HBW Resources: Ollison Fracking Report
Below is a summary of publicly available activities currently underway at the federal, state and international levels that could impact the use of hydraulic fracturing for oil and gas extraction. With numerous state legislatures now in session, HBW Resources is monitoring these activities to ensure that responsible and feasible policies based on sound science are advanced.
State Legislative Update
Please see linked spreadsheet for an updated listing of state legislation dealing with hydraulic fracturing.
Two environmental groups, the Center for Biological Diversity and the Sierra Club filed suit against Secretary of the Interior Sally Jewell and the Bureau of Land Management asserting that the government auctioned oil-drilling leases on the land in December without sufficiently considering the dangers hydraulic fracturing, or fracking, poses to watersheds, endangered wildlife and air quality. The suit is attempting to protect an additional 17,000 acres of central California agricultural and ranch lands, located within part of the Monterey Shale formation, from fracking.
Anticipating that new drilling techniques will make it possible to tap vast oil reserves thought to be unrecoverable, a Los Angeles-based oil company has been aggressively securing mineral rights beneath thousands of acres of Ventura County land.Vintage Petroleum, a subsidiary of Occidental Petroleum, has entered in 192 lease agreements over the past six months in deals involving at least 9,000 acres.
Fort Collins Council members delayed once again an ordinance that would lift a citywide moratorium on oil and gas operations as it applies to Prospect Energy LLC, which operates in the Fort Collins Field on the northeast edge of the city. The ordinance is up for a second and final reading. Prospect Energy, a subsidiary of Denver-based Black Diamond Minerals, signed an agreement with the city in March that exempts it from the ban on fracking as it pertains to its long-standing work it the Fort Collins Field. But the agreement also applies to a 2-square-mile area near the Anheuser-Busch brewery known as the underdeveloped area, or UDA. The Council delayed a decision until May 21.
The Florida House passed a bill that will require companies to disclose what chemicals they use when they explore for oil and gas using the controversial extraction process. HB 743, “Fracturing Chemical Usage Disclosure Act” introduced by Rep. Ray Rodrigues (R, District 76) passed by a vote of 92-19. A similar bill is being considered in the Senate. Following the vote, the House delayed action on HB 745, which would have prevented public disclosure of fracking chemicals classified as part of trade secrets.
U.S. Representative John Shimkus (R, IL 15), Chairman of the House Energy & Commerce Subcommittee on Environment and the Economy, wrote an Op-Ed, “Fracking will Boost our Rural Economy” in the McLeansboro Times-Leader.
The State Board of Canvassers approved an amended ballot petition by the Committee to Ban Fracking in Michigan. The petition proposes to amend the Natural Resources and Environmental Protection Act to prohibit the use of horizontal hydraulic fracturing in the state of Michigan. The proposal would also ban frack wastes and eliminate the state’s policy codified into current law ‘fostering’ the oil and gas industry and maximizing production.
The Broome County Town of Sanford has rescinded a rule that banned public discussion of fracking at town board meetings. The Natural Resources Defense Fund had filed suit against the town after it prohibited residents from speaking about the drilling technique during the board meeting’s public comment period. Residents are now allowed to submit their comments on fracking to the town clerk for review.
Gov. Cuomo has come up with yet another excuse for delaying a decision on allowing fracking for natural gas in New York’s Southern Tier: He’s afraid the Legislature will stop him. At least that’s what Cuomo told a high-level meeting of state business leaders at the Executive Mansion just a few weeks ago, when he was pressed on why he wouldn’t green-light a process that even his own state Health Department said was safe and that his Environmental Conservation Department said will create tens of thousands of jobs in one of the poorest areas of the state.
In a letter toGovernor Cuomo, the head of the Independent Oil and Gas Association, said of the delays: “We are tremendously anxious that a profound misunderstanding and misrepresentation of the processes for indigenous natural gas production may now prevail in New York, rather than fair consideration based on science and real-world experience,” Brad Gill, executive director of IOGA, wrote.
Similar bills, commonly referred to as “CJ’s Law,” introduced in both the Assembly, A06220, and Senate,S3466, could eliminate the possibility of hydraulic fracturing in New York, no matter what Gov. Cuomo decides by placing onerous rules and regulations for any new drilling permit applicant.
A recent Quinnipiac University poll of 1,404 New York residents, found that voters are divided on drilling for natural gas with 42% in support because of the economic benefits while 46% oppose due to the environmental concerns. The poll also found that 72% – 20% of respondents believe that drilling for natural gas will create jobs but 54-16% believe that hydraulic fracturing will damage the environment.
