Delaware River Basin Commission to consider fracking ban

On Wednesday, the Delaware River Basin Commission voted to begin the rule making process that could lead to a fracking ban in parts of New York, New Jersey, Pennsylvania, and Delaware. The Commission, which regulates the Delaware River watershed and is comprised of members from each of the above states and a representative from the U.S. Army Corps of Engineers, now has until November 30 to draft its proposal.

The Delaware River watershed encompasses parts of New York, New Jersey, Pennsylvania, and Delaware and provides drinking water to millions of people in the four states. It also encompasses territory rich in oil and gas, particularly in Northeast Pennsylvania. The proximity of the two interests—drinking water and oil and gas—has produced longstanding debate over the region’s use.

On Wednesday, New York, Pennsylvania, and Delaware voted to begin the rule making process. New Jersey abstained, and the U.S. Army Corps of Engineers voted against the process. The 3-1-1 result is enough for consideration of a ban, and Commission staff will set to work on a proposal, which ultimately will be subject to public comment and hearings.

Industry decried the Commission’s decision, and has long questioned the Commission’s authority to regulate the region’s oil and gas. Litigation pending in the federal Third Circuit could address the Commission’s powers concerning resource development. In the meantime, industry considers the proposal unnecessarily duplicative of federal and state efforts already making the area safe for development.

The region has been under a fracking moratorium since 2010, when the Commission began exploring fracking’s impacts on the area. Any ban is unlikely to take effect until 2018.

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INEOS granted second UK exploratory drilling permit

On 18 July 2017, INEOS was granted an environmental permit to drill an exploratory borehole to take core shale samples at a site near Common Road, Harthill, South Yorkshire. It was the second permit granted by the Environment Agency (EA) to INEOS in less than three weeks after a similar ‘standard rules’ permit was approved on 29 June 2017 for another site near Bramleymoor Lane, Marsh Lane, North Derbyshire.

Despite the protests of environmental campaigners, the EA was keen to stress that the permit only consents for INEOS to carry out drilling and waste management at the site as a means of taking rock samples but “it does not allow fracking.”

INEOS was not required to carry out an environmental impact assessment for either site as part of the previous planning permission process. However, the EA made it clear that standard rules permits are only issued to companies that demonstrate they understand and can manage risks to people and the environment.

These permits were issued in the context of Cuadrilla’s ongoing legal battle to resume hydraulic fracturing at its Preston New Road site in Lancashire and are being regarded by the shale industry as a key stepping stone for fracking taking place in England again for the first time since 2011.

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US BLM plans to rescind Obama-era fracking rule

The US Bureau of Land Management on Tuesday issued a proposed rule that would rescind Obama-era fracking regulations. The regulations, which were promulgated in 2015 and related to hydraulic fracturing on federal and tribal lands, had never taken effect.

In March 2015, the BLM, then under the Obama administration, issued a final rule that imposed limits and reporting requirements on operators fracking federal and tribal lands. The regulations, which focused on well casing, wastewater storage, and disclosure of chemicals used in fracking operations, were widely decried by industry.

The rule was blocked in late 2015, before it could take effect, and in June of last year a federal district court judge overturned the rule, stating the BLM exceeded its authority in issuing the rule in light of the fact that Congress never directed the agency to regulate fracking. The BLM appealed, but the recent change in administrations led the BLM to ask for more time to reconsider the rule.

On Tuesday, the BLM’s review was complete, and it proposed rescinding the rule. It found the rule “unnecessarily duplicative” of state and tribal regulations. It also found that the rule imposed burdensome requirements and unjustified costs on industry.

The BLM is requesting comments on the planned rescission, which comments are due by September 25.

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More production cuts possible in Europe’s Groningen gas field due to earthquakes

Authorities in the Netherlands have proposed more production cuts in the Groningen gas field, Europe’s largest, in response to earthquake concerns. The cuts would limit production by another 10%, in addition to cuts that have already taken effect, with intent to further reduce the number of earthquakes occurring in the country’s north.

For decades, the Groningen has been a key industry asset, successfully developed by major players in the oil and gas space. However, in the early nineties, the region—one with no previous history of earthquakes—began experiencing seismic activity. The number of earthquakes grew until 2013, and the Dutch government intervened in early 2014 to reduce the number of earthquakes through production limits. Since the intervention, the number of earthquakes occurring per annum has declined, and Groningen’s gas production has been reduced by more than half.

The majority of earthquakes in the Groningen register low magnitudes, between 1.5 and 2 on the Richter scale. Occasionally, a more noticeable (though still low-magnitude) earthquake surfaces, like the magnitude 3.6 earthquake felt in 2012. The structures in the region were not designed to withstand even such low magnitude earthquakes, leading to damage.

More than 80,000 damage claims have been filed by local residents, and industry and the government have established funds aimed at compensating residents, strengthening structures, and stimulating the economy.

