Another Induced Seismicity Suit Filed in OK

By: Michael K. Reer

On March 3, 2017, the Pawnee Nation of Oklahoma filed a lawsuit in the District Court of the Pawnee Nation, alleging damages from induced seismic events, including damages resulting from a September 3, 2016 magnitude-5.8 seismic event that occurred near two wastewater disposal wells. Specifically, the lawsuit alleges absolute liability, negligence, private nuisance, and trespass causes of action and seeks compensation for physical damages to real and personal property, market value loss to real property, and punitive damages. Named defendants in the lawsuit include two wastewater disposal well operators and 25 unnamed companies that have “engaged in injection well operations in and around Pawnee.”

The Petition also discusses the U.S. Geological Survey’s recently released 2017 Induced Seismicity Forecast, which projects that Oklahoma has a greater than 10% chance of experiencing an induced seismic event in 2017.

Monday, March 20, 2017

Early 2017 RRC Data Points to Industry Rebound

By:  Michael K. Reer  

The monthly statistics published by the Texas Railroad Commission suggest that a noticeable industry rebound began in November of 2016. In December of 2016 alone, the RRC issued nearly 300 more permits than it issued in December of 2015. Increased operator activity was also noticeable in January and February of 2017, months in which the RRC issued nearly twice the number of permits compared to the same time period in 2016.
Friday, March 17, 2017

BLM to Withdraw Hydraulic Fracturing Rule

On March 15, 2017, the U.S. Department of the Interior, Bureau of Land Management, stated in a legal filing that it will withdraw its contested final rule that would have updated the Bureau’s regulations applicable to hydraulic fracturing operations on Federal and Indian Lands. The rule was published as final in the Federal Register on March 26, 2015 but enjoined by the U.S. District Court for the District of Wyoming preliminarily in September 2015 and finally in June 2016. Under the Obama Administration, BLM pursued an appeal of the district court injunction, which found that Congress has not delegated to BLM the authority to regulate hydraulic fracturing, to the U.S. Court of Appeals for the Tenth Circuit.

Had the rule taken effect, it would have required, among other items, that operators: submit detailed information regarding the proposed hydraulic fracturing operation, including wellbore geology information and the estimated length of fracture propagation; design and implement a casing and cementing program that meets certain best management practices and performance standards; manage recovered fluids in rigid enclosed, covered, or netted and screened aboveground storage tanks, with some exceptions; and disclose the chemicals used in hydraulic fracturing to BLM and the public, with limited exceptions for trade secrets.
Thursday, March 16, 2017

U.S. Silica Holdings to Double Output

By: Michael K. Reer

On February 28, 2017, Bloomberg reported that U.S. Silica Holdings Inc. is expected to double its total supply of silica over the next 12-18 months. Silica, the price of which has increased 20% since October, is used by many operators as a proppant in hydraulic fracturing operations. Bloomberg noted that the “dramatic tightening” in the silica market – which has doubled the value of shares of the four biggest sand suppliers in the U.S. – points to a significant recovery in the oil and natural gas sector.
Tuesday, March 14, 2017

President Trump to Nominate 3, Restore Quorum to FERC

By: Blake C. Billings

On March 9, 2017, the Wall Street Journal reported that President Donald J. Trump will nominate Neil Chatterjee, Kevin McIntyre, and Robert Powelson as commissioners of the Federal Energy Regulatory Commission. The five-commissioner panel has only two sitting commissioners and has been without a quorum, and therefore unable to vote to advance or permit major interstate natural gas pipeline projects, since February 3, 2017. In addition to the three current vacancies, commissioner Colette D. Honorable’s term is set to expire in June.

Chatterjee is an energy policy advisor and liaison to the Senate Committee on Energy and Natural Resources for Senate Majority Leader Mitch McConnell. McIntyre is an energy attorney and partner in the Washington, DC, office of Jones Day, where he co-heads the firm’s energy practice group. Powelson is a commissioner of the Pennsylvania Public Utility Commission and President of the National Association of Regulatory Utility Commissioners. The nominees must be confirmed by the United States Senate prior to taking their seats at FERC—a process which could take several months.

Monday, March 13, 2017

Texas Supreme Court Finds Contamination Claims Barred By Limitations

By: Michael K. Reer

On February 24, 2017, the Supreme Court of Texas found that a plaintiff’s oil-field contamination claims are barred by the state’s four-year statute of limitations because the claims were brought more than four years after the alleged spills and releases occurred. The plaintiff in the case alleged oil-field contamination claims resulting from an operator’s production activities that occurred over a 60-year period. Once the operator sold its leasehold interest in the tract, the plaintiff hired an environmental manager to investigate whether the tract had been contaminated from development operations. The environmental manager alleged that 1.2 acres of the tract suffered contamination, and estimated that remediation would cost $6.3 million. The plaintiff sought an injunction requiring the operator to remediate the alleged contamination.

