13 October 2015

Sidley Shale and Hydraulic Fracturing Report

Vol. 4, No. 41

Topics discussed in this week’s Report include:

  • House passes legislation to end crude-oil export ban.
  • Environmental Protection Agency (EPA) reports methane emissions from oil and gas operations have dropped for three years in a row.
  • Pennsylvania: New legislation encourages use of mine water in hydraulic fracturing.
  • Pennsylvania: State House votes down governor’s proposed tax on natural gas production.
  • Texas: In FY 2015, regulators issue more penalties to oil and gas operators while enforcement actions drop.

Federal

House passes legislation to end crude-oil export ban. On October 9, the House passed legislation to end the 1970s-era ban on the export of crude oil. House members voted 261-159 to overturn the ban, about 30 votes short of what would be needed to override a threatened presidential veto should the legislation make it through the Senate.

Environmental Protection Agency (EPA) reports methane emissions from oil and gas operations have dropped for three years in a row. EPA’s Greenhouse Gas Reporting Program released an update showing that methane emissions from the oil and gas sector have decreased from 77 million metric tons CO2e in 2013 to 73 million metric tons CO2e in 2014, marking the third consecutive year of declining emissions. Methane emissions from the oil and gas sector were 84 million metric tons CO2e in 2011 and 81 million metric tons CO2e in 2012.

States

Pennsylvania: New legislation encourages use of mine water in hydraulic fracturing. On October 8, Pennsylvania’s governor signed into law Senate Bill 875, which encourages coal mine operators to treat used mine water by providing a limited immunity from liability under state law governing the use and disposal of mine water, if the treated water is properly reused in hydraulic fracturing oil and gas wells. Proponents of the law say that it will help conserve water in Pennsylvania. The limited immunity for coal mine operators is contingent on operators properly treating the mine water, and the mine water being used outside the boundaries of the mining area, for oil and gas development, by someone other than the mine operator. The oil and gas well operators who use the treated water also will receive a limited immunity for properly using the water. Any liabilities under state and federal law for spills or releases of the mine water would remain.

Pennsylvania: State House votes down governor’s proposed tax on natural gas production. The GOP controlled Pennsylvania House of Representatives voted down a tax on natural gas production that Governor Tom Wolf, a Democrat, had proposed only days earlier. The proposed 3.5 percent tax on natural gas production, plus an additional tax of 4.7 cents per thousand cubic feet of gas produced, was part of the Governor’s revised budget plan. Pennsylvania has an annual impact fee for natural gas drilling sites in place but does not currently have a tax on gas production.

Texas: In FY 2015, regulators issue more penalties to oil and gas operators while enforcement actions drop. The Texas Railroad Commission (the Commission) issued their fourth quarterly Report on Oil and Gas Field Operations’ Violations and Enforcement as required by state statute. In FY 2015, the Commission issued administrative fines for $3.6 million, a 37 percent increase over fiscal year 2014. The Commission also conducted three percent more inspections of oil and gas facilities in FY 2015 than the previous year, referred 44 percent fewer cases to its general counsel for enforcement and issued 18 percent fewer pipeline severance/seal orders in FY 2015 than in FY 2014.

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