The Pennsylvania Department of Environmental Protection announced on Monday that the public comment period for proposed policy changes would be extended from July 22nd to August 27th because of a printing error in the Pennsylvania Bulletin that provided the incorrect e-mail address for comments. The draft policy would impact the permit review process by proposing procedures for public hearings, and for receiving and responding to public comments. All permits that are published in Pennsylvania’s official information outlet, the Pennsylvania Bulletin, will be affected by this proposed policy change, including permits for oil and natural gas wells.
The Wall Street Journal reports that a group of Brazilian business and energy industry professionals known as the Brazil Industries Coalition is visiting Pennsylvania this week in an attempt to learn from the state’s experience and to evaulate the possibility of sending exports to Brazil. The group is meeting with Pennsylvania regulators and operators and will tour a drilling site. The WSJ cites to the National Confederation of Industry, which states that energy costs in Brazil are among the highest in the world. One Brazilian energy company executive noted that one unit of natural gas sells for $18.00 in Brazil. In the United States, that same unit would sell for about $4.00.
On July 18, 2013, the full U.S. Senate voted to confirm Gina McCarthy as the next U.S. EPA Administrator. The Senate voted 59-40 in favor of President Obama’s controversial nominee, after months of delay. The President formally nominated McCarthy in March 2013. McCarthy has led EPA’s air office since 2009 and is expected to play a pivotal role in implementing the President’s Climate Action Plan.
The Department of Energy’s National Energy Technology Laboratory released a statement at the end of last week regarding its preliminary findings in its study to monitor for impacts of hydraulic fracturing on groundwater, noting that “nothing of concern has been found thus far.” Additionally, the NETL’s reported discussions with the AP that same day confirmed that the NETL’s preliminary findings have shown that there is “no evidence that chemicals from the natural gas drilling process moved up to contaminate drinking water aquifers at a western Pennsylvania drilling site.” According to the AP’s report, this is the first time that an operator permitted government scientists to inject tracers into the hydraulic fracturing fluid to track the distribution of the fluid underground. The study is expected to be completed by the NETL by the end of the year, at which time a final report will be released.
Newly-appointed Pennsylvania Supreme Court Justice Correale Stevens will not participate in ruling on the legality of Act 13 or on any other case that has gone through oral argument. With only six justices participating in the decision, the Act 13 decision could end up in a tie vote that would effectively affirm the Commonwealth Court’s July 2012 opinion.
On July 9, 2013, the House Energy and Committee voted in favor of legislation that would expedite the process of obtaining federal approval of natural gas pipeline projects. The bill, H.R. 1900, would establish deadlines for the issuance of any federal permits, licenses, or approvals for such projects and would deem those requests granted by default if an agency fails to act within that time.
On July 16, 2013, the U.S. House of Representatives voted 405-2 in favor of extending a deadline that restricts the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration’s (PHMSA) ability to reference consensus industry standards in its regulations and guidance documents. The restriction, enacted in the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 (PL 112-90), the most recent reauthorization of the federal pipeline safety laws, states that as of January 3, 2013, an industry standard cannot be incorporated by reference into a new pipeline safety standard or guidance document unless it is available to the public, free of charge, on an internet website. The House bill, H.R. 2576, would extend the effective date of that provision for two more years to provide PHMSA and the industry standards organizations additional time to achieve compliance.
The Republic reports that a public meeting has been scheduled for July 18 at 6:00 p.m. at the Tyler County courthouse to discuss issues with land records searches in the county. Currently, only 16 people at one time are able to enter the records vault in the County Clerk’s Office, leading to extremely long lines and waiting times to access the records. The courthouse extended its hours and limited access to abstractors to two-hour timeframes, but this has not solved the problem as there are still lines of abstractors outside of the courthouse waiting in line for their turn around the clock. Tyler County Clerk Theresa Hamilton has indicated that the process to digitize the records has commenced, which would enable abstractors to access the records via the internet, but that there is no set time for the process to be completed. It is expected that representatives from the oil and gas industry, the Tyler County Clerk and commissioners and residents will be in attendance at the meeting.
The U.S. Geological Survey (USGS) noted in a recent article published in Science magazine that over the last few years earthquakes have become more frequent in the central and eastern United States, which in some instances appear to coincide with the injection of industrial wastewater in deep disposal wells. To better understand the relationship between earthquakes and injection disposal activities, USGS recommends improvements in the collection and reporting of injection data to regulatory agencies, with a focus on daily reporting of injection volumes, peak and average injection pressures.
