HBW Resources Ollison Fracking Report

HBW Resources: Ollison Fracking Report

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Below is a summary of publicly available activities currently underway at the federal, state and international 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
During his recent confirmation hearing, Dr. Ernest Moniz when asked about hydraulic fracturing, said that the shale plays in different areas of the country all have different characteristics and that local/state guidance on these will continue to be very important.  He said industry best practices are needed and are being implemented in many areas.  He said DOE’s role is limited in this area given primary oversight and regulation setting will be conducted by the EPA, but DOE could play an important role in R&D involving integrated waste water treatment, reuse, and storage.

The Obama administration is quietly advancing a proposal that would permit wastewater from hydraulic fracturing to be transported on barges, in what could be a bellwether for future White House policy toward fracking. The proposed plan was drafted by the U.S. Coast Guard and will be considered by the White House Office of Management and Budget as to whether or not to push it forward as a proposed rule.

The EPA’s Science Advisory Panel will be hosting a public meeting on May 7-8, 2013 in Arlington, VA to provide a progress report on potential impacts on drinking water resources. EPA will also be hosting a teleconference on May 16, 2013 to discuss the progress.

The Potential Gas Committee, a research panel based at the Colorado School of Mines, stated that the amount of natural gas that is technically recoverable in the U.S. hit a record estimate of 2,384 trillion cubic feet at the end of 2012. This is the highest resource evaluation in the Committee’s 48-year history, exceeding the previous high assessment (from 2010) by 486 Tcf. Most of the increase arose from new evaluations of shale gas resources in the Atlantic, Rocky Mountain and Gulf Coast areas.

The Environmental Protection Agency (EPA) hosted a webinar on Monday, March 25 for a technical workshop on analytical chemical methods related to its ongoing hydraulic fracturing study and to provide a technical summary of the February 25, 2013 roundtable hosted in Research Triangle, NC. The slide presentation is now available.

States 

Alaska
Alaska’s Oil and Gas Conservation Commission began two days of hearings on proposed new regulations on hydraulic fracturing. The petroleum industry said they would be among the toughest in the nation, if adopted. Among the recommendations would be requirements to submit detailed information about hydraulic fracturing before it was done, and on the composition of the fracturing fluids with no trade secret protection.

California
The South Coast Air Quality Management District, which regulates air quality in Southern California, approved rule, 1148.2, requiring oil and gas companies to notify authorities before drilling and report air pollutants emitted during extraction. Drillers must also disclose the chemicals used in fracking fluid, which is injected into wells at high pressure to break up rock formations that contain oil and natural gas.

The California Department of Conservation and its Division of Oil, Gas and Geothermal Resources will host will host events to explain California’s draft regulations on hydraulic fracturing in Santa Barbara, CA on April 19 and Monterrey, CA on April 30.

According to U.S. Magistrate Judge Paul Grewal in California, the U.S. Bureau of Land Management (BLM) violated the National Environmental Policy Act by failing to take the necessary “hard look” at the impact of hydraulic fracturing when it sold oil and gas leases in California.  The case brought by the Center for Biological Diversity involves 2,700 acres of federal land in Monterey and Fresno counties leased by the BLM in 2011. The group had asked Grewal to invalidate the leases, which he declined to do. Instead, he ordered both sides to meet and submit a remedy to him by April 15. Grewal granted the government’s request to throw out claims that the leases violated the Mineral Leasing Act.

The California Senate Natural Resources and Water Committee approved SB 4, sponsored by Sen. Fran Pavley (D, District 27), with a 6-2 vote. The bill would mandate water quality testing and another independent study to address health and safety issues; direct the state’s Division of Oil and Gas and Geothermal Resources to adopt regulations by Jan. 1, 2015 requiring oil companies to disclose what fluids they use in fracking, while providing trade secret protection for the chemical formulas.

