Marcellus Shale case appealed to Pa. Supreme Court could create ‘chaos’ by questioning ownership of gas rights

By DONALD GILLILAND, The Patriot-News

A court case that many believe has the potential to upend 100 years of case law and God knows how many Marcellus gas leases in Pennsylvania hinges on what the everyday definition of “minerals” was in 1836.

Attorneys at Buchanan Ingersoll & Rooney who appealed the case to the Supreme Court on Friday say they simply want the high court to reaffirm what’s been “bedrock” property law for more 100 years.

The case involves John and Mary Butler, owners of 244 acres in Susquehanna County, and the heirs of Charles Powers, who in 1881 was granted “one-half the minerals and Petroleum Oils” under the property.

Powers’s heirs argue that they are entitled to half the Marcellus gas under the property as well.

Susquehanna County President Judge Kenneth Seamans ruled against that claim in January 2010, citing what’s known as the “Dunham Rule” – a Supreme Court ruling that has stood since 1882 that a conveyance of “minerals” in a deed does not include oil and gas unless specifically stated. The Powers deed makes no mention of gas.

Powers’s heirs appealed that decision to the Superior Court, arguing that the Dunham Rule should not apply, but rather a 1983 ruling that found U.S. Steel owned the natural gas contained in the coal it owned – not the property owner who had retained the right to drill through the coal for oil and gas.

As the attorney for the heirs put it to the Superior Court: “Whoever owns the shale, owns the gas.”

To read the rest of this article click on the below link.

http://www.pennlive.com/midstate/index.ssf/2011/10/marcellus_shale_bellwether_leg.html

 

 

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Forced Pooling: When Landowners Can’t Say No to Drilling

by Marie C. Baca, Special to ProPublica May 19, 2011

As the shale gas boom sweeps across the United States, drillers are turning to a controversial legal tool called forced pooling to gain access to minerals beneath private property–in many cases, without the landowners’ permission. Forced pooling is common in many established oil and gas states, but its use has grown more contentious as concerns rise about drilling safety and homeowners in areas with little drilling history struggle to understand the obscurities of mineral laws.

Joseph Todd, who lives in rural Big Flats, N.Y., wasn’t especially concerned when he learned in 2009 that his half-acre property had become part of a drilling unit. But when methane gas showed up in his drinking water well after the drilling began, he became outraged, describing forced pooling as “eminent domain for gas drillers.” “We never wanted to be a part of the drilling,” he said. “To have something like this happen is beyond frustrating.” Todd and some of his neighbors are now suing the company that is drilling near their neighborhood, even though no link has been proven between drilling and the contamination of their water.

People who see forced pooling as an infringement of property rights also tend to oppose the practice, including Pennsylvania’s Republican governor, Tom Corbett, who has otherwise been a staunch supporter of the drilling industry.“I do not believe in private eminent domain, and forced pooling would be exactly that,” Corbett told a group of nearly 400 drilling industry representatives and supporters last month. He also said he won’t sign pending legislation that would allow forced pooling for drilling in Pennsylvania’s gas-rich Marcellus Shale.

Forced pooling compels holdout landowners to join gas-leasing agreements with their neighbors. The specific provisions of the laws vary from state to state, but drillers are generally allowed to extract minerals from a large area or “pool”–in most states a minimum of 640 acres–if leases have been negotiated for a certain percentage of that land. The company can then harvest gas from the entire area. In most cases, drillers aren’t allowed to build surface wells on unleased land, so they use horizontal wells or other means to collect the minerals beneath those parcels.

Thirty-nine states have some form of forced pooling law. West Virginia and Pennsylvania each have measures that don’t apply to drilling in the Marcellus Shale, and proponents are trying to expand the laws in those states. (Check out our chart of forced pooling laws across the United States.)

In New York, the owners of 60 percent of the acreage in the proposed drilling unit must agree to lease their land before the state oil and gas board will consider a driller’s petition for compulsory integration, as it is known there. In Virginia, only 25 percent of the land must be leased. In all states with such laws, drillers must notify all the landowners within the prospective drilling area of their right to participate in a hearing before the oil and gas board, or whatever regulatory agency the state has set up for that purpose.

If the board approves the driller’s petition, holdout landowners typically have three choices: contribute to the cost of the well and share profits from the sale of the gas; don’t pay for the well and share the gas profits after a “risk aversion” penalty is subtracted, or receive a state-mandated minimum royalty payment. Landowners who choose none of these options are automatically enrolled in the last plan. Opting out is not a possibility.

