09 September 2015

Sidley Shale and Hydraulic Fracturing Report

Vol. 4, No. 36

Topics discussed in this week’s Report include:

  • District Court Overturns Endangered Species Act Listing for Lesser Prairie Chicken.
  • Texas: Hearing Examiners Find Insufficient Evidence to Establish Link Between Injection Well and Seismic Activity
  • EIA Report Concludes That Lifting Oil Export Ban Would Help Producers and Consumers, but Adversely Affect Refiners.

Federal

District Court Overturns Endangered Species Act Listing for Lesser Prairie Chicken. On September 1, 2015, a federal district court judge in Texas overturned the U.S. Fish and Wildlife Service’s (FWS’s) decision to list the lesser prairie chicken as threatened under the Endangered Species Act (ESA), holding that the agency failed to follow its own procedures in evaluating voluntary conservation efforts. The lesser prairie chicken can be found in oil producing areas in Texas, New Mexico and Oklahoma and the listing decision was challenged by the Permian Basin Petroleum Association and four New Mexico counties. The Court determined that the FWS failed to properly consider the range-wide conservation plan established by Texas, New Mexico, Oklahoma, Kansas and Colorado to protect the lesser prairie chicken. The plan, which these states developed to protect the lesser prairie chicken without additional burdens of a federal ESA listing, has produced commitments of 100,000 acres of land for lesser prairie chicken habitat and pledges of $46 million to pay for conservation efforts. The court’s decision could have a significant impact on FWS’s ESA evaluations for other species, including the sage grouse.

States

Texas: Hearing Examiners Find Insufficient Evidence to Establish Link Between Injection Well and Seismic Activity. Texas Railroad Commission (TRC) hearing examiners recently found there was insufficient evidence to establish that a wastewater injection well owned by XTO Energy caused 20 earthquakes in Azle, Texas in 2013 and 2014. In April 2015, researchers from Southern Methodist University (SMU) had released a study asserting a link between the earthquakes and XTO’s well. In response, the TRC ordered a show cause hearing to determine whether XTO’s wastewater injection well permit should be revoked. The Administrative Law Judge and Technical Examiner overseeing the hearing have issued a proposed decision and recommended order holding that the SMU study was not sufficient to establish a causal link between the injection well and the seismic events. The TRC must decide whether to adopt the proposed decision.

Studies

EIA Report Concludes That Lifting Oil Export Ban Would Help Producers and Consumers, but Adversely Affect Refiners. Under existing law, crude oil exports are generally prohibited, with exceptions for exports to Canada and certain exports approved by the President. The Energy Information Administration (EIA) however, has evaluated the cross-cutting effects of lifting the export ban on different aspects of the U.S. economy. According to the EIA report, if U.S. oil production remains below 10.6 million barrels per day through the next decade, there would be few differences between leaving the export ban in place versus removing it. If production rises beyond that level, however, removing export restrictions would have several effects: higher domestic oil production, higher crude exports and lower refined product exports. Some members of Congress have resisted calls to lift the crude oil export ban, concerned with the potential for higher domestic gasoline prices. The EIA, however, predicts that gasoline prices would be either unchanged or slightly reduced by the removal of current restrictions on crude oil exports.

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