Southwestern And DTE Energy Sign Deal To Expand Bluestone Gathering System

Southwestern Energy Company and Detroit-based DTE Energy Company have made a deal to expand DTE’s natural gas gathering system in Susquehanna County, PA by 50%. The Bluestone Gathering System delivers gas from the Marcellus shale in Pennsylvania through the Millennium Pipeline in Broome County, NY and the Tennessee Gas Pipeline in Susquehanna County. According to Nasdaq, the new agreement will increase Southwestern’s transportation capacity on the Bluestone Pipeline, which currently ships up to 0.8 Bcf per day and will increase to 1.0 Bcf per day by mid-2016. The plan for increased infrastructure is significant for Southwestern, which recently acquired 413,000 net acres and 1,500 wells in southern Pennsylvania and northern West Virginia from Chesapeake Energy Corporation and had an increase of 47% in gas production over the past year.

Pennsylvania Court Grants Condemnation Of A Temporary Construction Easement To Operator

The Court of Common Pleas of Lycoming County, Pennsylvania recently granted the condemnation of a temporary construction easement to UGI Penn Natural Gas, Inc. (UGI).  UGI is a public utility, regulated by the Pennsylvania Public Utility Commission.  The term of the easement is for 1 year in order to park and store vehicles and equipment and materials related to the construction, maintenance, replacing and changing of one or more pipelines for the transportation, transmission and distribution of gas.   

 

The issue in the case was whether a public utility’s condemnation for the construction and maintenance of a pipeline for the transportation, transmission and distribution of natural gas to a private business which operates as a power generating plant within its service area violates Pennsylvania’s Property Rights Protection Act.  The court concluded that it did not.  Because UGI is a public utility, regulated by the Public Utility Commission, it falls within “the limited, defined class of condemners” permitted to use the eminent domain power to provide public services in tandem with benefits to a  private enterprise.  26 Pa.C.S. Sec. 204(b)(2)(i).  The Court also distinguished the present case from prior cases in that UGI, as the public utility, will own the easement rather than the private enterprise.

Ohio EPA, Ohio Division Of Oil And Gas Resources Management, And Ohio Department Of Health Issue A Joint Guidance Letter On Landfill Disposal Of Oil And Gas Production Waste

Ohio EPA, the Ohio Division of Oil and Gas Resources Management, and the Ohio Department of Health, on November 17, 2014, jointly issued a four-page guidance letter on how Ohio regulates the landfill disposal of oil and gas production waste.  The letter addresses what waste is defined as solid waste that must be disposed in landfills, classification of certain drill cuttings as not constituting regulated solid waste, and substances classified as TENORM that must be analyzed for radioactivity prior to landfill disposal. The letter can be accessed on Ohio EPA’s website at http://epa.ohio.gov/Portals/0/Drilling%20Waste%20Ltr.pdf.

Pennsylvania DEP Proposes Changes to GP-5 Air Permit for Compression, Processing Facilities

On Saturday, November 15th, the Pennsylvania Department of Environmental Protection (DEP) published proposed changes to its General Plan Approval and/or General Operating Permit (BAQ-GPA/GP-5 or General Permit) for Natural Gas Compression and/or Processing Facilities (known as “GP-5″) issued in February 2013.  Operators may apply for coverage under GP-5 to authorize the construction, modification, and/or operation of a natural gas compression and/or a gas processing facility.

Among other proposed changes, DEP has deleted the applicability threshold requirement for greenhouse gases in response to the United States Supreme Court’s Utility Air Regulatory Group (UARG) v. Environmental Protection Agency (EPA) decision issued on June 23, 2014.  DEP also added a requirement to submit an annual compliance certification for GP-5; the annual certification would be due to DEP by March 1 each year.  Public comments on the proposed revisions to GP-5 will be accepted by DEP until January 6, 2015.

