Texas Energy Lawyer Blog

Does Ohio's Regulation of Hydraulic Fracking in SB 315 provide sufficient Trade Secret protection for the Chemical Formulas?

Tue, 19 Jun 2012 12:54:44 -0600

The Bill includes a medical exception to the trade secret exclusion. The information must be shared with doctors and medical professionals treating a patient claiming injury due to hydraulic fracking chemicals. In addition, they may also share such information and trade secrets with the patient and other medical professionals directly involved with the treatment. The medial exception is placed immediately in front of the trade secret provision and two rules prior to the right to civil action against an owner claiming a trade secret. This provision will likely be litigated or amended in the foreseeable future, because it appears to be in violate the basic concept of trade secret protection. If litigation does proceed, the legislative intent of inserting this provision prior to the trade secret provision should be addressed.

Sec. 1509.10(H)(1) If a medical professional, in order to assist in the diagnosis or treatment of an individual who was affected by an incident associated with the production operations of a well, requests the exact chemical composition of each product, fluid, or substance and of each chemical component in a product, fluid, or substance that is designated as a trade secret pursuant to division (I) of this section, the person claiming the trade secret protection pursuant to that division shall provide to the medical professional the exact chemical composition of the product, fluid, or substance and of the chemical component in a product, fluid, or substance that is requested.
(2) A medical professional who receives information pursuant to division (H)(1) of this section shall keep the information confidential and shall not disclose the information for any purpose that is not related to the diagnosis or treatment of an individual who was affected by an incident associated with the production operations of a well. Nothing in division (H)(2) of this section precludes a medical professional from making any report required by law or professional ethical standards.

Does Ohio SB 315 provide sufficient Regulation of Hydraulic Fracking? (Part 2)

Sun, 17 Jun 2012 12:42:47 -0600

If the Department does not have a MSDS on a particular disclosed chemical, then the owner must provide one to the Department.

Sec. 1509.10(E) If a material listed or designated under division (A)(9) or (10) or (B)(3) of this section is a material for which the division of oil and gas resources management does not have a material safety data sheet, the owner shall provide a copy of the material safety data sheet for the material to the chief.

An owner has three options to submit such information to the Department and the Department must publish such information on its website.

Sec. 1509.10(F) An owner shall submit to the chief the information that is required in divisions (A)(10)(b) and (c) and (B)(3) of this section consistent with the requirements established in this section using one of the following methods: (1) On a form prescribed by the chief; (2) Through the chemical disclosure registry that is maintained by the ground water protection council and the interstate oil and gas compact commission; (3) Any other means approved by the chief.
(G) The chief shall post on the division's web site each material safety data sheet obtained under division (E) of this section. In addition, the chief shall make available through the division's web site the chemical information that is required by divisions (A)(9) and (10) and (B)(3) of this section.

Does Ohio SB 315 provide sufficient Regulation of Hydraulic Fracking? (Part 1)

Sat, 16 Jun 2012 12:26:21 -0600

On June 11, 2012, Ohio Governor John R. Kasich signed Am. Sub. S.B. 315 regarding Ohio's Energy Policy. The Bill modifies Ohio's energy and natural resources laws and related programs. The Governor's office states "Without a federal energy policy on which to rely, and with continued uncertainity in the Middle East, Gov. Kasich and his staff began working with energy stakeholders - from energy producers to environmentalists to energy consumers - to develop a comprehensive energy policy for Ohio that would encourage economic growth." The Bill presents an extensive set of regulations regarding the oil and gas industry and hydrauclic fracking.

The comprehensive energy policy rests on 10 pillars. Pillar 1 addresses concerns due to recent oil and gas shale exploration and production in Ohio. The Bill builds upon S.B. 165 that required upgrading procedures for proper well construction, notifying the Department of Natural Resources prior to cementing a well, and submitting cementing records to the Department for analysis. This post is Part 1 of a two part series focusing on sections of the Bill relating to the chemical disclosure of hydraulic fracturing fluids used in stimulation operations.

