01 August 2017

Sidley Shale and Hydraulic Fracturing Report

Vol. 6, No. 29

Topics discussed in this week’s Report include:

  • BLM issues proposed rule that would rescind Obama-era regulation governing hydraulic fracturing on public lands.
  • West Virginia and Pennsylvania separately delay construction of two pipelines.
  • Massachusetts will study proposed Enbridge natural gas compressor station.
  • EIA predicts that U.S. crude oil production will set new record in 2018.

Federal

BLM issues proposed rule that would rescind Obama-era regulation governing hydraulic fracturing on public lands. The Bureau of Land Management (BLM) proposed to repeal its March 2015 rule governing the use of hydraulic fracturing on federal and Indian lands. The 2015 rule regulates various elements of the hydraulic fracturing process, such as wellbore construction, chemical disclosures and water management. The 2015 rule never went into effect since the District of Wyoming set it aside in June 2016, holding that BLM did not have statutory authority to regulate hydraulic fracturing. The U.S. Circuit Court of Appeals for the Tenth Circuit recently heard oral argument regarding whether BLM had the authority to issue the 2015 rule. The proposed rule would repeal the 2015 rule without replacing it, returning the affected portions of the Code of Federal Regulations to the language that existed prior to the 2015 rule. BLM’s proposed rule justified the agency’s planned rescission of the 2015 rule by stating that it is “unnecessarily duplicative of state and some tribal regulations” and that it imposes “burdensome reporting requirements and other unjustified costs on the oil and gas industry.”  The deadline for commenting on the proposed rule is September 25, 2017.

States

West Virginia and Pennsylvania separately delay construction of two pipelines. The West Virginia Department of Environmental Protection (DEP) issued an order to Rover Pipeline, LLC to immediately halt land development activities in Doddridge and Tyler Counties associated with the construction of the Rover Pipeline. The order stated that multiple recent DEP inspections revealed various alleged violations of the company’s water pollution control permit and state regulations and that Rover Pipeline, LLC would not be able to restart work until coming into compliance. As discussed previously here, Ohio had issued a similar order regarding the Rover Pipeline, a 700-mile natural gas pipeline. Likewise, in an order, the Pennsylvania Environmental Hearing Board suspended all horizontal drilling associated with Sunoco Pipeline, L.P.’s Mariner East 2 pipeline project for 13 days and called for Sunoco Pipeline, L.P. to provide affidavits stating whether the delay would cause equipment damage, safety issues or environmental harm. The order also stated that the Environmental Hearing Board could extend the construction delay. The Mariner East 2 project will include two pipelines approximately 350 miles long which will carry natural gas liquids from Ohio, West Virginia and western Pennsylvania to eastern Pennsylvania.

Massachusetts will study proposed Enbridge natural gas compressor station. As announced in a letter from Governor Charlie Baker to Mayor Robert Hedlund of Weymouth, Massachusetts, several Massachusetts agencies will study Enbridge Inc.’s plans to build a natural gas compressor station as part of the Atlantic Bridge project to expand several existing natural gas pipeline systems. Massachusetts’ Office of Coastal Zone Management will study possible future sea level rise impacts to the compressor station, to be located in Weymouth, and the Massachusetts Departments of Environmental Protection and Public Health will prepare an air quality assessment of the compressor station. The Massachusetts Executive Offices of Public Safety and of Energy and Environmental Affairs will also solicit community comments regarding the public safety aspects of the project’s construction and operation. The announcement is a victory for opponents of the Atlantic Bridge project, which received a certificate of public convenience and necessity from the Federal Energy Regulatory Commission in January 2017.

Studies

EIA predicts that U.S. crude oil production will set new record in 2018. The U.S. Energy Information Administration (EIA) predicted that domestic crude oil output will average 9.9 million barrels per day in 2018, exceeding the current record production of 9.6 million barrels per day in 1970. 2017 production is expected to be approximately 9.3 million barrels per day. Production in Texas and New Mexico’s Permian Basin, anticipated to be 2.9 million barrels per day of crude oil next year, is expected to drive 2018’s growth.

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