North America Shale Blog

North America Shale Blog

From Playa Lakes To Prairie Potholes: Four Things Energy Companies Need to Know About the WOTUS Rule

Posted in U.S. EPA, Water

Rural Landscape_463185431Have one or several playa lakes on or near a well pad in the Permian Basin? An access road nearby an ephemeral tributary of the Green River in the Uintah Basin? A pipeline that traverses lands dotted with prairie potholes in the vicinity of Williston? Effective August 28, a new definition of “waters of the United States” that the Environmental Protection Agency (EPA) and the Army Corps of Engineers recently promulgated is likely to change the way oil and gas operators locate, design, construct, and maintain oil and natural gas production facilities under all these circumstances.

The agencies’ redefinition of “waters of the United States” is the latest attempt to resolve a legal dispute over the scope of federal regulatory power under the Clean Water Act dating back more than three decades. In 1972, Congress passed the Clean Water Act “to restore and maintain the chemical, physical, and biological integrity of the Nation’s waters.” Among other provisions, the Act prohibits the discharge of “any pollutant to navigable waters from any point source.”[1] But while the Clean Water Act defines “navigable waters” as “waters of the United States,”[2] the Act omits any definition of “waters of the United States.”

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Will Congress Repeal the Crude Oil Export Ban in Fall 2015?

Posted in Oil and Gas, Shale

OilWellRising congressional support signals real promise that the ban on U.S. crude oil exports could be repealed within the next six months. The U.S. now exports more than 550 thousand barrels per day (kbd) of crude oil and another 120 to 140 kbd of condensate as of May 2015.[1] Yet continuing restrictions mean producers can only access a handful of markets. Meanwhile, U.S. oil refiners are sourcing stranded domestic oil at cut-rate prices, processing it, and then turning around and freely exporting more than 2.5 million bpd of gasoline, diesel, and other refined products at premium global prices.

Low oil prices have emboldened Congress to seriously consider lifting the crude oil export ban. By my count at this time last year, nine lonely members of Congress publicly supported a repeal; now there are at least 150 (128 representatives and 22 senators). Exhibit 1 provides a cumulative summary of congressmen and -women who have publicly endorsed repealing the ban. These numbers will likely rise once representatives and senators return to Washington after the August recess. Continue Reading

Increased Earthquake Activity Prompts Oklahoma to Reduce Wastewater Injection Rates in Limited Number of Wells

Posted in Earthquakes, Hydraulic Fracturing, Oklahoma

Earthquake_Seismic_iStock_000019145469SmallRegulators in Oklahoma have issued new restrictions on underground injection control wells in the vicinity of the Arbuckle formation – a 122 square mile area that recently experienced a cluster of minor earthquake activity, citing ongoing concerns over the increased incidence of seismicity.

The Oklahoma Corporation Commission’s (OCC) Oil and Gas Conservation Division announced the new rules last week as part of its ongoing efforts to stem the increase in seismic activity linked to hydraulic fracturing.

Citing data from the Oklahoma Geological Survey (OGS), the OCC explained that Oklahoma saw just two seismic events of magnitude 2.5 or greater in 2012, while in 2014, there were 359 – an increase of almost 18,000 percent.  Continue Reading

D.C. District Court Judge Chastises the Department of the Interior, Ordering It to Deliver a Plan on a BLM Drilling Permit, After a 29-Year Suspension

Posted in Land Use, U.S. Bureau of Land Management

Natural_Gas_Drilling_Rig_PeekingOn July 27, 2015, D.C. District Court Judge Richard J. Leon entered a strongly worded order in Solenex LLC v. Jewell, chastising the defendants, including the Department of the Interior and numerous other federal agencies, for unreasonably delaying action in their review of Solonex LLC’s suspended 1985 drilling permit. Civ. No. 1:13-cv-00993, Doc. No. 52.

The court provided a summary of the “torturous” factual history of the case. Id. at 2. The Bureau of Land Management (“BLM”) issued a lease to the plaintiff’s predecessor-in-interest in 1982, which covered 6,247 acres in Montana, known as Badger-Two Medicine by the Native American Blackfeet Nation. Subsequently, the BLM approved an application to drill (“APD”) a single natural gas exploratory well on January 31, 1985. The BLM then suspended the permit six times, starting October 1, 1985, with the last suspension occurring on July 15, 1998. During this time, “various agencies, including the Forest Service and the BLM [were] performing various reviews under the National Environmental Policy Act (“NEPA”), 42 U.S.C. § 4331 et seq., the National Historic Preservation Act (“NHPA”), 16 U.S.C. §§ 470-470x-6, and other applicable statutes.” Id. Continue Reading

New Battleground Emerges in New York Fracing Debate

Posted in Natural Gas, New York

New York Morning177729561When New York officially banned hydraulic fracturing in late June 2015, many assumed the long-heated political debate was over and there would be no fracing in New York unless the courts overturned the ban. In less than a month, however, the energy industry has exposed a potential loophole in the ban with new proposals to use a waterless method to extract natural gas from shale formations.

