02 November 2015

Sidley Shale and Hydraulic Fracturing Report

Vol. 4, No. 44

Topics discussed in this week’s Report include:

  • Advisory panel considers the Environmental Protection Agency’s (EPA) draft report assessing hydraulic fracturing’s potential effects on drinking water.
  • Kansas: State Commission extends order limiting wastewater injection.
  • North Dakota: State ends program encouraging use of irrigation water for hydraulic fracturing.
  • Ohio: Commission reports that oil and gas severance tax is lower than in other states.

Federal

Advisory panel considers the Environmental Protection Agency’s (EPA) draft report assessing hydraulic fracturing’s potential effects on drinking water. In meetings last week, members of the Hydraulic Fracturing Research Advisory Panel of EPA’s Science Advisory Board (SAB panel) continued their review of EPA’s June 2015 draft report, “Assessment of the Potential Impacts of Hydraulic Fracturing for Oil and Gas on Drinking Water Resources.” The preliminary summary responses posted by the SAB panel reflect the peer review process and discussions to date, although the panel has not yet reached any consensus on the issues. The panel is scheduled to send its draft review to EPA early next year.

States

Kansas: State Commission extends order limiting wastewater injection. The Kansas Corporation Commission (the Commission) issued a six-month extension of its order limiting the injection of wastewater by oil and natural gas producers and requiring continued monitoring and data gathering. Originally imposed in March 2015, the Commission’s order applies to five areas in two counties that had experienced an increase in the number and intensity of seismic events during 2014 and early 2015. Although available data did not draw a nexus between a specific event and a specific injection well, Commission staff—in consultation with the Kansas Geological Survey—had recommended that the Commission impose the limitations and authorize data gathering and monitoring to evaluate whether the injection had contributed to the observed events. The restrictions had been scheduled to expire in September, but Commission staff had sought more time to evaluate whether the limitations on wastewater injection had been effective. The full text of the order can be found here.

North Dakota: State ends program encouraging use of irrigation water for hydraulic fracturing. North Dakota’s Industrial Water Use in Lieu of Irrigation Program (ILOP) ends December 31, except in certain limited geographical areas. Developed in 2010 by the state’s Department of Transportation and Office of the State Engineer, the program allowed farmers to give up a season’s worth of irrigation water in exchange for a temporary water permit they could then transfer to drillers. North Dakota created ILOP in response to a lack of readily available water for hydraulic fracturing as drilling first boomed in the state, but the state now says that decreased drilling and increased availability of water via other means allow for it to be discontinued.

Ohio: Commission reports that oil and gas severance tax is lower than in other states. Ohio’s 2020 Tax Policy Study Commission released a report asserting that Ohio’s severance tax on oil and gas is lower than similar taxes in other states with shale gas drilling. While Gov. John Kasich would like to raise the oil and gas severance tax, the Commission’s report recommended caution due to current market conditions. The report recommended an eventual updated tax rate commensurate with that of other states.

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