Regulation And Beyond
The oil and gas industry in the United States is ever conscious of a shifting body of regulations that can affect production. Each state has its specific challenges, and some regulatory tussles spawn lawsuits. Other issues, such as seismic activity, bring calls for more regulations. Local referendums have become a looming issue as some municipalities have voted to place limits on hydraulic fracturing. Other communities have set election dates.
Here’s a mixed bag of issues that producers in six states are facing:
• The industry, in the Lone Star State and nationally, is watching a Nov. 4 referendum in Denton, Texas. If approved by voters, fracking within city limits would be banned.
• The Texas Commission on Environmental Quality and the EPA are doing flyovers of oil and gas facilities and taking pictures with a camera that reveals emissions.
• Environmental groups are backing initiatives to more thoroughly reveal the composition of chemicals used in fracking fluids in Texas and some other states.
• Texas is the likely centerpiece of upcoming EPA regulations for air standards that will govern upstream and midstream operations. Producers will be required to meet most requirements by the end of 2014.
• So far in 2014, Oklahoma has had more than twice the number of earthquakes as California, making it the most seismically active state in the continental U.S. Many seismologists are convinced that wastewater injected back into the ground is shifting fault lines and triggering earthquakes.
• As a result of the increase in seismic activity, the state has established new rules that increase pressure and volume recording requirements for disposal wells in the Arbuckle formation, the state’s deepest injection formation.
• For existing wells, seismic issues that may once have been considered minor now must be addressed immediately─even if it requires well shut-down.
• Lawsuits are the biggest threat to oil and gas production in the state.
• Legacy lawsuits, in which land owners claim that oil and gas operations result in contamination and pollution of their properties, have exploded. Today, 275 such lawsuits have been filed with between 10 to 20 producers named as defendants.
• The Southeast Louisiana Flood Protection Authority East, a board that governs three levee districts in the New Orleans area, filed a lawsuit against 97 oil and gas companies in 2013. The lawsuit seeks $10 billion in damages for deterioration of the coast.
• St. Tammany Parish, where Louisiana Republicans joined Sarah Palin in chanting “drill baby drill,” has filed a lawsuit against Helis Oil & Gas. The lawsuit aims to keep hydrofracking out of the parish.
• Beverly Hills in May 2014 became the first municipality in the state to prohibit fracking.
• State law requires oil companies to obtain permits for fracking, acidizing and using hydrofluoric acid and other chemicals to dissolve shale rock.
• Occidental Petroleum Corp. CEO Steve Chazen said in May 2014 that the company will not drill in communities that oppose oil and gas activity or hydraulic fracturing.
• U.S. Rep. George Miller and three of his House colleagues from Northern California asked the U.S. Department of Transportation in July 2014 to tighten regulations on crude oil transportation by rail. The four urged the DOT to adopt safety standards before crude shipments dramatically expand in the state.
• To comply with state regulations, gas drilling must not occur within 200 feet of drinking water supplies, within 100 feet of any surface water, or within 100 feet of any wetland greater than one acre in size.
• Drillers are required by the Pennsylvania Oil and Gas Act to replace or resolve any loss of drinking water due to contamination from drilling operations. Drillers are held responsible for contamination if it occurs within 1,000 feet from the well in question and within six months after well completion.
• The state has adopted extensive regulations controlling standards for well casings.
• The state currently has a fracking moratorium in place. The current moratorium, as opposed to a legislative moratorium, is not codified into law and does not have an expiration date.
• New York’s cities and towns can block hydraulic fracturing within their borders, the state’s highest court ruled in June 2014. The ruling could lead the oil and gas industry to abandon fracking in New York.