Regarding the latest proposed cuts, industry warns that continued changes to production limits could threaten the profitability of the project.

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Texas task force notes benefits of fracking, calls for more data

The Task Force on Environmental and Community Impacts of Shale Development in Texas on Monday released a 204-page report analyzing fracking’s impacts on the state. The Task Force, a group sponsored by The Academy of Medicine, Engineering and Science of Texas and comprised of individuals from varied backgrounds in the energy and environmental community, lauded the economic benefits of fracking but also called for better oversight of its effects.

The report first notes the revolution that was the shale boom—that is, the proliferation of horizontal drilling and multi-stage hydraulic fracturing in the oil and gas industry—and the significant economic and other benefits the revolution has had for Texas, the United States, and other parts of the world. In particular, the revolution has opened access to vast new supplies of natural gas that in many areas are changing the way we generate power.

The report goes on to identify six areas of impact the Task Force studied regarding fracking’s potentially negative effects and to analyze each area in turn. The six areas are:

  1. Geology and Earthquake Activity
  2. Land Resources
  3. Air Quality
  4. Water Quantity and Quality
  5. Transportation, and
  6. Economic and Social Impacts.

Across these areas, a common theme emerged—the need for more and better data and “easier and wider access” to that data. Texas is a large geographic area and accordingly complex. There is no doubt, per the Task Force, that fracking affects the earth, the resources, and the lives around it. But in such a complex environment, the need for more comprehensive data to study the nature of fracking’s impacts and to eliminate extraneous impacts is paramount.

Of specific note, the Task Force found that in light of the depth separation between oil-bearing and drinking water zones in Texas, “[d]irect migration of contaminants from targeted injection zones is highly unlikely to lead to contamination of potential drinking water aquifers.” Instead, surface spills or leaks pose the dominant fracking-related risk to water resources.

The report, while extensive, does not close the book on fracking research. As the Task Force noted, “This study aims to help all Texans better understand what is and is not known about the impacts of shale oil and gas development in Texas, and offer recommendations for future research priorities.”

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Latest USGS study finds fracking is not a current threat to drinking water

In a study published May 31, 2017, the United States Geological Survey concluded that unconventional oil and gas production in the Eagle Ford, Fayetteville, and Haynesville shale formations is “not currently a significant source of methane or benzene to drinking water wells.”

Researchers sampled over one hundred drinking-water wells in the frack zones of Texas, Louisiana, and Arkansas. This produced two key observations about the quality of the water. First, over 90 percent of the wells containing methane had concentrations below the government’s proposed threshold of 10 milligrams per liter. And even then, “most of the methane detected in groundwater was from naturally occurring microbial sources at shallow depths rather than deep shale gas.” Second, just 9% of the wells contained any benzene and the highest concentration of benzene was about 40 times lower than the federal standard for drinking water.

While this study should encourage fracking operators, the USGS stopped short of stating that the study proves that fracking is safe. One new technique used in the study allowed the researchers to determine the age of the water in the aquifer. This new technique demonstrated, for example, that the groundwater in Texas and Louisiana tends to be very old—several thousand years at least. Thus, the benzene in that water could not be sourced from fracking activities in the last decade. This is consistent with the energy industry’s broader position that much of the methane and chemicals found in water near fracking sites occurs naturally. But the researchers also learned that the timetables for different aquifers vary dramatically, causing the USGS to conclude that while fracking is not a current source of pollutants in groundwater, it may take decades to understand the full effect of fracking on aquifers.

For now, this study is another blow to those claiming that fracking has caused widespread drinking water contamination and may serve as a powerful companion to the EPA’s study from last year finding that fracking does not lead to “widespread, systematic impacts on drinking water resources in the U.S.” Whether the USGS study is similarly attacked remains to be seen.

“Crude and imperfect” expert report enough to survive summary judgment in Arkansas subsurface trespass

The 8th Circuit held on Monday, May 22, 2017, that the Arkansas district court abused its discretion when it granted summary judgment for the defendants in a subsurface trespass case. The appellate court instead held that the plaintiffs’ “crude and imperfect” expert report was not flawed to the point of exclusion and also held that, even without the report, the plaintiffs had raised a fact issue for the jury.

In 2009, Southwestern Energy approached the Stroud family seeking to use a plugged well on their property as a waste water injection site. The Strouds declined and Southwestern began injecting water on an adjacent property through a well located just 180 feet from the Strouds’ property line. All told, Southwestern injected 7.6 million barrels of waste water.

The Strouds sued Southwestern for trespass and unjust enrichment arguing that the waste water had migrated across the property line. The trial court ordered phased discovery, focusing first on the issue of “whether the waste fluid has migrated to the subsurface strata of the [Strouds’] real property.” At conclusion of that discovery, the trial court found the Stroud’s expert report too circular to support a jury finding and granted summary judgment for Southwestern.

