Fracking Ban Banned

Posted on June 24, 2015 by Jeff Civins

The State of Texas took swift action to block a municipality seeking to limit fracking.  In response to a 59 to 41% vote of its citizens, in November 2014, the City of Denton adopted an ordinance banning the well completion activity of hydraulic fracturing or fracking, which involves the high pressure injection of water, with proppants and small amounts of chemicals, into tight formations thousands of feet below surface to create and prop open fractures that facilitate the flow of oil and gas. 

Hours after the ordinance’s adoption, the Texas General Land Office and Texas Oil & Gas Association filed suit in Denton County district court, seeking to declare the ban invalid.  They argued that the ordinance intruded on powers granted by the legislature to the Railroad Commission of Texas and the Texas Commission on Environmental Quality and thus was preempted by state law.  On May 18, 2015, before the court could rule on the law suit, Texas Governor Greg Abbott signed into law House Bill 40, which removes the authority of Denton and all other Texas municipalities to regulate not only fracking, but also all other oil and gas operations.  On June 17, 2015, in recognition of House Bill 40, Denton’s City Council voted to amend its ordinance by repealing it in its entirety.  

In seeking to reconcile the interests of those concerned with state government intruding on local rule with the interests of mineral owners and their lessees concerned with intrusive governmental restrictions on the use of their property, House Bill 40’s approach arguably was solomonesque.  In just 3 pages, the bill allowed cities, under certain circumstances, to regulate above ground activities related to oil and gas operations, but barred them from regulating oil and gas operations per se, reserving that regulation to the state. 

House Bill 40 declares that oil and gas activities are subject to the exclusive jurisdiction of the state, but clarifies that municipalities may adopt an ordinance that regulates above ground activities related to oil and gas operations, including ordinances governing fire and emergency response, traffic, lights, or noise, or imposing reasonable setback requirements.  The statute requires, however, that such an ordinance be “commercially reasonable,” not effectively prohibit an “oil and gas operation” conducted by a reasonably prudent operator, and not otherwise be preempted by state or federal law.  The statute defines the quoted terms.  It also creates a presumption that an ordinance is considered prima facie to be commercially reasonable if it has been in effect for 5-years and has allowed oil and gas operations to continue during that period.  

The stated concerns of the Denton ordinance generally related not to fracking, but rather to the above ground impacts of the oil and gas activities it facilitated, that is, things like traffic, lights, noise, and safety concerns.  The Denton ordinance did express concern with the potential for contamination of drinking water aquifers, but studies, including EPA’s recently released draft assessment on fracking, generally have shown that concern to be related more to oil and gas activities generally than to the subsurface migration of contaminants associated with fracking per se.  

Even in fossil energy friendly Texas, fracking can be controversial.  The new state statute allows municipalities to address above ground effects related to oil and gas operations, subject to certain limits to be more fully fleshed out, but reserves to the state the power to regulate oil and gas operations per se.  This approach preserves local authority over things that arguably mattered most to the citizens of Denton, while preserving regulation of oil and gas development by the agencies that have historically regulated them.

USEPA Finds No Systemic Contamination of Drinking Water from Hydraulic Fracturing

Posted on June 23, 2015 by Chester Babst

On June 4, 2015, the U.S. Environmental Protection Agency released a draft “Assessment of the Potential Impacts of Hydraulic Fracturing for Oil and Gas on Drinking Water Resources,” which finds no evidence that hydraulic fracturing activities have led to widespread, systemic impacts on drinking water supplies.  According to the draft assessment, between 2000 and 2013, there were an estimated 9.4 million people living within one mile of a well that was hydraulically fractured.  The draft assessment supports the assertion that state agencies, as the primary regulator of oil and gas development in the United States, are effectively governing hydraulic fracturing activities by the industry.  

Initially announced by USEPA in March 2010, the study has a broad scope.  USEPA reviewed each stage of the “hydraulic fracturing water cycle” – including water acquisition, chemical mixing, well injection, flowback and produced water recapture, and wastewater treatment and disposal – to assess for any widespread, systemic impacts on the quality or quantity of drinking water resources.  The agency also used an expanded definition of drinking water resources that includes currently undrinkable saline aquifers that might be desalinated for consumptive use in the future.  

Although the draft assessment acknowledged that hydraulic fracturing could potentially contaminate drinking water resources, USEPA found that the actual occurrences of such impacts were “small compared to the number of hydraulically fractured wells.”  The risks related to hydraulic fracturing activities identified in the draft assessment included:  water withdrawal in times of low availability; spills of fracturing fluids and produced water; fracturing directly into underground drinking water resources; below ground migration of liquids and gases; and inadequate treatment and discharge of wastewater.  

