Hydraulic Fracking Blog

BLM releases revised proposed rules on hydraulic fracturing

noreply@blogger.com (Matthew Gilpin) — Thu, 16 May 2013 22:12:00 +0000

The U.S. Bureau of Land Management (BLM) oversees approximately 700 million subsurface acres of federal mineral estate and 56 million subsurface acres of tribal mineral estate across the United States. Currently, nearly 36 million acres of federal land are under lease for potential oil and gas development.

On May 11, 2012, BLM published a proposed rule governing hydraulic fracturing on federal and tribal lands for public comment. The May 2012 proposal sought to update rules for oil and gas drilling on public and Indian lands by requiring the disclosure of fracturing fluids, satisfaction of various well construction standards, and management of flowback waters. BLM received over 177,000 public comments on the proposed rule.

Today, BLM released a Supplemental Notice of Proposed Rulemaking and Request for Comment, updating its earlier proposal. The supplemental proposed rule revises the set of evaluation tools oil and gas operators may use to show that groundwater is being protected and provides more detailed guidance on how trade secrets claims will be handled, modeled on the procedures promulgated by the State of Colorado.

The 30-day public comment period will start when the proposed rules are published in the Federal Register.

This post was prepared by Heather M. Corken (hcorken@fulbright.com or 713 651 8386) and Ted Bosquez (tbosquez@fulbright.com or 724 416 0423) from Fulbright's Environmental Law Practice Group.

House reintroduces FRAC Act

noreply@blogger.com (Matthew Gilpin) — Tue, 14 May 2013 21:13:00 +0000

On May 9, 2013, the Fracturing Responsibility and Awareness of Chemicals Act of 2013 (the “FRAC Act”) was reintroduced in the U.S. House of Representatives. The FRAC Act was first introduced to Congress in 2008. If passed, the FRAC Act would repeal the exemption for hydraulic fracturing in the Safe Drinking Water Act. The Act establishes groundwater protection safeguards for hydraulic fracturing operations and requires the disclosure of chemicals used during the hydraulic fracturing process.

Specifically, the FRAC Act would require that persons conducting hydraulic fracturing operations disclose to the state: (1) a list of chemicals intended for use; (2) the Chemical Abstracts Service numbers for each chemical and constituent; (3) Material Safety Data Sheets when available; and (4) the volume of each chemical used. The same information must also be submitted within 30 days after hydraulic fracturing operations end. Similar to chemical disclosure rules adopted by many states, the FRAC Act would not require the public disclosure of proprietary chemical formulas.

This article was prepared by Heather M. Corken (hcorken@fulbright.com or 713 651 8386) from Fulbright's Environmental Law Practice Group and Kristen Hulbert (khulbert@fulbright.com or 713 651 5303) from Fulbright's Environmental Law Practice Group.

Senate Committee to hold forum on shale development

noreply@blogger.com (Matthew Gilpin) — Mon, 13 May 2013 21:47:00 +0000

The U.S. Senate Committee on Energy & Natural Resources will hold a Full Committee Forum on “Shale Development: Best Practices and Environmental Concerns” on May 23, 2013, beginning at 10 a.m. EDT. Witnesses will include representatives from oil and gas companies, environmental groups, and state and federal regulatory agencies. The forum will be webcast at FULL COMMITTEE FORUM: Shale Development: Best Practices and Environmental Concerns - Hearings and Business Meetings - Hearings - U.S. Senate Committee on Energy and Natural Resources. An archived video will be available on the Committee’s website shortly after the forum.

This article was prepared by Barclay Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice Group.

Ohio voters reject proposal to ban hydraulic fracturing in northeast Ohio

noreply@blogger.com (Matthew Gilpin) — Mon, 13 May 2013 19:00:00 +0000

In February 2013, the City Council of Youngstown, Ohio agreed to include on its ballot a proposal to ban hydraulic fracturing within the city limits after an anti-fracking organization, Frackfree Mahoning Valley, collected sufficient signatures for a successful petition. The unofficial results of the election held on May 7, 2013 show voters rejected this proposal by a significant margin: 57 percent opposing the proposal vs. 43 percent supporting the proposal.

In Youngstown, the proposal resulted in an unusual alliance of interest groups united in their opposition to the ban. The local business community actively campaigned against the proposal and argued this prohibition and the litigation likely to arise from the ban would have prompted companies to reevaluate their decisions to invest and expand in the area. Likewise, organized labor opposed the proposal arguing the prohibition would have negatively impacted the economic recovery of the community.

This debate over hydraulic fracturing is increasingly on display in local level elections as anti-fracking organizations pursue similar proposals to ban or otherwise restrict operations within resource-rich eastern Ohio. In November 2012, voters in Mansfield and Broadview Heights approved proposals to amend their city charters to permit the regulation of injection wells capable of storing waste associated with hydraulic fracturing operations. In Athens, an organization named the Bill of Rights Committee is collecting signatures to put the issue on the upcoming November ballot as a referendum.

Ohio sits atop the gas-rich Utica Shale formation and will likely remain a key battleground for the legal and political struggle over hydraulic fracturing. State officials anticipate the development of this formation will generate much-needed tax revenue and employment opportunities for the region.

This post was prepared by Ted Bosquez (tbosquez@fulbright.com or 724 416 0423) from Fulbright's Environmental Law Practice Group.

USGS assesses undiscovered oil resources in Bakken and Three Forks Formations

noreply@blogger.com (Matthew Gilpin) — Mon, 13 May 2013 14:00:00 +0000

The U.S. Geological Survey (USGS) recently completed a geology-based assessment of the oil and gas resources of the Bakken and Three Forks Formations, located in North Dakota, Montana, and South Dakota, finding that these formations together hold an estimated mean of 7.38 billion barrels of oil, 6.7 trillion cubic feet (tcf) of gas, and 0.53 billion barrels of natural gas liquids. See USGS Fact Sheet 2013–3013: Assessment of Undiscovered Oil Resources in the Bakken and Three Forks Formations, Williston Basin Province, Montana, North Dakota, and South Dakota, 2013. The Three Forks Formation was found to have 3.73 billion barrels of estimated mean resource of oil, with the Bakken Formation having a 3.65 billion barrels (approximately the same amount as was found in the USGS’ 2008 assessment of the Bakken Formation). The formations combined estimate ranges from 4.42 million barrels with a 95% change of production to 11.43 billion barrels with a 5% chance. Gas estimates ranged from 3.43 tcf (with a 95% chance of production) to 11.25 tcf (with a 5% chance) and 0.23 billion barrels (95%) to 0.95 billion barrels (5%) of natural gas liquids. This assessment was undertaken as part of the USGS’ nationwide project to assess U.S. petroleum basins using standardized methodology and protocol. Data for this assessment was provided by the North Dakota Geological Survey, North Dakota Industrial Commission, Montana Board of Oil and Gas, and multiple industry groups working in the formations.

