Tuesday, November 19, 2013

Are Confidential Fracking Ingredients at Risk of Disclosure?

On April 12, 2013, the West Virginia Legislature passed Senate Bill 243 which promulgated the West Virginia Department of Environmental Protection’s (“DEP”) Rules Governing Horizontal Well Development (the “Rules,” codified at W.Va. C.S.R. § 35-8-1 et seq.). While the DEP’s Rules require well operators to report a list of all chemicals and additives used in the hydraulic fracturing process, a legislative amendment was added to the Rules which allowed the well operator to “designate the information regarding the specific identity or concentration or both of a chemical as a confidential trade secret not to be disclosed to the agency or anyone else except in the event of an investigation by the office, medical emergency, or for diagnostic or treatment purposes involving the designated chemical.” See W.Va.C.S.R. § 35-8-10.1.a. This amendment allows well operators to protect confidential trade secrets related to their fracking ingredients, even from the DEP under most circumstances.

A similar confidentiality provision is under attack in Wyoming. In November 2011, several environmental groups made a public records request for the identity of fracking ingredients which were designated as confidential by the oil service companies operating in Wyoming. Those requests were denied, and after several appeals, the issue is now before the Wyoming Supreme Court, which is set to hear argument on November 20, 2013. This blog post further describes the debate in Wyoming and links to the briefs filed by the parties and the live stream of the oral argument before the Wyoming Supreme Court.

The Wyoming Supreme Court’s ultimate decision will set a precedent on this issue which will undoubtedly be heard in the courtrooms of many other gas producing states, including West Virginia. This is one case worthy of some attention for the hydraulic fracturing industry operating in West Virginia.

Friday, November 15, 2013

Wood County Cracker Plant Announcement a Small but Important Step

Yesterday, Governor Earl Ray Tomblin, alongside officials from the Brazilian-based conglomerate Odebrecht, announced plans for the development of a state of the art petrochemical complex in Wood County. The complex was dubbed Project ASCENT – an acronym for Appalachian Shale Cracker Enterprise. The proposed petrochemical complex would include a much-discussed ethane cracker, along with three polyethylene plants and accompanying infrastructure. Governor Tomblin called the proposed development a “game changer” for West Virginia.

While yesterday’s announcement came with much fanfare, Odebrecht and its subsidiary company, Braskem, have had their eye on West Virginia for some time. In fact, West Virginia Commerce Secretary Keith Burdette announced back in July 2012 that the state signed a non-disclosure agreement with Braskem related to the company’s interest in building an ethane cracker plant in West Virginia. Yesterday’s announcement seems to take this ambition just one step closer to reality.

While the announcement is exciting news for both legislative officials and the business community in West Virginia, the company took a conservative approach in disclosing details of the impact of the project. As discussed previously in this blog here and here, West Virginia officials have been excited and later ultimately disappointed with respect to other potential ethane cracker projects in West Virginia. The 2011 decision by Shell to locate its ethane cracker plant in Pennsylvania, despite the legislature’s hurried passage of a significant business tax incentive designed to lure Shell to West Virginia, was particularly disappointing.

Cracker plants break down complex organic molecules into simpler molecules. In the context of the natural gas industry, an ethane cracker plant, like the one proposed yesterday, creates ethylene, a compound used in plastic manufacturing. The raw material for the plant – ethane – is a byproduct of hydraulic fracturing in the Marcellus and Utica natural gas shale regions. After methane, ethane is the second-largest component of natural gas, roughly 1-6% by volume. In the past, the ethane was simply burnt away with the methane as fuel. Now, however, because of ethane’s value as an important petrochemical feedstock, it is captured during the fracking and refining process.

A plant located in West Virginia to convert this byproduct from the local natural gas industry to a valuable petrochemical has the potential to create countless jobs in the region, continue to spur the growth of the natural gas industry, and provide a needed spark to the sluggish petrochemical industry in the area. While Governor Tomblin and Odebrecht officials were notably hesitant to make any promises about the timeline or eventual economic impact of the proposed complex, it is clear that the public announcement is a major step in making this long-time initiative a reality.

Thursday, November 14, 2013

MSHA Releases Third Quarter 2013 Fatality Data

The following was posted on Huddleston Bolen’s Blog: Safety and Health Connection.

