The Pennsylvania Department of Environmental Protection recently published three important notices in the Pennsylvania Bulletin affecting the oil and gas industry. They are:
- The final Erosion and Sediment Control General Permit-2 (ESCGP-2) for Earth Disturbance Associated with Oil and Gas Exploration, Production, Processing or Treatment Operations or Transmission Facilities, which includes several supporting documents and a policy document.
- A final technical guidance document regarding the Department’s “Policy for NPDES Permits for Stormwater Discharges Associated with Construction Activities at Oil and Gas Wells (Document No. 550-2100-008)”).
- A notification regarding “Emissions and Source Reporting Requirements for Natural Gas Operations” pursuant to the Pennsylvania Air Pollution Control Act.
The ESCGP-2 notice includes detailed information regarding the DEP’s plan for the proposed transition from the current ESCGP-1 (which expires on April 12, 2013) to the new ESCGP-2. In the notice regarding emissions and source reporting requirements for unconventional natural gas operations, the DEP identified sources subject to reporting, which include: “compressor stations; dehydration units; drill rigs; fugitives, such as connectors, flanges, pump lines, pump seals and valves; heaters; pneumatic controllers and pumps; stationary engines; tanks, pressurized vessels and impoundments; venting and blow down systems; well heads; and well completions.” Complete source reports are due by March 1, 2013, and annually on March 1 thereafter.
WJAC-TV in Johnstown is reporting that the Jefferson County Pennsylvania Commissioners recently drafted and then approved a resolution opposing underground disposal injection wells. Although there are currently no plans for an injection well in Jefferson County, the resolution came about after two oil and gas companies applied for permits for injection wells in nearby Clearfield and Elk counties. Commissioner Jeffrey Pisarcik told WJAC-TV that the commissioners decided to pursue a resolution rather than an ordinance because the latter could potentially lead to a lawsuit if it precluded a company from applying for a permit. The resolution does not prohibit companies from seeking a permit.
Triad Hunter LLC, a subsidiary of Magnum Hunter Resources Corp., and Eclipse Resources I LP, of State College, PA, have formed a joint venture in order to develop 1,950 mineral acres in Monroe County, OH. Triad, as operator, will drill a total of 24 wells into the Marcellus and Utica formations over a three year period. Another Magnum subsidiary, Eureka Hunter Pipeline LLC, is expected to carry the production through a midstream pipeline, which is currently under construction.
The West Virginia State Journal recently observed that the effect of the Natural Gas Horizontal Well Control Act, passed by the West Virginia Legislature in December 2011, remains unclear. The Act provided a statutory and regulatory framework for natural gas producers, but significant questions remain regarding the true impact of the Act in West Virginia. Although natural gas production and midstream services job opportunities have grown in West Virginia, some question whether West Virginians are filling newly created jobs. The Supreme Court of Appeals of West Virginia has been critical of the Act’s treatment of damages to surface owners, as seen in Martin v. Hamblet (November 2012). Consequently, it is likely that the West Virginia State Legislature will be forced to face further oil and gas issues in the 2013 sessions.
As reported in The Hill’s Energy and Environment Blog, the U.S. House of Representatives’ Committee on Oversight and Government Reform will be creating a new subcommittee on Energy Policy, Healthcare and Entitlements for the 113th Congress. Representative James Lankford (R-Okla.) will be chairing the subcommittee, which will focus on cross-jurisdictional energy policy issues, including potential changes to the energy provisions in the U.S. Tax Code.
The American Petroleum Institute (API) filed a petition for writ of certiorari asking the U.S. Supreme Court to hear its challenge to the U.S. Environmental Protection Agency’s (U.S. EPA) 2010 revised standard for nitrogen dioxide (NO2) emissions. The petition states that Supreme Court review is appropriate as the case “presents a question regarding the limits of the Environmental Protection Agency’s authority to set National Ambient Air Quality Standards.”
API asserts that, by upholding U.S. EPA’s revised NO2 standard, the D.C. Circuit unlawfully authorized U.S. EPA to exercise boundless discretion in establishing an air quality standard. Section 109(b)(1) of the Clean Air Act requires U.S. EPA to determine that a contemplated air quality standard is “requisite to protect the public health.” API claims that the scientific justification for the revised NO2 standard is based on a “simulated world” and, thus, U.S. EPA failed to show that lowering the standard is “requisite” or necessary to protect the public health.
Houston-based Plains Marketing LP purchased 40-plus acres situated on the outskirts of Toronto, Ohio from FirstEnergy for its shale-related business activity. According to the papers filed in the Jefferson County recorder’s office on December 28, 2012, Plains Marketing LP paid $2.5 million for the property. Sources close to the transaction have indicated that Plains Marketing LP intends to transport wet gases from Utica shale wells to the site, where it will be stored and eventually shipped to refineries on the Gulf Coast.
