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

The WSJ is reporting that the Securities and Exchange Commission (SEC) has started asking operators for more information regarding their use of hydraulic fracturing:  "The Securities and Exchange Commission is asking oil and gas companies to provide it with detailed information—including chemicals used and efforts to minimize environmental impact—about their use of a controversial drilling process used to crack open natural gas trapped in rocks."

No reason to be surprised, given other moves by U.S. EPA and others ...

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IHS Cambridge Energy Research Associates (IHS CERA) has issued a new report calling for the re-evaluation of greenhouse gas emissions estimates prepared by U.S. EPA.  From the CERA website:  "The estimates are based on assumptions that do not reflect current industry practice and should be reevaluated, the reports says. *** 'Estimates are being used that are not supported by data, do not reflect current industry practice and would be unreliable to use as a base for decision-making.'"  For more, including a copy of the report, see here.

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The U.S. Geological Survey recently released an updated survey on recoverable reserves in the Marcellus.  From The Hill:  "According to the updated USGS mean estimate, the area contains 84 trillion cubic feet of technically recoverable natural gas and 3.4 billion barrels of natural gas liquids.  *** The new estimate for the Marcellus Shale — which includes portions of New York, West Virginia and other states — is far higher than the 2002 survey, when the mean estimate was 2 trillion cubic feet of natural gas and 10 million barrels of natural gas liquids."  However, according to Bloomberg:  "The U.S. will slash its estimate of undiscovered Marcellus Shale natural gas by as much as 80 percent after a updated assessment by government geologists."

You can find a copy of the updated survey here.

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We thought you might be interested in these items on regulatory initiatives addressing Marcellus development in West Virginia:

• From the Houston Chronicle:  "Another factor that could help lawmakers: the emergency Marcellus rules ordered earlier by acting Gov. Earl Ray Tomblin. The Department of Environmental Protection could issue them as soon as this week, according to state officials and stakeholders. *** These rules are expected to cover several key areas. One involves permits for the horizontal drilling method that often accompanies Marcellus development. Another is oversight of the large volumes of water withdrawn from area supplies, and of the chemicals mixed with that water before it is pumped underground to break up the shale and release the gas. Environmental groups remain concerned about this hydraulic fracturing process, also known as fracking, and the large pools of tainted water left over afterward."

• From the West Virginia Department of Environmental Protection:  "The West Virginia Department of Environmental Protection, *** filed an emergency rule today with the Secretary of State’s Office to increase the DEP’s regulatory oversight of horizontal well development in the state. *** The rule, which adds new permit application requirements for operators drilling horizontal gas wells, as well as new operational rules to protect the state’s water quality and quantity, will become effective after approval by the Secretary of State and remain in effect for 15 months."  You can find a copy of the rule here.

Interesting.

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That's according to an article in the Philadelphia Inquirer on complaints regarding water withdrawals by operators in Pennsylvania.  "Public confusion about where the drillers can legally withdraw water in the summer - and where it is banned - has caused an increase in complaints to the SRBC [i.e., the Susquehanna River Basin Commission]. *** Withdrawals that the public reports as suspicious turn out to be legal pumping by municipal road crews, garden centers, and nurseries that are allowed to withdraw small amounts of water. Gas drillers have sufficient, metered withdrawal points to meet their needs."

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The Vermont Supreme Court found that circumstantial evidence of benzene exposure allegedly causing cancer was insufficient to allow a jury to determine causation.  The case was co-counseled by Vorys lawyer Joe Lonardo.  The case, Blanchard v. Goodyear Tire & Rubber Co. can be found here.  A more thorough description of the case can be found at the Vorys toxic tort weblog.

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We reported previously on a Cornell study claiming that natural gas development will likely contribute more to global warming than burning coal (see here).  The Patriot-News is now reporting on the conclusions reached by scientists at Carnegie Mellon University:  "The peer-reviewed study published Aug. 5 in 'Environmental Research Letters' appears to be a direct refutation of an April study from researchers Robert Howarth and Anthony Ingraffea at Cornell University that indicated that shale gas was worse for global warming than coal."  Looking specifically at Marcellus shale development, it finds that "Marcellus gas is essentially no different than conventional natural gas, the study found, and 20-50 percent cleaner than coal for producing electricity."

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The Department of Energy (DOE) has released its 90-day report on shale gas development finding, on balance, that federal and state regulatory programs are effective in protecting the public.  The report goes on to make several recommendations, focusing largely on improving the public's perceptions.  You can find a copy of the report here.

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The WSJ is reporting that New York State's Attorney General has issued subpoenas to several producers seeking valuation information:  "New York state's Attorney General recently issued subpoenas to several energy companies requesting details of how they value their natural gas discoveries, the latest evidence of increasing regulatory scrutiny of gas drillers."  Does this increase or decrease the likelihood that producers will want to enter New York, if and when the moratorium on hydraulic fracturing ends?

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The Times Leader is reporting on a recent industry win overturning Morgantown's ban on Marcellus shale drilling.  "On Friday, Monongalia County Circuit Court Judge Susan Tucker delivered a victory to Charleston-based Northeast Natural Energy in its legal battle with the city of Morgantown. *** Northeast is drilling wells above the Monongahela River about a mile from a city drinking water intake. Citing concern over its water supply and the lack of tough state regulations, the City Council passed an ordinance in June to ban deep horizontal drilling and hydraulic fracturing within city limits and up to a mile beyond.*** Tucker sided with Northeast, declaring the state has sole regulatory authority over oil and gas operations."  Nice.

