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September 29, 2014

Texas' New Seismologist

Michael Brick has written an excellent article in the Houston Chronicle about the Texas Railroad Commission's new seismologist, David Craig Pearson. The article, "Vexed by Earthquakes, Texas Calls In a Scientist," relates the events leading up to his hiring, his background, and the RRC's initial foray into addressing the issue by proposing new rules on injection well operators.

Dr. Pearson grew up in McCamey, worked in the oil fields, studied at SMU, and worked at Los Alamos National Laboratory in New Mexico for 13 years. He left in 2006, returning to West Texas and ranching. He inherited some mineral rights in Upton County. When the RRC advertised for a seismologist, he applied and was hired.

So far, Dr. Pearson has published no conclusions, but the RRC has been praised for its new proposed rules. Pearson testified in August before the House Energy Resources Subcommittee on Seismic Activity that he wants to wait for reports from SMU's study of seismic and injection activity around the town of Azle, in the Barnett Shale, before drawing any conclusions. 

September 16, 2014

Gas Contamination of Groundwater Traced to Faulty Casing

A study published in the Proceedings of the National Academy of Sciences, examining eight clusters of contaminated water wells in Pennsylvania and Texas, found that the wells' contamination was either from naturally occurring gas deposits -- i.e., the gas is naturally occurring within the aquifer -- or from poor casing and cementing of nearby gas wells. The study concluded that the hydraulic fracturing of the wells was not a cause of groundwater contamination. The study was led by a researcher at The Ohio State University and included researchers at Duke, Harvard, Dartmouth and the University of Rochester. The researchers were able to "fingerprint" the gas by measuring the amount of "noble" gases such as helium included with the natural gas. The researchers were able to distinguish between the fingerprints of naturally occurring methane in the aquifers and gas from the Barnett and Marcellus Shale formations. Ohio State's press release about the study can be viewed here.

I have written previously about the ongoing battle between Range Resources and the Lipskys over the Lipskys' claims that Range's wells contaminated their groundwater. A facet of that battle is pending in the Texas Supreme Court. This new study will add fire to the debate.

June 19, 2014

Concerns Continue of Water Well Contamination from Hydraulic Fracturing

Investigations continue in response to complaints of alleged contamination of water wells from drilling activity in the Barnett Shale.

In May, the Texas Railroad Commission issued a report of its investigation of complaints of well contamination by methane in Parker County. It concluded that "the evidence is insufficient to conclude that Barnett Shale production activities have caused or contributed to methane contamination in the aquifer beneath the neighborhood."

But Parker County resident Steve Lipsky, who's complaint at the RRC caused it to conduct its new study, continues his battle with Range Resources, arguing that its wells are responsible for the methane in his water well.  Two other scientists who have reviewed the RRC test data concluded that the gas in Lipsky's water is definitely the result of fracking operations.

Lipsky's battle with Range continues in the Texas Supreme Court, where Lipsky and Range have both filed petitions for writs of mandamus. Lipsky has asked the court to dismiss Range's claims against Lipsky for defamation and business disparagement. Range accused Lipsky and his expert Alisa Rich of fabricating evidence in Lipsky's suit for damages for contaminating his well.  Range asks the court to reinstate its claims that Lipsky and his wife and Rich conspired to fabricate evidence to defame the company. The court has not yet ruled on the petitions.

Meanwhile, the University of Texas at Arlington, along with UT's Bureau of Economic Geology, are conducting a study of 550 water wells in North and West Texas, including baseline testing of wells in Nolan County using samples taken before commencement of drilling in that county, to investigate the impact of drilling and disposal operations over time. Some states, including Pennsylvania -- but not Texas -- require drillers to test nearby water wells before drilling to provide baseline data on groundwater.

May 28, 2014

A Second Nuisance Verdict in Barnett Shale

A jury has awarded damages in a second nuisance case against an operator, this time against Chesapeake Energy.  In Crowder et al. v. Chesapeake Operating Inc., case number 2011-008169-3, in Tarrant County Court at Law, the jury awarded the Crowders $20,000 for what the jury found to be a temporary nuisance - drilling operations conducted by Chesapeake in a field behind their house, where Chesapeake has drilled 13 wells. The Crowders complained of offensive odors and extensive noise. The jury failed to find that Chesapeake's operations created a permanent nuisance, which would have entitled the Crowders to additional damages. The Crowders filed their suit in 2011.

