The 2014 Babst Calland Report Focuses on the Appalachian Shale Industry in Transition

June 9, 2014

Challenges Evolving for Producers and Midstream Operators

PITTSBURGH, June 9, 2014 – The law firm of Babst Calland released its fourth annual energy industry report, The 2014 Babst Calland Report – Appalachian Shale Industry in Transition: Evolving Challenges for Producers and Midstream Operators. This annual review of natural gas and energy development activity acknowledges the significant growth of the Appalachian shale industry and offers insights on the issues and legal implications resulting from such growth.

This year’s Report explores major challenges for the industry ranging from political, regulatory and local government influences to property rights, land use issues and workforce safety. As the industry transitions from its startup years to an era of production efficiencies and a promising outlook of manufacturing renaissance, Babst Calland attorneys provide comment in this Report on related Marcellus and Utica shale issues and developments relevant to Pennsylvania, Ohio and West Virginia.

Commenting on this year’s Report, Joseph K. Reinhart, Shareholder and Co-Chair of Babst Calland’s Energy and Natural Resources Group, said, This Report offers a unique glance at key issues for the industry. In addition to navigating increased regulatory and legislative challenges, the next chapter for the shale gas industry will be shaped by political influences, regulatory and local government developments, property rights challenges and workforce safety.

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 from plentiful and globally competitive, low cost gas and natural gas liquids. This industry dynamic is opening the way for new and expanded derivative manufacturing facilities. While shale development unto itself will sustain for many years, this region’s ability to attract downstream users will ultimately tell the story of increased economic activity overall, added Reinhart.

The 32-page Report reflects the perspectives of Babst Calland’s multi-disciplinary team of energy attorneys. It contains six sections, each covering a specific subject matter considered to be a key challenge for Appalachian Shale producers and midstream operators. This year, Kathryn Z. Klaber, shale industry advisor to Babst Calland and former CEO of the Marcellus Shale Coalition, offers a Foreword perspective and also contributed to the Report’s content.

The Report incorporates commentary for each key issue, including specific implications for shale operators in the primary Appalachian shale states such as:

  • 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 Report, contact info@babstcalland.com.

To stay on top of these developments, periodic update articles, news and regulatory information can be found on babstcalland.com or at the Firm’s Shale Energy Law Blog shaleenergylawblog.com. Subscribe to receive regular updates.

Note: The Babst Calland Report is provided for informational purposes only to our clients and friends, and is not intended to constitute legal advice.