The Shale Sector Just Got Two Critical Wins — In Two Different States

A lot of things in flux right now for U.S. oil and gas producers. And that includes critical legal frameworks for unconventional development across the country. 

The regulatory landscape got notably better for E&Ps this past week. With not one but two critical decisions coming down in favour of producers, in two completely separate parts of America. 

Perhaps the biggest development came Tuesday in the state of Pennsylvania. Where the state legislature moved to strike down a controversial set of new rules that would have made surface use for oil and gas drilling more difficult. 

A group of lawmakers forming Pennsylvania’s House Environmental Resources & Energy Committee voted 19 to 8 to strike down the tougher drilling laws — which had been introduced in April by the state’s Independent Regulatory Review Commission. 

The move was seen as a big positive for unconventional development in key plays like the Marcellus shale. With the proposed rules mandating more expensive storage solutions for drill fluids — and requiring E&Ps to assess potential impacts on a slate of “public resources” before drilling. 

This undoubtedly would add considerable time and expense to wells here. With dissenting lawmakers saying that the rules had been implemented without considering the impact on local business. Opponents also noted that the rules might not be compliant with existing laws because of special considerations levelled at unconventional drillers. 

And that wasn’t the only bright spot for drillers. With a key court decision Monday coming down in favour of E&Ps — all the way across the country in Colorado. 

That came from the Colorado Supreme Court. Which ruled that fracking bans implemented by two Colorado cities are illegal because they conflict with state law. 

Judges in the high-profile case decided that state-level regulatory body Colorado Oil and Gas Conservation Commission has the mandate to promote “efficient and responsible development of oil and gas resources.” With the court saying that municipal bans impeded this function for state regulators. 

This was the final challenge in a long legal battle over municipal frack bans here — and looks to leave Colorado’s oil and gas sector open to unhindered development. 

The Pennsylvania case is a little less straightforward. With state Governor Tom Wolf having said he will veto attempts to halt the new surface use rules. Meaning that lawmakers in Pennsylvania’s House and Senate will have to agree on a veto-proof majority in order to lay aside the rules. 

Hearings on that front have already begun. Watch for a decision on this key issue in unconventional over the coming weeks. 

Here’s to tipping the scales,

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Dave Forest

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