BakerHostetler Shale Symposium

BakerHostetler

Shale Symposium

The Utica Shale Play: Working in and

with the State of Ohio

June 6, 2013

Martin T. Booher, Partner

The Regulation of Natural Gas and

Liquids Pipelines and Related

Infrastructure in Ohio:

Who, What, When, Where and

How?

Gas/Liquids System Overview

(Ohio)

3

Why Are Pipelines and Related

Infrastructure Important in Ohio

• The Utica can provide (as can other historically produced

areas using new drilling techniques) significant oil, natural

gas and natural gas liquids

• But unless there are markets (e.g., ethane) and the product

can be processed and then moved to the markets, the oil,

natural gas and natural gas liquids are going to stay in the

ground

• Gathering lines, processing facilities, fractionation facilities

and pipelines are needed and, as noted, several proposals

are pending

4

Regulation of Natural Gas Pipelines

and Related Infrastructure

• Several Layers of Potentially Overlapping Jurisdiction – Federal

– State

– Local

• Depends on the Type of Pipeline/Project – Natural Gas Vs. Oil/Natural Gas Liquids

– Interstate

– Intrastate

– Gathering Line, Processing Facility, Transmission Pipeline, Distribution Pipeline

5

Federal Jurisdiction

• Natural Gas Act

– Grants Jurisdiction to the Federal Energy

Regulatory Commission (“FERC”) over Interstate

Natural Gas Pipelines (associated compressor

stations), Storage Facilities and LNG Terminals

(Interstate Commerce)

– State Law Preemption

– Right of Eminent Domain

– Rigorous Licensing Process (National

Environmental Policy Act)

6

Federal Jurisdiction

• What is Not Regulated

– Oil and Natural Gas Liquids Pipelines

(Licensing/Construction)

– Intrastate Pipelines

– Production and gathering pipelines

– Distribution pipelines (i.e., local gas utilities)

7

Ohio Jurisdiction

• Ohio Regulatory Agencies still play critical role

in FERC-jurisdictional pipelines through the

implementation of various federal

environmental laws

• SB 315 changed/clarified a number of

jurisdictional issues in Ohio as it relates to

“non FERC-jurisdictional” pipelines (e.g.,

intrastate pipelines, production and gathering

pipelines and intrastate distribution pipelines)

8

Ohio Regulatory Agencies

Key Ohio Regulatory Agencies Regulating Natural

Gas Pipelines and Related Infrastructure in Ohio

• ODNR

• OPSB

• PUCO

• OEPA/US Army Corps of Engineers

• Resource Agencies

9

ODNR

• Critical O&G agency in Ohio

• Regulates Drilling and Pad, Production

Pipelines

• Deep Injection Wells

• No meaningful, direct regulatory oversight over

natural gas pipelines/related infrastructure

(beyond production site)

10

OPSB

• Pre-S.B. 315 controversy over definition of gas pipelines

• Kinder Morgan 2010 application to OPSB filed under protest (for natural gas liquids pipeline)

• S.B. 315 limited OPSB’s regulatory authority over natural gas and liquids pipelines/related infrastructure

• OPSB still a key player: Issues certificates (through an adjudicatory proceeding) for natural gas pipelines (and associated facilities) which are: (1) > 500 feet in length; (2) > 9 inches in outside diameter; and (3) designed for transporting gas at MAOP in excess of 125 psi

• Excluded from OPSB certification requirements: gathering lines, gas gathering pipelines, processing plant gas stub pipelines, gas processing plants, natural gas liquids finished product pipelines, pipelines from gas processing plants to interstate or intrastate gas pipelines or to any natural gas liquids fractionation plant, an oil, gas or other production operated regulated by the Ohio, including pipelines upstream of any gathering lines and certain compressor stations.

11

PUCO

• Primarily Responsible for Pipeline Safety

• No Direct Licensing/Siting Authority

– Requires pipelines transporting gas from horizontal wells constructed on or after September 10, 2012 to comply with applicable federal design standards

– 21 Day Preconstruction Notice

– Submission of as-builts (60 days)

• No authority exercised over liquid pipelines (rests with PHMSA)

12

OEPA/Resource Agencies

• Air Quality

– PTI/PTO

– Title V

– No General Air Permit for Compressors

– GHGs

• Water Quality

– NPDES • General Stormwater Permit

• General Hydrostatic Testing Permit

– Wetlands • 401/404 Permits/NWP 12 (U.S. Army Corps of Engineers

Involvement)

• Resource agencies (endangered species, cultural resources,

fisheries, etc.)