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The Billings Gazette has an interesting update on development of the Niobrara shale.  It starts:  "Development of the oil-rich underground zone has cooled as testing of the geology and consolidation of interests in the play slowed action in the state’s southeast counties of Laramie, Platte and Goshen, said Michael Bodino, head of energy research for Global Hunter Securities LLC."  The overall message though - Don't give up yet!

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At least, those are the results of a Quinnipiac University survey according to the NY Post:  "The Quinnipiac University survey found state voters back the drilling, 47-42 percent, with majority support in both the suburbs, 52-35 percent, and upstate, 51-39 percent."  Who opposes drilling in NY?  "City voters."  No surprise there.

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The Energy Information Administration (EIA) has released its Short-Term Energy Outlook for August 2011 finding, among other things:  "Natural gas working inventories ended July 2011 at 2.8 trillion cubic feet (Tcf), about 7 percent, or 194 Bcf, below the 2010 end-of-July level. EIA expects that working natural gas inventories will build strongly, approaching last year's high levels by the end of this year's inventory build season. The projected Henry Hub natural gas spot price averages $4.24 per million British thermal units (MMBtu) in 2011, $0.15 per MMBtu lower than the 2010 average. EIA expects the natural gas market to begin tightening in 2012, with the Henry Hub spot price increasing to an average of $4.41 per MMBtu."  (Emphasis is ours.)

For more, see here.

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On July 21, 2011, Citizens For Pennsylvania’s Future (“CPF”) filed a lawsuit against Ultra Resources, Inc. (“Ultra”) in the United States District Court for the Middle District of Pennsylvania alleging that Ultra violated the Clean Air Act ("CAA") by not applying for and obtaining the proper permit to construct and operate its natural gas wells, pipelines, compressor stations and associated equipment in Tioga County and Potter County, Pennsylvania.  The central issue is whether all of Ultra's equipment involved in its natural gas production operations should be aggregated for air permitting purposes, which would impose significantly more stringent permitting, recordkeeping and reporting requirements on Ultra.

We will monitor the suit and keep you posted.

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Earth Justice recently filed a citizen suit petition under TSCA asking the USEPA to regulate the chemical substances and mixtures used for oil and gas exploration and production ("E&P").  They seek to have manufacturers and processors of E&P chemicals conduct testing of all chemical substances and mixtures, submit existing health and safety studies and identify chemicals and mixtures used during E&P.  The petition can be found here.

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USEPA announced today the first grants awarded under the Great Lakes Restoration Initiative. . . with $4.5 million awarded to Ohio organizations, agencies and universities.  Today's press release can be found here.  Grant recipients include:

· $1,348,595, University of Toledo (Maumee River Area of Concern—Wolf Creek passive treatment wetland).

· $498,612, Wayne State University (Toledo Harbor invasive species early warning system pilot project).

· $242,837, Ohio Environmental Council (Lake Erie Lakewide Management Plan public engagement).

· $331,669, The Nature Conservancy (Phragmites control on western Lake Erie shoreline).

· $151,000, Delta Institute (Cleveland and Toledo e-waste reduction).

· $425,160, Cleveland-Cuyahoga County Port Authority (Cuyahoga River Area of Concern debris management system).

· $369,472, Cleveland Metroparks (Invasive plant control in Cuyahoga River Basin).

· $294,693, Cleveland Metroparks (West Creek ecosystem restoration).

· $546,417, Ohio EPA (Lake Erie nutrient reduction).

· $177,688, Ohio EPA (Fish deformity analysis).

· $122,429, Ohio EPA (Ohio Lake Erie Phosphorus Task Force).

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Mandatory pooling is back on the table for consideration in Pennsylvania - at least in part.  "[T]he Marcellus Shale Advisory Commission has revived a debate over whether to allow areas of Pennsylvania rich with natural gas to be gathered into large land 'pools,' even against property owners' wishes."  (From the Pittsburgh Post-Gazette.)  The new proposal appears to have a strange twist, though:  "Only drilling companies would be forced to allow pooling, not property owners who haven't signed leases."

Better than nothing?

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The Philadelphia Inquirer is reporting that Dominion Resources is building a $500 million natural gas processing plant in West Virginia:  "The Richmond, Va., energy company announced Thursday that it would construct a processing and fractionation plant along the Ohio River in Natrium, W. Va., that would separate propane, butane, and ethane from gas extracted from the Marcellus Shale formation and, increasingly, the deeper Utica Shale."

For a copy of the press release, see here.

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From NPR:  "The rise of fracking as a method for extracting natural gas from shale rock has triggered demand for a key ingredient in the process: silica sand. In parts of the upper Midwest, there's been a rush to mine this increasingly valuable product."  And without the gratuitous attacks on the industry ...  Really.  Interesting.

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So says the NYT public editor about yet another NYT article on the dangers associated with U.S. shale production:  "In the article and in the document viewer, readers never learn the actual positions or identities of the e-mail senders, who are characterized using descriptors like 'official,' 'energy analyst,' 'federal analyst,' 'senior adviser' or 'senior official.' Nowhere is an e-mailer characterized as an 'intern.'"  (Emphasis is ours.)  What's happened to the paper of record?

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The Pennsylvania Patriot-News has an interesting article on Europe's interest in the Marcellus:  "Ever since New York state declared a moratorium on drilling for natural gas in the Marcellus Shale, the conventional wisdom has been it was watching Pennsylvania and learning from us.  It turns out other eyes are watching us as well. *** Markus Wailand, a film producer from Vienna, recently spent 10 days interviewing people involved with Marcellus drilling in Pennsylvania for what he called Austria’s version of '60 Minutes.'"

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