A midstream joint venture between Houston-based Kinder Morgan Energy Partners LP and Denver-based MarkWest Utica EMG LLC announced Wednesday that it has plans to build Ohio’s sixth natural gas-processing plant and a new pipeline to carry liquids from Ohio, Pennsylvania and West Virginia to the Gulf Coast for processing. Although a price tag has yet to be disclosed, industry experts expect the cost for the two projects would approach $1 billion, with the first phase set to begin in the fourth quarter of 2014. At its conclusion, MarkWest chairman, Frank Semple, believes the pipeline will be “the most efficient project for the Marcellus and Utica producers to access the Gulf Coast natural gas liquid markets.”
On August 7, 2013, the Susquehanna River Basin Commission appointed Project Review Manager Andrew D. Dehoff as executive director, effective September 19, 2013. Mr. Dehoff will be the third executive director in the history of the SRBC and will succeed Paul O. Swartz, who has served as executive director since 1992. Mr. Dehoff has been with the SRBC since 1995. As Project Review Manager, Mr. Dehoff oversaw the technical review of all applications for water use projects in the Susquehanna River Basin.
The Pennsylvania Public Utility Commission (PUC) filed two applications this week with the Pennsylvania Supreme Court in cases related to Act 13. In the appeal related to the constitutionality of Act 13 the PUC filed an Application to Resubmit Case, which requests that the case be resubmitted, at minimum, on briefs to the full Supreme Court and, if the court chooses, that additional oral argument be held. The PUC stated that the Application is appropriate because the pending issues are of broad concern to the Commonwealth and its municipalities and because Section 3304 of Act 13 was declared unconstitutional by a fiercely divided Commonwealth Court. Justice Correale Stevens was recently sworn in to replace Justice Joan Orie Melvin, who resigned from the Supreme Court in May following criminal convictions. While Justice Stevens brings the Supreme Court up to seven members, the Supreme Court issued a statement that Justice Stevens would not participate in deciding any case on which he had not heard oral argument. This Application is clearly an attempt for the PUC to get the case before the full Supreme Court.
Also of note is an Application for Reconsideration filed by the PUC in an appeal related to an order of the Commonwealth Court enjoining the PUC from reviewing municipal ordinances. On October 25, 2012, Senior Judge Keith B. Quigley issued an order enjoining enforcement of Section 3305 of Act 13 because it “is a vehicle by which Section 3304 is enforced.” The PUC appealed that order to the Supreme Court. On July 25, 2013, the Supreme Court quashed the PUC’s Notice of Appeal. The PUC requests that the Supreme Court grant reconsideration of the July 25th order quashing the Notice of Appeal before the entire Supreme Court for the following reasons: the October 25, 2012 order of Judge Quigley was subject to appeal, and it was incorrect to quash the Notice of Appeal; if the Commonwealth Court’s decision is upheld, it is unclear if that decision would resolve all issues regarding Act 13 because Judge Quigley’s order enjoined enforcement of Act 13 Sections 3301-3301 and 3305, even though Section 3301-3305 were never challenged and Section 3305 was determined to be constitutional; the Supreme Court should clarify explicitly why the Notice of Appeal was quashed; the July 25th order is inconsistent with other Supreme Court decisions; and the pending case regarding the overall constitutionality of Act 13 may not dispose of all issues.
The Pennsylvania Department of Environmental Protection (PADEP) recently announced that its long-term Marcellus air sampling study in southwestern Pennsylvania will continue for the remainder of the 2013 year. PADEP also released a guidance document which gives detailed information on the study, including its sampling design and methods of analysis for data collected. The sampling will include ground-level ozone, particulate matter, carbon monoxide, nitrogen oxides, hydrogen sulfide, methane and various volatile organic compounds and hazardous air pollutants. A final report is expected to be released in the first quarter of 2014.
MarketWatch reports that Range Resources will convert its vehicle fleet to cleaner-burning compressed natural gas. Range’s current fleet consists of approximately 184 CNG vehicles, about 100 of which operate in southwestern Pennsylvania. Most of the vehicles are Chevrolet Silverado 2500 and Ram 2500 models. According to the report, Range expects its investment to pay for itself within two years. Range joins other Marcellus operators, such as Chesapeake Energy and EQT Corp., which have also announced similar transitions to CNG, according to the Pittsburgh Post-Gazette.
The U.S. Environmental Protection Agency (EPA) has released the pre-publication version of its final revisions to the New Source Performance Standards for the Oil and Natural Gas Sector (i.e., 40 CFR 60, Subpart OOOO). EPA made significant changes to the provisions affecting “storage vessels,” including storage tanks, used in oil or natural gas production and transmission. In general, an individual storage tank is subject to the rule if it has the potential to emit six or more tons per year of volatile organic compounds (VOCs). According to EPA, “storage tanks subject to the rule may be located anywhere along the oil and natural gas production and transmission process,” which, for natural gas, “extends from the natural gas well to the point where gas enters the distribution system.”
The proposal to revise Subpart OOOO was first published in the Federal Register in April 2013. EPA revised Subpart OOOO in response to several petitions for reconsideration of the final rule issued in 2012. EPA has acknowledged that a far greater number of storage vessels come online each year than the agency originally anticipated. On that basis, EPA has delayed the compliance deadline for some storage vessels. The effective date of the final revisions will be identified upon publication in the Federal Register.
