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

That aphorism comes to mind when considering U.S. EPA's new proposal to reduce air emissions from oil and gas operations. From its press release: "Today’s proposal would cut smog-forming volatile organic compound (VOC) emissions from several types of processes and equipment used in the oil and gas industry, including a 95 percent reduction in VOCs emitted during the completion of new and modified hydraulically fractured wells."  But - it really helps industry make money:  "EPA’s analysis of the proposed changes, which also include requirements for storage tanks and other equipment, show they are highly cost-effective, with a net savings to the industry of tens of millions of dollars annually from the value of natural gas that would no longer escape to the air."  Really!  Thank goodness they're looking out for at your pocketbook.  (Emphasis is ours.)

You can find a copy of the rule package here.

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The Energy Information Administration recently commissioned INTEK, Inc., to assess the technically recoverable onshore shale gas and shale oil resources of the lower 48 states as of January 2009.  Among other things, INTEK found:

Eighty-six percent of the total 750 trillion cubic feet of technically recoverable shale gas resources identified in Table 1 are located in the Northeast, Gulf Coast, and Southwest regions, which account for 63 percent, 13 percent, and 10 percent of the total, respectively. In the three regions, the largest shale gas plays are the Marcellus (410.3 trillion cubic feet, 55 percent of the total), Haynesville (74.7 trillion cubic feet, 10 percent of the total), and Barnett (43.4 trillion cubic feet, 6 percent of the total).

Very interesting.  For more, see here.

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The WSJ has a good article on the substantial impact environmental politics can have on a state's oil and gas - and job - development.  Comparing Pennsylvania and New York, it observes:  "More than 2,000 wells have been drilled in the Keystone State since 2008, and gas production surged to 81 billion cubic feet in 2009 from five billion in 2007. A new Manhattan Institute report *** estimates that a typical Marcellus well generates some $2.8 million in direct economic benefits from natural gas company purchases; $1.2 million in indirect benefits from companies engaged along the supply chain; another $1.5 million from workers spending their wages, or landowners spending their royalty payments; plus $2 million in federal, state and local taxes. Oh, and 62 jobs."

But, consider Pennsylvania's northern neighbor, which has in effect imposed a moratorium on Marcellus drilling:  "Consider New York's Broome County, which borders Pennsylvania and from which you can spot nearby rigs. The county seat of Binghamton ought to be a hub for shale commerce, but instead its population is falling as its young people leave for jobs elsewhere."  (Emphasis is ours.)

Read it all.  Especially if you're a policymaker.

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We've previously noted the substantial benefits of local production.  The Republic discusses yet another example, this time in New Mexico:  "Although the boom isn't expected to last, it's the latest sign of an uptick in New Mexico oil production despite ongoing debate over the state's environmental regulations. Oil production in New Mexico during the just-ended fiscal year had increased by more than 4 percent. *** Every $1 increase in crude oil prices generates $4 million in revenue for state coffers over the course of a year."  (Emphasis is ours.)

Useful in a slow economy?

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The PA Marcellus Shale Advisory Commission has issued its final report on natural gas drilling in the state.  According to the press release, it contains 96 policy recommendations that include increasing setback distances, making more information available to the public, imposing tougher civil and criminal penalties for violations of law, and at the same time assisting local companies do business with the natural gas industry.

You can find a copy of the report here.

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Maybe not the best thing to do when you are concerned about rolling blackouts due to increased cooling demand during a heat wave:  "Mayor Gives $50 Million to Anti-Coal Campaign" (NYT).  To do what?  "Expressing frustration with the paralysis at the national and international levels on setting policies to combat climate change, Mayor Michael R. Bloomberg announced on Thursday that he would donate $50 million to the Sierra Club’s campaign to shut down coal-fired power plants across the United States."  (Emphasis is ours.)

Why don't they turn off their air conditioning for a couple of days, just to see what it's like first?

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We've reported previously on various economic impact studies done showing the benefits of local oil and gas development (for example, see here (Oklahoma); here (West Virginia)).  The Philadelphia Inquirer is reporting on an updated study for Pennsylvania:  "'Our estimates suggest that in 2020 the Marcellus industry in Pennsylvania could be creating more than $20 billion in value added, generating $2 billion in state and local tax revenues, and supporting more than 250,000 jobs,' said the authors associated with Penn State's department of energy and mineral engineering."

Not bad at all.

[Update:  You can find a copy of the report here.]

[Link now fixed.]

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We've reported previously on studies of air emissions from natural gas sites in the Fort Worth, TX, area (see here, e.g.).The city of Fort Worth recently released the final report on a study focused on air pollution issues surrounding natural gas exploration in the area, finding:

While Fort Worth residents are exposed to these and other pollutants released from natural gas sites, the measured and estimated air pollution levels did not reach levels that have been observed to cause adverse health effects.  Further, the measured benzene and formaldehyde levels in Fort Worth were not unusually elevated when compared to levels currently measured by TCEQ elsewhere in Texas.

For more, including a copy of the report, see here.

[Update:  The Fort Worth Star-Telegram finds that the study is not credible when it comes to its criticisms of compressor emissions because it relied solely on modeling of what could happen, rather than what actually happens, in the field.  Interesting.]

