The 2018 Babst Calland Report Focuses on the Appalachian Basin Oil & Gas Industry Forging Ahead Despite Obstacles

PITTSBURGH, June 21, 2018 /PRNewswire/ -- The law firm of Babst Calland today released its annual energy industry report: The 2018 Babst Calland Report - Appalachian Basin Oil & Gas Industry: Forging Ahead Despite Obstacles; Legal and Regulatory Perspective for Producers and Midstream Operators. This annual review of shale gas development activity in the Appalachian Basin acknowledges an ongoing rebound despite obstacles presented by regulatory agencies, the courts, activists, and the market. To request a copy of the Report, contact info@babstcalland.com.

In this Report, Babst Calland attorneys provide perspective on issues, challenges, opportunities and recent developments in the Appalachian Basin and beyond relevant to producers and operators.

According to the U.S. Energy Information Administration's May 2018 report, the Appalachian Marcellus and Utica shale plays account for more than 40 percent of U.S. natural gas output, compared to only three percent a decade ago. Since then, the Appalachian Basin has become recognized in the U.S. and around the world as a major source of natural gas and natural gas liquids.

The industry has been forging ahead amidst relatively low natural gas prices, infrastructure building, acreage rationalization and drilling plans that align with business expectations. The policy landscape continues to evolve with ever-changing federal and state environmental and safety regulations and tax structures along with a patchwork of local government requirements across the multi-state region.

Joseph K. Reinhart, shareholder and co-chair of Babst Calland's Energy and Natural Resources Group, said, "This Report provides perspective on the challenges and opportunities of a shale gas industry in the Appalachian Basin that continues to enjoy a modest rebound. While more business-friendly policies and procedures are emanating from Washington, D.C., threats of trade wars are raising concerns about the U.S. energy industry's ability to fully capitalize on planned exports to foreign markets."

He added, "In a sustaining low price natural gas environment, operators in the Appalachian Basin continue to reduce operating costs and maximize capital and operating budgets by increasing efficiencies, employing new technologies and consolidating operations. As a result, drilling activity and production continue to be strong compared to a year or two ago. All indicators suggest continued growth prospects for Appalachian Basin shale despite the lingering obstacles facing the industry."

The 84-page Report contains five sections, highlighted below, each addressing key challenges for oil and gas producers and midstream operators.

    --  Business Outlook: Growth Prospects Continue The U.S. Energy Information
        Administration predicts that U.S. energy consumption and production is
        most likely set for modest growth over the next 30 years. Henry Hub spot
        prices for natural gas rebounded modestly in 2017 and have tracked
        reasonably close in the first half of 2018. Given relatively-flat price
        projections, Appalachian operators' ability to keep costs down, improve
        efficiency, and pursue attractive transactions remains critical. The
        energy industry turnaround is evidenced by the significant slowing of
        bankruptcy filings, from 70 in 2016 to just 24 in 2017.
    --  Oil and Gas Regulations Continue to Evolve, Reform and PersistFederal
        and state courts, legislatures and regulatory agencies are addressing
        various oil and gas issues and reforms. Pennsylvania's Environmental
        Rights Amendment (ERA) poses a new and significant legal and novel
        constitutional issue for operators in the Commonwealth. Recent court
        challenges include a sharp rise in the total dollar amount of assessed
        penalties based on how PADEP calculates fines and civil penalties. West
        Virginia's Governor Jim Justice issued a series of executive orders that
        seek broad regulatory reform.
    --  Pipeline Outlook Positive, But More Public Pressure The pipeline
        industry is continuing to experience increased scrutiny from regulators
        at all levels of government. Much of this scrutiny is being driven by
        public interest groups and environmental advocacy organizations becoming
        more active in the pipeline permitting process and resorting with
        greater frequency to litigation as a means of advancing policy
        initiatives that are not favorable to the energy industry.  The Pipeline
        and Hazardous Materials Safety Administration (PHMSA) continued to make
        progress in finalizing the Gas Transmission and Gathering Final Rule
        with the intention to divide the content of the proposed rule into three
        separate final rules with the hope of issuing the rules by the end of
        2019.
    --  Local Government Regulation Continues to Spawn Debate and Legal
        Challenges In Robinson Township, the Pennsylvania Supreme Court
        invalidated two sections of Pennsylvania's updated Oil and Gas Act (Act
        13) that limited the authority of local governments to regulate oil and
        gas operations. This was based on a reinvigorated interpretation and
        application of the Article I, Section 27 of the Pennsylvania
        Constitution, commonly known as the Environmental Rights Amendment
        (ERA). On June 1, 2018, the PA Supreme Court published its long-awaited
        Gorsline opinion. In a 4-3 decision, the majority reversed the
        Commonwealth Court's decision affirming the granting of a conditional
        use approval for an unconventional natural gas well pad. West Virginia's
        Lincoln and Fayette counties have enacted forms of "nuisance ordinances"
        that could potentially be used to target oil and gas related operations.
        As Ohio Courts heard and decided several cases regarding the extent of
        local authority to regulate oil and gas development, anti-fracking
        groups pursued an alternative route to regulation through local ballot
        initiatives.
    --  Litigation Trends West Virginia continues to see private nuisance suits
        filed against both upstream and midstream companies. In the last few
        years, civil suit filings alleging property contamination and nuisance
        claims from unconventional natural gas development have diminished
        significantly in Pennsylvania. Articles related to claims of alleged
        health effects from unconventional natural gas development continue to
        be published in scientific journals and in the media in even greater
        numbers, resulting in increasing controversy and polarization.

Many of the current opportunities and challenges facing the industry are described in the pages of this Report. Babst Calland's multidisciplinary team of energy attorneys have chronicled the legal and regulatory landscape to help inform the energy industry operating in the Appalachian Basin.

About Babst Calland
Babst Calland was founded in 1986 and has represented environmental, energy and corporate clients since its inception. The Firm has grown to more than 140 attorneys who concentrate on the current and emerging needs of clients. This team of attorneys has focused law practices in construction, corporate and commercial, creditors' rights and insolvency, emerging technologies, employment and labor, energy and natural resources, environmental, land use, litigation, public sector, real estate and transportation safety.

Headquartered in Pittsburgh, Pa., Babst Calland also has offices in Washington, D.C., Charleston, W.Va., State College, Pa., Canton, Ohio and Sewell, N.J. Babst Calland's attorneys have been acknowledged by various organizations, including: U.S. News & World Report's "Best Law Firms," Best Lawyers in America(©), "Pennsylvania Super Lawyers," and Chambers USA's America's Leading Lawyers for Business. For more information, including attorney profiles, visit babstcalland.com.

The Babst Calland Report is provided for informational purposes to our clients and friends and is not intended to constitute legal advice.

View original content:http://www.prnewswire.com/news-releases/the-2018-babst-calland-report-focuses-on-the-appalachian-basin-oil--gas-industry-forging-ahead-despite-obstacles-300670469.html

SOURCE Babst Calland