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.

The Associated Press | 14 December 2015

EPA Approves Water Quality Rules Dividing Montana, Wyoming

The US Environmental Protection Agency waded into a long-running skirmish between two states by approving water quality rules meant to protect southeastern Montana cropland from waste water produced during natural gas drilling in neighboring Wyoming.

Wyoming officials and oil and gas companies have assailed the rules as a threat to energy production. The rules set standards that limit how much salty water—a byproduct of drilling—can enter waterways in the Tongue and Powder River basins along the Montana/Wyoming border.

Gas production in the region has declined dramatically in recent years because of falling prices. But Montana rancher Mark Fix said that he continues to see evidence of high salt levels in the Tongue River during the annual spring runoff because of past drilling. That has forced him to alter how he irrigates his fields.

Some farmers have said their crop yields dropped by more than half due to poor-quality water flowing out of Wyoming gas fields.

The Denver Post | 14 December 2015

Colorado High Court Hears Cases on City Oil and Gas Fracturing Bans

Colorado Supreme Court justices plunged into oral arguments as Front Range cities push to limit oil and gas development near people—a step toward resolving a long-running tussle over local vs. state power to regulate industry.

The question is how far cities, towns, and counties can go to shield residents under current law, which establishes an overriding Colorado interest in production of oil and gas.

Fort Collins voters in 2013 passed a 5-year moratorium on hydraulic fracturing inside city boundaries, defying Gov. John Hickenlooper and state authorities, who contend locals lack the power to regulate oil and gas.

Longmont leaders in 2012 imposed rules for oil and gas activity. Colorado’s attorney general at the time, John Suthers, sued the city. Longmont voters responded by banning hydraulic fracturing.

The Colorado Oil and Gas Association (COGA) and state have been fighting the ban and moratorium. COGA and state attorneys argue both are illegal because case law and regulations give only the state the right to regulate hydraulic fracturing.

The Associated Press | 14 December 2015

Report Says Short Review Did Not Compromise Alaska Lease Sale

A federal agency rushed through an environmental review of an Alaska offshore petroleum lease sale at the insistence of high-level managers but did not compromise its quality, a federal reviewer has concluded.

The Office of the Inspector General, which investigates fraud, abuse, and misconduct, concluded that managers edited an environmental review of the 2008 Chukchi Sea lease sale and established an “expedited timeline” for its completion by an Interior Department agency.

The Environmental Protection Agency, however, concluded that the review contained adequate scientific information, according to the report. And the short time frame for the review, ordered by Interior Department chief of staff Tommy Beaudreau, was put in place to protect the Interior Department from blame if Royal Dutch Shell had decided it could not drill exploratory wells on its Chukchi leases in 2015, he told inspectors.

BakerHostetler via Mondaq | 19 November 2015

Column: Do You Dare To Flare? A North Dakota Field Office Provides a View Into the Federal Regulatory Future

While high-profile regulatory efforts focused on hydraulic fracturing, waters of the United States, sage grouse, and greenhouse gas emissions have grabbed media headlines over the last several months, a potent stew of seemingly mundane technical initiatives has been simmering under the noses of domestic energy companies.

Taken individually, narrow regulatory proposals related to oil and gas accounting, permitting and planning requirements, procedural rules for administrative appeals, royalty reporting, weights and measures, bonding requirements, and infrastructure development have been of interest to only a small group of regulatory and legal technocrats. But understood collectively, these less glamorous initiatives have the potential to fundamentally change the scale and nature of oil and gas development in the United States.

Safety+Health | 12 November 2015

OSHA Delays Enforcement of New PSM Policy

The Occupational Safety and Health Administration (OSHA) will delay enforcing a new interpretation of its Process Safety Management (PSM) Standard, prompting a bipartisan group of lawmakers to call for the agency to withdraw that interpretation.

In a July 22 memorandum, OSHA announced it had revised the interpretation that exempted retail facilities from PSM requirements. The exemption originally was intended only for retail establishments that sold hazardous chemicals in small quantities, such as gas stations, but the agency had been applying the exemption to establishments that made more than 50% of their income from direct sales of those chemicals to end users.

The new interpretation states that only facilities with North American Industry Classification System codes of 44 and 45 will be exempt. OSHA announced on 20 October that it will focus efforts on compliance assistance and, in most cases, will not cite newly nonexempted facilities for failing to comply with the PSM rule.

In response to the interim enforcement policy, 38 congressmen on 22 October sent a letter to Secretary of Labor Thomas Perez asking OSHA to rescind the memo and begin a formal rule-making process. The representatives claim that the interpretation is arbitrary and will impose a great cost on small and medium-sized businesses.

