Shale Law Weekly Review – November 4, 2019

Production and Operation: Pennsylvania Legislature Passes Bill Allowing Horizontal Cross-Tract Drilling
On October 30, 2019, the Pennsylvania legislature passed Senate Bill No. 694, which would amend the Oil and Gas Lease Act and authorize operators to drill horizontal wellbores across multiple leased tracts.  This law would apply only where the operator has a lease with the landowner of each tract, and the operator is required to allocate production among the various landowners.  SB 694 has been presented to Governor Tom Wolf but has not yet been signed.  If signed, SB 694 would become effective sixty days from enactment.

Pipelines: Landowners Request FERC to Enjoin Construction of Spire Pipeline
On October 21, 2019, a group of landowners known as the Impacted Spire Landowners filed a complaint before the Federal Energy Regulatory Commission against Spire STL Pipeline, LLC, challenging the construction of the Spire Pipeline.  The Spire Pipeline is a 65-mile steel underground pipeline project that would connect with the existing Rockies Express Pipeline located in Scott County, Illinois.  The pipeline is designed to transport natural gas through the counties of Scott, Greene and Jersey in Illinois and the counties of St. Charles and St. Louis in Missouri.  In this case, plaintiffs allege that the company violated FERC’s certificate to construct and operate the Spire Pipeline and that these violations have led to “irreversible mixing of topsoil with subsoils, contamination of water supply, and flooding and erosion outside the limits of the pipeline easement, resulting in millions of dollars of damage to landowners.”  Plaintiffs asked FERC to halt construction of the project until environmental remediations have been completed and the matter has been resolved.

Royalties: Mineral Owners File a Class Action Lawsuit Against Oil & Gas Company for Royalty Payments Disagreement
On October 18, 2019, mineral rights owners in Columbiana and Carroll Counties, Ohio, filed a class action lawsuit in the U.S. District Court for the Northern District of Ohio against EAP Ohio, LLC, (EAP) seeking damages for alleged breach of royalty clauses in their oil and gas leases (Zehentbauer Family Land LP et al. v. EAP Ohio, LLC et al., No. 4:19-cv-02434).  Plaintiffs argued that EAP has consistently deducted post-production costs when calculating royalties, despite being barred in writing from doing so in their individual leases.  Plaintiffs claim that it is plainly stated in the lease that only imposed taxes/fees from the government can be withheld from the royalties.

Production and Operation: Study Reports that Increase in U.S. Natural Gas Production Led to $1.1 Trillion in Natural Gas Savings from 2008 to 2018
On October 21, 2019, the Ohio Oil & Gas Energy Education Program published a study entitled Natural Gas Savings to End-Users: 2008-2018, A Technical Briefing Paper.  Researchers found that U.S. natural gas consumers saved about $1.1 trillion over the last decade in natural gas expenses, averaging about $4,000 per household.  According to the study, these savings are largely due to an increase in natural gas production, and especially due to horizontal drilling, which mostly took place in the states of Pennsylvania, Ohio and West Virginia.  The study suggests that natural gas production from these states accounts for 85% of the natural gas production growth in the United States from 2008 to 2018.

From the National Oil & Gas Law Experts:
Charles Sartain, Louisiana Operator’s Bad Faith Does Not Preclude Recovery (Oct. 30, 2019)
John McFarland, The Railroad Commission and the Coal Industry (Oct. 30, 2019)
John McFarland, Arkansas Case On Post-Production Costs (Oct. 29, 2019)

National Legislation

Environmental Protection Agency
Notice; Information Collection Request Submitted to OMB for Review and Approval; Comment Request; Treatment of Indian Tribes in a Similar Manner as States for Purposes of Section 303(d) of the Clean Water Act (Renewal) (Oct. 30, 2019)

Pennsylvania Legislation
Senate Bill 694: bill would allow well bores to cross multiple units (Presented to Governor; Oct. 30, 2019)

Pennsylvania Actions and Notices

Department of Environmental Protection
Applications, Actions and Special Notices (November 2, 2019)

Follow us on Twitter at PSU Ag & Shale Law (@AgShaleLaw) to receive ShaleLaw HotLinks:
“Frackers Scrap Idled Equipment Amid Shale Drilling Downturn,” Rigzone
“Oil: Keystone pipeline leaks in N.D.,” Energy Wire
“U.S. natgas glut dims outlook for big producers as prices head to 25-year low,” Reuters
“BLM: ‘Negligible’ impacts from central Calif. fracking,” Greenwire
“Natural-Gas Prices Jump as Producers Promise Restraint,” The Wall Street Journal
“Lawsuit claims Encino underpaid landowners at least $5M for royalties,” Shale Gas Reporter
“Increased natural gas production saves users nearly $93B in Ohio, Pa. and W. Va,” Shale Gas Reporter
“Natural Gas: Appeals court hears dispute over pipeline compressor station,” Energy Wire

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Written by:
Chloe Marie – Research Specialist
Jackie Schweichler – Staff Attorney