Volume 3, No. 3
FERC Draft EIS Finds Cameron LNG Export Project Will Have Limited Environmental Impact. On January 10, 2014, the Federal Energy Regulatory Commission (FERC) issued a draft Environmental Impact Statement (EIS) for the $6 billion Cameron LNG Export Project in Hackberry, Louisiana. After accounting for proposed mitigation efforts, the EIS found the proposed facility would have limited environmental impact. It found most impacts would be temporary, while identifying some permanent impacts on lands, migratory birds and certain fish species. FERC is accepting comments on the draft EIS until March 3, 2014. If a final EIS and record of decision are issued by the agency approving the project, Cameron will be able to construct the facility, subject to other state and federal permitting requirements.
Industry Trade Associations Challenge BLM’s Deferral of Oil and Gas Lease Sale. The Western Energy Alliance, along with member company Castle Valley Holdings LLC, have appealed the Bureau of Land Management’s (BLM’s) decision to withdraw nearly 100,000 acres of federal land in Utah from a November 2013 lease sale. The appeal, which was filed with the Interior Board of Land Appeals, alleges that BLM based its decision on an untimely protest by the Utah Rock Art Research Association. A number of interest groups submitted comments opposing leases on some of the withdrawn lands. BLM claims that it withdrew this acreage in order to address residual concerns regarding cultural resources and sensitive species.
EPA Letter to NRDC Stresses Agency Actions to Address Hydraulic Fracturing. In a letter to the Natural Resource Defense Council (NRDC), Environmental Protection Agency (EPA) Administrator Gina McCarthy defended the agency’s hydraulic fracturing initiatives. McCarthy stressed EPA’s draft guidance for the use of diesel fuel in hydraulic fracturing under the Safe Drinking Water Act’s Underground Injection Program, the agency’s involvement in BLM’s proposed regulations for hydraulic fracturing on public land, and the agency’s ongoing groundwater study. The letter stated that EPA’s diesel fuel guidance is anticipated to be issued in the next few weeks. McCarthy did not respond to charges concerning EPA’s investigations into alleged impacts from hydraulic fracturing in Pavilion, Wyoming, Dimock, Pennsylvania, and Parker County, Texas.
DOT Meeting Sparks Voluntary Railway Safety Changes for Oil Transport. After meetings last week with the Department of Transportation, oil and rail industry representatives, including the Association of American Railroads and the American Petroleum Institute, agreed to adopt a series of safety measures for transporting crude oil by rail. Specific measures addressed at the meetings include speed reductions on high-risk routes and better information sharing between the railroads and oil industry. The meetings were prompted by a series of train derailments over the past year involving cars transporting crude oil.
Texas: Duke University Testing Finds Methane in Wells. Testing data from Duke University researchers found elevated levels of methane in wells near Weatherford, Texas. These tests took place near the location of a Range Resources well that EPA previously claimed had impacted groundwater, but EPA has since dropped its pursuit of those claims. The Duke data contrast with data collected by Range Resources, who submits their operations did not cause or contribute to the presence of what is naturally occurring methane.
Arkansas: UT Study Highlights Promise of Fayetteville Shale. A study conducted by the Bureau of Economic Geology at the University of Texas has found that the Fayetteville Shale will remain one of the most prolific natural gas plays in the United States. The Bureau’s study was part of a four-basin analysis of shale gas plays funded by the Alfred P. Sloan Foundation. The study concludes that the Fayetteville Shale holds 38 trillion cubic feet (tcf) of recoverable gas, of which 18 trillion tcf can be economically recovered at a price of $4 per BTU. According to the Bureau’s projections, natural gas can be economically extracted through 2050.
North Carolina Commission Approves Chemical Disclosure Rule. On January 14, 2014 the North Carolina Mining and Energy Commission approved new disclosure rules for chemicals used in hydraulic fracturing fluids. Under the rules, information subject to a trade secret claim would not be disclosed, subject to review by the Department of Environment and Natural Resources and except if needed to address a medical emergency. The rule, which will not become effective until it is approved by the North Carolina legislature, is one of many regulations that must be issued before the state lifts its moratorium on hydraulic fracturing.
Minnesota Agencies Form Advisory Panel for Silica Mining. Minnesota’s Pollution Control Agency and Department of Natural Resources formed a 15-member advisory panel to aid them in developing new silica mining regulations. The panel includes individual citizens, as well as representatives from local governments and the mining industry. Legislation passed last year directs the agencies to develop the new regulations.
Alaska Takes Equity Stake in LNG Joint Venture. The Alaska Department of Natural Resources has agreed to become an equity partner in a $45 billion liquefied natural gas (LNG) project along with ExxonMobil, ConocoPhillips, BP, and TransCanada. The LNG export project will include an 800 mile pipeline from Alaska’s North Slope to the Kenai Peninsula and is expected to produce 15-18 metric tons of LNG per year. As part of the agreement, the state will supply $5.75 billion toward the costs of the project.
