Shale Law Weekly Review – April 27, 2020

Production and Operation: Oklahoma Corporation Commission Approves Emergency Order Allowing Oil Producers to Shut-in Wells in Response to COVID-19
On April 22, 2020, the Oklahoma Corporation Commission announced approval of an emergency order allowing oil producers to shut-in or reduce production of oil wells for the prevention of waste.  The order was approved in response to a request from LPD Energy Company LLC seeking to prevent waste by stopping or reducing oil production without impacting the company’s lease agreement.  The request stated that due to a decline in demand and oversupply from COVID-19 circumstances, LPD is losing $200,000 per month by producing “economically challenged” wells.  At a hearing on April 17, 2020, the Commission heard testimony and made findings.  No objections to the requested relief were filed or received at the hearing.  The Commission’s Media Advisory stated that the order “gives those operators the freedom and flexibility they need to respond to market forces and decide what actions to take to survive.”

Water Quality: EPA Issues Final Rule Defining Waters of the United States
On April 21, 2020, the Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers issued a final rule regarding the definition of “waters of the United States” (WOTUS) under the Clean Water Act.  The rule is titled “The Navigable Waters Protection Rule: Definition of ‘Waters of the United States’” and replaces the previous 2015 WOTUS rule.  The new rule follows President Trump’s Executive Order 13778, which required review of the 2015 WOTUS rule to ensure navigable waters were kept pollution-free while also promoting economic growth.  Additionally, the Executive Order directed EPA to define “navigable waters” in a way that was consistent with Justice Scalia’s opinion in Rapanos v. United States, 547 U.S. 715 (2006).  The final rule’s interpretation of WOTUS includes: “territorial seas and traditional navigable waters; perennial and intermittent tributaries; . . .  certain lakes, ponds, and impoundments of jurisdictional waters; and [adjacent] wetlands.”  The final rule also defines waters that are considered “non-jurisdictional,” and as such are excluded from the definition of WOTUS.  The final rule will take effect on June 22, 2020.

Production and Operation: Government Accountability Office Finds Thousands of Approved Oil and Gas Drilling Permits Not Being Used
In March 2020, the U.S. Government Accountability Office (GAO) issued a report finding that thousands of the Bureau of Land Management’s (BLM) approved drilling permits were not in use. (p. 2).  The report is titled, Oil and Gas Permitting: Actions Needed to Improve BLM’s Review Process and Data System.  The report states that between 2014 and 2019, BLM approved 19,941 drilling permits for wells, out of which 9,991 permits were not being used.  Additionally, during the same time period, 2,628 applications for permits remained under review and 1,137 of the applications were denied by BLM.  GAO made three recommendations to BLM, suggesting that they develop a consistent and documented process for prioritizing permit applications and that BLM should formalize its data processing systems.  BLM only agreed with GAO’s third recommendation to “document and implement corrective actions for the data system based on lessons learned.”

From the National Oil & Gas Law Experts:
George A. Bibikos, At the Well Weekly (Apr. 17, 2020)
Charles Sartain, Who Said What at the Railroad Commission Market Demand Prorationing Hearing? (Apr. 20, 2020)
Joshua Downer, Railroad Commission of Texas Declines to Order Prorationing – For Now (Apr. 22, 2020)
John McFarland, Proration at the Railroad Commission: Sitton’s Motion to Conditionally Order Texas Operators to Reduce Their Oil Production By 20% is Tabled (Apr. 21, 2020)

AGENCY PRESS RELEASES—STATE/FEDERAL

Pennsylvania Department of Energy Press Releases:
DEP Approves Permit for Underground Injection Well in Allegheny County (Apr. 20, 2020)

U.S. Department of Energy
Department of Energy Announces $28 Million to Develop Ultra-high Temperature Materials for Gas Turbine Applications (Apr. 21, 2020)
Department of Energy Announces $25 Million for Grid Management Systems and Risk Assessment Systems (Apr. 23, 2020)
Department of Energy Announces $131 Million for CCUS Technologies (Apr. 24, 2020)

U.S. Environmental Protection Agency
EPA and Federal Partners Commemorate 10-Year Anniversary of Deepwater Horizon Oil Spill (Apr. 20, 2020)

STATE ACTIONS—EXECUTIVE/LEGISLATIVE

Pennsylvania Executive Agencies—Actions and Notices:
No actions Apr. 27, 2020.

Pennsylvania Legislature:
No actions Apr. 20 – 27, 2020.

FEDERAL ACTIONS—EXECUTIVE/LEGISLATIVE

Federal Executive Agencies—Actions and Notices:

Energy Department
85 FR 23013 “Epcilon LNG LLC; Application for Long-Term, Multi-Contract Authorization to Export Domestically Produced Natural Gas Through Mexico to Non-Free Trade Agreement Countries After Liquefaction to Liquefied Natural Gas” Notice (Apr. 24, 2020)
85 FR 23014 “Sabine Pass Liquefaction, LLC; Application for Blanket Authorization to Export Previously Imported Liquefied Natural Gas to Non-Free Trade Agreement Countries on a Short-Term Basis” Notice (Apr. 24, 2020)

Federal Energy Regulatory Commission
85 FR 22730 “Port Arthur LNG Phase II, LLC, PALNG Common Facilities Company, LLC; Notice of Schedule for Environmental Review of the Port Arthur LNG Expansion Project” Notice (Apr. 23, 2020)
85 FR 22730 “Guardian Pipeline LLC; Notice of Request Under Blanket Authorization” Notice (Apr. 23, 2020)
85 FR 22733 “Black Marlin Pipeline LLC; Notice of Filing” Notice (Apr. 23, 2020)
85 FR 23017 “Dakota Natural Gas, LLC; Notice of Application” Notice (Apr. 24, 2020)

Land Management Bureau
85 FR 22750 “Notice of Proposed Reinstatement of Terminated Oil and Gas Lease COC-77358, Colorado” Notice (Apr. 23, 2020)
85 FR 22750 “Notice of Proposed Reinstatement of Terminated Oil and Gas Lease COC-77272, Colorado” Notice (Apr. 23, 2020)

House Energy and Commerce Committee Actions:
No new actions Apr. 20–27, 2020.

Senate Energy and Natural Resources Committee Actions:
No new actions Apr. 20–27, 2020.

Follow us on Twitter at PSU Ag & Shale Law (@AgShaleLaw) to receive ShaleLaw HotLinks:
“Keystone XL Hits Another Snag in Court,” Rigzone
“Oil Price Crashes into Negative Territory for the First Time in History Amid Pandemic,” Reuters
“Oil Drilling, Fracking Could Drop Another 60%,” Energywire
“‘A Big Deal:’ Keystone XL Ruling Could Threaten Other Pipelines,” Energywire
“U.S. Natgas Trading at Premium Over Oil After Crude Price Collapse,” Reuters
“Why Marcellus Shale Stocks Are Lifting, While Other Basins See Drop,” Pittsburgh Business Times
“Satellites Find Highest U.S. Methane Emissions Ever Recorded,” Energywire
“Bankruptcy Looms Over U.S. Energy Industry, From Oil Fields to Pipelines,” Reuters
“Historic Oil Rout Poised to Bust Shale,” Rigzone
“Halliburton Books $1.1 Billion Charge, Slashes Spending by 50%,” Reuters

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Written by:
Sara Jenkins – Research Assistant
Jackie Schweichler – Staff Attorney
Brennan Weintraub – Research Assistant