Sec. 1509.10(A)(10)(a) If applicable, the type and volume of fluid, not including cement and its constituents or information that is designated as a trade secret pursuant to division (I)(1) of this section, used to stimulate the reservoir of the well, the reservoir breakdown pressure, the method used for the containment of fluids recovered from the fracturing of the well, the methods used for the containment of fluids when pulled from the wellbore from swabbing the well, the average pumping rate of the well, and the name of the person that performed the well stimulation. In addition, the owner shall include a copy of the log from the stimulation of the well, a copy of the invoice for each of the procedures and methods described in division (A)(10) of this section that were used on a well, and a copy of the pumping pressure and rate graphs. However, the owner may redact from the copy of each invoice that is required to be included under division (A)(10) of this section the costs of and charges for the procedures and methods described in division (A)(10) of this section that were used on a well.

Should the Dune Sagebrush Lizard be listed under the Endangered Species Act?

Thu, 14 Jun 2012 06:00:00 -0600

No, New Mexico, Texas and oil and gas companies have agreed to unprecedented conservation agreements to protect the Dune Sagebrush Lizard and their habitat. This statement will come as a shock to both environmentalist and the oil and gas industry.

On June 13, 2012, the Office of the Secretary of the U.S. Department of the Interior announced that the U.S. Fish and Wildlife Service ruled that the Dunes Sagebrush Lizard does not need to be listed under the Endangered Species Act. This is a result of unprecedented conservation agreements now is place in New Mexico and Texas that provide for the long-term conservation of the Lizard.

The Secretary of Interior Ken Salazar stated, "This is a great example of how states and landowners can take early, landscape-level action to protect wildlife habitat before a species is listed under the Endangered Species Act." "The voluntary conservation efforts of Texas and New Mexico, oil and gas operators, private landowners and other stakeholders show that we don't have to choose between energy development and the protection of our land and wildlife-we can do both," claim Secretary Salazar.

States are leading the voluntary conservations efforts to protect the existing shinnery oak dune habitat and reduce oil and gas development's impact across the Lizard's range of 650,000 acres in New Mexico and Texas. In particular, state and federal agencies will ensure that the Lizard and their habitat will not be harmed in: building new roads, pipelines, power lines; seismic exploration operation; spraying tebuthiuron; surface occupancy near designated areas; and removing brush.

Does the Injection of Hydraulic Fracking Fluid Cause Drinking Water Contamination?

Mon, 11 Jun 2012 07:00:00 -0600

Hydraulic fracturing stimulation process does not contaminate drinking water. Despite federal regulators and environmental groups claiming hydraulic fracturing is a pollutant that contaminates our nation's drinking water sources, natural gas is a 'bridge fuel' to a cleaner future. An isolated surface spill is not proof that the whole oil and gas industry is contaminating U.S. drinking water sources. In addition to making the public aware of its environmental efforts, the oil and gas industry must educate them to the fact that it has hydraulically fracked more than 1 million natural gas wells over the last 60 years without ever directly contaminating a drinking water source.

Drinking water contamination near natural gas wells is potentially due to one of three possibilities. First, hydraulic fracturing could produce fractures that extend directly into the shallow rock formations that contain drinking water supplies. Second, the well's casing might fail and permit fluids to escape into underground drinking water supplies. Third, accidently spilled fluids used for hydraulic fracturing might contaminate surface water or seep into groundwater.

Environmental groups fear that unrecovered chemicals will migrate into drinking water sources. To counter this misperception, the industry needs to educate the public about the geology of shale gas formations. For example, in the Barnett Shale, the depth to the base of treatable water is roughly 1,200 feet; meanwhile, the shale formation is usually 6,500 to 8,500 feet deep. The force of gravity plus a mile of impermeable rock separating the target shale formation from the shallow ground water zone prevents migration of hydraulic fracturing fluids. These intervening layers of rock also contain multiple layers of shale or siltstone that act as natural barriers to the vertical migration of fluids.

