Eighth LNG export terminal gains approval. The Department of
Energy (“DOE”) authorized LNG Development Company LLC to export
up to 1.25 billion cubic feet of gas per day to countries without a freetrade agreement from a planned LNG export terminal in Oregon. The
approval, valid for 20 years, is the eighth LNG export license granted by
the Department. DOE considered the company’s application under what
may be considered the “old rules.” The Department is taking comments
on a new process that will give priority to applications for projects that
have already completed an environmental review under the National
Environmental Policy Act, instead of on the existing first-come, firstserved basis, as projects that have completed that review are deemed to
be more likely to be constructed. The recently approved LNG Oregon project is expected to cost $12 billion and
begin exporting gas in 2017, relying primarily on gas transported from Western Canada.
Industry group challenges Compton moratorium. Western States Petroleum Association filed suit in
Los Angeles Superior Court arguing that the City of Compton’s moratorium on hydraulic fracturing is preempted
by existing Department of Conservation’s Division of Oil, Gas, and Geothermal Resources (“DOGGR”) rules for
hydraulic fracturing. Compton claims that DOGGR’s rules are not adequate to protect health, safety and the
environment, although the division is currently drafting new regulations.
New York mineral rights owners appeal dismissal of delay suit. Several landowners have appealed a
trial court decision rejecting their request to compel Governor Andrew Cuomo to issue regulations that would
allow for hydraulic fracturing in New York. The suit charged the delays in determining whether to allow
hydraulic fracturing was a regulatory taking of their property interests, but the trial court found the landowners
lacked standing to sue. A de facto moratorium has been in place in New York since 2008, when the state began
work on a Supplemental Generic Environmental Impact Statement (“SGEIS”) for hydraulic fracturing. Although
the New York Department of Environmental Conservation claimed that it would conclude the SGEIS in 2009,
the Department has still not issued a final SGEIS. Presently, DEC’s work is on hold as it awaits the completion
of a separate New York State Department of Health review of hydraulic fracturing that has been ongoing for two
Sidley is pleased to announce that our
weekly update “This Week in Hydraulic
Fracturing” is now available as a blog on
the internet. Please visit The Sidley Shale and
Hydraulic Fracturing Report.
Firm clients and other interested parties
can now sign up for email alerts that will
notify them when new posts are added to
the blog. If you have any editorial
questions or comments, you should
contact Roger Martella (DC), Sam
Boxerman (DC), Joel Visser (DC) or Jim
Wedeking (DC) or Katharine Newman
(CH). SIDLEY SHALE GAS AND HYDRAULIC FRACTURING REPORT
U.K. opens shale development licenses for bidding. The U.K.’s Department of Energy and Climate
Change is putting up licenses for bids that will allow energy companies to begin exploratory shale drilling. Prime
Minister David Cameron said his government is “going all out for shale” in an effort to boost Britain’s energy
self-sufficiency. Shale exploration in the U.K. has been subject to a moratorium for the past three years, after
drilling by Cuadrilla Resources in northern England allegedly contributed to small scale tremors. The licenses
are the first step in the exploration process but do not give outright permission to drill. Oil and gas exploration
companies must also obtain planning permission, environmental permits and health and safety approvals before
they can receive final go-ahead to drill, a process that means it will be several years before new drilling actually
commences. The British Geological Survey has estimated that Britain has substantial shale gas reserves of
approximately 1,300 trillion cubic feet, but landowners have little incentive under current law to allow
exploration ,as they are not guaranteed a share of the resources recovered.
European Commission: Poland’s drilling rules violate EU directive. According to the European
Commission, Poland violated the European Union’s Environmental Impact Directive by issuing regulations that
allow for shale drilling at depths up to 5,000 meters without completing an environmental impact assessment.
Recent revisions to Poland’s regulations would exempt most drilling projects from environmental impact
assessments, except for those within 500 meters of sensitive areas. The European Commission is threatening
legal action in the European Court of Justice, if Poland does not commit to revising its regulations. Poland is
seeking to develop shale gas, in part, in an effort to reduce the amount of natural gas it imports from Russia.
Hess to spin-off Bakken midstream assets. Hess Corporation announced that it would spin-off its Bakken
shale midstream assets into a master limited partnership (“MLP”). The new MLP would take interests in Hess’
Bakken crude railway loading terminal, natural gas processing and storage facilities, and pipelines. Industry
analysts had been expecting the move for months as the MLP provides significant tax advantages to investors.
The MLP’s initial public offering will likely take place in the first quarter of 2015.
Texas: No evidence of Barnett shale cancer cluster. The Texas Department of State Health Services
(“DSHS”) re-affirmed its prior 2010 study in failing to find a cluster of blood, brain, breast or lymphatic cancers
in Flower Mound, Texas, located in the Barnett Shale. The study was undertaken in response to a March 2014
paper by University of Texas law professor Rachel Rawlins that criticized DSHS’s 2010 survey for using a 99%
confidence interval in linking drilling activities to cancer diagnoses, claiming that the standard was too high.
The new DSHS study used the 95% confidence interval suggested by Rawlins but reached the same results. Both
DSHS studies found slightly higher incidences of breast cancer in Flower Mound but did not conclude that they
resulted from shale drilling.