Chapter 3A The States' Legal Framework: Texas/Louisiana Region American Law And Jurisprudence On Fracking
| Jurisdiction | United States |
(Nov 2011)
THE STATES' LEGAL FRAMEWORK: TEXAS/LOUISIANA REGION AMERICAN LAW AND JURISPRUDENCE ON FRACING
Haynes & Boone LLP
Houston, Texas
CHRISTOPHER S. KULANDER joined the firm of Haynes and Boone LLP in Houston, Texas, in August 2007 and served as an associate until May 2011. He then joined the law faculty at Texas Tech University in Lubbock, where he teaches courses covering oil and gas and property law. He continues to assist Haynes and Boone with questions and issues of oil and gas law and is a firm resource for the geosciences. Prior to entering law school, he served as a geophysicist for the United States Geological Survey in Denver.
American Law and Jurisprudence on Fracing--2011
by Thomas E. Kurth, Michael J. Mazzone, Mary S. Mendoza and Chris S. Kulander
The original version of this paper was published by the Rocky Mountain Mineral Law Foundation in the Rocky Mountain Mineral Law Foundation Journal, Vol. 47, No. 2 (2010). This 2011 version represents extensive updates and revisions reflecting new and revised regulations, statutes, and field development nationwide over the last year and a half.
Haynes and Boone, LLP
Attorneys and Counselors
2323 Victory Avenue, Suite 700
Dallas, Texas 75219-7672
Phone: 214.651.5000
Fax: 214.651.5940
[Page ii]
Table of Contents
Table of Contents
Acknowledgements
Introduction
Hydraulic Fracturing--an Overview
Drilling and Groundwater Protection
Fracing Fluids and Operations
Fracing Operations Nationwide
Marcellus and Utica Shale
Barnett Shale
Woodford Shale
Fayetteville Shale
Haynesville Shale
Eagle Ford Shale
Antrim Shale
New Albany Shale
Bakken Shale
Effect on Domestic Production
Oil and Gas Jurisprudence in the Realm of Fracing
Surface Ownership vs. Mineral Ownership
Neighboring Mineral Owners
The Aftermath of Coastal
Current Fracing Litigation
State Regulation of Hydraulic Fracturing
Arkansas
Kansas
Louisiana
Maryland
Michigan
Montana
New Mexico
New York
[Page iii]
North Dakota
Ohio
Oklahoma
Pennsylvania
Texas
Utah
West Virginia
Wyoming
Fracing in Indian Country
Fracing in Canada
Federal Regulation of Fracing
Bureau of Land Management
Environmental Protection Agency
Securities Exchange Commission
Air Quality Permitting and Controls
Permitting
Control of Emissions
Emissions Impact Analysis
Future Developments
Conservancy Districts
Conclusions
[Page 3A-1]
American Law and Jurisprudence on Fracing
Acknowledgements
The primary authors wish to thank the following people at Haynes and Boone, LLP who conducted research, provided comments, and contributed to this report: Ben Allen, Megan Bibb, Jim Braddock, Jeff Civins, Buddy Clark, Austin Elam, Austin Frost, Kraig Grahmann, Kendall Hollrah, Liz Klingensmith, Wolf McGavran, Jason Payne, Chris Perez, Mike Raab, Adam Sencenbaugh, Will White and Alan Wright.
Introduction
The substantial growth of domestic unconventional shale resources in recent years has largely been a result of the increase in the use of hydraulic fracturing. The concept and practice of fracing was in existence in the 1940s in West Texas in vertical well bores, designed to create artificial permeability in an oil-bearing formation consisting of a thick geological deposit with little or no permeability. In the past decade, hydraulic fracturing has unlocked oil and natural gas deposits in deep shale formations around the country.
Hydraulic fracturing is generally viewed as a completion technique that is a practical necessity to promote development of unconventional "tight" shale reservoirs, particularly gas-shale. Hydraulic fracturing entails treating water, oil, or gas wells to stimulate more production than otherwise would have been achieved using standard drilling and production techniques. This report deals with hydraulic fracturing and the legal and technical issues associated with it.
