West Virginia Court Rulings Highlight Evolving Law on Property Owner Rights

Two recent decisions by the West Virginia Supreme Court
illustrate the evolving legalities over the rights of property owners near gas
drilling operations. In a ruling issued June 5, the court unanimously ruled that
EQT trespassed when it drilled wells on property owned by two Doddridge County
residents to access gas reserves on neighboring properties. While the company had a lease that entitled it to drill for
gas beneath their property, it did not have permission to enter the land to
build a new well pad to take the gas from thousands of acres of adjoining land. Unconventional gas well development involves drilling horizontal
wells deep into the earth, which then are turned laterally and can stretch out
a mile or more. After drilling, a process called hydraulic fracturing is used
that involves pushing fluids and sand under high pressure into the well to
fracture or “frack” the Marcellus Shale layer and allow the gas stored in it to
be released.

The Petrochemical Industry is Increasing Efficiency and Cutting Costs

Most people who have passed through Beaver County have seen the construction of Shell’s massive ethane cracker plant. The $6 billion facility that turns natural gas into various chemicals, such as plastics building block ethelyne, spans 340 acres and boasts two of the world’s largest cranes. The Beaver cracker is the first built outside of the south in two decades, but future cracker plants could use lessons learned in the south to make construction more efficient. Cracker plants are extensively capital and labor-intensive
projects. Depending on its size, a cracker plant can cost anywhere from $1
billion to more than $11 billion to build, with total costs often dwarfing
estimated costs.

Study Gauges American Attitudes Toward Natural Gas Exportation

A study published in the September 2018 edition of the
journal Energy Policy examined public opinion of natural gas exports in the
United States. Authors Johnathan J. Pierce, Hilary Boudet, Chad Zanocco, and
Megan Hillyard used polls to ask a variety of questions regarding natural gas
exportation. The study found that nearly a majority of respondents supported
exporting natural gas. When asked whether the respondent supported or opposed
exporting natural gas from the United States, 48.9 percent either strongly or
somewhat supported, while 34.3 percent strongly or somewhat strongly opposed. The researchers accessed a sample of 1,042 people from
across the United States using Amazon’s Mechanical Turk, or MTurk, online
polling service.

NG Export Terminal to be Built on Delaware River

A former dynamite plant in western New Jersey could be converted into a major export terminal for natural gas products like propane and butane in the future. Groups advocating for the environment fear redevelopment of the site for exportation of natural gas products could have significant impacts on the environment and human health. Investment group Delaware River Partners, LLC (DRP) purchased the former DuPont Repauno Plant on the Delaware River with the intent to use the site as a port for exporting butane and propane to European markets. The Repauno Plant’s location on the Delaware River and the existing features of the plant make it a prime site as an export terminal. DRP plans to spend $450M to expand existing underground caverns beneath the plant to hold up to 3 million barrels of natural gas, fortify rail systems for transport, and build a wharf in the Delaware River that can dock multiple tankers by 2022.

Court Says Operating History Relevant in Zoning Permit Case

The Pennsylvania Supreme Court upheld a borough’s denial of
a conditional use permit for unconventional oil and gas development in an oil
and gas overlay zone, ruling that the borough could rely on testimony from
residents of an adjacent township about their adverse experiences with
development by the same applicant. On May 31, 2019, in EQT
Production Co. v. Borough of Jefferson Hills, the Court by 6-1 decision
reversed the Commonwealth Court’s 2017 decision which had required the borough
to issue the permit for a 30-acre 16-well site. A conditional use permit is a zoning tool that requires an
applicant to make a specific showing that it has satisfied objective standards
and criteria set forth in the zoning ordinance. The local “governing body shall
hold hearings on and decide requests for such conditional uses in accordance
with such standards and criteria.” 53 P.S. § 10913.2.

Petrochemical Demand is on the Rise with New Opportunity Presented to Appalachia

The American petrochemical industry continues to grow and
has the potential to become a dominant commodity in the near future. The number
of chemical manufacturing facilities like Shell’s ethane cracker plant being
constructed in Beaver County, continue to increase and attract large sums of
domestic and foreign investment. Petrochemicals, which are chemicals derived from crude oil
and natural gas, are used to produce a variety of products ranging from dyes
and pigments to plastic resins and pharmaceuticals. The International Energy
Agency estimates that petrochemicals will, “account
for more than a third,” of the demand for
oil globally and will, “have a greater influence on the future of oil,” than
the transportation sector. According to the American Chemical Council, there are 333 chemical projects/facilities that total $200 billion in value in the United States.

Stressed Out: What Causes Pipelines to Degrade

Shale gas production over the past several years has caused
a flurry of activity and generated a significant amount of physical development
in the Commonwealth. Today, Pennsylvania is home to thousands of natural gas
wells and hundreds of miles of new as well as previously existing pipelines
that gather and transport natural gas. These pipelines, though typically made
of steel because of its strength, can significantly degrade over time. A recent
study analyzed the stresses that pipelines endure and how these stressors may
cause the steel used to make the pipes and their fittings fail. There are three
types of pipelines used in the process of transporting natural gas in its
gaseous or liquid state.

Dominion Energy Targets Methane Emissions

Oil and gas companies are making efforts to reduce their
carbon footprint by reducing greenhouse gas emissions. One company in this push
is Dominion Energy. At a recent conference in West Virginia, a representative from
spoke about the new initiatives and outlined their future emissions goals
and methods to achieve them. Dominion Energy is a major player in the American energy
sector. The Virgnina-based company and its 16,200 employees generate and transmit
energy for customers in 14 states, with a $42.93B market capitalization.

AG Shapiro Takes Aim at O&G Industry

Pennsylvania’s Attorney General Josh Shapiro is taking
aim at the state’s oil and gas industry. As promised in his 2016 campaign,
now-Attorney General Shapiro is following through on promises
to “hold oil and gas companies criminally liable” for any offenses committed
during unconventional natural gas development in Pennsylvania. Environmental
crimes typically include air pollution, improper dumping of hazardous
materials, groundwater pollution, and any other violation of the state’s
environmental regulations. The Attorney General’s efforts to hold companies accountable began with an investigatory grand jury convened to explore any “environmental crimes” that may have been committed. The Attorney General’s actions come amidst a host of incidents across the Commonwealth caused by companies engaged in upstream and midstream development.

Lukewarm Weather is Driving NG Storages Up and Prices Down

Comfortable weather is causing uncertainty in the natural
gas futures market. Natural gas futures, one of the metrics commodities traders
use to gauge the market, have fallen after a steady rally. Natural gas is used year-round for residential and
commercial energy needs but fluctuates with the seasons. In the winter, demand
increases as households use more natural gas for home heating. Demand then
decreases in the spring as it warms up before rebounding in the summer when
much more electricity is used to power air conditioners.