Earlier this year, the Department of Interior’s Bureau of Land Management (BLM) released its final version of rules governing hydraulic fracturing on federal land. As discussed in a previous post, these rules will not only impose heightened requirements on drilling operations but also increase the reporting duties for drilling operators. Shortly after the BLM released its proposal, the Independent Petroleum Association of America (IPAA) and Western Energy Alliance (WEA) sued the BLM in Wyoming to challenge the proposed rules. The IPAA and WEA argued that the BLM’s rules are unnecessary because states adequately regulate hydraulic fracturing. The IPAA and WEA have also alleged that the BLM’s final rules are unsubstantiated.
A second lawsuit was later filed by Wyoming against the BLM. In its petition for review of the BLM’s fracking rules, Wyoming stated that the BLM exceeded its authority and its fracking rules would hamper state regulation of hydraulic fracturing. Specifically, Wyoming has argued that the BLM’s authority under the Mineral Leasing Act and the Federal and Policy and Management Act do not authorize the agency to enact the hydraulic fracturing rules. According to Wyoming, the BLM’s rules also conflict with the Safe Water Drinking Act, which grants states the exclusive right to regulate underground injections. North Dakota later joined Wyoming’s petition for review. North Dakota has stated that it is one of the largest oil and gas producers in the United States and the BLM’s rules inhibit the state’s ability to regulate hydraulic fracturing in the state.
The opposition to the United States Bureau of Land Management’s (BLM) rules for hydraulic fracturing is growing. Colorado has also joined the lawsuit challenging the BLM’s new rules for hydraulic fracturing. Cynthia Coffman, the Attorney General for Colorado, describes the BLM’s rules as an encroachment on an area that has historically been regulated by states. Coffman further noted that Colorado has sufficient regulations governing hydraulic fracturing. In addition, Coffman stated that although hydraulic fracturing should be regulated, the BLM lacked the authority to enact the rules.
Read the amended petition for review.
This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713 651 3662) and Johnjerica Hodge (johnjerica.hodge@nortonrosefulbright.com or 713 651 5698) from Norton Rose Fulbright's Energy Practice Group.
Showing posts with label Wyoming. Show all posts
Showing posts with label Wyoming. Show all posts
Wyoming to strengthen chemical disclosure requirements for fracking operations
The Wyoming Public Records Act (WPRA) requires that oil and gas companies disclose information about the chemicals used in their hydraulic fracturing operations. Specifically, companies must disclose the type of chemical used, the concentration of each chemical, the chemical compound name, and the CAS number—the unique number assigned to that chemical for purposes of public scientific literature. Companies may forgo disclosing this information, however, by requesting an exemption from the state’s disclosure rules on the basis that the information constitutes a trade secret, privileged information, or confidential information.
This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713 651 3662) and Johnjerica Hodge (johnjerica.hodge@nortonrosefulbright.com or 713 651 5698) from Norton Rose Fulbright's Energy Practice Group.
On January 23rd, the Wyoming Oil & Gas Conservation Commission (WOGCC) agreed to a settlement that would require the WOGCC to strengthen its criteria for requests to protect the confidentiality of chemicals used in fracking operations.
The settlement agreement resolves a suit filed by several environmental organizations against the WOGCC. The environmental groups challenged the WOGCC’s decision to exempt multiple oil and gas companies from the state’s chemical disclosure requirement.
The WOGCC’s decision was affirmed by the district court. However, on March 12, 2014, the Wyoming Supreme Court remanded the case back to the district court. The Supreme Court reasoned that the district court had to engage in an independent review of the companies’ request for an exemption instead of simply evaluating whether the WOGCC’s decision was arbitrary and capricious. The Supreme Court also held that, for purposes of the WPRA, trade secrets should be defined as the term is defined in federal case law for the Freedom of Information Act.
The new standards will require fracking companies to provide additional factual detail when filing a request for an exemption from the WPRA’s disclosure requirements. The WOGCC agreed to implement the heightened requirements within seven days of the district court’s approval of the settlement agreement. In addition, the WOGCC agreed to provide the parties to the suit with notice of at least thirty days before the WOGCC decided to amend, withdraw, or supersede the rule changes discussed in the settlement agreement. Moreover, the WOGCC agreed to reconsider the environmental groups’ request at issue in the suit. The companies with information requested by the environmental groups will have to submit revised requests for exemptions that conform with the heightened requirements set forth in the settlement agreement.
Read the settlement agreement.
The settlement agreement resolves a suit filed by several environmental organizations against the WOGCC. The environmental groups challenged the WOGCC’s decision to exempt multiple oil and gas companies from the state’s chemical disclosure requirement.