ReedSmith | 29 October 2015

Pennsylvania Federal Court Strikes Down Ordinance Banning Disposal of Waste Water as Unconstitutional

In Pennsylvania General Energy Co. L.L.C. v. Grant Township, Magistrate Judge Susan P. Baxter of the United States District Court for the Western District of Pennsylvania, in an unpublished opinion, held that several provisions of an ordinance enacted by Grant Township establishing a Community Bill of Rights were invalid or preempted by state law. The ordinance banned corporations from disposing of waste water from hydraulic fracturing within Grant Township.

Plaintiff Pennsylvania General Energy Company (PGE) is involved in the exploration and development of oil and natural gas. In 1997, PGE drilled a deep gas well in Grant Township. In May 2013, PGE filed a permit application with the US Environmental Protection Agency (EPA) seeking to convert the well into a brine-injection well. Upon learning of PGE’s permit application, Grant Township enacted an ordinance entitled Community Bill of Rights. The ordinance provided that corporations should not have more rights than the people of its community and that people have the right to regulate all activities pursuant to a right of local self government.

PGE filed an action challenging the constitutionality, validity, and enforceability of the ordinance adopted by Grant Township, arguing that the ordinance violated several state statutes, including Pennsylvania’s Second-Class Township Code—Grant Township is a second-class township—and Pennsylvania’s Limited Liability Companies Law. Further, PGE argued that the ordinance violated state law as an impermissible exercise of police power because it is exclusionary. Grant Township filed a counterclaim, alleging that challenging the ordinance violated the rights of the people to “local community self government.”

Norton Rose Fulbright via Mondaq | 15 October 2015

Rules and Regulations of the Oil and Gas Industry in Australia: Navigating the Governance Maze

As the regulation of the oil and gas industry around Australia becomes increasingly complex, unconventional resources legal expert Liz Allnutt breaks down the regulatory process state by state and highlights some of the key legal principles guiding the development of the unconventional sector around the country.

General Legislative Framework
In Australia, all six states and the Northern Territory have their own legislative power to govern onshore petroleum exploration and production activities within their boundaries. State legislation also regulates activities within coastal waters extending up to three nautical miles from the coastal baseline. The onshore petroleum regimes in each state are broadly similar but not identical. The onshore petroleum regimes in Australia start from a fundamental position of treating unconventional gas resources in the same manner as conventional petroleum resources.

In addition to the petroleum-specific legislation, there is other legislation that applies to petroleum exploration and production activities. This includes environment and heritage protection legislation (at state, territory, and Commonwealth level), legislation governing the allocation of onshore water rights, native title and Aboriginal heritage protection legislation, legislation governing industrial relations and workplace health and safety, planning legislation, and general land tenure legislation.

The Standing Council on Energy and Resources, comprising Australia’s energy and resources ministers, has endorsed and implemented a harmonized framework for the regulation of coal seam gas. The National Harmonised Regulatory Framework provides a suite of leading-practice principles to be used as a guidance and reference tool for Australian Commonwealth, state and territory government regulators for the coal seam gas industry.

The framework focuses on four key areas of operations, covering the life cycle of the development of natural gas from coal seams: well integrity, water management and monitoring, hydraulic fracturing, and chemical use. The framework acknowledges that, although shale gas and coal seam gas have some common exploration and development procedures, the geological and hydrological issues that apply to different forms of unconventional gas are also significant.

There is no expectation that the harmonized regulatory framework developed for coal seam gas will be extended to apply to shale gas. However, it would be reasonable to expect that a similar harmonization process may subsequently be implemented for the shale gas industry, and that some of the recommendations in the coal seam gas framework could be incorporated into that process.

ReedSmith via Mondaq | 15 October 2015

Column: UK Courts Get Tough on Environmental Crime

There is a widely held belief that environmental laws in the UK are toothless in practice because enforcement authorities are under-resourced and typical levels of fines and penalties imposed are far too low.

This view is particularly prevalent among those with first-hand experience of jurisdictions where environmental enforcement has historically tended to be stricter (for example, the United States).

Although they ignore the significant reputational damage that can occur from environmental noncompliance, such views have considerable basis in historical fact in the UK. Often, environmental crime in the UK has been seen to pay. This has been a frequent source of complaint by the majority who strive, at considerable cost, to comply whilst seeing those who apparently “get away with it” all too often.

However, such views need to be reappraised in light of recent new sentencing guidelines and senior judicial statements equating serious breaches of environmental law with financial services offenses. A recent decision of a unanimous Court of Appeal that included the Lord Chief Justice presages a much tougher approach in the future.

This is particularly true in the case of environmental offenses committed by large commercial organizations.