As reported by the Wilkes Barre Times-Leader, the Pennsylvania Department of Environmental Protection (“DEP”) recently approved a solid waste disposal permit modification to allow Keystone Sanitary Landfill (“Keystone”), located in Lackawanna County, to process water-based drilling fluid waste. Keystone will separate the solids from the incoming fluid waste. According to DEP’s approval letter, the separated liquid will be returned to oil and gas industry operators for reuse, while the solid waste will be processed on site and deposited in the landfill. The approved permit modification does not increase Keystone’s 2,000-ton daily limit on the disposal of drilling-related materials.
In a recent opinion, the Pennsylvania Superior Court addressed whether Pennsylvania’s Landlord and Tenant Act of 1951 (the “Act”), and the applicable statute of frauds contained therein, applies to oil and gas leases. In Nolt v. TS Calkins & Associates, LP, a landowner executed an oil and gas lease to lease the oil and gas rights in a 98-acre parcel of land. The landowner thereafter agreed to sell a portion of his property to the plaintiffs. The plaintiffs subsequently filed a quiet title action arguing that the oil and gas lease is invalid and created a cloud on the title on their property. More specifically, the plaintiffs argued that the oil and gas lease was subject to the Act, and that the statute of frauds contained in the Act requires a lease to be signed by both the lessor and the lessee to be valid. Because the lessee did not sign the lease, the plaintiffs argued that only a year-to-year lease was created and that it had expired. In response, the defendants argued that an oil and gas lease is not a lease governed by the Act, but instead is a transfer of realty subject to the more general statute of frauds, which requires only the signature of the grantor. The Pennsylvania Superior Court agreed with the defendants and held that the transaction did not create a lease, but rather a transfer of a property right in the oil and gas. Accordingly, the conveyance was subject to the general statute of frauds, not the statute of frauds contained in the Act, and the plaintiffs’ argument fails.
The Pittsburgh Business Times reports that Rice Energy Inc. is acquiring 12 wells and 22,000 net acres in Greene County, Pennsylvania from Chesapeake Energy Inc. Seven of the wells are currently producing and the five other wells are being developed, according to a statement by Rice.
Warren Resources has executed a purchase and sale agreement to acquire Marcellus shale assets from Citrus Energy Corporation and two other working interest owners, reports Shale Energy Insider. The acquired assets, located in Wyoming County, Pennsylvania, are all held by production, and provide Warren with a new core area in addition to its oil assets in California and natural gas assets in Wyoming.
Marcellus Drilling News reports that the Pennsylvania House and Senate passed a budget that did not include a Marcellus Shale severance tax. Governor Tom Corbett withheld his signature while he continues to work with lawmakers on pension reform.
Oil and gas production increased by 640% from 2012 to 2013 according to a report published by the Ohio Department of Natural Resources. The one year increase was the largest in Ohio history and is the most natural gas that Ohio has produced since 1982. Much of the increase is due to the production of 352 active horizontal wells in Ohio, which have overtaken the production of over 51,000 vertical wells. To date, Ohio has approved 1,386 permits for horizontal drilling with 470 wells in production or capable of production. Officials project that another 700 wells will be drilled in 2014 and 800 in 2015.
Today the New York Court of Appeals issued an opinion affirming local zoning laws adopted by two upstate towns that prohibited oil and gas-related activities within their borders. Specifically, the Court ruled that there was nothing within the plain language, statutory scheme and legislative history of the New York Oil, Gas and Solution Mining Law (“OGSML”) that manifested an intent by the legislature to preempt a municipality’s home rule authority to regulate land use. The Court expressly stated in the decision that it was not passing judgment on “whether hydrofracking is beneficial or detrimental to the economy, environment or energy needs of New York,” noting that the cases only “concerned the relationship between the State and its local government subdivisions, and their respective exercise of legislative power.” A copy of the Court’s opinion can be found here.
Energy Transfer Partners, L.P.’s board of directors has approved the construction of a new pipeline to transport gas to markets in the United States and Canada. The pipeline’s capacity is proposed to transport 2.2 billion cubic feet per day and may be expanded up to 3.25 billion cubic feet. The pipeline has already received commitments from some of the largest producers in the area and is expected to gain additional commitments in the future.
