E&E Publishing | 6 September 2015

The Hydraulic Fracturing “Loophole” That Just Keeps Growing

Like a fish story, the “Halliburton loophole” grows a little with every telling.

It started 10 years ago as a narrow, little-known exemption to a federal environmental law embedded in sweeping energy legislation.

In the intervening years, it has grown to be an all-purpose bogeyman for environmentalists raging against hydraulic fracturing. And, in a new twist, even hydraulic fracturing boosters have now cast it as a bulwark against federal regulation of oil and gas drilling.

The one-paragraph section of the 551-page Energy Policy Act of 2005 exempted hydraulic fracturing from the Underground Injection Control (UIC) provisions of the Safe Drinking Water Act (SDWA). The UIC portion regulates holes drilled to inject contaminants deep underground and wells used to force oil and gas to the surface.

It does not cover the Clean Air Act, the Clean Water Act or any other environmental law. It does not cover other aspects of oil and gas, such as drilling or production. And, if an oil company is found to be polluting drinking water, the US EPA can still use SDWA to penalize it.

But to some, particularly the harshest critics of domestic production, the Halliburton loophole turned the oil field into the Wild West.

“Certain groups have used it to suggest there is no federal regulation of fracturing, which is not fully accurate,” said Hannah Wiseman, a Florida State University professor of law who studies regulation of oil and gas. “There are many other ways for states and the federal government to regulate hydraulic fracturing.”

Morgan Lewis via Mondaq | 28 August 2015

EPA Issues Proposed Rules on VOC and Methane Emissions From Oil and Gas Operations

On 18 August, the US Environmental Protection Agency published proposed changes to the new source performance standards (NSPS) and draft amendments to the control techniques guidelines (CTGs) for the oil and natural gas industry, seeking to further reduce volatile organic compound (VOC) and methane emissions by 40–45% from 2012 levels by 2025. NSPS are established for many industry sectors and establish minimum performance standards for new or modified sources of air pollution. CTGs are guidelines recommended by EPA to achieve NSPS. Once CTGs are finalized, states are required to evaluate the CTGs to determine if they must change their regulatory programs to accomplish EPA’s recommendations for controls as presented in the CTGs.

Rigzone | 19 August 2015

Groups Say Proposed EPA Rules Would Add Costly Burden to Oil, Gas Industry

The US Environmental Protection Agency’s (EPA) proposed rule to limit methane emissions from domestic oil and natural gas operations would add costly, duplicative, complex regulations to existing rules that would yield few environmental benefits and threaten to derail the US shale renaissance, energy industry groups said on 18 August.

The EPA said its “common sense” proposed standards—part of the Obama administration’s strategy under President Obama’s Climate Action plan—would reduce emissions of greenhouse gases and volatile organic compounds (VOC) from oil and gas operations by 40 to 45% from 2012 levels by 2025. To achieve this goal, the oil and gas industry would be required to find and repair leaks; capture gas from the completion of hydraulically fractured oil wells; limit emissions from new and modified pneumatic pumps; and limit emissions from several types of equipment used at natural gas transmission compressor stations, including compressors and pneumatic controllers.

As part of the proposal, EPA will update the 2012 New Source Performance Standards to address methane as well as VOC emissions for sources covered in that rule. The oil and gas industry would be required to reduce VOC and methane emissions from hydraulically fractured and refractured oil wells. The proposal also means that methane and VOC reductions downstream from wells and production sites, covering equipment in the natural gas transmission segment of the industry that was not regulated in EPA’s 2012 oil and gas rules.

EPA also intends to clarify and streamline Clear Air Act permitting requirements in states and Indian country. EPA also will propose guidelines for states to reduce VOC emissions from existing oil and gas sources in certain ozone non-attainment areas, as well as mid-Atlantic and Northeast states that are part of the Ozone Transport Region.

Energy industry groups pointed out that the oil and gas industry already uses technology that reduces methane emissions, and that methane emissions from hydraulic fracturing have declined in recent years while US oil and gas production has climbed. The American Petroleum Association (API) noted that methane emission from hydraulically fractured natural gas wells have fallen nearly 79 percent since 2005, and carbon dioxide emission is down to 27-year lows. API credited the declines to oil and gas industry leadership and significant investments in new technologies.

StateImpact | 14 August 2015

New Oil and Gas Rules Irk Both Environmentalists and Industry

State environmental regulators are asking for comments on the final version of new oil and gas rules. The Pennsylvania Department of Environmental Protection (DEP) released detailed updates to its oil and gas rules on 12 August. The proposals result from a 4-year process that garnered nearly 30,000 public comments to DEP.  Still, this latest version is getting push back from both industry and environmentalists.

In a call with reporters, DEP Secretary John Quigley called the announcement a “great step forward in responsible drilling in Pennsylvania.”

“DEP’s definition of responsible drilling is protecting public health and the environment while enabling drilling to proceed,” Quigley said.

Although the release of the draft rules marks the final leg of a long process that began as a result of the passage of the state’s drilling law Act 13 in 2012, Quigley says there’s more to come.