The Mine Safety and Health Administration (MSHA) recently released its fatality data for the third quarter of 2013.  The agency announced that, sadly, nine miners lost their lives in workplace accidents between July 1st and September 30th.  Five of the fatalities occurred at coal mines and four occurred at metal/non-metal mines.  

While the loss of just one life is tragic, one positive to take from the fatality report is that there were two less fatalities in the third quarter of 2013 than in the third quarter of 2012.  Additionally, there have been three less fatalities (27) in first three quarters of 2013 than during the first three quarters of 2012 (30). Click here for more.

Thursday, November 7, 2013

OSHA Taking Aim at Silica Exposure in Fracking Operations

The use of hydraulic fracturing in upstream oil and gas operations has increased significantly in the past several years as a result of new technologies that have provided increased access to oil and gas deposits located in deep rock formations.  Hydraulic fracturing operations inject a fracturing fluid into the ground, which contains “proppants” that help hold open fractures in the rock formations created by the fracturing fluid and force the gas into the well bore.  One of the primary proppants used in hydraulic fracturing fluids is sand, which can contain up to 99% silica. 

Workers who are exposed to high levels of silica dust can contract a disease called silicosis, which can lead to lung cancer and other disabilities and death.  OSHA, which has jurisdiction over upstream oil and gas operations, has always required employers to monitor their employees’ levels of exposure to silica and to ensure that such exposures do not exceed certain prescribed permissible exposure limits (“PEL”).  OSHA regulations that apply to silica exposure include 29 CFR 1910.1000 (Air Contaminants), 29 CFR 1910.1200 (Hazard Communication), and 29 CFR 1910.134 (Respiratory Protection). 

Because large amounts of sand are used in fracking operations, oil and gas workers employed in these operations can be exposed to high concentrations of silica.  With the discovery of the Marcellus Shale in the eastern United States, oil and gas exploration employing fracking technologies has dramatically increased.  Perhaps not coincidentally, OSHA and the related agency National Institute for Occupational Safety and Health (NIOSH) have recently been investigating worker safety and health hazards in upstream oil and gas operations.  NIOSH made safety and health in the upstream oil and gas industry a priority area of focus in 2005 when it created the National Occupational Research Agenda (NORA) Oil and Gas Extraction Council to address occupational safety and health issues in the industry.  Additionally, OSHA has begun using national, regional, and local emphasis programs to inspect oilfield work sites in the five OSHA regions located in areas of significant upstream activities.

In June of 2012, OSHA and NIOSH issued a Hazard Alert identifying exposure to airborne silica as a health hazard to workers performing certain jobs in the hydraulic fracturing process.  The Alert states that NIOSH collected 116 full shift air samples at 11 hydraulic fracturing sites in 5 states.  The results revealed that a large percentage of the samples showed silica exposures well in excess of the current OSHA PEL of roughly .1 milligrams per cubic meter (mg/m3) and the NIOSH recommended exposure limit (“REL”) of .05 mg/m3.  Many of the samples were more than 10 times the PELs/RELs.  The Alert warns that employers must monitor silica exposure levels and choose proper controls, such as engineering controls and respiratory protection, to protect workers who could be exposed to silica dust in excess of OSHA PELs.

OSHA also published a Notice of Proposed Rulemaking (NPRM) for Occupational Exposure to Respirable Crystalline Silica in the Federal Register on September 12, 2013.  The NPRM seeks to decrease the OSHA PELs for silica exposure to 50 micrograms per cubic meter of air (μg/m3) on an 8-hour time-weighted average.   The new rule would also include new provisions governing the measurement of silica exposure, limiting workers' access to areas where silica exposures are high, methods for reducing exposures, provision of medical exams to workers with high silica exposures, and provision of training for workers regarding silica-related hazards. The new rules would apply to all OSHA industry standards, including the General Industry Standards that govern upstream oil and gas activities.  The proposed new regulation is open for comment until December 11, 2013.

What should employers in the upstream oil and gas industry take from these recent actions by OSHA and NIOSH?  They should know that OSHA will be focusing on health and safety hazards in their industry, especially including chemical and silica exposures.  Employers in the industry should be prepared for increased inspections that target excessive silica exposures. They should also monitor and stay ahead of these new proposed rules regarding silica exposure by consulting OSHAs Crystalline Silica Rulemaking Page.  Employers should also consult the OSHA Hazard Alert discussed above for insight on which occupations in the industry that OSHA believes are most likely to suffer excessive silica exposures and the controls that OSHA believes to be most effective in limiting exposures.