West Virginia and Pennsylvania are positioning themselves to be at the forefront of the nationwide movement to transition more of the country’s vehicles to natural gas as a fuel source. In an op-ed published in the Charleston Gazette earlier this month, former West Virginia governor Ed Wise cited Kanawha and Harrison counties’ efforts to add new natural gas-powered vehicles into their fleets as a showcase for the benefits of extraction of shale gas in the Appalachian Basin. In Pennsylvania, the Port Authority of Allegheny County, which manages Pittsburgh’s bus system, is considering the cost savings that would come from converting its fleet to compressed natural gas. Also, Pennsylvania’s Department of Environmental Protection announced this month it will begin accepting applications for its Natural Gas Vehicle Grant program, which will provide up to $20 million over the next three years to help pay for the incremental purchase and conversion costs of heavy-duty natural gas fleet vehicles.
Exco Resources Inc. and Harnbinger Group Inc., a holding company, will form a joint venture, according to Reuters. Exco will contribute $172.5 million worth of oil and gas properties to the joint venture, with Harbinger Group paying $372.5 million for a 75 percent stake in Exco’s conventional oil and gas assets.
After receiving a favorable decision from the Ohio Environmental Review Appeals Commission (ERAC) and resuming its operations treating low-salinity wastewater from hydraulic fracturing operations, Patriot Water Treatment, LLC (Patriot) has filed suit against the Ohio Department of Natural Resources (ODNR). Patriot’s operations were shut down as a result of Ohio EPA’s order denying the city of Warren a permit to receive water from Patriot and remained closed for three months until ERAC’s July 3, 2012 decision reversed Ohio EPA’s order. Patriot’s complaint, filed in the Court of Claims of Ohio on November 2, alleges that ODNR concealed public documents which could have prevented Patriot’s operations from being shut down. Patriot seeks $3.5 million in damages and attorney’s fees.
On November 6, 2012, residents of the city of Mansfield, Ohio voted to approve an environmental bill of rights that will require any company planning to construct an injection well for the disposal of brine from oil and gas production operations to obtain prior approval from the Mansfield city council. The city council decided to put the environmental bill of rights before voters in July 2012 but the bill did not garner much attention until a few weeks before the election when the Ohio Chamber of Commerce, American Petroleum Institute, and Mansfielders for Jobs issued political materials opposing the bill. The bill was approved with 62.9 percent of voters in favor of the bill.
Opponents of the environmental bill of rights have expressed concern that the regulatory scope of the bill may extend beyond injection wells. Section 1.02(H)(2) states that “No permit, license, privilege or charter issued by any State or government agency . . . which would violate the prohibitions of this Charter provision or deprive any City resident(s), of any rights, privileges, or immunities secured by this Charter, the Ohio Constitution, the United States Constitution, or other laws, shall be deemed valid within the City of Mansfield, without the written legislative consent of the City of Mansfield.” However, the bill of rights may not be enforceable and could face a court challenge since the local legislation would be preempted by state law under Ohio Rev. Code 1509.03.
On November 2, 2012, Ohio EPA reported that the air quality near a drilling site in Muskingum County, Ohio is within federal standards. Ohio EPA collected four months of data from a monitor that measured concentrations of particulate matter, various hydrocarbons, and methane. The agency explained that the only exceedance, which occurred on June 8, 2012, may have been caused by the construction of a nearby road on that particular date. Ohio EPA plans to continue monitoring air quality at well sites for at least two years.
On October 31, 2012, the American Clean Skies Foundation published a report highlighting, on a state-by-state basis, the positive economic impacts for consumers and supply chains from the increased development and production of natural gas. The report notes that, since 2007, the oil and natural gas industry will create up to 1.6 million new jobs across the country and will increase the U.S. gross domestic product by up to $245 billion by 2017. In breaking these numbers down, the report estimates that for every billion cubic feet of additional gas demand per day, 13,000 new drilling and pipeline jobs are created, plus thousands of additional new jobs in various downstream sectors that use natural gas. Significant benefits highlighted in the report include Shell’s construction of an ethane plant and up to 145,000 new jobs in Pennsylvania, and how the development of natural gas resources in Ohio has brought new life to Ohio’s steel industry as U.S. Steel and Timken plan to expand to meet the increased demand for steel pipe and other drilling materials.
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On October 30-31, 2012, the Advanced Energy B2B Expo was held at the Greater Columbus Convention Center in Columbus, Ohio. The conference brought energy companies, regulators, and researchers together to discuss the diverse portfolio of advanced energy technologies that are being developed and implemented in Ohio including solar, co-generation, and natural gas. James Zheringer, Director of the Ohio Department of Natural Resources, noted that while Ohio is only in the early stages of developing the Utica shale (431 permits issued, 178 wells drilled, and 36 wells producing natural gas), the shale industry is expected to contribute close to $ 5 billion to Ohio’s gross state product and create nearly 66,000 new jobs by 2014. Todd Snitchler, Chairman of the Public Utilities Commission of Ohio spoke about the importance of continued innovation and commercialization in the advanced energy sector. Chairman Snitchler also highlighted the importance of having policies in place that will stimulate the growth of advanced energy.
