NEW: HBW (http://hbwresources.com/) @BoOllison #Fracking Report–State, Fed, & Int’l Events Affecting #OilandGas #Energy Development

The Ollison Hydraulic Fracturing Report
Friday, June 21st, 2013 

HBW Resources: Ollison Hydraulic Fracturing Report
 
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. 
 
States 
 
State Legislative Update: Please see linked spreadsheet for an updated listing of state legislation dealing with hydraulic fracturing. Please contact us if you would like more information.
 
 California
Sen. Fran Pavley’s (D, District 27) bill, SB 4, passed the Senate last month on a 28-11 vote. The legislation would set standards for how California regulates oil drilling and what sort of information drillers would be required to make public. The Department of Conservation’s Division of Oil, Gas and Geothermal Resources is working on its own regulations governing fracking, but Pavley has criticized the department for moving too slowly. Pavley says she’s now preparing to rewrite the measure so that it covers other aspects of shale drilling, not just the fracking process that makes up just one stage of the oil extraction process.  “We’ll amend it to broaden the well-stimulation processes,” she said, “with the bottom line being protecting the public health and safety, and not guessing which technology [to cover.] That’s perhaps not the point – it’s more so to have the transparency and disclosure in all our regulatory agencies.” Another change removes language that would have imposed a moratorium on the permitting of fracking if a safety study wasn’t completed by 2015. For more information contact Bo Ollison.
 
Colorado
A company whose oil well sprayed out 84,000 gallons of hydraulic fracturing flowback water in February has agreed to pay $35,000. The Greeley Tribune reports the Colorado Oil and Gas Conservation Commission could have fined PDC Energy around $9,000, but company officials said it was the “appropriate thing to do” to go beyond that. In entering into an administrative order by consent, PDC Energy also agreed to arrange for classes in Weld County on how emergency workers can respond to oil and gas well situations. A mechanical failure led to the fluid spraying from one of PDC’s well sites north of Windsor in February. Soil and groundwater testing indicated little to no contamination. Please contact us if you would like more information.
 
Boulder County’s 16-month-old moratorium on accepting new applications for oil and gas development in unincorporated areas of the county will be extended for another 18 months, county commissioners decided. The additional year and a half will give Boulder County more time to consult and participate in more studies about the public health impacts of hydraulic fracturing, the commissioners said, while allowing the county to try to ensure that its own staff is adequately prepared to inspect and monitor conditions before, during and after drilling gets under way. For more information contact Bo Ollison.
 
The City Council in Boulder, Colo., said it wants to send a strong message to Gov. John Hickenlooper (D) by placing an item on a November citywide ballot asking voters to approve at least a three-year moratorium on hydraulic fracturing. The council voted to direct city staff to devise a ballot item, which the council would have to approve at a later date.
 
Illinois
Governor Pat Quinn (D) signed legislation, SB 1715, the Hydraulic Fracturing Regulatory Act, which enacts the regulations on hydraulic fracturing. One of Quinn’s top priorities this year, the bill has the potential to create thousands of jobs in Southern Illinois. Under the new law, Illinois will become the first state in the nation in which hydraulic fracturing operators will be required to submit pre- and post-fracturing chemical disclosures to the state. The state will also require the storage of fluid in above-ground closed tanks rather than traditional pits. The law includes strong public participation requirements, including a mandatory 30-day public comment period, a public hearing opportunity and a 15-day follow-up public comment period. The state will consider all submitted written comments and testimony from public hearings when making its decision to approve or deny the permit application.
 
An Oklahoma company is set to begin drilling at a site that could be the first major horizontal hydraulic fracturing operation in Illinois. SM Energy of Tulsa has completed construction of an exploratory well on a farm in Wayne County in southern Illinois. At the Wayne County site, engineers will drill straight down about 5,000 feet and then at a horizontal slant another 3,000 feet. For more information contact Bo Ollison.
 
Southeastern Illinois College in Harrisburg and Rend Lake College in Ina announced a cooperative agreement to provide training in the emerging field of high-volume oil and gas drilling. Officials announced the plan after Gov. Pat Quinn signed a new law establishing rules companies must follow during hydraulic fracturing, or “fracking.” Both colleges plan to provide a safety program and other training needed by the industry. Southeastern Illinois College has submitted a custom training certificate program to the state for approval. Rend Lake College plans to establish an associate degree program in oil and natural gas.
 