UGI Utilities Connects a Utica Well to its Distribution System

According to a report published by Pennsylvania Business Daily, Reading-based UGI Utilities, Inc. recently became Pennsylvania’s first natural gas utility to connect one of its pipelines to a Utica Shale well, thereby increasing the supply of natural gas available to customers in Tioga and Potter counties.  The expansion required UGI to construct a new meter and regulator station system, but it is estimated that the natural gas resources in the expanded system, which includes one Utica well and two Marcellus wells, can meet the energy needs of more than 50,000 households.  According to a statement by Kelly Beaver, UGI’s Vice President of Supply, “[m]ore than 70 percent of the natural gas we deliver through our system is produced in the Marcellus Shale region.  We are pleased to add volumes of lower-cost Utica Shale natural gas to our portfolio as another supply source.”

West Virginia University Announces Launch of Field Laboratory for the Long-Term Study of Shale Gas Production Operations

West Virginia University recently announced that it will be establishing the “Marcellus Shale Energy and Environment Laboratory,” at a site in the Morgantown Industrial Park near the WVU campus.  The laboratory is being funded as part of a five-year, $11 million agreement with the U.S. Department of Energy and will be operated in conjunction with the DOE’s National Energy Technology Laboratory (that has long had a presence in Morgantown) and Charleston-based natural gas producer Northeast Natural Energy, LLC.  Timothy Carr, WVU Professor of Geology, will be the Director of the new lab, which will also benefit from contributions by faculty with Ohio State University’s Subsurface Energy Resource Center.  The primary goal of the new lab is to undertake a comprehensive, long-term study of the environmental and other aspects of the extraction of shale gas resources, focusing on the precise measurement of various parameters and developing best operating practices based on their research.

Sunoco Moves Forward With Marcellus/Utica Pipeline

Fox Business reported that Sunoco Logistics Partners will invest $2.5 billion in the Mariner East 2 pipeline, which will carry natural gas liquids from the Marcellus and Utica Shale plays to an East Coast port. Mariner East 2 will connect processing plants in Pennsylvania, West Virginia and eastern Ohio with the Marcus Hook Industrial Complex near Philadelphia, which will distribute liquefied natural gas to domestic and international markets. The pipeline is the second phase of the Mariner East project, the first phase of which is expected to begin transporting gas later this year. Mariner East 2 is scheduled to begin service by the end of 2016.

Unconventional Well Report Act Signed Into Law

On October 22, 2014, Pennsylvania Governor Tom Corbett signed House Bill 2278, The Unconventional Well Report Act, into law. The Act requires operators of unconventional wells to submit monthly production reports to the Department of Environmental Protection. The change is to revise Act 13, which had required semi-annual production reporting for unconventional wells. The initial report under the Act is due to the DEP on March 31, 2015, and thereafter monthly production reports are due 45 days after the close of the reporting period. The DEP will make the submitted reports available on its website and may use the reports in enforcement proceedings.

Recording of Surrender Documents from Oil and Natural Gas Lease Act Signed Into Law

On October 22, 2014, Pennsylvania Governor Tom Corbett signed House Bill 402, also known as the Recording of Surrender Documents from Oil and Natural Gas Lease Act, into law.  The Act imposes a duty on a lessee to deliver a surrender document to a lessor within 30 days of the termination, expiration or cancellation of an oil and gas lease.  Read our Administrative Watch to learn more.

New York Court Declines to Re-Hear Land Use Case as Governor Anticipates Health Report by End of 2014

On October 16, 2014, the New York Court of Appeals denied a request by the bankruptcy trustee for Norse Energy to re-hear arguments in the landmark case affirming local zoning laws adopted by two upstate towns that prohibited oil and gas-related activities within their borders.  In June 2014, the Court of Appeals issued an opinion that the New York Oil, Gas and Solution Mining Law did not preempt a municipality’s home rule authority to regulate land use.  Meanwhile, since June 2008, New York has imposed a de facto moratorium on high-volume hydraulic fracturing. Governor Andrew Cuomo has stated that a decision on whether to lift the moratorium will not be made until the New York Commissioner of Health finalizes a study on the public health effects of hydraulic fracturing.  During a gubernatorial debate on October 22, 2014, Governor Cuomo said that the highly anticipated report should be done by the end of the year,  but he did not indicate whether the moratorium would be lifted at that time.