Spectra Energy Corporation and Northeast Utilities Propose $3 Billion “Access Northeast” Pipeline Expansion Project

As reported on Bloomberg.com, Spectra Energy Corporation, a Houston-based pipeline operator, and Northeast Utilities, a Connecticut-based utility provider, have partnered in proposing a $3 billion pipeline expansion that will increase natural gas supply to the six New England states.  The project, known as “Access Northeast,” will provide fuel for power plants and home heating in an attempt to combat soaring energy prices in the New England region.  According to the report, power prices in New England reached a 6-year high last spring due to extreme cold temperatures and a shortfall in pipeline capacity, which restricted gas supply.  The proposed Access Northeast project plans to boost the capacity of Spectra’s existing Algonquin and Maritimes pipelines, by as much as 1 billion cubic feet per day and create additional delivery points for local distribution.  The project is expected to be in service by November 2018.

According to the report, Access Northeast is not the only pipeline project aimed at connecting the booming Marcellus Shale gas formation with other states: (i) Kinder Morgan Energy Partners LP’s proposed “Northeast Energy Direct” project will also supply natural gas to New England, (ii) Duke Energy Corp., Dominion Resources, Inc., Piedmont Natural Gas Co. and AGL Resources Inc. have partnered to construct a $5 billion pipeline from West Virginia to North Carolina, (iii) NextEra Energy Inc. and EQT have paired up to build a 330-mile pipeline from West Virginia to the southeastern states, and (iv) Spectra is also seeking to expand its Texas Eastern pipeline system in Ohio pursuant to an agreement with American Electric Power Co. and Chesapeake Energy Corp.

Colleges in Western PA Offer Programs Geared Toward Energy Industry

The Pittsburgh Tribune Review reports that colleges located in Western Pennsylvania are creating programs to prepare students for jobs in the energy industry.  For example, Kennedy Township’s Rosedale Technical Institute (soon to be re-named Rosedale Technical College) currently offers an industrial technician associate degree program, and it will add additional programs next year.  Westmoreland County Community College offers an energy degree program and Butler County Community College recently added four energy classes to its course offerings.  Allegheny County and Beaver County Community Colleges also offer classes geared toward the energy industry.  According to the Pennsylvania Department of Labor and Industry, shale-related industries employed approximately 238,000 people in 2013.

Ohio Governor Vows to Hike Drilling Tax

Ohio Governor John Kasich increased his rhetoric regarding a new severance tax on shale oil and gas production. So far, the legislature has opposed any additional increase in the severance tax that was passed in House Bill 375 in May of this year. Governor Kasich describes the current 2.5 percent severance tax as “puny” and vows to push harder for an increase if he wins re-election this November. Governor Kasich previously advocated for a 2.75 percent tax with fewer deductions and credits.

New York High Court Asked to Re-hear Arguments in Case Banning Oil and Gas Activities

Citing a recently decided case in Colorado, the bankruptcy trustee for Norse Energy filed a motion in early August urging the New York Court of Appeals to re-hear arguments in the case.  In June, the Court of Appeals issued an opinion which affirmed local zoning laws adopted by two upstate towns that prohibited oil- and gas-related activities within their borders.  The motion filed by the trustee in August asserted that a Colorado court’s rationale in striking down a voter-approved local law prohibiting hydraulic fracturing provides support for the position that municipal-wide drilling bans directly conflict with New York’s Oil, Gas and Solution Mining Law.  In response, the environmental group Earthjustice recently filed a motion urging the Court of Appeals to reject the trustee’s request on the grounds that the motion for reargument was untimely and the Colorado decision was based on different laws and legal analyses.

WVDEP Releases Draft Rule Affecting Aboveground Storage Tanks

The West Virginia Department of Environmental Protection (WVDEP) has released a draft “Interpretative Rule” to implement certain inspection, certification, and spill prevention – response plan provisions of the Aboveground Storage Tank Act (AST Act) enacted earlier this year.  The AST Act requires that all qualifying aboveground tanks (generally those with a capacity of 1,320 gallons or more) be inspected and certified as suitable for use by January 1, 2015.  Owners of such tanks must also submit a “Spill Prevention Response Plan” to WVDEP by December 3, 2014.  Read our Administrative Watch for more information about the rulemaking and the AST Act.