“This is not the end of the process,” he said. “There is more study needed on additional measures, and there will be more rule making in a separate process to ensure responsible drilling and protection of communities, public health, and the environment.”

The proposed rules include everything from what defines a public playground to how drillers store their waste water. Previous proposals included new regulations on noise. But the DEP has tabled that issue for now, saying more scientific study is needed. The DEP also affirmed its authority to deny drilling permits if the agency decides it would pose too much of a risk to water supplies.

Some environmentalists have criticized the department for not using its authority to shut down bad actors or prevent drilling in high risk areas.

“We argued with them for years that they should be making those decisions,” said Tracy Carluccio with the Delaware Riverkeeper Network. “But it’s good that they’re recognizing this power and putting it in black and white.”

Industry is unhappy with the proposals, calling the rules a “regulatory overreach,” and saying they would cost drillers too much money to implement.

“Unfortunately, DEP’s regulatory proposal will cost Pennsylvania job creators nearly USD 2 billion annually without providing meaningful environmental benefits,” said Marcellus Shale Coalition president David Spigelmyer.

The Associated Press | 14 August 2015

Shell Seeks Modified Permit for Arctic Offshore Drilling

With a key safety vessel repaired and in northern waters, Royal Dutch Shell has applied to amend its federal exploratory drilling permit to allow drilling into oil-bearing rock in the Arctic Ocean off Alaska’s northwest coast.

Shell in July received permission to begin some drilling at two sites in the Chukchi Sea but was banned from digging into petroleum zones roughly 8,000 ft below the ocean floor.

The federal Bureau of Safety and Environmental Enforcement limited the permit then because equipment was not on hand to handle a possible well blowout.

The equipment is on the Fennica, a leased Finnish icebreaker that suffered hull damage 3 July as it left Dutch Harbor, a port in the Aleutians Islands.

Arctic offshore drilling is strongly opposed by environmental groups that say industrial activity will harm polar bears, Pacific walrus, ice seals, and threatened whales already vulnerable from climate warming and shrinking summer sea ice.

They also say that drilling in US Arctic waters, which the government estimates holds 26 billion bbl of recoverable oil, will delay a transition to renewable energy.

The Associated Press | 29 July 2015

Panel Scales Back New Oil Rules for North Dakota Reservation

Tribal leaders from a prolific portion of North Dakota’s oil-rich Fort Berthold Reservation are scaling back proposed drilling regulations that industry officials warned could slow crude production.

Leaders of a section of the reservation that produces the most oil recently formed the West Segment Regulatory Commission, based in Mandaree, to impose its own regulations on oil drilling activity in its region. The idea was not well received by industry officials, existing regulators or overall leadership of the Three Affiliated Tribes, which represents the Mandan, Hidatsa, and Arikara people on the million-acre reservation in western North Dakota.

John Mahoney, an attorney for the commission, said on 28 July that it agreed to back off on most of the proposed rules. The commission will continue to require companies working in the area to register and pay a “nominal fee” and will “supplement and enhance” state, federal, and tribal laws already in place, he said.

“We’re being very cautious and easing into this,” said Mahoney, who also is a part-time tribal judge on the reservation. “We’re not going into this with a big club.”

San Antonio Express-News

New Offshore Safety Rules Would Make Drilling Some Wells Too Difficult, Industry Lobbyists Tell White House

The oil industry is blasting an Obama administration plan to better safeguard offshore exploration, arguing that the Deepwater Horizon-inspired proposal imposes costly and “ill-advised” mandates that could make some wells impossible to drill.

The Interior Department’s Bureau of Safety and Environmental Enforcement rule, unveiled in April, aims to prevent a repeat of the 2010 Gulf of Mexico disaster by codifying a number of voluntary steps that companies have already taken to better keep offshore wells in check.

But it goes further in laying out specific mandates for the design of wells and the emergency devices known as blowout preventers that are meant to serve as a final protection against uncontrolled surges of oil and gas.

A coalition of oil trade groups insists that the proposed rule goes too far by establishing “prescriptive new requirements that would impose unjustified economic burdens, discouraging economic growth (and) innovation” often without a clear rationale.”

And the groups—including the American Petroleum Institute, Independent Petroleum Association of America, and International Association of Drilling Contractors—insist that some of the proposed mandates “would introduce new risk rather than reduce (it).”

Reuters | 21 July 2015

Oklahoma Broadens Oil and Gas Drilling Regulations To Stem Quakes

Oklahoma is expanding restrictions on drilling activities to stem a sharp increase in earthquakes that has damaged homes and raised concerns about the future of the energy industry in the state.

But the action, announced on 17 July, fell short of more drastic measures expected after a further increase in the rate of significant quakes last month prompted the state’s regulator to say the situation was a “game changer.”

Oklahoma and several other states in the central US have experienced a sharp increase in earthquakes since 2009, which scientists say is linked to underground injection of briny wastewater, a byproduct of booming oil and gas production.