Indiana
The Terre Haute City Council passed by voice vote a moratorium, Resolution No. 12, 2013, on the use of hydraulic fracturing to access subsurface oil and gas reserves within the city limits. The motion to pass the Resolution was introduced by Councilman Todd Nation (District 4) and seconded by Councilman Don Morris (At-Large).The ordinance to amend the City Code is in the process of being written at this point and the earliest it would come before the Council is the August 8, 2013 meeting. For more information contact Bo Ollison.
 
Kentucky
The Kentucky Oil and Gas Association (KOGA) released its first comprehensive research of the economic impact of the state’s oil and natural gas industry. “The Economic Impact of our Industry on Kentucky’s Economy” presented the number of people working and investing in Kentucky’s oil and gas industry, the average annual salaries by industry sector, the amount of state taxes collected through severance taxes and the total production value of the industry to Kentucky’s economy. For more information contact Bo Ollison.
 
Minnesota
The Goodhue County Board of Commissioners approved two ordinances to regulate the frac sand mining industry. The new rules in Goodhue County limit mineral extraction facility operation sites to 40 acres of exposed or uncovered ground at any one time; mining operations are limited to the hours of 6 a.m. to 10 p.m., Monday through Saturday; the county is given authority to require air quality monitoring; and mining must be 1,000 feet from any existing dwelling or platted residential subdivision. The rules also allow the county to add additional conditions to mitigate noise, dust, hours of operation or blasting. For more information contact Bo Ollison.
 
Montana
An energy company with its eyes on 10,000 acres of land outside Augusta is working to drum up investors for what it’s promoting as the next big oil play, saying the Bakken formation south of Sun River holds as much potential as the Williston Basin. But Lewis and Clark County commissioners haven’t heard of Norstra Energy’s push to develop the region, and the Montana Oil and Gas Commission is passing off the claims as an exploration venture, saying the area doesn’t hold the resources claimed in company literature. For more information contact Bo Ollison.
 
New Mexico
Natural gas production in northwest New Mexico decreased 15.8 percent during the first three months of 2013, continuing a years-long decline that has rippled across the San Juan Basin. Perhaps most discouraging for the basin’s sprawling oil and gas industry, oil production — a source of some hope — was also down by 12.3 percent, according to the New Mexico Oil Conservation Division. Natural gas production fell to 168.4 billion cubic feet from 200 billion cubic feet during the same period in 2012. This year is on track to mark the seventh consecutive year of declining gas production in northwest New Mexico. Oil production also fell to 227,553 barrels, down from 259,548 barrels during the first quarter of 2012. That’s a reversal after two years of climbing oil production. For more information contact Bo Ollison.
 
New York
The Rochester City Council voted 9-0 to extend ordinance No. 2012-269, now in effect, to June 30, 2014, which specifically calls for a moratorium on accepting gas drilling applications and approving gas drilling permits, zoning certificates and variances. For more information contact Bo Ollison.
 
Norway’s Norse Energy reported that it has appointed divestiture adviser The Oil & Gas Clearinghouse, of Houston, Texas, to broker the sale of some of its oil and gas assets. The US-focused firm said that the anticipated asset sales are part of the company’s ongoing restructuring plan. Norse holds a land position of approximately 130,000 bet acres in New York State with certified 2C contingent resources of 951 million barrels of oil equivalent as of the end of December 2012. For more information contact Bo Ollison.
 
North Dakota
Preliminary data released by the state Industrial Commission, the Bakken shale formation in North Dakota has produced a record 727,149 barrels a day in April this year. This was a 1.2% increase from March this year and a 33% increase from April last year. Overall, the state produced an average of about 793,250 barrels daily in April. That’s up from about 783,000 barrels a day in March. Data show there were 8,758 producing wells in April, up from 8,639 wells in March. North Dakota also produced a record 846,906 million cubic feet of natural gas daily in April. In March, the state produced 834,637 million cubic feet. For more information contact Bo Ollison.
 
Natural Resources Partners L.P. has entered into an agreement with Abraxas Petroleum Corporation to purchase non-operated working interests in producing oil and gas properties in the Bakken/Three Forks play. These assets are located in the Williston Basin of North Dakota and Montana. Natural Resources will pay $35.3 million in cash for an 11 percent stake in about 13,500 acres. The assets include 120 producing wells, as well as interest in 22 wells that are in various stages of development. For more information contact Bo Ollison.
 
