Another FERC Commissioner to Leave

By:  Michael K. Reer

On April 28, 2017, the Associated Press reported that Federal Energy Regulatory Commissioner Colette Honorable will not seek reappointment after her term expires in June. Honorable’s departure leaves FERC with just one commissioner, far short of the three commissioners needed for a quorum. Without a quorum, natural gas pipeline projects totaling more than $10 billion in investment could face significant delays in obtaining the FERC permits necessary for construction. On March 9, 2017, the Wall Street Journal reported that President Donald Trump was prepared to nominate three republicans to the commission, but the senate has yet to receive the formal nominations.

According to the Associated Press: “Lawmakers from both parties have expressed alarm at the prolonged vacancies. Senate Energy Committee Chairwoman Lisa Murkowski, R-Alaska, has pressed the White House for months on the issue to no avail.”
Thursday, May 04, 2017

States Sue Over Valuation Rule Delay

By: Michael K. Reer

On April 26, 2017, the states of California and New Mexico filed a lawsuit in the U.S. District Court for the Northern District of California that challenges the Bureau of Land Management’s February 22, 2017 decision to delay the effective date of the “Consolidated Federal Oil & Gas and Federal & Indian Coal Valuation Reform Rule.” BLM’s decision to postpone the effective date of the final rulemaking was made in light of a lawsuit filed by several trade associations challenging the rule in the U.S. District Court for the District of Wyoming. BLM has since published a proposal to repeal the rule in its entirety.

BLM previously stated that the Valuation Rule would increase royalty collections on federal lands between $71.9 million and $84.9 million annually. According to California and New Mexico, because the final rule became effective January 1, 2017, it was improper for BLM to postpone the effective date on February 22, 2017 – after the final rule was already effective. The states argue that Section 705 of the Administrative Procedure Act does not permit the federal government to delay a rule that is already effective.
Wednesday, May 03, 2017

Texas Supreme Court Clarifies RRC Jurisdiction

By: Michael K. Reer

On April 28, 2017, the Texas Supreme Court delivered an opinion in Forest Oil Corp. v. El Rucio Land and Cattle Co., Inc., No. 14-0979 (Tex. 2017). One of the principal questions in the case concerned whether the Railroad Commission has exclusive or primary jurisdiction over claims of environmental contamination related to oil and natural gas development, thus precluding suits for damages and other judicial relief. The Texas Supreme Court found that the Railroad Commission does not have exclusive jurisdiction over common-law actions related to contamination, particularly where the plaintiff brings a breach of contract cause of action related to a surface use agreement. The Court cautioned, however, that “an operator can reduce or eliminate the landowner’s damages” “by seeking an RRC determination of contamination allegations and complying with RRC cleanup orders.”
Tuesday, May 02, 2017

NPS Approval of Seismic Surveys Upheld

By: Michael K. Reer

On April 27, 2017, the U.S. District Court for the Middle District of Florida upheld the National Parks Service’s approval of Burnett Oil Co., Inc.’s Plan of Operations to conduct a three-dimensional seismic geophysical survey using vibroseis technology within the Big Cypress National Preserve in South Florida. The Natural Resources Defense Council and other environmental advocacy organizations challenged NPS approval of Burnett’s Plan of Operations under the Administrative Procedure Act, National Environmental Policy Act, Endangered Species Act, and NPS regulations.

While the federal government owns the surface of Big Cypress National Preserve, a significant portion of the mineral interests underlying the surface are privately owned. Development of the minerals interests is governed by federal regulations codified at 36 C.F.R. Part 9, which apply to “all activities within any unit of the National Park System in the exercise of rights to oil and gas not owned by the United States where access is on, across, or through federally owned or controlled lands or waters.” To achieve access to the mineral interests, operators must secure approval of a Plan of Operations from the NPS. Federal regulations provide that NPS “shall not approve a plan of operations . . . until the operator shows that the operations will be conducted in a manner which utilizes technologically feasible methods least damaging to the federally-owned or controlled lands . . .”

The District Court found that NPS adequately evaluated and considered the Plan of Operations submitted by the operator and the potential impacts to the park that the Plan of Operations would entail. Notably, the District Court upheld the NPS decision to consider a Plan of Operations that covered approximately 25% of the acreage held by the operator. Although the environmental advocacy groups argued that NEPA requires NPS to consider the cumulative impact of the “reasonably foreseeable” development of the remaining acreage, the District Court noted that future development operations “cannot be meaningfully analyzed until there is some degree of certainty about the scope of the project and specific actions proposed.”