This article was prepared by Barclay Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice Group.

Pending hydraulic fracturing bills in Illinois legislatures

noreply@blogger.com (Matthew Gilpin) — Fri, 10 May 2013 19:00:00 +0000

Currently there are four bills pending in the Illinois legislatures relating to high volume hydraulic fracturing activities. One bill creates the Illinois Hydraulic Fracturing Regulatory Act, two bills would ban fracking, and one requires fracking regulations to be added to the Illinois Oil and Gas Act. All of these bills are currently in committees.

House Bill 2615 which creates the Illinois Hydraulic Fracturing Regulatory Act has provisions requiring permits for hydraulic fracturing and the disclosure of fracking fluids.

High volume hydraulic fracturing operations require a permit. The permit application must contain detailed well and operations information, including:

A detailed description of the proposed well to be fracked, including total depth, proposed angle and direction, the approximate depth at which well deviates from vertical, angle and direction non-vertical portion of the wellbore, and estimated length and direction of proposed horizontal lateral or wellbore.
Estimated depth and elevation of the lowest potential fresh water along the entire length of the proposed wellbore.
A detailed description of the proposed high volume hydraulic fracturing operations, including the formation affected by the operation, the anticipated surface treating pressure range, the maximum anticipated injection treating pressure, the estimated fracture pressure of the producing and confining zones, and the planned depth of all proposed perforations or depth to the top of the open hole section.
A chemical disclosure report identifying each chemical and proppant anticipated to be used in the fracking fluid for each stage of the fracturing operation, including the anticipated total volume of water, fracturing additives to be used, each chemical to be intentionally added to the base fluid, and percent concentration of each chemical added. Trade secrets can be protected with appropriate information provided to the Department of Natural Resources.
A plan for handling, storage, transportation, and disposal or reuse of hydraulic fracturing fluids and hydraulic fracturing flowback.

Within 60 days after concluding hydraulic fracturing operations, the operator must file a high volume horizontal hydraulic fracturing operations completion report which requires the following information:

The total water volume used and the type and total volume of base fluid used.
The quantity of hydraulic fracturing flowback recovered from the well and a description of its disposal or re-use.
A chemical disclosure report identifying each chemical and proppant used in the fracturing fluid for each stage of the hydraulic fracturing process. Trade secrets can be protected if the party seeking protection presents:

Redacted and unredacted copies of documents that contain the chemical disclosure information.
A justification of the claim containing a detailed description of how the information has been protected, identification of persons to whom the information has been disclosed, a certification that the information has not been published, an explanation of why the information is of competitive value, and any other information supporting the claim.

House Bill 3086 and Senate Bill 1418 would amend the Illinois Oil and Gas Act to create the Hydraulic Fracturing Task Force to gather information, evaluate and make recommendations for the regulation of hydraulic fracturing in Illinois. Until the Task Force provides its findings, all high volume horizontal hydraulic fracturing operations are banned.

Senate Bill 3280 would amend the Illinois Oil and Gas Act to require well integrity tests before hydraulic fracturing, disclosure of fracking fluids (except for trade secrets), and re-use or disposal of flowback at an appropriate disposal facility. Operators of hydraulically fracked wells would be required to disclose all chemicals used on the FracFocus website. A service company that performed the hydraulic fracturing or a supplier of any additive used in the fracking fluid must provide to the operator the information needed for the operator to respond to the FracFocus.org website. Trade secret information may be withheld.

This article was prepared by Barclay Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice Group.

Proposed hydraulic fracturing legislation and rules in california may chill development in the Monterey Shale

noreply@blogger.com (Matthew Gilpin) — Fri, 10 May 2013 14:00:00 +0000

Members of the California legislature have been extremely busy proposing ten (10) laws that would rein in hydraulic fracturing and possibly chill the development of the Monterey Shale formation. This play extends more than 1,700 miles and is believed to contain 15.4 billion barrels of oil, approximately two-thirds of the U.S. shale oil reserves. Legislation in the General Assembly (A.B. 1301) would block hydraulic fracturing until the legislature passes rules specifying under what conditions it could be done safely. A.B. 1323 imposes a moratorium on fracking until regulators examine its health and environmental impacts (a report which is due in 2019). Another Assembly bill (A.B. 649) would ban hydraulic fracturing near an aquifer until a determination is made that the drilling would not endanger health. S.B. 4 [Bill Text - SB-4 Oil and gas: hydraulic fracturing.] would regulate hydraulic fracturing operations, including the construction of wells and well casings and the disclosure of fracturing fluids. It would require an independent scientific study on hydraulic fracturing treatments, and it would prohibit the issuance of hydraulic fracturing permits until the report is completed and peer-reviewed (which would be January 1, 2015 or after).

Along with the proposed moratoriums, the California Department of Conservation proposed rules that would require oil and gas companies to reveal the locations of wells being hydraulically fractured and to disclose the chemicals used.

These potential delays and the required disclosures may have energy firms considering whether the Monterey Shale’s resources are worth the wait.

Additional pending legislation includes the following:

S.B. 395 would classify hydraulic fracturing wastewater as a hazardous substance.
S.B. 665 would amend bonding requirements for operators of natural gas wells.
A.B. 7 would require the disclosure of the chemicals used in hydraulic fracturing, while providing protection for trade secrets.
A.B. 288 would give the Division of Oil, Gas and Geothermal Resources 30 days to approve a new drilling permit application, extending the deadline from 10 days.
A.B. 669 would require the operator to get approval from the regional water quality control board for the method and location of wastewater disposal before starting to drill.
A.B. 982 would require groundwater monitoring before and after any hydraulic fracturing operation.

