Sidley shale and hydraulic fracturing report - November 9, 2015

States

Texas Railroad Commission allows wastewater injection wells to keep operating. On November 3, the Texas Railroad Commission voted unanimously to adopt staff recommendations to allow two wastewater injection well operators to keep their permits. The Commission previously ordered the operators to show cause why the permits should not be revoked after a study published by Southern Methodist University researchers concluded that the wells were responsible for increased seismicity near Reno and Azle in 2013 and 2014. After the hearing, the Commission concluded that there was insufficient evidence to establish a causal link between the earthquakes and the disposal wells. The proposed decision that was adopted by the Texas Railroad Commission is available here.

Oklahoma: Environmental groups threaten lawsuit over alleged seismicity from wastewater disposal wells. On October 29, the Sierra Club, Weitz & Luxenberg PC and Public Justice sent a notice of intent to sue to four oil and gas companies, demanding that they reduce the amount of wastewater they inject into certain disposal wells in Oklahoma. The letter alleged that wastewater disposal wells were causing or contributing to increased seismic activity that may result in an imminent and substantial endangerment under the federal Resource Conservation and Recovery Act. A spokesman for the Oklahoma Oil and Gas Association asserted that private lawsuits regarding induced seismicity were unnecessary because the Oklahoma Corporation Commission is already taking steps to evaluate such charges.

International

China poised to expand shale gas exploration. Recent reports suggest that China will expand shale gas exploration by auctioning oil and gas exploration rights for up to 40 blocks of land. China’s last auction took place in 2012, when 19 parcels were auctioned. Results from shale oil exploration in China have been mixed, with low gas prices and geologic challenges diminishing opportunities for development. China also plans to reduce subsidies for shale gas development from 0.4 yuan per cubic meter to 0.3 yuan in 2016 and to 0.2 yuan in 2019. The subsidy is intended to promote natural gas as an alternative to coal for electricity production.