter can be tried on the merits.”

Frac Sand: USGS Announces Study Suggesting That River Sediment May Be Used as Frac Sand

On February 27, 2018, the U.S. Geological Survey (USGS) issued a press release on a recent study suggesting that sediment from the Missouri River Basin could be used a proppant in hydraulic fracturing. The researchers removed samples of sediment from the Missouri River and analyzed them using protocols from the American Petroleum Institute. They found that sand coming from the Nebraska Sand Hills and flowing into the Missouri River could potentially be used as suitable proppant or “frac sand.” The researchers also suggest that use of river sediment for hydraulic fracturing could help mitigate the cost of removing excess sediment from river basins. The study is entitled, Suitability of River Delta Sediment as Proppant, Missouri and Nibrara Rivers, Nebraska and South Dakota.

Follow us on Twitter at PSU Ag & Shale Law (@AgShaleLaw) to receive ShaleLaw HotLinks

"Shell: LNG outlook points to potential global supply shortage" - OGJ online

"Murrysville council places additional conditions on Huntley & Huntley pipeline construction" - TribLive

"This Just In: LNGFrom Cove Point Is Soon Heading Out" - Oil and Gas Investor

"Rover Pipeline donating $270,000 to emergency responders in 4 states" - MLive

"Interaction between wells can boost production" - MRT

"IEA: US To Overtake Russia As Top Oil Producer By 2019 At Latest" - Rigzone

"OPEC to meet with U.S. shale firms in Houston on Monday - sources" -  Reuters

"Eclipse closes $92.2M deal for Utica shale acreage" -Shale Gas Reporter

"US Congressional committees request FERC for Rover gas line briefing" - OGJonline

"NEXUS pipeline expected to generate millions in tax revenue" -Shale Gas Reporter

"Chevron board member questions oil industry's future" - EENews

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 Governance in Michigan

Check out this week’s Shale Law in the Spotlight: Overview of BLM Oil and Gas Leasing Program Reform

Stay informed with our monthly Agricultural Law Brief located here.

Induced seismicity update: Oklahoma Issues Earthquake Response Plan

On March 7, 2016, the Oklahoma Corporation Commission (OCC) issued a regional earthquake response plan in an effort to limit the impact of wastewater injection wells overlying the Arbuckle formation in seismic regions of central Oklahoma. In addition, the Commission also envisages expanding the size of the area of interest for the purpose of reducing waste volumes. Oil & Gas Conservation Division (OGCD) Director Tim Baker declared that “the central Oklahoma action will cover more than 5,000 square miles and more than 400 Arbuckle disposal wells [which] is similar to the regional response strategy that was instituted in western Oklahoma on February 16.”

The response plan for central Oklahoma will be phased in over 4 stages and provides some limitations as to the daily disposal capacity of injection wells in the area of interest. Among those limitations, operators will have to ensure that daily disposal will not exceed “the lesser of 20,000 bbls per day of two times (x2) the reported daily average” and that the 30 day average daily disposal volume should not be more than 15,000 bbls for each well and not exceed the total allowed daily disposal volume capacity.” Operators are responsible for ensuring compliance with the response plan’s provisions before May 28, 2016.

The Commission also announced that the size of the area of interest will now cover 118 more Arbuckle disposal wells and, to the end of reducing waste volumes, the response plan provides that operators may plug some of their wells into or in communication with the crystalline basement rock, following comprehensive plug back procedures and schedule.

Researchers have found that there is a causal link between increased earthquake activity in Oklahoma and wastewater injection wells. The Commission has taken many different measures since March 25, 2015 to mitigate the risks of induced seismicity. In November 2015, the Commission announced a plan to end operations at two disposal wells located in Cherokee-Carmen with a volume reduction of 41% for some wells considered at risk after a magnitude 4.7 earthquake hit northern Oklahoma. More recently this year, the Commission also observed that the recent seismic events in the Fairview area might have “a very close correlation to the storms that created power outages in such area. It is believed that the power outage may have created a situation where a number of producing wells were shut in, then simultaneously came back on line.”

The Commission noted that from March to July 2015, 224 wells have been forced to be plugged back and 14 others wells have had their waste volumes reduced by half.