Florida
The Fracturing Chemical Usage Disclosure Act, House Bill 743, sponsored by Rep. Ray Rodrigues (R, District ), has cleared all committees – Agriculture and Natural Resources Sub-Committee 11-0; Agriculture & Natural Resources Appropriations Sub-Committee 9-3; State Affairs Committee 10-4; and has been added to the Second Reading Calendar and is heading the House floor.

Illinois
The Perry County Farm Bureau will hold an informational meeting on hydraulic fracturing at 1:30 pm on Tuesday, April 23 at St. Paul’s UCC in Pinckneyville.

HB 2615, Hydraulic Fracturing Regulatory Act, introduced by Rep. John E. Bradley (D, District 117), which would prohibit high volume horizontal hydraulic fracturing operations performed without a permit and would regulate where high volume horizontal hydraulic fracturing operations are proposed, planned, or occurring may be located. The bill has run into to trouble within the legislature. The proposed addition of worker certification provisions, which as currently outlined are not acceptable to the industry. The business community sees the move as labor unions trying to get guaranteed jobs by saying every drilling site needs to have an accredited worker, and worries it could take a couple of years to get new workers certified. As a result, the bill is mired in committee.

New Mexico
Merrion Oil & Gas announced Monday that a joint venture with a Denver-based company, Bill Barrett Corp., to develop the San Juan Basin Mancos Shale formation has been terminated.

New York
set of guidelines for monitoring well water was approved by the Wyoming County Board of Supervisors. The guidelines have been established in the event high-volume natural gas “fracking” projects show interest in the county, said Steve Perkins, director of environmental health for the county’s Public Health Department. They’re meant to give a clear set of recommendations and eliminate confusion.

Oneida County Board of Legislators passed legislation, F.N. 2013-099, placing a county-wide moratorium on any shale gas extraction on county lands. The moratorium would be in effect until any potential long-term impacts of shale gas extraction are identified and addressed. The moratorium passed 21 to five.

Ohio
The number of drilling permits issued in Ohio’s Utica Shale play is close to the 600 mark, with nearly half of the drilling sites in some state of development by oil and natural gas exploration companies. Energy in Depth released an update on drilling permits issued by the Ohio Department of Natural Resources. Of the 581 permitted wells, 281 of them have been developed, including 77 that are in production. Permits have been provided in 22 counties to 26 companies.

Mahoning Valley Coalition for Job Growth and Investment, a coalition of business, labor and political officials was established to defeat a charter amendment that would ban hydraulic fracturing in the City of Youngstown. The group that is driving the charter amendment, Frack Free Youngstown is hoping that voters vote in favor of the ban on May 7, 2013. Frack Free Youngstown is asking voters to vote “Yes” to amend the Youngstown Home Rule Charter, “Shall the Youngstown Home Rule Charter be amended to add a Community Bill of Rights which protects those rights by prohibiting natural gas extraction using hydraulic fracturing, bans the establishment of infrastructures supporting gas production, and bans the storage, transportation or depositing of gas drilling waste products within the City?” The new business coalition wants businesses to know that Youngstown is open for business and is concerned with the language of the proposed charter amendment.

Halcon Operating Co., a division of Halcon Resources, has secured a permit to drill a new horizontal well in Jackson Township in Mahoning County.

Oklahoma
SB 78, introduced by Rep. John Trebilcock (R, District 98) and Sen. Brian Bingman (R, District 12) creates the Horizontal Well Development Act. The measure modifies the 2011 Shale Reservoir Development Act by authorizing the Oklahoma Corporation Commission to allow multi-unit horizontal drilling in targeted reservoirs, in addition to shale. The measure defines “targeted reservoir” and clarifies allocations for multi-unit horizontal wells. It also allows owners to participate in drilling and development of subsequent wells that are covered under a pooling order under certain circumstances. Passed Senate 44-0 on March 13, 2013 and passed Energy & Aerospace Committee on April 3, 2013.

