29 September 2015

Sidley Shale and Hydraulic Fracturing Report

Vol. 4, No. 39

Topics discussed in this week’s Report include: 

  • Interior Department concludes that Endangered Species Act (ESA) listing not warranted for sage grouse.
  • Kansas Corporation Commission (KCC) staff recommends extension of limits on wastewater injection.
  • North Dakota extends deadlines to reduce natural gas flaring.
  • University of Michigan issues report describing options for hydraulic fracturing.

Federal

Interior Department concludes that Endangered Species Act (ESA) listing not warranted for sage grouse. On September 22, Interior Secretary Sally Jewell announced that the sage grouse would not be listed as threatened or endangered under the ESA. In 2010, the agency concluded that ESA listing was warranted but deferred a listing because other species were higher priority for the agency. Since then, states, landowners and businesses have made an unprecedented effort to protect sage grouse habitat, completing 325 sage grouse projects that improved more than 275,000 acres of habitat. In addition, the Department of Interior finalized new land use plans in 10 western states that will provide additional protection for sage grouse. These plans—in California, Colorado, Idaho, Montana, Nevada, North Dakota, Oregon, South Dakota, Utah and Wyoming—focus on core sage grouse habitat and prohibit or significantly limit hardrock mining, oil and gas development, wind turbines and transmission lines. These new protections for sage grouse were critical to the government’s decision not to list the sage grouse under the ESA.

States

Kansas Corporation Commission (KCC) staff recommends extension of limits on wastewater injection. Staff at the KCC recently recommended that the KCC extend limitations on wastewater injection into certain underground injection wells for an additional six months. The limits were initially put in place in response to increased seismic activity near the wastewater disposal wells associated with oil and gas activities in the Mississippi Lime formation. Under the initial six-month order, wells injecting into the Arbuckle formation cannot inject more than 25,000 barrels per day of wastewater; some wells were given limits as low as 8,000 barrels per day. KCC staff noted a decrease in seismic activity after the injection limits went into effect. The KCC could issue a decision on the staff’s recommendation by the end of the month.

North Dakota extends deadlines to reduce natural gas flaring. The North Dakota Industrial Commission extended until November 2016 the deadline for oil producers to reduce natural gas flaring to 15 percent of natural gas production in the state. In return, the final limits on flaring, which will be achieved in 2020, will be reduced from 10 percent to 9 percent of natural gas production. Flaring has been a challenge in North Dakota, where significant amounts of natural gas are produced along with oil from the Bakken Shale, but the infrastructure necessary to collect and process natural gas has not kept pace with the extraordinary development of oil resources. In response, the state developed a tiered structure to reduce natural gas flaring over time. To date, industry has met the first two deadlines (reducing flaring to approximately 23 percent of the natural gas produced) but, due to changes driven in part by falling oil prices, was not on pace to meet the state’s 15 percent target by January 1, 2016. The compromise position recognizes more time is needed in the short term due to market changes while still reducing flaring over the long term.

Studies

University of Michigan issues report describing options for hydraulic fracturing. On September 23, researchers at the University of Michigan’s Graham Sustainability Institute issued a report that describes a range of options for regulating hydraulic fracturing within the state. Drawing on a wide range of existing research on hydraulic fracturing, the 174-page report focuses on options available to Michigan regulators. While Michigan has not experienced the same degree of interest in hydraulic fracturing as neighboring states such as Ohio, there is a statewide ballot initiative to ban the practice. In addition to describing policy options, the report incorporates regulations passed earlier this year by the Michigan Department of Environmental Quality.

If you have any questions regarding this Report, please contact us.

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