Koch Pipeline Co LP may build a 250,000 barrel-per-day North Dakota-to-Illinois pipeline to move Bakken shale oil to markets, if enough shippers show interest, the company said. On July 1, Koch will launch a non-binding, 45-day open season. If enough shippers show interest in the project during that time, the company will launch a binding open season to seek formal shipper commitments. If approved, the Dakota Express pipeline would start up in 2016 with an initial capacity of 250,000 bpd, Koch said. The company did not disclose its estimated cost. Last November, ONEOK Partners LP shelved plans to build a 200,000 bpd pipeline to carry Bakken crude to the U.S. crude futures hub in Cushing, Oklahoma, for lack of shipper interest.  For more information contact Bo Ollison.
 
Southwest Engineers Inc., a full-service civil and environmental engineering consulting firm, has announced it has signed an extensive agreement with Earthwater Resources Inc. for a major project on the Bakken Shale oil and gas zone in North Dakota. The project includes drilling and transporting water from a previously undiscovered, nontraditional, groundwater resource to multiple filling stations for the successful fracking of oil and gas wells in the region.
 
Ohio
According to Harry Schurr, general manager of Utica Operations for CONSOL Energy, companies drilling in Utica shale are concentrating on the centre portion of the shale (Jefferson, Harrison, Guernsey and Carroll counties) where there is natural-gas condensate – a low-density mixture of hydrocarbon liquids that exists in the raw natural gas produced from many natural-gas fields. Although the western part of the shale contains a lot of oil, it is too shallow and does not have enough pressure to extract oil economically. Similarly, the eastern portion consists of dry gas which is also costly to extract as it is at 8,000 feet, much deeper than say the Marcellus Shale. Please contact us if you would like more information.
 
Ohio University is slated to handle a variety of capital projects in its 2014 fiscal year including the construction of a new $70 million replacement power plant. Unlike the existing plant, the new facility will run on natural gas instead of coal. The university has tried running its current plant on natural gas in the past, and student groups have called on the university to move faster toward climate neutrality. The new plant design will be 85 percent efficient in converting natural gas to useful energy. It will also utilize waste heat from the steam generation process to produce electricity, and the plant design will achieve EPA compliance and reduce greenhouse emissions. Construction is expected to be completed by Jan. 31, 2016.
 
HB 212, introduced by Rep. Bob Hagan (D, District 58) would enact a 7.5 percent severance tax on oil and gas produced via fracking. Of that total, 5 percent would go to local governments, mostly in eastern Ohio. Another 1.5 percent would go to the Ohio Department of Natural Resources to hire and train well inspectors and supplement other costs related to the drilling industry. And the remaining 1 percent would go into a special trust fund, inaccessible to lawmakers until after 2020, for use in future economic development and other efforts. For more information contact Bo Ollison.
 
Pennsylvania
A Louisiana-based fracking company is coming to Monessen, potentially providing as many as 200 new local jobs. Mayor Mary Jo Smith confirmed the imminent arrival of Green Field Energy Services, which will occupy a 70,000-square-foot building that formerly housed Maronda Integrated Systems Inc. on riverfront property behind Donner Avenue. The site will soon become headquarters for Green Field, which offers environmental-friendly technology by using gas-powered turbines instead of diesel engines to pump in fracking fluid during the natural gas drilling process.  For more information contact Bo Ollison.
 
While gas drilling thrives throughout the state, a large swath of northeast Pennsylvania still remains off-limits. This is in stark contrast to what is happening in a neighboring watershed, the Susquehanna River basin. There, the Susquehanna River Basin Commission has exercised less control over the industry, leaving most of the regulation, besides water withdrawals, to the state. In May 2010, the Delaware River Basin Commission, based in West Trenton, N.J., declared a moratorium on natural gas extraction within the basin, a nearly 14,000-square-mile watershed that straddles four states and is home to the Delaware Water Gap National Recreation Area. Since then, environmentalists and landowners in favor of gas drilling have tried to persuade, through their attorneys and massive letter-writing campaigns, the commission to either completely close the door on the industry or open the watershed to wide-scale development. Yet three years later, nothing has changed. The Northern Wayne Property Owners Alliance, which banded together nearly 1,300 families to lease tens of thousands of acres for development to two drilling companies, Hess Corp. and Newfield Exploration Co. Please contact us if you would like more information.
 