• Indiana Bats and Inadvertent Discharges

13

Other Ohio-Specific Siting

Observations

• Board of Building Standards Regulations eliminate

local jurisdiction over the construction of

buildings/structures associated with the operation of

natural gas liquids fractionation or processing facilities.

• ODNR requirements supplant local jurisdiction

• OPSB requirements supplant local jurisdiction

• PUCO requirements supplant local jurisdiction

• Eminent domain for siting of pipelines and related

facilities is available

• Acceptance by local communities remains critical

14

BakerHostetler

Shale Symposium



June 6, 2013

Radioactive Waste Disposal: Examining the Legal Horizon

Ben L. Pfefferle, Partner

Radioactive Materials

• The land formations that contain oil and gas deposits also contain radioactive materials.

• The drilling process may expose these materials to the surface.

• Such radioactive materials include: – Uranium

– Thorium

– Radium

– Lead-210

17

NORM & TENORM

• The radioactive materials associated with the

drilling process are commonly classified into two

categories:

– Naturally Occurring Radioactive Materials (NORM)

– Technologically Enhanced Naturally Occurring

Radioactive Materials (TENORM)

• The most recent version of Ohio’s proposed

budget contains the following definitions of

NORM and TENORM:

18

NORM

• NORM: material that contains any nuclide that

is radioactive in its natural physical state

– Does not include source material, byproduct

material, or special nuclear material

19

TENORM

• TENORM: naturally occurring radioactive material with radionuclide concentrations that are increased by or as a result of past or present human activities

– Does not include drill cuttings, natural background radiation, byproduct material, or source material

• Drilling creates TENORM by concentrating the naturally occurring radionuclides and exposing them to the surface environment and human contact.

20

Ohio Senate’s Proposed Budget

• The Ohio Senate’s proposed budget includes

several provisions regulating the disposal of

NORM and TENORM.

• The provisions are similar in some ways to

NORM/TENORM provisions that the Ohio

House stripped out of Governor John Kasich’s

proposed budget.

21

Key Provisions

• Under the Senate’s proposed budget:

1) Well operators generally must sample any wastes

potentially containing TENORM for radium prior to

shipping wastes off-site.

2) Well operators do not, however, have to sample

wastes for radium if:

a) The material is reused in a horizontal well

b) The material is disposed of at an injection well for which a

permit has been issued under Ohio law

c) The material is used in a method of enhanced recovery

for which a permit has been issued under Ohio law

d) The material is transported out of Ohio for lawful disposal

22

Key Provisions


3) If materials other than TENORM come in contact

with a refined oil-based substance, then the well

operator must either: a) Dispose of the materials at a solid waste facility authorized to accept such

material under Ohio law;

b) Beneficially use the material in accordance with Department of Environmental

Protection rules; OR

c) Recycle or reuse the material with the approval of the Chief of the Division of Oil

and Gas Management.

4) Solid waste landfills are prohibited from receiving

TENORM if the material contains radium-226 or

radium-228 equal to or greater than 5 picocuries per

gram above natural radiation levels. 23

Key Provisions


5) Solid waste landfills may accept TENORM containing

radium-226 or radium-228 above acceptable levels

for “purposes other than transfer or disposal,” so long

as the landfill operator maintains all necessary

authorizations.

6) Solid waste facilities may not receive or dispose of

TENORM from drilling operations without first

receiving representative testing results to determine

compliance with Ohio law.

24

Key Provisions

• Under the Senate’s proposed budget: 7) The Director of Environmental Protection may adopt

rules governing the handling and disposal of radioactive materials by solid waste facilities.

8) The Director of Environmental Protection may establish the definition of “beneficially use” as it applies to non-TENORM materials from horizontal wells that have come in contact with refined oil-based substances.

9) The Director of the Department of Health must promulgate rules governing TENORM, and the rules must not apply to NORM.

25

Brine Disposal

• The Senate’s proposed budget also includes

provisions governing the disposal of brine and

other fluids associated with the drilling process.

• In general, the provisions:

– Require that the Chief of the Division of Oil and Gas

Resources Management adopt rules governing

brine disposal

– Prohibit the storing or processing of brine without

the required permits

– Establish rules governing impoundments

26

On the Horizon

• Industry and environmentalists have not had an

opportunity to comment on the Senate’s

NORM/TENORM provisions, as they were just

released on June 4.

