American Oil and Gas Reporter - April 2015 - 58

IPAA, WEA Challenge BLM Frac Rule
DENVER-Independent oil and gas
producers wasted no time in challenging
the Bureau of Land Management's new
rule for hydraulic fracturing on public
lands. On the same day BLM announced
its final rule, attorneys with Baker &
Hostetler LLP filed a petition for review
of the agency action in the U.S. District
Court for the District of Wyoming in
Cheyenne on behalf of the Independent
Petroleum Association of America and
the Western Energy Alliance.
IPAA President and Chief Executive
Officer Barry Russell calls BLM's new
mandates "the complete opposite of common sense. These so-called base-line
standards will threaten America's economic upturn and further deter oil and
natural gas development on federal lands."
Fees associated with the new rules
"will add burdensome costs on independent producers," Russell adds, stating:
"(BLM) needs to further engage stakeholders, adequately assess the costs, and
compare the proposal to safeguards under
state law."
Western Energy Alliance President Tim
Wigley points out, "States have been regulating fracturing successfully for decades,
including on federal lands, with no incidents
that necessitate redundant federal regulation.
BLM struggles to meet its current workload
of leasing, environmental analysis, permitting, monitoring, inspecting, and otherwise administering the federal onshore
oil and natural gas program. Yet it is undertaking an entirely new regulatory regime
that it has neither the resources nor the
expertise to implement.
"If anything, BLM should be delegating
more to the states in recognition of their
exemplary environmental and safety
records, not implementing new federal
red tape that is not justified," Wigley
maintains.

Rule-Making Deficiencies
The associations' petition, which was
filed March 20, contends that "BLM's
rule making represents a reaction to unsubstantiated concerns and the administrative record lacks the factual, scientific,
or engineering evidence necessary to sustain the agency's final rule. The rule
making has been procedurally deficient
and the final rule as issued is contrary to
law."
The petition asks the court to find the
rule invalid and set it aside "because the
regulatory conditions (it) imposes constitute arbitrary and unnecessary burdens
that either duplicate state law requirements

58 THE AMERICAN OIL & GAS REPORTER

or improperly curtail the primary jurisdiction of state governments, and because
the regulations are not properly tailored
to achieve a legitimate government purpose."
In its own announcement of the lawsuit,
BakerHostetler argues that the wellbore
cementing and construction standards in
BLM's fracturing rule merely duplicate
existing state regulations and industry
best practices, as does the requirement to
disclose frac chemicals on Fracfocus.org.
BakerHostetler says the confidentiality
of operational and engineering information
BLM now requires on notices of intent
is protected under federal public records
laws, and lambasts the requirement to
manage flowback in rigid, aboveground
storage tanks "regardless whether that
storage method represents the most environmentally sensitive method of managing produced water."
The firm comments, "Even if another
layer of administrative rules was necessary
to ensure that hydraulic fracturing could
be conducted safely-a position that contravenes decades of technical evidence-
BLM's new regulations do not represent
those rules. Despite being titled a rule
for 'hydraulic fracturing on federal and
Indian lands,' BLM's proposal does not
attempt to govern any aspect of the fracturing process. This omission suggests
little more than a politically motivated
attempt to appeal to those who . . . use
hydraulic fracturing as a proxy for all oil
and gas development."
Companion Lawsuit
The Wyoming Attorney General's Office filed a second challenge to BLM's
new fracturing rule on March 26, joining
IPAA and the Western Energy Alliance
in the U.S. District Court for the District
of Wyoming.
Describing Wyoming's action as analogous to IPAA and WEA's lawsuit, BakerHostetler attorney Mark Barron says,
"The state's leadership in regulating oil
and gas development, and particularly
the process of hydraulic fracturing, disproves the myth of the regulatory gap on
which the Department of Interior's rule
is premised. Wyoming's willingness to
fight these regulations in federal court is
evidence of the extent to which Interior's
action represents regulatory overreach
and an untenable infringement on state
sovereignty."
Barron, Poe Leggette and Alex
Obrecht, who are members of BakerHostetler's energy and shale practice

team in Denver, are the lead attorneys in
the IPAA and WEA lawsuit.
By way of background, the associations
recall that BLM released its initial proposed well stimulation and fracturing
regulation in May 2012. At that time, the
two associations say they "urged BLM
to produce a gap analysis identifying inadequacies in existing requirements that
BLM's proposed rule would remediate,
which BLM has failed to produce."
A year later, IPAA and WEA continue,
BLM issued a supplemental proposal.
"Unfortunately," the associations state,
"this revised proposal, (which is) reflected
in BLM's current rule making, still failed
to account for the facts related to hydraulic
fracturing. BLM's proposal is technically
unsound and does not provide any benefits
that state regulations do not currently
provide."
IPAA and WEA note that they, along
with numerous other cooperating associations, asked BLM to withdraw the May
2013 proposed rule.
Finally, the two associations mention
that in February 2015, the White House
Council of Economic Advisers "stated
environmental regulation of hydraulic
fracturing is best addressed at the state
and local level."
Ì

Lockhart Excited About
Raton Basin Assessment
AUSTIN, TX.-Independent consulting
firm DeGolyer & MacNaughton has completed a preliminary report on the conventional and unconventional prospective
resources at Lockhart Oil & Gas' property
in New Mexico. The analysis, which includes a high assessment of more than 8
trillion cubic feet of raw natural gas resources, prompts a Lockhart announcement to pose the question: "Is the Raton
Basin the next Eagle Ford play?"
According to the company, the findings
illustrate the trillions of cubic feet of
natural gas available on Lockhart's acquisition of 193,000 net mineral acres
and 203,000 gross mineral acres in Colfax
County, N.M. The company notes it does
not include the oil reserves within the
sands and shales.
Lockhart points out that the acreage's
key shale formations include the Niobrara,
with an average mean thickness of 670
feet, and the Pierre, with an average mean
thickness of 1,850 feet. The company
says the report puts the gross raw natural
gas resources between 1.24 Tcf and 8.80
Tcf, with a best estimate of 3.52 Tcf. Ì



American Oil and Gas Reporter - April 2015

Table of Contents for the Digital Edition of American Oil and Gas Reporter - April 2015

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