XTO Energy Inc. opened a new facility in Butler County on Tuesday that will recover natural gas liquids from Marcellus Shale drilling. The Renfrew plant encompasses 340 acres, 40 miles of connecting pipeline and two gas compressor stations. It is the first of its kind in the Appalachia region for XTO, a Fort Worth, Texas energy company that is a subsidiary of ExxonMobil.  For more information please contact HBW Resources.
 
Within the next three weeks, seismic testing will be conducted in Perry Township and vicinity. The testing is part of a 280-square-mile project called “Dogbone 3D” will eventually shift into other municipalities like Dunbar, Jefferson and Washington townships, according to Rod White of McDonald Land Services – the company that will perform the permitting work for testing. Seismic testing produces underground sound waves to map areas of shale suitable for hydraulic fracturing that, in turn, allows extraction of natural gas and other substances. Canadian company CGG Veritas will then perform the actual geological testing to pinpoint where Chevron would conduct drilling and fracking. For more information contact Bo Ollison.
 
Geisinger Health System said the $1 million grant that was announced in February 2012 remains the only funding for a study on possible health impacts of natural gas drilling, that was projected to cost at least $25 million. Geisinger plans to look at health histories of hundreds of thousands of patients who live near Marcellus Shale gas wells in Pennsylvania.
 
Tennessee
The University of Tennessee Board of Trustees in October will take up a plan to lease the natural gas rights on the 8,600-acre Cumberland Forest in Morgan and Scott counties. The board will hear details of the plan before the university goes to the State Building Commission with a contract with a private company for the gas drilling, UT President Joe DiPietro said in a message to trustees. For more information please contact HBW Resources.
 
Texas
Xtreme Drilling and Coil Services announced record depths reached for coiled tubing completion operations in the Eagle Ford shale. In May, Xtreme continued to increase the reach at which operators are able to efficiently complete wells in the Eagle Ford. The company completed three separate wells with lateral lengths greater than 10,000 feet. The total measured depth on these wells ranged from 19,800 to 20,400 feet with up to +41 composite completion plugs in the well. The longest of the three wells had a lateral length of 10,240 feet (calculated from 80 degrees) and was completed in 5 1/2 inch casing.
 
Canadian oil and gas company Talisman Energy Inc. is exploring the sale of its shale assets in the Eagle Ford basin in south Texas, hoping it could raise as much as $2 billion. Talisman owns about 74,000 acres of land in the Eagle Ford, where it has a joint venture with Norway’s Statoil ASA, according to the company’s website. Its production in the region averaged 15 million barrels of oil equivalent per day (mboe/d) in 2012, up from 5 mboe/d in 2011. Its full-year guidance is currently for around 30 mboe/d.
 
Gov. Rick Perry (R) signed into law S.B. 1747, which responds to requests by communities in the Permian Basin and Eagle Ford Shale for funding to repair roads that are crumbling from the onslaught of heavy truck traffic brought by the growth of drilling and hydraulic fracturing. It permits Texas counties feeling the biggest impact of drilling to create new County Energy Transportation Reinvestment Zones that can obtain financing from a new infrastructure fund created by the bill. The money would be used to repair and improve highways and rural roads that weren’t built to withstand the thousands of heavy trucks rumbling over them each day as oil production increases.  For more information please contactHBW Resources.
 
Wyoming
EPA announced that it is abandoning its longstanding plan to have independent scientists confirm or cast doubt on its finding that hydraulic fracturing may be linked to groundwater pollution in central Wyoming. The EPA is standing by its findings, but state officials will lead further investigation into the pollution in the Pavillion area. The area has been a focus of the debate over whether fracking can pollute groundwater ever since the EPA’s initial report came out in late 2011.
 
Wisconsin
Hydraulic fracturing for oil and gas is getting a green light in Illinois: That’s good news for Wisconsin frac sand producers. While Wisconsin doesn’t have any oil or gas deposits, it has plenty of the sand used to get the oil. Rich Budinger is the President of the Wisconsin Industrial Sand Association. He says increased drilling in southern Illinois could mean a new market for Wisconsin frac sand.
 
