10 November 2014

Sidley Shale Gas and Hydraulic Fracturing Report

Volume 3, No. 45

States

Illinois: Administrative rulemaking commission approves new regulations authorizing permits to develop wells using hydraulic fracturing. On November 6, 2014, the Illinois Joint Commission for Administrative Rules (JCAR) approved new rules to implement the state’s Hydraulic Fracturing Regulatory Act. The final rule will allow the Illinois Department of Natural Resources (DNR) to grant permits to develop wells using hydraulic fracturing. The final rule is similar to the most recent draft released by the DNR in August. The JCAR approval marks the conclusion of a year-long regulatory process following the State’s passage of the Act in 2013.

California: Ballot measures to ban hydraulic fracturing pass in two of three counties. Voters in San Benito County and Mendocino County passed local moratoriums on hydraulic fracturing while a third measure failed in Santa Barbara County. By a 57 to 43% vote, San Benito voters banned use of hydraulic fracturing along with acid well stimulation and cyclic steam injection. At present there are 26 operating wells in San Benito County, none of which have used these well completion methods. Mendocino County’s vote passed by a margin of 62 to 38%, but is largely symbolic as there are no oil and gas wells in Mendocino County. By contrast, by a margin of 63 to 37%, Santa Barbara County, which has a large number of active wells, voted down the proposed ban. Santa Barbara also currently has more than 300 permit applications pending, all of which would involve cyclic steam injection.

Ohio: Municipal voters reject 3 of 4 ballot measures to ban hydraulic fracturing. Voters in Ohio largely rejected local measures to ban hydraulic fracturing in last week’s election. Residents in Youngstown voted for the fourth time to defeat a ballot measure to ban hydraulic fracturing. Local bans were also defeated in Gates Mill and Kent. Voters in Athens, Ohio did approve a measure to ban hydraulic fracturing as part of a community bill of rights which also enumerated residents’ rights to clear air and water.

Texas: City of Denton passes initiative to ban hydraulic fracturing; faces immediate lawsuit. The City of Denton became the first city in Texas to ban hydraulic fracturing within city limits. Residents in Denton, which is located in the Barnett Shale and currently has more than 200 operating gas wells, voted 59% to 41% in favor of the ban. Denton’s city council had voted down a similar ban proposed last July. The day after the election, the Texas Land Commissioner and the Texas Oil and Gas Association filed separate declaratory judgment actions seeking to overturn the initiative as preempted by state law and contrary to the Texas Constitution. The Texas Oil and Gas Association has also asked the court to issue a preliminary injunction in advance of the ballot measure’s effective date of December of this year.

West Virginia: University establishes field laboratory dedicated to shale gas resources. On November 6, 2014, West Virginia University announced the launch of The Marcellus Shale Energy and Environment Laboratory, which will be dedicated to the long-term evaluation of shale resource development. The program will employ a multidisciplinary team that will be focused on identifying best practices for responsible shale development. The program obtained $11 million in funding over five years from the U.S. Department of Energy.

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