The WOGCC’s decision was affirmed by the district court. However, on March 12, 2014, the Wyoming Supreme Court remanded the case back to the district court. The Supreme Court reasoned that the district court had to engage in an independent review of the companies’ request for an exemption instead of simply evaluating whether the WOGCC’s decision was arbitrary and capricious. The Supreme Court also held that, for purposes of the WPRA, trade secrets should be defined as the term is defined in federal case law for the Freedom of Information Act.
The new standards will require fracking companies to provide additional factual detail when filing a request for an exemption from the WPRA’s disclosure requirements. The WOGCC agreed to implement the heightened requirements within seven days of the district court’s approval of the settlement agreement. In addition, the WOGCC agreed to provide the parties to the suit with notice of at least thirty days before the WOGCC decided to amend, withdraw, or supersede the rule changes discussed in the settlement agreement. Moreover, the WOGCC agreed to reconsider the environmental groups’ request at issue in the suit. The companies with information requested by the environmental groups will have to submit revised requests for exemptions that conform with the heightened requirements set forth in the settlement agreement.
Read the settlement agreement.
This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713 651 3662) and Johnjerica Hodge (johnjerica.hodge@nortonrosefulbright.com or 713 651 5698) from Norton Rose Fulbright's Energy Practice Group.
Methane emissions from oil and gas operations targeted by state regulations
Ohio has joined Colorado and Wyoming in issuing new regulations aimed at limiting the emission of methane gas from oil and natural gas operations to address climate change and health concerns. In development for more than a year, the revised Ohio rules are effective immediately and apply to high volume hydraulic fracturing, oil and gas well site production operations. The rules modify the Ohio Environmental Protection Agency’s general permitting process and include the following:
Federal rules are already in effect requiring the use of green completion technology at well sites beginning in 2015. These rules target emissions from compressors, oil storage tanks and other oil and gas equipment, with the exception of “wildcat wells.” In March 2014, the White House released its “Climate Action Plan: Strategy to Reduce Methane Emissions” to target emissions from coal mines, landfills, agriculture and oil and gas activities.
As part of this plan, the Interior Department is to propose updated standards to reduce flaring and venting of methane gas. In addition, the EPA will be assessing several potentially significant sources of methane and other emissions and will be soliciting information from independent experts through a series of white papers.
In the fall of 2014, the EPA will decide how best to pursue further methane reductions; and, if necessary develop additional regulations by the end of 2016.
This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.
- Operators must now test and monitor for any fugitive emissions taking place at a well site on a quarterly basis.
- A leak detection and repair program must be developed and implemented. The program must be “designed to monitor and repair leaks from ancillary equipment and compressors covered by [the] permit, including each pump, compressor, pressure relief device, connector, valve, flange, vent cover, any bypass in the closed vent system, and each storage vessel.”
- “Leaks shall be detected by the use of either a ‘Forward Looking Infra-Red’ (FLIR) camera or” other approved technology.
- The first attempt at repair of a leak must be made within five (5) calendar days of finding the leak. Full repairs must be completed within 30 days.
- Information must be recorded during leak inspections and these records must be kept for at least five (5) years.
- Permit Evaluation Reports must be filed annually with the Ohio EPA.
Federal rules are already in effect requiring the use of green completion technology at well sites beginning in 2015. These rules target emissions from compressors, oil storage tanks and other oil and gas equipment, with the exception of “wildcat wells.” In March 2014, the White House released its “Climate Action Plan: Strategy to Reduce Methane Emissions” to target emissions from coal mines, landfills, agriculture and oil and gas activities.
As part of this plan, the Interior Department is to propose updated standards to reduce flaring and venting of methane gas. In addition, the EPA will be assessing several potentially significant sources of methane and other emissions and will be soliciting information from independent experts through a series of white papers.
In the fall of 2014, the EPA will decide how best to pursue further methane reductions; and, if necessary develop additional regulations by the end of 2016.
This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.
Wyoming Supreme Court reverses & remands suit on trade secret protection for hydraulic fracturing chemicals
Four environmental groups sued the Wyoming Oil and Gas Conservation Commission (WOGCC) under Wyoming’s Administrative Procedure Act (APA), asserting that the WOGCC unlawfully withheld the identification of hydraulic fracturing chemicals used by various oil and gas operators under the trade secret exception to the state’s disclosure rules.
On March 21, 2013, the district court upheld the WOGCC’s decision, ruling that the Supervisor “acted reasonably” in establishing a policy for evaluating trade secret requests and that his decisions to grant trade secret protection were not arbitrary or capricious and were in accordance with the law.
