Pennsylvania Shale Gas Sets Another Record

In the second half of 2014, Pennsylvania gas drillers produced more than two trillion cubic feet of gas. This record-setting production of four trillion cubic feet of gas for all of 2014 is 30 percent higher than 2013.

These astounding levels of production were unheard of just a few short years ago. According to David Yoxtheimer, a researcher at Penn State University’s Marcellus Center for Outreach and Research, “Basically, we’re seeing a trillion cubic feet of growth per year. I think if you were to even ask the industry if they were to be expecting that…they would not have guessed those kinds of rates of increase.”

Even though many drillers are electing to drill less this year, they still expect to produce 30 percent more than the year prior.

However, two things could cause a wrinkle in increased production – lower prices and new taxes.

Click here to read the entire TribLive Business article.

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Now is the WOTUS of Our Discontent…..

As published in IOGA of West Virginia newsletter, January 2015

By John C. (Max) Wilkinson
Vice Chair of the Environmental Practice Group

Spilman Thomas & Battle, PLLC

“Waters of the United States” or “WOTUS” in the esoteric taxonomy of the Clean Water Act (“CWA”), is a term with which many are becoming increasingly familiar. This deceptively simple phrase is anything but simple in its application.

The oil and gas industry is increasingly experiencing the U.S. Environmental Protection Agency’s (“EPA”) proclivity finding CWA jurisdiction through WOTUS interpretation. New proposed regulatory language issued by the EPA and the U.S. Army Corps of Engineers (“USACE”), makes WOTUS even broader.

On April 21, 2014, the EPA and the USACE jointly proposed rules revising the definition of WOTUS in seven categories. They also created a new definition of a tributary.

What are the proposed rules on WOTUS? What is the significance? What is the impact?

Click here to read the entire article.

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Methane Emissions from Fracking Are Decreasing

The University of Texas has published a study that shows methane emissions from natural gas production, including fracking, are less than previously thought – 10 percent lower than a 2013 study found.

Since a small number of sites account for the majority of emissions, researchers stated current technologies may be especially effective in managing methane leakage.

This study corresponds with similar findings released by the U.S. EPA.

Click here to read the full article.

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Washington County and 59 Million Cubic Feet Per Day – Success in the Utica

Range Resources has a project in Washington County, Pennsylvania that is producing 59 million cubic feet of natural gas per day. This project is producing significantly more than the previous record-setting well in Tyler County – producing 46 million cubic feet per day.

The success in the Utica has been coupled with several companies pulling out due to the downturn in gas prices. However, according to Range Resources President and CEO Jeff Ventura, “We are very excited about the initial test results of our Utica/Point Pleasant well. Given our 400,000 net (acres) in the area, coupled with existing well control and 3-D seismic, we believe this translates into significant potential.”

Click here to read the entire The Wheeling Intelligencer article.

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Pennsylvania Finds Little Threat From Naturally Occurring Radiation

Following a two-year study by the Department of Environmental Protection, it has been determined that naturally occurring radioactive material (“NORM”) poses little threat to workers and the public.

The state also weighed in that the industry should study wastewater spills and disposal of items in landfills.

Click here to read the entire article.

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Enforcing a “Fair Day’s Pay” – What Can You Do in the Face of This Initiative?

The Department of Labor (“DOL”) announced in late 2012 it was launching a multi-year wage and hour enforcement initiative on Marcellus Shale contractors operating in Pennsylvania and West Virginia. Following that announcement, DOL has issued several reports about the success of its efforts to recover what it describes as “a fair day’s pay.”

The most recent DOL press release, issued December 9, 2014, involved investigators from the Wage and Hour Division Offices located in Wilkes-Barre and Pittsburgh. DOL announced it had secured agreements from employers to pay almost $4.5 million in back wages to 5,310 employees, primarily to remedy overtime wage violations.

Examples of violations cited by DOL included the misclassification of some salaried employees as being exempt from overtime and the failure to include production bonuses paid to hourly employees in the regular rate for purposes of calculating overtime. DOL attributes the prevalence of violations in part to the fractured nature of the extraction industry, which frequently involves the use of dozens of small contractors performing work on one job site and other contractors providing ancillary services away from the site. Those contractors are said to face significant competitive bidding pressures, which increases the likelihood of cutting corners.

The DOL enforcement initiative continues, and as can be seen from the most recent example, the costs of noncompliance can be substantial. DOL audits typically look back two years and in the case of willful violations, lost wages and other damages, including double damages, can be sought for three years. Employers must continue to be proactive in installing and monitoring FLSA-compliant pay practices and provisions.

Click here to read the entire article and learn what employers can do in the face of this initiative.

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Legal Authority Disagreements and Fracking Bans – Complicating Issues

Local authorities and their fracking bans are posing complicated legal issues when it comes to regulation at the state level. With the Ohio Supreme Court about to enter the fray, many await to see the outcome and the effects.

In 2011, a state court backed the town of Munroe Falls in their right to zone and issue permits to the oil and gas drilling company, Beck Energy. An appellate court in February sided with the company. In late 2014, the Ohio Supreme Court heard arguments in the case.

According to Penny Seipel, spokeswoman for The Ohio Oil and Gas Association, everyone is closely watching for a decision. “Once that court case is decided, I think it will probably help … reaffirm that the state ultimately has control over the oil and gas industry,” Ms. Seipel said.

Click here to read the entire article.

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Why Cracker Plants? The Plastics and Tech Sectors Know

Many are questioning whether the number of proposed ethane cracker plants planned for Pennsylvania, Ohio and West Virginia make sense for the region.

As the TribLive explains, “With as many as four ethane crackers in various states of planning above the Marcellus and Utica shales, much attention has focused on whether these plants could get enough of the natural gas liquid needed to produce polyethylene — the building block of many plastic-related products — for 20 years or more. Now the concern centers on building a sustainable market for the plastics that could employ tens of thousands of people close to the multibillion-dollar plants.”

We turn to the plastics and tech sectors to see if they are ready. They say they are.

Read the entire article here.

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Recession? What Recession? How the Gas Industry Saved the Labor Force

According to a recent study by the University of Illinois, Marcellus development operations raised spending for construction and maintenance in 2012-2013. This spending lifted the entire labor workforce.

According to Robert Bruno, University of Illinois labor expert and professor, more than 36,000 workers were employed between 2008 and the first half of 2014. That was almost 10,000 more than were employed between 2000 to 2007 for the same region.

Sean McGarvey, president of North America’s Building Trades Unions, said, “One of the few, if only, bright spots was the jobs created by the oil and gas industry.”

Click here to read the entire article.

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1,000 More Miles of Pipeline Planned to Help Move Marcellus and Utica Shale Gas

Several regions plan to add significant amounts of pipeline to move the large amount of natural gas and natural gas liquids coming from the Marcellus and Utica Shales.

As it stands right now, there is not enough pipeline to move the massive amount of gas being retrieved in the two shale plays. And, even though the costs are high, regulations are tight and opposition exists, plans are moving forward for 1,000 new miles of pipeline infrastructure.

Click here to read Pennsylvania Oil & Gas Association’s breakdown on where the new pipelines are being proposed.

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