On August 1, 2013, the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) published a notice in the Federal Register seeking public comment on whether to apply its integrity management (IM) program requirements to pipelines located outside of high consequence areas (HCAs) and, if so, whether that decision would obviate the need for its class location requirements. A mandate in the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011, the most recent reauthorization of the federal pipeline safety laws, requires PHMSA to evaluate these issues and provide a report to the U.S. Congress with its findings by January 2014. After providing an overview of the current requirements, the notice discusses the comments that PHMSA received on its proposal to expand its IM requirements in an August 25, 2011 advance notice of proposed rulemaking, which the agency issued in response to the September 2010 gas transmission line failure that occurred in San Bruno, California. The notice also requests public comment on a series of additional questions, particularly with respect to whether its class location requirements should be eliminated and replaced with a single design factor that would apply to all (or certain) levels of population density and categories of pipelines. The deadline for submitting comments on the notice is September 30, 2013.
As we previously reported in June, the Pennsylvania Democratic Party voted to pass a resolution supporting a statewide moratorium on hydraulic fracturing. We recently learned that on June 15, 2013, eighteen Democrats from Pennsylvania’s House of Representatives (including House Minority leader Frank Dermody) wrote a letter to the Pennsylvania Democratic Party expressing their concern regarding the Party’s vote to support a statewide moratorium, specifically stating that it was “short sighted and ignores the many positive impacts Pennsylvania is experiencing due to the growth of the natural gas industry in this state.” The letter goes on to say that the authors “believe that a moratorium on hydraulic fracturing is not in the best interest of the Commonwealth or the citizens of Pennsylvania.”
The Pittsburgh Post-Gazette reports that some southwestern Pennsylvania energy companies have begun to research the Upper Devonian formation and its interplay with other formations, including the Marcellus. The Upper Devonian formation is a group of shales that lie a few hundred feet above the Marcellus. The companies are beginning to determine: (i) well profiles and production totals from Upper Devonian wells; (ii) the impact of developing the Upper Devonian formation prior to developing the Marcellus; and (iii) the ability to reuse well pads and access roads that were originally drilled for Marcellus. EQT Corporation has been monitoring four Upper Devonian wells for several years and CONSOL Energy Inc. has drilled one well to the Burkett, the closest Upper Devonian shale to the Marcellus.
According to the Charleston Gazette, the Lewis Wetzel Wildlife Management Area in Wetzel County is now contains several natural gas drilling operations by various companies operating in the State of West Virginia. The Lewis Wetzel Wildlife Management area is approximately 13,590 acres; however, the West Virginia Department of Natural Resources only owns a fraction of the mineral rights underlying the preserve. Private owners of those mineral rights are now leasing to various companies who are, or will be, drilling wells in the area. While the natural gas is being extracted from beneath the preserve, operators will be working in conjunction with the WVDEP and other agencies to minimize the impact of any drilling operations on both the preserve and its human visitors.
New York’s moratorium on hydraulic fracturing has entered its sixth year. On July 23, 2008, former Governor David Paterson directed the New York State Department of Environmental Conservation (DEC) to conduct an environmental review of high-volume hydraulic fracturing. After taking office, Governor Andrew Cuomo continued the order, and the DEC has not yet finalized its environmental review. Gov. Cuomo said that he will not make a decision on lifting the moratorium until the New York Commissioner of Health performs a public health review of the DEC’s work. No timetable for the completion of the public health review has been announced.
U.S. Senator John Rockefeller (D-WV), Chair of the Commerce, Science, and Transportation Committee, recently asked the Government Accountability Office to assess the impact of current shale oil and gas development on the nation’s existing transportation infrastructure, including rail and pipelines. Rockefeller’s request was reportedly prompted by a recent train derailment incident in Quebec and the Sissonville, WV, pipeline explosion event which occurred in December 2012. The Committee held a hearing on rail safety in June 2013 and a field hearing on pipeline safety in January 2013.
A newly constructed natural gas processing and fractionation complex is now online in Columbiana County. The plant was constructed by M3 Midstream and includes an extensive gathering system, a 200-million cubic-feet-per-day cryogenic processing facility and a 45,000-barrel-per-day natural gas liquids fractionation facility. M3 Midstream is planning two additional phases to the complex which will greatly increase processing capacity.
Updating previous posts, the Western Energy Alliance (WEA) recently released an economic analysis in response to the Department of the Interior, Bureau of Land Management’s (BLM) latest version of its proposed fracking rules for wells on federal lands. Bloomberg BNA reports that WEA believes that although positive changes were made in the latest revised rules, BLM did not consider a number of factors, such as initial delay costs associated with implementing the rule in light of current staffing levels. BLM estimated that its revised proposal would cost industry between $12 million to $20 million annually, which is substantially lower than the estimated costs of the original proposal ($37 to 44 million annually). However, WEA found that BLM’s latest proposal will still have a significant financial impact on the industry. WEA and other industry groups have urged BLM to abandon the proposed rules.
In a statement issued this morning, Kathryn Klaber announced that she will step down from her position as the CEO of the Marcellus Shale Coalition. Ms. Klaber has led the MSC since late 2009. She will play a key role in a nationwide search to select the MSC’s next leader. MSC Chair Dave Spigelmyer praised Ms. Klaber’s leadership, noting that she worked with both the Rendell and Corbett administrations “to modernize and strengthen the Commonwealth’s regulatory framework” and build “a topnotch community outreach and advocacy infrastructure …”