On January 11, 2013, the Federal Energy Regulatory Commission (FERC) issued an order denying a joint request by three environmental groups to delay the construction of Tennessee Gas Pipeline Company, L.L.C.’s (TGP) Northeast Upgrade Project in Pennsylvania and New Jersey. FERC found that the environmental groups had not shown that they would be irreparably harmed by allowing the Project to go forward, and that the agency had complied with the National Environmental Policy Act in considering the environmental impacts of the Project. According to a January 10, 2013 press release, two of the environmental groups have filed a separate challenge to FERC’s approvals of the Project in the U.S. Court of Appeals for the District of Columbia. Additionally, as noted in a previous post, TGP recently filed a lawsuit in federal court seeking to block an administrative challenge to the Project before Pennsylvania’s Environmental Hearing Board.
After taking his oath as the 51st Auditor General of Pennsylvania on January 15, 2013, Eugene DePasquale announced that one of his “first official duties as auditor general will be to initiate a performance audit of the Pennsylvania Department of Environmental Protection to make sure our constitutional right to pure water is not being compromised by natural gas drilling.” The following day, Mr. DePasquale called and sent a letter to DEP Secretary Michael Krancer to inform him of the performance audit of the years 2009 through 2012 for the DEP’s water programs related to the “adequacy and effectiveness of DEP’s monitoring of water quality as potentially impacted by shale gas development activities, including but not limited to systems and procedures for testing, screening, reporting and response to adverse impact such as contamination.” Mr. DePasquale’s letter also indicated that the performance audit will review the “adequacy and effectiveness of DEP’s monitoring of the handling, treatment, and disposal of waste” from shale gas development activities. The Post-Gazette has more.
Last month, the Allegheny County Airport Authority accepted a bid from CNX Gas Company LLC, a subsidiary of CONSOL Energy Inc., to drill for Marcellus gas under the authority’s 9,300 available acres. The Pittsburgh Post-Gazette reports that as the parties continue to negotiate the lease, county officials expect the bonus payment to be between $35 and $40 million. Some estimates value the project at as much as $250 million over the next 30 years. Per Federal Aviation Administration regulations, any gas proceeds must be spent to improve the airport or its properties.
The Potter Leader Enterprise reports that REVH20 LLC may soon begin construction of a shale gas wastewater treatment plant in Ulysses Township, Potter County, Pennsylvania. The company has already obtained the necessary permits from the DEP, and will break ground on the plant as soon as the Ulysses Township supervisors approve it. REVH20 expects the plant, which is to be built along Route 49, to bring new jobs to the area.
UGI Corporation has announced that it has partnered with Tenaska Resources LLC, an affiliate of independent energy company Tenaska, to jointly develop in the Marcellus Shale region, as reported by the Oil & Gas Financial Journal. Starting in late 2013 or early 2014, UGI Energy Services, Inc., will construct approximately 20 miles of new gathering pipelines and related processing facilities for wells that Tenaska intends to drill in Potter County, Pennsylvania. In additional to the gathering system, UGI has invested $25 million for an approximate 19 percent non-operating working interest in acreage that Tenaska operates in Tioga County, Pennsylvania.
Pennsylvania state Senator Daylin Leach (D-Montgomery County) recently circulated a memorandum to state senators stating that he would re-introduce legislation in the 2013-2014 Regular Session to amend portions of Act 13 of 2012 that relate to disclosure of confidential hydraulic fracturing constituents to health professionals. Act 13 contains provisions regarding when chemicals used in hydraulic fracturing and considered proprietary by an operator may be disclosed to health professionals and limiting the disclosures. In his memorandum, Senator Leach stated that the provisions of Act 13 on this issue are “poorly drafted” and that his bill would provide “clarifying language” regarding circumstances when such information can be requested and disclosed by a health professional.
CONSOL Energy Inc. announced today that it expects to invest $835 – $935 million in its gas operation in 2013. According to a press release from CONSOL, (i) an estimated $160 million will be used to maintain production; (ii) $600 million will be used to develop Marcellus Shale assets; and (iii) $122 million will be invested in the CONSOL/Hess Corporation joint venture in the Utica Shale. According to the press release, CONSOL projects its gas production to increase by 8 to 15 percent in 2013 to approximately 170-180 Bcfe.
Don S. Wardius, head of Renewable and Alternative Feedstocks Development at Bayer Material Science, said Bayer wants to see a research and development consortium organized to explore turning methane, a main component in natural gas, into benzene, as reported by the Tribune-Review and Pittsburgh Business Times. Bayer uses benzene as a raw material for the polymers in high-performance plastics. Wardius spoke at the Manufacturing Renaissance Series held in Pittsburgh on Thursday, which was a gathering of chemical executives, academics and lawmakers to discuss the attractive economics around using natural gas to create compounds required in plastics and other industries.
A report published in Environmental Practice this month contends that the Pennsylvania Department of Environmental Protection undercounted the number of unconventional wells in the state when assessing well impact fees for 2012. The report suggests that the state failed to include between about 15,000 and 25,000 wells that qualified under the threshold for an impact fee contained in Act 13. The DEP disputed the report’s claims and indicated that its authors failed to understand which wells could be assessed an impact fee. The Scranton Times-Tribune has more.
