Energy & Environmental Law Blog : Energy & Environmental Lawyer & Attorney : Vorys, Sater, Seymour and Pease Law Firm : Oil, Gas & Green Technology

On April 21, 2011, Ohio EPA announced that it combined its three waste divisions into two.  The Division of Energency and Remedial Response (DERR), the Division of Solid and Infectious Waste Management (DSIWM) and the Division of Hazardous Waste Managment (DHWM) are being consolidated into: The Division of Environmental Response and Revitalization (DERR) and the Division of Materials and Waste Management (DMWM).  See the attached news release to determine what each new Division will regulate.

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The WSJ is reporting that the Federal Energy Regulatory Commission (FERC) has fined Brian Hunter, the hedge fund trader whose trades led to the downfall of Amaranth Advisors LLC, $30 million.  "In a statement, FERC said it found Mr. Hunter 'sold significant numbers of futures contracts' at times when the market was vulnerable to big price swings 'with the intent to depress prices and financially benefit his significant derivative positions held on other platforms.'"

(Note:  Subscription may be required.)

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The Pennsylvania Department of Environmental Protection (DEP) has asked Marcellus producers to stop disposing of their wastewater streams at the remaining treatment facilities in the state:  "At the direction of Governor Tom Corbett, acting Department of Environmental Protection Secretary Michael Krancer today called on all Marcellus Shale natural gas drilling operators to cease by May 19 delivering wastewater from shale gas extraction to 15 facilities that currently accept it under special provisions of last year’s Total Dissolved Solids (TDS) regulations."

Well ...

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New York's Attorney General has told the U.S. Army Corps of Engineers and other federal agencies that he will sue if they fail to conduct a full review of proposed hydraulic fracturing regulations in the Delaware River Basin.  "'Both the law and common sense dictate that the federal government must fully assess the impact of its actions before opening the door to gas fracking in New York,' said Attorney General Schneiderman. 'New Yorkers are correctly concerned about fracking's potential dangers to their environment, health and communities, and I will use the full authority of my office, including aggressive legal action, to ensure the federal government is forced to address those concerns.'"  (See here for more.)

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"Billions in Potential Value" is how this article from centralohio.com describes the possible resource recovery from the Utica Shale in Ohio.  "In a presentation to the Ohio Oil and Gas Association last month, Larry Wickstrom, the state's geologist, estimated producers could recover as much as 15.7 trillion cubic feet of natural gas and 5.5 billion barrels of oil from Ohio's share of the Utica Shale."  And that's a conservative estimate.

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Yes, it may be hard to believe your eyes, but look here (in the NYT):  "The country has been handed an incredible gift with the Marcellus Shale. With an estimated 500 trillion cubic feet of reserves, it is widely believed to be the second-largest natural gas field ever discovered. Which means that those of you who live near this tremendous resource have two choices. You can play the Not-In-My-Backyard card, employing environmental scare tactics to fight attempts to drill for that gas. *** Or you can embrace the idea that America needs the Marcellus Shale, accept the inconvenience that the drilling will bring, but insist that it be done properly."

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The WSJ has an interesting article on the shale potential in France.  "One option that has been fiercely debated is shale gas, whose emergence in the U.S. has helped the country reduce its dependence on imported energy and eased prices while providing a fuel that burns cleaner than oil or coal. France has abundant shale, with the most promising drilling area covering 10,000 square kilometers in the southeast, and technological advances are making it possible to extract deposits trapped deep in the rock."

(Note:  May require a subscription.)

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The NYT is reporting on U.S. EPA's efforts to regulate the use of diesel in hydraulic fracturing operations.  "While Congress in 2005 exempted fracturing from the need to get permits under the Safe Drinking Water Act, it is not exempt when diesel is used. But companies have acknowledged using diesel in some instances. At a subcommittee hearing today, Sen. Tom Udall (D-N.M.) questioned Perciasepe on that."

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U.S. EPA does intend to regulate natural gas drilling in the United States.  According to this article at nasdaq.com:  "The Environmental Protection Agency has the authority to regulate natural gas drilling and is committed to doing so, EPA Deputy Administrator Robert Perciasepe told a Senate committee Tuesday."  How?  Through the Clean Water Act.

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The Oklahoman is reporting on a new national registry for frac fluid constituents:  "The searchable site allows visitors to look up the chemicals used on wells in their area, while offering a wealth of information about the process industry officials say has been instrumental in triggering a revolution in oil and gas production."  For the site itself, go here.  Very cool.