Industry standards and regulations for proper casing and cementing have been implemented to act against oil and gas contamination. The industry places multiple strings of steel casing and cement in the wellbore to protect surface groundwater. State agencies set regulatory controls for exploration and production, i.e., casing and cementing. For instance, Texas' regulation requires the operator to set and cement the surface casing deeper than 200 feet below the specified depth to protect all usable-quality water strata. These layers of protection are designed to prevent natural gas or chemicals from escaping around the drill pipe and contaminating drinking water by preventing natural gas or chemicals from traveling outside the casing from the mile deep shale formations to surface drinking water. If chemicals and natural gas were allowed to escape, it would potentially not only contaminate drinking water, but would also cost the operator lost revenue from natural gas production lost and time and money in order to stop the natural gas from escaping from the reservoir.

What is the Production Process for Drilling a Shale Gas Well? (Part 3)

Sun, 10 Jun 2012 19:54:04 -0600

This post is part three of a three part series, in which the preceding posts discussed drilling a vertical and horizontal well.

1. Hydraulic Fracturing Fluid

To be economically viable, drilling in shale requires hydraulic fracturing because of the low permeability and porosity in shale formations. In hydraulic fracturing, water, sand, and additives are pumped into the wellbore and down the casing under high pressure, up to 10,000 pounds per square inch, into the perforation and into surrounding rock to fracture the shale. Depending on the formation, the process may use two to four million gallons of water, with three million gallons being most common. For example, in a four-stage hydraulic fracturing treatment for a well completed in the Marcellus Shale, the entire operation would require 2.3 million gallons of water and 1.8 million pounds of proppant such as sand. Sand, as a common proppant, remains behind to prop open these small micro-fractures. These micro-fractures create a pathway connecting the reservoir to the well which allows gas to flow into the wellbore.

Hydraulic fracturing fluid is composed of 90 percent water, 9.5 percent sand, and .5 percent chemicals. The chemical additives typically contain the following compounds: acids, sodium chloride, polyacrylamide, ethylene glycol, borate salts, sodium/potassium carbonate, glutaraldehyde, guar gum, citric acid, and isopropanol. Glutaraldehyde, commonly used to sterilize medical and dental equipment, is used to eliminate bacteria in the water. Another compound, guar gum, commonly used as a thickener in cosmetics, baked goods, ice cream, tooth paste, sauces, and salad dressing, is used to thicken the water to suspend the sand. Taken together, the chemical additives serve multiple purposes: thickening the water into gel to prop the fractures, reducing friction, and preventing equipment corrosion.

2. Hydraulically Fracturing a Well

Once the horizontal portion of the well is drilled, the drilling rig is no longer needed and a temporary wellhead is installed. The location is then ready for surface crews to prepare the well for production. The first step toward production is to perforate the casing. To do this, workers will lower a perforating gun into the casing to the targeted section of the horizontal leg. Once the perforating gun is in place, workers will send an electrical current down the wire line to the perforating gun. The electric current triggers a charge that shoots small holes through the casing, through the cement, and out a short distance into the shale formation. Workers then remove the perforating gun from the hole.

What is the Production Process for Drilling a Shale Gas Well? (Part 2)

Sat, 09 Jun 2012 19:44:01 -0600

This post is part two of a three part series, in which the preceding post discussed drilling a vertical well. Below is a video that explains the entire drilling process.

B. Drilling a Horizontal Well

At approximately 500 feet above the planned horizontal portion of the well, the drill pipe and bit are pulled out of the well. The angle building process requires a specialized down-hole drill motor with measurement while drilling instrument. The "kickoff point" is where the curve drilling begins to make the transition from a vertical well to a horizontal well. It is about 500 to 600 feet to drill the curve from the kickoff point to where the wellbore becomes horizontal. Once the curve is completed, drilling begins on the horizontal section.