This article was prepared by Barclay Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice Group.

Lawmakers question funds budgeted to EPA for fracking studies

noreply@blogger.com (Matthew Gilpin) — Thu, 09 May 2013 19:00:00 +0000

On April 26, 2013, members of the U.S. House of Representatives’ Science, Space and Technology Committee’s Subcommittee on Energy and Subcommittee on Environment Joint Hearing - A Review of Federal Hydraulic Fracturing Research Activities | Committee on Science - U.S. House of Representatives questioned the U.S. Environmental Protection Agency (EPA) about its studies on hydraulic fracturing and the additional monies requested to pursue these studies. The 2014 proposed budget sets aside $38 million to continue a multi-agency study of fracking’s impact, a project that was given $45 million in 2013. The Subcommittee members want the EPA to explain what it plans to do with the additional money, especially in light of the “Administration’s embarrassing track record of unsubstantiated allegations when it comes to hydraulic fracturing.” One of the members questioned whether “a blank check for the Administration is a good policy” and stated that the budget needs to be carefully considered because the “EPA’s past and on-going fracturing studies and investigations demonstrate a cart-before-the-horse approach” to science. The members pointed to the EPA’s “draft” report dated December 2011 which implied that fracking was responsible for water contamination near Pavillion, Wyoming. That report was later revealed to be “deeply flawed.” Even the EPA’s former Administrator indicated that she was not confident that the water contamination in Pavillion was caused by fracking.

In addition, the multi-agency study has yet to get off the ground. In April of 2012, President Obama issued an Executive Order -- Supporting Safe and Responsible Development of Unconventional Domestic Natural Gas Resources | The White House creating a senior level task force charged with coordinating federal actions related to the development of unconventional natural gas. Immediately thereafter, the EPA, the Department of Energy, and the Department of Interior signed a Memorandum of Agreement to develop an interagency plan to study environmental impacts of unconventional oil and gas production. These departments committed to release a draft research plan in October 2012 and complete the final plan by January 2013. Neither of these deadlines has been met. According to the Subcommittee members, the “Administration should recognize that shale gas is a solution rather than a problem.”

This article was prepared by Barclay Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice Group and Heather M. Corken (hcorken@fulbright.com or 713 651 8386) from Fulbright's Environmental Law Practice Group.

New York legislator sponsors fracking settlement disclosure bill

noreply@blogger.com (Matthew Gilpin) — Thu, 09 May 2013 15:34:00 +0000

Settlements arising from hydraulic fracturing disputes have typically included non-disclosure provisions. A New York State Senator has proposed S4630-2013 which would prohibit non-disclosure agreements in settlements relating to “fracturing where the facts disclosed in the action relate to a public health or safety threat.” The bill would amend New York’s civil practice law to prohibit the court from approving “a settlement of such action that includes a non-disclosure agreement until the court has reviewed all facts with regard to a threat to public health or safety.” Because legal actions relating to fracturing involve the impact of toxic chemicals on persons and property, any information revealed in the actions that relates to public health or safety should be available to the public, according to the senator. Besides hydraulic fracturing, this bill would apply to the “storage, transportation and disposal of fluids” used in shale gas drilling. This proposed law comes in the wake of a Pennsylvania Court of Common Pleas’ decision that a settlement agreement entered in a case complaining of drilling activities be unsealed and made available to the public. This decision was discussed in this blog on April 2, 2013, Court determines that settlement agreement concerning drilling activities is public record.

This article was prepared by Barclay Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice Group.

Methane in water wells in Franklin Township, Pennsylvania not from natural gas drilling activity

noreply@blogger.com (Matthew Gilpin) — Wed, 08 May 2013 22:09:00 +0000

The Pennsylvania Department of Environmental Protection (DEP) announced the results of its 16-month investigation into the alleged methane contamination of three private water wells in Franklin Township, Susquehanna County, where the Marcellus Shale formation is being developed by hydraulic fracturing. The DEP tested water from the three water wells and compared it with the chemical make-up of natural gas samples taken from the nearby drilling rigs and also with samples from water wells in the nearby Salt Springs State Park. The testing showed that the methane in the water from the private wells contained a similar isotopic make-up to the samples from the State Park, indicating that the methane in the wells is naturally occurring shallow gas. The DEP concluded that the methane in the private water wells was not production gas from the nearby gas wells being drilled by WPX Energy Inc. WPX has been paying for delivery of replacement water to the owners of the three water wells and has not yet determined if the deliveries will continue. Despite the DEP’s conclusion, the water well owners continue to believe that gas drilling is responsible for the contamination and will move forward with their lawsuit. Manning v. WPX Energy Inc. and The Williams Companies, Inc., No. 3:12-cv-00646 (M.D. Pa. April 9, 2012).

This article was prepared by Barclay Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice Group.

Texas' budget benefits from shale development

noreply@blogger.com (Matthew Gilpin) — Tue, 07 May 2013 20:16:00 +0000

Towns in the Eagle Ford Shale and other shale formations in Texas are benefiting from the oil and gas boom. The influx of oilfield workers and their families has created the need for more homes, hotels, medical facilities, educational institutions and basic domestic resources. These effects were examined in the Eagle Ford Shale Task Force Report, March 2013. Besides the local economies, shale development has created a windfall for Texas. Taxes on oil and gas development have soared past budget estimates. Oil and gas interests paid $7.4 billion in taxes in 2010, $9.25 billion in 2011, and $12 billion estimated in 2012. Severance tax income from oil production and regulation was 43% higher than estimated, at $2.1 billion, and the natural gas production tax was 38% higher than estimated, at $1.5 billion. The state’s Rainy Day Fund profits from these taxes, which funds can be used to pay for infrastructure projects, such as water. Currently the Fund has approximately $8 billion, but that is expected to rise to $11.8 billion in 2014-2015.

Another effect of the shale boom is the increase in property taxes collected by local governments. The amount collected from oil and gas interests is significant – about $3.6 billion in 2012. Sales tax from oil and gas totaled approximately $2.5 billion in 2012.