On January 9, 2012, the Pennsylvania Department of Environmental Protection released a final White Paper regarding the use of “mine-influenced water” in oil and natural gas operations. According to the White Paper, mine-influenced water “may include water contained in a mine pool or a surface discharge of water caused by mining activities that pollutes, or may create a threat of pollution to, waters of the Commonwealth,” and it “may also include surface waters that have been impacted by pollutional mine drainage.” The White Paper outlines (1) the process for DEP review and evaluation of proposals for use of mine-influenced water, (2) the storage options (impoundments, pits, tanks, etc.) for mine-influenced water prior to use by the oil and gas industry for natural gas well development, and (3) the DEP’s “potential solutions” to long-term liability issues related to the use of mine-influenced water. The DEP has set up a webpage on its Bureau of Abandoned Mine Reclamation website regarding the White Paper, including a searchable database of mine-influenced water discharges in Pennsylvania.
The Scranton Times-Tribune is reporting that Houston-based Tennessee Gas Pipeline Company, LLC, has filed a federal-court complaint seeking to block attempts by two environmental groups to interfere with the operator’s Northeast Upgrade Project. Specifically, Tennessee Gas seeks to preclude the Pennsylvania Environmental Hearing Board from considering petitions and an appeal filed by the Delaware River Network and the Responsible Drilling Alliance. Tennessee Gas seeks to prevent the groups from delaying construction of the 41-mile pipeline project, which would travel across New Jersey and Northeast Pennsylvania. It argues that, because the Federal Energy Regulatory Commission approved construction of the pipeline, the EHB is preempted from taking any action on the petitions and appeal, which are scheduled to be argued before the EHB on Jan. 14, 2013. Pursuant to its contractual obligations, Tennessee Gas must complete the project by Nov. 1, 2013.
The Pennsylvania Department of Environmental Protection recently published three important notices in the Pennsylvania Bulletin affecting the oil and gas industry. They are:
- The final Erosion and Sediment Control General Permit-2 (ESCGP-2) for Earth Disturbance Associated with Oil and Gas Exploration, Production, Processing or Treatment Operations or Transmission Facilities, which includes several supporting documents and a policy document.
- A final technical guidance document regarding the Department’s “Policy for NPDES Permits for Stormwater Discharges Associated with Construction Activities at Oil and Gas Wells (Document No. 550-2100-008)”).
- A notification regarding “Emissions and Source Reporting Requirements for Natural Gas Operations” pursuant to the Pennsylvania Air Pollution Control Act.
The ESCGP-2 notice includes detailed information regarding the DEP’s plan for the proposed transition from the current ESCGP-1 (which expires on April 12, 2013) to the new ESCGP-2. In the notice regarding emissions and source reporting requirements for unconventional natural gas operations, the DEP identified sources subject to reporting, which include: “compressor stations; dehydration units; drill rigs; fugitives, such as connectors, flanges, pump lines, pump seals and valves; heaters; pneumatic controllers and pumps; stationary engines; tanks, pressurized vessels and impoundments; venting and blow down systems; well heads; and well completions.” Complete source reports are due by March 1, 2013, and annually on March 1 thereafter.
Royal Dutch Shell plc and Horshead Corp. agreed to a six-month extension for Shell to acquire land for a proposed cracker plant that it is considering building in Beaver County. Shell had a December 31, 2012, deadline to buy the land in Center and Potter Townships, but obtained the extension to allow it more time to assess the project. The Tribune-Review reports that local and state officials remain optimistic that Shell will move forward with the plant. The cracker facility will be used to process ethane produced from the Marcellus and Utica shales, and the plant and associated businesses are projected by some to create up to 8,000 jobs for the local economy.
The Pennsylvania House and Senate have announced new chairs for the state House and Senate Environmental Resources and Energy Committees. Rep. Ron Miller (R-York) will replace Rep. Scott Hutchinson as the majority chairman of the House Environmental Resources and Energy Committee, and Sen. Gene Yaw (R-23) will replace Sen. Mary Jo White as the majority chairman of the Senate Environmental Resources and Energy Committee. The committees focus on bills, polices and issues dealing with energy resources and development, including regulations, conservation, strategic reserves and standards, and public lands. The Post-Gazette has more.
At its December 20, 2012, public meeting, the Pennsylvania Public Utility Commission (PUC) clarified sections of its implementation of Chapter 23 (“Unconventional Gas Well Fee”) of Act 13 of 2012 (Act 13) in response to a Petition for Amendment and Clarification of the PUC’s Implementation Order pertaining to Act 13. By a vote of 5-0, the PUC ordered that setting a conductor pipe constitutes “spudding” for purposes of triggering the well impact fee, that the impact fee for a plugged well ceases for the calendar year following the plugging of the well, and that the approved budget reports for local governments receiving impact fee payments must be filed with the PUC on or before March 31 each year (with budget reports for both 2011 and 2012 due to the PUC by March 31, 2012). Additionally, the PUC addressed in its Order the assessment of impact fees for wells that are reclassified from horizontal wells to vertical wells, as well as addressed the issue of which producer is responsible for payment of an impact fee when the interest in a well is transferred from one producer to another producer.