• Similar provisions in the Governor’s proposed

budget, however, faced strong opposition from

both industry and environmentalists.

27

On the Horizon

• According to industry, the provisions are

unnecessary because Ohio’s current regulatory

approach to TENORM is adequate.

– They also note that testing at Utica well sites

indicates low radiation levels.

• Environmentalists recommend that radioactive

materials instead be shipped to landfills licensed

to handle radioactive waste.

28

BakerHostetler

Shale Symposium



June 6, 2013

David Mustine Managing Director

2013 Strategic Focus

31

Retention & Expansion

o 2,000 companies for R&E calls

Attraction

o Target select geographies and industries where Ohio has a comparative advantage

Marketing

o Robust communications activity, including more editorial outreach, public events, and

increased communication with internal audience and stakeholders

Revitalization Program

o Work with Ohio Development Services Agency, Ohio EPA, and stakeholders to identify and

prioritize potential sites

o Provide a more streamlined, responsive, and flexible program

Ohio River Strategy

o Develop comprehensive catalog of available properties

Workforce

o Promote Governor Kasich’s workforce development initiatives and coordinate with his Office of

Workforce Transformation

o Work with colleges and universities to develop curriculum and certification programs that

address industry needs

Targeted Industries

32

Ohio’s Robust Oil and Gas Supply Chain

33

V&M Star, Youngstown – steel tubing

Miller Supply, Inc., Wooster – oilfield supply and services

Pioneer Group, Marietta – midstream fabrication and construction

Timken, Canton – manufacturer and supplier of bearings

Ariel Corporation, Mt. Vernon – gas compressors

Gorman-Rupp, Mansfield – pumps used in oilfield operations

Kelchner, Springboro – construction

DBA Mutual Tool, Tipp City – fabricating

Exterran, Youngstown – oilfield equipment

Pipeline & Midstream Projects: Ohio Utica Shale

34

Company Location Operations Estimated

Investments

MarkWest Harrison & Noble

counties

G, P, & F $1.5 Billion

M3

Midstream

Partnership

Columbiana & Harrison

counties

G, P, & F $1.2 Billion

NiSource

Eastern Ohio G&P $390 Million

Dominion/C

aiman*

Eastern Ohio G&P $800 Million

Spectra* Northern & Eastern

Ohio

Natural Gas

Pipeline

$430 Million - plus

Enterprise* Eastern, Central,

& Southwestern Ohio

Ethane Pipeline $1 Billion-plus

*Announced

Gathering – Processing – Fractionation

Midstream Map

35

Polymers & Chemicals

36

• Global polymer industry leader

• World class university-based research

and strong engineering programs

• Four refineries in Ohio

• Utica shale provides low-cost and

reliable supply of natural gas and natural

gas liquids

• Possible links to specialty chemicals


37

• Focus on opportunities that build on our existing strengths of

adding value to base chemicals and polymers. Link to other

sectors such as automotive and aviation.

• Recruit companies that add value to gas streams. Target major

chemical and products companies.

• Pursue bio-based products, especially non-edible agricultural

products converted to high value products.


38

Natural Gas Liquids

Ethane/Propane/Butane

Ethylene/Propylene/Butadiene

Plastics/Synthetic Rubber

Workforce

39

• Recognizing the value of a strong workforce system, Governor

Kasich created the Office of Workforce Transformation to prioritize

the work of reforming the system.

• OWT’s goal is to create a unified workforce system that supports

business in meeting its workforce needs.

• OWT is focused on three specific priorities:

1) identifying business’s most urgent job needs;

2) aligning those job needs with educators and trainers, and;

3) reforming Ohio’s workforce delivery system

Questions?

