The Republic reports that Senator Joe Scarnati, R-Jefferson, recently introduced Senate Bill 555. The bill would create a health advisory panel to review public health data for areas where shale gas extraction occurs and determine the health impacts and benefits such operations. The Governor’s Marcellus Shale Advisory Commission suggested creating a permanent health advisory panel.
The Pennsylvania Department of Environmental Protection (DEP) has reportedly concluded that high levels of methane found in three private water wells in Franklin Forks (Susquehanna County) are not attributable to the nearby gas drilling operations of WPX Energy. DEP conducted an extensive 16-month investigation which included isotopic testing to determine the origin of methane found in the private water wells. Meanwhile, WPX voluntarily provided residents with replacement water supplies. Based on the agency’s own investigation, DEP determined that the elevated methane in the private water wells can be attributed to naturally-occurring methane in the area. The Franklin Forks case has drawn significant media attention partly because the town is located just 10 miles from the border of New York State, where the fracking debate continues at full steam.
Three transactions involving Pennsylvania’s Marcellus Shale have reportedly totaled $882 million in the first quarter of 2013, the second-most for any formation in the country. Ohio’s Utica Shale formation was the subject of two deals worth $283 million, making it the third-most popular. PwC tracked energy deals worth more than $50 million and included acquisitions, investments or partnerships allowing companies to split the costs associated with oil and gas development. The first quarter results represent a significant drop for Marcellus Shale transactions from the first quarter of 2012, where three transactions were reportedly worth about $3 billion.
On April 24, 2013, the Supreme Court of Pennsylvania issued an opinion in the case of Butler v. Powers, addressing the distinction between the words “gas” and “minerals” in private conveyances of land in Pennsylvania. The case began as a quiet title action in Susquehanna County, and the issue was whether an 1881 reservation of “One-half the minerals and Petroleum Oils” in a parcel of land would also include a right to the natural gas. The appellees argued that gas from shale formations should be classified under the term “minerals” in land conveyances, similar to the manner in which coalbed methane gas is considered a part of the coal estate in Pennsylvania. The appellees’ argument was contrary to the long-standing rule stated in an 1882 decision of the Supreme Court of Pennsylvania, Dunham & Shortt v. Kirkpatrick, which created a rebuttable presumption that a reservation of “minerals” did not include “oil” or “gas” unless the term was specifically recited in the reservation.
On appeal of the Butler trial court decision, the Superior Court of Pennsylvania remanded the case in order for the parties to obtain expert testimony explaining whether gas from the Marcellus Shale is “conventional gas” and could be considered a “mineral.” The Supreme Court of Pennsylvania ultimately rejected the Superior Court’s analysis and appellees’ arguments, and held that the rebuttable presumption in Dunham applies the same to shale gas as it would to gas recovered from shallow formations. Thus, the Supreme Court of Pennsylvania upheld the “Dunham Rule” in its April 24, 2013 opinion. According to the Supreme Court, the Dunham Rule (and subsequent case law) remains “viable,” “controlling,” and “unwavering in clarity.” The majority opinion can be found here and concurring opinion here.
A fight is brewing in State College, PA over the proposed installation of a two-mile, 12-inch natural gas distribution pipeline through the borough’s Highlands neighborhood to Penn State’s West Campus steam plant. The proposal riled community activists and the Borough Council, resulting in the Borough Council passing a resolution on April 1, 2013 directing the Borough Manager to not issue a street opening permit, or any other permits related to the proposed pipeline, to the gas distribution company.
An additional complicating factor is that the Borough adopted a charter amendment in 2011 based upon a model drafted by the Community Environmental Legal defense Fund (CELDF). CELDF model based enactments contain controversial provisions, including a “bill of rights” protecting “natural communities and ecosystems” for borough citizens and a provision stripping corporations of all rights granted under the Pennsylvania and United States Constitutions. The charter amendment also prohibits the construction of new infrastructure, including pipelines, for non-sustainable energy sources and purports to override state and federal government preemption of local ordinances and prohibits corporations from challenging the validity of ordinances or the charter amendment. According to the borough’s solicitor, challenges to the permit denial and the charter amendment appear to be imminent.
On April 3, 2013, the PADEP issued a press release informing the public that it had released additional information and details regarding its ongoing comprehensive radiation study of oil and gas development in Pennsylvania, which was originally announced by PADEP on January 24, 2013. The additional information includes PADEP’s:
According to the press release, PADEP “will sample and analyze radioactivity levels of flowback waters, treatment solids, drill cuttings and drilling equipment, along with the transportation, storage and disposal of drilling wastes.” PADEP noted that it plans to begin sampling this month.
According to StateImpact and the Pike County Courier, on March 22, 2013, the U.S. Army Corps of Engineers issued a permit to Tennessee Gas Pipeline Company (TGPC) for wetland, stream, and river crossings associated with its Northeast Upgrade Project. Despite opposition from environmental groups and local citizens, regulators at the Army Corps’ Philadelphia District determined that the proposed work is not contrary to the public interest.
