West Virginia Public Broadcasting reports that a new study has begun regarding the use of water in hydraulic fracturing in the Marcellus Shale in West Virginia, Pennsylvania, and Ohio. The Robert and Patricia Switzer Foundation is providing funding for the study, which is being undertaken by Downstream Strategies and the non-profit organization Earthworks, as well as Switzer Foundation scholars. The goal of the study is to develop a life cycle analysis of water involved in drilling and hydraulic fracturing. In addition to the amount of water used, the study will identify the source and the final destination of the water in order to compare water use for hydraulic fracturing to the water used for other types of energy production. The findings of the study are expected to be available by the end of 2013.
The fate of New York’s fracking moratorium remains uncertain. According to the Huffington Post, if the rules proposed by the New York State Department of Environmental Conservation (DEC) are not finalized by February 27, 2013, the proposal will expire and create an opportunity for another round of public comment. Whether the new rules will be issued by the deadline remains uncertain. DEC Commissioner Joe Martens recently testified before state legislators that DEC “[does] not have a timetable” for completing the environmental impact review related to the regulations. Martens indicated that DEC’s completion of the rules is dependent upon a forthcoming report from the Department of Health. Martens added that completing the rules could take even longer if the Health report recommends modifications to the proposed rules. A coalition of New York state lawmakers has demanded that DEC provide an opportunity for the public to comment on the health aspects of the impact review. This could delay the completion of the rules even further. Based on a recent telephone poll of approximately 1,200 registered voters in New York, there is an even divide among New Yorkers on whether to lift the 4 ½ year-long moratorium.
President Obama announced on February 6th that he has nominated Sally Jewell to be the next Secretary of the U.S. Department of the Interior. Ms. Jewell has been the president and CEO of outdoor retailer Recreational Equipment Inc. (REI) since 2005. Prior to joining REI, Ms. Jewell worked as an engineer for Mobil Oil Corp. for three years after graduating from college. She also spent nearly twenty years in the commercial banking industry, culminating with her becoming president of Washington Mutual’s commercial banking group. President Obama said that Ms. Jewell “knows the link between conservation and good jobs. She knows that there’s no contradiction between being good stewards of the land and our economic progress; that in fact, those two things need to go hand in hand.” Senate confirmation hearings will begin in the next few weeks.
A federal judge has granted a preliminary injunction in favor of Tennessee Gas Pipeline, LLC, precluding two environmental groups from bringing a permit challenge before the Pennsylvania Environmental Hearing Board, the Scranton Times-Tribune reports. Tennessee Gas filed a complaint and sought the injunction to block attempts by the environmental groups to seek review of permits associated with the company’s Northeast Upgrade Project. In an order issued February 5, 2013, District Judge Robert Mariani concluded that Natural Gas Act precluded the Environmental Hearing Board from reviewing permits issued by the Pennsylvania Department of Environmental Protection to Tennessee Gas under the Clean Water Act and the Clean Streams Law. The Delaware Riverkeeper Network and the Responsible Drilling Alliance brought an appeal before the Environmental Hearing Board in December 2012 seeking review of permits.
The court noted that two permits were issued under the Clean Water Act and one permit was issued under the state Clean Streams Law, but concluded that the three were interrelated such that review by a federal appellate court alone rather than two separate tribunals was appropriate. The court also concluded that the Natural Gas Act precluded the Environmental Hearing Board from reviewing the DEP’s permitting decisions prior to an appeal to a federal appellate court. The court’s analysis focused on the application of Section 717r(d)(1) of the Natural Gas Act, which provides that “the United States Court of Appeals for the circuit in which a facility . . is proposed to be constructed, expanded, or operated shall have original and exclusive jurisdiction over any civil action for the review of an order or action of a Federal agency … or state administrative agency acting pursuant to Federal law to issue, condition, or deny any permit … required under Federal law … .”
Early results from producers operating within eastern Ohio’s Utica shale play have spurred additional investment from other firms. Energy & Minerals Group, a Houston investment firm, recently increased its investment in a joint venture with MarkWest Energy Partners LP by an additional $450 million, bringing the total investment of both companies in MarkWest Utica EMG LLC to $950 million, with plans for pipelines and a processing plant in Harrison County.
LS Power Development LLC, a New Jersey based company, received site approval this week to build a power plant estimated to cost $750 million in Lawrence County, Pennsylvania, the Pittsburgh Tribune-Review reports. The plant would be powered by Marcellus shale gas. The company still needs state and federal permits, but construction could begin early next year and the plant could generate electricity by 2016. Tennessee Gas Pipeline Company, L.L.C., a subsidiary of Kinder Morgan Energy Partners, owns and operates the gas pipelines that would supply the plant.