Pennsylvania
A number of bills, Marcellus Works Package, are pending in the House. Within the House Finance Committee, House Bill 301, sponsored by Rep. Stan Saylor (R, District 94) would provide for a natural gas fleet vehicle tax credit; House Bill 305, sponsored by Rep. Gordon Denlinger (R, District 99) would amend the Tax Reform Code of 1971 by providing $5 million for a natural gas corridor tax credit andHouse Bill 309, sponsored by Rep. Seth M. Grove (R, District 196) would also amend the Tax Reform Code of 1971, by providing a natural gas vehicle tax credit.  The House Environmental Resources and Energy Committee will be considering five bills this week. House Bill 302, sponsored by Rep. Dan Moul (R, District 91) would establish the Keystone Transit Program and provide a transfer of $5 million in funds from the Oil and Gas Lease Fund to the Department of Environmental Protection for a competitive grant program for the transition of small mass transit bus fleets to compressed natural gas. House Bill 303, sponsored by Rep. Katherine M. Watson (R, District 144) would establish the Clean Transit Program and provide a transfer of funds from the Oil and Gas Lease Fund to the Department of Environmental Protection for a $7.5 million loan program for the transition of large mass transit bus fleets to compressed natural gas. House Bill 306, sponsored by Rep. Tina Pickett (R, District 110) would amend the Alternative Fuels Incentive Act of 2004 by establishing the Keystone Fuel Incentive Fund, authorize grants to promote the use of compressed natural gas and impose new responsibilities on the Department of Environmental Protection. House Bill 307, sponsored by Rep. Eli Evankovish (R, District 54) would amend the Air Pollution Control Act of 1960 to provide for the Clean Vehicles Program. House Bill 308, sponsored by Rep. Stan Saylor (R, District 94) which would amend the Air Pollution Control Act of 1960 to further provide definitions and disposition of fees, fines and civil penalties and would establish the Keystone Vehicle Program.

South Dakota
The South Dakota legislature’s Rules Review Committee approved, HB 1005, sponsored by Rep. Spencer Hawley (D, District 7) to require companies using hydraulic fracturing to report the chemicals they use to the FracFocus.org website. The rules exempt chemicals that are considered to be proprietary trade secrets. Hydraulic fracturing is rarely used in South Dakota, however, a spokesman from the Department of Environment and Natural Resources said that the state wanted rules to be in place in case development increases. The state only produces 1.6 million barrels of oil per year from fields in the Northwest corner of the state; however, state officials believe that there is the potential for increased natural gas development.

Texas
A new study from the Texas Independent Producers & Royalty Owners Association (TIPRO) shows that Texas leads the nation in oil-and-gas employment and production. TIPRO released its first State of Energy Report, which provides a comprehensive overview of national and state trends in employment, wages and other economic factors by the oil and gas industry. The reports states that Texas accounts for 39% of U.S. oil and gas jobs. Texas’ oil and gas industry employed 379,800 people, including 34,600 new jobs were added in the first half of 2012.

The Texas House Energy Resources Committee debated two bills dealing with recycling water used in hydraulic fracturing. The bills, HB 3537, sponsored by Rep. Roland Gutierrez (D, District 119) and HB 2992, sponsored by Rep. Tracy King (D, District 80) would require the Texas Railroad Commission to develop rules to require the recycling and reuse of hydraulic fracturing water.

West Virginia
West Virginia federal judge asked the state’s Supreme Court to issue an opinion on the unsettled question of whether a horizontal well can legally draw gas from underneath neighboring properties. No clear West Virginia case law exists on the issue. Plaintiff Richard Cain does not own the mineral rights to his land, but argues that the drafter of his 1907 property deed could never have imagined the use of horizontal drilling to extract the minerals. His suit also claims that the developer must pay to use 36 acres of his property for a well pad in order to drill.

