19 July 2016

Sidley Shale and Hydraulic Fracturing Report

Vol. 5, No. 29

Topics discussed in this week’s Report include:

  • EPA requests additional information on oil and gas industry emissions.
  • PHMSA and FRA propose regulations for trains carrying crude oil and other flammable cargo.
  • Researchers conclude that the advent of hydraulic fracturing did not result in an increase in wellbore failures in Colorado’s Denver-Julesburg Basin.
  • EIA concludes that the U.S. will become net natural gas exporter in 2017.

Federal 

EPA requests additional information on oil and gas industry emissions. In a request for information (RFI) published in the Federal Register on July 18, the U.S. Environmental Protection Agency (EPA) asked the public to submit data on “monitoring, detection of fugitive emissions, and alternative mitigation approaches in the oil and natural gas sector.” The potentially interested source categories listed by EPA are the oil and gas extraction and distribution categories, including pipelines. According to EPA, it is issuing the request to gather information on emerging monitoring and leak detection methods in order to inform potential future rulemakings under the Clean Air Act. Responses are due by November 15, 2016. The RFI is  another expansive information gathering effort into the oil and gas industry by the federal government. Earlier this year, as reported here, EPA published a draft information collection request that, if finalized, would require owner/operators to provide data and other information in connection with methane emissions from existing sources in the oil and gas sector.

PHMSA and FRA propose regulations for trains carrying crude oil and other flammable cargo. The Pipeline and Hazardous Materials Safety Administration (PHMSA) and the Federal Railroad Administration (FRA) issued a pre-publication proposed rule governing the transport by rail of high-hazard flammable materials, including crude oil. The agencies are proposing to direct railroads to develop more detailed oil spill response plans than those currently required by law, with the level of details based in part on the amount of oil being transported. The agencies also propose to require railroads to be prepared for a “worst case” spill and to share information on their cargoes with state and tribal emergency response commissions. The agencies explained that the proposal was prepared in response to recent derailments of trains carrying crude oil, such as the derailment in Mosier, Oregon in June.

Studies

Researchers conclude that the advent of hydraulic fracturing did not result in an increase in wellbore failures in Colorado’s Denver-Julesburg Basin. Researchers at the University of Colorado and California State Polytechnic University concluded that the use of hydraulic fracturing in the Denver-Julesburg Basin did not increase the rate at which groundwater in the basin may be affected in the course of oil and gas development there. The researchers looked at 924 water well samples, 42 of which they reported contained stray gas originating from oil and gas deposits. The researchers determined that the gas entered the wells through wellbore failure due to inadequate surface casings, and to leaks in production casings and wellhead seals in older, vertical oil and gas production wells. According to the report, the wellbore failure contributing to these findings has occurred in the basin at a rate of about two cases annually since 2001, a rate that did not change after high-volume hydraulic fracturing and horizontal drilling technology were introduced in the basin in 2010.

EIA concludes that the U.S. will become net natural gas exporter in 2017. The U.S. Energy Information Administration (EIA) has projected that the United States will become a net exporter of natural gas for the first time since the 1950s during the latter half of next year. EIA projects that exports will increase due to the Sabine Pass LNG export terminal’s ability to operate at full capacity next year. Meanwhile, natural gas imports have dropped significantly, with imports in March 2016 matching a 30-year low.

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

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