As the search for more oil and gas from shale formations continues, Texas will benefit from the lucrative exploration and development activity. Texas has the largest oil and gas field services sector in the nation. This sector includes among others, trucking, hydraulic fracturing fluid production, and drilling equipment. Everything bought by the energy companies and their employees is taxable so the local and state coffers will continue to benefit.

This article was prepared by Barclay Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice Group.

New York appeals court upholds local bans on hydraulic fracturing

noreply@blogger.com (Matthew Gilpin) — Fri, 03 May 2013 18:08:00 +0000

On May 2, 2013, a New York state appeals court issued an order upholding a local ordinance banning all activities related to the exploration for, and production or storage of, natural gas and petroleum in the Town of Dryden, New York. The court affirmed the judgment of the lower court, entered on February 22, 2012, which held that certain amendments to the Town of Dryden zoning ordinance are not preempted by New York State’s Oil, Gas and Solution Mining Law (“OGSML”).

The appeals court also issued an order upholding a local ordinance banning natural gas drilling in the Town of Middlefield, New York. The court affirmed the judgment of the lower court, entered on August 8, 2012, which held that the Town of Middlefield’s zoning law was not preempted by the OGSML.

The two lower court opinions are discussed in our prior blog post on February 29, 2012, Two New York State Courts Uphold Local Bans on Hydraulic Fracturing.

Town of Dryden

On August 2, 2011 the Town of Dryden amended its zoning ordinance to “ban all activities related to the exploration for, and production or storage of, natural gas and petroleum,” which effectively banned all hydraulic fracturing in the area.

Anschutz Exploration Corporation, a driller and developer of oil and gas wells that owned leases covering approximately 22,200 acres in the Town of Dryden, then filed a declaratory judgment action seeking invalidation of the zoning amendment on the ground that it was preempted by the OGSML.

The lower court ruled in favor of the town, holding that the legislative intent of OGSML was not to preempt local zoning authority. Instead, the purpose of OGSML is to “regulate any development or production of such resources which may occur in a manner that prevents waste, permits greater ultimate recovery of oil and gas, and protects the correlative rights of all persons.”

On appeal, the appellate court affirmed the ruling of the lower court. The appellate court found that the zoning ordinance “does not seek to regulate the details or procedure of the oil, gas and solution mining industries. Rather, it simply establishes permissible and prohibited uses of land within the Town for the purpose of regulating land generally.” The court acknowledged that the zoning ordinance will inevitably have an incidental effect upon the oil and gas industry. Nonetheless, the court found that the OGSML does not preempt a municipality’s authority to enact a local zoning ordinance banning all activities related to the exploration for, and the production or storage of, natural gas and petroleum within its borders.

Town of Middlefield

In June 2011, the Town of Middlefield enacted a new zoning law that categorized all oil, gas and solution mining and drilling as prohibited land uses within the town, which effectively banned all oil and gas drilling within the geographical borders of the township.

Cooperstown Holstein Corporation (“Cooperstown”), a company that owns oil and gas leases on real property in the Town of Middlefield, then filed a declaratory judgment action seeking a declaration that the zoning ordinance was preempted by the OGSML.

The lower court ruled against Cooperstown, holding that the zoning law was not preempted by the OGSML. The court looked to the legislative intent and history of the OGSML to determine that it “does not serve to preempt a local municipality such as defendant from enacting land use regulation within the confines of its geographical jurisdiction and, as such, local municipalities are permitted to permit or prohibit oil, gas and solution mining or drilling on conformity with such constitutional and statutory authority.”

The appellate court agreed with the lower court, affirming the court’s judgment that the Town of Middlefield’s zoning law is valid.

Both decisions are expected to be appealed.
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This article was prepared by Heather M. Corken (hcorken@fulbright.com or 713 651 8386) from Fulbright's Environmental Law Practice Group and Barclay Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice Group.

EPA extends deadline for public input to fracking study

noreply@blogger.com (Fulbright Energy) — Fri, 03 May 2013 16:54:00 +0000

In the April 30, 2013 Federal Register, the U.S. Environmental Protection Agency (EPA) extended its deadline for the public to submit data and scientific literature for its Study of the Potential Impacts of Hydraulic Fracturing on Drinking Water Resources. The deadline for the public to provide feedback is now November 15, 2013.

The EPA extended the deadline to “ensure that [it] is up-to-date on evolving hydraulic fracturing practices and technologies.” This study has been underway since 2011, and it is expected that this extension will not delay the release of the final report in late 2014.

In a December 2012 progress report, the EPA stated that it was conducting 18 research projects on the relationship between fracking and drinking water and reviewing data on fracking fluids, well construction, chemical spills, and water quality from wells around the country.

The EPA’s progress report is discussed in our prior blog post on February 27, 2013, EPA Technical Roundtables Concerning Potential Impacts of Hydraulic Fracturing on Drinking Water Resources.

Review the Federal Register notice of the deadline extension.

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EPA lowers its estimate of methane gas leaks during natural gas production

noreply@blogger.com (Matthew Gilpin) — Tue, 30 Apr 2013 19:55:00 +0000

The U.S. Environmental Protection Agency (EPA) issued a new report relating to greenhouse gas emissions from natural gas production and hydraulic fracturing. This report dramatically lowers the EPA’s estimate of how much methane gas leaks during natural gas production. Methane is the main component of natural gas. According to the agency, tighter pollution controls resulted in an average annual decrease of 41.6 million metric tons of methane emissions from 1990 through 2010, or more than 850 million metric tons overall. That is a reduction of about 20% from previous estimates even though natural gas production has grown by nearly 40% since 1990 and remains the leading source of methane emissions in the U.S., at about 145 million metric tons in 2011. The EPA converts the methane emissions into their equivalent in carbon dioxide, following standard scientific practice.

Oil and gas representatives state that this report shows that emissions from hydraulic fracturing can be managed and that leaks can be controlled by fixes, such as gaskets, maintenance and monitoring, which allow for the production and sale of more natural gas. The EPA said that it was seeking more data and feedback on methane leaks and that the report may change in the future. The report, which is based on expert reviews and new data from several sources, including an oil and gas industry-funded report, has been criticized as not being based on independent field tests of actual emissions. Environmentalists believe that the EPA is wrong and that, regardless, the revisions do not change the bigger picture that damage from greenhouse gas emissions, including methane gas, needs to be limited.

