30 May 2017

Sidley Shale and Hydraulic Fracturing Report

Vol. 6, No. 22

Topics discussed in this week’s Report include:

  • States urged PHMSA to establish vapor pressure limits for shipping oil by rail.
  • Arkansas: Eighth Circuit reversed district court, reviving challenge to contamination from waste water disposal well.
  • New York pursued new limits on methane emissions.
  • Canada announced plans to regulate methane emissions from the oil and gas industry.

Federal

States urge PHMSA to establish vapor pressure limits for shipping oil by rail. Attorneys General for New York, California, Illinois, Maine, Maryland and Washington recently sent a letter to the Pipeline and Hazardous Materials Safety Administration (PHMSA) urging it to set a vapor pressure limit of nine pounds per square inch for railcars transporting crude oil. The Attorneys General argued that the vapor pressure limit is necessary to close a regulatory loophole and protect the public from explosions and fire danger from derailed cars. In 2015, PHMSA issued a rule that imposed operational restrictions and other limits on railcars transporting crude oil but did not establish vapor pressure limits. Industry representatives have argued that vapor pressure limits are not needed because vapor pressure of railcars was not linked to the severity or consequences of railcar derailments.

States

Arkansas: Eighth Circuit reverses district court, reviving challenge to contamination from wastewater disposal well. The Eighth Circuit recently reversed a district court decision granting summary judgment against the plaintiffs in a case alleging contamination from a hydraulic fracturing wastewater disposal well. In the case, plaintiffs R. Dale and Kari Stroud allege that hydraulic fracturing waste migrated from a wastewater disposal well onto their property. The district court granted summary judgment on the basis of insufficient evidence. The Eighth Circuit reversed, finding that an expert report submitted by the plaintiffs regarding wastewater migration was sufficiently credible and created a triable issue that a jury should decide.

New York pursues new limits on methane emissions. The state of New York recently proposed new regulations to reduce methane emissions to meet the state’s greenhouse gas emissions targets. The proposal, which includes regulations to address methane emissions from the oil and natural gas sectors, follows the U.S. Environmental Protection Agency’s (EPA) announcement that it would reconsider recently promulgated regulations to address methane emissions. The proposed plan includes actions to methane emissions, including regulation of natural gas transmission lines not regulated by the EPA, increased monitoring and reporting of emissions from natural gas transmission lines, diversion of organic wastes from landfills and improved farm management programs. Opponents of the proposal note that methane emissions from the natural gas sector have fallen significantly in recent years despite an increase in production due to voluntary efforts to reduce methane emissions.

International

Canada announces plans to regulate methane emissions from the oil and gas industry. On May 27, the Canadian government issued a proposal to cut methane emissions from the oil and gas sector by 40 to 45 percent by 2025 as part of Canada’s climate change plan. The proposal includes provisions to reduce methane leaks from hydraulic fracturing and oil and gas production equipment, reduce venting of waste gases and reduce volatile organic compound emissions from refineries. If finalized, the proposed regulations would become effective in 2020 and be fully implemented by 2023. Compliance costs associated with the proposal are estimated to be C$3.3 billion from 2018 to 2033.  However, Canadian officials also estimate that the rules would save C$1.5 billion in methane that is currently lost due to leaks or venting, as well as avoided costs from climate change. Comments on the proposed regulations must be submitted by July 27.

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