Regulation

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    2 Bills Affecting Utica Shale Head to Gov Kasich for Signature

    OH Gov. John Kasich

    A pair of bills recently passed the Ohio State legislature and have gone to Gov. John Kasich’s desk for his signature. Both bills affect companies in the oil and gas space, in particular those drilling in the Utica Shale. One bill, House Bill (HB) 430, tightens up the tax code, what is and what is not allowed as deductions for drilling companies. Ohio state auditors have taken advantage of unclear language to aggressively go after oil and gas companies over legitimate tax breaks they receive under Ohio law (to not pay taxes on equipment used directly in producing oil and gas). Lawmakers want to end the tax witch hunts by clearing up language. They did so back in 2016, but Kasich and Democrats successfully spun the issue as a “tax break” under which up to $264 million would have to be refunded to Big Oil. Total lie. But Kasich vetoed that bill and it died (see OH Gov Kasich Vetoed Misnamed ‘Tax Relief’ for Utica Drillers). The bill is back, in a different form, and sent to Kasich for a signature. Will he sign it this time? The second bill, House Bill (HB) 225, addresses the issue of plugging some of the estimated 600 orphan wells in the Buckeye State. HB 225 triples the amount of money set aside to cap orphan wells (money which comes from Ohio’s severance tax, paid for by oil and gas producers). The bill also “creates a more streamlined and efficient process for identifying and plugging” orphan wells. The amazing thing about HB 225 is that both Big Green groups and the drilling industry support it! We predict a quick signature on this one…
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    PA DEP Releasing Onerous New GP-5 & 5A Methane Regs June 8

    Last December the Pennsylvania Dept. of Environmental Protection (DEP) issued “draft final language” for the proposed General Permit 5A (GP-5A) and the revised General Permit 5 (GP-5)–regulations that supposedly will cut down on fugitive methane from escaping from drill pads and pipelines (see PA DEP Signals Onerous New GP-5 & 5A Methane Regs Coming 1Q18). The onerous regulations, which for now only apply to *new* sources (not existing) were originally prompted by bullying from the Obama Environmental Protection Agency. Even though EPA pressure disappeared under President Trump, PA Gov. Wolf is still pushing these onerous new regs. GP-5 applies to pipelines and compressor stations, while GP-5A applies to well pads and drilling. Following a flood of comments, the DEP tweaked the onerous regs yet again (for the third or fourth time), and in late March published yet another revised final final final final final version of the regs (see PA DEP Releases Draft Final GP-5 & 5A Methane Regulations). The DEP just announced they will issue the final final final final version of the revised regs on June 8, and two months later, on August 8, the new rules will officially go into effect–unless they delay it again…
    Read More “PA DEP Releasing Onerous New GP-5 & 5A Methane Regs June 8”

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    Quebec to Ban Utica Shale Drilling, Most Other Drilling Too

    It seems the Canadian province of Quebec has decided to ban pretty much all oil and gas drilling, which is a good news/bad news thing. The good news is that Quebec will have to import their hydrocarbons from other places–namely the Marcellus/Utica. The bad news is for Questerre, a Canadian driller who has patiently waited for years to begin drilling on their extensive Utica acreage in the St. Lawrence Lowlands of Quebec. Questerre thought they would begin drilling this year (see Questerre Plans 8 Initial Well Pads in Canadian Utica 2018-2019). Instead, Questerre is now hosed. In addition to a total frack ban, Quebec is instituting a “no drill zone” for conventional (non-shale) drilling of 1 kilometre (.62 miles) from municipalities, 300 metres (984 feet) from private residences, 550 metres (1,804 feet) from schools, hospitals or public buildings, and 200 metres (656 feet) from “ecotourism” sites. In other words, all drilling of any kind will be pretty much banned pretty much everywhere. Quebec is following in the footsteps of New York, where the hydrocarbon industry has been decimated by Gov. Andrew Cuomo. It’s a sad day for our Canadian cousins in Quebec…
    Read More “Quebec to Ban Utica Shale Drilling, Most Other Drilling Too”

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    Democrat FERC Commissioner Seeks to Block PennEast Pipe