National
The BLM announced that it is reopening the public comment period for proposed revisions to its commercial oil shale regulations.  Public comments will now be accepted until July 15, 2013. On March 27, the BLM published a proposed rule to revise certain provisions of the commercial oil shale leasing regulations. The proposed rule provided a deadline of May 28 to comment on the proposed revisions. The proposed rule identifies several options for amending the current royalty rates for commercial oil shale production. The BLM will consider whether a single royalty rate or royalty structures should be set in advance or whether to retain some administrative flexibility to adjust royalty rates when more information is available about costs of production, energy inputs, and impacts associated with various emerging extraction technologies. The largest known domestic oil shale deposits are in a 16,000-square mile area in the Green River formation in Colorado, Utah and Wyoming. 
 
Natural gas prices will become far more volatile and influenced by global market conditions once the U.S. begins to export liquefied natural gas, according to a study released by the PIRA Energy Group.
 
U.S. natural gas production will top 70 billion cubic feet per day for the very first time in 2013, the EIA has estimated, on reports that both increased onshore reserves and higher prices will be seen this year. The Energy Information Administration stated that daily output for domestic natural gas will reach 70.01 billion cubic feet per day (bcfd), up from its estimate in May of 69.9 billion. This will be a record high in U.S. natural gas production.  The EIA reported that it expects output to be up a total of 1.2 percent from the record-breaking levels of 2012.
 
Top Obama administration officials pledged to lawmakers that they would move quickly but carefully in vetting applications to broadly export domestic natural gas, with more final decisions coming this year. Energy Secretary Ernest Moniz said he “absolutely” expects to have final decisions this calendar year on some of the 16 pending applications to export natural gas to countries that don’t have free-trade agreements with the United States. So far, the Energy Department has given two companies —Cheniere Energy and Freeport LNG — licenses to export domestically harvested natural gas. But the Energy Department’s export license is only one step; companies also must win approval from the Federal Energy Regulatory Commission to build the actual facilities that will liquefy natural gas for overseas transport. So far, just Houston-based Cheniere has cleared that hurdle, for its Sabine Pass terminal in southwest LouisianaFor more information contact Bo Ollison.
 
 
The Ground Water Protection Council and the Interstate Oil and Gas Compact Commission, which maintain the website FracFocus, have rolled out updates that allow users to search by date ranges, chemical names or chemical abstract numbers, the unique numerical identifier for a chemical.
 
The U.S. Environmental Protection Agency is analyzing the threat that hydraulic fracturing, or fracking, poses to drinking water, but that study won’t be completed until 2016. That assessment came from Jeanne Briskin, coordinator of hydraulic fracturing research at the EPA’s Office of Research and Development. Briskin said the EPA probably would complete and release a preliminary report in late 2014. It is “complex research,” she said.  Please contact us if you would like more information.
 
The U.S. will continue to need crude from Canada’s oil sands because rising production from its shale formations is too expensive to maintain. Increased crude output from U.S. shale isn’t “sustainable production,” Mike Tims, chairman of Canadian investment bank Peters & Co., said at a Bloomberg energy forum in Calgary. Producers need to invest too much to sustain production from wells in the Bakken and Permian basins, which falls as much as 70 percent in the first year. The optimism about additions to the U.S. oil production needs to be tempered a little bit,” Tims said. Oil-sands capital spending fell 10 percent last year to C$20.4 billion ($20 billion), as some Canadian producers cut budgets amid competition from lower-cost oil supplies in U.S. shale basins, Alberta energy regulators said in a report last month. Production from the Bakken Shale in North Dakota has more than doubled from 2011 through April to 727,150 barrels a day, according to the North Dakota Industrial Commission. The U.S., the world’s largest economy, will probably never be able to meet its own supply needs, said Chris Seasons, president of Devon Energy Corp.’s Canadian division. Devon produced 8.5 million barrels of crude from Canada in the first quarter, including from its Jackfish oil-sands project. For more information contact Bo Ollison.
 
A bipartisan group of state attorneys general are warning environmental regulators not to let threats of lawsuits force the release of new rules for carbon emissions from power plants. Officials from 21 states sent a letter to acting Administrator of the EPA Bob Perciasepe claiming that threats to sue the agency for delaying the rules have “no legal merit” and should be ignored.
 
Exploration and production companies remain concerned about unpredictable oil and natural gas prices, driving decisions about capital expenditures and joint ventures, according to asurvey by Grant Thornton and Hart Energy. Industry officials responding to the survey, released this week, expect Henry Hub natural gas spot prices to average $3.48 per million British thermal units in 2013, rising to $4.09 by 2015. Prices for West Texas Intermediate crude oil are expected to average $91.18 in 2013, rising to $94.12 by 2015. Please contactus if you would like more information.
 