The Texas Supreme Court found that the statute of limitations began to run when the plaintiff became aware of the alleged contamination. Deposition testimony demonstrated that the plaintiff was aware of periodic spills throughout the operator’s tenure on the tract, but that none of the spills occurred within four years of the date of the lawsuit. The Court found that where the plaintiff is actually aware of the spills that allegedly result in contamination, the limitations clock begins to run immediately, and not when the scope of the contamination is investigated or understood.

The case is ExxonMobil Corp. v. Lazy R Ranch, LC, et al., No. 15-0270 (Tex. Feb. 24, 2017).
Friday, March 10, 2017

RRC to Open Comment Period on Draft Chapter 1 Amendments

By: Michael K. Reer

On March 17, 2017, the Texas Railroad Commission will open a public comment period on a proposal to simultaneously repeal and adopt several subchapters in 16 Texas Administrative Code Chapter 1. According to the RRC memorandum accompanying the rule proposal, RRC staff propose to repeal and replace Chapter 1 to reorganize and update certain rules in order to clarify current RRC practice and procedures and to reflect certain statutory changes. The changes to Chapter 1 will likely impact the procedure used in contested case proceedings in front of RRC hearing examiners.

The public comment period will be open from March 17, 2017 until May 1, 2017.
Thursday, March 09, 2017

PA Wells, Gas Production Increase

By: Michael K. Reer

On March 2, 2017, the Pennsylvania Independent Fiscal Office released its 2016 4th Quarter Natural Gas Production Report. The IFO found that production of natural gas increased 6.8% in Pennsylvania in 2016. Pennsylvania operators drilled just 504 horizontal wells in 2016, the lowest number since IFO tracking began in 2011. Despite the low number of spud wells, IFO found significant signs of an industry rebound. For example, the number of wells spud by quarter reached a low point in the second quarter of 2016 (72) before noticeably rebounding in the third (146) and fourth (176) quarters. Moreover, the number of spud but not completed wells fell 5.1% in 2016 as operators completed wells drilled in prior years. Also, production from wells spud in 2014 began declining in 2016, by nearly 2%, which may incentivize operators to drill additional wells.

Susquehanna and Washington counties were the top producing counties in 2016, followed by Bradford, Greene, Lycoming, Wyoming, Tioga, Butler, Sullivan, and Fayette. The Commonwealth currently trails only Texas in domestic natural gas production.

The Pennsylvania Department of Environmental Protection announced March 3, 2017 that the Department has launched an iPad app for electronic field inspections at oil and natural gas production sites. The app will replace paper and clipboard inspections and allow operators to receive inspection results concerning erosion and sedimentation, waterways encroachment, waste management, and spill cleanup in a more timely fashion.
Wednesday, March 08, 2017

USGS Releases PA Test Results

By: Michael K. Reer

On March 6, 2017, the U.S. Geological Survey released the test results of 75 private drinking water wells in Lycoming County, in north-central Pennsylvania. USGS found that water from most of the sampled wells contain concentrations of radon that exceed a proposed, non-binding health standard for drinking water and that some wells contain concentrations of arsenic or methane that exceed existing drinking water standards.

USGS states in its press release that the tests were carried out in 2014, in part, to assess the natural characteristics of local groundwater and the potential effects of land uses, including natural gas production, on local water supplies. Significantly, USGS found that water wells near unconventional development were of similar quality to water wells previously sampled in Wayne County – where unconventional development is not permitted.

Pennsylvania does not have comprehensive regulations governing the drilling and maintenance of private drinking water wells. The relatively high number of naturally contaminated water wells in the Commonwealth highlights the importance of conducting comprehensive water quality sampling prior to unconventional development.
Tuesday, March 07, 2017

Colorado Report Finds Low Risk of Health Effects

In February 2017, the Colorado Department of Public Health and Environment issued an “Assessment of Potential Public Health Effects from Oil and Gas Operations in Colorado.” The Health Assessment Report concluded that, based on currently available air monitoring data, “the risk of harmful health effects is low for residents living near oil and gas operations.” Moreover, the assessment found that studies of populations living near oil and gas operations provide only “limited evidence of the possibility for harmful health effects,” which would need to be confirmed or disputed with “higher quality studies.”

According to the executive summary accompanying the assessment, the assessment was undertaken in response to published papers that have outlined “the potential chemical and non-chemical hazards from oil and gas operations.” The assessment notes that studies evaluating the relationship between living near oil and natural gas operations and the potential for certain adverse health effects have been widely publicized and have “led to heightened public and policy-maker concerns about whether or not harmful health effects occur in people living near oil and gas operations.” As these studies continue to develop, oil and natural gas operators may see an uptick in resident concerns regarding the alleged health effects of unconventional development. However, as the Colorado assessment makes clear, thus far the published literature has not provided concrete evidence that unconventional development is related to negative health outcomes.
Monday, March 06, 2017

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