2015 June - Bakken Oil Business Journal

The Northern Plains Resource Council (NPRC) has asked the Board of Oil and Gas Conservation to commence rule making to impose quarter mile (1,320 ft) setbacks of drilling rigs from occupied dwellings. This is a greater distance than the proposal struck down before the legislative Senate Natural Resources committee just months ago, after ample testimony on both sides.

NPRC claims that because other states have imposed setbacks, Montana should follow suit for the benefit of landowners. However, existing statute and administrative rules, along with the structure and function of the BOGC, are a made in Montana solution that works. Using a checklist of out of state rules and regulations to shape policy in Montana is not a good idea. Doing so neglects to take into account those attributes which are unique to Montana.

This Wednesday, at a public meeting before the Board of Oil and Gas Conservation (BOGC), the Montana Petroleum Association (MPA) will be providing comments on how implementation of the proposed rule would negatively impact oil and gas opportunities in Montana, siting that:

Montana’s drilling and permitting activity pales in comparison to other states who’ve elected to impose setbacks, especially with consideration to densely populated areas
Other states do not have the same protest ability that Montana landowners do with regard to oil and gas drilling
The public, including land/surface owners, have considerable access to the BOGC
Montana’s BOGC is set up to mitigate concerns on a case by case basis; ensuring responsible and efficient development of mineral resources
If imposed, drilling opportunities in Montana would be severely impacted, with many small and exploratory oil and gas operators essentially placed out of business without the ability to drill into small target formations
Many claim horizontal wells have greater flexibility in surface placement, however, operators seek to evenly space wells within a DSU (drilling spacing unit)
Setbacks would reduce the number of wells there could be in a given DSU (within the same lease), shorten laterals, thereby increasing wasted oil and gas reserves, and lessening both production revenue (including that to the state and counties) and royalty payments to mineral owners, which include universities, hospitals, and charitable organizations
Setbacks neglect to recognize that minerals are the dominate estate (under common law) in split estate scenarios.
Setbacks act as a taking of mineral owners rights without compensation
Correlative rights of mineral owners are compromised by setback rules administered as a “one-size-fits-all” rule
Potential legal conflicts exist with regard to treatment of existing leases under setback rules
Surface use agreements are currently negotiated between landowner and operator, prior to drilling
The BOGC sites less than a handful of cases wherein a surface owner came before the Board with a concern over the placement of a well
The BOGC currently has the ability to exercise authority over well placement to mitigate surface owner concerns when necessary, based on potential harms
Montana has a longstanding history of environmentally responsible development of oil and gas, without negative impacts on air, soil, or water

The rule would have widespread effects on Montana’s economy and on mineral rights. Mineral owners, royalty recipients, and oil and gas operators with an interest in preserving future drilling opportunities in the Treasure State ought to weigh in at the June 24th meeting at the Board of Oil and Gas Conservation office in Billings, 2535 St. Johns Avenue, at 1:00 pm.

Public hearings will follow at a date TBD, should the Board commence rule making.

Interested parties may contact the Montana Petroleum Association at mpa@montanapetroleum.org to stay updated on the issue, and to be notified of future opportunities for public comment.

Contact: Jessica Sena, 590-8675

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Assessment shows hydraulic fracturing activities have not led to widespread, systemic impacts to drinking water resources and identifies important vulnerabilities to drinking water resources.

Washington — The Environmental Protection Agency (EPA) is releasing a draft assessment today on the potential impacts of hydraulic fracturing activities on drinking water resources in the United States. The assessment, done at the request of Congress, shows that while hydraulic fracturing activities in the U.S. are carried out in a way that have not led to widespread, systemic impacts on drinking water resources, there are potential vulnerabilities in the water lifecycle that could impact drinking water. The assessment follows the water used for hydraulic fracturing from water acquisition, chemical mixing at the well pad site, well injection of fracking fluids, the collection of hydraulic fracturing wastewater (including flowback and produced water), and wastewater treatment and disposal [http://www2.epa.gov/hfstudy/hydraulic-fracturing-water-cycle].

“EPA’s draft assessment will give state regulators, tribes and local communities and industry around the country a critical resource to identify how best to protect public health and their drinking water resources,” said Dr. Thomas A. Burke, EPA’s Science Advisor and Deputy Assistant Administrator of EPA’s Office of Research and Development. “It is the most complete compilation of scientific data to date, including over 950 sources of information, published papers, numerous technical reports, information from stakeholders and peer-reviewed EPA scientific reports.”

EPA’s review of data sources available to the agency found specific instances where well integrity and waste water management related to hydraulic fracturing activities impacted drinking water resources, but they were small compared to the large number of hydraulically fractured wells across the country. The report provides valuable information about potential vulnerabilities, some of which are not unique to hydraulic fracturing, to drinking water resources, but was not designed to be a list of documented impacts.

These vulnerabilities to drinking water resources include:

water withdrawals in areas with low water availability;
hydraulic fracturing conducted directly into formations containing drinking water resources;
inadequately cased or cemented wells resulting in below ground migration of gases and liquids;
inadequately treated wastewater discharged into drinking water resources;
and spills of hydraulic fluids and hydraulic fracturing wastewater, including flowback and produced water.

Also released today were nine peer-reviewed EPA scientific reports (www.epa.gov/hfstudy). These reports were a part of EPA’s overall hydraulic fracturing drinking water study and contributed to the findings outlined in the draft assessment. Over 20 peer-reviewed articles or reports were published as part of this study [http://www2.epa.gov/hfstudy/published-scientific-papers].

States play a primary role in regulating most natural gas and oil development. EPA’s authority is limited by statutory or regulatory exemptions under the Clean Water Act, Safe Drinking Water Act, the Comprehensive Environmental Response, Compensation and Liability Act, and the Resource Conservation and Recovery Act. Where EPA’s exemptions exist, states may have authority to regulate unconventional oil and gas extraction activities under their own state laws.

EPA’s draft assessment benefited from extensive stakeholder engagement conducted across the country with states, tribes, industry, non-governmental organizations, the scientific community and the public to ensure that the draft assessment reflects current practices in hydraulic fracturing and utilizes all data and information available to the agency.

The study will be finalized after review by the Science Advisory Board and public review and comment. The Federal Register Notice with information on the SAB review and how to comment on the draft assessment will be published on Friday June 5, 2015.

For a copy of the study, visit www.epa.gov/hfstudy.

To submit comments on the report, see http://yosemite.epa.gov/sab/sabproduct.nsf/fedrgstr_activites/HF%20Drinking%20Water%20Assessment?OpenDocument