Gas companies argue that forced pooling allows them to build fewer wells and harvest gas efficiently, creating tidy drilling parcels as opposed to a patchwork pattern of leased and unleased land.

Forced pooling is also supported by landowners who fear that drilling companies will place wells near their property and siphon off their gas without payment. Another group of supporters includes people who own the surface rights to their property while someone else owns the mineral rights–a situation known as a “split estate.” Although these landowners usually aren’t entitled to any payment, some forced pooling laws compel drillers to compensate them, too.

The complexities of forced pooling can be seen in Big Flats, a town of about 7,000 in Chemung County, in the southern tier of New York. Gas drilling has provided a huge boost to the county’s economy, said budget director Steven Hoover, bringing in $30,000 to $40,000 a year in royalties and more than a million dollars in bonus payments from land the county has leased to drilling companies. That money, along with savings in other areas, has allowed Chemung County to cut property taxes over the last few years, Hoover said.But Joseph Todd thinks struggling communities like his are too willing to accept the erosion of residents’ property rights in exchange for an influx of cash.

In 2009, he and his wife Bonnie received a letter from the state informing them that Anschutz Exploration Corporation would be allowed to extract gas from beneath their land.

At first, the Todds didn’t think much about it. No construction crews visited the modest ranch house where they had lived for more than 20 years. No heavy equipment materialized in their backyard. A horizontal well was built less than a mile away, but from the road its operations were almost invisible.

Then in September 2010 the couple discovered mud and methane in their private water well. Methane, the largest component of natural gas, isn’t toxic, but it can be explosive if it accumulates.

“We’ve lived in this house for 22 years without any problems, and suddenly the water turns dirty and fizzy and can be lit with a match,” said Todd, a firefighter.

After hearing about similar water problems near drilling operations in Pennsylvania, the Todds began to wonder if their dirty water–and the water problems that had simultaneously cropped up at nine neighboring homes–could be traced to the nearby drilling.

Denver-based Anschutz and the New York Department of Environmental Conservation both say the water problems aren’t related to drilling. But in February, the Todds and their neighbors filed a lawsuit in Chemung County State Supreme Court, accusing Anschutz and its subcontractors of negligence in the drilling, construction and operation of the wells, causing the families to be exposed to combustible gases and toxic chemicals, and reducing property values. They are seeking millions in damages.

Anschutz spokesman Jim Monaghan said the company abides by state law and has committed no wrongdoing.

Joseph Todd says he’s angry, not just about his contaminated well water but about the compulsory integration law that made it easier for drilling companies to move into his neighborhood. He said he has spent thousands of dollars on bottled water and laundromat fees–and that the royalty payments he’s supposed to receive, even as an unwilling participant in the nation’s natural gas boom, haven’t begun arriving yet.

ProPublica’s Nicholas Kusnetz contributed to this report.

Correction (May 19): This story has been corrected. It should have made clear that state regulations in New York and Virginia require drillers to lease a certain percentage of the acreage in a drilling unit before forced pooling or compulsory integration can occur, rather than a percentage of the landowners. May 20: This story originally said 38 states have some form of forced pooling law. Actually, 39 states do.

To read this article in full online, click here:

http://www.propublica.org/article/forced-pooling-when-landowners-cant-say-no-to-drilling

To read what Governor Corbett told the 400 drillers, click here:
To view ProPublica’s chart of forced pooling laws across the USA, click here:
To read the Marcellus Shale Coalition’s take on forced pooling, which they term “fair pooling”, click on these links:

Documents: Politics, Recycling and Tracking of Natural Gas Waste

The New York times ran this article recently. Documents: Politics, Recycling and Tracking of Natural Gas Waste

Over the past nine months, The Times reviewed more than 30,000 pages of documents obtained through open records requests of state and federal agencies and by visiting various regional offices that oversee drilling in Pennsylvania. Some of the documents were leaked by state or federal officials. Here, the most significant documents on wastewater recycling are made available with annotations from The Times. Previously published documents relate to natural gas waste.

To see these documents click the link below.

http://www.nytimes.com/interactive/2011/03/01/us/natural-gas-documents-2.html#document/p64/a10110

FrackTracker

Here’s an exceprt from the blog at Fracktracker, a useful site for info and maps and visuals.