Michele Siekerka, the chairman of the Delaware River Basin Commission (DRBC) who represents New Jersey Governor Chris Christie on the commission, recently issued a statement outlining the steps being taken by DRBC to reach a decision on natural gas drilling within the Delaware Basin. DRBC is apparently evaluating scientific studies and new regulations, practices and standards adopted by state and federal agencies. DRBC is also performing water quality and quantity monitoring to establish baseline conditions prior to the start of natural gas drilling activities within the Delaware Basin. Siekerka emphasized that DRBC is continuing to work towards a consensus both within and outside of regularly scheduled business meetings. See our previous posts regarding DRBC’s drilling moratorium for additional information.
Rockies Express Pipeline LLC, owners of the 1,698 mile long Rockies Express Pipeline, announced that it has executed an agreement for the transmission of processed gas from the Utica Shale formation, adding significant natural gas supply to the pipeline for transport both to the east and to the west. The pipeline is one of the largest ever constructed in North America, with the capability of carrying up to 1.8 billion cubic feet of natural gas daily.
The Superior Court of Pennsylvania upheld the trial court’s decision in Humberston v. Chevron U.S.A. to grant preliminary objections in favor of Chevron U.S.A., Inc. and Keystone Vacuum, Inc., holding that Chevron and Keysone had the right under the oil and gas lease to construct a fresh-water impoundment and to utilize hydraulic fracturing on the landowner’s property. The landowners argued that Chevron and Keystone violated the terms of the lease because hydraulic fracturing was never contemplated by the parties and the water impoundment was impermissible because it would service neighboring drilling sites.
Looking at several key provisions of the lease, the Superior Court found that the landowner’s arguments were in conflict with the clear and unambiguous language of the contract. The trial court determined that, “[t]he lease clearly provides that the lessee has the right to use as much [of] the surface as is ‘necessary or convenient’ to lessee to explore for, develop and produce oil and gas.” In addition the lease “provides that lessee, in its efforts to explore for, develop and produce oil and gas from the subject premises and from lands which adjoin the subject premises, may use ‘methods and techniques which are not restricted to current technologies.’” The Superior Court agreed that this language leaves no room for doubt that the lease permitted hydraulic fracturing and water impoundments.
Hess Corporation and Newfield Exploration Company recently terminated lease agreements with about 1,300 property owners in Wayne County, Pennsylvania, where the Delaware River Basin Commission (DRBC) has imposed a moratorium on gas drilling since May 2010. The moratorium is not intended to be permanent, but only until the DRBC develops environmental regulations for drilling in the watershed. The landowners received a combined $150 million (at $3,000 per acre) initially, and would have received an estimated $187 million in royalties had the wells been drilled. The landowners are free to negotiate with other energy companies, but it is unclear whether any drillers would be interested given the moratorium. Several weeks ago, the Northern Wayne Property Owners Alliance threatened to sue the DRBC “to regain [their] right to access [their] mineral estates.”
StreetInsider.com reports that CONSOL Energy Inc. (“CONSOL”) has provided an operations update for the second quarter, which ended on June 30, 2013. The update notes that CONSOL drilled its first well into the Burkett formation, the deepest of formation of the Upper Devonian shale. Other gas highlights include CONSOL producing 38.6 Bcfre for the second quarter, an increase of 3% from last year’s second quarter, and drilling 9 Marcellus Shale wells and 4 Utica Shale wells. CONSOL expects its third quarter gas production to be approximately 43 to 45 Bcfe, which is an estimated 14% increase compared to its second quarter production.
The third and final study on horizontal drilling mandated by the West Virginia Legislature suggested that no new legislation was necessary to address the health impacts of drilling on West Virginia residents. However, as noted in a July 10th article in the State Journal, the cover letter to the third study recommended that the Legislature consider changing the reference point for the horizontal well minimum setback to the well pad’s Limit of Disturbance rather than the center of the well pad. The State Journal discussed the well setback proposal with Delegate Tim Manchin, who indicated that a hard-and-fast increase of the setback distance “would be difficult,” but that a greater setback distance, with some flexibility if operators commit to abatement measures, may be achievable. The State Journal also discussed well setback changes with WVU professor Michael McCawley, who oversaw the air quality study. Professor McCawley indicated that a health-based proposal for wellpad setbacks would require three years of data from wellpads in a wide variety of settings.
On July 1, 2013 the New York State Department of Environmental Conservation (DEC) released its annual oil and natural gas production data for 2012. While oil production in New York increased by 1%, the 2012 reported total gas production of 26.424 billion cubic feet (bcf), representing a decrease of 15 percent from 2011’s posted production of 31.1 bcf. The 2012 natural gas production was the lowest level in New York since 2000’s production of 17.8 bcf.