41 S. High Street, Ste. 1500 | Columbus, OH 43215

(614) 224-6446 | jobs-ohio.com

40

BakerHostetler

Shale Symposium



June 6, 2013

Gary M. Alletag, Partner

Mergers and Acquisitions

and Financing

Mergers and

Acquisitions

2012 Reported Upstream


44



45

North America



46

United States

2012 Reported Shale


47

Bakken / Williston Shale Play

Announced

Date Buyers Sellers

12/31/2012 American Eagle Energy Corporation Undisclosed company(ies)

12/10/2012 Enerplus Corporation Undisclosed company(ies)

11/27/2012 Stratex Oil & Gas Holdings, Inc. Undisclosed company(ies)

11/26/2012 Magnum Hunter Resources Corp. Samson Resources Company

11/15/2012 Vanguard Natural Resources LLC Halliburton Energy Services

11/8/2012 Continental Resources, Inc. Samson Resources Company

11/2/2012 Magnolia Petroleum PLC Undisclosed company(ies)

10/22/2012 Halcon Resources Corporation Petro-Hunt Group

10/22/2012 PetroShale Inc. Undisclosed company(ies)

9/20/2012 Exxon Mobil Corporation; XTO Energy Incorporated Denbury Resources Incorporated

9/19/2012 Stratex Oil & Gas Holdings, Inc. Undisclosed company(ies)

9/12/2012 WellStar Energy Corp. Undisclosed company(ies)

8/23/2012 QEP Energy Company; QEP Resources, Inc. Black Hills Corporation; Helis Oil & Gas Company, LLC;

Sundance Energy Australia Ltd.; Undisclosed company(ies);

Unit Corporation

8/22/2012 Undisclosed company(ies) American Eagle Energy Corporation

7/10/2012 Emerald Oil, Inc. Emerald Oil & Gas NL

7/10/2012 Stratex Oil & Gas, Inc. Stratex Oil & Gas Holdings, Inc.

6/14/2012 Apache Corporation Undisclosed company(ies)

2012 Reported Shale


48

Bakken / Williston Shale Play

Announced

Date Buyers Sellers

6/8/2012 Undisclosed company(ies) U.S. Energy Corp.

5/25/2012 Noble Royalties Inc. Undisclosed company(ies)

5/10/2012 The X-Change Corporation Undisclosed company(ies)

5/1/2012 Legacy Reserves LP Undisclosed company(ies)

4/30/2012 Mountainview Energy Ltd. Undisclosed company(ies)

4/18/2012 Magnum Hunter Resources Corp. Baytex Energy Corp.



3/28/2012 Continental Resources, Inc. Wheatland Oil Inc.

3/26/2012 Emerald Oil & Gas NL Undisclosed private company(ies)

3/22/2012 Whiting Petroleum Corporation Undisclosed company(ies)

3/12/2012 Fidelity Exploration & Production Company;

MDU Resources Group, Inc.

Undisclosed company(ies)

2/29/2012 Undisclosed company(ies) Primary Petroleum Corp.

2/22/2012 Continental Resources, Inc. Undisclosed company(ies)

2/22/2012 Emerald Oil & Gas NL North Plains Energy, LLC

2/22/2012 Continental Resources, Inc. Undisclosed company(ies)

2/8/2012 The Blacksands Pacific Group, Inc. Undisclosed company(ies)

2012 Reported Shale


49

Eagle Ford Shale Play

Announced

Date Buyers Sellers

12/21/2012 Sundown Energy, Inc. Lucas Energy, Inc.

12/17/2012 NFR Energy LLC Undisclosed company(ies)

11/13/2012 Sundance Energy Australia Ltd. Texon Petroleum Ltd.

11/12/2012 Undisclosed company(ies) Abraxas Petroleum Corporation

10/24/2012 Marathon Oil Corporation Undisclosed company(ies)

10/22/2012 Amadeus Energy Limited Ecofin Energy Resources PLC; Lonestar Resources, Inc.

10/12/2012 Undisclosed company(ies) Forest Oil Corporation

10/3/2012 Penn Virginia Corporation Undisclosed company(ies)

10/2/2012 Milestone Energy LLC Lucas Energy, Inc.

9/20/2012 Global Earth Energy, Inc. Local Partners

9/11/2012 Energy & Exploration Partners, LLC Chesapeake Energy Corporation

8/27/2012 Strata-X Ltd. Undisclosed company(ies)

8/23/2012 Lucas Energy, Inc. Dolphin Oil Partnership LP

8/10/2012 Japan Petroleum Exploration Co., Ltd. Marathon Oil Corporation

8/8/2012 Magnum Hunter Resources Corp. Undisclosed company(ies)

7/31/2012 Kohlberg Kravis Roberts & Co. L.P. Comstock Resources Incorporated

7/30/2012 Kohlberg Kravis Roberts & Co. L.P. Comstock Resources Incorporated

2012 Reported Shale


50

Eagle Ford Shale Play

Announced

Date Buyers Sellers

7/24/2012 TexStar Energy Corp. Undisclosed company(ies)