While the jury award in Crowder will not excite plaintiffs' attorneys to look for additional such cases -- unlike the $2.9 million verdict recently awarded in another case, Lisa Parr v. Aruba Petroleum, Cause No. 11-01650-E, in the County Court at Law No. 5 of Dallas County -- the case does show the viability of nuisance claims aimed at oil and gas operations near residences, especially in urban areas.

The Dallas city council recently adopted a drilling ordinance prohibiting well locations within 1,500 feet of any residence, effectively prohibiting most drilling within the city limits. The setback in Fort Worth is 600 feet. There are more than 1,700 wells in the City of Fort Worth.

April 21, 2014

Methane Fugitive Emissions Face Increased Scrutiny

Emissions of methane from oil and gas exploration, production and transportation facilities have become a big topic in the news recently. The E&P industry touts natural gas as a more environmentally friendly fuel than coal for electric generation, reducing greenhouse gas emissions. But methane is a powerful greenhouse gas, and there is much debate over the amount of fugitive emissions from wells, pipelines, processing facilities and other industries handling the fuel.

  • The UN Intergovernmental Panel on Climate Change has endorsed natural gas as a "bridge fuel" to reduce greenhouse gases.
  • The EPA has issued estimates of methane fugitive emissions that have been criticized as low by environmental groups.
  • The Obama Administration has recently outlined a new strategy for reducing methane emissions.
  • Colorado has recently adopted regulations to require operators to reduce and capture fugitive emissions and monitor for leaks.

Emissions from oil and gas exploration and production also are being blamed for increased ozone readings in shale-boom areas in Wyoming and Texas. In Texas, a state-funded study by the Alamo Area Council of Governments is underway to determine whether drilling in the Eagle Ford is contributing to increased ozone readings in San Antonio. San Antonio may soon be cited by the EPA as a nonattainment area for ozone, which would require the city to impose additional air quality regulations. Recently, the Texas Commission on Environmental Quality, which is funding the study, froze increased funding because the Alamo Council issued a statement tying increased ozone levels around San Antonio to Eagle Ford drilling without getting clearance from the TCEQ. 

San Antonio's problems are reminiscent of a debate a few years ago over whether oil and gas exploration in the Barnett Shale was contributing to air pollution in the Dallas-Fort Worth area. The TCEQ has concluded that Barnett Shale drilling has had no significant impact on local ozone levels.  But a recent study by a graduate student at the University of North Texas concluded that ozone is higher in areas with drilling activity in the Barnett Shale.

I expect that the Texas Railroad Commission and the TCEQ will come under increased pressure to tighten rules for fugitive emissions of methane from oil and gas activities in Texas.

 

 

December 30, 2013

Another Chapter in EPA's Battle with Range Resources in Parker County

On December 20, the Office of Inspector General of the Environmental Protection Agency issued its "Response to Congressional Inquiry Regarding the EPA's Emergency Order to the Range Resources Gas Drilling Company."  The report was requested by Congress as a result of an emergency order issued by the Dallas regional office of the EPA against Range Resources on December 7, 2010. That order required Range to take certain actions based on EPA's finding that Range's wells in the Barnett Shale were the likely source of contamination of water wells in Parker County.

I have written about Range's saga before.  EPA sued Range to enforce its emergency order. Range disputed and fought the EPA order, suing in the U.S. Court of Appeals to get the order revoked. Range called a hearing before the Texas Railroad Commission (in which EPA did not participate), after which the RRC found that Range's wells were not the source of the gas in the water wells. One of the well owners, the Lipskys, sued Range in state court for damages;  Range countersued, contending that the Lipskys had falsified evidence and defamed the company. The district court found that Lipsky had created a "deceptive video" that was "calculated to alarm the public into believing the water was burning." The Lispkys have appealed to the Texas Supreme Court, where their case remainds pending.


