HBW Resources Ollison Fracking Report

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HBW Resources: Ollison Fracking Report

Below is a summary of activities currently underway at the federal and state levels that could impact the use of hydraulic fracturing for oil and gas extraction. With numerous state legislatures now in session, HBW Resources is monitoring these activities to ensure that responsible and feasible policies based on sound science are advanced.

National
According to press reports, environmental groups are continuing to meet with the Office of Management and Budget to air concerns over the Bureau of Land Management’s pending fracking rule. Among the groups listed as participating in the meetings are: NRDC, Sierra Club, Clean Water Action and American Water Works Association.
The United States isn’t producing enough qualified workers to meet the future needs of the mining and energy sectors, from coal digging and gas drilling to solar and wind power, a new report released by the National Research Council. “Emerging Workforce Trends in the U.S. Energy and Mining Industries” (http://www.nap.edu/catalog.php?record_id=18250) urges new partnerships to tackle the problem of retiring Baby Boomers who cannot readily be replaced.

Colorado
The Fort Collins, CO City Council approved an operating agreement, Resolution 2013-024, with Prospect Energy LLC, which is the lone company doing oil and gas production in the city. The agreement passed 4-2 with Councilmember Ben Manvel and Mayor pro tem Kelly Ohlson voting against it. The Council also gave initial approval to an ordinance lifting a moratorium on fracking by Prospect Energy by a 5-1 vote. The agreement calls for Prospect Energy to meet standards that meet or exceed the requirements of the Colorado Oil and Gas Conservation Commission. The company currently operates seven wells and it plans to drill another six or eight wells from existing well pads. A copy of the bill can be viewed here: http://citydocs.fcgov.com/?cmd=convert&vid=72&docid=2059645&dt=AGENDA+ITEM&doc_download_date=MAR-19-2013&ITEM_NUMBER=28.

Connecticut
The State of Connecticut’s General Assembly’s Energy and Technology Committee introduced HB 6533, an Act Concerning Hydraulic Fracturing, to define hydraulic fracturing and hydraulic fracturing waste and to prohibit the treatment, discharge, disposal or storage of hydraulic fracturing waste in the state of Connecticut. A copy of the bill can be viewed here: http://www.cga.ct.gov/asp/cgabillstatus/cgabillstatus.asp?selBillType=Bill&bill_num=HB06533&which_year=2013.

Mississippi
The Mississippi Energy Institute called on the Mississippi legislature to capitalize on shale opportunities, particularly those involving the Tuscaloosa Marine Shale formation in southwest Mississippi. “With limited capital and a number of formations with activity in North America, Mississippi policymakers should consider sending a clear welcome message to those looking to allocate capital in exploration and production. Local economies in other producing areas around the country have been significantly boosted with energy related and induced jobs and revenue. Resource development and extraction jobs, on average, pay twice the average private sector job wages, so these are exactly the kind of jobs we want to add in Mississippi. The Mississippi Energy Institute supports legislation to provide the appropriate incentive, through a temporary severance tax reduction to 1.25% for a period of 30 months, to attract private capital for horizontal drilling to address the technical challenges and achieve production profitability in Mississippi tight formations.”

Ohio
Economic activity has increased in Ohio counties as a result of shale exploration and the early-stage production of oil and gas from shale reservoirs, according to a new study by Cleveland State University’s Maxine Goodman Levin College of Urban Affairs. Among the study’s findings: strong shale counties experienced a 21.1% increase in total sales activity in 2012 ($14.9 billion) as compared to 2011 ($12.3 billion) while non-shale counties experienced just a 6.9% increase. Strong shale counties also experienced greater average employment yearly growth (1.4%) as compared to the State of Ohio (1.1%) and non-shale counties (1.3%). A copy of of the study can be viewed here: http://urban.csuohio.edu/publications/hill/OhioUticaShaleRegionMonitor_Mar2013.pdf.

