Babst Calland lawyers write the book on local Marcellus Shale development
April 23, 2012 3:30 PM
Babst Calland lawyers Joseph Reinhart (left) and Chester Babst with the book they helped create on natural gas development.
By Erich Schwartzel Pittsburgh Post-Gazette
A drilling operator moving into the Marcellus Shale region has to translate more than Pittsburghese.
The companies hoping to tap the lucrative natural gas below much of Pennsylvania must first navigate a thicket of legal updates, legislative development and environmental regulations above it -- all of which seem to change every day.
To assist, the attorneys at Downtown's Babst Calland have done their homework so drillers don't have to. The result: "Natural Gas Development in Pennsylvania: Recent Activities and Expected Trends," a 45-page report on everything from land-use law to the Shell Oil Co. decision last month to build a massive petrochemical plant in Beaver County.
The report doesn't read like typical law firm fare; an alternative title might be, "Everything You Wanted to Know About Drilling But Were Afraid to Ask."
The study -- now in its second edition -- is available for order on the firm's website and traces shale gas development right up until Pennsylvania's Act 13 legislation, which introduced a plethora of new regulations and practices to the industry just this month.
Parts of that legislation are still being challenged in court, so the report comes with a "freshness dating" that will almost certainly require a third update in the next year, said Joseph Reinhart, an environmental attorney at the firm and one of the chief architects of the report. The report lists 17 attorneys as contributors.
Babst Calland, which has focused on environmental law since its founding in 1986, has more than 50 clients who work in drilling or in the midstream operations that help process and move the gas to market. The firm represents companies in the industry and focuses on business-end clients, having declined to represent landowners in the past.
Keeping up with shale developments can be logistically difficult, especially when the meeting minutes of, say, the Bradford County Board of Supervisors aren't on your radar.
Often, major decisions about local regulations of gas drilling operations are made at small-town meetings covered by newspapers with no online presence. The law firm subscribes to more than 100 publications from across the region to keep up with the news.
Translating years of legal precedent and regulatory frameworks into plain English can be a tall order -- sections with titles like "Total Dissolved Solids (TDS) and Chapter 95 Technical Guidance Document" don't exactly scream readability.
But while much of the report focuses on legal cases, the style is almost casual.
A one-paragraph section on drilling in state lands, for example, begins with Gov. Ed Rendell, a Democrat, signing a moratorium against it in October 2010 and ends by saying recent news coverage hints that Republican Gov. Tom Corbett might rescind that ban in the coming year.
Tracking the legislation out of Harrisburg has been a daily task, said Jean Mosites, an environmental attorney and contributor to the report. It started before Mr. Corbett had even announced the creation of the Marcellus Shale Advisory Commission that shaped much of the initial legislation, she said.
Marcellus Shale development has offered the firm the first opportunity to draft a report of this kind, said Chester Babst, a founding shareholder at the firm. When the firm was founded, the steel industry was rather static -- or declining -- and didn't require this kind of "living document" study.
Legal firms across the region have hustled to provide representation for the fast-moving industry. Babst Calland saw a 25 percent increase in energy representation in the last year alone. Previous years typically saw growth around 5 percent.
The natural gas industry that the firm represents is in turmoil right now because low gas prices have forced companies to shift rigs to more lucrative regions, or scale back drilling altogether. But when operators struggle, their legal representation doesn't go away -- it just changes focus.
An emphasis on the "wet" gas that is found in Western Pennsylvania and parts of Ohio and West Virginia helped lead Babst Calland to open a Charleston, W.Va., office so the firm could move along with its clients' operations.
When prices fall and take activity with them, legal concerns shift to the kind of deals and transactions that can help keep a company's cash afloat.
As a result, attorneys at Babst Calland field more questions about company reorganizing, land and lease swapping and joint ventures with other firms -- all of which help raise money when the market isn't complying.
And of course, if things get really bad, the firm could also go into the book business.