Wyoming
State officials are estimating that more than 20,000 new gas wells could be permitted in Wyoming, mostly in the western and central regions. The single largest project is the Continental Divide-Creston proposal, which would see 9,000 new wells in a 1.1 million acre area. Nearly twenty companies would develop the area under a Bureau of Land Management joint project. A final environmental review by BLM should be completed by summer of 2014. Additionally, Encana Oil & Gas will add approximately 8,000 new wells on its acreage in the Moneta Divide and Normally-Pressured Lance fields. Other companies are planning for additional wells in Wyoming’s Sweetwater County, near the Colorado border.

International
A new report by Durham University states that hydraulic fracturing is not a significant mechanism for inducing felt earthquakes. Richard Davies, director of the U.K. University’s energy institute, said in a statement, “the size and number of felt earthquakes caused by fracking is low compared to other manmade triggers such as mining, geothermal activity or reservoir water storage.”

Argentina
Americas Petrogas Inc., Calgary, has said it discovered natural gas by hydraulically fracturing the Los Toldos I block in the Vaca Muerta shale formation. It said it was able to produce as much as 3.2 million cubic feet of natural gas during initial production tests. Interests in the Los Toldos blocks are Americas Petrogas 45%, ExxonMobil Corp. 45%, and Gas y Petroleo del Neuquen 10%.

France
France is pushing ahead with plans to harness geothermal energy from smoldering rock deep in the earth’s crust using drilling methods the oil industry says are like hydraulic fracturing, or fracking, which France outlawed in 2011. Environment Minister Delphine Batho awarded two geothermal exploration licenses in February and said 18 more are in review. Some will permeate rock using a process called “stimulation” that blasts acid and water into fissures to release volcanic heat.

India
India’s Ambassador to the United States, Nirupama Rao wrote an op-ed in the Wall Street Journalfocused on how energy, particularly liquefied natural gas (LNG) can strengthen the relationship between the two countries and expand their economies. “A boost in LNG exports would have many positive effects on both the U.S. and Indian economies. For the U.S. it would help create thousands of jobs and an expanded revenue stream for the federal government. For India, it would provide a steady, reliable supply of clean energy that will help reduce our crude oil imports from the Middle East and provide reliable energy to a greater share of our population. For both countries, which are committed to environmental sustainability, increasing the use and transport of LNG globally will help put into greater use one of the cleanest energy sources in the world.”

Russia
Russia’s oil exports could plunge in the coming decades as the U.S. ramps up output of shale oil, a group of government-linked experts said, in an unusually frank admission that the North American energy boom poses a threat to Russia’s hydrocarbon-fueled economy. The report by the Russian Academy of Sciences’ Energy Research Institute said the growing output of shale oil, particularly in the U.S., could also threaten Russia’s crude oil exports.

Spain 
Lawmakers in Spain’s northern Cantabria region unanimously voted to ban hydraulic fracturing on environmental concerns, shooting down the central government’s hopes for a project to boost jobs in a region believed to be rich in shale gas.

Ukraine
U.S. Ambassador to Ukraine John Tefft was quoted by National Radio Co. of Ukraine as saying hydraulic fracturing concerns are justified, but only if shale campaigns are reckless. The practice is safe if done correctly. Ukraine is among the Eastern European countries eyeing shale gas reserves. In January, Shell Chief Executive Officer Peter Voser signed a $10 billion contract to explore Ukrainian shale.

State Legislative Update
Please see linked spreadsheet for a listing of state legislation dealing with hydraulic fracturing.

Additional Information
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

If you have any questions, please contact me anytime. Previous versions of the HBW Ollison Fracking Report, daily updates and new Member profiles can be viewed at: http://www.mzehrhbw.wordpress.com. Hope you all have a great day!

Thanks,

Michael Zehr
HBW Resources
1666 K Street, NW, Suite 500
Washington, DC 20006
Direct: 202-429-6081
Cell: 202-277-3927
E-mail: mzehr@hbwresources.com
Twitter: @mzehrhbw

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