U.S. natural gas production will accelerate from 2014 through 2018 as higher prices spur drilling and expanded infrastructure allows more shale supplies to reach the market, according to the International Energy Agency. Gas output will reach 797 billion cubic meters by 2018, 17 percent higher than last year’s total of 681 billion, the IEA said in itsMedium-Term Market Report. Global liquefied natural gas markets will face “unprecedented” tightness this year and next as incremental LNG demand from Asia exceeds new supply. About 138 billion cubic meters a year of LNG production was under construction as of mid-2013, bringing total capacity to at least 500 billion cubic meters by 2018, according to the IEA. Of the new supply, almost 86 billion cubic meters will be sold to Asia and more than 80 percent has been contracted on a long-term basis. For more information contact Bo Ollison.
 
Hydraulic fracking has been studied with a published paper, A Preliminary Energy Return on Investment Analysis of Natural Gas from the Marcellus Shale, showing the energy return on investment (aka EROI) with a total input energy compared with the energy in natural gas expected to be made available to end users is similar to or better than coal. The analysis indicates that the EROI ratio of a typical well is likely between 64:1 and 112:1, with a mean of approximately 85:1. This range assumes an estimated ultimate recovery (EUR) of 3.0 billion cubic feet per well. This is similar but significantly higher to the EUR of coal, which falls between 50:1 and 85:1. For more information contact Bo Ollison.
 
Representative Fred Upton, Chairman of the House Energy and Commerce Committee said fueling vehicles with natural gas holds great promise and praised the hydraulic fracturing technology that is unearthing greater supplies of the gas. “We’re the largest natural gas producer now in the world because of the advances that we’ve done on hydraulic fracking. … We are so rich in that resource.”

International
Angola
Chevron Corp.’s $10 billion Angola LNG plant shipped its first cargo after an 18-month delay prompted by fires, labor shortages and U.S. shale drilling that erased demand for African fuel in the world’s largest gas market. The shipment of gas that was cooled to -256 degrees Fahrenheit (-160 degrees Celsius) to shrink its volume was sold to state-owned Sonangol EP for transport to Brazil. The facility in Soyo in northern Angola plans one or two shipments in June and July before performing checks on its systems and resuming output in the fourth quarter. Global LNG demand is expected to exceed production around the end of this decade with the deficit growing to 100 million metric tons a year by 2025. Demand for the fuel will increase at an estimated average rate of 15 million tons a year through 2025, led by growth in Asian nations such as Japan, South Korea and Taiwan. For more information please contact HBW Resources.
 
Australia
Empire Energy Group Limited has signed an exploration agreement through its wholly owned subsidiary Imperial Oil & Gas with Aboriginal Native Title Claimants and the Northern Land Council covering its petroleum exploration area EPA 184 in the Northern Territory. The EPA 184 exploration area covers 11,220 square kilometres of highly petroleum prospective Urapunga region in the central trough of the McArthur Basin south of the Roper River. The principal target is unconventional and conventional oil & gas sourced from Palaeo-Proterozoic age black carbonaceous shales of the Barney Creek and equivalent formations. With the Native Title agreement in place, the relevant Northern Territory government authorities are required to complete their formalities and endorse the proposed exploration program before the permit is granted.
 
Canada
Pieridae Energy announced it plans to develop a liquefied natural gas export terminal in Nova Scotia following a deal with German utility E.ON. The Goldboro LNG terminal would draw on natural gas from the Marcellus Shale but would sell at European prices instead of the much lower U.S. Henry Hub prices. Pieridae has already begun the environmental review process with the Nova Scotia government and the First Nations tribes in the area. The company expects that construction will begin in 2015 with operations starting in 2019. Please contact us if you would like more information.
 
First Nations chiefs are calling on the provincial government and mining companies start talks with them to discuss natural resource development opportunities in New Brunswick. The Assembly of First Nations’ Chiefs in New Brunswick issued a statement that also criticized companies and governments that refused to work with them, as well as protesters from outside their communities. The chiefs say they are concerned about the “depth of poverty” that is prevalent in many First Nations communities and they hope natural resource development could help alleviate it. Energy and Mines Minister Craig Leonard said he has been working with First Nations on the shale gas file for the past six months.
 