Drill pipe can be 30 feet in length per section and a section can weigh over 495 pounds. It takes over 350 sections of pipe weighing 87 tons to drill a 10,500-foot well. At different stages the pipe is taken out and put back in, called tripping pipe. When the well reaches its targeted distance, the drill pipe and bit are removed from the wellbore. Steel pipe, referred to as production casing, is then inserted into the full length of the wellbore. Cement is pumped into the casing and out through the casing shoe. The cement moves up between the casing and wall of the hole filling the open space known as the annulus. Upon completion of the cementing process, the production casing is pressure tested to ensure its integrity. Casing the well is a very important process, because it permanently secures the wellbore and prevents natural gas and other fluids from seeping out into upper formations as the fluids are brought to the surface.

What is the Production Process for Drilling a Shale Gas Well? (Part 1)

Fri, 08 Jun 2012 18:55:51 -0600

The production of natural gas from shale formations is difficult. Vertical wells in shale formations have been mostly unproductive, because of its geology and its low permeability. The industry needed a means for the well to access a greater number of fractures, so it began drilling horizontal wells. Then, the industry started injecting large volumes of hydraulic fracturing fluids into isolated sections of the horizontal well. The pressurized fluids fracture the shale. Hydraulic fracturing fluid contains sand that lodges into the fractures and remains after the fluids are pumped back out, enabling shale gas to freely flow into the wellbore.

Horizontal drilling significantly multiplies the wells' pay zone length by aligning the well with the horizontal shale layers. For example, if a rock formation is 100 feet thick, a vertical well would have a pay zone of 100 feet. However, a horizontal well that stayed horizontal for 5,000 feet through the target formation would have a pay zone that is 50 times longer than the vertical well. Horizontal drilling and hydraulic fracturing techniques make it economically feasible to extract natural gas from unconventional deposits. This post is part of series of three posts that discuss the drilling process for a vertical and horizontal well and the hydraulic fracturing process for a typical well in a shale gas formation.

A. Drilling a Vertical Well

Horizontal drilling and hydraulic fracturing stimulation have made shale gas exploration and production successful. First, the vertical portion of the well is drilled. As the drill bit grinds away, drilling mud or air is pumped down the drill pipe and through the bit to remove rock cuttings from the wellbore. State or federal regulatory agencies determine the specific depth that the hole must extend below the deepest fresh water zone. Next, the drill pipe and bit are removed, and steel pipe called surface casing is inserted into the drilled hole to isolate the fresh water zones. The casing serves as the base that links the well control and safety devices, which are connected to the well and wellbore.

Should the State or Federal Government Regulate Hydraulic Fracking?

Thu, 07 Jun 2012 22:36:13 -0600

Natural gas exploration and production is regulated under a complex set of federal, state, and local laws. Federal agencies are not able to regulate all natural gas activities in the U.S., because most of the federal laws contain provisions that permit states to implement programs with federal approval. States can adopt its own standards; however, they must be at least as protective as the federal standards. Once the respective federal agency approves the standard, the state has primary jurisdiction.

Federal regulation of hydraulic fracking offers a broad national perspective. On May 4, 2012, the U.S. Department of Interior's Bureau of Land Management released their proposed draft rules for hydraulic fracking operations on public and Indian lands. The draft rules require companies to publicly disclose the chemicals used in hydraulic fracking, include provisions that improve assurances of greater wellbore integrity, and confirm that operators have a plan to properly handle hydraulic fracking flow back water. However, these regulations fail to consider key issues that arise in particular shale plays or regions being drilled.

State regulations are more effective in addressing regional or local issues because they can tailor regulations for the local environment. Natural gas states have developed a legal infrastructure that ensures environmental protection while facilitating natural gas production. In implementing state regulations, states look at several factors including geology, topography, development history, population density, state laws, and local economies. This post discusses regulations from a traditional oil and gas state and a state that has never had a producing oil and gas well.

Vermont became the first state to ban hydraulic fracturing. On May 16, 2012, the Vermont Governor signed a politically symbolic bill banning hydraulic fracking in Vermont. The bill also bans anyone from storing or treating hydraulic fracturing wastewater within the state. Ironically, Vermont has never had a producing oil and gas well and the last well drilled 28 years ago was a dry hole.