The draft assessment noted that the primary means of disposing of wastewater from hydraulic fracturing activities conducted in the United States is underground injection wells.  However, one notable exception to this finding is in the Marcellus shale play, where USEPA found that most wastewater is reused by industry.  The high percentage of reuse and recycling of wastewater in the Marcellus shale play is a practice that industry has long asserted is a valuable means of reducing the amount of freshwater needed for well development activities.

USEPA is expected to publish a final assessment after the completion of a notice and comment period, which is currently open and concludes on August 28, 2015, and a review of the draft assessment by the Science Advisory Board Hydraulic Fracturing Research Advisory Panel.  The Panel has scheduled a public meeting to conduct a review of the draft assessment from October 28 to October 30, 2015, and teleconferences to discuss the draft assessment on September 30, October 1, and October 19, 2015.

Ozone, Oil and the Uintah Basin

Posted on November 6, 2014 by James Holtkamp

Ozone is the quintessential ambient pollutant.  It is the result of complicated chemical reactions involving NOx and VOCs, sunlight, humidity and temperature.  It is primarily an urban pollutant, because that is where most of the NOx and VOCs are emitted, but it is also a regional challenge particularly in the eastern U.S. 

The Uintah Basin of eastern Utah is the quintessential Western U.S. Empty Quarter.  It is sparsely populated and windswept, and is a high-altitude desert.  It is home to the Ute Indian Tribe, and the greater part of the Basin is Indian Country for purposes of environmental regulation, meaning EPA – not the State of Utah – has regulatory authority.  The Basin is home to extensive reserves of oil, gas, oil shale and oil sands.

If the Basin is a dry, windy environment, then why have ambient ozone levels spiked dramatically in the Basin the last few years, during the winter, no less?  It turns out that ozone is not only created during hot muggy summer days, but when VOCs build up during winter inversions with a lot of sun and snow.  Periodic winter high pressure systems trap the VOCs and the ozone appears.  EPA has classified the Basin as “unclassifiable” for ozone and has denied an administrative petition to classify the area as nonattainment.  That denial is currently under review at the D.C. Circuit.

So where is this aberrant ozone coming from?  Although oil and gas has been produced in the Basin for decades, the fracking boom has swept into Eastern Utah with a vengeance, and the number of wells and associated facilities has mushroomed.  Utah DEQ, EPA Region 8, the counties, the Tribe, NGOs and the operators are jointly working on strategies to mitigate the problem, including newly promulgated state rules requiring retrofit of existing wells with equipment to reduce VOCs.  These efforts are complicated, however, by the jurisdictional differences over air issues as between Utah DEQ and EPA and the results are sometimes a bit clumsy.  But all of the stakeholders see the need to address the ozone issue proactively, and the end result will hopefully be a model for addressing similar issues in North Dakota, western Wyoming and Western Colorado.

Texas Railroad Commission finalizes proposal to require seismic surveys

Posted on November 4, 2014 by Jeff Civins

Over 30 earthquakes jolted the area in and around the City of Azle, Texas —20 miles north of Fort Worth—last November through January. In response to citizen concerns, the Texas House Committee on Energy Resources created a Subcommittee on Seismic Activity to investigate whether there was a link between earthquakes and increased oil and gas production and disposal wells.  On August 12, the Railroad Commission of Texas, with support from both  the Texas oil and gas industry and environmental groups, proposed rules that would require companies to do a seismic survey before obtaining permits for new oil and gas disposal wells—so-called Class II injection wells.  On October 28, 2014, the Railroad Commission unanimously voted to finalize that proposal.

Presently, the state has more than 3600 active commercial injection wells used for the disposal of oil and gas wastes. The rules require applicants for new oil and gas disposal wells to provide additional information, including logs, geologic cross-sections, and structure maps for injection well in an area where conditions exist that may increase the risk that fluids will not be confined to the injection interval. Those conditions include, among other things, complex geology, proximity of the base rock to the injection interval, transmissive faults, and a history of seismic events in the area as demonstrated by information available from the USGS. The rules also clarify that the Railroad Commission may modify, suspend, or terminate a permit if fluids are not confined to the injection interval, that is, if it poses a risk of seismic activity. The effect of these rules will be not only to regulate oil and gas disposal activities to address potential seismic effects, but also to generate data that may be useful in determining whether and to what extent to further regulate those activities.  The rules also may serve as a model for other states concerned about the seismic effects of oil and gas waste disposal.