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Department of Justice Launches an Antitrust Investigation into Pressure Pumping Services Used in Hydraulic Fracturing

by Nicole Castle On July 24, 2013, Baker Hughes, Inc., the owner of the third-largest pressure pumping fleet in the United States, disclosed as part of its filing with the Securities and Exchange Commission that it had received a civil investigative demand (CID) from the Department of Justice (DOJ) on May 30, 2013.  The CID requests information and documents relating to U.S. pressure pumping services for the period from May 29, 2011, through May 30, 2013.   Baker Hughes stated in its filing that it was “not able to predict what action, if any, might be taken in the future by the DOJ or other governmental authorities as a result of the investigation.” Pressure pumping services generally refers to the process of pumping water and other materials into a well to break apart rock formations and increase the well’s oil or gas production.   Pressure pumping is the main step in the hydraulic fracturing process, and has in recent years...

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Illinois Set to Regulate Shale Oil and Gas

by Thomas Hefty On June 17, 2013, Illinois P.A. 98-0022 (the Act), consisting of the Hydraulic Fracturing Regulatory Act (HFRA) and the Illinois Hydraulic Fracturing Tax Act (HF Tax Act), became law. The Act, which was the result of months of negotiations among industry and some environmental groups, had been stalled since March 2013 after a last-minute amendment added a licensing regime that would have favored water-well drilling contractors. That impasse was resolved when the objectionable well-licensing regime was replaced by a local workforce credit against HF Tax Act liability. The Act is a defeat for those environmental and community groups that favored a moratorium on horizontal hydraulic fracturing in Illinois until the U.S. Environmental Protection Agency completed its ongoing study of horizontal hydraulic fracturing’s potential to affect groundwater resources. HFRA’s supporters tout it as the United States’ most comprehensive and...

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Increased Fracking on the Horizon in UK Gas Sector?

 by Charlotte Doerr The United Kingdom has seen significant steps forward on the shale gas exploitation front.  In light of recent discoveries of substantial reserves in the north-west of England, the ongoing debate on hydraulic fracturing (fracking) has once again come to the fore.  With recent studies from the British Geological Survey estimating that the capacity of the yet-untapped reserves of shale gas could climb to 170 trillion cubic feet (tcf), this is a significant discovery for the United Kingdom and could have important ramifications for the country’s energy supply and policy for many years to come.  The sheer size of these reserves is put sharply into context when viewed alongside the remaining gas reserves in the UK North Sea, judged to be as little as 7 tcf. The UK’s decision to lift a temporary moratorium on fracking in May 2013, which had been in place since the previous year after shale gas exploration resulted...

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Illinois to Act on Fracing – Or Not

by Thomas L. Hefty The Illinois General Assembly could be on the verge of enacting legislation, the Hydraulic Fracturing Regulatory Act (H.B 2615), that some environmental groups are touting as an environmental best practices for regulating the shale oil and gas recovery method known as horizontal hydraulic fracturing (fracing). H.B. 2615, the result of months of negotiations between environmental groups and the oil and gas exploration and production (E&P) industry, was set to be voted on in the Illinois General Assembly in late March, but a last second amendment (favoring in-state licensed drilling companies) has stalled the bill’s progress.  While HB 2615 is laudable for setting robust regulations on horizontal fracing operations, what should make it the betting favorite is that it is also a revenue bill – the second half of H.B. 2615 contains the Illinois Hydraulic Fracturing Tax Act. Under H.B. 2615, Illinois...

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New Research Finds Shale Natural Gas Production Emits Less Fugitive Methane that Previously Reported

by James A. Pardo and Brandon H. Barnes Shale natural gas production emits significantly less fugitive methane than previously thought, concluded researchers at the Massachusetts Institute of Technology (MIT) in a November 26, 2012, study published in Environmental Research Letters.  According to the researchers, "it is incorrect to suggest that shale gas-related hydraulic fracturing has substantially altered the overall [greenhouse gas] intensity of natural gas production."   Methane has been singled out as one of the most powerful greenhouse gases (GHG) because of its "global warming potential" - or the relative heat trapped in the atmosphere by a gas - which is 20 times greater than that of carbon dioxide.  Fugitive methane emissions are losses of methane gas that may occur during flowback (the return of fluids), during drill-out following fracturing, and during well-venting to alleviate well-head...

