Regulations
Osler, Hoskin & Harcourt via Mondaq | 25 February 2016

New Canadian Offshore Liability Regime Becomes Effective 26 February

The Energy Safety and Security Act (ESSA), passed in 2014 by the Harper government, introduced changes to the liability regimes governing Canada’s offshore oil and gas industries. These changes are slated to be effective on 26 February and include increasing the amount of security required to be provided to CAD 100 million, raising the cap on absolute, or no-fault, liability from CAD 30 million (CAD 40 million in the Arctic) to CAD 1 billion and empowering offshore regulators to issue administrative monetary penalties.

In their current form, the guidelines and regulations indicate that participants in Canada’s offshore oil and gas industries will be required to post CAD 100 million security in respect of each operations authorization for the drilling for or development or production of petroleum. While not perhaps initially appreciated, this change in regulatory practice may be one of the most significant changes implemented by ESSA. However, ESSA provides relief from this financial responsibility requirement where participants demonstrate their participation in a pooled fund that is maintained at a minimum of CAD 250 million.

The Washington Times | 15 February 2016

Alaska Adopts New Rules for Dispersant Use in Oil Spills

Alaska oil spill responders have adopted new rules for the rapid use of chemical dispersant but say dispersant will continue to be considered only rarely when mechanical cleanup is not practical.

Chemical dispersant has been used on an oil spill just once in Alaska in the last 40 years—in tests during the 11-million-gallon crude oil spill that followed the 1989 grounding of the Exxon Valdez oil tanker. The preferred method of cleanup is mechanical, usually using boom to corral oil and skimmers to lift it from the water.

The plan sets up one “preauthorization zone” that would allow a federal on-scene coordinator to authorize mobilization of dispersant and the elaborate gear needed to spread it. A final decision on actually using dispersant would be made after consultation with wildlife experts, tests of the dispersant and other steps.

Offshore Energy Today | 11 February 2016

US To Enlarge Funds for Oil and Gas Regulatory Bodies

US President Barack Obama’s fiscal year 2017 budget, announced on 9 February, includes a request of USD 175.1 million to fund the Bureau of Ocean Energy Management’s (BOEM) mission to manage offshore energy and mineral resources and a request of USD 204.87 million for the Bureau of Safety and Environmental Enforcement (BSEE).

According to BOEM, the request would provide BOEM with resources needed to effectively manage oil and gas development, renewable energy, and mineral resources on the US outer continental shelf (OCS) in a way that promotes efficient and environmentally responsible development.

“The president’s budget request for BOEM will support ongoing efforts and important initiatives that are vital to our mission and critical to advancing Administration priorities,” said BOEM Director Abigail Ross Hopper.

“This request reflects the resources and personnel needed to develop our capacity and to carry out our mission carefully, responsibly, and efficiently.”

Wyoming Tribune Eagle | 11 February 2016

Wyoming Regulators Approve Tougher Well Flaring Rules

Wyoming oil and gas regulators approved new rules on 9 February to limit how much and for how long natural gas petroleum developers may vent or burn off gas from newly drilled wells.

Companies would need approval to vent or flare longer than 6 months under the rules approved by the Wyoming Oil and Gas Conservation Commission in Casper.

Lower volumes of gas could be vented, or released without burning. Higher volumes would need to be burned off for safety and to limit air pollution.

Gas vented or flared from a well couldn’t exceed 45 million cubic feet, or 600 times more gas than an average US household uses in a year, without commission approval.

Philly.com | 4 February 2016

Pennsylvania Board Approves New Rules for Gas and Oil Drillers

The Pennsylvania Environmental Quality Board (EQB), which promulgates the state’s environmental regulations, on 3 February approved controversial new rules intended to reduce the surface effects of oil and gas drilling.

The EQB approved the new rules by a 15–4 vote. The rules will likely face a legal challenge from the industry.

The last revision of the rules came in 2001, 3 years before the first Marcellus shale well was drilled, launching a boom that has turned Pennsylvania into the nation’s second-largest gas-producing state.

“Work on this package began almost 5 years ago,” said John Quigley, secretary of the Department of Environmental Protection. “It’s time to finish the job and put these reasonable, balanced, and incremental protections for public health and the environment into effect.”

 

The Hill | 27 January 2016

Obama Targets Methane Emissions on Federal Land

The Obama administration is targeting oil and natural gas drillers on federal land in its latest regulatory push to cut down on methane emissions.

In a set of standards proposed 22 January by the Interior Department, regulators want to restrict the rates at which drillers deliberately or accidentally release natural gas.

The standards are also intended to restrict the deliberate burning of gas that is not captured.

It’s the latest climate-change-related push from the Obama administration and comes after several organizations pronounced 2015 as the warmest year on record.The administration has vowed to crack down not only on carbon dioxide but also on methane. Methane is the main component of natural gas, and, though it doesn’t stay in the atmosphere very long, it has more than 25 times the global warming power of carbon.

Read the full story here.