Oklahoma Proposal Seeks Information from Disposal Wells. In response to increased seismic activity, the Oklahoma Corporation Commission has proposed rules that would expand the integrity testing and reporting requirements for Class II well operators who dispose of hydraulic fracturing waste water. The proposal would generate additional data from which seismologists and the Commission itself could determine whether there is a link between earthquakes and the disposal of waste water from hydraulic fracturing.
Texas Legislature Forms Subcommittee to Investigate Increased Seismic Activity. Last week, the Texas legislature formed a Subcommittee on Seismic Activity to investigate the cause of recent earthquakes northwest of Fort Worth. The announcement comes after the Texas Railroad Commission announced plans to hire a seismologist and to work with other state agencies to investigate the same issues. NGOs, including Texas-based Earthworks, have been critical of the state’s response to the earthquakes to date.
European Union Issues Guidelines for Hydraulic Fracturing. The European Commission today published non-binding guidelines covering hydraulic fracturing operations in the European Union. The guidelines do not impose requirements, but instead provide principles and best practices that member states are urged to follow. In addition, the EU is asking member states to submit to the EU their plans for shale exploration and development. While the EU had considered a legally binding directive that would have established uniform regulatory requirements across the entire EU, opposition by the United Kingdom, among others, resulted in issuance of the guidelines as an alternative.
European Commission Urged to Assess UK Shale Gas Incentives Under State Aid Rules. The United Kingdom’s tax incentives to promote shale gas development have come under scrutiny by hydraulic fracturing opponents, who assert these incentives violate the EU’s state aid rules. The state aid rules prohibit governments from using selective measures to grant an advantage to a specific company or companies. The legality of the UK’s incentives for oil and gas developers, as well as for local communities supporting development, has been hotly debated within the European Parliament. EU Competition Commissioner Joaquin Almunia has signaled a willingness to investigate whether the incentives comply with state aid rules.
Canada Proposes Upgraded Standard for Crude Oil Rail Cars. In response to recent train derailments involving cars carrying crude oil, including the accident in Lac-Megantic, Quebec, the Canadian government has proposed new standards for rail cars carrying crude oil. The proposed regulations, which would apply to Canadian National Railway and Canadian Pacific Railway, along with regional operators, would align Canadian regulations with proposed regulations in the United States. Among other things, the regulations would require the use of thicker shielding and normalized steel, as well as enhanced recordkeeping by railroads on how they classify dangerous goods and document the sampling methods for crude.
China: Shale Gas Output Surpasses 200 Million Cubic Meters in 2013. China’s Land and Resource Ministry reported that 2013 natural gas output increased to 200 million cubic meters (7.1 billion cubic feet), a 500% increase from 2012. The growth occurred primarily in the Changning-Weiyuan, Fushun-Yongchuan, and Fuling areas. China expects growth to continue and has set an annual target of 6.5 billion cubic meters for 2015.
EIA Projects Record High Natural Gas Output. In its January Short Term Energy Outlook, the U.S. Energy Information Administration (EIA) projects that natural gas production will increase to 72.58 billion feet per day by 2015. This marks the fifth consecutive annual record high for natural gas production. At the same time, net imports of natural gas are projected to fall to the lowest levels in 30 years, with the U.S. becoming a net exporter by 2018. According to the EIA, production increases, particularly in the Marcellus Shale, have resulted in a slight decline in natural gas prices.
Operations Begin for Pennsylvania-to-Texas Ethane Pipeline. A Enterprise Products Partners LP ethane pipeline running from the Marcellus Shale to Gulf Coast petrochemical facilities has commenced construction. The 1,230 mile Appalachia-to Texas Express (ATEX) pipeline, which has a 150,000 barrel per day capacity, will send ethane, a co-product in natural gas production to ethylene facilities in Louisiana and Texas. Increased availability of ethane due to hydraulic fracturing has spurred significant investment in ethane facilities, with eight new facilities planned for the Gulf Coast, along with two in the Northeast.
ACC Projects Growth in Chemical Exports Due to Shale Gas Production. A recent report by the American Chemistry Council (ACC) projects that exports of U.S. chemicals will increase by more than 45% over the next five years. Increased production of shale gas and liquids is cited as a primary reason for the resurgence in the U.S. chemical industry. After being a net importer as recently as 2011, ACC projects that net exports will rise to $30 billion by 2108.
Duke University Study Touts Novel Method for Recycling Waste Water. Researchers at Duke University claim to have developed a novel method for removing radioactive material from hydraulic fracturing flowback in Pennsylvania by combining it with acid mine drainage from nearby coal mining operations. When the two fluids are combined, radioactive metals forms solids and settle out of the fluid. While researchers acknowledge that is a not a complete solution for recycling flowback, they note that it can substantially improve the quality of water recovered from hydraulic fracturing operations.
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