The EPA’s report entitled “Inventory of U.S. Greenhouse Gas Emission and Sinks” has international implications because, in mid-April, the report was submitted to the United Nations Framework Convention on Climate Change.

View the complete report

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This post was prepared by Barclay Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice and Heather M. Corken (hcorken@fulbright.com or 713 651 8386) from Fulbright's Environmental Law Practice Group.

BLM faces new NEPA challenge for granting leases without evaluating fracking risks

noreply@blogger.com (Fulbright Energy) — Tue, 30 Apr 2013 19:09:00 +0000

Monterrey Formation

In our April 10th blog post, BLM Violated NEPA by Granting Leases without Evaluating Fracking Risks (Hyperlink), we reported on a recent federal court ruling that the Bureau of Land Management (BLM) violated the National Environmental Policy Act (NEPA) by leasing 2,700 acres of federal land in the Central California Monterrey Shale Formation for oil and gas extraction without assessing the risks posed by hydraulic fracturing. It was the first court decision to find a federal lease sale invalid on this basis.

The ruling cast into doubt another recent BLM auction in the central California as BLM allegedly conducted a similar review before proceeding with the auction. As expected, the Center for Biological Diversity and the Sierra Club moved to contest this auction.

On April 18th, the groups filed suit in the federal court (Case No. CV-13-1749, in the United States District Court for the Northern District of California, San Jose Division). As in the prior suit, the groups assert that a detailed environmental impact study (EIS) was needed to investigate how potential hydraulic fracturing could affect the local groundwater and endangered species living in the area. They allege that the BLM unreasonably and arbitrarily relied on an environmental assessment that only looked at the environmental impact of a single well on one acre of land, even though the lease covered almost 18,000 acres. It remains to be seen how BLM will approach this litigation in consideration of the outcome of the earlier challenge.

The recent legal challenges to the BLM auctions, however, complicate ongoing efforts to develop the Monterrey Shale Formation and secure access to its estimated 15.5 million barrels of recoverable petroleum.

View the Complaint
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This post was prepared by Barclay Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice and Ted Bosquez (tbosquez@fulbright.com or 724 416 0423) from Fulbright's Environmental Law Practice Group.

Scientists rebut study linking hydraulic fracturing and groundwater contamination

noreply@blogger.com (Fulbright Energy) — Mon, 29 Apr 2013 18:30:00 +0000

Last year, hydrologic geologist Tom Myers’ conclusion that hydraulic fracturing of deep shale gas wells can be expected to impact shallow groundwater aquifers in less than ten years received much publicity, especially among environmental groups who had funded the work. Myers' findings appeared in an article entitled, “Potential Contaminant Pathways from Hydraulically Fractured Shale to Aquifers,” which appeared in the November/December 2012 issue of Groundwater, the journal of the National Groundwater Association. In response, a group of scientists from the Pennsylvania Geological Survey and the Pennsylvania Council of Professional Geologists have published a rebuttal of Myers’ work.

These scientists found many deficiencies with Myers’ modeling simulation, including a lack of objectivity and a” lack of understanding how to develop a credible hydrogeological conceptual site model.” They questioned Myers’ conceptual site model as not comprising the following (1) an accurate representation of the study area’s geology; (2) how hydraulic fracturing can be expected to modify the shale reservoir’s natural fracture characteristics; and (3) proper insight into the hydrodynamic and pore conditions of the rocks through which the water and hydrocarbons flow. As a result of their findings, the scientists have determined that Myers’ is fatally flawed with misinformation. Some examples include:

The geology overlying the Marcellus Shale formation is an alternating series of sandstones, siltstones, shales, and carbonate rocks that vary in thickness, extent, and rock physical properties depending on location. Myers incorrectly based his model on “predominantly sandstone” overlying the formation.
Fracture orientations in rock vary with both depth and lithography and cannot be presumed to be vertical throughout an entire sequence of sedimentary rock. Unsupported by empirical data, Myers assumed a continuous 19.7 ft. wide, vertical, high-permeability fault extending from the Marcellus Shale formation at depth to ground surface.
Myers’ assumption of continuous upward flow from the Marcellus Shale to shallow groundwater aquifers would require that the sedimentary sequence between the shale and the aquifers be completely saturated with water. Extensive oil and gas drilling and production as well as geological studies have demonstrated that the shale is highly under-saturated with water. “There is no evidence to suggest that upward fluid migration has been continually occurring in the Appalachian basin. In fact, were this an active process throughout geologic time, the fresh groundwater aquifers currently sourcing more than one million private water supplies in Pennsylvania alone would not be fresh – instead, they would be unpotable.”

This article was prepared by Barclay Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice Group.

Agencies to collaborate in natural gas drilling air impact research

noreply@blogger.com (Fulbright Energy) — Mon, 29 Apr 2013 14:30:00 +0000

On April 22, 2013, the Office of Fossil Energy’s National Energy Technology Laboratory (“NETL”) and the National Institute for Occupational Safety and Health (“NIOSH”) entered into a memorandum of understanding to “perform collaborative research related to airborne emissions and air quality at natural gas drilling sites.” The agencies will strive to improve scientific understanding of the pollutants by identifying and monitoring the potential impact of shale gas activities on air quality and greenhouse gas emissions.

NETL is a U.S. Department of Energy national laboratory. Thus, NIOSH joins the U.S. Department of Energy, Department of the Interior and the Environmental Protection Agency’s team of scientists. This Multi-Agency Collaboration on Unconventional Oil and Gas Research was created through an April 13, 2012 Executive Order.

This article was prepared by Kristen Hulbert (khulbert@fulbright.com or 713 651 5303) from Fulbright's Environmental Law Practice Group.

Florida House passes bill requiring disclosure of hydraulic fracturing fluids

noreply@blogger.com (Fulbright Energy) — Fri, 26 Apr 2013 18:18:00 +0000

In our April 16th blog post, Florida lawmaker proposes bills requiring disclosure of hydraulic fracturing fluids, we discussed two bills before the Florida House of Representatives requiring the disclosure of fluids used in hydraulic fracturing operations.

