Methane emissions are a chief concern across the oil and gas value chain. Gary Steinbauer and Sean McGovern, both shareholders with Babst Calland, discuss methane mitigation and how players in the energy space can best handle it in this video, divided into three segments.
In the first segment, Steinbauer discusses the Biden administration’s approach to methane emissions in the energy sector, including proposed regulatory changes in the EPA’s Methane Rule.
In the second segment McGovern discusses abandoned and orphaned wells, how they are being plugged, and the help that operators can receive from the Bipartisan Infrastructure Law that passed in 2021.
In the final segment, both attorneys offer step-by-step advice to operators in Appalachia trying to navigate a slew of updated regulations.
View the three-part video, here.
In Woodhouse Hunting Club, Inc. v. Hoyt, an unpublished opinion filed February 2, 2018, the Pennsylvania Superior Court upheld the practice of “title washing” of unseated land in Pennsylvania. Prior to January 1, 1948, title washing occurred through a tax sale of unseated land from which oil, gas and/or minerals (the “subsurface estate”) had been previously severed. If the subsurface estate had not been separately assessed, the tax sale of the unseated land would extinguish the prior severance and vest the tax sale purchaser with full ownership in the surface and subsurface estates. If the oil and gas had been separately assessed, then the tax sale of the surface would have no effect on the subsurface estate. After January 1, 1948, mineral estates were no longer separately assessed from the surface in Pennsylvania and title washing could no longer occur. In 2016, the Pennsylvania Supreme Court upheld the practice of “title washing” of unseated or unimproved land in Pennsylvania. Herder Spring Hunting Club v. Keller, 143 A.3d 358 (Pa. 2016).
Prior to the Superior Court ruling, the trial court had quieted title in favor of Woodhouse Hunting Club, Inc. based upon the Club’s argument that Hoyt did not own subsurface mineral rights due to a 1902 title wash. In issuing its ruling in Hoyt, the Superior Court noted that the Herder Spring decision addressed and disposed of all of Hoyt’s issues in the case. Therefore, the Superior Court relied on the holding in Herder Spring in affirming the trial court’s decision to grant summary judgment and quiet title in favor of Woodhouse Hunting Club, Inc.
On March 10, 2017, Senate Bill 576 (SB 576) was introduced in the West Virginia Senate to take the place of SB 244, which addressed the oil and natural gas industry’s effort to efficiently develop production of natural resources. Similar to SB 244, SB 576’s stated purpose is “to encourage the efficient and economic development of oil and gas resources[;]” however, it contains a number of provisions that differ from SB 244.
If signed into law, SB 576 would create a new code section, W. Va. Code §37B-1-1, et seq., titled the “Cotenancy and Lease Integration Act,” which, like SB 244, contains both “co-tenancy” and “lease integration” provisions.
SB 576 declares in proposed §37B-1-2 that West Virginia public policy includes both “the maximum recovery of oil and gas” and the “protect[ion] and enforce[ment of] the clear provision of contracts lawfully made.” This section also states that West Virginia public policy is to “safeguard, protect and enforce” both “the rights of surface owners” and “the correlative rights of operators and royalty owners in a pool of oil and gas to the end that each such operator and royalty owner may obtain his or her just and equitable share of production from that pool of oil and gas[.]”
Proposed section §37B-1-4 allows oil and gas production on a piece of property when “two thirds of the ownership interest in the oil and gas mineral property consent to a lawful use [i.e., production] of the mineral property[.]” By contrast, SB 244 only required that a “majority” of ownership interests agree to a “lawful use.”
In addition, SB 576 (like SB 244) states that payment of royalties will be on a pro rata basis, with payments for a mineral owner who cannot be located reserved by the producer. Unlike SB 244, however, SB 576 would specifically allow surface owners to use W. Va. § 55-12A-1, et seq. (the unknown and missing landowners statute), to lay claim to the interests of the absent or missing owners. Finally, and importantly, SB 576 would require that a mineral interest owner who opposes oil or natural gas development be paid royalties (1) “free of post-production expenses” and (2) “equal to his or her fractional share of the average royalty of his or her consenting cotenants[,]” but “in no event may the royalty be less than his or her fractional share of one-eight [12.5%].”