On March 12, 2014, the Wyoming Supreme Court reversed and remanded the lawsuit for further proceedings, pointing to a “procedural flaw” and stating that “[b]ecause the district court reviewed the Commission Supervisor’s decision under the APA, we must reverse and remand.”
The Supreme Court found that, in their prayer for relief, the environmental groups “asked the district court to compel the Supervisor to show cause why its partial denial of their request for access to its records was lawful.
However, no order to show cause [under the Wyoming Public Records Act (WPRA)] was ever issued, and…the district court never held a show-cause evidentiary hearing.”
The Supreme Court directed the district court to determine whether it will allow the environmental groups “to amend their existing pleadings to request and issue an order to the Supervisor to show cause as to why the documents requested should not be produced, or dismiss the case, which will permit Appellants to file a new action.”
“[U]nwilling to cast the district court adrift without some guidance on the standard to be applied…” and adopting the Freedom of Information Act standard, the Supreme Court defined a trade secret under the WPRA as “a secret, commercially valuable plan, formula, process, or device that is used for the making, preparing, compounding, or processing of trade commodities and that can be said to be the end product of either innovation or substantial effort, with a direct relationship between the trade secret and the productive process.”
The district court is required to determine as a matter of fact based on evidence presented to it whether the information sought is a trade secret.
The district court will have to “review the disputed information on a case-by-case, record-by-record, or perhaps even on an operator-by-operator basis, applying the definition of trade secrets…and making the particularized findings which independently explain the basis of its ruling for each.”
This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.
On March 21, 2013, the district court upheld the WOGCC’s decision, ruling that the Supervisor “acted reasonably” in establishing a policy for evaluating trade secret requests and that his decisions to grant trade secret protection were not arbitrary or capricious and were in accordance with the law.
On March 12, 2014, the Wyoming Supreme Court reversed and remanded the lawsuit for further proceedings, pointing to a “procedural flaw” and stating that “[b]ecause the district court reviewed the Commission Supervisor’s decision under the APA, we must reverse and remand.”
The Supreme Court found that, in their prayer for relief, the environmental groups “asked the district court to compel the Supervisor to show cause why its partial denial of their request for access to its records was lawful.
However, no order to show cause [under the Wyoming Public Records Act (WPRA)] was ever issued, and…the district court never held a show-cause evidentiary hearing.”
The Supreme Court directed the district court to determine whether it will allow the environmental groups “to amend their existing pleadings to request and issue an order to the Supervisor to show cause as to why the documents requested should not be produced, or dismiss the case, which will permit Appellants to file a new action.”
“[U]nwilling to cast the district court adrift without some guidance on the standard to be applied…” and adopting the Freedom of Information Act standard, the Supreme Court defined a trade secret under the WPRA as “a secret, commercially valuable plan, formula, process, or device that is used for the making, preparing, compounding, or processing of trade commodities and that can be said to be the end product of either innovation or substantial effort, with a direct relationship between the trade secret and the productive process.”
The district court is required to determine as a matter of fact based on evidence presented to it whether the information sought is a trade secret.
The district court will have to “review the disputed information on a case-by-case, record-by-record, or perhaps even on an operator-by-operator basis, applying the definition of trade secrets…and making the particularized findings which independently explain the basis of its ruling for each.”
This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.
Wyoming requires groundwater testing before and after drilling
On November 12, 2013, the Wyoming Oil and Gas Conservation Commission (WOGCC) approved regulations to be effective on March 1, 2014, that will require oil and gas operators to conduct testing of water sources before and after drilling a well. With an Application for Permit to Drill or Deepen a Well, operators must identify all water sources within one-half mile of the surface location of the proposed oil or gas well and submit a plan to sample, analyze, and monitor at least four of these groundwater sources.
The plan must include “initial baseline water sampling and testing followed by a series of subsequent sampling and testing after setting the production casing or liner.” The baseline sampling must be done within a year prior to drilling. The first subsequent testing of the same water sources must be done within 12 to 24 months after installation of the production casing or liner, and the second subsequent sample to be taken within 36 to 48 months after the installation of the production casing or liner (but no less than 24 months after the first subsequent sample).
The new rule sets out a sampling and analysis protocol, requiring identification of various constituents including dissolved gases (methane, ethane, propane), alkalines, calcium, iron, potassium, sodium, and BTEX compounds (benzene, toluene, ethylbenzene and xylenes). The operator is required to provide the results of all analytical tests to the WOGCC and to the water source owner within 90 days of the sampling. If, however, the tests show any increases in thermogenic gas, methane, or BTEX compounds above certain thresholds, the operator must “provide verbal and written notification” within 24 hours to the Supervisor of the WOGCC, the Director of the Department of Environmental Quality, and the water source owner.