On April 24, 2013, one of the bills, H.B. 743, knowing as “the Fracturing Chemical Usage and Disclosure Act,” passed by a 92-19 vote. The bill requires owners and operators of wells on which hydraulic fracturing is performed to disclose the chemicals used to the Florida Department of Environmental Protection (“DEP”), which would then post them to FracFocus.org, a national chemistry registry website. The bill is largely preemptive, as Florida lacks major tight oil and gas plays that would require hydraulic fracturing. The bill has now been sent to the Florida Senate, where it was referred to the Senate’s Environmental Preservation and Conservation Committee.

The bill’s companion measure, H.B. 745, was temporarily postponed after it was criticized for contradicting many of the requirements in H.B. 743. The bill proposes to exempt trade secrets involving hydraulic fracturing from the public records requirements H.B. 743. No official reason was given for the postponement.

This article was prepared by Lauren Brogdon (lbrogdon@fulbright.com or 713 651 5375) from Fulbright’s Litigation Practice Group.

Pennsylvania Supreme Court upholds the continuing vitality of the 177 year old Dunham rule

noreply@blogger.com (Fulbright Energy) — Thu, 25 Apr 2013 17:56:00 +0000

The Pennsylvania Supreme Court has upheld the continuing vitality of the 177 year old Dunham rule in Pennsylvania, reiterating that a rebuttable presumption arises in any private deed or land conveyance that natural gas is not a "mineral" unless it is expressly designated as such in the document. To rebut that presumption, the party seeking to have it so considered must present "clear and convincing evidence that the parties intended to include natural gas or oil within" the word minerals.

This decision reaffirming the Dunham rule was made in relation to a deed executed in 1881 which reserved to the grantor the subsurface and removal rights of "one-half [of] the minerals and Petroleum Oils" contained beneath the property. The Court applied the rule and determined that this reservation did not include natural gas, including that contained in Marcellus Shale, beneath the property.

The Pennsylvania Supreme Court turned aside several challenges to the application of the rule, including an argument that the "trapped" nature of the gas in the Marcellus Shale converted it to a mineral. Additionally, the Court reiterated that any inquiry into the intent as to whether oil and gas would be considered a mineral, e.g., for attempting to rebut the presumption, "may only be shown through parol evidence that indicates the intent of the parties at the time the deed was executed." Moreover, the Supreme Court rejected that this intent can be shown through scientific evidence - "the common, layperson understanding of what is and is not a mineral is the only acceptable construction of a private deed."

In its unwavering affirmation of the Dunham rule, the Pennsylvania Supreme Court found no "compelling reasons of public policy or the imperative demands of justice" to overrule or limit the Dunham rule "that has formed the bedrock for innumerable private, real property transactions for nearly two centuries."

View the Opinion
View the Concurring Opinion

This article was prepared by Jeremy Mercer (jmercer@fulbright.com or 724 416 0440) and Barclay Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice Group.

Flowback fluid recycling regulation in the Marcellus Shale

noreply@blogger.com (Fulbright Energy) — Thu, 18 Apr 2013 21:46:00 +0000

This is the second article in a series of blog posts evaluating the current status of flowback and produced water recycling regulations in the major shale play states. These waters are generated through the hydraulic fracturing process, and this blog post continues the discussion of the manner in which these waters are disposed. The Marcellus Shale, the largest in the country by geographic area, extends throughout much of the Appalachian Basin, under Maryland, New York, Ohio, Pennsylvania, Virginia, and West Virginia. However, this post will focus on flowback and produced water recycling regulation in the most active hydraulic fracturing states, specifically, Ohio, Pennsylvania, and West Virginia. Recycling of flowback and produced waters is a growing trend in the Marcellus Shale, as off-site disposal facilities are not often available in close proximity to oil and gas wells.

Ohio

Ohio’s Department of Natural Resources (“ODNR”) regulates the disposal of flowback and produced water from oil and gas drilling. ODNR also regulates the design and operation of lagoons/pits and tanks that are used at the drill site to temporarily store fluids that are either being recycled or collected. Long-term storage of these fluids in on-site pits is not authorized in Ohio. Ohio prohibits the discharge of any produced and flowback waters directly to waters of the state and also prohibits disposal of brine at any location other than an ODNR-permitted Class II injection well. However, the state strongly encourages recycling of flowback water.

Currently, Ohio’s regulations pertaining to the recycling of flowback and produced waters from hydraulic fracturing activity fall in the context of permitting the surface application of brine collected during the production of a well to roads, streets, highways, and other land surfaces owned or controlled by a county, township, or municipal corporation. Such application would be utilized to control surface dust or ice. However, flowback water and other fluids from well stimulation may not be applied to roadways or the land surface.

Pennsylvania

In April 2011, the Pennsylvania Department of Environmental Protection (“PADEP”) instructed 15 Publicly Owned Treatment Works (“POTWs”) to stop handling flowback fluids from the Marcellus Shale. At the time of the order, around two-thirds of flowback and produced waters were recycled in Pennsylvania.

The reuse of produced water is managed by the PADEP’s Residual Waste Division. This division has developed general permits for the beneficial use of residual waste, including WMGR123, a 2012 consolidation of General Permits WMGR119 and WMGR 121, that permits the processing, transfer and beneficial use of oil and gas liquid waste to develop or hydraulically fracture an oil or gas well. Oil and gas liquid waste is defined to include liquid wastes from the drilling, development and operation of oil and gas wells and includes contaminated water from well sites.

Pennsylvania also sets forth wastewater treatment requirements specifically for the handling of flowback and produced water from fracturing and other natural gas well operations. Under the requirements, well operators must develop a wastewater source reduction strategy and submit it to the PADEP upon request. Within the strategy, the operator must identify the methods and procedures that will be utilized to maximize the recycling and reuse of flowback and production fluids either to (1) fracture other natural gas wells or (2) for other beneficial uses approved under the regulations. According to a May 2012, NRDC study, the recycling of flowback and produced waters for use in additional hydraulic fracturing has increased by 10% between 2011 and 2012.