Toronto Mayor John Geddis described the site, which has been vacant since 1986, as “prime property,” with barge docking facilities and the potential for a rail spur. Mayor Geddis further indicated that the project would likely bring jobs to the area in the near future.
The domestic steel industry is drawing increased investment as a result of the surge of natural gas production across the United States, Bloomberg News reports. Not only does hydraulic fracturing require the use of steel pipes, but additionally the low cost of natural gas is a huge benefit to steel producers. United States Steel Corporation recently spent $100 million on a facility to make tubular product for gas producers. According to a press release of U.S. Steel, “Energy industry customers utilize U. S. Steel Tubular Products’ casing, tubing, line pipe and couplings to help them locate, retrieve, transport and refine the oil and natural gas products that fuel the world.” U.S. steelmaker Nucor Corporation is constructing a $750 million Direct-Reduced Iron facility in Louisiana. Nucor entered into a long-term natural gas agreement with Encana Oil & Gas (USA) Inc. in order to guarantee a reliable, low cost natural gas supply for its existing and expected future needs. The international steel industry has also noticed the benefit of the natural gas boom in the United States. Austrian steelmaker Voestalpine AG has announced that it plans to focus on investments in North America.
The Ohio Department of Natural Resources (ODNR) reports that during the week of December 16 through December 22, it approved 11 new horizontal well drilling permits regarding the Utica/Point Pleasant Shale, the majority of which were issued for operations in Carroll County, which leads the state in well permits issued for the year (177, through December 22, 2012). Other recently issued permits include one in each of Columbiana and Guernsey Counties, and two in Monroe County. Through December 22, the ODNR has issued 485 horizontal well permits, and 196 horizontal wells were drilled under such permits, 45 of which are in production. Additionally, the rig count for Utica Shale development has reached a total of 30 rigs.
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On December 27, 2012, EPA Administrator Lisa Jackson announced that she plans to leave her position after President Obama’s State of the Union address in early 2013. Reportedly, the list of candidates to replace Jackson includes Kathleen McGinty, former Secretary of the Pennsylvania Department of Environmental Protection. U.S. EPA Deputy Administrator Bob Perciasepe will serve as acting administrator in the interim.
On December 21, 2012, EPA released a much-anticipated progress report as part of its major hydraulic fracturing study. EPA began research in 2011 under its “Plan to Study the Potential Impacts of Hydraulic Fracturing on Drinking Water Resources,” in order to assess the potential impacts, if any, of hydraulic fracturing on drinking water. In the 278-page progress report, EPA outlines past and future research efforts but avoids drawing any preliminary conclusions. EPA expects to release draft research results in late 2014.
Royal Dutch Shell plc and Horshead Corp. agreed to a six-month extension for Shell to acquire land for a proposed cracker plant that it is considering building in Beaver County. Shell had a December 31, 2012, deadline to buy the land in Center and Potter Townships, but obtained the extension to allow it more time to assess the project. The Tribune-Review reports that local and state officials remain optimistic that Shell will move forward with the plant. The cracker facility will be used to process ethane produced from the Marcellus and Utica shales, and the plant and associated businesses are projected by some to create up to 8,000 jobs for the local economy.
Hannibal Real Estate of White Plains, NY, and Carload Express of Oakmont, PA, plan to revive a 12 mile rail line serving Hannibal Industrial Park in Monroe County, OH. The partners hope the rail line, known as the Ohio Terminal Railway Co., will attract businesses that are participating in the Utica and Marcellus shale plays. Trains are expected to haul sand, concrete and other materials used in shale development to and from the 122 acre industrial park.
On December 20, 2012, the Buckeye Water District, a municipal sewer and water authority in Columbiana County, Ohio, approved the sale of treated sewage water for use in hydraulic fracturing operations. Under the one-year agreement with Keystone Clearwater Solutions, Keystone will pay a bulk rate of $6.60 per thousand gallons for the first 30 million gallons used. For any additional water, Keystone will pay a descending scale of $12, $10, $8 or $6 per thousand gallons depending on the daily volume used.
On December 11, 2012, seven states sent the United States Environmental Protection Agency a Notice of Intent to Sue the agency for failing to address methane, a greenhiouse gas (GHG), emissions from the natural gas industry. The states assert that, although the revised new source performance standards adopted in August 2012 will have the incidental benefit of reducing methane emissions, U.S. EPA’s “failure to consider directly controlling methane emissions resulted in the omission of controls for certain operations that emit large amounts of methane.” The states intend to file suit in a federal district court if U.S. EPA does not respond favorably within the allotted 60-day waiting period.
GHGs, which currently are being addressed under various permitting regimes, are not the only air-related subject of increased regulatory oversight. On December 20, 2012, 30 environmental groups petitioned U.S. EPA to require ozone monitoring in natural gas production areas.