Midweek Energy Updates: January 3, 2018

The full version of these articles will appear in The Foster Report No. 3180, published on January 5, 2018.

 

BLM Decision to Rescind Fracking Rule Gains Praise from Industry Groups

January 2, 2018

In a move that earned praise from producers, the Bureau of Land Management (BLM) rescinded a 2015 rule covering hydraulic fracturing on federal land that was challenged in court and never implemented to address the chemical content of fracking fluids.

The Department of Interior (DOI) agency found that state efforts to regulate fracking have increased, that the disclosure of chemicals in fracking fluids to agencies or databases such as FracFocus is more prevalent than it was in 2015, and that the cost and regulatory burden to comply with the rule was too great. BLM reviewed comments in its 7/25/17 proposed rule to rescind the regulation, concluding that the 2015 rule is a duplicative regulation that should be repealed, it said in a 12/28/17 decision.

The 2015 rule, approved under former President Barack Obama, was intended to complement existing state regulations to ensure environmentally responsible development of oil and natural gas resources on federal and Indian land. It has never gone into effect due to being challenged in court by the Independent Petroleum Association of America (IPAA), Western Energy Alliance (WEA), and others. The U.S. District Court for the District of Wyoming set it aside and an appeal at the U.S. Court of Appeals for the Tenth Circuit was pending when oral argument was held in the summer of 2017 and the Trump administration proposed to repeal the regulation.[1]

The Tenth Circuit gave DOI until 1/12/18 to address its planned repeal of the rule, and the BLM decision makes the court deadline moot.

Because a majority of federal land where oil and gas production takes place is in the West, the 2015 rule was closely followed and challenged by producers with a lot of assets in that part of the country.

Under Executive Order 13783 from President Donald Trump to reduce the burden of federal regulations that hinder economic growth and energy development, along with Secretarial Order 3349 by DOI Secretary Ryan Zinke to promote energy independence, BLM conducted a review of state and federal regulations, including the 2015 rule. After completing the review, “BLM now believes that the 2015 rule imposes unnecessary and unjustified compliance costs and burdens,” it said in the final rule repealing the regulation.

In light of state, tribal, and existing BLM regulations for oil and gas production operations on federal and Indian land, “the rescission of the 2015 rule will not lead to poorly regulated oil and gas development activities, including hydraulic fracturing operations,” BLM said.

[1]   For past stories, see, BLM Issues Proposed Rule to Rescind 2015 Fracking Rule, Comments Due by September 25, FR No. 3159, pp. 30-31, Federal Court in Wyoming Decisively Rejects Bureau of Land Management’s Move to Regulate Fracking on Public and Indian Lands, FR No. 3105, pp. 1-4, and DOI’s Bureau of Land Management’s Hydraulic Fracturing Rule Attempts to Dodge and Weave Expected Criticism from all Stakeholders – Gas/Oil Industry and Environmentalists Both, FR No. 3042, pp. 30-33.

 

FERC Issues Certificates for Columbia’s Mountaineer XPress and Gulf XPress Projects

January 2, 2018

The Commission issued an order on December 29, granting certificates to Columbia Gas Transmission LLC (CP16-357) for the Mountaineer XPress Project and Columbia Gulf Transmission LLC (CP16-361) for the Gulf XPress Project.

Columbia Gulf, on 4/29/16, requested FERC’s authorization under section 7(c) of the Natural Gas Act (NGA) to construct, modify, operate, and maintain compressor facilities, as well as other appurtenant facilities, located in Kentucky, Tennessee, and Mississippi.[1]  The incremental capacity boost will enable Columbia Gulf to transport additional gas from an existing interconnection with Columbia Gas at Leach, Kentucky for delivery to points south on Columbia Gulf’s system, including firm deliveries to the Gulf Mainline Pool.  The Gulf XPress Project will allow for additional north-to-south transportation capacity.

The purpose of the proposed project is to increase the capacity of the Columbia Gulf pipeline system by 860,000 Dth/d of natural gas.

Also on 4/29/16, Columbia Gas requested FERC’s authorization under sections 7(b) and (c) of the NGA to construct and operate the Mountaineer XPress Project to provide up to 2,660,000 Dth/d of firm transportation service from receipt points in West Virginia, Ohio, and Pennsylvania, to delivery points at Columbia Gas’ TCO Pool (1,800,000 Dth/d), which supplies multiple Midwest, Northeast, and Mid-Atlantic markets, and at Columbia Gas’ Leach interconnect with Columbia Gulf (860,000 Dth/d), which serves markets in the South and the Gulf Coast.

Certificate Policy Statement. In the order, the Commission determined that both projects will not adversely affect the companies’ existing customers; won’t adversely impact other pipelines or their captive customers; and the companies have taken adequate steps to minimize any adverse impacts on landowners and surrounding communities.

[1]   See, Columbia Gulf Files Formal Certificate Application for FERC Authorization of Proposed Gulf XPress Natural Gas Pipeline Project, FR Np. 3098, pp. 15-17.

 

GAO Tells PHMSA to Address Strategy for Improving Safety at Gas Storage Facilities

January 3, 2018

The Pipeline and Hazardous Materials Safety Administration (PHMSA) should take a few steps to assess its strategy for improving safety at underground natural gas storage facilities, the Government Accountability Office (GAO) said in a report sought by Congress.[1]

GAO listed two recommendations for PHMSA to follow as it carries out a mandate from the Protecting Our Infrastructure of Pipelines and Enhancing Safety (PIPES) Act of 2016 related to gas storage safety. Both involve defining levels of performance by the Department of Transportation (DOT) agency, such as evaluating whether inspections lead to fewer facilities that do not meet new minimum safety standards for the 415 gas storage sites in the U.S.

With PHMSA in the middle of a rulemaking to set storage safety standards, GAO focused on broad strategy principles for the agency to follow and assess progress in meeting its goals.

Members of Congress asked GAO to examine PHMSA efforts to implement the PIPES Act requirement for setting minimum safety standards at underground storage facilities and the extent to which PHMSA has planned strategically to enforce its standards, which are being developed in an interim final rule and an upcoming final rule.

DOT received a draft version of the report, concurred with the recommendations and listed steps PHMSA is taking or plans to take regarding oversight of safety at gas storage facilities. In addition, DOT Assistant Secretary Keith Nelson said DOT would provide a detailed response to both recommendations within 60 days of the final report, which was issued on December 22. 

[1]   Natural Gas Storage: Department of Transportation Could Take Additional Steps to Improve Safety Enforcement Planning, GAO-18-89, November 2017.

 

 

These articles will appear as published in The Foster Report No. 3180, being issued on January 5, 2018

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