According to the rule, these sampling results “shall not create a presumption of or against liability, fault, or causation against the owner or operator of a well or multi-well pad who conducted the sampling, or on whose behalf sampling was conducted by a third-party. The admissibility and probative value of any such sampling that results in an administrative or judicial proceeding shall be determined by the presiding body according to applicable administrative, civil, or evidentiary rules.”
With this rule, Wyoming becomes the second state to require groundwater testing and monitoring both before and after drilling. Colorado was the first state, with its regulation taking effect in January 2013. Colorado requires operators to collect up to four water samples from aquifers, water wells, and other water sources within one-half mile of the oil or gas well site before the well is drilled and within 72 months after the well is placed in operation.
This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.
The plan must include “initial baseline water sampling and testing followed by a series of subsequent sampling and testing after setting the production casing or liner.” The baseline sampling must be done within a year prior to drilling. The first subsequent testing of the same water sources must be done within 12 to 24 months after installation of the production casing or liner, and the second subsequent sample to be taken within 36 to 48 months after the installation of the production casing or liner (but no less than 24 months after the first subsequent sample).
The new rule sets out a sampling and analysis protocol, requiring identification of various constituents including dissolved gases (methane, ethane, propane), alkalines, calcium, iron, potassium, sodium, and BTEX compounds (benzene, toluene, ethylbenzene and xylenes). The operator is required to provide the results of all analytical tests to the WOGCC and to the water source owner within 90 days of the sampling. If, however, the tests show any increases in thermogenic gas, methane, or BTEX compounds above certain thresholds, the operator must “provide verbal and written notification” within 24 hours to the Supervisor of the WOGCC, the Director of the Department of Environmental Quality, and the water source owner.
According to the rule, these sampling results “shall not create a presumption of or against liability, fault, or causation against the owner or operator of a well or multi-well pad who conducted the sampling, or on whose behalf sampling was conducted by a third-party. The admissibility and probative value of any such sampling that results in an administrative or judicial proceeding shall be determined by the presiding body according to applicable administrative, civil, or evidentiary rules.”
With this rule, Wyoming becomes the second state to require groundwater testing and monitoring both before and after drilling. Colorado was the first state, with its regulation taking effect in January 2013. Colorado requires operators to collect up to four water samples from aquifers, water wells, and other water sources within one-half mile of the oil or gas well site before the well is drilled and within 72 months after the well is placed in operation.
This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.
Wyoming members of Congress seek federal fracking rules exemption
In a letter dated August 19, 2013, three members of Wyoming’s congressional delegation (its two U.S. Senators and one Representative, all Republicans) asked the Department of Interior to exempt Wyoming and other states having hydraulic fracturing regulations from the pending Bureau of Land Management’s rule applicable to hydraulic fracturing on public lands.
This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.
The lawmakers argue that the proposed BLM rule duplicates “in many aspects, state regulations that already address well-bore integrity and flowback water and require the disclosure of hydraulic fracturing constituents used on Federal public lands. We believe that BLM’s proposed rule will significantly delay oil and gas permitting and in turn discourage oil and gas production on our nation’s public lands.” Indicating “that states are best positioned to regulate hydraulic fracturing,” they questioned whether “BLM’s final rule will provide any meaningful benefits not already provided by public land states…, such as Wyoming, Colorado, Idaho, Montana, New Mexico, and Utah [which] currently enforce their own hydraulic fracturing regulations… [on] private and state lands… [and which] could be applied to Federal public lands with the states’ respective borders.”
Expressing a similar position, in mid-July 2013, Representative Bill Flores (R.-Texas) introduced a bill entitled “Protecting States’ Rights and Preventing Federal Red Tape on American Energy Act” which would bar the DOI from applying its proposed rule in states having their own hydraulic fracturing regulations, regardless of duplication or whether the state rules are more or less restrictive than the proposed rule. See previous blog dated July 25, 2013, “Proposed legislation would allow a state to control hydraulic fracturing on public lands within its borders.”
The proposed BLM rule provides for a variance, deferring to states and tribes that already have regulations in place that meet or exceed the proposed rule. However, the BLM retains the authority to modify the variance, which, according to the Wyoming legislators, would “lead to regulatory uncertainty for oil and gas producers.” The public comment period for the BLM’s proposed rule ends on August 23, 2013.
Expressing a similar position, in mid-July 2013, Representative Bill Flores (R.-Texas) introduced a bill entitled “Protecting States’ Rights and Preventing Federal Red Tape on American Energy Act” which would bar the DOI from applying its proposed rule in states having their own hydraulic fracturing regulations, regardless of duplication or whether the state rules are more or less restrictive than the proposed rule. See previous blog dated July 25, 2013, “Proposed legislation would allow a state to control hydraulic fracturing on public lands within its borders.”