The Project aims to increase the capacity on TGPC’s Line 300 by constructing 40 miles of new pipeline in Pennsylvania and New Jersey and modifying four compressor stations. As indicated in a March 2011 Economic Report by Rutgers University, the Project will create 1,100 job years, $37.8M in income for local labor, and $51.4M in GDP in Pennsylvania, as well as $12.2M in federal tax revenues, $1.9M in state tax revenues, and $2.1M in local tax revenues. The Federal Energy Regulatory Commission issued a certificate of public convenience and necessity for the Project in May 2012. FERC is the lead federal agency for the Project.
The University of Pittsburgh’s Institute on Politics has reportedly assembled a group of natural gas industry representatives, public interest organizations, and regulators under the name “Shale Gas Roundtable.” Members of the Roundtable have been quietly meeting for over a year to develop recommendations addressing various aspects of shale development. One of the Roundtable’s chief goals is to prompt a long-term study of shale gas development and its effect on the environment. The Roundtable expects to publicly release its recommendations in June.
The Pittsburgh Post-Gazette provides coverage today on the race to ship natural gas liquids (NGLs) from Pennsylvania to the Gulf Coast. As indicated in the story, several companies have announced plans to build or convert pipelines to transport NGLs from the Marcellus and Utica to facilities in Beaumont and Mount Belvieu, Texas. The story also discusses the potential impact of the petrochemical facility that Royal Dutch Shell may build in Beaver County, Pennsylvania.
Pennsylvania Governor Tom Corbett announced today that Pennsylvania DEP Secretary Michael Krancer will resign from the DEP effective April 15. Mr. Krancer will return to private law practice at his former law firm, Blank Rome, LLP. No successor has been named, but the deputy chief of staff for the governor, E. Christopher Abruzzo, will serve as acting secretary after Mr. Krancer’s departure. In a press release from the DEP, Governor Corbett stated, “Secretary Krancer has been an invaluable member of our team and I am grateful for his service. His impressive efforts at DEP have taken the agency back to basics, protecting the environment and making the permitting process more efficient.”
According to recent press reports, President Judge Joseph F. Kameen of the Pike County (Pennsylvania) Court of Common Pleas has granted an injunction to prevent protestors from interfering with the construction of a gas pipeline in northeastern Pennsylvania. The proponent of the project, Tennessee Gas Pipeline, L.L.C., received a certificate of public convenience and necessity from the Federal Energy Regulatory Commission to build the pipeline last year, and the line is projected to be in service by November 1, 2013.
The Marcellus shale play reached a production rate of more than 7 billion cubic feet per day, making it the largest gas-producing play in the United States, IHS reports. This is despite the fact that due to low natural gas prices, the number of active drilling rigs in the Marcellus shale play declined by one-third to approximately 80 rigs during 2012. However, the Marcellus still has more gas-directed rigs running than any other play in the United States. The most active counties in the Marcellus shale play were Bradford, Lycoming, Susquehanna, Tioga and Washington.
On March 11, 2013, Pennsylvania State Representative Mike Reese introduced legislation that would require a new disclosure statement in easements for certain natural gas pipelines. The legislation, House Bill No. 904, specifically provides that “[a]ny easement agreement for a natural gas pipeline, other than a natural gas pipeline operated by a public utility regulated by the commission and used to provide retail natural gas service to end-use customers, entered into or otherwise obtained after the effective date of this section shall include a disclosure statement identifying the natural gas pipeline’s potential impact radius and potential impact circle.” The terms “potential impact radius” and “potential impact circle” are defined by referencing the definitions already established in the minimum federal safety standards for gas pipeline facilities.
In what appears to be a first in Pennsylvania, on March 11, 2013, Forward Township in Allegheny County enacted an ordinance specifically targeting and extensively regulating both transmission and gathering pipelines. While the ordinance is technically not a zoning ordinance, it imposes an approval process similar to a conditional use whereby an application is reviewed by the Township Planning Commission and approved by the Board of Supervisors, which may place any conditions or restrictions on the permit that the Board determines is necessary for the public health and safety. In addition to a detailed application, the ordinance requires an application fee of $3,000 per mile of pipeline proposed (up to $15,000) and, upon approval by the Board, a performance bond of $25,000 per mile of pipeline. The operator must also provide the Township with an escrow or letter of credit in the amount of $50,000 for the closure and abandonment of the pipeline for any restoration of the property, air or environment where the pipeline is located. The ordinance probably is preempted by a number of state and Federal statutes.
On March 8, 2013, Pennsylvania State Representative Greg Vitali (D-Delaware County) introduced legislation, House Bill 950, to permanently ban Marcellus Shale leasing on “lands owned and managed by the Department of Conservation and Natural Resources” (DCNR). In 2010, then-Governor Ed Rendell imposed by executive order a moratorium on additional leasing of state forests for drilling. Vitali said his legislation is needed because Governor Tom Corbett could lift the Rendell moratorium at any time. According to Vitali’s press release, House Bill 950 would not affect drilling on private land, nor would it prevent drilling on the more than 700,000 acres of state forest already available for drilling.