    FERC Commissioner Richard Glick

    In January, the Federal Energy Regulatory Commission (FERC) voted 4-1 to approve the $1 billion, 120-mile PennEast Pipeline project that will stretch from northeast PA to the Trenton area of New Jersey (see FERC Grants Final Approval for PennEast Pipe – Real Battle Begins). Democrat FERC Commissioner Richard Glick (wind lobbyist, hand-picked by hyper-partisan NY Sen. Chuck Schumer), voted against approving the project. A number of Big Green groups filed a request for a “rehearing” of FERC’s decision to approve PennEast. FERC used a “tolling order,” which gives them longer than the statutory 30 days to respond, to play out the rehearing request. The use of tolling orders is the only way to get projects built these days. FERC has to play the game–put off saying “no” to these anti groups, because as soon as they tell them “no” to a rehearing request, antis then run to the courts and try to block the project there. Glick is siding with antis. He issued a statement last week once again trash-talking PennEast, and demanding FERC answer the groups rehearing request pronto so they can hurry like a bunny to the nearest Appeals court to try to stop PennEast…
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    PIOGA Consultant Remarks (Mis)Used to Promote 250% Shale Fee Hike

    We spotted a rather strange story (for us) on a major energy news service (Platts) that says, in so many words, that “the industry” says hiking the permit fee to drill a new Marcellus well in Pennsylvania by 250%–to $12,500–is no big deal. Which made our eyebrows go up. According to a long-time regulatory consultant for the Pennsylvania Independent Oil & Gas Association (PIOGA) quoted by Platts, “I don’t think it’s [the 250% fee hike] going to make or break people’s decisions” as to whether or not to drill. Hmmm. That’s not the feedback we’ve heard others, like the Marcellus Shale Coalition, say on the record. The same article quotes PIOGA President Dan Weaver saying, “We haven’t developed an official statement, but we definitely don’t agree with it [the fee hike]. We feel that we pay enough fees as it is.” So what’s going on here? Does the industry, as represented by PIOGA, think this fee hike is nuts (as we do)? Or does PIOGA think the fee hike is okey dokey? We contacted Dan to ask about the consultant’s comments and got an interesting response…
    Read More “PIOGA Consultant Remarks (Mis)Used to Promote 250% Shale Fee Hike”

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    Penn Twp Frack Ban Decision Now in Hands of Local Judge

    Last November we updated you on a lawsuit filed by a group of anti-fossil fuelers in Penn Township (Westmoreland County), PA (see Penn Twp Ninny Nannies File Lawsuit to Block Apex, H&H Wells). A group calling themselves Protect PT, backed with money and legal help from Big Green group PennFuture, filed a lawsuit to try and stop Apex Energy and Huntley & Huntley (H&H) from drilling wells in the township. A Westmoreland County judge heard some testimony in the case in April (see Penn Twp Antis Try to Use PA ERA to Block Shale Drilling). The peril with Protect PT’s lawsuit is that it uses Pennsylvania’s so-called Environmental Rights Amendment (ERA), which liberal PA judges have, in recent years, breathed new life into. The argument is that fracking denies those who live near this temporary activity their “right” to enjoy Mom Nature, therefore it should be banished forever. Protect PT is attempting to pull off a total frack ban in the Penn Township. Although the judge heard testimony in April, more was given this week. All testimony is now done and the case rests with the judge. We expect whoever loses will appeal. Below is a recap of the case and the testimony given this week…
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    PA House Passes Bill Exempting Conventional Drillers from Shale Regs

    In March, two identical bills were introduced, one in the PA Senate, the other in the PA House, that would “roll back” (more like “lock in”) regulations that govern conventional PA drilling to the Oil and Gas Act of 1984 (see 2 PA Bills Would Roll Back Conventional Drilling Regs to 1984). The bills are in response to coming changes proposed by leftist Gov. Tom Wolf to over-regulate conventional drillers. Big Green didn’t waste any time opposing the bills, spinning them as a lessening of environmental protections in a letter to legislators (see Big Green Opposes Bill to Relax Regs for PA Conventional Drillers). The big news is that the House’s version of the bill, HB 2154, passed yesterday by a vote of 111-84. The issue now swings to the Senate (SB 1088), where its future is more uncertain. Let’s assume the Senate passes SB 1088 (a really big assumption). Lefty Gov. Tom Wolf is vehemently against it and will veto the bill when it hits his desk–so says one of his top lieutenants. It’s not clear if there would be enough votes in the Senate (or House) to override a Wolf veto. Hey, we’re still hopeful, but in all honesty, this legislation faces an uphill battle…
    Read More “PA House Passes Bill Exempting Conventional Drillers from Shale Regs”