West Virginia

A recent study in West Virginia found that 81 percent of recovered flowback water was able to be recycled and re-used. A 2010 Memorandum of Agreement between the West Virginia Division of Highways and the West Virginia Department of Environmental Protection allowed for the beneficial use of natural gas well brines for roadway pre-wetting, anti-icing, and deicing. Such use is limited to natural gas well brines that fall within certain allowable levels.

West Virginia’s oil and gas regulations do set forth construction and maintenance requirements for flowback and produced water pits and freshwater impoundments. However, they do not contain any specific rules governing recycling of that water.

This article was prepared by Heather M. Corken (hcorken@fulbright.com or 713 651 8386) and Kristen Hulbert (khulbert@fulbright.com or 713 651 5303) from Fulbright's Environmental Law Practice Group.

Florida lawmaker proposes bills requiring disclosure of hydraulic fracturing fluids

noreply@blogger.com (Fulbright Energy) — Tue, 16 Apr 2013 20:53:00 +0000

Currently pending before the Florida House of Representatives are two bills that would require the disclosure of various fluids used in hydraulic fracturing operations. H.B. 743, known as “the Fracturing Chemical Usage Disclosure Act,” requires owners and operators of wells on which hydraulic fracturing is performed to disclose the chemicals used to the Florida Department of Environmental Protection (“DEP”). The DEP will then post them to FracFocus.org, a national chemistry registry website. The bill’s companion measure, H.B. 745, would create an exemption from the public records requirement for trade secrets.

Representative Ray Rodrigues (R-Estero), who sponsored the bills, said they were modeled after similar laws in Texas. The Florida measure is largely a precautionary one, however, as the state lacks major tight oil and gas plays that would require hydraulic fracturing. In a March 28 legislative State Affairs Committee meeting, Rodrigues said, “[i]t [is] better to do this now, before we have fracturing than waiting until after fracturing actually occurs.”

This article was prepared by Lauren Brogdon (lbrogdon@fulbright.com or 713 651 5375) from Fulbright’s Litigation Practice Group.

Texas publishes new hydraulic fracturing fluid recycling rules

noreply@blogger.com (Fulbright Energy) — Tue, 16 Apr 2013 20:09:00 +0000

On April 12, 2013 the Texas Railroad Commission’s (“RRC”) hydraulic fracturing fluid recycling rules were published in the Texas Register. The new rules, adopted by the RRC on March 26, 2013, amend the state’s commercial recycling rules and are discussed in greater length in our prior blog post, Texas Adopts New Hydraulic Fracturing Fluid Recycling Rules.

This article was prepared by Kristen Hulbert (khulbert@fulbright.com or 713 651 5303) from Fulbright's Environmental Law Practice Group.

EPA has no current plans to use FIFRA to increase oversight of hydraulic fracturing

noreply@blogger.com (Fulbright Energy) — Mon, 15 Apr 2013 19:20:00 +0000

In March 2013, the Deputy Director of the Antimicrobials Division of the United States Environmental Protection Agency (EPA) stated the agency is not considering using its authority under the Federal Insecticide, Fungicide & Rodenticide Act (FIFRA) to regulate hydraulic fracturing beyond mandated registration responsibilities.

The statement represents an effort by EPA to respond to industry concerns the agency was evaluating the use of FIFRA to expand its oversight of hydraulic fracturing operations and initiate enforcement actions against operators. The concern is understandable as FIFRA, unlike the Clean Water Act and Safe Drinking Water Act, does not contain an exemption for oil and gas activities.

The recent actions of federal and state regulators have fed into this anxiety by emphasizing the role of FIFRA in the regulation of hydraulic fracturing. For example, in its most recent set of National Enforcement Initiatives, EPA highlighted FIFRA as a major component of the regulatory toolbox supporting its increased oversight of oil and gas operations.

In October 2012, members of the Association of American Pesticide Control Officers (AAPCO), an association of state pesticide regulators, publicly questioned whether the use of biocides in fracturing fluids constituted a violation of FIFRA. Montana even went so far as to urge its oil and gas industry to collaborate with the state agricultural department to develop state-specific registration and labeling requirements to shield operators from potential EPA enforcement actions.

In this environment, it is understandable oil and gas operators have grown uneasy about their potential liability under FIFRA. The inclusion of biocides in hydraulic fracturing fluids is a common practice among operators to control algal and microbial growth. The commonly used biocides (e.g., acrolein or dazomet) are classified as pesticides and therefore regulated under FIFRA.

EPA, however, sees no present need to change labeling provisions or otherwise expand its use of FIFRA to oversee extraction operations. It remains to be seen if this position will change as state regulators press for further evaluation of the adequacy of biocide labeling provisions and the need for special certification requirements for their use in hydraulic fracturing fluids.

The ultimate resolution of this issue may be influenced by EPA’s Study of Hydraulic Fracturing and Its Potential Impact on Drinking Water Resources. The drinking water study plan includes an assessment of biocides utilized in hydraulic fracturing fluids. EPA anticipates the final results of this study will be released in 2014. The results could have a significant impact on the regulation of hydraulic fracturing in the United States, including the role of FIFRA.

This post was prepared by Heather Corken (hcorken@fulbright.com or 713 651 8386) and Ted Bosquez (tbosquez@fulbright.com or 724 416 0423) from Fulbright's Environmental Law Practice Group.

California air quality district adopts new notification and reporting requirements for hydraulic fracturing

noreply@blogger.com (Fulbright Energy) — Fri, 12 Apr 2013 21:39:00 +0000

In California, the South Coast Air Quality Management District (SCAQMD) has adopted comprehensive notification and reporting requirements to provide information needed to assess air quality and health effects from oil and gas drilling, including hydraulic fracturing, in the region. SCAQMD is the air pollution control agency for Orange County and major portions of Los Angeles, San Bernardino and Riverside counties.

Rule 1148.2 applies to any operator who is conducting oil or gas well drilling, well completion, well reworks, or well production stimulation and treatment activities, including acidizing, gravel packing, hydraulic fracturing, or any combination of treatments.