On October 25, 2012, GreenHunter Water, LLC, a wholly-owned subsidiary of GreenHunter Energy, Inc., acquired two Class II Underground Injection Control (UIC) wells in Washington County, Ohio and Ritchie County, West Virginia for the disposal of salt water and other wastewater produced from natural gas exploration and production operations. The UIC well in Washington County has a disposal capacity of up to 2,000 Barrels per day, and the Richie County well has a disposal capacity of up to 1,000 Barrels per day. GreenHunter also added five 80-Barrel water hauling to its Appalachia fleet.
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Acknowledging the agency’s limited authority to regulate hydraulic fracturing under the principal environmental statutes such as the Safe Drinking Water Act and the Resource Conservation & Recovery Act, the United States Environmental Protection Agency (EPA) is now considering its authority under the Federal Insecticide, Fungicide & Rodenticide Act (FIFRA) to ensure that hydraulic fracturing is adequately regulated. Small quantities of antimicrobial chemicals are used in hydraulic fracturing operations to prevent algal and microbial growth that could impede the flow of oil or natural gas during the extraction process. Biocides commonly used in hydraulic fracturing fluid including, acrolein, dazomet, and glutaraldehyde are pesticides and therefore regulated under FIFRA. While EPA is only in the initial stages of weighing the risks associated with the use of antimicrobial chemicals in hydraulic fracturing, industry has raised several FIFRA compliance-related issues including, industry obligations under FIFRA, registration status of certain biocides, and enforcement liability.
Tom Aluise, spokesman for the West Virginia Department of Environmental Protection (WVDEP), recently stated that WVDEP is still trying to fill several vacant positions in the Office of Oil and Gas. In June, WVDEP announced in a press release that the agency was seeking inspectors in the Office of Oil and Gas (OOG) to serve in northern West Virginia, in particular. Last week, a local news source reported that although WVDEP is receiving applications for the positions, the agency is struggling to identify qualified candidates. Applicants for inspector positions must pass a written examination and demonstrate that they have qualifying industry experience. The remaining open inspector positions would cover Doddridge, Tyler, Mingo, Cabell, Wayne, Lewis, Braxton, Gilmer, Pocahontas and Webster counties; OOG will have 21 inspectors when the vacancies are filled. WVDEP hopes to fill these and other vacant OOG positions by the end of the year.
On October 9, Michael Hohn, director of the West Virginia Geological and Economic Survey, briefed the West Virginia joint House and Senate Judiciary Committee Subcommittee A with the findings of a report of the National Research Council entitled “Induced Seismicity Potential in Energy Technologies,” reported by the State Journal. The report indicates that hydraulic fracturing poses very little risk of inducing seismic activity. However, the report found that subsurface disposal of waste water does pose a risk of inducing seismic activity, but that the circumstances necessary to induce seismic activity were rare. Hohn indicated that the long-term effect of waste water disposal upon seismic activity is unknown, and that predicting the effects is difficult because of a lack of information regarding rock systems, including the presence and locations of faults.
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On Monday, October 15, 2012, Carizzo Oil and Gas announced that Halcon Resources Corp. purchased a majority of their Utica Shale leases in Trumbull, Ohio, and Mercer and Crawford counties, Pennsylvania, for $43 million. An existing drilling pad and approved well drilling permits were also part of the sale. Carrizo will continue to own an undivided 10% interest, along with an option to increase its ownership to 50%, in nearly 26,000 additional gross acres, primarily in Guernsey County, Ohio, where the company said there were encouraging drilling results. Continue reading…
The Pennsylvania Public Utility Commission and Governor Tom Corbett announced yesterday that Pennsylvania’s Act 13 impact fees have generated $204.2 million in revenue through October 15, 2012. $108.7 million dollars will be distributed directly to local governments in areas hosting unconventional wells. The remaining $72.4 million finances the Marcellus Legacy Fund, which supports several statewide funds that finance infrastructure, environmental protection, and recreation. This chart provides a breakdown of how the $204.2 million will be allocated, while this chart indicates the amounts that will be dispersed to each county and local government. Four Southwestern town townships, South Fayette, Cecil, Robinson and Mount Pleasant, will have their impact fees withheld while drilling ordinances they have passed are being reviewed by the state.
Citing concerns of negative impacts to forests, the U.S. Fish and Wildlife Service is opposing the proposed Constitution Pipeline carrying gas from Pennsylvania to New York. The Constitution Pipeline, a joint venture of Williams Partners and Cabot Oil & Gas, is a 30-inch underground pipeline extending 121 miles from Susquehanna County in Pennsylvania to Schoharie County in New York. In its comment to the Federal Regulatory Energy Commission, a Fish and Wildlife Service field supervisor called on FERC to evaluate whether existing pipelines carrying gas from Pennsylvania to New York are adequate. The comment also stated that the proposed project would fragment many tracts of forest, resulting in the loss or deterioration of habitat for interior species such as black bear and northern goshawk. The proposed pipeline has its supporters, however. In Delaware County, New York, one of the counties the proposed pipeline will cross, a majority of town supervisors passed a resolution on October 10 stating that the construction of Constitution Pipeline would have a positive economic impact. FERC, which has jurisdiction over the siting of transmission pipelines, extended the public comment period, originally expiring on October 9, to November 9.
Gulfport Energy Corporation reported positive production results for its Shugert 1-1H well in Ohio’s Utica shale. Located in Belmont County, Ohio, Shugert 1-1H tested at a peak rate of 20.0 million cubic feet per day of natural gas, 144 barrels of condensate per day, and 2,002 barrels of natural gas liquids per day. Gulfport plans to begin flowing the Shugert 1-1H well into a sales pipeline by early December.