Fracking Insider Readers: We are pleased to bring you Volume 32 of our State Regulatory Roundup, including updates in Colorado, North Dakota, and Texas. As we explained in earlier volumes, we designed the Roundup to provide quick overviews on state regulatory activity. If you have any questions on any of these summaries, please do not hesitate to ask.
Colorado – The Colorado Air Quality Control Commission approved rule revisions on February 23rd that make the state the first to impose methane emission controls on oil and gas operators. Regulations 3,6, and 7 include requirements for leak detection in drilling and production processes, monthly inspection of large emission sources, and a timeline for the repair of discovered leaks at oil and gas production sites. Gov. John Hickenlooper (D) proposed the rules in November 2013, after they were drafted in conjunction with Noble Energy, DCP Midstream, Encana Corp., and Anadarko Petroleum Corp., as well as the Environmental Defense Fund. The rules are designed to reduce ground-level ozone levels through reduction of emissions of volatile organic compounds, and to address climate change by reducing emissions of methane. Some oil and gas operators expressed concern about statewide application of the rules, asserting that there was not adequate accommodation of differences among basins and operators.
North Dakota – Gov. Jack Dalrymple (R) told an audience in a February 24thspeech before the Energy 2020 conference that his state flares approximately 30% of the one billion cubic feet of natural gas it produces every day because of a lack of infrastructure to transport the gas and a lack of local industry that can put it to productive use. He noted that companies have been working to construct pipelines and processing plants to manage the large quantity of natural gas that is produced alongside the oil that is primarily targeted in the Bakken Shale formation. However, the speed of development and permitting delays have caused natural gas infrastructure to lag behind production. Gov. Dalrymple offered ideas for additional uses for supplies of natural gas, specifically fertilizer production, heating, crop drying, and petrochemical production. Lance Langford, vice president of Development and Production North America for Statoil, informed the conference of his company’s joint effort with General Electric to develop mobile capture and compression systems for natural gas that could facilitate the uses envisioned by the governor.
Texas – If approved, an application filed February 24th with the Federal Energy Regulatory Commission (FERC) by Houston-based Excelerate Energy L.P. would allow for the construction of the first floating natural gas export facility in the U.S. The facility would comprise both a permanently moored floating liquefaction storage and offloading vessel and an onshore natural gas processing plant connected to the existing pipeline network. The facility, which would be located in Lavaca Bay on the Texas Gulf Coast, is estimated to cost $2.5 billion to construct. The production capacity of the proposed facility is expected to be about 1.3 billion cubic feet of LNG per day. A final investment decision regarding feasibility of the project is expected within twelve months, and the facility could be operational in the fourth quarter of 2018 if it receives regulatory approval.
With assistance from Andrew McNamee