Shale Law Weekly Review – May 12, 2020

Water Quality: Supreme Court Vacates Kinder Morgan Pipeline Spill Case in Light of Recent Clean Water Act Decision
On May 4, 2020, the U.S. Supreme Court ordered that a Kinder Morgan pipeline leak case be vacated and remanded in light of a recent Clean Water Act decision (Kinder Morgan Energy Partners, L.P. v. Upstate Forever and Savannah Riverkeeper, No. 18-268).  The case was remanded to the U.S. Court of Appeals for the Fourth Circuit following the Supreme Court’s recent decision in County of Maui v. Hawaii Wildlife Fund, 590 U. S. ___ (2020).  In 2014, Kinder Morgan’s Plantation pipeline ruptured and leaked 370,000 gallons of gasoline and diesel into soil, groundwater, and a nearby stream. Two years after the spill, environmental groups brought suit against Kinder Morgan under the Clean Water Act, which requires a permit for the “discharge of pollutants into navigable waters.”  The district court dismissed the complaint, but the Fourth Circuit reversed, holding that the Clean Water Act covers the spills into navigable waters wherever there is a “direct hydrological connection.”  Kinder Morgan filed their Petition for Writ of Certiorari asking the Supreme Court to determine if the pipeline leak constituted a discharge under the Clean Water Act.  The Supreme Court remanded the case in light of County of Maui, which held that the Clear Water Act requires a permit when there is a direct discharge into navigable waters or the “functional equivalent of a direct discharge.”

Production and Operation: Texas Railroad Commission Issues Exception for Underground Storage of Liquid Hydrocarbons
On May 5, 2020, the Texas Railroad Commission approved an exception to the Texas Administrative Code for underground storage of liquid hydrocarbons.  The exception allows applicants to store crude oil in underground geological formations other than salt formations.  The need for additional storage capacity is a result of decreased demand caused of COVID-19.  The Commission noted that an applicant will have to demonstrate that the storage facility will be maintained to prevent waste or escape of crude oil, avoid pollution of groundwater, and prevent danger to life or property.  The exception will remain in effect for one year, and any crude oil stored in a facility other than a salt formation will have to be removed within five years.  The open meeting where the exception was discussed and approved is available here.

Infrastructure: Virginia Commission Confirms Process for Certification of Natural Gas Facilities
On May 5, 2020, the Virginia State Corporation Commission denied a motion from various environmental groups to suspend the procedure schedule and continue the public comment period regarding the certification of natural gas facilities.  The Commission issued a procedural schedule for the case after Virginia Natural Gas filed for approval and certification of natural gas facilities.  According to the Commission, the schedule will continue as planned; the Commission will hear public testimony on May 12, 2020, and hold an evidentiary hearing on May 13, 2020. The Commission stated that they have implemented procedural accommodations to allow public witness testimony while adhering to social distancing requirements.

Production and Operation: U.S Companies Plan to Curb Oil Production by 616,000 Barrels Per Day in May
On May 7, 2020, Rystad Energy issued a press release estimating U.S. oil production will be curbed by 616,000 barrels per day (bpd) in May and 655,000 bpd in June.  Rystad Energy Research and Analysis interpreted guidance released from 19 producers to reach the estimations.  Rystad summarized specific cuts in production from various oil producers including Chevron, ExxonMobil, and ConocoPhillips, which plan to cut production by 32-42%.  Several smaller producers will also contribute to cuts through shut-ins of higher-cost wells and reducing output from other wells.

From the National Oil & Gas Law Experts:
Charles Sartain, Louisiana Servitude Extended By Good Faith Drilling (May 8, 2020)
Josh Downer and Conrad Hester, Prorationing No Longer on the Table, Railroad Commission Enacts Other Temporary Relief (May 6, 2020)
John McFarland, Sitton Drops Motion to Prorate (May 4, 2020)
John McFarland, The State of Crude Oil Inventory (May 7, 2020)
John McFarland, Texas’ “Competitive” Retail Electricity Market (May 8, 2020)

AGENCY PRESS RELEASES—STATE/FEDERAL

Pennsylvania Department of Energy Press Releases:
No new releases May 4–11, 2020.

U.S. Department of Energy
No new releases May 4–11, 2020.

U.S. Environmental Protection Agency
No new releases May 4–11, 2020.

STATE ACTIONS—EXECUTIVE/LEGISLATIVE

Pennsylvania Executive Agencies—Actions and Notices:
No actions May 11, 2020.

Pennsylvania Legislature:
SB 258, “Pipeline Emergency Notification” Removed from Table (Apr. 28, 2020)

FEDERAL ACTIONS—EXECUTIVE/LEGISLATIVE

Federal Executive Agencies—Actions and Notices:

Federal Energy Regulatory Commission
85 FR 26971 “Rockies Express Pipeline, LLC; Notice of Petition for Declaratory Order” Notice (May 6, 2020).
85 FR 27736 “Jordan Cove Energy Project, LP, Pacific Connector Gas Pipeline, LP; Notice of Petition for Declaratory Order” Notice (May 11, 2020).
85 FR 27737 “Kinetica Energy Express, LLC; Notice of Application” Notice (May 11, 2020).

Foreign-Trade Zones Board
85 FR 27206 “Foreign-Trade Zone (FTZ) 116-Port Arthur, Texas, Notification of Proposed Production Activity, Golden Pass LNG Terminal LLC (Liquified Natural Gas Processing), Port Arthur, Texas” Notice (May 7, 2020).

House Energy and Commerce Committee Actions:
H.B.6707 “To Amend the Mineral Leasing Act and the Outer Continental Shelf Lands Act to Limit the Authority of the Secretary of the Interior to Reduce Certain Royalties, to Amend the CARES Act to Limit the Provision of Assistance to Certain Businesses, to Impose a Moratorium on Certain Oil and Natural Gas Lease Sales, the Issuance of Coal Leases, and Modifications to Certain Regulations, to Extend Certain Public Comment Periods, and for Other Purposes” Introduced in House (May 5, 2020).

Senate Energy and Natural Resources Committee Actions:
S.3611 “To Amend the Mineral Leasing Act and the Outer Continental Shelf Lands Act to Limit the Authority of the Secretary of the Interior to Reduce Certain Royalties, to Amend the CARES Act to Limit the Provision of Assistance to Certain Businesses, to Impose a Moratorium on Certain Oil and Natural Gas Lease Sales, the Issuance of Coal Leases, and Modifications to Certain Regulations, to Extend Certain Public Comment Periods, and for Other Purposes” Read Twice and Referred to the Committee on Energy and Natural Resources (May 5, 2020)

Follow us on Twitter at PSU Ag & Shale Law (@AgShaleLaw) to receive ShaleLaw HotLinks:
“When the Flames Go Out, the Permian’s Methane Problem Worsens,” Bloomberg
“How Natural Gas is Withstanding the Energy Market Collapse,” Washington Examiner
“Oil Prices Jump Amid Partial Economic Reopening,” The Hill
“In Historic Oil Shutdown, Hard Part Is Picking Which Well Closes,” Yahoo! Finance
“Construction to Start on Pipeline From Norway to Poland,” Energywire
“Exxon Reports Historic Losses, Closes 75% of Permian Rigs,” Energywire
“Supreme Court Sends Back Pipeline Case After Maui Ruling,” Bloomberg
“In US Shale Bust, Frack-Sand Miners Are the New Coal Companies,” Reuters
“Shale Drillers Risk Relapse Into Rampant Oil Output at $30 Crude,” Yahoo! Finance
“Plan to Fix Oil at $45 a Barrel Gains Momentum in Argentina,” Bloomberg

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