House Votes to Thwart USEPA and Army Corps’ ‘Waters of the United States’ Rulemaking

On September 9, the U.S. House of Representatives voted to pass a bill introduced in response to the ‘Waters of the United States’ Proposed Rule that was prepared jointly by the U.S. Army Corps of Engineers (USACE) and U.S. Environmental Protection Agency (USEPA) and published in April 2014.  The bill, known as the “Waters of the United States Regulatory Overreach Protection Act of 2014” (H.R. 5078), would prohibit USEPA and USACE from “developing, finalizing, adopting, implementing, applying, administering, or enforcing” the proposed rule.  On September 8, the White House announced its objections to the bill, including concerns that H.R. 5078 would “derail” efforts to clarify the scope of the Clean Water Act.  The announcement also noted that if the President were presented with H.R. 5078, his senior advisors would recommend that he veto the bill.   Notwithstanding H.R. 5078, the public comment deadline for the proposed rule is fast-approaching.  Comments are due to USEPA/USACE by Monday, October 20, 2014.

Marcellus Shale Coalition Seeks To Establish Standards For Water Source Methane Tests

Natural Gas Intelligence reports that the Marcellus Shale Coalition has awarded Pennsylvania-based consulting firm Environmental Standards Inc. with a contract to manage a study that will analyze the presence of methane in groundwater samples. Specifically, the study will seek to establish a consensus standard for analyzing light gases in groundwater, both before and after the drilling process. Although there are several published procedures for analyzing methane in water sources, none are widely adopted, nor has the U.S. Environmental Protection Agency published any particular one. The goal is to establish uniform standards that will provide more reliable test results. The study will examine the practices of the Pennsylvania Department of Environmental Protection’s laboratory, as well as 10-15 other private laboratories across the country. The final report is expected by the end of the first quarter of 2015.

Shell Finds Utica Success in Tioga County

The Pittsburgh Business Times reported that Shell has drilled two producing wells in the Utica Shale formation in Tioga County, Pennsylvania.  Shell credited its success to “solid technical work in [its] onshore business.”  The two wells are many miles away from the majority of existing Utica wells and illustrate the potential of the Appalachian basin.  The wells have demonstrated flowback rates of 11.2 million cubic feet per day and 26.5 million cubic feet per day.  Shell is currently awaiting production results on four more recently drilled wells in Tioga County.

Draft Final BLM Rules Under White House Review

The federal Bureau of Land Management (BLM) has taken another step towards finalizing updated regulations for hydraulic fracturing on federal and Indian lands, by sending a revised final rule to the White House Office of Management and Budget (OMB) for review.  The revised rule was published in the Federal Register in May 2013.  During the subsequent public comment period, BLM received a large number of comments on the rule from both public interest organizations and industry groups.   Any revisions will not become public until OMB completes its review and the final rule is published, perhaps by late fall of this year.  The rule would apply to hydraulic fracturing operations conducted on the approximately 700 million acres of federal mineral estate and 56 million acres of Indian mineral estate overseen by BLM.

Ohio Court of Appeals Decision Adds New Wrinkle to Dormant Mineral Act Litigation

A recent decision from the Seventh District Court of Appeals, Eisenbarth v. Reusser, adds a new wrinkle to the ongoing legal battles concerning the applicability and scope of Ohio’s Dormant Mineral Act (“DMA”). The Seventh District previously ruled in Walker v. Shondrick-Nau that the 1989 DMA applies to current disputes over ownership of severed mineral interests and that a mineral interest which was “dormant” for a twenty-year period merges with the surface of the property. In further applying the 1989 DMA, the Court in Eisenbarth decided that the 1989 DMA only applies to the twenty-year period immediately preceding its enactment and that it does not apply on a “rolling” basis to successive twenty-year periods. Under this ruling, the 1989 DMA would not apply if any statutory savings event occurred after March 22, 1969 (twenty-years preceding the 1989 DMA’s enactment) because the person claiming that the mineral interest was abandoned would have to rely on a period of time occurring outside of the prescribed twenty-year period.

The Court also ruled that a recorded oil and gas lease is a title transaction for purposes of the DMA. This issue is currently the subject of an appeal to the Ohio Supreme Court in Chesapeake Exploration, L.L.C. v. Buell.