SB 576 adds proposed sections §37B-1-5 and -6, which would take the place of the “Joint Development” provision in SB 244. Under proposed §37B-1-5, “[w]here an operator or operators have the right to develop multiple contiguous oil and gas leases, the operator may develop these leases jointly by horizontal drilling unless the development is expressly prohibited by the terms of a lease or agreement.” Importantly, an operator may only disturb the surface of property subject to this provision if it “has a surface use agreement” with the owner(s) of the property that will be disturbed. As with SB 244, under proposed §37B-1-6, royalty payments are based upon “production [that] shall be allocated to each lease in the proportion that the net acreage of each lease bears to the total net acreage of the jointly developed tracts.” As with dissenting owners under proposed §37B-1-4, however, “[i]n the absence of specific agreement to the contrary or where deductions are authorized by statute, the royalty for all royalty owners of the jointly developed acreage who do not have leases containing express pooling and unitization clauses shall not be reduced for post-production expenses incurred by the operator.” This provision, however, is not “intended to impact royalties due for wells drilled prior to the effective date of this chapter.”
While SB 576 keeps the basic goals of SB 244 – development without the approval of all mineral interest owners and development of contiguous property through horizontal drilling – it contains a number of provisions designed to mollify the concerns of surface owner organizations and other property rights groups. The “co-tenancy” provision now requires a 2/3 majority of mineral ownership interests to permit development, and royalty payments to dissenting owners must not take post-production costs into account. The “lease integration” provisions explicitly allow horizontal drilling of contiguous tracts that are each subject to production leases (provided horizontal drilling is not expressly prohibited), but if a production lease does not explicitly permit pooling or unitization, then royalty payments to the owners under that lease cannot be deducted for post-production costs. Important to surface owners is the requirement that a surface use agreement be in place before the surface of any property is disturbed by joint development.
Babst Calland will follow SB 576 during West Virginia’s Legislative Session, which is scheduled to end on April 8, 2017.
On October 14, 2015, the United States District Court for the Western District of Pennsylvania invalidated several provisions of a Grant Township, Indiana County, Pennsylvania local ordinance that was intended to prevent an oil and gas operator from operating an injection well that had been permitted by the U.S. Environmental Protection Agency. In Pennsylvania General Energy Company, L.L.C. v. Grant Township, C.A. No. 14-209, 2015 U.S. Dist. LEXIS 139921 (W.D. Pa. Oct. 14, 2015), Pennsylvania General Energy Company, L.L.C. challenged the constitutionality, validity and enforceability of the Grant Township ordinance that sought to establish a self-described Community Bill of Rights Ordinance. For additional information, read our recent Administrative Watch.
Veteran attorneys Timothy Miller from Robinson & McElwee, and Christopher ‘Kip” Power, Mychal Schulz and Robert Stonestreet from the Charleston office of Dinsmore & Shohl have joined forces with Babst Calland in providing senior-level legal counsel in key practice areas including environmental, litigation and employment. The addition of the new attorneys and staff will double the size of Babst Calland’s Charleston office which opened in 2011. For more information, please visit the firm’s website.
“The 2014 Babst Calland Report – Appalachian Shale Industry in Transition: Evolving Challenges for Producers and Midstream Operators” comments on key issues facing producers and midstream operators from a legal and regulatory perspective, including:
- Governments and politics are playing a major role in shale energy. State elections will shape how the industry operates. In Ohio and Pennsylvania, the tax debate is still very much alive. In West Virginia, a gas severance tax has been in effect and has remained unchanged despite attempts to raise it. The industry faces increased budgetary and operational challenges from legislative sessions in all three states. Politically-driven developments continue to impact the prospects for new and existing underground injection wells, ranging from new seismic testing requirements to public objections to pending permit applications.
- Regulatory issues remain fluid for the Appalachian shale gas industry. There is no shortage of regulation for the burgeoning shale gas industry, particularly given the degree of transparency, public scrutiny and political influence for and against the extractive industries. A large number of regulatory issues remain, requiring constant attention to developments and details across a spectrum of subjects including: reporting, permitting, well site construction, impacts to species, and unique standards for water and air quality.