China
Research company Sanford C. Bernstein & Co has said that water management will be China’s biggest problem when it comes to fracking for shale gas, as the process not only requires a lot of water but there is also concerns that it may lead to contaminated drinking supplies.
 
PetroChina Co., the nation’s largest oil producer, began construction on the country’s first pipeline dedicated to transporting shale gas. The pipeline will span 58 miles from Sichuan province’s Changning block and will have a daily transport volume of 4.5 million cubic meters, China National Petroleum Corp., PetroChina’s parent, said. HBW Staff recently travelled extensively in China.  Please contact us if you would like more information.
 
India
The government plans to come out with a shale gas policy early next month. “The shale gas policy will be announced in the next 20-25 days…we have sought comments from different ministries and will finalize it by then,” oil minister Veerappa Moily said. The draft shale gas policy favors market determined pricing, spelt out in clear terms so that operators are aware of the risks before committing themselves to a project. The policy does not permit cost recovery and, hence, profit sharing — the two features that came under the criticism of the Comptroller and Auditor General of India during its audit of Reliance Industries’ KG-D6 block. Please contact us if you would like more information.
 
Malawi
NuEnergy Gas Ltd. (NGY), an Australian power-development company, said it’s optimistic of making significant shale-gas finds in eastern Africa, where it has begun exploration. The company is starting to search for shale gas in Malawi, has applied for permits in Tanzania and is looking to explore in Zambia, Mozambique and other eastern African nations. NuEnergy conducted an aeromagnetic survey of a 346 square kilometers (134 square miles) of land in southern Malawi in May to determine which sites are best to start exploratory drilling. The survey was the first of its kind in the country and results are expected in about three weeks
 
Mexico 
President Enrique Peña Nieto will seek in the coming months to end a taboo of nearly eight decades by opening the state-run oil-and-gas industry to private investment and competition, a move the government hopes will attract billions of dollars in investment. Mr. Peña Nieto’s government wants to allow private energy firms to share the risks involved in developing increasingly complex energy reserves such as deep-water oil deposits by letting them produce oil and gas through profit-sharing deals and joint ventures with state monopoly Petroleos Mexicanos (Pemex). The plan calls for opening up exploration and production in deep water where more than half of Mexico’s prospective oil resources are thought to lie, and for oil and gas found in shale-rock formations. Shallow water and onshore oil, where Pemex has expertise and its lowest-cost production, would remain the exclusive domain of the state firm. For more information please contact HBW Resources.
 
Mexico’s top steelmaker is hoping to tap the country’s ample shale gas reserves if an energy sector overhaul expected this year provides an opening, a senior executive with the company, Altos Hornos de Mexico said. The company holds some 6 million acres (2.4 million hectares) of mining concessions near the U.S.-Mexico border in areas where shale deposits are believed to be concentrated. While Mexico’s constitution mandates that only the state can own and extract oil and gas resources, President Enrique Pena Nieto has promised a reform to attract new investments from private oil companies aimed at boosting lagging production.
 
Scotland
Murdo Fraser, convener of the Scottish Parliament’s economy, energy and tourism committee, insists it is time for Scotland to embrace the “shale gas revolution”. Mr. Fraser said the most recent estimates showed that the United Kingdom’s technically recoverable shale gas — much of which is in Scotland — amounts to 10 times annual gas demand. He claimed that 35,000 jobs could be created, energy costs slashed and the economy boosted if the Government backed the power source. For more information contact Bo Ollison.
 
South Africa
In its assessment of 41 other countries, the EIA revised South Africa’s shale-gas estimates down from 485-trillion cubic feet in 2011 to 390-trillion cubic feet, due to a reduction in the prospective area for the three shale formations in the Karoo Basin as well as the geological complexity caused by igneous intrusions into the shale formation, the report said. South Africa nevertheless remains in the top 10 countries with technically recoverable shale gas resources, above Russia and Brazil. The advent of gas
 
 
is positive for South Africa, particularly in terms of electricity supply, where the country is trying to shift away from carbon-intensive coal-fired power. Eskom accounts for an estimated 45% of South Africa’s greenhouse gas emissions. A number of factors could constrain gas development. Infra­structure in particular is a major bottleneck, with significant investment needed in areas such as import and regasification terminals, pipelines and the electricity grid. For more information please contact HBW Resources.
 
