Marcellus Shale is Hot Topic in PA Environmental Law
A few years ago, if you asked Pennsylvania environmental lawyers to identify hot topics, they would never have mentioned oil and gas law. Yes, there were a handful of practitioners handling the limited oil and gas law work floating around, mainly relating to liability for old uncapped gas wells. In all of the PBI Environmental Law Forums that I have attended and spoken at over the last 10 years, oil and gas issues have been rarely discussed. As the price of oil and natural gas has risen, however, so has the interest in finding new domestic sources of energy. And it turns out that Pennsylvania is one of the states sitting on top of the Marcellus Shale formation, which is thought to hold as much as 50 trillion cubic feet of recoverable natural gas under Pennsylvania, New York and West Virginia.
The areal extent of the Marcellus Shale is said to be 54,000 square miles. The Marcellus formation varies in depth, but in Pennsylvania it is found between 5,000 and 8,000 feet below ground -- more than a mile deep. There is something of a modern day oil rush going on to get at the natural gas, with Penn State estimating the economic value of the formation at $1 trillion. That means big royalties for landowners sitting on top of the formation and lots of new jobs for those involved in the oil and gas industry.
So what does environmental law have to do with the Marcellus Shale? The answer is that the Marcellus Shale is likely to create a lot of work for environmental lawyers. We've already heard from many landowners who have been approached by oil and gas exploration companies and asked to sign lease agreements. Those are legal documents that should be reviewed by an attorney to ensure that the landowner is protected, the payments are fair, and the law is complied with. We've seen legal battles being fought between oil and gas exploration companies and municipal governments arguing over the extent to which Pennsylvania oil and gas law preempts local government from imposing local land use and zoning controls and imposing local ordinances to regulate exploration. Moreover, there are permits needed to engage in oil and gas exploration from a variety of governmental agencies, each with jurisdiction over some aspect of the exploration projects.
The PADEP is taking a very active role in asserting its authority to regulate the exploration of the Marcellus Shale formation. Last week, the Acting Secretary of the Department, John Hanger, testified before a House Committee on the actions being taken by the Department. PADEP has implemented an enhanced permitting process in which drilling operators must provide information on the location and sources of water to be used in the drilling process, the impacts of drilling on water resources, and locations of facilities where drilling wastes and wastewater will be taken fro treatment and disposal. The enhanced permitting process was developed in response to inspections that found poorly constructed water impoundments, inadequate erosion and sedimentation controls, unregistered withdrawals of water from streams, and wetlands encroachment. The application addendum and instructions for Marcellus Shale Gas Well Development is the package that PADEP has put together to assist permit applicants in preparing the required water management plan associated with the development of Marcellus Shale Gas wells. The package can be found on the Department's website by inserting the keyword Oil and Gas, then clicking on "Marcellus Page."
The Marcellus Shale is a matter of profound interest to landowners, oil and gas exploration companies, environmental consultants, wastewater treatment companies, and equipment suppliers, as well as local governments, watershed groups, and citizens. Legal issues include the approval of water withdrawals, permitting water impoundments, erosion and sedimentation controls, wastewater discharges and treatment, and complying with local land use and zoning for ancillary facilities. There are a myriad of regulatory agencies with oversight including PADEP, the Susquehanna and Delaware River Basin Commissions, the US Army Corps if wetlands are involved, the County Conservation Districts for E&S and NPDES stormwater construction permits, and even the DCNR and PA Fish and Boat Commission, if threatened and endangered species are identified.
While people are still learning the breadth of the regulatory oversight involved, companies are moving forward with their plans for exploration. As of August 15, PADEP has issued 83 permits containing the enhanced water management requirements to companies looking to drill for natural gas in the Marcellus Shale, so there is no time to wait if you want in on what could be a $1 trillion market with billions to be collected in royalties. It's ironic that Pennsylvania, which experienced its first oil boom in 1859 with the drilling of a 70 foot well in Titusville, PA, is now experiencing a second natural gas boom as a result of the Marcellus Shale and new drilling technologies capable of recovering gas from more than a mile deep below ground. Looks like those oil and gas lawyers are going to be in high demand, and there should be plenty of work for environmental and local land use and real estate lawyers, as well.