Read more here: http://www.star-telegram.com/2012/02/17/3744111/owner-of-contaminated-water-well.html#storylink=cpy

The EPA and Range eventually settled their dispute, Range agreeing to conduct tests of 20 water wells in the area every 3 months for a year. Those tests showed no methane contamination of the water wells.

The Range-EPA fight led to the resignation of the Dallas regional admnistrator of the EPA, Dr. Al Armendariz, after he was videoed saying that, because of the limited number of staff in his office, his enforcment approach is to act like the Romans: "They'd go into a little Turkish town somewhere, they'd find the first five guys they saw and they would crucify them. And then you know that town was really easy to manage for the next few years."  His actions were criticized in Congress, leading to a congressional request that the Office of Inspector General investigate EPA's actions in the Range matter.

The OIG's report vindicates EPA's actions.  If found that the EPA's actions "conformed to agency guidlines, regulations and policy." It also found that "the EPA lacks quality assurance information for the Range Resources' sampling program, and questions remain about the contamination."

A large part of the controversy concerned the EPA's "isotopic fingerprinting and compositional analysis" of the gas in the Lipskys' well, from which EPA concluded that the methane came from the Barnett Shale.  In Parker County, the principal aquifer lies just above a shallow formation that contains methane, and water wells will become contaminated with that methane if they are drilled through the aquifer into the shallow gas sands. Range's evidence at the RRC hearing showed that EPA's "isotopic" analysis was flawed and that the gas in the Lipskys' well was not from the Barnett Shale. Range's evidence for the source of the gas is not mentioned in the OIG report.

Armendariz, now employed by Sierra Club, said that the OIG report is "complete and total vindication of the work we did at EPA."  Lipsky continues to believe that Range is responsible for contamination of his well:  "The holding tanks [for well water] in people's garages are going to explode and I don't care where it's coming from, someone is going to get killed," he said.

December 9, 2013

"Induced Seismicity" Caused By Wastewater Injection in Barnett Shale

StateImpact Texas has published a series of good articles about the growing evidence that the huge quantities of wastewater being injected in the Barnett Shale field are causing earthquakes -- some of sufficient intensity to cause significant damages. Lawsuits have been filed in Johnson County to recover for the damage.  StateImpact's most recent article can be found here. Links to all of StateImpact's articles on earthquakes caused by oil and gas activity are here.
March 11, 2013

University of Texas Study of Barnett Shale

UT's Bureau of Economic Geology has issued a comprehensive report on the estimated reserves in the Barnett Shale Field. The study, funded by the Alfred P. Sloan Foundation, looked at 16,000 wells in the field. It has been submitted for peer review before publication, but a summary of the report can be found on the BEG website.

The BEG created a model with data from 15,000 wells drilled through 2010. Assuming a $4 constant gas price, the model predicts another 13,000 wells through 2030. It predicts total field production of 44 Tcf of gas through 2050. Here are two images showing results of the study:

BEG Barnett Shale 1.JPG

BEG Barnett Shale 2.JPG

 

The BEG plans to complete similar studies of the Marcellus, Haynesville and Fayetteville Shales by the end of 2013.

 

 

December 15, 2012

George Mitchell - The Man Who Figured Out Fracing

I recently heard an interview with George Mitchell, the independent operator who found the key for combining hydraulic fracturing technology and horizontal drilling to unlock vast reserves of gas in the Barnett Shale, the first shale play. And it only took him 17 years to figure it out. Now 93 years of age, Mr. Mitchell was interviewed by American Public Media's Marketplace radio program. You can view the interview here.

Mr. Mitchell has some unorthodox views for a wildcatter. First, his foundation, the Cynthia and George Mitchell Foundation, has given millions of dollars to support development of clean energy resources. And he supports a carbon tax on hydrocarbons.

Mr. Mitchell also supports tough regulation of independent operators. "I've had too much experience running independents," Mitchell says. "They're wild people. You just can't control them. And if it doesn't do it right, penalize the oil and gas people. Get tough with them." Earlier this year, Mr. Mitchell told Forbes magazine that he is in favor of federal regulation of hydraulic fracturing by the U.S. Department of Energy. 