The Environmental Protection Agency has submitted a draft of its Hydraulic Fracturing Study Plan, which is to be reviewed by the Science Advisory Board (SAB), a group of independent scientists that works with the agency. According to the EPA’s news release, the focus of the study will be the lifespan of the water, from extraction to disposal of the waste water.

The 140 page draft has been made to the public. The SAB is scheduled to review the plan March 7th and 8th, and the plan will likely be edited based on their input.

Initial results of this study are expected by 2012, with an additional report due by 2014.

Want to see more of this site? Go here: http://www.fractracker.org/

Oil and Gas Companies Illegally Using Diesel in Fracking

By Adam Federman, Earth Island Journal

Posted on February 1, 2011

The 2005 Bush-Cheney Energy Policy Act famously exempted hydraulic fracturing from the Safe Drinking Water Act. But it made one small exception: diesel fuel. The Policy Act states that the term “underground injection,” as it relates to the Safe Drinking Water Act, “excludes the underground injection of fluids or propping agents (other than diesel) pursuant to hydraulic fracturing operations related to oil, gas, or geothermal production activities [italics added by author].” But a congressional investigation has found that oil and gas service companies used tens of millions of gallons of diesel fuel in fracking operations between 2005 and 2009, thus violating the Safe Drinking Water Act. Hydraulic fracturing is a method of drilling that injects large volumes of water, chemicals, and sand underground at high pressure to break open rock formations and release stores of natural gas. In some cases, however, water based fluids are less effective and diesel fuel or other hydrocarbons may be used.

In a letter to EPA Administrator Lisa Jackson, the congressional committee noted that between 2005 and 2009, “oil and gas service companies injected 32.2 million gallons of diesel fuel or hydraulic fracturing fluids containing diesel fuel in wells in 19 states.” None of the companies sought or received permits to do so. “This appears to be a violation of the Safe Drinking Water Act,” the letter states. “It also means that the companies injecting diesel fuel have not performed the environmental reviews required by the law.”

Moreover, because the necessary environmental reviews were circumvented, the companies were unable to provide data on whether they had used diesel in fracking operations in or near underground sources of drinking water. Diesel fuel contains a number of toxic constituents including benzene, toluene, ethylbenzene, and xylene, which have been linked to cancer and other health problems.

In the last few years, shale gas extraction has increased exponentially, raising fears that drinking water wells and underground aquifers may be at risk. It has become a particularly sensitive issue in the northeast’s Marcellus Shale, which underlies parts of Ohio, West Virginia, Pennsylvania, and New York. Later this month the Delaware River Basin Commission will hold public hearings on drilling in the watershed—a source of drinking water for more than 15 million people.

The EPA is currently conducting its own study of the impact of hydraulic fracturing on drinking water supplies due out in late 2012. But will companies that have violated the Safe Drinking Water Act since 2005 be held accountable?

Matt Armstrong, a lawyer with the Washington firm Bracewell & Giuliani, which represents several oil and gas companies, told the New York Times, “Everyone understands that E.P.A. is at least interested in regulating fracking.” But: “Whether the E.P.A. has the chutzpah to try to impose retroactive liability for use of diesel in fracking, well, everyone is in a wait-and-see mode. I suspect it will have a significant fight on its hands if it tried it do that.”

To read this article online, click here:

http://www.alternet.org/story/149760/oil_and_gas_companies_illegally_using_diesel_in_fracking_

To read the New York Times coverage of this issue, click here: http://www.nytimes.com/2011/02/01/business/energy-environment/01gas.html

To read the Energy policy Act, click here: http://www.epa.gov/oust/fedlaws/publ_109-058.pdf

To read the letter from the Congressional Committee to EPA Administrator Jackson, click here: http://democrats.energycommerce.house.gov/index.php?q=news/waxman-markey-and-degette-investigation-finds-continued-use-of-diesel-in-hydraulic-fracturing-f

NOTE: The letter states, “In 2003, EPA signed a memorandum of agreement with the three largest providers of hydraulic fracturing to eliminate the use of diesel fuel in coalbed methane formations in underground sources of drinking water. Two years later, Congress exempted hydraulic fracturing from the Safe Drinking Water Act except when the fracturing fluids contain diesel. As a result, many assumed that the industry stopped using diesel fuel altogether in hydraulic fracturing…

According to EPA, any company that performs hydraulic fracturing using diesel fuel must receive a permit under the Safe Drinking Water Act. We learned that no oil and gas service companies have sought—and no state and federal regulators have issued—permits for diesel fuel use in hydraulic fracturing…

In a 2004 report, EPA stated that the ‘use of diesel fuel in fracturing fluids poses the greatest threat’ to underground sources of drinking water….