Pennsylvania
A coalition of energy explorers, environmentalists and Pennsylvania philanthropies has created a new center to set more stringent fracking standards for the region. The new standards include limits on emissions of methane, a potent greenhouse gas, and the flaring, or burning off, of unwanted gas; reductions in engine emissions; groundwater monitoring and protection; improved well designs; stricter wastewater disposal; the use of less toxic fracking fluids; and seismic monitoring before drilling begins. The Center for Sustainable Shale Development seeks to set operational performance standards for companies in the Marcellus Shale formation to boost water, air quality and climate protections. Among the founding companies and organizations are: Shell, Chevron, Consol Energy, EQT Corp., Clean Air Task Force, Environmental Defense Fund, Group Against Smog and Pollution, Citizens for Pennsylvania’s Future, the Pennsylvania Environmental Council, the Heinz Endowments and the William Penn Foundation. The organization will be managed by a 12 person board, comprising of four representatives each from industry and environmentalist as well as four independent members – former Treasury Secretary Paul O’Neill, former New Jersey Governor and EPA Administrator Christie Todd Whitman, Carnegie Mellon University President Jared Cohon and Jane Long, former associate director at the Lawrence Livermore National Laboratory. A copy of the operational performance standards can be viewed here: http://037186e.netsolhost.com/site/wp-content/uploads/2013/03/CSSD-Performance-Standards-3-13R.pdf.

New IHS Study on Marcellus Production
According to a new report by IHS, the Marcellus shale play has reached a production rate above 7 billion cubic feet (BCF)/day, surpassing the Haynesville shale to become the largest gas producing play in the United States. A copy of the study can be viewed here: http://press.ihs.com/press-release/energy-power/marcellus-shale-transformational-some-companies-others-still-yet-realize-.

New York
New York’s Supreme Court recently heard arguments in a potentially, precedent setting case determining whether towns can use zoning laws to ban hydraulic fracturing. The Towns of Middelfield and Dryden, NY banned fracking through its zoning law and have been sued by Cooperstown Holstein Corp, and Norse Energy Corp., who claim only the State can regulate an industry. Their argument focuses on the notion that state regulations can pre-empt local laws, especially if for “the greater good.” A decision is expected in six to eight weeks. Additional information on the case can be reviewed here: http://www.businessweek.com/news/2013-03-21/n-dot-y-dot-dairy-farm-with-gas-leases-urges-end-to-drill-ban.

North Carolina
In North Carolina, SB 76, which passed the Senate by a 39-7 vote, has now been referred to the House Committee on Commerce and Job Development. The bill would authorize the Department of Environment and Natural Resources to issue permits on or after March 1, 2015 for oil and gas exploration and development activities in the state, including the use of Horizontal Drilling and Hydraulic Fracturing treatments for that purpose. A copy of the bill can be viewed here: http://www.ncleg.net/gascripts/BillLookUp/BillLookUp.pl?Session=2013&BillID=S76.

North Dakota
North Dakota crude oil production (including lease condensate) averaged an all-time high of 770,000 barrels per day in December 2012, according to the Energy Information Agency. Total production more than doubled between 2010 and 2012 through the use of horizontal drilling and hydraulic fracturing. North Dakota now only trails Texas and the U.S. federal offshore region. North Dakota, through its expansion of natural resource development, has the lowest unemployment in the country at 3.3% in January. A copy of the EIA report can be reviewed here: http://www.eia.gov/todayinenergy/detail.cfm?id=10411.

Tennessee
A Tennessee State Building Commission Executive Subcommittee considered a proposal by the University of Tennessee requesting permission from the state to allow an outside company to drill on nearly 8,000 acres of woodlands it maintains as an outdoor laboratory in the Cumberland Plateau, while performing research on the effects on water quality, air quality and ground impacts. The subcommittee voted unanimously to allow the university to seek bids from companies. Copy of the proposal can be viewed here: http://www.tn.gov/finance/OSA/documents/MarSpSUB13.pdf.

Texas
Sanchez Energy Corp. will buy 43,000 acres in the Eagle Ford Shale from Hess Corp. for $265 million. The purchase will bring Sanchez Energy’s total acreage in the Eagle Ford to 138,000 acres and more than doubles it current production rate. The assets are spread across Dimmit, Frio, LaSalle and Zavala counties (TX) and include approximately 13.4 million barrels of oil equivalent of proved reserves and 4,500 barrels of oil equivalent per day of current production.

In Texas, House Bill 448 introduced by Rep. Dawnna Dukes (D, District 46) requires operators of oil or gas wells using hydraulic fracturing treatments to mail residents within 500 feet of the site a list of chemicals used in the fracturing process. The bill was referred to the Energy Resources Committee. A copy of the bill can be viewed here: http://www.capitol.state.tx.us/BillLookup/History.aspx?LegSess=83R&Bill=HB448.

For additional information, contact Bo Ollison with HBW Resources. His contact information is below.

Bo Ollison
HBW Resources
2211 Norfolk Street, #410
Houston, TX 77098
Tel: 713-337-8810
E-mail: bollison@hbwresources.com
Web: http://www.hbwresources.com

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