6/11/2012 Eagle Ford Oil & Gas Corp. Undisclosed company(ies)

6/11/2012 Hess Corporation ZaZa Energy Corporation

6/11/2012 Penn Virginia Corporation Undisclosed company(ies)

6/11/2012 ZaZa Energy Corporation Hess Corporation

5/15/2012 Aurora Oil and Gas Limited Individual Investor

5/9/2012 Marathon Oil Corporation EnCap Energy; Macquarie Bank Limited;

Paloma Resources II, LLC; Paloma Resources LLC

5/1/2012 Sun Resources NL Undisclosed company(ies)

4/30/2012 Aurora Oil and Gas Limited Eureka Energy Limited

3/29/2012 ZaZa Energy Corporation / Old Range Resources Corporation

2/29/2012 Undisclosed company(ies) Pioneer Natural Resources Company

2/24/2012 Access Industries; Apollo Global Management LLC;

Korea National Oil Corporation; Riverstone Holdings LLC;


EP Energy Global LLC;El Paso Corporation

1/6/2012 Marubeni Corporation Hunt Oil Company

1/6/2012 Marubeni Corporation Hunt Oil Company

1/4/2012 Lucas Energy, Inc. Hall Phoenix Energy, LLC

2012 Reported Shale


51

Utica Shale Play

Announced

Date Buyers Sellers

12/17/2012 Gulfport Energy Corporation Wexford Capital LP

10/15/2012 Undisclosed company(ies) Carrizo Oil & Gas Incorporated

10/15/2012 Carrizo Oil & Gas Incorporated Avista Capital Partners LLC

10/9/2012 1st NRG Corporation Undisclosed private company(ies)

9/12/2012 Undisclosed company(ies) Chesapeake Energy Corporation

7/9/2012 Hilcorp Energy Company NiSource Inc.

6/25/2012 Halcon Resources Corporation Undisclosed company(ies)

3/27/2012 BP plc Local Partners

2/17/2012 Magnum Hunter Resources Corp.;Triad Hunter, LLC Undisclosed company(ies)

2/11/2012 Antero Resources LLC Undisclosed company(ies)

1/3/2012 China Petrochemical Corporation; Devon Energy Corporation;

Sinopec International Petroleum Exploration & Production

Corporation


2013 Reported Utica Shale

Properties For Sale

• Entervest

• Devon Energy

• Chesapeake Energy

52

Unreported Mergers and

Acquisitions

• Merger of independents

• Sale and purchase of developed properties

• Sale and purchase of undeveloped properties

• Farmout of shale rights

53

Unique Issues Related to the

Purchase of Shale Properties

• Horizontal drilling provisions

• Issues related to ownership of limited

depths

• Issues related to farmouts

54

Financing

Financing of Major

Acquisitions

• Availability of funds

• Hedging requirements

• Syndication issues

• Borrowing base

56

Drilling Programs

BakerHostetler

Shale Symposium



June 6, 2013

W. Ray Whitman, Partner

Hydraulic Fracturing Litigation:

An Assessment and Analysis of Recent

Hydraulic Fracturing Litigation Trends

Rise of Hydraulic Fracturing Litigation

2009—Dramatic rise in fracturing litigation

• Increased use of hydraulic fracturing

• Public awareness

• Economic and environmental implications

Rise of Hydraulic Fracturing Litigation

• Anticipate Claims and Damages

• Steps to Manage Litigation

• Pre-litigation Preparation

U.S. Shale Plays

Litigation Hot Spots

14

17

12 3

12

4

3

4

1

1

Litigation to Anticipate

Litigation to Anticipate

1. Contamination Claims

2. Challenges to State and Local Laws

3. Citizen and Environmental Group Enforcement

Actions

4. Earthquake Claims

Contamination Claims

Litigation Hot Spots—Contamination Claims

2

10 3

4

3

2

2

13

Contamination Claims

Hydraulic fracturing activities alleged to cause:

