23 February 2015

Sidley Shale Gas and Hydraulic Fracturing Report

Vol. 4. No. 8


USGS Releases Decades of Hydraulic Fracturing Data. U.S. Geological Survey (USGS) scientists released data analyzing over 60 years of hydraulic fracturing information. The report covers nearly one million drilled wells and two million fracturing treatment records between 1947 and 2010, and describes trends in water usage and treatment fluids. The report also reflects the rapid increase in horizontal hydraulic fracturing — these wells accounted for six percent of drilled wells in the United States in 2000 and 42 percent in 2010. According to the report, the states with the largest number of hydraulic fracturing wells are Texas, Colorado, Pennsylvania, Oklahoma and New Mexico.

Environmental Group Sues DOI Regarding Offshore Oil and Gas Development. The Center for Biological Diversity (CBD) filed suit against the Department of the Interior (DOI) in federal district court in California, alleging that the agency was issuing offshore oil and gas permits without adequate consideration of environmental impacts, in violation of the National Environmental Policy Act. CBD requested the court issue an order barring all permitting until the impacts are fully studied. The litigation follows a similar lawsuit filed by the Environmental Defense Center challenging permits in the Santa Barbara Channel, as well as a CBD lawsuit seeking information regarding offshore wells permitted in the Gulf of Mexico.


Ohio Rejects Local Restriction of Fracking. On February 17, the Ohio Supreme Court invalidated municipal ordinances that purported to ban hydraulic fracturing, holding that the local laws conflicted with, and thus were preempted by, the state’s oil and gas law. In State ex rel. Morrison v. Beck Energy Corp, the court ruled 4-3 that regulations adopted by the town of Munroe Falls regulations were in direct conflict with Ohio’s statewide, uniform regulation of oil and gas operations. Munroe Falls had argued that the ordinances were a valid exercise of the city’s home-rule power, granted by the Ohio state constitution. The court rejected the argument, finding the ordinances would render the state law meaningless and that, notwithstanding home rule powers, the state law was the exclusive authority for regulation of permitting.

Pennsylvania Court Rejects Lease-Extension Doctrine. The Pennsylvania Supreme Court recently ruled that oil and gas drillers are not entitled to longer leases after successfully defending against a landowner lawsuit. Several states have adopted the doctrine that a driller is entitled to make up for production time lost after winning a lawsuit against a landowner, but historically Pennsylvania has not supported the practice. In this case, Cabot Oil & Gas Corp. suspended production during litigation and after prevailing, requested an extension of its leases to recoup its drilling time. The court, however, rejected the argument, finding that oil and gas drillers may draft lease provisions to provide for equitable extensions but the doctrine alone was insufficient.

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