HBW Resources: Ollison Hydraulic Fracturing Report

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. If you have any questions or would like additional information, please contact us.
State Legislative Update: Please see linked spreadsheet for an updated listing of state legislation dealing with hydraulic fracturing.
SB 4, introduced by Sen. Fran Pavley (D, District 27) would require disclosure on chemicals used, require notification of residents before drilling starts and create a system for testing groundwater. The bill would cover not just hydraulic fracturing but other types of well stimulation, including acidization. Additionally, it would require an independent scientific study. The measure passed the Assembly’s Natural Resources Committee with a 6-3 vote. It already has cleared the Senate. One more hearing is planned in the Assembly’s Appropriations Committee. If that panel approves it, the bill will go to an Assembly floor vote. For more information please contact HBW Resources.
The U.S. Forest Service announced in April that it is conducting an environmental impact study of oil and gas development in the Pawnee National Grasslands, an area between Fort Collins and Sterling. When the Forest Service last updated its management plan for the grasslands in 1997, it estimated that 25 oil and gas wells would be drilled through 2012, with only 10 of them actually producing oil and gas. Today, there are 1,884 state-approved oil and gas wells on public and private land existing within all of the township and range survey sections that include parcels of national grasslands, according to a Coloradoan analysis of Colorado Oil and Gas Conservation Commission data. Some of those wells are permitted but haven’t been drilled yet. Others were drilled, fracked and are producing oil and gas. Of the wells in the area, 214 are producing oil and gas and 71 are listed as being drilled, COGCC data show. About 63 of the wells within the national grasslands boundary are on public land, 18 of which have been drilled since the management plan was last updated in 1997, according to the Forest Service. The Forest Service’s environmental study, a draft of which is delayed and due to be published sometime this winter, will update the Pawnee’s 15-year-old grasslands management plan to account for all the new interest in drilling on the public grasslands. It will determine how much more oil and gas development will be allowed on the grasslands and add certain restrictions on drilling that will minimize its effect on the prairie. The original proposal, or “scoping,” for the environmental study generated between 2,300 and 2,800 public comments before the study even began.
Oil-related items are expected to come up during the Fort Collins City Council’s July 16 meeting. Discussions around them are likely to be replays of conversations about the safety of oil operations, such as hydraulic fracturing that have been going on for some time. One item is fairly straightforward: The council will give initial consideration to an ordinance calling for a special election Nov. 5. The move is in anticipation of a successful petition drive by Citizens for a Healthy Fort Collins, which wants to place a measure on the ballot calling for a five-year moratorium on fracking within city limits so that studies may be conducted on impacts the practice has on health, safety and property values. The group’s fracking moratorium would extend to Prospect Energy, which is the only oil development company working within city limits. If approved, the ordinance would be the first step in saving a spot on the ballot for the proposal. Final consideration of the ordinance is tentatively scheduled for Aug. 20. The group faces an Aug. 5 deadline for submitting the petition signatures of 3,907 registered city voters to get the proposal on the ballot.The second oil item is actually two fold: The council will consider whether to extend its moratorium on accepting applications for oil and gas operations to Dec. 31 while the process of modifying the land use code to establish city regulations on those operations is completed. The moratorium is scheduled to end July 31. For more information please contact HBW Resources.
Colorado oil and gas industry regulators have given medical community leaders a written assurance that doctors can obtain and share trade-secret information about fracking chemicals for the purpose of treating patients and protecting public health. Colorado Medical Society president Dr. Jan Kief said the letter from Colorado Oil and Gas Conservation Commission chairman Thomas Compton addresses concerns raised by doctors and the medical society who feared that signing a confidentiality pledge kept them from sharing information with other medical professionals. Doctors still are required to fill out a Form 35 confidentiality pledge before obtaining information on fracking chemicals. In return, they can share information with patients, other health care professionals and with public health agencies.
26 small brewers in Colorado are saying their industry could be affected by fracking, a drilling technique that pumps water, sand and chemicals down well bores to break apart rock and release trapped oil and gas. In a letter to Gov. John Hickenlooper (D, CO), twenty six representatives of Colorado beer makers called for preserving clean water for their businesses and respecting the state’s natural allure. In May, German brewers worried about possible fracking-related water contamination raised similar concerns. The Colorado Oil and Gas Association, a trade group for the state’s petroleum industry, has requested to meet with the letter’s signatories to discuss their concerns. Hickenlooper, an avowed fan of both craft beer and oil and gas drilling, has not directly responded to the letter, but a spokesman for the governor said he would review the matter.
