Wednesday, October 23, 2013

Marcellus Production's Dramatic Growth Makes Region Tops In Nation

Reports and news articles this week further illustrate the dramatic increase in Shale production from the Marcellus Region:

EIA: Natural gas production from the Marcellus Shale region is growing faster than expected
http://www.dailymail.com/News/201310220062

Shale Output Surges; 12 billion cubic feet of gas produced daily
http://www.theintelligencer.net/page/content.detail/id/591389/Shale-Output-Surges.html?nav=515

Marcellus now tops in production among 6 shales
http://www.bizjournals.com/pittsburgh/blog/energy/2013/10/marcellus-now-tops-in-production-among.html?ana=twt

U.S. Shale Producers Drilling Bigger, Faster Wells
Boom in Oil and Natural Gas Far From Over, Federal Data Show
http://online.wsj.com/news/article_email/SB10001424052702303672404579151874236726940-lMyQjAxMTAzMDIwMzEyNDMyWj

Draft Report: Data Lacking On Natural Gas Drilling Waste Disposal In West Virginia

More news from this week's legislative interim meetings:

Data lacking on natural gas drilling waste disposal in West Virginia
The Charleston Gazette, Oct. 23, 2013
http://www.wvgazette.com/News/201310220108

Tuesday, October 22, 2013

Marcellus Discussions Continue At Legislative Interims

Subcommittee B of the Joint Standing Committee on the Judiciary met for an extended period on the afternoon of October 21 to receive presentations on various aspects of Marcellus Shale geology, engineering, land management and production.  Presenters included Dr. Michael Hohn, Director of the West Virginia Geological and Economic Survey (and State Geologist); Dr. Robert Chase, Chair of the School of Petroleum Engineering at Marietta College; David Elkin, Vice President of EQT and Roger Cutright, of Stone Energy.  Each presenter offered a detailed analysis of the industry from his particular professional perspective and provided the committee a wealth of information on the opportunities and challenges facing Marcellus producers going forward.  There was an extensive question and answer session with members of the committee on the topics discussed.  The subcommittee took no action and made no recommendations.

WVU Professor Recommends Air Quality, Monitoring Regulations For Drilling Activities

The Joint Standing Committee on the Judiciary received a presentation at its meeting on Monday, October 21 from Dr. Michael McCawley, Research Assistant Professor at the West Virginia University School of Public Health on his study of “Air, Noise and Light Monitoring Results for Assessing Environmental Impacts of Horizontal Gas Well Drilling Operations.”  Dr. McCawley’s recommendation to the committee was that DEP develop regulatory standards for air quality, noise and lighting, and further that all oil and gas production permits should be required to include provisions for the installation of monitoring equipment to ensure compliance with the standards.  The committee took no action on the presentation and the recommendation.

In addition, the committee discussed the current set-back requirements.  Read more:

Distance buffer for gas drilling not far enough, researcher says
The Charleston Gazette, October 22, 2013
http://www.wvgazette.com/News/201310210089

Monday, October 21, 2013

New EIA Drilling Report Will Provide Region-Specific Information

Starting tomorrow, the U.S. Energy Information Administration (EIA) will start publishing a new monthly Drilling Productivity Report (DPR). The report will provide region-specific insights into rig efficiency, new well productivity, decline rates at previously existing wells and overall production trends. The DPR information initially will cover six regions, including the Marcellus region. Click to learn more.

Monday, October 14, 2013

WVDEP Issues New NPDES General Permit for Stormwater Associated with Oil and Natural Gas Construction Activities

The West Virginia Department of Environmental Protection (“WVDEP”) recently issued an NPDES general water pollution control permit for stormwater associated with oil and natural gas related construction activities that disturb more than one acre of land. This permit regulates all oil and natural gas construction activities not permitted by WVDEP’s Office of Oil and Gas (“OOG”) under a well work permit or impoundment certification.  Since most access roads and gathering pipelines are generally permitted with the well site as part of OOG’s well work permit given to the producer, their construction would not be covered by this permit.  However, if gathering lines were not covered by the well work permit or a new gathering line is constructed after the well work permit has expired, the construction of a gathering line to a well site may be required to obtain coverage under the permit.

