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Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

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

A lot of things are 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. Related: Why The Petrodollar Is Facing Its End

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 leveled at unconventional drillers. Related: Oil Prices Fall Back as Rally Hits a Ceiling

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 the 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. Related: The Last Great Frontier For Cheap Oil And Gas?

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. This means 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,

By Dave Forest

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Leave a comment
  • Pete Kolbenschlag on May 05 2016 said:
    Colorado is halfway across the country from Pennsylvania.
  • Bill Simpson on May 10 2016 said:
    The oil companies in the US has better take a straight talk lesson from 'The Donald', and do some public service TV ads asking, "Would you like $8 a gallon gasoline? Ban fracking, which has been used since the 1940's to produce oil right here in the United States, and you might get it. And send more money to these guys too." Then show a piece of the terrorist video getting ready to drown the people in the cage, or burn the pilot alive.
    Those 'feel good' ads they are using now won't get the job done to safeguard fracking from the ignorant masses. Fear works. Look what that sensationalist movie, 'The China Syndrome' did to our nuclear industry. Instead of using something used for making bombs to generate electricity, we are using something useful for making fertilizer. How dumb is that?
    If I was in charge of the oil majors, and the government kept putting unreasonable restrictions on my business, I would shut all the refineries in the county down. Watch who would back off when food quit moving, and gas stations ran out of fuel. People would discover what a gallon of gasoline was really worth, after they had to walk to work with nothing to eat. Or Washington could try to run the refineries. Would that be fun to watch, or what. From at least a mile away, of course.

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