Protect Our Loveland Inc. organizers say they are a grassroots initiative of residents who have come together over concerns about new technology for hydraulic fracturing and horizontal drilling in their community. A growing number of volunteers are circulating petitions and collecting signatures with the hope of getting the moratorium question on the Nov. 5 ballot. On the July 8 deadline, the group intends to submit the petitions to the City Clerk’s office. They need to have valid signatures from 5 percent of the city’s registered electors – at least 2,523 voters. Organizers won’t say how close they’ve come to that number since petitions started circulating early this month, but they’re confident going into the final week of signature-gathering. In May 2012, the Loveland City Council imposed a nine-month moratorium on oil and gas development in the city, during which time city staff members worked to research and craft rules for the industry that would not be superseded by state regulations. Those regulations, which city officials call some of the most strict in the state with their inclusion of incentives for oil companies to adhere to higher standards than state regulations require, were unveiled earlier this year. And after a series of contentious and often emotional public hearings, the regulations were approved by a split City Council and took effect in April. A letter of intent submitted last month and the subsequent petition language instead asks for an ordinance to impose a two-year moratorium. If approved by the voters, the moratorium period — which could also be lifted by a vote of the people — would block oil and gas drilling permits in the city. During that time, the initiative calls for full studies on the effects of the process on property values and human health.  For more information please contact HBW Resources.

Sefton Resources, Inc., the independent oil and gas exploitation and production company with interests in California and Kansas, released an update on oil & gas exploration and production (E&P) operations for June 2013 and the results of a Mississippian Limestone Study in North East Kansas. In June 2013, oil production increased to approximately 500 barrels a month from 11 wells, up from approximately 450 barrels a month reported in May, all from the Company’s wells in Leavenworth County, Kansas. Additional production is expected from a number of leases in the future as the ongoing program of workovers and recompletions continues on oil and gas wells (with the emphasis on oil wells) in proximity to the Company’s 100 percent-owned and operated pipeline systems. As part of the ongoing leasing program, the Company has now acquired leases with over 50 wells on them that will be reviewed as part of this initial development program. Alongside the pipeline system for gathering natural gas, TEG MidContinent also has water disposal facilities in place along with a water tanker truck to provide ample water disposal capabilities. With infrastructure for oil, water and gas production in place, economics improve as more wells are brought back into production.
The Lansing Board of Water & Light opened a natural gas-fired power plant, its first new plant in 40 years, saying the facility is environmentally friendly and will give the area an economic boost. The REO Town plant was fully operational Monday, the utility said. The plant is part of a $182 million project that includes a headquarters building and a restored Grand Trunk Western Railroad depot for the BWL Board of Commissioners meetings. The plant will generate up to 300,000 pounds of steam for 225 steam customers in downtown Lansing, replacing the Moores Park Steam Plant. It also will provide 100 megawatts of electricity, about 20 percent of the utility’s electric generation. The Board of Water & Light offers water, electric, steam and chilled water service to more than 100,000 residential and business customers. For more information please contact HBW Resources.
Experts on hydraulic fracturing will present both sides of the practice at a July 17 informational meeting hosted by the Ottawa County Planning Commission. The meeting will be held at 7 p.m. pm in the Main Conference Room of the Ottawa County Fillmore Street Complex, 12220 Fillmore St., West Olive, MI. The meeting is expected to conclude at 9 p.m. The seminar will include presentations from a local environmental consultant, the Michigan Department of Environmental Quality, the Michigan Oil and Gas Association, the Committee to Ban Fracking in Michigan, the law firm of ScholtenFant and the Michigan State University Extension. A question and answer session will follow the presentations. Individuals interested in attending are encouraged to RVSP by July 10 by contacting the Ottawa County Department of Planning and Performance Improvement by phone at 616-738-4852 or by email at plan@miottawa.org
A frac sand hauler is suing the city of Wabasha, claiming he should not be subject to city zoning rules. In his federal lawsuit, Jim Roemer claims that because he has a contract to ship sand on railroad lines, his facility must follow only federal regulations, not local ones. Roemer wants to increase his daily truck trips from 40 to about 150. His attorney says Roemer isn’t seeking damages, but wants to do business without limits of city regulations. Roemer’s company, which hauls frac sand as well as other materials, is within the boundaries of the city’s wellhead protection zone — the area located above the city’s water supply. The city is required to closely monitor and regulate all development in the area, Wabasha’s City attorney said. Any expansion or modification of businesses in that area need special approval from the Wabasha City Council.
New Mexico
The prolonged drought gripping New Mexico has hurt crops in Eddy County, driving some farmers in the area to sell their water supplies to oil and gas drillers. The petroleum industry has an endless thirst for water for hydraulic fracturing. Drillers are willing to pay a premium for local water supplies in New Mexico, prompting many in the agricultural sector to apply for commercial rights to sell water from extra wells. For more information please contact HBW Resources.
New York
Rockland County Executive C. Scott Vanderhoef signed into law legislation banning the use of fracking waste, its processing at all wastewater treatment plants and its application on all roads including for deicing and dust control in the county. Other area counties that have adopted similar local laws include Ulster, Orange, Putnam and Westchester. The law has been sent to the State.