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    Westmoreland Town Votes to Overturn Restrictive Shale Ordinance

    Elections have consequences, including local elections. Here’s a story that caught our eye because it’s so unusual (“man bites dog” type of story). Donegal Township in Westmoreland County (southwestern PA) is a rural township: population 2,465 people living in 42 square miles. There was some Marcellus well drilling in the town several years ago, but after WPX plugged wells in the town (see WPX Plugging 9 Wells in Westmoreland County, PA), we find no actively producing wells nor any permits to drill new wells, according to the forthcoming Marcellus & Utica Shale Upstream Almanac 2018 (due out later this week!). Even so, most residents support more Marcellus development. We base that on this observation: A previous town board passed a restrictive zoning ordinance, aimed at blocking shale drilling. Donegal had no zoning ordinance of any kind before the board passed one (last year? year before?). Opponents to the ordinance got themselves elected to the board last November and last Tuesday night voted 4-1 to repeal the zoning ordinance put there by the previous board. According to one of the new board members, tossing out the zoning ordinance “will be helpful to the residents because they’ll have more freedom.” What a breath of fresh air!…
    Read More “Westmoreland Town Votes to Overturn Restrictive Shale Ordinance”

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    Trump Makes Rare Wrong Move – Protects Coal & Nuke Plants

    We admire President Trump and the job he’s doing–and aren’t afraid to say so publicly. However, we don’t always agree with his decisions and policies. This is one of those times. In fact, we strongly disagree with a new Trump policy. President Trump has decided that the nation’s electricity grid, in order to be “secure” and not vulnerable to outages, needs to have a diversity of sources producing electricity. Even if those sources (coal and nuclear) are no longer economic. Natural gas, and to a far less degree, renewables like wind and solar, are replacing both coal and nuclear power plants. The gas is abundant, it’s cheap, it burns clean and just makes sense. Yet powerful lobbying interests for coal and nuclear have convinced Trump that without their higher-priced electricity in the mix, the country is somehow threatened. That’s bunkum. Last Friday, President Trump ordered Dept. of Energy Secretary Rick Perry to “prepare immediate steps” to stop the coal and nuke plants from retiring. That is unfortunate. Obama picked energy winners and losers. Fossil fuels like coal were targeted for extinction by Obama. Now, Trump is doing the same thing but in reverse. By propping up coal and nuclear, he will make electricity far more expensive for everyone. The right answer here, as it always has been, is to let the free market work…
    Read More “Trump Makes Rare Wrong Move – Protects Coal & Nuke Plants”

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    PA Supreme Court Rules on Gorsline Zoning Case – Mixed Decision

    Not long after the Pennsylvania legislature passed the Act 13 Marcellus Shale drilling law in 2012, signed into law by then-Gov. Tom Corbett, seven selfish towns sued, claiming they should have the right (via zoning laws) to determine just where an oil and gas well can be located within their borders. The challenge was brought by rabid anti-drillers and appealed all the way to the PA Supreme Court, where unfortunately the antis won (see PA Supreme Court Rules Against State/Drillers in Act 13 Case). What the antis didn’t think about was the fact some towns may decide to exercise their newly-won rights to allow wells, instead of prohibit them. Whoops. Guess they didn’t see that one coming. A town in Lycoming County decided to allow a shale well on property zoned residential/agricultural (i.e. farming country) by using a “conditional use” permit. Anti-drilling Big Green groups, including PennFuture, THE (arrogant) Delaware Riverkeeper, and the Peters Township gang (none of which are from mid-PA where the town is located) sued to deny the town the right to exercise its Act 13 authority to allow a shale well. The case, Brian Gorsline v. Board of Supervisors of Fairfield Township (Gorsline is an avowed anti-driller), was appealed to the PA Supreme Court and in March 2017 (over a year ago!) the Supremes heard oral arguments (see Gorsline Zoning Case Argued Before PA Supreme Court Justices). Last Friday the Supremes came down from Mt. Olympus to issue their ruling–and they ruled (4-3) against the town and for the antis. However, before you jump to any conclusions and before you believe headlines from Big Green supporters trumpeting their “victory,” you need to know this: the decision potentially makes it harder (not easier) for antis to stop drilling in the future. We’ll explain…
    Read More “PA Supreme Court Rules on Gorsline Zoning Case – Mixed Decision”