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Earlier this week, acting West Virginia Governor Earl Ray Tomblin issued Executive Order No. 04-11 requiring the state's Department of Environmental Protection to develop rules regulating Marcellus Shale production.  "The rules will focus mostly on the 'fracking' process, in which millions of gallons of water are mixed with chemicals and pumped underground to fracture shale deposits. Among other things, the regulations will make companies that withdraw more than 210,000 gallons of water a month disclose the list of additives used in frack fluid, and file a water management plan with the DEP."  - from the Charleston Gazette.

We will post a copy of the order once we obtain it.

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We all will likely be reading and hearing more about a US House Bill (H.R. 2018) coming before the full House for a vote - the bill purports to "bring the federal water quality permitting process back to center and help ensure a more stable, clear, and equitable national clean water program."  Find a Press Release here that explains in more detail what is being proposed. 

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ASTM has issued a new standard dealing with Continuing Obligations for contaminated properties -- what to do after a Phase 1 identifies recognized environmental conditions that are not all fully remediated.   More information on the standard can be found at:  www.astm.org/Standards/E2790.htm  The standard is intended to provide procedures to help users satisfy continuing obligations applicable to CERCLA's "innocent landowner", "contiguous property owner" and "bona fide prospective purchaser" protections.

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USEPA has announced that it will revoke part of a Bush era RCRA hazardous waste exemption for recyclables. If you took advantage of the exemption in the past few years - this change could be a big deal. The 232 page proposed rule is attached and will open for comment once this hits the Federal Register.

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The Wheeling Intelligencer has a free-market/regulatory success story for Ohio taxpayers (resulting in large part from cross-state regulatory program differences):  "For months, Pennsylvania gas drillers tapping into the Marcellus Shale have been shipping the hydraulic fracturing, or fracking, waste to eastern Ohio. The Buckeye State is on pace to gain nearly $1 million in fees from out-of-state drillers for accepting the brine."

Of course, there are the usual statements regarding environmental fears.  Still, interesting.

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Ohio ranks in the top 10 of most attractive places for oil and gas investment worldwide according to a Calgary-based global petroleum survey (from this article in RigZone):  "The states in the top 10 were deemed as having attractive commercial and regulatory climates, and were described by survey respondents as having stable and predictable regulatory framework, favorable corporate taxation systems and being energy-friendly with rich resources."

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Ohio has created an Oil and Gas Leasing Commission to encourage the productive development of state lands.  Among other things:  "After the effective date of the rules [to be issued], [the Act] generally requires the state agency that owns or controls the parcel of land that is the subject of a nomination approved by the Commission to enter into a lease with the Commission's selection of the highest and best bidder."  (From the bill analysis.)

For a copy of the legislation, see here (HB 133).

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The Philadelphia Inquirer is reporting on the possibilities a shale gas revolution can bring to the state:  For example, "Power plants could consume more gas to produce electricity, displacing coal. Natural gas vehicles might replace some diesel and gasoline transport. A few entrepreneurs are even talking about shipping liquefied gas to overseas markets."

Read it all.  Interesting.

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Ohio's Governor Kasich signed Amended Substitute House Bill Number 153 (HB 153) on Thursday amending several significant provisions of Ohio's oil and gas conservation laws.  HB 153, for example, clarifies that production operations in Ohio include "all operations and activities and all related equipment, facilities, and other structures that may be used in or associated with the exploration and production of oil, gas, *** including operations and activities associated with site preparation, site construction, access road construction, well drilling, well completion, well stimulation, well site activities, reclamation, and plugging."  See 1509.01(AA).

It also clarifies that the Division of Oil and Gas Resources Management has, with only limited exceptions, sole and exclusive authority over all aspects of oil and gas E&P operations in Ohio: 

There is hereby created in the department of natural resources the division of oil and gas resources management, which shall be administered by the chief of the division of oil and gas resources management. The division has sole and exclusive authority to regulate the permitting, location, and spacing of oil and gas wells and production operations within the state, excepting only those activities regulated under federal laws for which oversight has been delegated to the environmental protection agency and activities regulated under sections 6111.02 to 6111.029 of the Revised Code. The regulation of oil and gas activities is a matter of general statewide interest that requires uniform statewide regulation, and this chapter and rules adopted under it constitute a comprehensive plan with respect to all aspects of the locating, drilling, well stimulation, completing, and operating of oil and gas wells within this state, including site construction and restoration, permitting related to those activities, and the disposal of wastes from those wells.

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The New York Department of Environmental Conservation (NY DEC) has released a series of documents related to its Preliminary Revised Draft Supplemental Generic Environmental Impact Statement (SGEIS) issued in September 2009.  From the Executive Summary:  "The final SGEIS will apply statewide, except in areas that the Department proposes should be off-limits to surface drilling for natural gas using HVHF technology. As explained below, these areas include the watersheds associated with unfiltered water supplied to the New York City and Syracuse areas pursuant to Filtration Avoidance Determinations issued by the U.S. Environmental Protection Agency ('EPA'), reforestation areas, wildlife management areas, state parks, and 'primary' aquifers as defined by State regulations, and additional setback and buffer areas."

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