North America Shale Blog

North America Shale Blog

Third Circuit Court of Appeals Affirms That Pennsylvania Law Does Not Recognize Automatic “Equitable Extensions” of Oil and Gas Leases Based Solely on the Premise That a Lessor’s Attempt to Legally Invalidate the Lease Constitutes a Repudiation

Posted in Oil and Gas, Pennsylvania

oilOn June 25, 2015, the United States Court of Appeals for the Third Circuit affirmed the District Court for the Middle District of Pennsylvania’s prior entry of summary judgment in favor of the lessor plaintiffs on the counterclaims of the lessee defendant, Cabot Oil and Gas Corporation. Harrison v. Cabot Oil & Gas Corp., No. 12-3613 (3d Cir. June 25, 2015).

According to Cabot, the plaintiffs’ lawsuit was a repudiation of the lease because it sought declaratory relief invalidating the lease. Thus, Cabot’s counterclaims asserted it was entitled to an extension of the five-year lease term for the length of time it took to defeat the plaintiffs’ suit. This concept is known as “equitable extension,” and courts have repeatedly permitted its application in other oil-and-gas-producing jurisdictions such as Louisiana and Texas. See Harrison v. Cabot Oil & Gas Corp., Civ. No. 3:10-cv-00312, Doc. No. 51 at p. 12. Continue Reading

EPA Releases Study of Hydraulic Fracturing’s Potential Impacts on Drinking Water

Posted in Hydraulic Fracturing, Water

Waterbottlephoto80705420Authored by: Amanda Tate, 2015 Summer Associate

On June 4, 2015, the U.S. Environmental Protection Agency (EPA) released an external review draft of a report assessing the potential impacts of hydraulic fracturing on drinking water. The report, “Assessment of the Potential Impacts of Hydraulic Fracturing for Oil and Gas on Drinking Water Resources,” is the government’s most comprehensive investigation to date of the connection between drinking water and hydraulic fracturing. Overall, EPA did not find any evidence that current hydraulic fracturing mechanisms have had widespread, systemic impacts on drinking water resources. However, EPA did identify several potential vulnerabilities in the hydraulic fracturing process that could lead to future impacts. Continue Reading

Wyoming Federal District Court Stays BLM’s Hydraulic Fracturing Rule

Posted in Hydraulic Fracturing, U.S. Bureau of Land Management

oil fracking rig 519054087On June 23, a coalition of industry, states, and tribal interests convinced a federal judge to stay the effective date of the Bureau of Land Management’s (BLM) hydraulic fracturing rule.

The stay demonstrates the first step for the industry in holding the BLM accountable to the requirements of the Administrative Procedure Act (APA) and the first step for the states in holding the BLM within its jurisdictional boundaries. Continue Reading

Texas Town Repeals Voter-Approved Ban on Hydraulic Fracturing

Posted in Hydraulic Fracturing, Texas

Portable industrial well drilling rig on an old truckJust seven months after voters in Denton, Texas, approved a measure banning hydraulic fracturing within city limits, the Denton City Council voted 6 to 1 to repeal the ban.

Council members called the move a “strategic repeal” after plaintiffs in two pending lawsuits seeking to invalidate the ban amended their complaints to invoke a recently enacted Texas law that bars local ordinances that prevent hydraulic fracturing and other drilling activities.  Continue Reading

Oilfield Water Recycling Could Significantly Boost Texas Water Supplies

Posted in Fracking, Oil and Gas, Texas

Water drop close upRobust drilling and production activity in the Eagle Ford, Permian Basin, Granite Wash, and other oil-producing areas of Texas has unleashed high demand for frac water and a surge of produced water as wells come online. A single large Eagle Ford frac job can require as much as 11.5 million gallons of water – enough to submerge a one-acre plot of land under more than 30 feet of water.[1] After the frac job, a sizable proportion of this fluid flows back and must be collected and either disposed of or reused. And after that, once a well begins producing, an average of 10 barrels of produced water will likely accompany each barrel of oil produced.[2]

Texas now produces nearly 3 million barrels per day of crude oil and condensate – more than Mexico or Kuwait.[3] But it must deal with more than 10 times this much produced water each day. Indeed, data from the Argonne National Laboratory suggest that as early as 2007, the state’s oil and gas fields produced a volume of water equivalent to nearly 22 percent of all water used by municipalities in Texas that year.[4] Yet this massive potential resource has – to date – gone largely unused because treating oily, salty water was too expensive. Continue Reading