The proposed BLM rule provides for a variance, deferring to states and tribes that already have regulations in place that meet or exceed the proposed rule. However, the BLM retains the authority to modify the variance, which, according to the Wyoming legislators, would “lead to regulatory uncertainty for oil and gas producers.” The public comment period for the BLM’s proposed rule ends on August 23, 2013.
This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.
EPA withdraws from continued study of water in Pavillion, Wyoming
The EPA’s withdrawal comes after it spent approximately three years sampling and testing water in the area. In 2010, after well owners in Pavillion complained of objectionable taste and odor in their water, the EPA tested water samples and found that 11 out of 39 wells were polluted with 2-butoxyethanol phosphate which is contained in some drilling fluids. The EPA published a draft report of their findings in December 2011. This report was greatly criticized as being based on limited and questionable data, dismissing reports of historical problems with groundwater quality, and examining fracking as the only contamination source. The EPA eventually delayed peer review of the draft report to allow for additional sampling. In 2012, in cooperation with the EPA, the U.S. Geological Survey (USGS) re-sampled the EPA’s two monitoring wells as well as four private and one public water supply wells. The USGS found that groundwater near the monitoring wells contained synthetic chemicals and high levels of methane. Once again these results were criticized, first by the Wyoming DEQ who complained that the results had not been vetted by state agencies and that the research was conducted without transparency and also by Encana, an operating company with gas wells in the area, who argued that the EPA provided no evidence that fracking or any drilling activity was the direct cause of the water contamination. Shortly after extending the public comment period for the draft report and the USGS’ results until September 30, 2013, the EPA announced its withdrawal from the investigation.
Wyoming Governor Matt Mead is pleased with the state taking over the investigation and with Encana’s contribution of $1.5 million to defray the costs of investigation and to provide interim funding for a nonprofit to provide water to several Pavillion residents. The Pavillion Area Concerned Citizens (PACC), the Powder River Basin Resource Council, and Earthworks (all environmental groups) are critical of the change, believing that state officials will not hold the energy companies accountable.
Wyoming Governor Matt Mead is pleased with the state taking over the investigation and with Encana’s contribution of $1.5 million to defray the costs of investigation and to provide interim funding for a nonprofit to provide water to several Pavillion residents. The Pavillion Area Concerned Citizens (PACC), the Powder River Basin Resource Council, and Earthworks (all environmental groups) are critical of the change, believing that state officials will not hold the energy companies accountable.
This article was prepared by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.
Wyoming Court finds fracking formula protected by Trade Secret Law
In the case of Powder River Basin Resource Council, et al. v. Wyoming Oil and Gas Conservation Commission and Halliburton Energy Services, Inc., in the Seventh Judicial District Court, County of Natrona, State of Wyoming, Civil Action No. 94650-C, four environmental plaintiffs challenged the trade secret exemption of the Wyoming Oil and Gas Conservation Commission’s hydraulic fracturing fluid disclosure rules. The plaintiffs asserted that the Commission had unlawfully withheld the identification of hydraulic fracturing chemicals used by various oil and gas producers, including Baker Hughes, BJ Services Company, CESI Chemical, Champion Technologies, Core Laboratories, Halliburton Energy Services, Inc., NALCO Company, SNF, Inc., and Weatherford International. They complained that the oil and gas producers did not provide sufficient factual support to uphold their claim of trade secret and want all the chemicals publicly disclosed. Halliburton Energy Services, Inc., who intervened in this litigation, warned that uncovering the hydraulic fracturing formula could hamstring project development efforts in the state.
On March 21, 2013, the Court ruled that the Commissioner “acted reasonably when he established a policy for evaluating trade secret requests and that policy is in accordance with the Wyoming Public Records Act” and that the plaintiffs failed to demonstrate that the Commissioner’s “decisions to grant trade secret protection requests were arbitrary, capricious, or not in accordance with the law.” The Commission’s decision to withhold the hydraulic fracturing formula information was upheld by the Court. In its conclusion, the Court expressed its awareness of the “important issues of public policy” implicated in the parties’ positions. The plaintiffs’ position that the “identity of hydraulic fracturing chemicals is key to understanding the potential environmental and health impacts of hydraulic fracturing” and the defendant’s position that hydraulic fracturing has a positive economic impact on Wyoming and that disclosure would adversely affect the industry have “substantial merit, however the Court feels these competing concerns are best addressed through legislative action, or further rule promulgation and are not properly within the Court’s purview.”