Mr. Mitchell and NY Mayor Micheal Bloomberg recently teamed up to write an Op Ed piece in the New York Times supporting the development of natural gas reserves with the new fracing technology and pledging their foundations to support efforts to develop responsible regulations to assure that drilling can be done safely:

Several states, including Colorado, New York and Ohio, are taking the lead in this regard, recognizing the need to establish an appropriate framework for regulatory safeguards. It appears that Texas, as the pioneer of hydraulic fracturing in shale formations, is poised to step forward in developing promising state guidelines as well. More such leadership is needed.

To jump-start this effort, each of our foundations will support organizations that seek to work with states and industries to develop common-sense regulations that will protect the environment -- and ensure that the industry can thrive.

We will encourage better state regulation of fracking around five key principles:

     Disclosing all chemicals used in the hydraulic fracturing process;

     Optimizing rules for well construction and operation;

     Minimizing water consumption, protecting groundwater and ensuring proper disposal of wastewater;

     Improving air pollution controls, including capturing leaking methane, a potent greenhouse gas; and

     Reducing the impact on roads, ecosystems and communities.

The latest research, including peer-reviewed studies out of Carnegie Mellon University and Argonne National Laboratory, suggests that if properly extracted and distributed, the impact of natural gas on the climate is significantly less than that of coal. Safely fracking natural gas can mean healthier communities, a cleaner environment and a reliable domestic energy supply right now.

. . .

We can frack safely if we frack sensibly. That may not make for a great bumper sticker. It does make for good environmental and economic policy.

The Texas Railroad Commission has recently published revised draft regulations specifically aimed at assuring that fracing and well completion operations are conducted safely and adequately protect groundwater resources.

I agree with Mr. Mitchell. Drilling technology is much more complex than it was ten or twenty years ago. Fracing involves managing very high pressures and toxic chemicals. Wells now cost $8 to $10 million. Texas needs to take the lead in assuring that these operations are conducted with the best available technology and safety practices, and the Railroad Commission needs to crack down on operators who don't follow those practices.

 

October 2, 2012

Reuters Pursues Chesapeake Again

Reuters published a new story on Chesapeake recently, continuing its series critical of the company and its CEO Aubrey McClendon. In this article Reuters reports on its research of Rule 37 cases filed by Chesapeake. Incredibly, Reuters researchers identified all Chesapeake Rule 37 requests back to January 2005 - all 1,628 of them, more than twice the number filed by the next most-frequent filer, XTO (now owned by Exxon). Reuters also got hold of "hundreds of internal Chesapeake emails and thousands of pages of documents" showing how Chesapeake deals with landmen and landowners in lease plays, and the article cites some of those documents relating in particular to Chesapeake's lease acquisitions in Michigan.

A "Rule 37" exception is a permit to drill a well that would otherwise violate the applicable spacing rules for the well because it is closer than those rules allow to an adjacent tract. In the last few years Chesapeake has made extensive use of Rule 37 exceptions, particularly in the urban portions of the Barnett Shale play in Tarrant County, where most lot owners own the minerals under their homes. Some lot owners refuse to lease on any terms. These unleased owners create "holes" in the pooled units Chesapeake puts together for drilling horizontal shale wells, and sometimes there are so many unleased tracts in the units that it is impossible to drill a horizontal well without coming too close to the unleased tracts. So, Chesapeake asks the Railroad Commission to let it put its well closer to those unleased tracts than Barnett Shale field rules would otherwise allow. Chesapeake is required to give the unleased homeowner notice of its application for the Rule 37 exception, but most homeowners don't have the resources to contest the application, and if no objections are filed the Commission typically grants the exception. As a result, the Chesapeake well, when completed, is likely to drain hydrocarbons from under the unleased tract, and the owner of the unleased tract receives no compensation. Reuters characterizes Chesapeake's tactic as "exploit[ing] little-known laws to force owners to hand over drilling rights and sometimes forfeit profits."