Notification of oil and gas drilling activities. No more than 10 days and no less than 24 hours prior to any of these activities, the operator must notify SCAQMD of the following: (a) the well identification and owner/operator information; (b) the location of the subject well and the nearest sensitive receptor (i.e., private homes, apartments, schools, or health care facilities) within 1,500 feet; and (c) the expected start date and identification of general activities to be conducted. This information will be posted on the SCAQMD website within 24 hours of receipt.

Emissions reporting. Within 60 days of completing any drilling activity, the operator must electronically report to SCAQMD the following: (a) the well identification and owner/operator information; (b) combustion equipment (>50 hp) used during the activities; (c) type and amount of dry materials used for well drilling, well completion, and well reworks (including the method of how the dry materials were mixed and any air pollution control techniques, devices, and/or practices used to control fugitive emissions or odors); and (d) the volume of well completion fluids used and volume of flowback fluid recovered (including any method(s) used for collecting, storing, conditioning, separating, and/or treating drilling fluids and/or flowback fluids as they return to the surface, any air pollution controls; and final disposition of recovered drilling fluids and flowback fluids).

Identification of chemicals by supplier.

- For all non-trade secret chemicals, within 10 days of delivery, the chemical supplier must provide the operator with (a) the name and chemical abstract service number of each chemical ingredient; and (b) the purpose, amount, maximum concentration and identification if air toxic.

- For all trade secret chemicals, within 10 days of delivery, the chemical supplier must provide the operator with (a) the identification of chemical information claimed to be a trade secret; and (b) the basis for the claim of trade secret, chemical family, and identification of whether a chemical family is an air toxic.

- Within 60 days of delivery, for trade secret chemicals, the supplier must electronically notify SCAQMD of the following: (a) the operator, name and the API number of the well where the chemicals are to be used; (b) the name and chemical abstract service number of each chemical ingredient, purpose of chemical, amount, maximum concentration and identification if air toxic; and (c) basis for claim of trade secret, chemical family, and identification if ingredient within chemical family is an air toxic.

Chemical use reporting required from operator. Within 60 days of the last activity, the operator must electronically report to SCAQMD the following: (a) the operator, name, and the API number of the well where the chemicals were used; (b) for non-trade secret chemicals, the name and chemical abstract service number of each chemical ingredient, purpose of chemical, amount, maximum concentration and identification if air toxic; and (c) for trade secret chemicals, the identification of chemical information claimed to be a trade secret and the basis for the claim of trade secret, chemical family, and identification of whether a chemical family is an air toxic.

SCAQMD website posting of chemicals. For each event, the SCAQMD website will identify the operator name, well name and API number, location, and date of activity. For non-trade secret chemicals, the website will show the name and chemical abstract service number of each ingredient, purpose of chemical, amount, maximum concentration, and identification if an air toxic. For trade secret chemicals, the website will show the chemical family and identification of the ingredient if the ingredient within the chemical family is an air toxic.

These rules were passed by the SCAQMD Board on April 5, 2013 and will go into effect in 60 days. Within six months of collecting the first emissions report, the Board will convene a working group to discuss the results of the emissions and chemical use data. Within two years, the SCAQMD staff must report on the status of the data collection and notification requirements to determine whether new or additional rules are needed.

This post was prepared by Barclay Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice and Heather Corken (hcorken@fulbright.com or 713 651 8386) from Fulbright's Environmental Law Practice Group.

BLM Violated NEPA by Granting Leases without Evaluating Fracking Risks

noreply@blogger.com (Fulbright Energy) — Wed, 10 Apr 2013 15:30:00 +0000

On March 31, 2013, United States Magistrate Judge Paul S. Grewal ruled that the Bureau of Land Management (BLM) violated the National Environmental Policy Act (NEPA) by leasing land for oil and gas extraction without assessing the risks posed by hydraulic fracturing.

In April 2011, the BLM decided to sell four oil and gas leases for approximately 2,700 acres of federal land in the Central California Monterey Shale Formation and issued a draft Environmental Assessment (EA). During the 36-day public comment period, the BLM received comments from citizens, agencies, and environmental groups, such as the Center for Biological Diversity and the Sierra Club, who expressed concerns about the oil and gas development. After receiving these comments, the BLM issued its final EA and, on June 16, 2011, a Finding of No Significant Impact (FONSI), meaning that “the proposed action would not result in any significant environmental impact requiring further analysis under NEPA.”

On December 8, 2011, the Center for Biological Diversity and the Sierra Club filed a lawsuit against the BLM, complaining that the final EA did not adequately and fully analyze the impacts of oil and gas development on the surrounding area and the effects of hydraulic fracturing in particular. The environmental groups asserted that a detailed environmental impact study (EIS) was needed in order to consider the endangered species living in the area (e.g., San Joaquin kit fox, blunt-nosed leopard lizard, steelhead trout, and the California condor), the “highly controversial and dangerous drilling method” of hydraulic fracturing, and the impacts of oil spills, habitant contamination, and methane leaks. The BLM countered that it was premature to evaluate the impacts at this stage, that the impacts must be evaluated in the site-specific assessments conducted in relation to applications for permits to drill.

Disagreeing with the BLM, Magistrate Judge Grewal stated that NEPA required federal agencies to conduct the impact review at the earliest possible time to allow for proper consideration of environmental values. The court found that the BLM unreasonably relied on an earlier single-well development scenario and failed to take into account all reasonably foreseeable effects of its actions in categorically refusing to consider the effects of hydraulic fracturing. According to the court, the BLM could not shirk its NEPA responsibilities by labeling discussion of hydraulic fracturing as a “crystal ball” inquiry. Therefore, Magistrate Judge Grewal ruled that the BLM failed to conduct the “hard look” analysis required by NEPA by dismissing any development scenario involving hydraulic fracturing when used in combination with technologies such as horizontal drilling. The court further found the EA and the FONSI to be erroneous as a matter of law.

The ruling may be a setback for oil and gas development in central California and could cast into doubt a recent and much larger lease sale of 18,000 acres in the same region, which the BLM reportedly approved in a similar fashion.

View the 30-page Opinion and Order.

This post was prepared by Barclay Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice and Ted Bosquez (tbosquez@fulbright.com or 724 416 0423) from Fulbright's Environmental Law Practice Group.