PADEP Settles Enforcement Actions for $3.5 Million

By: Michael K. Reer

On December 7, 2016, the Pennsylvania Department of Environmental Protection assessed an oil and natural gas operator $3.5 million in civil penalties to settle statutory and regulatory violations at 10 well sites and six pipeline locations. The violations occurred in Washington and Greene Counties, and, according to the PADEP news release, include: 

• $1,633,550 for leaks from an unpermitted wastewater impoundment and insufficient erosion and sediment controls, failure to stabilize the well site, and other violations at two well sites in Greene County; 

• $1,314,275 for failure to obtain a permit before earthmoving activities, failure to obtain a pre-operational inspection prior to drilling, and multiple erosion and sediment control violations in Washington and Greene Counties; 

• $437,100 for erosion and sediment control violations and a well casing violation at sites in Washington and Greene Counties; 

• $97,852 for failure to obtain a permit for a culvert, illegal discharge into a waterway, and erosion and sediment control violations at sites in Washington and Greene Counties;

• $14,850 for slope failure and sediment discharge outside of the permitted limit of disturbance at sites in Greene County;

• $11,750 for violations associated with the operator’s failure to maintain erosion and sedimentation controls in Washington County; and

• $35,075 for well site stabilization, casing, and road construction violations in Greene County.

Thursday, December 08, 2016

PADEP Appeals Chapter 78a Injunction to Pa. Supreme Court

On December 6, 2016, the Pennsylvania Department of Environmental Protection requested that the state’s Supreme Court overturn a Commonwealth Court Order enjoining parts of Chapter 78a. Chapter 78a contains the Commonwealth’s new environmental performance standards for unconventional oil and natural gas development. On November 8, 2016, the Commonwealth Court temporarily enjoined key provisions of Chapter 78a, including provisions relating to public resource agencies, area of review and well monitoring, well development impoundments, and well site restoration. The Chapter 78a regulations were published as final in the October 8, 2016 Pennsylvania Bulletin and challenged in Commonwealth Court on October 13, 2016 by the Marcellus Shale Coalition, a trade association based in Pittsburgh.

Wednesday, December 07, 2016

18 States Challenge USFWS Rulemaking

On November 29, 2016, 18 states filed suit in the U.S. District Court for the Southern District of Alabama to challenge two final rules published by the U.S. Fish and Wildlife Service on February 11, 2016. The states allege that the final rulemakings exceed the authority given to USFWS in the Endangered Species Act.

In their complaint, the states allege that the final rulemakings erode the distinctions between occupied and unoccupied critical habitat mandated by the ESA. Specifically, the states allege that USFWS may only designate areas unoccupied by an endangered species as critical habitat “when a designation limited to [the species’] present range would be inadequate to ensure the conservation of the species.” The states allege that the final rulemakings allow USFWS to designate areas as “occupied critical habitat” even if the areas are not occupied and are not capable of supporting the species.

The case is State of Alabama v. Nat. Marine Fisheries Serv., 1:16-cv-00593 (S.D. Ala. Filed Nov. 29, 2016).  

Tuesday, December 06, 2016

AP Reports Decrease in Oklahoma Seismicity

On December 2, 2016, the Associated Press released a statistical analysis showing that seismic activity in Oklahoma has dropped significantly since May 28, 2016, when the state ordered Class II-D Underground Injection Control wells to decrease injection volumes by 40%. Specifically, the AP reported that since Oklahoma ordered a 40% reduction in injection volumes, the state has seen a decrease of seismic activities of magnitude 3.0 or larger. The AP reports that prior to the reduction in injection volumes, the state experienced an average of 2.3 seismic events of magnitude 3.0 or larger per day. By comparison, the state averaged 1.3 seismic events of magnitude 3.0 or larger per day in November 2016, and just one such seismic event per year prior to 2009.

The AP analysis was released shortly after the journal Science Advances published a paper by Cornelius Langenbruch and Mark Zoback that detailed the findings of computer simulations of future seismic events in Oklahoma. According to Langenbruch and Zoback, their computer simulations show that seismic events in Oklahoma will continue to decrease to pre-2009 levels over the next several years. 
Monday, December 05, 2016

USEPA Reaches $8.2 Million Settlement With ND Operator

On December 1, 2016, the U.S. Environmental Protection Agency and the U.S. Department of Justice announced a settlement with a North Dakota operator to resolve alleged violations of the Clean Air Act. The settlement resolves USEPA’s allegations that the operator failed to adequately design, operate, and maintain vapor control systems on its storage tanks at approximately 170 oil and natural gas well pads in North Dakota. USEPA states in its announcement that inadequately designed, operated, or maintained vapor control systems can lead to uncontrolled emissions of volatile organic compounds, which contribute to the formation of ground-level ozone and hazardous air pollutants.

As part of the settlement, the operator agreed to implement system upgrades, monitoring, and inspections at an estimated cost of $4.1 million. The settlement also requires the operator to use advanced technology such as infrared cameras and electronic pressure monitors to detect and fix emissions sources. Additionally, the operator is required to spend at least $2 million to fund environmental mitigation projects and pay a $2.1 million civil penalty. The settlement is part of USEPA’s larger national enforcement initiative to reduce public health and environmental impacts from energy extraction activities.