Wyoming’s hydraulic fracturing disclosure rules require owners, operators or service companies to disclose to the Commission the chemical additives, compounds and concentrations or rates proposed to be mixed and injected. The required information includes additive type, compound name and Chemical Abstract Service (CAS) numbers, and proposed rate or concentration for each additive. The Commission retains discretion to request the formulary disclosure for the chemical compounds. However, this formulary information only needs to be disclosed to the Commission and confidentiality protection shall be provided for trade secrets. Before granting trade secret exemptions, the Commission requires the party seeking the exemption to submit details of the chemicals whose identities they want to withhold, along with a cover letter justifying their trade secret position. The Commission staff then reviews the chemical information and the justification to ensure compliance with the disclosure rule and the Wyoming Public Records Act. If there is compliance, the Commission withholds the information.
Read The Court’s Order
This post was prepared by Barclay Nicholson (bnicholson@fulbright.com or 713 651 3662) fromFulbright's Energy Practice.
On March 21, 2013, the Court ruled that the Commissioner “acted reasonably when he established a policy for evaluating trade secret requests and that policy is in accordance with the Wyoming Public Records Act” and that the plaintiffs failed to demonstrate that the Commissioner’s “decisions to grant trade secret protection requests were arbitrary, capricious, or not in accordance with the law.” The Commission’s decision to withhold the hydraulic fracturing formula information was upheld by the Court. In its conclusion, the Court expressed its awareness of the “important issues of public policy” implicated in the parties’ positions. The plaintiffs’ position that the “identity of hydraulic fracturing chemicals is key to understanding the potential environmental and health impacts of hydraulic fracturing” and the defendant’s position that hydraulic fracturing has a positive economic impact on Wyoming and that disclosure would adversely affect the industry have “substantial merit, however the Court feels these competing concerns are best addressed through legislative action, or further rule promulgation and are not properly within the Court’s purview.”
Wyoming’s hydraulic fracturing disclosure rules require owners, operators or service companies to disclose to the Commission the chemical additives, compounds and concentrations or rates proposed to be mixed and injected. The required information includes additive type, compound name and Chemical Abstract Service (CAS) numbers, and proposed rate or concentration for each additive. The Commission retains discretion to request the formulary disclosure for the chemical compounds. However, this formulary information only needs to be disclosed to the Commission and confidentiality protection shall be provided for trade secrets. Before granting trade secret exemptions, the Commission requires the party seeking the exemption to submit details of the chemicals whose identities they want to withhold, along with a cover letter justifying their trade secret position. The Commission staff then reviews the chemical information and the justification to ensure compliance with the disclosure rule and the Wyoming Public Records Act. If there is compliance, the Commission withholds the information.
Read The Court’s Order
This post was prepared by Barclay Nicholson (bnicholson@fulbright.com or 713 651 3662) fromFulbright's Energy Practice.
New EPA Report Again Ties Wyo. Water Pollution To Fracking
On October 10, 2012, as a follow-up to its December 2011 draft report concerning allegations of groundwater contamination in Pavillion, Wyoming, the EPA released the methodology and results for additional water samples collected from two monitoring wells by the U.S. Geological Society, in cooperation with the Wyoming Department of Environmental Quality, in April 2012, a report that was highly criticized by industry.
The EPA announced that the results of the additional testing “are generally consistent with the monitoring data” in the draft report which indicates that the groundwater in the area contains chemicals (glycols, alcohols, and methane) linked to hydraulic fracturing.
The December 2011 draft report and this additional data are now available for public comment on the EPA website through January 15, 2013. These reports can be found here; and additional information about the comment period can be found here.
The EPA’s conclusion is being questioned by industry representatives, including Encana Corp., the operator of oil and gas wells near Pavillion. An Encana spokesman stated that the EPA has provided no sound scientific evidence that drilling has impacted domestic drinking water wells and that finding hydrocarbons in two monitoring wells is not surprising given that the wells were drilled into a gas production zone.
This article was prepared by Barclay R. Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice.
This article was prepared by Barclay R. Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice.
Federal vs. State Regulation
The group wants the proposed regulations strengthened:
- to require the public disclosure of the pre- and post-fracturing chemicals and additives;
- to re-assess the use of FracFocus as the system for the public disclosure of chemicals and to consider a government-run system that would be subject to open records laws and that would allow the information to be published in an open, searchable format;
- to prevent the use of open-air pits to store wastewater from hydraulic fracturing operations;
- to set up strict guidelines for variances or waivers from the regulations; and
- to include rules relating to set-backs in order to control air pollution.
Within one day of this letter, Governor Matt Mead of Wyoming expressed his opposing opinion, stating that federal hydraulic fracturing rules are unnecessary because the state regulations are already stronger.
