11 October 2016

Sidley Shale and Hydraulic Fracturing Report

Vol. 5, No. 41

Topics discussed in this week’s Report include:

  • EPA issues deadline for compliance with its rule governing discharge of wastewater from unconventional oil and gas production facilities to POTWs.
  • PHMSA adopts rules addressing natural gas pipeline emergencies.
  • Oklahoma: EPA recommends that Oklahoma Corporation Commission consider a moratorium on a subset of underground injection of oil and gas wastewater.
  • United Kingdom approves first oil and gas project using both hydraulic fracturing and horizontal drilling.
  • EPA states that the oil and gas sector’s methane emissions decreased last year.

Federal

EPA issues deadline for compliance with its rule governing discharge of wastewater from unconventional oil and gas production facilities to POTWs. The U.S. Environmental Protection Agency (EPA) published a rule setting a deadline for compliance with its June 2016 effluent limitation guideline (ELG) rule for discharges from onshore, unconventional oil and gas production facilities into publicly owned treatment works (POTWs). As discussed in this publication, EPA’s June 2016 ELG rule prohibited the discharge of wastewater from hydraulic fracturing operations into POTWs but noted that no such discharges were currently occurring. EPA’s new, direct final rule, issued without first seeking comment on a proposed rule, recognizes that some hydraulic fracturing operations did in fact discharge to POTWS prior to the date of the June 2016 rule and established a deadline of Aug. 29, 2019 by which those operations must cease such discharges. EPA is accepting comments on the new rule through Oct. 31, 2016 and has said it will withdraw the rule if it receives any adverse comments.

PHMSA adopts rules addressing natural gas pipeline emergencies. The U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) issued an interim final rule that establishes the process by which PHMSA can issue emergency orders related to unsafe conditions or practices at natural gas pipelines that pose an imminent hazard to public health, safety or the environment. The interim final rule provides PHMSA with the authority to impose emergency restrictions, prohibitions, and safety measures on owners and operators of gas or hazardous liquid pipeline facilities but only to the extent necessary to abate the imminent hazard. PHMSA stated that it would use its new authorities under the rule in cases in which a serious manufacturing flaw has been discovered in pipeline equipment or where an accident reveals the need for an immediate change of action. PHMSA developed the rule pursuant to the Protecting Our Infrastructure of Pipelines and Enhancing Safety (PIPES) Act of 2016. Pursuant to the PIPES Act, after this interim final rule is published in the Federal Register, PHMSA must issue a final rule within 270 days.

States

Oklahoma: EPA recommends that Oklahoma Corporation Commission consider a moratorium on a subset of underground injection of oil and gas wastewater. In its annual review of Oklahoma Corporation Commission wastewater well regulations under the federal Safe Drinking Water Act, U.S. EPA suggested that the Commission consider implementing a moratorium on the underground disposal of oil and gas wastewater in certain areas of the Arbuckle formation in response to a recent increase in earthquakes in the state. In its review, EPA also praised the Commission for certain steps it has taken to respond to increased seismicity but criticized the state agency for allegedly not imposing sufficient penalties on violators.

International

United Kingdom approves first oil and gas project using both hydraulic fracturing and horizontal drilling. The United Kingdom’s Communities Secretary approved Cuadrilla Resources’ plan to produce natural gas using hydraulic fracturing and horizontal drilling at the Preston New Road site in Lancashire, which would be the first time the oil and gas production techniques would be used together in the country. The Communities Secretary overrode the local Lancashire County Council, which had denied Cuadrilla Resources permission to conduct hydraulic fracturing, citing noise and traffic impacts. Cuadrilla intends to begin hydraulic fracturing in 2017.

Studies

EPA states that the oil and gas sector’s methane emissions decreased last year. In tallying the 2015results from its Greenhouse Gas Reporting Program, EPA observed that methane emissions associated with oil and gas production, processing and storage infrastructure dropped 3.8 percent last year, from 73.1 million metric tons of carbon dioxide equivalent in 2014 to 70.3 million metric tons in 2015. The oil and gas sector’s methane emissions have decreased for four years in a row. In Texas alone, methane emissions associated with oil and gas production dropped by 3.58 million metric tons of carbon dioxide equivalent from 2011 to 2015. These substantial decreases occurred prior to the Obama administration’s recent efforts to regulate methane emissions from the oil and gas industry, describedpreviously in this publication.

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

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