- Local government regulation of the industry is expanding. The line between state and local control is still being tested in the state of Ohio, while the implications of Post-Robinson Twp. (Act 13) local regulation in Pennsylvania will not be evident until later in 2014.
- Property rights and land use present more challenges than ever before. Myriad unresolved property rights, royalty disputes and land-related issues are pending in the courts. Producers in Ohio, West Virginia and Pennsylvania are facing a continuously evolving environment concerning property rights and land use.
- Safety and labor remain priorities. The industry’s workforce and supply chain partners are keys to productivity gains and maintaining the all-important license to operate. As the oil and gas industry must protect its workers 24/7, it must remain vigilant on safety compliance and labor matters.
- Next step in the transition: we are at the threshold of a manufacturing renaissance. The Appalachian Basin is playing a leading role in the United States’ production of record amounts of oil, gas and natural gas liquids. New business opportunities are rapidly developing, and the Appalachian Basin has the potential to evolve from our vastly successful resource extraction activities to reclaim its historic reputation as a manufacturing juggernaut.
To request a copy of “The 2014 Babst Calland Report,” contact info@babstcalland.com.
As reported by NGI’s Shale Daily on June 4, many descended upon Pittsburgh, Pennsylvania on Wednesday for the first day of Hart Energy’s Developing Unconventional Gas (DUG) East Conference, where representatives from industry leaders discussed recent industry trends occurring in Ohio, Pennsylvania and West Virginia. Of the speakers on Wednesday, Range Resources Corp.’s CEO Jeffrey Ventura, Randall Wright, President of the consulting firm Wright & Co., Inc., were most notable, discussing the explosive and unparalleled growth in the Appalachian Basin in the past decade. Range CEO Jeffrey Ventura attributed Range’s growth in the past 10 years to expanding pipeline infrastructure and the wealth of knowledge that it has acquired through years of exploration and production, but noted that the Utica Shale, Marcellus and Upper Devonian formations were responsible for helping Range to assemble an asset base that it expects will grow the company’s current reserves by seven to ten times. President Randall Wright mirrored these observations by noting that a new, advanced learning curve, developed through years of experience resulting in more efficient practices by operators has led to an increase of thousands of dollars in property value as well as vast increase in production from 1.5 bcf/d in 2007 to 15 bcf/d this month. The DUG East conference concluded on Thursday, June 5 at the David L. Lawrence Convention Center, located in Pittsburgh, Pennsylvania.
The West Virginia University College of Law is now offering a Master of Laws in Energy and Sustainable Development Law set to begin during the Fall Semester 2014. With the addition of the one-year LL.M. program, the College of Law is focusing on West Virginia’s important role in the development of the Marcellus shale and supplementing the existing WVU Law Center for Energy & Sustainable Development as well as the National Energy & Sustainability Moot Court Competition, which occurs this year on March 27, 28 and 29 in Morgantown. The College of Law recognizes that “[e]nergy is the foundation of our nation’s future, both economically and environmentally. West Virginia is as the center of energy production in the country.” The LL.M. curriculum includes a variety of energy related courses including Oil and Gas Law, Energy Regulation, Markets and Environment, Land Use and Sustainable Development, Natural Resources Law and Environmental Protection Law, among others, and is designed to prepare attorneys to work on a broad spectrum of energy related issues. Review of applications began on March 1 but the LL.M. Program maintains a rolling admissions process.
The New York State Energy Planning Board released its Draft 2014 State Energy Plan on January 7, 2014. Although one of the draft plan’s key initiatives includes expanding access to natural gas as an alternative to petroleum products for heating and power generation, the Energy Planning Board does not take a position on whether the State should allow Marcellus Shale drilling. The Energy Planning Board notes in the draft plan that, although “both horizontal drilling and hydraulic fracturing are not new to natural gas development in New York, Marcellus Shale drilling using these techniques is on hold pending additional review.” According to the Energy Planning Board, natural gas production in other states currently satisfies 97 percent of New York’s demand, with a growing proportion of that supply coming from the Marcellus and other shale plays.
The Energy Planning Board predicts that New York’s natural gas production will continue to decrease significantly unless the State’s Marcellus Shale reserves are developed. Regardless of New York’s decision on whether to lift its five-year moratorium on hydraulic fracturing, the Energy Planning Board concluded that sufficient natural gas supplies should be available from other states to meet future demand, as long as interstate pipeline capacity exists to serve New York. The Energy Planning Board intends to hold public hearings in several cities and is currently accepting public comments in writing or electronically at energyplan.ny.gov.
