Daniel B. Markind, Esq.
Weir and Partners, LLP
As democratic presidential candidates argue over hydraulic fracturing, Cuomo appears to be stalling on approving permits the Constitution Pipeline needs.
With the presidential primaries now in the Northeast, the two Democratic Presidential candidates are competing for who is more opposed to fracking. In a very short period of time, the entire concept of hydraulic fracturing has become a political football. It will be interesting to see how far Hillary Clinton and Bernie Sanders take this antipathy as hydraulic fracturing is used for more than just shale gas and oil production. Indeed certain “cleantech” source like geothermal energy use techniques similar to hydraulic fracturing.
Given the timing and the current political atmosphere, expect New York Governor Andrew Cuomo to find a reason not to approve the 401 Clean Streams Permit needed to move forward the Constitution Pipeline. Cuomo has until April 29 to make a decision. While a refusal certainly will lead to litigation, it will be politically very difficult now in New York for the Governor to be seen taking a position facilitating the transportation and use of fossil fuels.
One of the owners of the Constitution Pipeline, Cabot Oil & Gas Corp., is battling on another front. Cabot is appealing a verdict awarded March 11 in the Federal District Court in Scranton granting two landowners in Dimock, Pennsylvania $4.2 million relating to methane contamination the plaintiffs claimed were caused by negligent well drilling by Cabot near their land. The entire affair was very curious. Numerous causes of action claimed by the plaintiffs were thrown out by Judge Martin Carlson, leaving the plaintiffs only with a generalized “private nuisance” claim.
During her closing argument, plaintiffs’ attorney Leslie Lewis made numerous references to evidence that had been excluded by Judge Carlson and implied that Cabot was “hiding something”. Even Judge Carlson interrupted Ms. Lewis three times during the closing argument and scolded her for making improper statements. Still, the verdict came down from the jury of four men and four women after 8 ½ hours of deliberation, and it has been seized upon by the anti-fracking groups as a great victory for the little guy over the big, bad gas company.
In Pennsylvania earlier this week, Energy Committees from both houses of the State Legislature voted to disapprove new rules governing gas and oil development promulgated by the Department of Environmental Protection. These Chapter 78 changes have been discussed many times here.
While some are common sense, other lack sense, and the entire process has been shady. Under Pennsylvania’s rule making methodology, the proposed regulations now go to the State’s Independent Regulatory Review Commission on April 21. In the end, the only way the rules will not come into effect (aside from a legal challenge) will be for both houses of the Legislature to override a veto by Governor Tom Wolf. This is highly unlikely.
Internationally, the oddity of the Israeli Gas Consortium continues. On March 28 the Israeli High Court of Justice blocked the deal between Houston’s Noble Energy and Israel’s Delek to develop the Leviathan and Tamar gas fields in the Mediterranean. The Court found that the Prime Minister had no ability to agree to a “stability” clause, which prevents future governments from changing any regulations for a decade. Noble Energy CEO David Stover responded by stating that Noble “will vigorously defend our rights…It is now up to the Government of Israel to deliver a solution which at least meets the terms of the framework, and to do so quickly.”
On a better note internationally, INEOS Europe AG and Rex Energy announced a new natural gas liquids sales and purchase agreement for ethane, propane and butane. Ethane will be transported immediately while propane and butane will start upon the completion of Mariner East 2, assuming that the powers-that-be allow Mariner 2 to be completed. It then would be transported by ship from Marcus Hook, Pennsylvania to refineries in Norway, relieving Europe of some of the monopoly power of Russia.
Right now, 8 of 28 EU countries rely on Russia for as much as 80% of their natural gas. Given Russia’s increasingly aggressive moves toward the United States, as exemplified by Tuesday’s simulated strafing run of an American warship in the Baltic Sea by Russian Sukhoi SU-24 warplanes, it is difficult to see how helping Russia retain its monopoly on Europe’s energy is in anyone’s best interest.
Editor’s Note: I wish Dan’s prediction about the Constitution Pipeline was over-the-top and improbable but, given the delay to date and Williams’ apparent unwillingness, until now at least, to fight, while naively trusting in the good will of a politicized DEC unable to make decisions without the approval of a corrupt governor, I fear he’s correct. Let’s hope he’s wrong. If not, then Williams (and pretty much every pipeline company) needs to change their strategy and get in the game fractivists are playing.