• Contamination to sources of ground water

• Gas explosions

• Surface spills and pollution

• Air pollution

Contamination Claims—

Anticipated Causes of Action

• Negligence

• Trespass

• Nuisance

• Negligence per se

• Res ipsa loquitur

• Gross negligence

• Premises liability

• Fraud/

Misrepresentation

• Strict liability

• Statutory violations

• Injunctive relief

• Deceptive trade

practices


Class Actions

• 5 contamination based class action claims

• Class claims assert negligence, trespass,

nuisance, and strict liability claims

• Class action claims also made in

earthquake cases


Common Damage Models

• Personal injury

• Property damage

• Loss of use and

enjoyment

• Diminished property

value

• Punitive damages

• Medical monitoring

• “Stigma”

• Injunction against

future operations

• Environmental

monitoring trust

Contamination Claims—Ohio

Mangan v. Landmark 4, LLC No. 1:12-cv-00613 Discovery

Boggs v. Landmark 4, LLC No. 1:12-cv-00614 Discovery

OH


Pennsylvania

• 13 cases since 2009

• 8 cases—Middle District

• 2 cases—Western District

• 3 cases—Court of Common Pleas

PA


Pennsylvania

Zimmermann v. Atlas America, LLC No. 2009-7564 Discovery

Fiorentino v. Cabot Oil & Gas Corp. No. 3:09-cv-02284 Settled

Berish v. Southwestern Energy Prod. Co. No. 3:10-cv-01981 Discovery

Armstrong v. Chesapeake Appalachia, LLC No. 10-cv-000681 Remanded to Court of Common Please

Otis v. Chesapeake Appalachia, LLC No. 3:11-cv-00115 Stayed Pending Arbitration

Bidlack v. Chesapeake Appalachia, LLC, No. 3:11-cv-00129 Stayed Pending Arbitration

Kamuck v. Shell Energy Holdings GP, LLC No. 4:11-cv-01425 Discovery

Dillon v. Antero Resources No. 2:11-cv-01038; Settled

Becka v. Antero Resources No. 2:11-cv-01040 Settled

Manning v. WPX Energy, Inc. No. 3:12-CV-00646 Motion Practice

Roth v. Cabot Oil & Gas Corp. No. 3:12-cv-00898 Discovery

Butts v. Southwestern Energy Prod. Co No. 3:12-cv-01330 Motion Practice

Haney v. Range Resources Appalachia, LLC No. 2012-3534 Motion Practice

Contamination Cases—

New York

NY

Maring v. Nalbone No. K12009001499 No Activity

Baker v. Anschutz Exploration No. 6:11-cv-06119 Discovery

Contamination Cases—

West Virginia

WV

Hagy v. Equitable Prod. Co. No. 2:10-cv-01372 On Appeal from Dismissal

Perna v. Reserve Oil & Gas, Inc. No. 11-c-2284 Discovery

Challenges to

State and Local Laws

Local Challenges—Ohio

• State ex rel Morrison v. Beck Energy Corp.

• In 2011, Beck Energy received drilling permits

from the Ohio Department of Natural Resources

• Beck did not obtain permits required by city

ordinances.

• City of Munroe Falls sued to enjoin Beck

• The Ninth District struck down the injunction

and held that many of the city’s ordinances

were preempted by Ohio’s oil and gas drilling

statutes

Local Challenges

• Municipal Attempts to Ban Hydraulic Fracturing in

New York and West Virginia

• Municipal Challenges to State Regulation in

Pennsylvania

Robinson Township v. Pennsylvania No. 284 M.D. 2012 Appealed 11/2012 to Pennsylvania Supreme Court

N.E. Natural Energy, LLC v. City of Morgantown

No. 11-C-411 Final Judgment

Anschutz Exploration Corp. v. Town of Dryden

2012 N.Y. Misc. LEXIS 687

Final Judgment

Citizen and Environmental Group Enforcement Actions

Citizen Suits

Ouachita Watch League v. U.S. Forest Service

No. 4:11-cv-425 E.D. Ark. Defs.’ 12(b) MTD Denied

New York v. U.S. Army Corps of Eng’rs; New York v. U.S. Army Corps of Eng’rs; Del. Riverkeeper Network v. U.S. Army Corps of Eng’rs

No. 1:11-cv-02599 No. 1:11-cv-03857 No. 1:11-cv-03780

E.D.N.Y. Dismissed for lack of subject matter jurisdiction; no appeal

Citizens for Pennsylvania’s Future v. Ultra Res., Inc.