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    PA Supreme Court Upholds Block on DEP Chapter 78a Drilling Regs

    In October 2016, after five years in the making, Pennsylvania adopted new shale drilling regulations (see PA’s New Chapter 78a Drilling Regs Go into Effect Oct 8). Although the regs were ready at the end of the Gov. Tom Corbett Administration, Corbett fumbled the ball and the regs didn’t get adopted, which left them vulnerable to the incoming left-leaning Tom Wolf Administration. Wolf’s people mangled the regulations under the Dept. of Environmental Protection (DEP) Dictator/Secretary John Quigley, who got fired over unethical collusion with Big Green groups. Some of the good stuff remained, but onerous new elements were introduced. The Marcellus Shale Coalition (MSC), which represents PA’s biggest shale drillers, filed an appeal in Commonwealth Court to block the most onerous aspects of the new regulations (see Marc. Shale Coalition Files Lawsuit to Block PA Chapter 78a Regs). The judge agreed to “temporarily” block some of the items in the MSC list (see PA Judge Temporarily Blocks Some DEP Chapter 78a Drilling Regs). In December 2016, the DEP escalated the case by asking the PA Supreme Court to undo the block on those regulations imposed by the lower Commonwealth Court (see PA DEP Asks Supreme Court to Overturn Stay on New Regs). Last October the Supremes heard oral arguments in the case (see PA Supreme Court Hears Arguments on DEP Request to Unblock Regs), and on Friday the Supremes ruled to not undo the block on DEP’s onerous regs–but instead bumped the case back down to Commonwealth Court to let the matter play out there…
    Read More “PA Supreme Court Upholds Block on DEP Chapter 78a Drilling Regs”

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    PA Senator Intros Bill Declaring DRBC Frack Ban ‘Taking’ of Property

    PA State Sen. Lisa Baker

    Three cheers for PA Senator Lisa Baker (Republican from Luzerne County). Rather than wait around for the Delaware River Basin Commission (DRBC) to move forward with adopting a threatened ban on fracking within their jurisdiction–a patently illegal move–Baker isn’t waiting. She’s taking a different approach to defeating the DRBC ban. Her approach is to bankrupt the DRBC if they decide to move forward with it. How? By introducing a bill which, if it becomes law, would make a DRBC ban officially a government “taking” under eminent domain. If the government “takes” (or seizes) a citizen’s property, that citizen is, under law, owed money from the government entity seizing the property. There is no way on God’s green earth the DRBC would/could have enough money to pay all of the landowners it’s shafting with a frack ban. Affected landowners live primarily in Wayne and Pike counties in northeastern PA. This is a brilliant move on Baker’s part–IF she can get the bill passed and signed into law by the feckless Tom Wolf…
    Read More “PA Senator Intros Bill Declaring DRBC Frack Ban ‘Taking’ of Property”

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    PA Dems & RINOs Intro Bill Creating Commission to Stop New Pipes

    On Friday, a small group of anti-drilling Democrats and RINOs introduced a “bi-partisan” resolution that would create yet another black hole to dump taxpayer money into–a so-called Commission to Study Pipeline Construction and Operations that would “recommend improvements for the safe transport of oil, natural gas and other hazardous liquids through pipelines.” The “bi-partisan” (meaning TOTALLY partisan and anti-pipeline) members include Republicans in Name Only from the Philadelphia area coupled with virulent antis from the Democrat party. They do their best, with the help of sycophantic supporters in the media, to make it sound like an unbiased, impartial look at how to make pipelines safer and better. It’s nothing of the sort. It’s a commission aimed at shutting down any more pipeline development in the Keystone State. The good news, if there can be said to be good news, is that resolutions and in this case the commission it would create have zero ability to impose laws or regulations. It is an exercise in bloviating, giving a bunch of windbags a forum from which to bash fossil fuels and the methods used to extract and transport them. We predict this resolution is going nowhere fast…
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    M-U Gas Now Travels to Dawn Hub in Canada via Rover Pipeline