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A new study has been in the news lately claiming that natural gas likely will contribute more to global warming than burning coal because it is vented to the atmosphere in far larger quantities than previously thought (see, e.g., this article in the NYT).  The problems with the study appear to be numerous, however, including the inappropriate use of "lost-and-unaccounted for" data from Texas and long-range transmission pipeline data from Russia; the misuse of a warming factor 45% higher than the one used, for example, by the UN's Intergovernmental Panel on Climate Change (IPCC); and the use of a 20-year limited time frame to study the effects of methane in the atmosphere rather than the commonly used 100-year time frame.  See here.

Apparently others have noticed the issues - see here (Council on Foreign Relations).

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Marcellus a non-issue for western New York?  That's the topic of discussion in this article from the Buffalo News:  "That’s because, even though the Marcellus runs through most of Western New York, the dark shale here doesn’t hold nearly the promise for drillers that it does along a swath that stretches from roughly the southeastern corner of Allegany County eastward to Delaware and Sullivan counties."

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The Denver Post has an interesting article on mapping the Niobrara for development:  "About 50 oil and gas companies are in the Niobrara, with most of the activity straddling the Colorado-Wyoming border. The top companies say they plan to drill more than 150 exploratory wells in 2011."

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There are two recent court decisions in the Appalachian Basin to bring to your attention (in the event you have similar issues):

• Allegheny Wood Products, Inc. v. Marathon Oil Company, in which the United States District Court for the Northern District of West Virginia held that Marathon had not contracted to lease property owned by Allegheny.  Allegheny claimed that it was a third-party beneficiary to a lease package entered into by Marathon, while Marathon asserted that the Allegheny property has been purposefully excluded.  Relying on fundamental principles of contract law, the court agreed with Marathon:  "[B]ased on [the lease package agreement's] plain terms, [Allegheny] did not receive a third-party option to lease its lands to Marathon."  (See Civil Action No. 1:09CV149).  And,

Swallie v. Rousenberg, in which an Ohio court of appeals examined (i) whether a grant of mineral interests that had been improperly notarized was nonetheless valid with respect to a subsequent grant of the property (looking at whether the subsequent grantee was a bona fide purchaser), and (ii) whether an oil and gas lease had expired pursuant to its terms.  It answered both in the affirmative.  (See Case No. 09-MO-2).

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The National Journal has an interesting article observing that plaintiffs lawyers are looking for work in the Marcellus Shale:  "The sound of drills piercing the Marcellus Shale formation has pricked up the ears of attorneys whose practices range from tax and regulatory to land use and environmental. But personal injury lawyers and class action attorneys have also taken notice of what some believe is an environmental disaster in waiting because of a lack of state government oversight and a natural gas industry rushing to get a piece of the shale."

You knew it was coming ...

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The Philadelphia Inquirer has a couple of articles to note:

• Pa.'s Natural Gas Rush, and
• Shale-gas regulation near river divides Pa.

You might take a look.

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The WSJ has a good article on the potential of shale gas.  "What has become known as the "unconventional-natural-gas revolution" has turned a shortage into a large surplus and transformed the natural-gas business, which supplies almost a quarter of America's total energy. This revolution has arrived, moreover, at a moment when rising oil prices, sparked by turmoil in the Middle East, and the nuclear crisis in Japan have raised anxieties about energy security. Government and producers alike have turned their attention back to domestic resources."

Read it.

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From CNBC:  "Energy Output From Shale Rock Could Match 20th Century Oil Boom."  Best line - "You can't leave 160 billion barrels in the ground."

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Reason Online has a good article making the case for increasing domestic oil production:  "Oil is the world’s most critical and scarce energy resource. Only oil is easily divisible, transportable, and vital for most transportation. Japan’s shuttered nuclear plants mean new demand for more millions of barrels of fuel oil to generate electricity for its cities and factories. Libyan oil production will now be shut down for months or years. There is almost no spare capacity in world production."  Take a look.

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The Houston Chronicle has an interesting article on the potential boost being given the Pickens plan:  "After spending nearly three years and more than $80 million of his own money to tout his energy plan, T. Boone Pickens says he's finally about to have something to show for his efforts. *** The measure, called the NAT GAS Act, aims to boost use of natural gas as a fuel in the transportation sector. Lasting five years, it would provide vehicle tax credits to buyers of vehicles powered by natural gas, giving automakers greater incentive to build them."  Interesting.

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The Intelligencer has an article on the possible drilling in Ohio:  "'The economies around us are benefiting from drilling. You see it in Pennsylvania, it's real; you see it in West Virginia, it's real. Now it's here, and we have to grasp the opportunity,' said state Sen. Wilson, D-Columbiana. 'I think this is the biggest opportunity for job growth for eastern Ohio we have seen in a generation.'"

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