In 2005, Congress passed the Energy Policy Act, which contained a provision addressing the application of Safe Drinking Water Act (SDWA) to hydraulic fracturing. Congress modified the definition of ‘underground injection to exclude’ ‘the underground injection of fluids or propping agents (other than diesel fuels) pursuant to hydraulic fracturing operations related to oil, gas… The effect of this law is to exempt hydraulic fracturing from the underground injection control (UIC) permit requirements unless the fluid being injected is diesel fuel. As EPA states on its website: While the SDWA specifically excludes hydraulic fracturing from UIC regulation … the use of diesel fuel during hydraulic fracturing is still regulated by the UIC program. Any service company that performs hydraulic fracturing using diesel fuel must receive prior authorization from the UIC program….

Investigating the US Gas Boom

I know many of you are becoming very aware of the natural gas boom happening in the Mid Atlantic area. This video covers some old ground but it also discusses some very current issues and is a great intro for anyone who is trying to learn about the problems with the fracking process.

http://www.theecologist.org/trial_investigations/687515/us_natural_gas_drilling_boom_linked_to_pollution_and_social_strife.html

EPA’s Public Meeting on Hydraulic Fracturing

EPA’s Public Meeting on Hydraulic Fracturing Study to Take Place in Binghamton, New York; Meeting Scheduled for September 13 and 15 at the Broome County Forum Theater

Release date: 08/31/2010

Contact Information: John Senn, (212) 637-3667, senn.john@epa.gov

New York, NY – The U.S. Environmental Protection Agency has selected a new venue and dates for the public meeting on EPA’s upcoming hydraulic fracturing study originally scheduled for August 12, 2010. The meeting will now be held at the Broome County Forum Theater in Binghamton, New York, on September 13th and 15th, 2010.

Meeting Information:
EPA will hold four identical sessions during a two day session at the same location:

Date: Monday, September 13, 2010
Location: Broome County Forum Theater, 236 Washington St., Binghamton
Time:

  • 12:00pm – 4:00pm (pre-registration begins at 10:30am)
  • 6:00pm – 10:00pm (pre-registration begins at 4:30pm)

Date: Wednesday, September 15, 2010
Location: Broome County Forum Theater, 236 Washington St., Binghamton
Time:

  • 12:00pm – 4:00pm (pre-registration begins at 10:30am)
  • 6:00pm – 10:00pm (pre-registration begins at 4:30pm)
Transition from the Postponed August 12 Meeting
The four sessions scheduled for September 13 and 15, 2010 will be identical to those already convened in Dallas, Texas; Denver, Colorado; and Canonsburg, Pennsylvania. The agenda will match that of the meetings previously scheduled for August 12. As with all previous meetings, EPA will make a short presentation at the beginning of each session and registered speakers will then have the opportunity to provide verbal or written comments directly to EPA.

All individuals who pre-registered for the August 12 meetings will retain their registration for the September 13 and 15 meetings. Because the timing of the sessions has changed from a one-day event to a two-day event and EPA has added another meeting session, EPA needs pre-registered individuals to specify the session they would like to attend.

  1. Pre-registered speakers for the August 12 session will be sent an e-mail from the Cadmus Group requesting they select one preferred session in which to provide verbal comment. The email notification will provide instructions on how to choose a session. Speakers who pre-registered using the telephone registration will be contacted by Cadmus by phone to confirm their preferred session.
  2. Pre-registered attendees (those who opted not to give verbal comment) will be asked to indicate the session they would like to attend via the registration website. The registration website is located at http://hfmeeting.cadmusweb.com and will open beginning at 9:00 am on Friday, September 3, 2010…….
For additional questions or comments, please email hydraulic.fracturing@epa.gov or call 1-866-477-3635. Meeting information may be found on the EPA Hydraulic Fracturing Study website athttp://water.epa.gov/type/groundwater/uic/class2/hydraulicfracturing/wells_hydroout.cfm……