HB 1134, sponsored by Rep. Todd Porter (R, District 34), Rep. Al Carlson (R, District 41), Rep. David Drovdal (R, District 39) and Sen. Kelly Armstrong (R, District 36), Sen. Stanley Lyson (R, District 1) and Sen. Rich Wardner (R, District 37) would grant a two-year tax exemption for gas that gets converted to electricity or processed into marketable liquids at drilling sites. The bill passed the House with a 84-7 vote and passed the Senate with a 46-0 vote.
The Muskingum Watershed Conservancy District approved separate proposalsto sell water from two district reservoirs to energy companies to help crack open the Utica Shale underneath much of eastern Ohio.These agreements represent the third and fourth agreements for short-term sales of water to the oil and gas industry that have been approved by the Board of Directors. The first two agreements were both in 2012, both were for slightly more than 7 million gallons total apiece, and both were sales to Gulfport Energy Co. for water from Clendening Lake in Harrison County. Those sales were fulfilled in the spring and fall through separate agreements, and involved temporary pipelines directly from the lake to a well site off of MWCD property about two miles away. The MWCD has pledged that any funds derived from the sales of water (to date nearly $135,000) will be placed into a separate account and dedicated to projects in the watershed that improve water quality.
A Pennsylvania firm has opened a new plant to treat and recycle wastewater generated by Marcellus Shale natural gas drilling. Aquatech International Corp., which is based in Canonsburg, opened the new plant in Tioga County. The facility has a central treatment plant that uses a combination of technologies to treat drilling fluids, the highly salty brine that flows back from wells, and other oil and natural gas wastewaters.
Stop Fracking Around Chattanooga and the Sierra Club will meet on April 25 to educate people about the potential pressure national forests are under from oil and gas drilling, as well as fracking operations and increased logging for Biofuels.
Range Resources Corp. won an appeals court’s permission to pursue defamation and business disparagement claims against a Parker County landowner who accused the company of fouling his water well. The Texas Second Court of Appeals in Fort Worth let stand two of Range’s claims against Steven Lipsky, who filed suit against the company in 2011.Lipsky’s suit came after the U.S. Environmental Protection Agency issued an administrative order saying the gas producer was responsible for contaminating Lipsky’s water with dangerous levels of methane and benzene, which can cause cancer.Range countersued, alleging the Lipskys and Rich conspired to persuade the EPA to intervene. The EPA withdrew its order in 2012 after Range challenged its findings and the Texas Railroad Commission found that the gas in Lipsky’s well was most likely from a different source.
The notion that an oil and gas producer can commit a trespass by engaging in hydraulic fracturinggained traction when U.S. District Judge John Preston Bailey of the Northern District of West Virginia denied a motion for summary judgment filed by oil and gas producer defendants Chesapeake Appalachia, LLC, Statoil USA Onshore Properties, Inc. and Jamestown Resources, Inc. in Stone v. Chesapeake Appalachia, LLC. Chesapeake Appalachia drilled a horizontal Marcellus Shale well with a vertical well bore within 200 feet of the plaintiffs’ property and a horizontal well bore within “tens of feet” of the plaintiffs’ property. Although Chesapeake Appalachia maintains a lease for the oil and gas underlying the plaintiffs’ property, plaintiffs’ lease does not authorize pooling or unitization of the Marcellus formation.
The House Science Committee Energy Subcommittee and Environment Subcommittee are holding a joint hearing on “A Review of Federal Hydraulic Fracturing Research Activities” on Friday, April 26. Kevin Teichmann, senior science adviser in the Environmental Protection Agency’s Office of Research and Development; Acting Deputy Assistant Energy Secretary for Oil and Gas Guido DeHoratiis, of the Office of Fossil Energy; David Russ, regional executive for the Northeast Area of the U.S. Geological Survey; and Robin Ikeda, acting director of the Health and Human Services’ Agency for Toxic Substances and Disease Registry will testify at the hearing.
The Progressive Policy Institute released a new report by Bruce Kauffmann, “Natural Gas Vehicles: Driving America to a More Prosperous, Secure, and Sustainable Future”which while primarily an argument for natural gas vehicles, also encourages the good fortune surrounding the burgeoning domestic natural gas boom is bringing and will continue to bring to the American economy. While the report doesn’t mention fracking specifically, it does focus on what to do with the natural gas, without dealing with how the U.S. develops it.
Interior Secretary Sally Jewell indicated that pending federal rules on hydraulic fracturing are likely to be announced, “fairly soon.” The rules are expected to address several issues, including managing so-called flowback water and maintaining well integrity.