The case is Nat. Res. Def. Council v. Nat. Park Serv., No: 2:16-cv-585-FtM-99CM, (M. Fl. 2017).
Monday, May 01, 2017

NETL Researchers Examine Low-Frequency Seismicity and Reservoir Stimulation

By: Michael K. Reer

On April 25, 2017, the Department of Energy’s National Energy Technology Laboratory issued a press release detailing the findings of a recent study that analyzed the impact of low-frequency seismicity on oil and natural gas production from unconventional shales. According to NETL, data collected as part of the study could assist operators in optimizing oil and natural gas production from unconventional shale. Specifically, NETL believes that “information about reservoir stress states and distribution of natural fractures linked to low frequency earthquakes can be used to plan reservoir stimulation in a manner that is both optimally efficient and most productive as a long-term energy resource.”
Thursday, April 27, 2017

Trump to Sign Order on National Monuments

By: Michael K. Reer

On April 24, 2017, the New York Times reported that President Donald Trump is expected to sign an executive order today that orders a review of the national monument designations made within the last 20 years. The Antiquities Act of 1906 authorizes the president to designate “objects of historic or scientific interest that are situated upon the lands owned or controlled by the Government” to be national monuments. A national monument designation is generally considered to greatly restrict certain land uses, including oil and natural gas development. President Trump’s executive order, if signed, would continue a controversy surrounding President Barack Obama’s designation of Bears Ears National Monument in 2016 – an area that oil and natural gas operators had expressed interest in developing. The review is expected to be overseen by Secretary of the Interior Ryan Zinke and to take approximately four months to complete.
Wednesday, April 26, 2017

Duke Researchers Release Report on Impacts of Hydraulic Fracturing

By: Michael K. Reer

On April 24, 2017, researchers from Duke University released “The Geochemistry of Naturally Occurring Methane and Saline Groundwater in an Area of Unconventional Shale Gas Development” – a peer reviewed study that examined the effects of hydraulic fracturing activities on water quality in West Virginia. Significantly, the study tested water wells before and after nearby hydraulic fracturing activities, and found that the test results “showed no evidence of anthropogenic contamination” in groundwater. The study also examined the effects of fluid spills on nearby surface waters, finding that the chemistry and isotope ratios of surface waters near known spills or leaks mimicked the composition of Marcellus flowback fluids. The study’s finding with respect to surface waters is unsurprising given that the researchers specifically targeted water bodies nearby reported spills. The industry blog Energy in Depth has posted an extensive analysis of the study.
Tuesday, April 25, 2017

EPA to Delay and Reconsider Methane Rule

By: Michael K. Reer

On April 18, 2017, the U.S. Environmental Protection Agency announced a delay and reconsideration of “Oil and Natural Gas Sector: Emission Standards for New, Reconstructed and Modified Sources” a final rule published by the Obama Administration that finalized new emissions regulations applicable to new, reconstructed, or modified sources in the oil and natural gas sector. Even though the new source emissions requirements were finalized by the previous administration, Clean Air Act Section 307(d)(7)(B) allows the agency to convene a proceeding for reconsideration of a final rule issued under the CAA if a party raises an objection to the final rulemaking and if it was impractical to raise the objection within the public comment period. EPA states that as a result of the reconsideration, the agency will issue a 90-day stay of the compliance date for the fugitive emissions monitoring requirements and that sources need not comply with the requirements while the stay is in effect.
Monday, April 24, 2017

USGS Estimates Bossier and Haynesville Formations

By: Michael K. Reer

On April 13, 2017, the U.S. Geological Survey announced that the Bossier and Haynesville formations onshore and within state waters along the Gulf Coast contain an estimated 4.0 billion barrels of oil, 304.4 trillion cubic feet of natural gas, and 1.9 billion barrels of natural gas liquids. The estimate marks the largest continuous natural gas assessment ever conducted by USGS and includes both conventional and unconventional reserves as well as undiscovered, technically recoverably resources. Undiscovered resources are those that are estimated to exist based on geologic knowledge and statistical analysis of known resources. Technically recoverable resources are those that can be produced using currently available technology and industry practices.

The assessment is part of a larger USGS effort to assess domestic petroleum basins using standardized methodology and protocol. In November 2016, USGS estimated that the Wolfcamp shale in the Permian Basin contains 20 billion barrels of oil, 16 trillion cubic feet of associated natural gas, and 1.6 billion barrels of natural gas liquids.
Tuesday, April 18, 2017

Trump Administration Means Widespread Changes for Oil and Gas

By: Michael K. Reer

On April 17, 2017, The American Oil and Gas Reporter published “Trump Administration Initiating Major Changes” – an Harris, Finley & Bogle, P.C. analysis of the new administration’s executive and regulatory initiatives affecting the oil and natural gas industry. The American Oil and Gas Reporter is the official publication of nearly 30 oil and gas trade associations across the United States.
Tuesday, April 18, 2017

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