No. 4:11-cv-01360 M.D. Pa. Discovery

San Juan Citizens Alliance v. Stiles 654 F.3d 1038 10th Cir. Final Judgment

Ozark Society v. U.S. Forest Service No. 4:11-cv-00782 E.D. Ark. Defs.’ MTD Denied

Ctr. for Biological Diversity v. Bureau of Land Mgmt.

No. CV-11-06174 N.D. Cal. Pre-Trial Motions

Powder River Basin Res. Council v. Bureau of Land Mgmt.

No. 1:12-cv-00996 D.C. Cross-MSJs Pending

Earthquake Claims

Earthquake Events

• Series of 12 earthquakes reported in

northern Ohio on New Year’s Eve 2011

• On March 9, 2012, the Ohio Department of

Natural Resources (DNR) issued a

preliminary report

• Compelling argument that seismic events

induced by injection wells

Other Earthquake Claims

• Cases Statistics:

• Multiple class actions E.D. Arkansas

• Cases

Sheatsley v. Chesapeake Operating

No. 4:11-cv-00353 Dismissed Without Prejudice

Hearn v. BHP Billiton Petroleum No. 4:11-cv-00474 Discovery/Settlement Conference Set 6/19/13

Earthquake Claims—Causation

Universities and research organizations are

examining the relationship between hydraulic

fracturing and earthquakes:

• U.S. Geological Survey Report

• Oklahoma Geological Survey Report

• Cuadrilla Resources Ltd Report

• University of Texas Institute for Geophysics

Litigation Solutions

Litigation Solutions—Traditional

Methods

• Motions to Dismiss

• Removal

• Summary Judgment

• Expert Challenges—Attack Causation

Litigation Solutions

• Anticipation of Litigation

• National Council

• Discovery

• Custodians

• Scope of Relevant Documents

• Protective Orders

• National Corporate Representative

• Seek Regulatory Action

• Case Management Plan/ Lone Pine Order

Litigation Solutions—

Lone Pine Order

• “Lone Pine Order” requires plaintiff to

address exposure and causation issues

before extensive discovery

• Lore v. Lone Pine Corp., 1986 WL 637507

(N.J. Sup. Ct. 1986).

• FRCP Rule 16 grants discretionary authority

for Lone Pine order


Lone Pine in Federal Court

Fifth, Ninth, Eighth, and Tenth Circuits generally

approve use of Lone Pine orders as a case

management tool:

• Acuna v. Root & Brown, Inc., 200 F.3d 335, 340 (5th Cir.

2000).

• Avila v. Willits Environmental Remediation Trust, 633 F.3d

828, 83334 (9th Cir. 2011).

• Schwan v. CHN America LLC, No. 4:04CV3384, 2007 WL

1345193, at *2 (D. Neb. Apr. 11, 2007). [Eighth Circuit]

• Wilcox v. Homestake Mining Co., No. CIV 04-534, 2008 WL

4697013, at *1 (D.N.M. Oct. 23, 2008). [Tenth Circuit]


Lone Pine in Federal Court

• Some courts have rejected the use of Lone Pine

orders on grounds that traditional procedural

devises adequately protect parties’ interests

• Hagy v. Equitable Prod. Co., No. 2:10-cv-01372, 2012

WL 713778 (S.D.W. Va. Mar. 5, 2012) (denying

defendant’s motion for Lone Pine order in case where

plaintiffs claim ground water contamination allegedly

caused by oil and gas production).


Lone Pine in State Courts

Authority among state courts to support Lone Pine orders:

• Schelske v. Creative Nail Design, 933 P.2d 799 (Mont. 1997) (affirming summary judgment in favor of defendants based upon plaintiff’s failure to comply with case management order).

• Schneider Nat. Carriers, Inc. v. Bates, 147 S.W.3d 264, 268 (Tex. 2004) (noting without disapproval that trial court signed Lone Pine order requiring residents to specify dates of exposure).

• Simone v. Girard City Bd. Of Educ., 872 N.E.2d 344 (Ohio Ct. App. 2007) (recognizing that Lone Pine order could be appropriate under certain circumstances).

Pre-Litigation Preparation

• Seismic monitoring and analysis of fracking

operations

• Pre- and Post-fracking sampling of water

and air

• Master Service Agreement

BakerHostetler

Shale Symposium



June 6, 2013

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© 2012 Baker & Hostetler LLP

BakerHostetler Shale Symposium

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Transcript of BakerHostetler Shale Symposium