20 April 2015

Sidley Shale Gas and Hydraulic Fracturing Report

Vol. 4. No. 16


Environmental Group Challenges Federal Wastewater Permits. The Public Employees for Environmental Responsibility (PEER) filed a petition with Environmental Protection Agency’s (EPA) Environmental Appeals Board challenging five federal National Pollutant Discharge Elimination System (NPDES) permits allowing three oil and gas companies to dispose of wastewater in surface streams. The permits were issued by EPA for hydraulically fractured drilling operations in Wyoming in and around the Wind River Indian Reservation. According to PEER, surface water disposal of liquid drilling wastes is prohibited in areas of Wyoming where the state has jurisdiction, and EPA failed to provide information to the public demonstrating that surface water disposal is safe. The petition further alleges the permits are invalid because the chemicals used in the discharged wastewater were not disclosed to the public (the chemicals are protected as trade secrets), depriving the public of the ability to comment on the potential impacts of the discharges on receiving waters.


Maryland Bill Would Allow Hydraulic Fracturing by 2017. Maryland’s General Assembly passed H.B. 449, which would require the Maryland Department of Environment (MDE) to issue permitting regulations that would become effective in 2017. Hydraulic fracturing has been subject to a de facto moratorium in Maryland since 2011. The bill does not specify what the MDE regulations should require from drilling companies. Governor Larry Hogan (R) is still reviewing the bill and has not commented on whether he will sign it. MDE has already proposed hydraulic fracturing regulations that would require drillers to collect two years of baseline environmental monitoring data before applying for a permit and impose several other requirements that industry officials submit are unnecessarily costly. The rules were proposed by MDE during the administration of former Gov. Martin O’Malley (D), and the new Governor has not indicated whether he intends to proceed to finalize those rules.


Dutch Court Slows Gas Production After Seismic Activity. The Administrative Jurisdiction Division of the Council of State limited gas production from the Loppersum area of the Groningen natural gas field after the Dutch Ministry of Economic Affairs claimed that 196 earthquakes were linked to hydraulic fracturing in the field. Some of the quakes damaged nearby homes. The judge agreed that there was enough of a link to limit production but declined to grant the petitioners’ request for a complete ban on production. Instead, the judge ordered the gas field operator, Nederlandse Aardolie Maatschappij, to limit gas production from the Loppersum area to a small volume unless production from other areas becomes impossible. The Groningen produced 61 percent of the Netherlands’ natural gas in 2014.


Appeals Court: Range Resources Must Disclose Chemical Information. A Pennsylvania superior court panel denied an interlocutory appeal by Range Resources seeking to reverse a lower court order to produce proprietary information on chemicals used at the company’s Marcellus Shale hydraulic fracturing operations. Landowners adjacent to the Range Resources’ Yeager Drill site alleged personal injuries and property damage from the operations and sought discovery on the chemicals supplied by third-party contractors. The lower court had ordered Range Resources to gather details about the chemicals from its contractors and produce the information to the plaintiffs. Range appealed the order, arguing that the chemicals’ identities and properties were proprietary and should be protected. The court panel upheld the order, finding only the chemical manufacturers had the right to seek protection for the information, and that Range Resources did not have a sufficient interest in keeping the information secret.


Rail Shipments of Oil Taper off. Thousands of crude oil tank cars have been sidelined as several factors reduce the shipment of Bakken crude oil by rail. According to the Surface Transportation Board, crude shipments have dropped by about 8,000 cars per week in April, compared to the prior year, and down seven percent since March 2015. The reduction is due in part to reduced production, as output has decreased slightly due to lower crude oil prices. Increased pipeline capacity has also cut into railway transportation. Industry analysts at Ernst & Young reported that new Department of Transportation safety standards for crude oil tank cars, to be published next month, are expected to increase shipping costs and erode further the advantages of shipping crude by rail.


Association of State Regulators Report Drilling Waste Regulations Differ Across States. The Association of State and Territorial Solid Waste Management Officials (ASTSWMO) released a survey of 40 state drilling waste management requirements, finding differing approaches. Increased oil and gas production due to hydraulic fracturing have generally caused states to examine new requirements for disposal or the beneficial reuse of drill cuttings, produced water, drilling fluids and sediments. Thirteen states approve of certain wastes being beneficially used as landfill cover, road base, in concrete manufacturing and for de-icing while others have barred re-use. The survey also found that, in many states, multiple agencies have jurisdiction over drilling wastes while some states have interpreted some or all oil and gas production wastes to be exempt from solid waste disposal requirements. Overall, states differed significantly on how they require various wastes to be disposed of, with options including burying the wastes at the well site, deep well injection, land application and disposal at a Subtitle D landfill.

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