27 April 2015

Sidley Shale Gas and Hydraulic Fracturing Report

Vol. 4. No. 17

Topics discussed in this week’s Report include:

  • USGS Proposes Annual Assessment of Seismic Risk.
  • House Democrats Revisit Bill to Prevent Hydraulic Fracturing on Federal Land.
  • Oklahoma Links Increased Seismicity to Injection of Produced Water From Oil and Gas Production Wells.
  • Texas Cities to Request Well Closures Following Earthquake Studies.
  • Colorado Supreme Court Rejects Lone Pine Case Management Orders.
  • North Dakota Permitted to Join Wyoming Case Against BLM’s New Oil and Gas Development Rules.

Federal

USGS Proposes Annual Assessment of Seismic Risk. The U.S. Geological Survey (USGS) released a report on April 23, proposing to conduct annual assessments of man-made seismic risks and outlining a model for forecasting the risks. Typically, USGS studies and releases seismic maps every six years, and excludes industry-related earthquakes from the results. However, given the increasing number of earthquakes in certain areas that have also experienced significant growth in the development of oil and gas, using hydraulic fracturing and the use of underground injection disposal wells, the USGS announced that the agency should be assessing risks more frequently. USGS identified 17 areas throughout the country that have experienced what the researchers believe may be man-made seismic activity, but noted the difficulty in attributing the activity to specific wastewater injection. The USGS report can be found here.

House Democrats Revisit Bill to Prevent Hydraulic Fracturing on Federal Land. Representatives Jan Schakowsky (D-IL) and Mark Pocan (D-WI) introduced a bill on April 22 to ban hydraulic fracturing on federal land, including national parks and other land under Bureau of Land Management (BLM) control or federal jurisdiction. Both representatives introduced a similar bill in 2014, but it failed to gain traction. The current bill follows last month’s first comprehensive set of federal regulations for drilling on federal land and would prevent the use of hydraulic fracturing fluid and acidization on new federal leases. The bill, considered by environmental groups to be the strongest anti-fracking legislation ever introduced, is not expected to pass the Republican-controlled Congress.

States

Oklahoma Links Increased Seismicity to Injection of Produced Water From Oil and Gas Production Wells. The Oklahoma Geological Survey (OGS) released a report on April 21 finding that it was very likely that the state’s increase in seismic activity was attributable to disposal by re-injection of high-salinity water found in the subsurface and produced during oil and gas drilling. In 2014, the state experienced more than 5,000 earthquakes with a magnitude of 2.5 or greater, the highest number of earthquakes recorded since OGS began recording data in the 1970s and more than 600 times higher than the background seismicity rate before 2008. The majority of activity occurred in north and central Oklahoma, in the Arbuckle formation. The agency concluded that produced water—the naturally occurring water within the Earth that is often high in salinity and co-exists with oil and gas in the subsurface and so is produced as the oil and gas is extracted—injected into the formation was likely responsible for the earthquakes, as opposed to hydraulic fracturing wastewater. OGS noted, however, that it is not possible to pinpoint the exact wells associated with specific seismic activity. The OGS report can be found here.

Texas Cities to Request Well Closures Following Earthquake Studies. The mayors of Azle, TX and Reno, TX, two towns located near Fort Worth, will request that state officials shut down drilling-waste disposal wells that Southern Methodist University (SMU) researchers linked to a series of earthquakes between November 2013 and January 2014. In particular, the research found that man-made processes were more powerful in influencing seismic activity than natural causes and demonstrated that there was a correlation between seismic activity and well injection levels. However, seismologists for the Texas Railroad Commission, the agency tasked with regulating oil and gas in Texas, do not believe that the SMU research documents the need to close the wells. Industry groups have likewise questioned the study’s methodology and urged caution before assigning weight to these findings.

Litigation

Colorado Supreme Court Rejects Lone Pine Case Management Orders. The Colorado Supreme Court held that state rules do not permit courts to issue Lone Pine orders requiring plaintiffs to provide evidence of injury prior to the completion of discovery. The full panel of the court held that the trial court violated the Colorado Rules of Civil Procedure, when it dismissed a case against Antero Resources Corp., after issuing a case management order requiring the plaintiffs to first show evidence of the injuries they alleged were caused by Antero’s drilling operations, but prohibited plaintiffs from conducting discovery. The court noted that the Colorado Rules of Civil Procedure, C.R.C.P. 16, permits judicial case management but does not permit courts to fashion their own summary judgment measures, such as dismissing claims during early stages of litigation.

North Dakota Permitted to Join Wyoming Case Against BLM’s New Oil and Gas Development Rules. A U.S. District Court in Wyoming ruled on April 22 that North Dakota may join Wyoming’s lawsuit against the U.S. Department of Interior. The case challenges the rules issued recently by BLM that would regulate the use of hydraulic fracturing on federal and tribal land, alleging that the rules exceed federal authority and infringe states’ rights. According to the court, North Dakota, the nation’s second largest oil and gas producer, will be permitted to join the case in order to protect its own interests, independent from those of Wyoming.

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

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