A new report by Harvard Law School’s Environmental Law Program, “Legal Fractures in Chemical Disclosure Laws,” sharply criticizes the industry-backed website FracFocus, where hydraulic fracturing companies voluntarily disclose fracking chemicals they use in oil and natural gas production.The report cites a lack of transparency about when disclosures are filed, allowing companies to disclose late without penalties. It also claims there is no review of the disclosures by FracFocus. Further, the report criticized an overly broad standard that gives companies sole discretion to determine when to assert trade secrets, which allows them to withhold the identity and amount of the chemicals used.Critics of the report state that Harvard failed to reach out to any state regulatory program that uses FracFocus.
U.S. Department of Energy Deputy Secretary Daniel Poneman, testifying before Congress, stated that the first of nearly 20 liquefied natural gas (LNG) export applications should be decided within a few months. The applications, if all approved, would allow for up to 26 billion cubic feet of natural gas per day to be exported to countries without a free trade agreement. DOE is continuing to review the nearly 200,000 comments submitted in response to a macroeconomic study concluding that high export volumes would deliver a net economic benefit. Senator Ron Wyden, chair of the Committee on Energy and Natural Resources, stated that unrestricted LNG exports could raise costs for electricity generation and manufacturing here in the U.S.
President Obama’s FY2014 budget proposal includes $45 million slated for a multi-agency research initiative to look into the health and safety aspects of fracking. It is being split between three agencies — Department of Energy ($12 million), the U.S. Geological Survey ($19 million), and the Environmental Protection Agency ($14 million).The National Institute for Occupational Safety and Health has also signed a memorandum of understanding with the National Energy Technology Laboratory to “perform collaborative research related to airborne emissions and air quality at natural gas drilling sites.”
Mining shale oil under the Great Barrier Reef is likely to be banned by Australia‘s federal Labor government as tensions rise over the environmental impact of the booming oil and gas industry on the coastline beside the reef.In February, the conservative Queensland state government lifted a moratorium on the shale oil industry in most places along the coast to allow companies to assess whether the US shale oil boom could be replicated in Australia.
The Head of the European Commission’s climate change unit, Jos Delbeke, said there was sufficient legislation to protect the environment and that the EU had to look for alternative sources of energy, including by means of fracking. The comments came just a week after the Government put a hold on granting any more licenses for drilling by hydraulic fracturing.
The IPO of Poland’s leading shale gas exploration company, Exalo Drilling, has been postponed, an official from its parent, gas firm PGNiG, announced on April 19. The move appears just the latest episode in the deepening mess surrounding the government’s energy strategy, particularly related to uncertainty surrounding Poland’s tax regime for oil and gas companies.
The U.S. Ambassador to the Ukraine, John Tefft recently stated that the U.S. is ready to help the Ukraine organize shale gas production. The Ambassador said that a group of U.S. experts in the legal field arrived in Ukraine to advise Ukrainian representatives in the issue of shale gas production.”Shale gas is an absolutely positive thing, and if everything is done correctly, if there are certain regulatory standards, companies that adhere to advanced technologies, this can be unambiguously positive, as it was in the United States.”
Shale in England’s Bowland basin is about three times as thick as the Marcellus deposit in the northeastern U.S. according to a geologist at the U.K.’s Keele University. That will allow horizontal wells to be stacked on top of one another, minimizing the number of well-heads on the surface.The Bowland may be 790 meters thick, compared with 270 meters in the Marcellus, a key region for U.S. shale gas production, and 150 meters in the Lublin basin in Poland.Even at a recovery rate of 10 percent, the gas extracted would be worth 140 billion pounds ($215 billion) at current prices.
The 18-month moratorium on shale gas drilling was a “scandal”, member of the UK House of Commons select committee on climate change Peter Lilley said. He was speaking at a panel session launching a report into the difficulties that the UK’s energy policy is facing, “Power from Fossil Fuels,” published by lobby group Carbon Connect. Even if shale gas production did not slash prices as it has in the US, Lilley said that a fortnight’s trip to the US — the birthplace of the shale gas revolution — could have answered all the questions surrounding the risks of hydraulic fracturing, enabling shale gas production to start that much earlier.
Shale gas extracted in the UK would be lower carbon than imported gas from countries such as Qatar, and help to reduce greenhouse gas emissions if well regulated, the government’s chief climate change advisers have said. In a new report, “Releasing the UK’s Carbon Footprint and Managing Competitiveness Risks” evaluates the role of consumption-based emissions and examines future scenarios for UK consumption emissions. “UK shale gas may therefore play a useful role substituting for imported gas in meetingdemand for heat, and for gas-fired generation to balance the system or in conjunction with CCS (Carbon capture and storage).”
For additional information, please contact Bo Ollison with HBW Resources. His contact information is below.
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