Texas Operator Pushes Back on Seismic Claims at Railroad Commission Hearing

Posted in Earthquakes, Hydraulic Fracturing, Texas

Hydraulic_Fracturing_iStock_000025097211MediumEarlier this week, the Texas Railroad Commission held its first “show cause” hearing under the rule amendments adopted last October to address issues related to disposal wells located in potential high-risk seismic areas. Under the amendments, the Railroad Commission has the authority to modify, suspend, or terminate a disposal well permit if it is determined that a disposal well is likely to be or determined to be contributing to seismic activity. At the June 10-11 hearing before the Railroad Commission’s Hearings Division, XTO Energy Inc. was ordered to show cause why the injection permit for a Parker County (TX) well should not be cancelled and the well ordered shut-in due to an alleged connection raised by new seismic research between ongoing operation of the well and seismic activity in the vicinity. In addition to the XTO well, the Railroad Commission’s order also covered a Wise County well operated by Enervest Operating L.L.C. Continue Reading

North Carolina Adds a New Square to the Patchwork Quilt of State-by-State Treatment of Hydraulic Fracturing

Posted in Hydraulic Fracturing

New York State garnered worldwide media attention on December 17, 2014, when Governor Andrew Cuomo’s administration announced after six years of study that it was instating a complete ban on high-volume hydraulic fracturing statewide. Despite the interest this action created, it was certainly not the first example of how states vary in their handling of hydraulic fracturing, whether it is through legislation, regulation, or court rulings. For example, the rules governing the development of natural gas in the Marcellus shale in Pennsylvania through hydraulic fracturing have seen numerous changes over the last several years, pursuant to multiple court rulings, state laws, local zoning, and Department of Environmental Protection regulation.

North Carolina has now joined Texas, Pennsylvania, Ohio, Colorado, and New York in making headlines by allowing hydraulic fracturing within its borders. In 2014, the North Carolina legislature lifted the moratorium on hydraulic fracturing. Although the state has yet to approve any drilling units, two lawsuits addressing the process and makeup of the Mining and Energy Commission in charge of granting such permits have officially delayed any actual activity in the state. Continue Reading

Oklahoma Follows Texas’ Lead in Prohibiting Local Hydraulic Fracturing Bans

Posted in Hydraulic Fracturing, Oil and Gas, Oklahoma, Texas

Natural_Gas_Drilling_Rig_PeekingIn the wake of Texas’ recent “ban on banning hydraulic fracturing,” Oklahoma lawmakers have passed a similar law—SB 809—prohibiting municipal governments from regulating oil and gas drilling at the local level. The bill now heads to Governor Mary Fallin, who is expected to sign it into law.

Oklahoma enacted SB 809 prohibiting local drilling regulations—one of several similar proposals in the Oklahoma legislature—in response to local efforts to curb or ban advanced drilling techniques such as hydraulic fracturing after reports linking increased seismic activity in Oklahoma to the surge in drilling in the state in recent years. Excluding offshore drilling, Oklahoma is the fifth largest crude-producing state in the U.S. Continue Reading

Frack 2.0: Refracing Could Enable a Second Wave of Production Growth in the Bakken and Eagle Ford

Posted in Fracking, Hydraulic Fracturing, Shale

Shale-Denver-Event-BlogOperators will likely refrac more oil and gas wells this year and further accelerate such activity in 2016. The reason is simple: substantial bang for CAPEX bucks. A recent study by engineers from SPE and Baker Hughes estimates that Bakken oil wells can be refraced for $1.8 million apiece – roughly ¼ of what it currently costs a top operator to drill and complete a new well. Yet the Bakken refracs in the study increased recoverable reserves by an estimated 69 percent and boosted production by 7.55 times relative to the pre-refrac level. Meanwhile, Eagle Ford wells can be refraced for $2.8 million apiece – about ½ a top operator’s average completed well cost. The Eagle Ford refracs reviewed in the study boosted production by an average factor of 7.26 relative to the pre-refrac production level and increased estimated recoverable oil reserves by 53 percent.

Equally profound, the study showed “no discernible correlation” between the amount of time a well has produced and the post-refrac performance metrics: In essence, even “young” wells may in fact be prime refrac candidates. Exhibit 1 shows the performance of refraced Bakken and Eagle Ford wells relative to well age. The performance metrics shown are the ratio of initial production (“IP”) post-refrac to initial production after the initial fracturing job, and the increase in estimated ultimate recovery (“EUR”).

Continue Reading

New Law in Texas Prohibits Local Municipalities from Banning Hydraulic Fracturing

Posted in Fracking, Hydraulic Fracturing, Texas

TexasOn Monday, May 18, 2015, Texas Governor Gregg Abbott signed House Bill 40 into law, prohibiting cities, towns, and local municipalities in Texas from enacting bans on fracing. The new law provides that “oil and gas operations [are] subject to the exclusive jurisdiction of [the] state” and preempts the authority of other political subdivisions to regulate oil and gas operations, except that a local municipality may enact, amend, or enforce ordinances and other measures that (i) regulate only activities related to oil and gas operations that occur aboveground, (ii) are commercially reasonable, (iii) do not effectively prohibit oil and gas operations conducted by reasonably prudent operators, and (iv) are not otherwise preempted by state or federal law. The bill passed by a large margin in the Texas House of Representatives in mid-April and was passed by the Texas Senate earlier in May by a margin of 24 in favor and only 7 against. Continue Reading