New York Assembly Speaker Sheldon Silver announced that the Assembly passed a bill on June 16, 2014, that would impose a moratorium on hydraulic fracturing for a period of three years. The legislation, which passed by a vote of 96 to 37, calls for the New York Department of Environmental Conservation to suspend issuing permits for hydraulic fracturing until 2017. The bill’s memo indicates that the delay is necessary to provide the legislature with additional time to review the effects of hydraulic fracturing on public health and the environment, citing several ongoing national studies that are not expected to be finalized within the next three years. “We do not need to rush into this. The natural gas deposits within the Marcellus Shale are not going to go anywhere,” Silver said. The Assembly passed similar legislation in 2013 that would have established a two-year moratorium, but that measure died in the Senate and was returned to the Assembly in January 2014. Observers believe that the Senate is unlikely to act on the bill before the lawmakers adjourn for the summer.
The U.S. Environmental Protection Agency (USEPA) recently extended the public comment deadlines associated with its proposed rulemaking to redefine “waters of the United States” for federal Clean Water Act programs and its request for information regarding a possible rulemaking for the disclosure of hydraulic fracturing chemicals. The new comment deadline for the Clean Water Act rulemaking is October 20, 2014. The new deadline to comment on the advance notice of proposed rulemaking regarding chemical disclosure is September 18, 2014.
On Friday, June 13, 2014, the Pennsylvania Department of Environmental Protection (“DEP”) adopted a final rulemaking that increased well permit fees for unconventional wells in Pennsylvania for the first time since October 24, 2009. The new rule, which took effect on June 14, 2014, fixes the permit fees for non-vertical natural gas wells at $5,000 and for vertical natural gas wells at $4,200. Prior to the new rule, permit fees for unconventional wells were calculated on a sliding scale basis as determined by the length of the wellbore. As reported by PR Newswire, the result of the DEP’s new rule will be to increase the permit fee for an average unconventional well by about $1,800 and $1,300 for horizontal and vertical gas wells, respectively, while the permit fees for conventional wells will remain the same. The DEP projects that this change will result in an additional $4.7 million in annual revenue, which will be used to support new information technology projects related to oil and gas and to hire additional staff for the DEP’s entirely self-funded Office of Oil and Gas Management.
The Jefferson Hills (PA) Borough Council recently voted to adopt an ordinance which establishes zoning districts for oil and gas drilling. The Pittsburgh Tribune-Review reported that the Council wants to have more control over the location of drilling activities. Seismic testing is already being conducted in the area and Council members stated that they wanted to be prepared for upcoming oil and gas activities.
The State Journal reports that American Energy – Marcellus LLC, a subsidiary of Oklahoma City based American Energy Partners LP, has agreed to acquire 48,000 leasehold acres in Doddridge, Harrison, Marion, Tyler and Wetzel Counties in West Virginia from East Resources, Inc. and an unnamed third party. The deal to acquire West Virginia leasehold properties is part of a larger $4 billion effort by American Energy Partners to enter the Southern Marcellus and Permian Basin plays in West Virginia and West Texas and to expand its holdings in the Utica Shale in Ohio. The companies plan to operate four to six rigs on the newest West Virginia and Ohio acquisitions by the end of 2014. American Energy – Marcellus LLC expects the West Virginia property to produce 135 million cubic feet of natural gas equivalent per day by the time the deal closes.
As reported by Law360, Representative Rick Mirabito, D-Lycoming, recently introduced House Bill 2318, which, if passed into law, would require the Pennsylvania Department of Conservation and Natural Resources to provide notice and require public input before leasing state forest lands for unconventional gas development. Specifically, the bill provides for a public comment period and at least one public hearing or meeting before any land could be leased by the DCNR. In addition, the public would have access to detailed development plans, including locations of well pads, impoundments, access roads, pipelines, compressor stations and other related structures and facilities, during the comment period. The DCNR would also have to provide an analysis of potential impacts of the proposed development on ecological, recreational, cultural and aesthetic resources.
The Sixth Circuit recently affirmed summary judgment granted to Chesapeake Appalachia, L.L.C. by the Southern District of Ohio court, holding that Chesapeake could extend its oil and gas lease with the plaintiffs on the same terms in the original lease. In Eastman v. Chesapeake Appalachia, L.L.C., the plaintiffs had argued that a provision providing Chesapeake with an option to “extend or renew under similar terms a like lease” required renegotiation of the lease’s terms. The court held that the lease could be unilaterally extended by Chesapeake, and that they would also have had the right to renegotiate a renewed lease.