Friday, December 02, 2016

Wyoming to Hold Public Meeting on Pavillion Investigation

By:  Michael K. Reer

On November 23, 2016, the Wyoming Department of Environmental Quality and the Wyoming Oil and Gas Conservation Commission announced that they will host a public meeting and open house regarding the Pavillion Area Groundwater Investigation. At the meeting, WODEQ and WOGCC will provide information regarding their final investigation report. The final report was issued November 10, 2016 and concludes that “it is unlikely that hydraulic fracturing fluids have risen to shallower depths intersected by water-supply wells.” The report also states that WODEQ and WOGCC were unable to determine whether methane found in the Pavillion water wells was naturally occurring in shallow gas formations or if the methane had migrated from the annular space in nearby production wells.

By way of background, in 2009, the U.S. Environmental Protection Agency began an investigation into alleged groundwater contamination within the Pavillion Gas Field Cistern Area. USEPA published a draft report in December of 2011, concluding that hydraulic fracturing fluids may have impacted the groundwater. The methodology used by USEPA in its draft report was heavily criticized, and USEPA subsequently announced that it would not publish a final report concerning its investigation. In June of 2013, WODEQ and WOGCC announced that they would conduct a separate investigation into the alleged groundwater contamination, which now concludes with the release of the final report.

Thursday, December 01, 2016

U.S. Now an Exporter of Natural Gas

By: Michael K. Reer

On November 28, 2016, the Wall Street Journal reported that the United States is projected to have exported more natural gas than it imported for the month of November. According to the U.S. Energy Information Administration, this is the first time the U.S. has been a net exporter of natural gas in 60 years.

Gas exports from the U.S. have risen more than 50% since 2010. Canada and Mexico are the largest consumers, but new export terminals hope to increase shipments to Asia and Europe. Cheniere Energy Inc.’s Sabine Pass, for example, has exported an average of 1.5 billion cubic feet of natural gas per day since it began operations in February of 2016.

Tuesday, November 29, 2016

EPA Approves Additional UIC Wells in Warren County, PA

On October 31, 2016, the U.S. Environmental Protection Agency approved three Class II-D Underground Injection Control permits for wells in Columbus Township, Warren County, Pennsylvania. If approved by state authorities, the three injection wells will supplement two existing wells owned by Bear Lake Properties near Pennsylvania’s border with New York State. Because the three wells were previously used for oil and natural gas production, Bear Lake Properties must obtain additional permits from the Pennsylvania Department of Environmental Protection. 

USEPA Region 3 has now approved 15 UIC wells for the Commonwealth, only eight of which are currently in operation. Region 3 noted in its Response to Comments document that the potential for the new injection wells to cause induced seismicity is low given that the wells are limited to an injection volume of 30,000 barrels per month (1/5 of the injection rates of some wells in Oklahoma and Texas) and a maximum bottom hole pressure of 3,916 psi, which is low enough “to prohibit the fracturing of the injection formation.”
Tuesday, November 29, 2016

Class Action Alleges Damages From Induced Seismicity

On November 17, 2016, a class action lawsuit alleging damages from induced seismicity was filed in Oklahoma state court.  The lawsuit, filed in Pawnee County, alleges that Oklahoma injection wells caused an induced seismic event on September 3, 2016, resulting in damages to the plaintiff class.  The petition seeks recovery for alleged physical damages to real and personal property, market value losses to real property, emotional distress, and punitive damages. 
The petition names two defendants, but also includes 25 unnamed oil and natural gas companies “that have engaged in injection well operations in and around Pawnee . . .”  The plaintiffs seek recovery on theories of absolute liability, negligence, trespass, and private nuisance and additionally request punitive damages.  The case is Adams v. Eagle Road Oil LLC, CJ-2016-78 (filed Nov. 17, 2016).  
Wednesday, November 23, 2016

Fall 2016 Regulatory Agenda Released

Last week, the U.S. General Services Administration released the Fall 2016 Unified Agenda of Federal Regulatory and Deregulatory Actions.  The Unified Agenda is released twice yearly, and lists the status of major rule proposals, including those with the potential to affect oil and natural gas development operations. 
In particular, operators might be interested in the following rule proposals.  After each proposal, the anticipated release date of the final rule is listed.
U.S. Environmental Protection Agency
  • National Pollutant Discharge Elimination System (NPDES) Application and Program Updates Rule (final in August 2016)
  • Toxics Release Inventory (TRI); Addition of Natural Gas Processing Facilities (final in August 2018)
  • Modernization of the Accidental Release Prevention Regulations Under Clean Air Act (final in December 2016)
Bureau of Land Management
  • Onshore Oil and Gas Order 1:  Approval of Operations (final in November 2016)
  • Onshore Oil and Gas Order 3:  Site Security on Federal and Indian Oil and Gas Leases (final in November 2016)
  • Onshore Oil and Gas Order 4:  Oil Measurement (final in November 2016)
  • Onshore Oil and Gas Order 5:  Gas Measurement (final in November 2016)
  • Waste Prevention, Production Subject to Royalties, and Resource Conservation (final in November 2016)
  • Non-Federal Oil and Gas Rights (final in December 2016)
  • Oil Shale Management (final in February 2017)
Wednesday, November 23, 2016

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