U.S. Shale Producers Just Won Their Biggest Legal Case In Years

Shale Delusion U.S. Tight Oil

U.S. Shale Producers Just Won Their Biggest Legal Case In Years by Dave Forest, Pierce Points

Fracking is once again becoming a hot topic in the oil and gas world. With Germany moving Tuesday to impose an indefinite ban on the unconventional drilling technique.

But in the U.S. this week the story was the opposite. With oil and gas drillers winning a critical legal victory over the future of fracking in America’s shale plays.

That came in Wyoming. Where a District Judge struck down a set of tougher rules on fracking that had been implemented by the U.S. Bureau of Land Management (BLM) early last year.

Last March, the BLM came down hard on the U.S. shale industry. Imposing a slate of requirements for stronger well casing and wastewater storage on fracking operations conducted on federal and native lands.

The BLM rules also required drillers to reveal what chemicals were used in each frack job. A measure that has been resisted by the industry because of concerns over proprietary techniques perfected for individual shale plays.

But the new rules were quickly challenged by a number of industry groups — as well as state governments such as oil-rich North Dakota. With these opponents winning a stay on the implementation of the BLM rules last September, pending the outcome of a full court challenge.

And this week that outcome became clear — the BLM rules are out. With Judge Scott Skavdahl ruling that the BLM does not have authority to make such wide-ranging rules for the national oil and gas sector.

Skavdahl noted that the U.S. Congress has never explicitly given the BLM power to regulate fracking. And without such authorization, he said, the BLM has overstepped its bounds.

As such, it appears this major threat to the shale industry will fall by the wayside for the time being. Watch to see if the BLM attempts to appeal the decision — or if the U.S. government makes alternative attempts to regulate the fracking business.

Here’s to staying within the lines,

Dave Forest

U.S. Shale

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About the Author

PiercePoints
Dave Forest writes Pierce Points Free Daily E-Letter, an advisory on mining and energy read every day by BP, Rio Tinto, JPMorgan, BNP Paribas, Repsol, GDF Suez, GE, Platts, Warburg Pincus, and the UN. Sign up for free at www.piercepoints.com. Mr. Forest has funded and managed over $80 million in global exploration and development in natural resources, and continues to design and develop projects globally. He is a professional geologist.

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