Written by Chloe Marie - Research Fellow

03/11/2016

Shale Gas Law Weekly Review – March 8, 2016

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

West Virginia Senate passes a bill modifying severance tax on oil and natural gas

On March 2, 2016, the West Virginia Senate passed Senate Bill No. 705 modifying natural gas and coal severance taxes. The Bill stipulates that the severance tax on natural gas would remain at five percent of gross value at the wellhead but “provided that if the coal severance tax . . . is changed to some amount other than five percent, then the severance tax imposed [on natural gas] shall adjust on the same dates and to the same percentages such that the two severance taxes continue to be equivalent percentages of the gross value of the natural resource produced.” Starting from July 1, 2018, the severance tax would be at three percent of the gross value of coal produced. A separate piece of legislation, Senate Bill No. 419, would terminate privilege taxes imposed on severing or producing natural gas in addition to the state severance tax. The spokesperson of West Virginia Governor Tomblin declared in a media report that “at a time when the state is already dealing with financial difficulties, additional tax cuts are not something the state can consider at this time.” The Bill is currently pending in the House Finance Committee.

West Virginia legislature rejects bill authorizing natural gas companies to enter private properties

On February 29, 2016, the West Virginia Legislature rejected Senate Bill No. 596 granting natural gas companies a right of entry upon private lands without permission to carry out some specific work. The bill would have allowed natural gas companies to perform survey activities and studies on the condition that operators provide proper notice of entry to the landowners. The bill failed to pass the Senate following a 11-23 vote. West Virginia Senator Mitch Carmichael introduced SB 596 on February 12, 2016, after the Monroe County Circuit Court refused natural gas companies permission to conduct surveying activities on private property for a proposed pipeline on the grounds that they did not have eminent domain right to do so, according to a media report.

Oklahoma House of Representatives passes a bill extending the OCC Plugging Fund for emergency situations

On February 29, 2016, the Oklahoma State Legislature passed House Bill No. 2303 extending the Oklahoma Corporation Commission Plugging Fund for five additional years. The Oklahoma Corporation Commission (OCC) uses the funds to help plug the abandoned wells when no responsible party can be found to pay the clean up costs. This Bill comes at a time when the Oklahoma Corporation Commission is preparing a new emergency regional plan to address earthquake activity in central Oklahoma that is suspected to be induced by oil and gas operations. The money to plug wells comes from the oil and gas industry taxation. The Bill provides that the Plugging Fund should remain steady at $5,000,000.00 prior to July 1, 2021, and that the OCC “may expend not more than eight percent (8%) of the total amount deposited to the credit of the plugging fund during the previous fiscal year” during emergency situations. The Bill is currently the subject of discussions in the state Senate.

IOGCC and GPC form a work group to address gas leak issues at natural gas storage facilities

In recent news releases, the Interstate Oil & Gas Compact Commission (IOGCC) and the Groundwater Protection Council (GPC) announced that they would partner to help states address methane production and natural gas storage facilities through their state regulations. Both organizations declared that they would create a work group through the States First Initiative “to recognize aging infrastructure concerns, identify technological advancements and determine the regulatory challenges.” IOGCC and GPC also explained that “the recent Aliso Canyon event in California has compelled states to revisit their natural gas storage regulations with a focus on technological advancements and aging infrastructure to ensure protection of health, safety and the environment.” More information on the Aliso Canyon gas leak can be found here.

The Kansas Corporation Commission is asked to expand its wastewater injection limitations for the purpose of reducing seismic activity in south central Kansas

On February 19, 2016, the Oil and Gas Conservation Division urged the Kansas Corporation Commission to pursue the state’s efforts to reduce seismic activity by continuing the injection well limitations implemented in the Commission’s Order dated March 19, 2015. The Commission issued the Order to reduce the volume of wastewater injections in south central Kansas deemed seismically sensitive. The Conservation Division stated in a letter to the Commission that the situation has significantly improved since the Commission’s Order even though they remain concerned about earthquake activity outside the areas subject to the volume reductions. As a result, the Conservation Division made nine recommendations to the Commission, among which “all Arbuckle injection wells in Harper and Sumner County should remain capped at a daily maximum injection allowable of 25,000 barrels per well per day” and “the reductions should remain in place without further Order or extension.”

Written by Chloe Marie - Research Fellow