Borden Ladner Gervais via Mondaq | 15 January 2016

Year in Review: Legislative, Regulatory, and Policy Changes of Import to the Canadian Oil and Gas Industry

In 2015, politics drove policy. With new federal and Alberta governments, last year ushered in unprecedented changes for the Canadian oil and gas industry. There is more to come. Greenhouse gas regulation and a revised royalty regime are poised to be two of the sector’s leading business challenges in 2016—along with stubbornly low price—as energy companies determine the impact to their bottom lines.

There are significant transitions happening to Canada’s energy economy. Pipelines remain elusive. Mergers-and-acquisitions activity is nascent and waiting for further price and policy clarity. International oil supply, buoyed by an end-of-year US policy shift to permit crude exports, continues to be robust. Green energy and renewable sources will play a larger role in the country’s energy mix. As the year progresses, companies with strong balance sheets and a low cost of capital are likely to be some of the biggest winners in 2016.

Canada’s oil and gas sector looks ahead to not only the implementation of provincial carbon initiatives, but also the federal government pursuing its own climate change agenda. This involves new international obligations arising from the 2015 United Nations Climate Change Conference as well as a commitment to set national emissions targets—and coordinate with existing provincial ones. 2016, therefore, will be a watershed year for energy companies navigating the shoals of carbon policy and economic transition. Changes are expected to be rapid and multidimensional, effects complicated.

 

The Associated Press | 14 January 2016

Massive Gas Leak Spurs Legislation To Avert Future Disasters

California lawmakers proposed stronger regulations on 11 January to prevent a natural gas storage leak like one that has sickened Los Angeles residents and driven thousands from their homes.

Sen. Fran Pavley, D-Agoura Hills, said the legislation would prevent a replay of the massive uncontrolled leak that has persisted nearly 3 months in the San Fernando Valley.

“I know we can do better,” Pavley said at a news conference in the Porter Ranch neighborhood, where residents have complained of nausea, headaches, nosebleeds and other ailments since the leak was discovered on 23 October. “How can we make sure this kind of tragedy never happens again?”

More than 4,500 families either plan to or have moved out of Porter Ranch while Southern California Gas tries to stop the leak. It has cost the company more than USD 50 million and is not expected to be plugged until March.

One proposed bill would require safety valves, better leak protection, and tighter restrictions if facilities are close to homes or schools.

Penn Live | 7 January 2016

New Pennsylvania Regulations Ban Pits

The Pennsylvania Department of Environmental Protection (DEP) on 6 January made available thousands of pages of documents outlining new rules for the oil and gas industry.

Among the trove of public documents are increased regulations for unconventional drillers, which apply to companies extracting natural resources from the Marcellus Shale.

Some of the biggest changes include “a prohibition on all pits,” such as the pits used for drill cuttings and flowback fluids.

A driller that still wants to use a centralized impoundment will need a residual waste permit, in addition to DEP permits.

Regulators say the changes are necessary after a number of cases in which pits and impoundments were found to be leaking.

“The risks all too often have been realized in Pennsylvania,” said Scott Perry, deputy secretary of DEP’s Office of Oil and Gas Management.

Kallanish Energy | 6 January 2016

Oil Firm Resists Call To Shut Down Wells Amid Earthquake Concerns

SandRidge Energy thus far is defying the Oklahoma oil and gas regulator’s request that it shut down six wastewater injection wells, despite allegations the injections may be contributing to earthquakes.

The Oklahoma City, Oklahoma-based independent producer has complied with similar requests in the past, but this time said it will not stop using its wastewater wells.

Research links earthquakes in Oklahoma and other oil- and gas-producing states to disposal wells, although SandRidge and other shale producers have criticized geologic reports.

“We continue to work closely with the Oklahoma Corporation Commission [OCC]. We look forward to addressing this issue through OCC’s established rules and procedures, which will ensure decisions are based on scientific analysis. This is a complex issue, and science must be our guide as we work together to address it,” David Kimmel, SandRidge’s communications director, said.

The commission is working on legal action to modify SandRidge’s permits to force it to abandon the wells, Matt Skinner, a commission spokesman, told the Wall Street Journal.

The Associated Press | 5 January 2015

Oklahoma Oil, Gas Regulators Order Changes After Earthquakes

The state commission that regulates Oklahoma’s oil and natural gas industry ordered some injection well operators to reduce wastewater disposal volumes on 4 January after at least a dozen earthquakes hit an area north of Oklahoma City in less than a week.

The Oklahoma Corporation Commission said it was implementing a plan that affects five wastewater injection wells operating within 10 miles of the center of earthquake activity near Edmond, a northeast suburb of Oklahoma City. Among the recent quakes to hit the area was a 4.2 magnitude temblor on New Year’s Day that caused minor damage but no injuries.

“We are working with researchers on the entire area of the state involved in the latest seismic activity to plot out where we should go from here,” Oil and Gas Conservation Division Director Tim Baker said, adding that responding to the swarm of earthquakes in the region was an ongoing process.