For example, current Wyoming state regulations require the pre-fracturing disclosure of all chemical identities and concentrations of each additive used in the hydraulic fracturing process.
This article was prepared by Barclay R. Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice.
This article was prepared by Barclay R. Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice.
Survey of Flaring Regs for Arkansas, Colorado, Louisiana, North Dakota, Pennsylvania, Texas and Wyoming
Natural gas production is booming in the United States.
Operators, aided by advances in hydraulic fracturing, have ramped up production, whether by reworking old oil wells or exploiting new formations altogether.
However, just because an operator has the ability to produce natural gas does not necessarily mean that it can sell the gas; compressors, pipelines, treatment plants, and other infrastructure must be prepared in order to get the gas to market.
However, just because an operator has the ability to produce natural gas does not necessarily mean that it can sell the gas; compressors, pipelines, treatment plants, and other infrastructure must be prepared in order to get the gas to market.
In some cases, this lack of infrastructure has led operators to vent or flare gas at the wellhead.
In order to get a better understanding of where the law stands and in what direction it may head, below is a survey of the major gas-producing states’ regulations regarding flaring.
Note: this survey covers only the regulations that speak directly to the question of whether an operator may flare the gas on private lands. Flaring has other potential legal repercussions, such as the particles that are emitted in the process that could call into question state or federal clean air laws or endangered species, and different regulations apply to wells located on state- or federally-owned land. Those concerns are beyond the scope of this survey.
Arkansas
Arkansas allows operators to vent or flare gas within 7 days of when gas is first encountered in a well. After that time, gas may not be vented or flared unless the operator obtains an exception from the Arkansas Oil and Gas Commission.Colorado
In Colorado, all flaring must be authorized by the Colorado Oil and Gas Conservation Commission unless it is done during an upset condition, well maintenance, well stimulation flowback, purging operations, or a productivity test.Louisiana
In Louisiana, flaring of natural gas is prohibited unless the Louisiana Office of Conservation finds upon written application that such a prohibition would result in an economic hardship on the operator. The regulations further note that no such economic hardship can be found if the current market value—at the point of delivery for the gas proposed to be vented—exceeds the cost involved in making the gas available to market.North Dakota
Gas may be flared during the first year of production from a well. N.D. Century code 38-08-06.4. After the one-year grace period, the well must be either connected to a pipeline or used at the wellhead to power an electrical generator, unless the producer applies for and obtains an exception. Id.
Producers can obtain exceptions from the Industrial Commission for additional flaring if the producer presents evidence demonstrating the economic infeasibility of piping gas from the well. Id.
It is economically infeasible to connect the well to a natural gas gathering line if the direct costs of connecting the well to the line and the direct costs of operating the facilities connecting the well to the line during the life of the well are greater than the amount of money the operator is likely to receive for the gas, less production taxes and royalties, should the well be connected to the gathering line. N.D. Century Code 43-02-03-60.2.
Oklahoma
In Oklahoma, an operator may vent or flare up to 50 mcf/day without a permit if: (i) it is not economically feasible to market the gas; (ii) a suitable stand, line, or stack is used to prevent a hazard to people; and (iii) there is less than 100 ppm of hydrogen sulfide in the gas. For venting or flaring at rate greater than 50 mcf/day, the operator must seek an administrative permit from the Conservation Division of the Oklahoma Corporation Commission.Pennsylvania
Pennsylvania’s oil and gas conservation regulations do not address flaring, other than to say that it may be done so long as it does not endanger people.Texas
Texas producers have a grace period of 10 days after the initial completion, recompletion in another field, or workover operations in the same field, during which they may flare natural gas. 16 TAC 3.32(f)(1)(A). Releases of gas that are not routinely measured (such as small amounts that escape during the initial completion of a well) are exempt from flaring requirements and need not be measured for the purposes of well allowables. 16 TAC 3.32 (d)(1).
Producers may also vent or flare gas when a well must be unloaded or cleaned-up to atmospheric pressure, but may only do so for fewer than 24 hours in one continuous event or a total of 72 hours in one calendar month. 16 TAC 3.32(f)(1)(B). Texas producers may obtain exceptions from the railroad commission for the release of gas when the operator presents information to show the necessity of the release. 16 TAC 3.322(f)(2).
However, such administrative exceptions shall not be granted for periods exceeding 180 days, though they may be renewed. 16 TAC 3.32(h).
Wyoming
Wyoming allows for flaring without any additional regulatory authorization in the following situations:- During emergencies or upset conditions, which are temporary situations that result in the unavoidable short-term venting or flaring of gas;
- For well purging and evaluation tests;
- During initial or recompletion evaluation tests which shall not exceed 15 days unless otherwise authorized; or
- If it is a venting or flaring of casinghead gas from an oil well that produces less than 60 MCF of gas per day, unless the Wyoming Oil & Gas Conservation Commission determines that waste is occurring.