After the ban, a group of five New York landowners near the Pennsylvania border signed an agreement allowing energy company Tioga Energy Partners to collect gas from roughly 53 acres collectively owned by the group. Tioga Energy Partners filed an application for a permit with the New York State Department of Environmental Conservation (DEC) in early July. DEC has not made a decision on the application to date, but the filing is already sparking new controversy over fracing in New York. Continue Reading

Toilet to Frac: Legal and Practical Aspects of Using Municipal Effluent for Fracing in Texas

Posted in Fracking, Oil and Gas, Texas

Wastewater treatment - 165476814Thus far, the idea of using purified municipal sewage effluent—“reclaimed water” in industry parlance—for city water supplies has proven a tough sell. Human psychology poses significant barriers to overcoming the “toilet to tap” aversion. But “toilet to frac” is an entirely different matter. In dry locations with large municipalities (100,000 persons or more) located within 50 miles of drilling operations, using reclaimed municipal effluent as a frac feedstock holds significant promise for reducing calls on groundwater. As oil prices stabilize and recover, the Permian Basin is likely to become the epicenter of municipal effluent use in fracing operations.

Pioneer Natural Resources’ current municipal effluent supply agreement with the city of Odessa and a prospective volume commitment from the city of Midland could by themselves supply enough water to frac nearly 6,000 long-lateral horizontal wells, or several times as many vertical Spraberry wells, during the next 11 to 12 years (Exhibit 1). Depending on oil prices, the Midland Basin likely has approximately 40,000 remaining drilling locations.[1] Therefore, municipal effluent has the potential to make a significant dent in local freshwater demand for fracing. Continue Reading

Illinois Appellate Court Concludes No Irreparable Harm From Implementation of New Hydraulic Fracturing Rules

Posted in Hydraulic Fracturing, Illinois, Shale

Hydraulic_Fracturing_iStock_000025097211MediumThe nascent Illinois shale oil and gas industry won a preliminary victory in the courtroom last week. The Appellate Court of Illinois for the Fifth District affirmed the denial of a preliminary injunction against the Illinois Department of Natural Resources’ (DNR’s) new hydraulic fracturing regulations.

Although the DNR’s regulations must still survive a decision on the merits of the case, the denial of the preliminary injunction moves Illinois closer to the benefits of modern shale development. In particular, development of the New Albany shale play will boost Illinois’ stagnant oil and gas production, add jobs, and increase private and government revenue.

But litigation has plagued Illinois’ hydraulic fracturing regulations, arguably stalling shale development in the state. Continue Reading

Pennsylvania Bill Promotes Using Mine Water in Hydraulic Fracturing Operations

Posted in Hydraulic Fracturing, Pennsylvania

Water drop close upAuthored by: Anthony Ponikvar, 2015 Summer Associate

The process of hydraulic fracturing requires millions of gallons of water. Currently, much of this water is pulled from freshwater sources; however, a recent bill in Pennsylvania making its way through the state legislature aims to change that.

Senate Bill 875, authored by Sen. Camera Bartolotta (R-Greene, Washington), would provide some relief to Pennsylvania’s waterways and preserve freshwater sources by encouraging drilling companies to use treated coal mine water instead of freshwater. Currently, drillers hesitate to use mine water for fear of being held liable if any untreated water from the mines were to leak into rivers and streams. The bill seeks to alleviate these liability concerns. Continue Reading

ONRR Continues to Penalize Oil and Gas Companies With Federal Leases in Wyoming for Failure to Submit Production Reports

Posted in Oil and Gas, Wyoming

bigstock-Show-me-money-26933555Today, the Department of the Interior’s Office of Natural Resources Revenue (“ONRR”) announced that it has issued a $6.9 million civil penalty to High Plains Gas, Inc., for failure to submit production reports for numerous federal leases in Wyoming.[1] This is the largest reported civil penalty ONRR has issued since December 2006 and appears to be the single largest reported civil penalty the agency has ever issued for failure to submit production reports.[2]

Current regulations state that “[i]f you operate a Federal or Indian oil and gas lease or federally approved unit or communitization agreement, you must submit production reports.”[3] Unless an exception applies, these reports are Form ONRR-4054 and Form ONRR-4058 for onshore and offshore oil and gas, respectively, and “ONRR must receive your completed Forms ONRR-4054 and ONRR-4058 by the 15th day of the second month following the month for which you are reporting.”[4] Continue Reading

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