This report first covers what hydraulic fracturing is and why it is done. It identifies the current location of the largest shale fields where hydraulic fracturing is common and the effect of hydraulic fracturing on domestic production. It then covers the environmental issues, focusing on the anecdotal and evidentiary call and response among environmental groups, regulators, landowners, and producers. It then discusses how traditional oil and gas jurisprudence impacts hydraulic fracturing, emphasizing both surface versus mineral estate issues and disputes that arise between two adjoining mineral owners. Finally, it addresses developments in technology and processes that promise to reduce the environmental footprint of the hydraulic fracturing while promoting its efficiencies and economies. These developments are gaining in the immediacy of their need with the increasing scarcity of water resources, especially in states plagued by drought, as well as populist pressures and the specter of the EPA yearning for expansion of its regulatory authority.
We examine the regulatory frameworks currently in place in fourteen (14) states where hydraulic fracturing is common. This state-level analysis is made with an eye towards regulations specific to hydraulic fractioning and the fluids used, as well as more overarching regulations that include hydraulic fracturing among other exploration and production activities,
[Page 3A-2]
such as general pollution disposal regulations that cover used hydraulic fracturing fluid as well as other liquid waste from drilling. In several instances, this report describes recent state-level legislation and associated regulations, as well as bills under consideration, and important opinions from state courts. We also consider hydraulic fracturing on semi-sovereign tribal land and in Canada.
Finally, this report analyzes the current and contemplated laws and regulations governing hydraulic fracturing on the federal level. In particular, it discusses the history of the litigation and legislative efforts challenging the current federal exception enjoyed by hydraulic fracturing. It also highlights the friction between state and federal oversight.
Hydraulic Fracturing--an Overview
Most people are familiar with the "gusher" well where reservoir pressure underground pushes oil up the wellbore. Oil and gas are harder to extract from "tight" rock formations, which do not allow passage of oil and gas through and up a well. Although such formations, often shale or coal, may be filled with gas or oil, they only allow those fluids to flow along preexisting cracks or "fractures."
Naturally-occurring fracture patterns have long been used to heighten development in otherwise uneconomic formations. One example is the Austin Chalk, a tight fossiliferous chalk and marl formation found in the Gulf Coast region of the United States. The Austin Chalk in Texas and coal seams in Appalachia are marked by zones of natural fractures which trend in a common direction.1 While the Austin Chalk is often saturated with hydrocarbons, it typically remains uneconomic unless a horizontal borehole intersects a number of the fractures. Therefore, seismic and surficial mapping techniques were developed to find these natural fracture zones and orientations.2
The usefulness and application of hydraulic fracturing to horizontal well bores only became apparent with the discovery that "tight" shale formations could be economically developed with hydraulic fracturing techniques--that is, by making artificial fractures. Now, instead of relying on natural fractures zones, developers make their own fractures.
[Page 3A-3]
Hydraulic fracturing--known colloquially as "fraccing," "fracking" and, in this report, as "fracing"--is a process in which fluid is injected into a well at very high pressures in order to either widen and deepen existing cracks or create new fractures in the tight formation.3 Generally, the use of fracturing technologies in vertical and horizontal well bores will allow more oil or gas to be produced from wells previously thought dry or in decline. Petroleum companies vary the type of fluid used for fracing depending on the rock type, depth or other factors. The fluids used can include water, water mixed with solvents, or drilling mud. The fluid is mixed with the "proppant," which is typically sand, ceramic pellets or other small granular material that is carried into the fractures where it remains to prop the crack open thereby allowing the oil or gas to flow.
Fracing is not a new technology. Hydraulic fracing was first tested in 1903 and first used commercially in 1948. By 1988, hydraulic fracturing had been applied to one million wells.4 It has also been used to enhance production from water wells. Currently, about 35,000 wells per year undergo some measure of hydraulic fracturing and a majority of oil and gas wells have undergone some form and level of fracturing during their productive lifetime.5 The prevalence of horizontal drilling has also increased the importance of fracing as boreholes can now traverse through a much longer portion of a targeted horizon instead of the interval covered by vertical or slant drilling, making the return to the operator in increased production worth the cost of mobilization of a fleet of fracing equipment. Because fracing can be conducted all along the interval the borehole is in the productive zone, more gas can be drained from each well, meaning one horizontal well can replace multiple vertical wells, cutting back on the surface footprint necessary to exploit the gas assets in a given area.
Drilling and Groundwater Protection
To understand how fracing operations work and the relationship between fracing fluids and groundwater, it is first necessary to understand the fundamentals of how drillers set casing, cement boreholes, and set up a production zone. Fracing fluids are not the first fluids to be introduced to a wellbore during drilling. During drilling operations, drilling fluid is...
To continue reading
Request your trial