Pa. Supreme Court to Hear Arguments in ‘Rule of Capture’ Case

Pennsylvania’s top court will hear oral arguments on Sept. 12 in a case being closely watched by gas drillers and industry associations,
as well as land owners. “Rule of capture” is a long-established legal principle used
in conventional well drilling. It holds that a property owner can drill a well
and extract oil or gas, even if it comes from beneath another owner’s land
without that person’s permission. It is based on the fact that gas and oil
traditionally were found in underground reservoirs and could migrate freely across
property lines.

DEP Audit Finds Beaver County Agency had Poor Oversight of Two Major Pipeline Projects

The Pennsylvania Department
of Environmental Resources recently revoked some of the Beaver County
Conservation District’s permitting powers after an audit showed that it did
a poor job overseeing many projects, including several big natural gas pipelines
being built there. The agency had been authorized to issue erosion and
sedimentation and water encroachment permits for the DEP. A press release noted
that such delegation of duties to county conservation districts is optional,
and that DEP will now take over handling those permits. An audit
conducted in April found that the agency did not have proper staffing, and
did not properly review applications, coordinate with DEP or sufficiently
inspect projects. “DEP staff identified significant and consistent problems
with BCCD’s recordkeeping, permit review, and inspections,” said DEP Secretary
Patrick McDonnell in a press release.

New EQT Leader Reaches Out About Changes

The new CEO of EQT, the largest gas producer in
Pennsylvania, recently went on the road to assure landowners that his takeover
of the company will pay dividends. Toby Rice is already well-known in Southwestern Pennsylvania
and Ohio as the former president of Rice Energy, a company which had many
leases and wells in Western Pennsylvania and Ohio and was ultimately acquired
in 2017 by EQT. He recently went on a two-week outreach campaign to connect
with landowners in Southwestern Pennsylvania, West Virginia, and Ohio. This
campaign consisted of holding well-attended events for landowners and community
members at which he spoke about his background and business philosophy, which
revolves around technology, planning, and relationships. He calls it the
“shalennial approach” to gas development.

EQT Settles WV Lawsuit

EQT has agreed to pay $53.5 million to settle a federal class-action
lawsuit with West Virginia residents who claimed the company was
shortchanging them on gas royalty payments by deducting a variety of
post-production expenses. The lawsuit, which included about 9,000 people, was filed in
2013 and a trial was scheduled for November. EQT, which is the second-largest
gas producer in the state, will pay the money into a settlement fund and it
will be distributed based on factors such as the type of lease held, the amount
of gas produced from each well and how much was deducted from royalty checks. The suit claimed that EQT deducted money from royalty checks
for its post-production activities, such as the cost of transporting and
processing gas. EQT, which claimed the deductions were proper, said the
settlement demonstrated “the company’s commitment to fostering a good
relationship with landowners.

Ohio Grant a ‘Positive Step’ Toward Final Decision on Second Appalachian Cracker Plant

Plans to build a second ethane cracker plant in the
tri-state region are moving forward. PTT
Global Chemical America has been studying the project in Belmont County,
Ohio, since 2015 and is close to making a final investment decision. In late July, JobsOhio, the state’s private economic
development organization, awarded a $30
million revitalization grant toward site preparation, which is expected to
cost about $65 million. It’s one of the largest awards ever offered by the
agency as an incentive to attract the plant. “JobsOhio’s revitalization grant will support initial site
preparation work, which will begin later this month.  While this is an important and positive step
for the project, no final investment decision has been made,” said JobsOhio
spokesman Matt Englehart.

DEP Reports Record Well Production in 2018

Pennsylvania natural gas wells produced a record amount in
2018, according to the recently released annual
report from the state Department of Environmental Protection. Gas production in the state reached more than 6.1 trillion cubic
feet in 2018, an increase of .8 trillion cubic feet over the previous year. The
amount of gas produced in Pennsylvania has risen each year since 2011, the
earliest year included in the report, when 1.06 trillion cubic feet was
produced. Pennsylvania is second only to Texas in the amount of gas
produced, the vast majority from unconventional gas wells, which use hydraulic
fracturing to access large amounts of gas trapped in layers of shale thousands
of feet beneath the surface. The wells use long lateral lines that travel
vertically out from the horizontal well boring to access more area.