    Click map for larger version

    Last Thursday, May 24, Energy Transfer Partners requested (frankly, begged) the Federal Energy Regulatory Commission (FERC) to approve final startup for the rest of Rover Pipeline not yet flowing–by June 1st. ET has contracts to honor and they promised shippers the full pipeline would be up and running by June 1st. ET requested permission to start up the “Majorsville Lateral, Supply Connector Line B, and Mainline B between CS1 and CS2 and between CS3 and the terminus,” along with a request to begin flowing on the “Burgettstown Lateral.” Note that some of the project has two pipelines, side by side (the Mainline and Supply Connector). ET asked that the second pipes in both cases be allowed to start up, along with the Majorsville and Burgettstown Laterals (see the map). ET got some of what it wanted–everything but permission to start up the laterals–yesterday from FERC. With the startup of Mainline B and Supply Connector B, ET says the Rover Pipeline project is now capable of flowing the full 3.25 billion cubic feet per day of natgas all the way to the Dawn Hub in Ontario, Canada. The only “problem” remaining is to find enough gas to flow the full 3.25 Bcf/d. They won’t be flowing the full 3.25 Bcf/d until all of the laterals are brought online…
    Read More “M-U Gas Now Travels to Dawn Hub in Canada via Rover Pipeline”

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    Big Green Sues to Stop DTE Energy’s MI Gas-Fired Electric Plant

    Click image for larger version

    Last June DTE Energy filed paperwork in Michigan to build a new “state-of-the-art” natural gas-fired power plant in St. Clair County (see DTE Energy Files to Build New Natgas-Fired Elec Plant in Michigan). The gas-fired plant will produce 1,100 megawatts of electricity, enough to power 850,000 homes. If all goes according to plan, the new $1 billion plant will go online in 2022, helping to offset three coal-fired plants set to be retired by 2023. The process is long to approve and then build such a project, with many hoops to jump through. The first hurdle, perhaps THE major hurdle, is an approval by Michigan utility regulators. That happened in April. Right on cue the far-left Sierra Club, Natural Resources Defense Council (NRDC), and Earthjustice, all of which seem to have unending sources of cash to file lawsuits, have together filed an appeal with the Michigan Court of Appeals to reverse the Michigan Public Service Commission (MPSC) decision to approve the project…
    Read More “Big Green Sues to Stop DTE Energy’s MI Gas-Fired Electric Plant”

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    PA DEP Hellbent to Ram Through 250% Hike in Shale Permit Fee

    Pennsylvania Gov. Tom Wolf’s Dept. of Environmental Protection (DEP), the agency charged with overseeing oil and gas drilling in the state, “blindsided” the shale industry in February with a proposal to hike the fee required when submitting an application to drill a new shale well (see PA DEP Plans to Raise Marcellus Well Permit Fee by 250%). The current fee is $5,000. The proposed new fee is $12,500–or 2.5 times (250%) higher. We understand…the DEP has fewer people working there than it once did and needs to hire more help. However, the DEP wants to slap this insanely high fee on shale drillers to (in part) cover the expenses associated with non-shale activities! According to the Pittsburgh Post-Gazette, the shale permit fees will, “fund the broad scope of the [DEP] office’s operations, including its oversight of traditional [i.e. conventional] oil and gas wells, gas storage wells, abandoned wells and earthmoving activities.” How is it, in any sense, fair to hike the fees of shale drillers so DEP agents can better keep an eye on non-shale wells? The DEP plans to steamroller this increase through. Last week the DEP’s own Environmental Quality Board approved the increase. The next step is to publish a notice about the increase in the Pennsylvania Bulletin. That will trigger a 30-day public comment period. However, don’t look for the fee increase to happen right away. It appears DEP thinks they’ll have a royal fight on their hands (which they will), because they said the fee increase won’t happen until 2019 or maybe even 2020…
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