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Department of Interior Secretary Endorses Federal Regulation of Hydraulic Fracturing

by James A. Pardo and Brandon H. Barnes Speaking about upcoming Bureau of Land Management/Department of Interior (DOI) rules for hydraulic fracturing (fracing) on federal land, DOI Secretary Salazar recently opined that state regulation of fracing was insufficient and suggested that more stringent federal regulations may be required.  This is a sea change for Salazar, who previously made clear his endorsement of state fracing regulation.  While it is possible that Salazar’s comments were meant only to defend the Obama Administration’s issuance of rules for fracing on federal land, that is not the way the comments have been interpreted.  Salazar's criticism of state fracing efforts as being "not good enough for" him was unambiguous.  The DOI Secretary's comments came on the same day that DOI extended the period for public comment on the DOI rules by 60 days to September 10, 2012. The issue of state versus federal...

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Reconsideration Motion Fails in Middlefield

by James A. Pardo and Brandon H. Barnes Cooperstown Holstein’s attempt to reverse the trial court’s decision upholding the Town of Middlefield’s zoning ban on hydraulic fracturing has failed.  The Cooperstown Holstein case is now heading for appeal to New York’s Appellate Division, Third Department, where it likely will be consolidated with the Town of Dryden action that was appealed earlier this year.  For more information about these cases, please see our earlier article, “Recent Court Decisions May Affect Hydraulic Fracturing in New York and Ohio.”

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Indiana Adopts “Emergency” Hydraulic Fracturing Fluid Disclosure Rule

by James A. Pardo and Brandon H. Barnes As hydraulic fracturing (fracing) activity increases in Indiana, in the view of the state’s Department of Natural Resources, so too has the need for increased and updated regulations.   Last week, Indiana addressed this need in part by adopting new "emergency" regulations for fracing fluid disclosure.  These regulations took effect on July 1, 2012, and require the following information to be disclosed immediately after well completion: Volume and source of base fluid (water or other substance);  Type and amount of proppant (sand or other substance); Trade name of each additive as identified on the material safety data sheets (MSDS); Purpose of each additive; MSDS for each additive; Maximum volume of each additive, expressed as a percentage by mass or by volume; Copies of documents like well service company job tickets that summarize the products used, pressure recording charts and...

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New York Governor Floats Idea to Ban Hydraulic Fracturing in Majority of New York Counties

by James A. Pardo and Brandon H. Barnes New York Governor Andrew Cuomo is reportedly considering a plan that would ban hydraulic fracturing  (fracing) in all of New York with the exception of five counties along the Pennsylvania border:  Broome, Chemung, Chenango, Steuben and Tioga.  Even within those five counties, however, fracing would be strictly limited under the Governor's scheme.  Specifically, fracing permits would only be issued for wells located in communities that had not acted locally to prohibit the process – in other words, towns within the five counties still could exercise "home rule" to ban fracing by zoning amendment, or otherwise.  Cuomo also would ban fracing in Catskill Park, near any drinking water aquifer, in any nationally-designated historic districts and initially would limit it to the “deepest” areas of the Marcellus Shale. Governor Cuomo has been under intense pressure from both...

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Hydraulic Fracturing Regulatory Updates in California and Pennsylvania

by James A. Pardo and Brandon H. Barnes California Exploring Hydraulic Fracturing Regulation California currently has no regulations specific to fracing but has well construction standards designed to keep natural gas and oil field fluids away from underground water sources.  Fracing has taken place in California, but applications for permits to frac are reviewed on a case-by-case basis by the Department of Environmental Conservation's (DEC) Division of Oil, Gas and Geothermal Resources.  This is likely to change soon, however, as the DEC announced last week that it will propose new rules specifically for fracing by the end of summer 2012.  DEC will hold a series of workshops across the State to gather data and will commission a study on fracing’s effects in the state.  The agency also plans to review its existing policies for underground injection wells.  If prior regulatory efforts in California are any indication, the issue...

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