Noticeable quakes—above magnitude 3.0—now strike the state at a rate of two per day or more, compared with two or so per year prior to 2009.

The earthquakes are not related to hydraulic fracturing, a widely used drilling technique. Instead, researchers say, the quakes stem from the reinjection of saltwater that occurs naturally in oil and gas formations.

On 17 July, the Oklahoma Corporation Commission, the state’s oil and gas regulator, released a directive that expands “Areas of Interest”—parts of the state that have been worst-hit by the quakes—and adds restrictions for 211 disposal wells.

Rigzone | 21 July 2015

Canada Provinces Agree to Strategy on Pipelines, Climate Change

Canada’s provinces reached a long-sought deal on 17 July over an energy plan for the country, agreeing broadly to curb greenhouse gas emissions while also promoting the use of pipelines.

The oil-producing province of Alberta originally conceived the strategy as a way to ensure that it could move its fuel to market. The plan was changed at the insistence of some of the provinces to reflect their desire to fight climate change.

Alberta and Saskatchewan have limited markets for their land-locked oil, with environmentalists opposing pipelines that have to go through other provinces to reach the Pacific or Atlantic oceans. These include the Energy East pipeline proposed by TransCanada, which is also trying to build the controversial Keystone XL pipeline through the United States.

Canada’s provinces agreed to ensure that regional, Canadian, and international infrastructure exists for sending energy products to domestic and international markets. The agreement was announced following the premiers’ annual summer conference, which was held this year in St. John’s, Newfoundland.

Saskatchewan Premier Brad Wall said he was more comfortable with the stronger language in the document on ensuring there is infrastructure in place to get energy to market. Quebec Premier Philippe Couillard, whose government has said Energy East must meet seven conditions before being allowed through the province, sounded conciliatory and mindful of the Lac-Megantic oil-by-rail disaster in his province in 2013.

“The bottom (line) is, oil will have to move,” he told reporters. “If it’s not moving by pipeline, it’s moving by rail. Is it really better by rail or safer by rail? I can tell you that in Quebec we have a different perspective on this.”

The energy plan includes goals and efforts for reducing greenhouse gas emissions, but did not lay out specifics.

The Hill | 6 July 2015

Regulators Seek Faster Pipeline Spill Notifications

Federal regulators want operators of pipelines for oil and other materials to notify federal officials within an hour after breaches and leaks.

The 1 July proposal came weeks after an oil pipeline was breached along the Pacific Ocean coast in Santa Barbara County, California, leaking more than 100,000 gallons into the ocean and coating beaches.

The owner of that pipeline, Plains All American Pipeline, did not notify the federal government until at least 90 minutes after it discovered the leak, according to The Associated Press. The Pipeline and Hazardous Material Safety Administration is proposing to require operators to notify its National Response Center at the “earliest practicable moment” after a leak, but not within more than an hour.

The requirement is part of an overhaul of the rules regarding how pipeline operators respond to incidents like leaks, including personnel training, drug and alcohol testing, and assessing pipeline cracks.

Rigzone | 1 July 2015

EU Offshore Safety Regulations: Guidance on New Rules

After the Deepwater Horizon accident occurred in the Gulf of Mexico in April 2010, the European Commission reviewed the existing regulatory framework around Europe. It concluded that the divergent and fragmentary nature of the requirements in place applying to the safety of offshore oil and gas operations did not provide adequate assurance that risks from offshore accidents were minimized.

As a result, the European Commission published the Offshore Directive on 28 June 2013. This aims to “help prevent accidents, as well as respond promptly and efficiently should one occur. The directive, broadly based on the UK’s current offshore safety regime according to the UK’s Health and Safety Executive, includes requirements relating to licensing, environmental protection, emergency response, and liability, as well as safety. And it will come into effect in just a few weeks’ time, 19 July.

Under the new regulations, companies must prepare a major hazard report for their offshore installation before exploration or production begins. This report must contain a risk assessment as well as an emergency response plan and be updated whenever appropriate.

Washington Examiner | 1 July 2015

Twenty-Two States Sue EPA Over Water Rule

Litigation against the US Environmental Protection Agency’s clean water rules reached a fevered pitch on 30 June.

Nine states added to a frenzy of lawsuits being leveled against the EPA and the Army Corps of Engineers after the Waters of the United States rule was published in the Federal Register on 29 June.

The publishing of the rule marks the day a regulation officially becomes law and, thus, ripe for litigation.

North Dakota led a group of 13 states on 29 June in a lawsuit filed in the US District Court in Bismarck, challenging the EPA over the rule. The states include Alaska, Arizona, Arkansas, Colorado, Idaho, Missouri, Montana, Nebraska, Nevada, South Dakota, and Wyoming, and the New Mexico Environment Department and State Engineer.

Officials say the goal is to delay or defeat the regulations before they take effect at the end of August.

West Virginia led the charge with eight other states in a separate court filing against the EPA on 30 June. The states argue that the rules undermine the constitutional rights of states to manage their own waterways.