In April of this year, Reuters reported on Aubrey McClendon's loans of some $1.5 billion to finance his share of drilling costs on his 1% interest in Chesapeake wells, alleging a conflict of interest. In June, Reuters issued a story questioning whether Chesapeake and Encana had colluded to avoid competition in their rush to acquire oil and gas leases in Michigan, resulting in a Department of Justice investigation of possible anti-trust violations. At least partly as a result of Reuters' stories, McClendon resigned as chairman of the board, and a new set of directors was elected.

Chesapeake was also in the news last month when it settled a long-running claim brought by Dallas/Fort Worth International Airport for underpayment of royalties due on Chesapeake wells drilled under the airport. Chesapeake agreed to pay $5 million in back royalties and the DFW lease was amended to require royalties to be based on an index price for gas.

Reuters' story relates Chesapeake's tactics on leasing in Michigan in some detail. It quotes emails from an independent landman in Michigan hired by Chesapeake to acquire leases, who was subsequently told by Chesapeake to "put on hold" hundreds of leases after a Chesapeake test well had disappointing results. The leases had already been approved, signed, and submitted to Chesapeake. The landman was forced to tell the landowners that Chesapeake had changed its mind and would not pay for the leases, resulting in 150 breach-of-contract lawsuits against the landman's company. Earlier this year, two state court judges in Michigan held that Chesapeake had no legal obligation to pay for the leases and could reject them for any reason. (More recently, an appeals court upheld a $20 million judgment against Chesapeake in Louisiana for attempting to back out of a deal to buy oil and gas leases from another company. See my previous post on that case here.)

While Chesapeake's rejection of leases may not be illegal, it certainly has given the industry a black eye and made it more difficult for other companies to do business with landowners. The landman who got the brunt of landowners' anger in Michigan clearly is not happy. I am personally familiar with Chesapeake's practice of "cold-drafting," a term used for the practice of sending a lease to a landowner with a draft for the bonus, in effect making an offer to lease, but with no present intent to honor the lease; evaluating whether to pay for the lease after the draft has been deposited and the lease signed and returned to the landman; and then picking and choosing which leases the company wants to take and which they want to reject. It allows the company to "lock up" the acreage by committing the landowner to the lease for the (usually 90) days that the draft is outstanding. I'm aware of one case in which Chesapeake even recorded the lease and then attempted to reject it. Landmen should, in my view, refuse to participate in such practices, and they should certainly be considered unethical.

March 10, 2011

More About Hydraulic Fracturing in the News

The EPA has issued its draft plan to study the impacts of hydraulic fracturing on drinking water in the U.S. Two state regulatory authorities have absolved frac'ed wells from responsibility for contaminating drinking water in Colorado and Texas. Maryland's top einvornmental regulator urged lawmakers to impose a two-year moratorium on frac'ing, as Maryland's legislature considers additional laws to regulate the practice. Meanwhile, the boom in shale gas drilling continues.

 

Continue reading "More About Hydraulic Fracturing in the News" »

February 17, 2011

Range Resources RRC Closing Statement In Parker County Water Well Contamination Investigation

Here is the closing statement of Range Resources filed with the Texas Railroad Commission after its hearing on complaints that Range's Barnett Shale wells in Parker County have contaminated groundwater.  It provides a good summary of the events to date and the evidence produced at the hearing.  Range Production Company Closing Statement.pdf

Here is a link to a summary of the Range dispute prepared by Gene Powell, Editor of the Powell Barnett Shale Newsletter.

January 24, 2011

Railroad Commission Holds Hearing on EPA Allegations Against Range Resources

Last week, a hearing was held before examiners at the Texas Railroad Commission to determine the source of water well contamination in Parker County. The Environmental Protection Agency had previously entered an emergency order finding that Range Resources was responsible for charging rural water wells with natural gas in Parker County, a finding that Range has vehemently denied. The Railroad Commission called the hearing after the EPA issued its order, to receive facts and testimony on the source of the contamination.

I have posted previously about this controversy, here, here, and here.

