Bloomberg | 17 March 2016

USD 4.2 Million Hydraulic Fracturing Verdict Likely To Spark More Suits

A recent jury verdict and USD 4.2 million award in favor of two Pennsylvania families who alleged hydraulic fracturing operations contaminated their well water is likely to trigger the filing of more suits, sources tell Bloomberg.

A jury on 10 March found Cabot Oil & Gas acted negligently in drilling hydraulic fracturing wells in Dimock, Pennsylvania, which created a private nuisance and significantly harmed the plaintiffs in their use and enjoyment of the property. A number of other families involved in the litigation settled before trial for a total amount less than what was awarded here.

It is one of the first hydraulic fracturing nuisance verdicts finding for plaintiffs but is not unprecedented.

A Texas jury awarded USD 2.9 million in 2014 to a family who alleged contamination from hydraulic fracturing operations caused them a variety of personal injuries, in Parr v. Aruba Petroleum in 2014.

In this case, however, no personal injury allegations were put before the jury.

Counsel for the plaintiffs, Leslie Lewis, a solo practitioner in New York, declined to speculate whether the case will have an impact on further litigation.

“I have no idea what the future will bring regarding other cases and future verdicts; this case was a particular fact pattern, with shoddy operations occurring early in the so-called ‘gas boom’ years,” Lewis said.

Holland & Knight via Mondaq | 24 February 2016

Interior’s Proposed Rule on Flaring Would Restrict Oil and Gas Development on Tribal Lands

The US Department of the Interior on 22 January proposed a rule developed by the Bureau of Land Management (BLM) that would limit the flaring, leaking, and venting of natural gas on public and tribal lands.

The Proposed Rule
The proposed rule would require oil and gas producers to inspect their equipment for leaks, replace equipment that unnecessarily releases large quantities of gas into the air, and adopt processes and technology that limit the rate of flaring. Metering and reporting would also be required when flared volumes reach 50 Mcf)/d. According to the BLM, if implemented, this rule would cost the oil and gas industry from USD 125 million to USD 161 million per year.

Impacts On Tribal Lands And Economic Development
Given the discoveries of Bakken and Marcellus shale gas resources on tribal lands, the rule would impose additional and unnecessary cost barriers to production, restricting oil and gas development on tribal lands. As some tribal governments and Native American-owned developers are new market entrants to this industry, the proposed rule may directly impact their ability to develop tribal natural resources.

The proposed rule states, “BLM requirements would not supersede equally effective or more stringent state and tribal requirements.” However, BLM’s proposed rule appears inconsistent with the federal government’s support of economic independence for tribal governments in other respects (e.g., leasing regulations under the HEARTH Act).

Bloomberg | 17 February 2016

Anadarko Reaches Out to Communities To Fend Off Drilling Bans

Windsor High School junior Kamille Hocking worried a dozen oil wells on her family’s 132-acre Colorado homestead might sicken them. Then, Rebecca Johnson, an Anadarko Petroleum engineer, used a blender in her chemistry class to show the interaction of swirling frack sand, city water, and friction reducer.

Anadarko Petroleum’s Rebecca Johnson speaks to students at Windsor High School in Windsor, Colorado. Photographer: Matthew Staver/Bloomberg

“We heard a lot of stories about how it could get into the water and pollute the land,” said Hocking, who is 16. “I’m going to tell my parents that fracking fluid only makes cracks in the rock the size of a hair that the sand gets into and holds open.”

Facing 10 possible ballot initiatives restricting hydraulic fracturing, Anadarko has deployed 160 landmen, geologists, and engineers such as Johnson to Rotary clubs, high schools, and mothers groups. They demonstrate how drilling works and try to convince people that the technique and the accompanying chemicals and geological effects don’t harm the environment or public health.

These de facto ambassadors are proving effective in deflecting the effort by Colorado municipalities to gain greater control over drilling. They have been so successful that the Woodlands, Texas-based company also trained 2,000 additional employees in Colorado, Wyoming, Utah, and Texas to answer questions posed to them by community members. The Coloradans use a smartphone app that supplies basic fracking facts. Others elsewhere get colorful printed materials.

Alaska Dispatch News | 16 February 2016

Army Corps Launches Review of Proposed North Slope Oil Project

A federal agency is launching an environmental review of plans by the Spanish oil company Repsol to develop what may be one of Alaska’s biggest oil discoveries in years.

