15 March 2016

Sidley Shale and Hydraulic Fracturing Report

Vol. 5, No. 11

Topics discussed in this week’s Report include:

  • Tenth Circuit allows appeal of preliminary injunction of Bureau of Land Management (BLM) hydraulic fracturing rule to move forward.
  • United States and Canada announce further plans to reduce methane emissions from oil and gas operations.
  • Louisiana: State intermediate appellate court holds that state law pre-empts local zoning ordinance prohibiting a hydraulic fracturing project.
  • Pennsylvania: Jury awards plaintiffs $4.24 million in tort suit against oil and gas company for alleged drinking water contamination in Dimock.
  • Ohio: Oil and gas production increased, as did wastewater disposed by underground injection.
  • Oklahoma: Oklahoma issues second plan to reduce oil and gas wastewater injection in the state.

Federal
 
Tenth Circuit allows appeal of preliminary injunction of Bureau of Land Management (BLM) hydraulic fracturing rule to move forward. The Tenth Circuit granted the Department of the Interior’s (DOI) request to hear an immediate appeal of the District of Wyoming’s fall 2015 preliminary injunction against BLM’s rule governing hydraulic fracturing on federal and tribal lands. The appeal of the preliminary injunction will run concurrently while the district court hears the case against the rule on its merits. The states challenging the rule had asked the Tenth Circuit to stay the appeal while the district court case played out.

United States and Canada announce further plans to reduce methane emissions from oil and gas operations. During an official visit to Washington, D.C., by Canadian Prime Minister Justin Trudeau, the United States and Canada announced joint efforts to further reduce methane emissions from the oil and gas sector within both countries. This joint plan includes U.S. Environmental Protection Agency (EPA) regulation of methane emissions from existing oil and gas operations under the Clean Air Act. The agency plans to issue an information collection request soon to oil and gas producers to gather data on existing methane emissions, emissions reduction technologies and costs associated with reducing emissions of methane. Canada also announced that it plans to introduce regulations by the end of 2017 that would reduce methane emissions from the oil and gas industry by 40 to 45 percent from 2012 levels by 2025, joining a similar pledge by the United States. In addition, the countries agreed to align safety standards on oil and gas exploration in the Arctic.

States

Louisiana: State intermediate appellate court holds that state law pre-empts local zoning ordinance prohibiting a hydraulic fracturing project. A three-judge panel of the Louisiana Court of Appeals for the First Circuit upheld a trial court opinion that approved a state agency’s decision to grant a drilling permit to Helis Oil & Gas Company for a hydraulic fracturing operation. Affirming the reasoning of the lower court, the panel determined that state oil and gas laws preempted a parish ordinance that rezoned unincorporated areas to residential, including the land on which Helis proposed to conduct drilling operations.

Pennsylvania: Jury awards plaintiffs $4.24 million in tort suit against oil and gas company for alleged drinking water contamination in Dimock. In a case brought against Cabot Oil & Gas Corporation in federal court for alleged contamination of drinking water that occurred in 2008, a jury awarded one family $2.75 million and another $1.49 million. The jury found that Cabot was negligent in drilling its wells and created a private nuisance by contaminating drinking water. The verdict came after a three-week trial. The award resolves litigation that began in 2009 with more than 40 plaintiffs, many of whom settled some years ago. EPA had determined in 2012 that hydraulic fracturing fluids had not caused the water contamination at Dimock. Cabot announced that it intended to challenge the verdict.

Ohio: Oil and gas production increased, as did wastewater disposed by underground injection. Notwithstanding reduced prices, Ohio’s shale oil and gas production increased substantially in 2015. Based on data from 1,230 operating wells, Ohio’s Department of Natural Resources reported that production of natural gas more than doubled and oil production increased nearly as much, compared with production in 2014. Along with increased production, almost 29 million barrels of oil and gas wastewater were injected into underground disposal wells, marking a 15 percent increase over the amount of wastewater disposed underground in Ohio during 2014. While Ohio’s underground injection wells have historically been used for wastewater from Pennsylvania and West Virginia, the increase in Ohio’s oil and gas operations has meant a majority of the wastewater injected in Ohio is now generated in-state. Ohio has approximately 200 underground injection wells.

Oklahoma: Oklahoma issues second plan to reduce oil and gas wastewater injection in the state. The Oklahoma Corporation Commission released a new plan to reduce the volume of oil and gas wastewater injected underground for disposal in the central part of the state by 40 percent below 2014 levels by May 28. The new plan will affect more than 400 wastewater disposal wells across a 5,000-square-mile area. This plan is the second that the Commission has issued this year; the first plan called for reductions in wastewater injection in the western part of the state. The plans were developed in response to concerns that increased seismic activity in Oklahoma is due to the wastewater volume as well as the depth and location of certain injection wells in the state.

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

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