The 8th Circuit held that the discovery order was not an abuse of discretion and affirmed the principle that “a district court must be allowed the discretion to limit the scope of discovery to what the court [perceived are] the central issues.”

But, on de novo review of the summary judgment ruling, the 8th Circuit disagreed with the trial court, holding that fact issues prevented summary judgment.

The factual question is whether the injected waste water crossed the Strouds’ property line. The Strouds’ expert concluded that waste water had crossed the line based on the assumption that the water migrated radially from the injection well. The trial court disregarded this approach because it “assumes the answer to the fighting issue.” In other, whether the waste water migrated radially was a key issue in the case, not something an expert could reasonably assume for purposes of other subsurface modeling.

Not only did the appellate court hold that the expert’s opinion—despite its apparent flaws—met the minimum standard for admissibility, it held that the Strouds presented a fact issue even without the expert’s opinion. The court based this holding largely on two facts. First, the fact that a landman initially approached the Stroud’s suggests a belief by Southwestern that the formation under the Stroud’s property is connected to that of the actual injection well. Second, the fact that the injection site property could hold just 1.1 million barrels—whereas Southwestern injected 7 times that amount—allows a jury to draw a reasonable inference that some of the waste water crossed the property line.

The 8th Circuit was critical of the plaintiffs’ evidence, at times describing it as “thin,” “crude,” and “rough.” It remains to be seen whether that evidence will develop through further phases of discovery and how the parties will approach a potential trial.

The style is Dale Stroud et al. v. Southwestern Energy Co. et al. It is case number 15-3458 in the US Court of Appeals for the Eighth Circuit.

US BLM asks 10th Circuit to pause review of Obama-era fracking rule

On Friday, the US Bureau of Land Management asked the Tenth Circuit to pause its review of an Obama-era rule on fracking. The rule, if implemented, would restrict fracking practices on federal and tribal lands.

The move comes at a time when the BLM and other agencies are reconsidering their positions in light of the new administration.

In June of last year, a federal district court judge overturned the rule, stating the BLM exceeded its authority in issuing the rule in light of the fact that Congress never directed the agency to regulate fracking. The BLM appealed, but now finds itself under new leadership and questioning its stance on the rule.

In its latest brief, the agency defended its ability to promulgate rules like the one at issue, stating “the district court made a serious and consequential error about federal authority and the interpretation of statutes.” But the BLM also asked the Tenth Circuit to allow it time to reconsider its stance on the rule: “The most efficient means of resolving this case—for all involved parties and for the court—is to wait until BLM has finished the process of reconsidering the Hydraulic Fracturing Rule.”

The rule, which was issued in March 2015 and blocked later that year, imposes on industry rigorous well casing and wastewater storage requirements. It also requires industry to disclose chemicals used in fracking operations.

If the court grants the BLM’s abeyance request, the agency noted in its brief, federal and tribal lessees will continue to operate under pre-rule regulations, as they have since the rule was blocked.

Opponents of the rule and environmental groups have until June 5 to file their responses.

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UK High Court dismisses challenge to fracking planning permission

On 12 April 2017, the High Court dismissed a judicial review application challenging the decision of the Secretary of State for Communities and Local Government, Sajid Javid, to allow fracking in Lancashire.

As reported in our blog of 22 November 2016, community group ‘Preston New Road Action Group’ (PNRAG) brought the application for judicial review of the decision to grant planning permission for fracking at the site near Little Plumpton, Lancashire (the Plumpton Site) under section 288 of the Town and Country Planning Act 1990. The challenge was based on grounds that the decision to grant the planning permission was unfair and unlawful.

It was submitted that the planning inspector’s decision to approve the Plumpton Site was flawed because it was based on arguments that were made after final submissions, and that the decision did not take into account greenhouse gas emissions associated with the fracking.

Mr Justice Dove, however, held that none of the arguments raised by PNRAG were of substance and therefore was obliged to dismiss the appeal.

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Northern Cross sues Yukon over fracking moratorium

Earlier this month, Northern Cross Limited, a company based in the western Canadian territory of Yukon, sued the Yukon government over its moratorium on fracking.

The company, which has been exploring the Eagle Plains region in the north of the territory, says the moratorium is a de facto “expropriation” of the company’s oil and gas interests.

The company owns fifteen exploration permits in the Eagle Plains area and has identified a wealth of unconventional resources in the region—resources that would require hydraulic fracturing to extract, the company’s Statement of Claim says.

The Yukon government, however, banned fracking in all but the southeast portion of the territory in 2015, and in 2016 a new government rose to power in part on its promise to ban fracking throughout the territory.

In total, Northern Cross claims damages of $2.2 billion Canadian, $1.8 billion of which it identifies as fair market value for resources proven to exist on the lands.

Northern Cross notes that it has always made plain its plans for unconventional resources on the lands, and that the government gave no warning of an impending moratorium.

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