The US Army Corps of Engineers announced it will prepare an environmental impact statement associated with the Nanushuk project on the North Slope, near the village of Nuiqsut, that the oil company estimates could yield 120,000 B/D.

Plenty of questions surround the proposal, including when, or if, Armstrong Oil and Gas, a privately held company from Denver, will take over majority ownership and operation, said Lanston Chinn, chief executive of the village’s Native corporation, Kuukpik.

The companies announced restructuring in October that would make Repsol the minority owner. The change is expected to be completed this summer, said Jan Sieving, Repsol’s vice president of public affairs in North America.

Kuukpik owns land in the area and could benefit economically from development. But the corporation, which asked for the environmental impact statement, does not like the project so far, Chinn said.

He said the corporation is concerned that a small company like Armstrong won’t have the capital to properly develop the area. Kuukpik will be watching warily to make sure things such as gravel roads and pipelines don’t threaten subsistence hunting and the environment, he said.

“Subsistence resources and the subsistence lifestyle have to be protected to our liking for oil and gas development to move forward,” Chinn said.

Sieving said Repsol fully supports the Corps’ decision to review the proposal. She said Repsol will continue working closely with the village and regulatory agencies.

“We are committed to environmental and subsistence protections,” she said.

The Corps decided in October that the project could significantly affect the human and natural environment, leading to the review, said Ryan Winn, north section chief for the US Army Corps regulatory division in Alaska.

EHS Today | 15 January 2016

Creating Value: How Occupational Health and Safety Is Being Integrated Into Financial Reporting and Why You Should Care

Terms like “sustainability” and “corporate social responsibility” are not new. They’ve been around for 20 years or more. What is new is the financial investment community’s recognition of the value of collecting and reporting material nonfinancial information as part of the measurement of organizational value.

More and more, corporations are recognizing that material nonfinancial information is important to investors and analysts. While they may have declined to participate in sustainability reporting a few years ago, corporations are discovering that the long-term viability of their operations is being judged not only on profitability, but on nonfinancial factors as well. This means that a growing number of organizations are including occupational safety and health data in “integrated” reports that include financial and nonfinancial information.

This means that a career- and practice-changing opportunity is presenting itself to occupational safety and health professionals, says Kathy Seabrook, chairperson of the Center for Safety and Health Sustainability, which just released the report “The Accounting Revolution and the New Sustainability: Implications for the OHS Professional.”

“Safety and health professionals don’t have a clue, don’t understand their leadership role in their company’s enterprise risk management,” Seabrook said in an interview.

The new report by the Center for Safety and Health Sustainability claims that integrated reports on performance tell a business’ stakeholders of its ability to create value in a sustainable way and feature data on a range of nonfinancial matters. This means that “human capital” issues such as the mental and physical health of the workforce and employee engagement are considered material to a company’s performance, just like balance sheets and statements of cash flow.

Rigzone | 22 December 2015

Column: Fixing Oil’s PR Problem—What Consumers Believe vs. Reality

If you spent a few hours stopping people on the street and asking whether they like the oil industry, chances are you would not find many folks who are huge fans. A recent Gallup poll confirms this with numbers showing that the majority of Americans either dislike or have no feelings about the oil industry; only 34% feel positively about it.

What’s more, that 34% is actually a huge improvement over years past. Previous polls have shown the industry struggling even more to gain public approval. In 2012, another Gallup poll showed that Americans hate oil companies more than the federal government.

So why do Americans feel so negatively about the oil industry?

Digging deeper, there seem to be three catching points that keep the public from feeling good about the oil companies. Here’s a closer look at what the public believes, what is actually true, and how the two can be reconciled moving forward.

Corporate Social Responsibility and the Law | 12 November 2015

World Exchanges Encouraged To Report Indicators of Long-Term Sustainability

On 4 November, the World Federation of Exchanges (WFE) released a set of 34 sustainability measures that include environmental, social, and governance indicators. WFE recommends that its member exchanges implement these indicators into the disclosure requirements for listed companies.

The WFE is an industry trade organization made up of 99 organizational members, including 64 regulated exchanges (e.g., NASDAQ and NYSE) across the globe. More than 44,000 companies list on WFE exchanges. It acts to establish standards for publicly regulated securities markets and to ensure good international corporate governance.