Turkey
Turkish Energy Minister Taner Yıldız was recently reported to have said that there is huge potential of shale gas reserves in the country and the government is undertaking exploratory activities. According to Yıldız, “Many have said there is huge potential of shale gas reserves in Turkey, specifically in the Central Anatolian cities of Ankara, Konya and Nevşehir, although it is not feasible to give accurate figures about the reserves before the completion of our exploration activities. We have already undertaken a series of shale gas exploration activities around Turkey, for example we have been drilling below 3,000 meters with Shell in the eastern city of Diyarbakır, and planning such activities in the Thrace Basin.” Hürriyet Daily News has reported that Shell and Turkish Petroleum Corporation (TPAO) began exploring for shale gas in the eastern province of Diyarbakır’s Sarıbuğday-1 natural gas field in September 2012. According to a report by the US Energy Information Agency (EIA), Turkey could meet 14 years of its gas demand by using its technically recoverable shale gas resources.  For more information contact Bo Ollison.
 
Ukraine
Ukraine’s Energy Minister Eduard Stavytsky has announced that the country is close to finalizing a shale gas project with Chevron regarding exploration in the 5,260sq km Olesska field in western Ukraine which has estimated shale reserves of up to 1.5 trillion cubic metres. A draft agreement with Chevron had been sent to local authorities for approval, which is required under Ukrainian law. “They will consider it sometime between June 18 and 21,” he said. The former Soviet republic signed a $10 billion production-sharing agreement with Royal Dutch Shell this year for shale gas exploration in the Yuzivska field in the east, but the Chevron plan has come up against more opposition. Stavytsky also said that talks are also being held with a consortium led by ExxonMobil for a deal on the Skifska field in the Black Sea.
 
President Victor Yanukovych has three strategic objectives in the pursuit of the shale gas revolution. First, to escape from the disastrous long-term 2009 gas contract signed by prime ministers Yulia Tymoshenko and Vladimr Putin. Second, Kiev believes it will become more geopolitically important in the eyes of Washington and Brussels. Third, energy independence and breaking free of Russia’s gas stranglehold could improve the chances of Ukraine’s integration into Europe. The shale gas revolution represents a strategic milestone in Ukraine’s new drive for energy independence. Yanukovych’s economic nationalism may yet prove to be more constructive than ethno-cultural nationalism promoted so avidly by his predecessor Yushchenko.  For more information contact Bo Ollison.
 
United Arab Emirates
U.S. shale gas and oil exploration is prompting Abu Dhabi, where the hydrocarbon industry accounts for more than half of the economy, to speed efforts to bolster non-oil output, a senior government official said. The holder of 6 per cent of the world’s proven oil reserves “isn’t underestimating the potential impact” of higher U.S. hydrocarbon output, Mohammed Omar Abdullah, undersecretary of the emirate’s Department of Economic Development, said. The government “is accelerating its efforts toward the more diversified economy,” he said. Abu Dhabi announced a plan in January to spend Dh330 billion to fund development projects over five years. The government aims to bring the share of oil and gas in the economy to an average of 52 per cent from 2012 through 2016, Mr. Abdulla said. The industry accounted for 59 per cent of gross domestic product at current prices in 2011. U.S. oil output jumped to the highest level in two decades with the use of techniques such as hydraulic fracturing and horizontal drilling, prompting a cut in imports from some members of the OPEC.
 
United Kingdom
Cuadrilla, the company behind fracking in Lancashire, has appointed engineering and design consultancy Arup to draw up environmental impact assessments as part of their efforts to drill for shale gas. The process will start this summer, and is expected to run into the first quarter of 2014. Arup’s work on the Environmental Impact Assessments (EIAs) will include environment risk assessment, public and stakeholder consultation and planning application support. For more information contact Bo Ollison.
 
Shale gas production from the UK’s Bowland basin could cut the country’s imports by 14% over the next seven years, according to a new report. The report from Deloitte, Potential Bowland Basin shale gas development: Economic and fiscal impacts, says shale-gas production from the Bowland basin, in northern England, could significantly reduce the country’s gas imports and gain valuable tax revenue for the government. Please contact us if you would like more information.

Additional Information
 
For additional information, please 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
Twitter: @BoOllison
 
Contact Information
 
If you have any general questions, please contact me anytime. Previous versions of the HBW Ollison Hydraulic Fracturing Report, the HBW Greenfield Offshore Energy 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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