On December 10, 2013, President Obama issued a memo entitled, “Federal Leadership on Energy Management,” that directs federal facilities to achieve new goals for renewable energy and implement new energy management practices. The principal goals are as follows: (1) by 2020, 20% of the total electric energy consumed by each agency during any fiscal year should come from renewable energy, with interim goals of 10% renewable energy usage by 2015, 15% in 2016 and 2017, and 17.5% in 2018 and 2019; (2) each agency must install building energy meters and sub-meters as required by the National Energy Conservation Policy Act and install additional ones where cost-effective and appropriate; and (3) the General Services Administration, in coordination with the Department of Energy, must initiate a strategy to pilot “Green Button” at federal facilities where feasible. “Green Button” is a data access system developed by the North American Energy Standards Board for providing web-based secure access to energy bill account data, usage data, and consumption data to customers and utilities for purposes of demand-side management. For purposes of the President’s memo, “renewable energy” is defined as “energy produced by solar, wind, biomass, landfill gas, ocean, geothermal, municipal solid waste, or new hydroelectric generation capacity.”
This week, the Pittsburgh Business Times published a ranking of the largest law firm energy practices in the Pittsburgh region. Among the 31 law firms listed, Babst Calland, with 70 lawyers serving the energy industry, ranked first among all firms practicing energy law. Serving a majority of E&P and Midstream operators in one or more legal practice areas, Babst Calland’s energy practice has grown six-fold during the past few years, including full-service offices in Pennsylvania, Ohio and West Virginia.
To view a copy of the full listing, click here https://www.bizjournals.com/pittsburgh/subscriber-only/2013/08/16/Largest-region-law-firm-energy-practices.html.
The Pittsburgh Business Times publishes weekly lists, which are compiled annually in the Book of Lists and recognized by readers as reliable and reputable sources of business information.
Pennsylvania state Senator Gene Yaw (R-Lycoming County) has introduced legislation that would effectively add a Pugh clause to leases being unitized for development of shale gas. Senate Bill 356, which was introduced by Senator Yaw and several others on January 31, has been referred to the Senate Committee on Environmental Resources & Energy for consideration. A Pugh clause releases the portion of leased acreage that is not included within a production unit. Senate Bill 356 would apply only to units formed after the effective date if the bill were passed and to development of unconventional reservoirs, as defined in the bill.
On Friday, the Circuit Court for Prince George’s County, Maryland, ruled that Dominion has the right to export liquefied natural gas (“LNG”) from its Cove Point terminal in Calvert County, Maryland. The Sierra Club and the Maryland Conservation Council sued Dominion last year, arguing that a 2005 agreement with Dominion prohibited exports from the Cove Point LNG import terminal. Platts reports that Circuit Court concluded that there is no provision in the 2005 agreement that explicitly prohibits the use of the facility from exporting LNG, and therefore, Dominion has the right to use the facility to export LNG. The State Journal reports that the facility was historically used for imports, but Dominion has since proposed to reconfigure the facility for liquefaction and exports as shale gas continues to boom.
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…
Marathon Petroleum Corporation announced Tuesday, October 9, 2012, that they plan to build a truck-to-barge loading facility in Wellsville, Ohio, to expedite the taking of hydrocarbon liquids oil produced in the Utica Shale play to Catlettsburg, Kentucky, for refining.
Marathon signed a letter of intent with Harvest Pipeline Company on September 27, 2012, agreeing to jointly develop infrastructure that will facilitate the transportation of hydrocarbon liquids production from the Utica Shale play in eastern Ohio and western Pennsylvania. The project will provide 24,000 barrels per day of truck-unloading capacity and a terminal that can load up to 50,000 barrels per day of oil onto barges at the Ohio River in Wellsville. The proposed project includes modifications to Marathon`s existing Wellsville river terminal to accommodate the additional volume for loading onto barges, and a new truck rack to be built on property leased by Harvest Pipeline next to the Marathon facility. The project is anticipated to be complete in late 2013. Continue reading…