WFE recommends reporting indicators such as ratios of CEO to median pay and male to female pay; employee turnover; workforce and board gender diversity; injuries; greenhouse gas emissions; water and waste management; child and forced labor; corruption and anti-bribery; and tax transparency. It also provides advice on how to roll out these new reporting metrics.

The guidance, while voluntary, could lead to greater corporate transparency and listed companies would benefit by attracting more long-term investors and identifying opportunities to save costs and lower risk. Long-term sustainability has gained traction in financial markets recently, particularly as institutional leaders warn that issues such a climate change will lead to financial crisis unless the private sector and its regulators do more to ensure transparency regarding current and future carbon emissions.

Penn Live | 29 October 2015

Energy Capital of the East: Marcellus Shale Drilling Brings Economic Boost

From design to drilling to environmental engineering to the supply chain, Marcellus Shale development is responsible for hundreds of thousands of jobs in Pennsylvania—including thousands in the midstate, according to the state Department of Labor & Industry.

It’s an outcome that former Gov. Tom Corbett likes to talk about in an industry he sees as marking his legacy.

“You go up into the Williamsport area, you see the sudden growth from what had been there years and decades before,” he said. “Go to Washington County and go to Southpointe and see all the buildings that are there from the energy industry.”

Indeed, Southpointe has changed. The office park in Cecil Township, which is about 20 miles south of Pittsburgh, was once known for its pharmaceutical and technology companies and the ice rink where the Pittsburgh Penguins practiced.

Now, it is home to 150 businesses, including several large energy companies: Chesapeake Energy, Columbia Gas, Consol Energy, Halliburton, Noble Energy, Range Resources, and Rice Energy.

Stikeman Elliott via Mondaq | 13 October 2015

Column: One Size Does Not Fit All—Changing Approaches Toward Aboriginal Engagement

Attaining an aboriginal community’s consent to a development project should not be viewed as a line item on a to-do list. Corporations that want to operate successfully in areas subject to aboriginal interests, therefore, must find new ways of building or rebuilding relationships, and the first step is developing mutual trust.

The Boreal Leadership Council (BLC), a working group of conservation organizations, indigenous peoples, resource companies, and financial institutions, has developed a framework through which industry and government can engage indigenous communities. The BLC has asked industry and government to implement the idea of free, prior, and informed consent (FPIC)—the right of indigenous peoples to offer or withhold consent to developments that may have an effect on their territories or resources—in other words, a veto power over resource development projects. FPIC cannot exist where a people does not have the option to meaningfully withhold consent.

The BLC—whose members include Suncor Energy, TD Bank, and Tembec—has concluded that fears of “arming” indigenous leaders with a veto power are misguided. The BLC believes that adopting FPIC would serve to facilitate partnerships and not create a barrier to development. In essence, FPIC is the most meaningful olive branch that can be offered by industry and government; it is a tangible step down the path toward true partnership.

Houston Chronicle | 8 October 2015

Proposals for Local Input on Oil, Gas Locations Under Fire

Colorado state regulators have released proposed rules to give local governments more of a say in the location of new oil and gas wells, and they quickly came under fire from the energy industry and environmental groups.

The Colorado Oil and Gas Conservation Commission is drawing up the rules to implement the recommendations of a task force convened by Gov. John Hickenlooper.

The governor asked the group to address tensions over hydraulic fracturing and conflicts that arise when cities and oilfields expand into each other.

The task force recommended, among other things, that local governments be given a consulting role when energy companies are deciding where to locate large oil and gas facilities if they’re near homes or businesses. Cities and counties would not be able to enforce their own rules, however.

Regulators released the first draft of the rules on 6 October and scheduled public hearings for 16–17 November.

Rigzone | 17 September 2015

Oil, Gas Works on Solution To Reduce Freshwater Use in Fracturing

While the quantity of water used for hydraulic fracturing increases, essentially with each new well put into production, industry researchers are developing ways to diminish the quality of that water—eliminating freshwater from the solution.

More and more companies are doing their part to lessen their impact on drinking water. In fact, some experts estimate that hydraulic fracturing could be free of freshwater production by the end of this decade.

Many wells, especially those in the Marcellus, still rely on millions of gallons of water—and that’s per well in some cases, Doug Kepler, vice president of environmental engineering at Seneca Resources in Houston, said. But each year more and more of that water is nonpotable water that would not be part of the drinking water supply.