The Ohio Oil and Gas Commission rendered a decision on August 12, 2015, affirming two orders of the Chief of the Division of Oil and Gas Resources Management that suspended operation of an injection well operated by American Water Management Services in Trumbull County, Ohio. The orders, issued in September, 2014, were based upon two seismic events near the well that were not felt on the surface and caused no property damage. American Water argued on appeal that the orders exceeded the Chief’s authority to suspend permits in the absence of regulatory violations and were unreasonable given the low magnitude of the events and American Water’s proposal to resume operations under a comprehensive plan to monitor seismic events and cease operations if seismic events occur at specified levels. The Commission rejected those contentions, finding that the Chief has inherent authority to suspend permits to protect public health and safety even where the permit holder has not violated applicable regulatory requirements. The Commission also found that the Chief acted reasonably due to a justifiable concern that the two low-level seismic events may be predictive of larger events that may jeopardize public health and safety.
The West Virginia Fair Pooling bill, which we first described last week, has been approved in the West Virginia House of Delegates by a vote of 60-40. In order to become law, the bill must be approved by the State Senate before March 14, when the legislative session ends. Governor Tomblin of West Virginia must then sign the bill in order for it to become law.
As reported by The State Journal, the West Virginia Senate has passed Senate Bill 280 (“SB 280”) which, if it becomes effective, would allow the Secretary of the West Virginia Department of Environmental Protection to transfer well work permits from one business entity to another, a process that has been previously prohibited by State Code. SB 280 was ultimately pushed in favor of Southwestern Energy, a company that has invested more than $5 billion to purchase wells in West Virginia and Pennsylvania. To become effective legislation, SB 280 must first pass through West Virginia House of Representatives before ultimately needing the approval of West Virginia Governor Earl Ray Tomblin.
On September 22, 2014, New York Governor Andrew Cuomo signed into law the “Community Risk and Resiliency Act”, which amends several provisions of the Environmental Conservation Law (ECL) to incorporate consideration of potential climate change impacts, including physical risks due to sea level rise, storm surges and/or flooding, when evaluating projects under a number of existing programs. The law amends ECL Article 23, also known as New York’s Oil, Gas and Solution Mining Law, in a manner that will prompt the New York State Department of Environmental Conservation (DEC) and applicants for oil and gas well permits to consider the effects of climate change. One provision within the law requires DEC, in consultation with the Department of State, to prepare guidance on implementing the law’s requirements, including development of “relevant data sets and risk analysis tools and available data predicting the likelihood of future extreme weather events,” by January 1, 2017. Applications and/or permits received after the adoption of the Department’s guidance must comply with the law. However, the statute also sets a final effective date of January 1, 2017, indicating that applicants must comply with the law even if the Department has not completed its guidance by that date.
On Friday, June 13, 2014, the Pennsylvania Department of Environmental Protection (“DEP”) adopted a final rulemaking that increased well permit fees for unconventional wells in Pennsylvania for the first time since October 24, 2009. The new rule, which took effect on June 14, 2014, fixes the permit fees for non-vertical natural gas wells at $5,000 and for vertical natural gas wells at $4,200. Prior to the new rule, permit fees for unconventional wells were calculated on a sliding scale basis as determined by the length of the wellbore. As reported by PR Newswire, the result of the DEP’s new rule will be to increase the permit fee for an average unconventional well by about $1,800 and $1,300 for horizontal and vertical gas wells, respectively, while the permit fees for conventional wells will remain the same. The DEP projects that this change will result in an additional $4.7 million in annual revenue, which will be used to support new information technology projects related to oil and gas and to hire additional staff for the DEP’s entirely self-funded Office of Oil and Gas Management.
The PA Environment Digest reports that the Independent Regulatory Review Commission (IRRC) approved an Environmental Quality Board regulation increasing oil and gas well fees. Additional information regarding IRRC’s approval can be found at its website. Under the current rule, fees are calculated based on wellbore length. Under the proposed rule, which was previously published in the Pennsylvania Bulletin, “unconventional nonvertical wells” and “unconventional vertical wells” will be assessed a fee of $5,000 and $4,200, respectively, regardless of total well bore length. Currently, the average permit fee is $3,200.
Largely due to increased revenues from drilling permit fees, the West Virginia Department of Environmental Protection (DEP) has nearly doubled its staff in the last two years. Metro News reports that the DEP cites this growth as allowing them to be more responsive to both the public and the oil and gas industry. An additional change that the DEP expects to have significant impact on the industry is the implementation of an e-filing system for drilling permit applications. The e-filing system is expected to improve the efficiency of the permitting system for both the DEP and the companies seeking permits.