Texas RRC Press Release, May 23, 2012
Texas Railroad Commissioner David Porter discussed the possibility of new regulations in a May 23 news release. Noting that gas drilling activity “is outstripping capacity and awaiting pipeline infrastructure,” Commissioner Porter asserted that Texas “must proactively address flaring.” The only specifics provided in the news release were:
- that the Railroad Commission is seeking to work in partnership with Texas electrical energy regulators to use excess gas for strategic generation in light of the threat of weather-induced power curtailment; and
- that the Railroad Commission is studying a pilot program for using gas as a source of power for on-lease operations in lieu of flaring the gas.
This article was prepared by Barclay Nicholson (bnicholson@fulbright.com / 713 651 3662) from Fulbright's Energy Law Practice.
President Obama Discusses the Benefits of Shale Gas in his State of the Union Address
On Tuesday President Obama in his State of the Union address discussed the merits of shale gas. The President made clear, "[a]nd nowhere is the promise of innovation greater than in American-made energy."
Obama went on to acknowledge that, "[w]e have a supply of natural gas that can last America nearly one hundred years." He also made comments about the jobs being created by shale gas stating that, "Experts believe this will support more than 600,000 jobs by the end of the decade." Read the full State of the Union address transcript.
Yet, despite his comments on the promise of shale gas and its economic benefit, the President also gave several clear indications that more regulation is to come. Specifically he stated that, "I’m requiring all companies that drill for gas on public lands to disclose the chemicals they use."
The promulgation of hydraulic fracturing disclosure rules was first discussed by Interior Secretary Ken Salazar and members of the House Natural Resources Committee in late 2010.
In October, November, and December 2011, Secretary Salazar stated that the DOI was “within weeks of” or “weeks away from” developing new regulations for natural gas and shale oil production on federal lands, including requiring the disclosure of chemicals used in hydraulic fracturing.
Secretary Salazar cited to the preliminary nature of the EPA’s recent report in Wyoming related to fracking and that the findings needed to be reviewed by other scientists to determine the validity of the report’s suggestion that hydraulic fracturing is polluting groundwater.
Secretary Salazar expressed his commitment to working with the energy industry and environmental groups to draft the new disclosure regulations to insure that chemicals used in fracking are disclosed and to create tougher standards for well bores during the fracking process.
As of today, those proposed disclosure regulations have yet to be put out for public comment. Many states have already passed hydraulic fracturing disclosure laws and are discussed on this blog.
The energy community was quick to comment on Mr. Obama's statements and I have attached links to them below:
Obama went on to acknowledge that, "[w]e have a supply of natural gas that can last America nearly one hundred years." He also made comments about the jobs being created by shale gas stating that, "Experts believe this will support more than 600,000 jobs by the end of the decade." Read the full State of the Union address transcript.
Yet, despite his comments on the promise of shale gas and its economic benefit, the President also gave several clear indications that more regulation is to come. Specifically he stated that, "I’m requiring all companies that drill for gas on public lands to disclose the chemicals they use."
The promulgation of hydraulic fracturing disclosure rules was first discussed by Interior Secretary Ken Salazar and members of the House Natural Resources Committee in late 2010.
In October, November, and December 2011, Secretary Salazar stated that the DOI was “within weeks of” or “weeks away from” developing new regulations for natural gas and shale oil production on federal lands, including requiring the disclosure of chemicals used in hydraulic fracturing.
Secretary Salazar cited to the preliminary nature of the EPA’s recent report in Wyoming related to fracking and that the findings needed to be reviewed by other scientists to determine the validity of the report’s suggestion that hydraulic fracturing is polluting groundwater.
Secretary Salazar expressed his commitment to working with the energy industry and environmental groups to draft the new disclosure regulations to insure that chemicals used in fracking are disclosed and to create tougher standards for well bores during the fracking process.
As of today, those proposed disclosure regulations have yet to be put out for public comment. Many states have already passed hydraulic fracturing disclosure laws and are discussed on this blog.
The energy community was quick to comment on Mr. Obama's statements and I have attached links to them below:
- Independent Petroleum Association of America (IPAA) Chairman Virginia "Gigi" Lazenby statements
- American Petroleum Institute President and CEO Jack Gerard's comments
- America's Natural Gas Alliance President and Chief Executive Officer Regina Hopper's comments
- Marcellus Shale Coalition (MSC) president Kathryn Klaber's comments
- American Gas Association (AGA) comments
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