Producers and midstream companies are reminded that it is important to determine at the outset of project planning (i.e. before construction activity is even slated to begin) whether or not the project is required to be covered by the permit and if so, which process must be followed.   For example, there is a streamlined process for projects that disturb more than one acre but less than three acres.  It is important to know which process to follow because construction activities requiring coverage CANNOT BEGIN until notice of WVDEP’s approval of the application is received by the applicant and some applications have to be submitted at least ninety days prior to the start of construction. 

The permit focuses mainly on controlling erosion and sediment, but measures also must be taken to control fugitive dust from the construction activities. And preventative and proactive measures are required that include employee training, spill prevention and response procedures, a maintenance program and frequent inspections.

For questions about this new permit, please contact Joe Jenkins at LGCR – jjenkins@lgcr.com.

Thursday, October 10, 2013

Federal Court Upholds The Enforceability Of Oil And Natural Gas Lease

Lewis Glasser Casey & Rollins PLLC successfully defended Triad Hunter, LLC in another oil and natural gas lease-busting case filed in the U.S. District Court for the Southern District of Ohio.  In Egnot v. Triad Hunter, LLC, Case No. 2:12-CV-1008, the Federal Court held that the lessor’s failure to sign the oil and natural gas lease in the presence of a notary does not invalidate the lease as between the lessor and the lessee.  The Court then held that a husband’s failure to sign over his dower interest in an oil and natural gas lease does not invalidate the lease between the wife, as titled owner, and the oil and natural gas company.  Finally, the Federal Court agreed with other Ohio State and Federal Courts that the lessee’s “Preferential Right to Renew” language in Paragraph 14 of the oil and natural gas lease does not give the lessor the right to invalidate the lease if the oil and natural gas company does not agree to match a third-party bona fide offer.

In addition to upholding the validity of Triad Hunter’s oil and natural gas lease, the Federal Court also made sure Triad Hunter did not lose any of the primary term of the lease while the lawsuit was pending.  The Court held that the running of the primary term of the lease must be tolled, or delayed, during any lawsuit or appeal challenging the validity of the lease.  Such a holding is critical to the oil and natural gas industry as it makes sure a lessor/landowner cannot run out the clock on an oil and natural gas lease by tying up the lease in litigation during the primary term of the lease.  The oil and natural gas company can now have the business security that it will not lose any of the primary term while the lawsuit is pending.

Ohio Federal Court Rules In Favor Of Tolling Of Natural Gas Leases

The U.S. District Court for the Southern District of Ohio has held that oil and natural gas leases challenged by the landowners/lessors will be tolled, or delayed, during the pendency of any lawsuit and appeal.  The Court found that the oil and natural gas company/lessee should not be penalized for an unsuccessful lawsuit challenging a valid lease.  In Wiley v. Triad Hunter, LLC, Case No., 2:12-CV-00605, a group of lessors challenged the validity of the oil and natural gas leases they entered with Anschutz Exploration Corporation, which were subsequently assigned to Triad Hunter, LLC.  Lewis Glasser Casey & Rollins PLLC represented Triad Hunter in this matter.

The Wiley lawsuit followed other similar lawsuits in which the lessors argued that the natural gas company/lessee’s Preferential Right to Renew in Paragraph 14 of the Anschutz leases required the lessee to match any bona fide third-party offers or terminate the leases.  The court first agreed with other Ohio state and federal courts by holding that the preferential right to renew does not allow the lessor to terminate the lease. The court then solidified Ohio law requiring the tolling of a lease during any lawsuit challenging the lease’s validity. The court’s decision allows oil and natural gas companies to keep the full remaining term of their oil and natural gas lease after a lawsuit is resolved.

Click to read more about this decision.