The Exponent Telegram reports a moratorium on floodplain oil and gas drilling permits in Doddridge County, WV has been lifted. The Doddridge County Commission voted 2-1 on June 4, 2013 to lift the moratorium, which had been in place since December 18, 2012.
The Ohio Department of Natural Resources (ODNR) reports that during the week of January 13 through January 19, 2013, it approved 3 new horizontal well drilling permits regarding the Utica/Point Pleasant Shale, all of which were issued to Chesapeake Exploration LLC for its operations in Carroll County. Through January 19, ODNR has issued 500 horizontal well permits for the Utica/Point Pleasant Shale, 212 horizontal wells have been drilled under such permits, and 48 wells are in production. Of the producing wells, Gulfport Energy Corp. has released production data from two new Utica Shale wells; one in Belmont county and one in Harrison County that are showing impressive numbers. Gulfport’s Stutzman well in Belmont County ranks fourth in production totals among all wells in Ohio, and its Clay well in Harrison County ranks eighth among all producing wells. Gulfport also operates Ohio’s most productive well, the Shugert well in Belmont County which reportedly is producing 7,482 barrels of oil equivalents per day, which includes 28.5 million cubic feet of natural gas per day, plus 300 barrels of oil and 2,907 barrels of natural gas liquids per day.
The Ohio Department of Natural Resources (ODNR) reports that during the week of January 6 through January 12, 2013, it approved 17 new horizontal well drilling permits regarding the Utica/Point Pleasant Shale, 6 of which were issued to Chesapeake Exploration LLC for its operations in Carroll, Harrison and Jefferson Counties. Through January 12, ODNR has issued 498 horizontal well permits for the Utica/Point Pleasant Shale, 208 horizontal wells have been drilled under such permits, and 48 wells are in production. Carroll County remains at the top of the list for permits issued with 179.
The Ohio Department of Natural Resources (ODNR) reports that during the week of December 30, 2012 through January 5, 2013, it approved 8 new horizontal well drilling permits, 4 of which were issued to Gulfport Energy Corporation for operations in Harrison County, bringing the total up to 63 Utica/Point Pleasant Shale well permits issued for activity in Harrison County. Through January 5, the ODNR has issued 487 horizontal well permits, and 205 horizontal wells were drilled under such permits, 47 of which are in production.
The Ohio Department of Natural Resources (ODNR) reports that during the week of December 23 through December 29, it approved 4 new horizontal well drilling permits regarding the Utica/Point Pleasant Shale, all of which were issued to Mountaineer Keystone, LLC for operations in Portage County. ODNR issued 14 permits for horizontal wells in Portage County in 2012. Through December 29, the ODNR has issued 485 horizontal well permits, and 199 horizontal wells were drilled under such permits, 45 of which are in production.
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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The Pennsylvania Department of Environmental Protection has provided E&P companies with information regarding a new requirement in Act 13 that unconventional well permit applicants submit a spill containment plan. According to the information from DEP, well permit applications submitted on or after October 14, 2012, must include a “Master Containment Plan.” The Master Containment Plan must be included in the first permit application made to each DEP regional office after that date. The information from DEP is available at its Act 13 Frequently Asked Questions page.
Babst Calland has more information in a recently posted Administrative Watch.
On September 25, 2012, the West Virginia Supreme Court heard oral arguments for the case of Martin, et al. v. Hamblet, Docket No. 11-1157. The issue in this case is whether a surface owner is vested with the right to an administrative hearing on and subsequent appeal of a drilling permit for a shallow horizontal well. Currently, the West Virginia statutes provide such rights to coal owners, coal lessees and coal operators only. Under West Virginia law, surface owners may submit written comments in the drilling permit application process in regards to shallow wells and may recover for certain damages to the surface estate. Under current case law, they only have a right to an administrative hearing on and subsequent appeal of a drilling permit for a deep well subject to statutory pooling.
The Hamblet surface owner’s arguments rely on the due process and equal protection clauses of the West Virginia and United States Constitutions and a controversial West Virginia Supreme Court precedent, while the OOG and gas operator are arguing for the court to apply the plain meaning interpretation of the existing statutes.
A Supreme Court decision in favor of the Hamblet surface owner may blur the distinction between shallow and deep wells and exponentially increase a surface owner’s role in the permitting process.