Range contends that the water wells are contaminated from gas migrating from a shallow gas-bearing formation just below the water table, the Strawn formation.  The EPA's order says that it did an isotopic fingerprint analysis of the gas found in the water wells matched the gas from Range's nearby wells producing from the Barnett Shale.

Range hired its own experts to do an analysis of gas from the water wells. They concluded that the gas came from the shallow Strawn sands, and that the "fingerprint" of the gas was inconsistent with gas produced from the Barnett Shale. They said the Strawn gas contains high levels of nitrogen not found in the Barnett Shale gas. Nitrogen levels of the gases were apparently not tested by the EPA. Range's expert report can be found here.

EPA representatives declined to attend the hearing. Instead, EPA filed suit in federal district court in Dallas seeking to enforce its emergency order. See copy of complaint here: Range complaint.pdf 

Range sought to depose EPA personnel involved in the investigation for the RRC hearing, but EPA has opposed Range's effort. It removed the motion for subpoena to federal district court in Austin. Last week, Judge Lee Yeakel ordered EPA to produce a representative to answer questions about the investigation. "I think we're dealing with parallel proceedings here [of the EPA and Railroad Commission] that are of extreme significance and will be significant around the country, based on the amount of publicity that [natural] gas and groundwater is getting in virtually every publication and every media outlet that there is," Yeakel said. "This has become a hot-button issue in the country." The RRC has held the record open in its hearing so that the EPA witness's testimony can be included in the record.

Range has also filed an appeal of the EPA emergency order with the U.S. Fifth Circuit Court of Appeals in New Orleans.

In light of the rash of cases being filed by landowners in the Barnett Shale alleging groundwater contamination, the Range-EPA fight may have significance well beyond the water wells involved in the case. Range appears resolved to prove that it is not responsible for the contamination. The case could be the first in Texas, and maybe the first in the nation, to finally have a court determine whether there is any merit to allegations of groundwater contamination being caused by fracing of wells.

December 31, 2010

Plaintiffs' Attorney Windle Turley Enters Fray on Barnett Shale Groundwater Contamination

Dallas attorney Windle Turley has filed three lawsuits in federal court in Dallas on behalf of landowners alleging contamination of their groundwater by Barnett Shale Wells: one on behalf of Jim and Linda Scoma of Johnson County, against Chesapeake, filed last June; one on behalf of Doug and Diana Harris, against Devon Energy, and one on behalf of Grace Mitchell against Chesapeake and Encana. The suits contend that plaintiffs' groundwater has been contaminated by drilling and hydraulic fracturing operations. A copy of the Harrises' suit can be viewed here.  Turley says more such suits will follow. Turley's website has a page dedicated to such suits, which says that, "when hydro-fracking occurs, it is possible for the property owner's groundwater to become contaminated and/or for gases to be forced into the groundwater. When this happens, the oil company may be liable to the property owner for property damages and injuries. ... The Turley Law Firm is very concerned over the damage done and future risk to property and individuals in the Barnett Shale area, and is filing damage suits on behalf of property owners." Groundwater contamination lawsuits may become new fertile ground for plaintiffs' attorneys.
December 23, 2010

Update on EPA Order Against Range Resources, Parker County

EPA's order against Range Resources for allegedly charging groundwater with gas from its Barnett Shale wells has caused quite a stir.

The Texas Railroad Commission has issued two news releases, one on December 7 and one on December 8.  Commission Chairman Victor Carrillo said that he has told EPA Regions 6 Administrator Al Armendariz that "EPA's actions are premature as the Railroad Commission continues to actively investigate this issue and has not yet determined the cause of the gas. This EPA action is unprecedented in Texas, and commissioners will consider all options as we move forward." Commissioner Michael Williams said "this is Washington politics of the worst kind.  The EPA's act is nothing more than grandstanding in an effort to interject the federal government into Texas business." The December 8 press release said that the Commission has called a hearing for January 10 and "expects both parties, the EPA as well as Range Resources representatives, to appear before Hearings Examiners and testify as to the allegations made yesterday." Range has said it will attend the hearing, but it understands that the EPA will not.

Continue reading "Update on EPA Order Against Range Resources, Parker County" »