On January 24, 2013, Judge Joy Flowers Conti of the Western District of Pennsylvania adopted an October 2012 Report and Recommendation by Magistrate Judge Robert Mitchell in the class action styled Pollock, et al. v. Energy Corporation of America, partially granting and partially denying a motion for summary judgment by Energy Corporation of America. In this case, a class of plaintiff landowners allege, among other things, that ECA improperly deducted post-production marketing costs from the plaintiffs’ royalties. Judge Conti’s Memorandum Order interprets the widely reported 2010 Pennsylvania Supreme Court decision Kilmer v. Elexco Land Services. In Kilmer, the Pennsylvania Supreme Court clarified the Pennsylvania Guaranteed Minimum Royalty Act, permitting operators to deduct post-production costs. Kilmer defined post-production costs as those “expenditures from when the gas exits the ground until it is sold.” Judge Conti held that that the “recital of post-production costs [in Kilmer] should not be interpreted as comprehensive and that deduction of marketing costs, generally, is not contrary to law.”
New York State Comptroller Thomas DiNapoli has announced that Cabot Oil and Gas Corporation has agreed to disclose its policies and procedures for reducing and eliminating toxic substances associated with its hydraulic fracturing fluids. DiNapoli commended Cabot Oil and Gas in the announcement, stating “Cabot has taken a positive step to reduce risk to shareholders, the environment and the communities in which it operates . . . This agreement means that Cabot will publicly release what it is doing to use less toxic substances in its hydraulic fracturing fluids and detail how it is ensuring these efforts are being carried out.” DiNapoli has also reached agreements with Hess Corp., Range Resources and SM Energy to disclose potential risks associated with their respective hydraulic fracturing activities.
The Intelligencer reports that Antero Resources will spend $1.65 billion in 2013 on development of the Utica Shale in Ohio and Marcellus Shale in West Virginia. Antero will reportedly operate two Utica rigs and 12 Marcellus rigs. Antero also plans to build an 80-mile freshwater pipeline in West Virginia across Doddridge, Harrison, and Ritchie Counties. The pipeline will not only reduce costs for the company but will also help reduce its impact on rural West Virginia. The West Virginia Department of Environmental Protection has received several drilling applications from Antero for Tyler, Doddridge, and Ritchie counties in recent days.
In a case of first impression, an Ohio appeals court issued an opinion today holding that state laws concerning oil and gas drilling preempt conflicting local ordinances. A trial court in Summit County ordered a driller to stop construction of a well because it had not complied with local ordinances concerning permitting, application fees, public hearings and zoning certifications. The driller had, however, complied with the applicable state laws. The appeals court reversed the decision of the trial court and found that the state laws control over the local ordinances.
The case could be appealled to the Ohio Supreme Court.
The Delaware River Basin Commission has advised that it will conduct a review of two completed pipeline projects in Northeast Pennsylvania, a reversal of its prior position. DRBC Executive Director Carol Collier made the decision after the Commission decided at its December 2012 meeting that Collier should assess whether the DRBC should review the projects. The projects are interstate pipelines built by Columbia Gas Transmission and Tennessee Gas Pipeline Co. While the DRBC does not review gas pipeline projects typically, the DRBC determined that review was needed in these cases because the pipelines went through the Delaware State Forest. The Philadelphia Inquirer has more.
Bloomberg News is reporting that New York Supreme Court Judge Eileen A. Rakower has denied a petition to block Spectra Energy Corporation’s New Jersey-New York Expansion Project. According to Bloomberg, Judge Rakower ruled that federal law precludes her from hearing the petition, which was filed by Sane Energy Project and other environmental groups. Spectra Energy’s project, which is slated for completion in November 2013, includes the installation of approximately 16 miles of new pipeline and five miles of replacement pipeline in northern New Jersey and southern New York, including Manhattan.
The Associated Press reports on continued efforts by the oil and gas industry to develop alternative formulations of fluids used to hydraulically fracture wells that include non-toxic and food-grade substances. In particular, the AP’s report spotlights a new fracturing fluid known as CleanStim that is produced by Halliburton Inc. and is made with ingredients sourced from the food industry. According to Halliburton’s website, “acquiring the ingredients from the food industry provides an extra margin of safety to people, animals and the environment in the unlikely occurrence of an incident at the wellsite.”
The Ohio Petroleum Council (OPC) and the Ohio Oil & Gas Association (OOGA) maintained their stance against Governor John Kasich’s proposal to increase the severance tax on oil and natural gas in a press release issued Monday. Kasich first proposed hiking the severance tax last year. By increasing the severance tax to 4%, Governor Kasich believes that all Ohioans will benefit from development of the Utica Shale. OPC and OOGA maintain that Ohioans are already benefiting from shale energy development by putting people to work, paying high wages and generating billions in revenue for the State. OPC and OOGA also cite a report saying that Ohio oil and gas companies paid more than $910 million in state and local taxes in 2011.
In a letter to U.S. Department of Energy staff, current Secretary Steven Chu announced on February 1, 2013 that he will not serve a second term and plans to step down at the end of February. Chu highlighted several achievements in the letter and also offered observations about the role of Department of Energy missions in relation to “our economic prosperity, dependency on foreign oil and climate change.” He intends to return to the academic arena of teaching and research.