Natural gas can be “effective” as a fuel but questions remain about whether it can be developed safely with hydraulic fracturing, Gov. Andrew Cuomo said. The state’s decision-making process on hydrofracking stretches back to 2008, with Cuomo’s administration inheriting it when he took office in 2011. The Marcellus Shale, which covers the economically struggling Southern Tier, has been targeted by gas companies looking to extract its gas. Cuomo said the positives of natural gas as a fuel are separate from the questions surrounding fracking.  Environmental, health and anti-fracking groups have raised numerous concerns about the fracking process, particularly as it’s related to water quality and the public health. The natural-gas industry says the risks can be properly mitigated and that drilling can lead to an economic turnaround in struggling areas of the state. State Health Commissioner Nirav Shah was first tasked last year with reviewing the state Department of Environmental Conservation’s proposals for fracking to ensure they protect the public health. That review apparently continues, and a decision on fracking waits until it’s finalized. Cuomo said there’s no update on when that work may be completed. “There’s nothing new as far as I know,” he said.
North Carolina
North Carolina’s Mining and Energy Commission (MEC) want state legislators to back off oil and gas regulation. In a letter to House and Senate leaders over the weekend, MEC Chairman Jim Womack said a chemical disclosure bill under consideration in Raleigh would pre-empt and undermine a measure the commission has spent months crafting.A provision inserted last week into HB 94, a broad environmental bill now in the Senate, would change how trade secrets are handled. Oil and gas companies would be able to withhold the information completely from the state and public. The measure would allow members of the public to challenge trade secret status.Womack slammed the legislature for stirring up anti-drilling fervor in the state and for disregarding the “meticulously” crafted work of the commission. The legislation passed the Senate on July 2 by a 35-11 vote.
North Dakota
HB 1134, introduced by Rep. Todd Porter (R, District 34), offers North Dakota oil drillers tax breaks beginning July 1 if they stop burning and wasting natural gas. The bill offers oil companies tax incentives for capturing and using the byproduct of the state’s crude production.Records show 275 million cubic feet of natural gas goes up in smoke each day in North Dakota, or enough to heat more than 1 million homes daily. Flaring also accounted for about 5 million tons of carbon dioxide emissions in North Dakota last year. That’s about the same amount that 945,000 automobiles would emit. For more information please contact HBW Resources.
Republican Gov. John Kasich wants an increase in the severance tax. Democrats in both chambers of the Ohio General Assembly support it. Ohioans, including a plurality of registered Republican voters, think oil and gas companies should be subject to a new tax, according to a March poll by Quinnipiac University. Yet 16 months after it was first proposed, the Legislature will break for summer with no “frack tax” and no apparent momentum to push for one in the fall. Republicans have time and again dismissed the idea of raising taxes on an emerging sector, saying that too little was known about the reserves at this point to set a new tax policy and that any increase could stunt the growth of jobs and investment. The governor’s proposal would have applied only to owners of horizontal wells, which are multimillion dollar undertakings designed to harvest oil and gas in volumes that dwarf what traditional vertical wells can produce. The discovery of the Utica Shale has attracted some of the largest energy firms in the world, including Chesapeake Energy, Chevron and ExxonMobil, all looking to employ this relatively new technology.
Eclipse Resources has acquired the Oxford Oil Company with approximately 184,000 net acres in Ohio and 13.8 Bcfe of proved developed producing reserves. Prior to the acquisition, Eclipse Resources owned approximately 41,000 net acres in Belmont, Guernsey, Monroe and Noble Counties in Ohio where the largest wells in the Utica Shale play have been reported to date. With the acquisition of Oxford, Eclipse Resources now owns approximately 90,000 net acres in these core Utica Shale counties, as well as in Harrison County, Ohio. Eclipse Resources has recently completed drilling a Utica Shale well in Monroe County with encouraging results, and has participated in five wells in Noble County that have shown strong initial production rates and high liquids yields.  For more information please contact HBW Resources.
Storage and treatment of liquid drilling wastes, air emissions of methane, water withdrawals for drilling and site construction are among the biggest problems facing shale-gas drilling in Ohio and other states. Those four problems top a list put together by researchers Nathan Richardson and Hal Gordon of Resources for the Future, a nonprofit group based in Washington, D.C. Their group surveyed 215 experts from government agencies, industry, academia or nongovernment organizations who were asked to rank 264 separate drilling threats from most serious to least serious.
The engineering firm S&ME Inc. is adding three employees at its Dublin office to help the company serve clients with projects in the Utica and Marcellus shale plays.  S&ME, based in Raleigh, N.C., is providing civil and environmental engineering services to the natural gas pipeline companies in the shale plays under development in eastern Ohio, western Pennsylvania and West Virginia. The firm has 900 employees in 25 offices across eight states. The Dublin office has hired six people since the first of the year, now employing about 60.
Oil and gas royalty owners and an environmental group in Pennsylvania said that legislation awaiting Gov. Tom Corbett’s signature seriously weakens negotiating rights for some landowners. The National Association of Royalty Owners said last-minute changes made during the weekend to SB 259, introduced by Sen. Gene Yaw(R, District 23) regulating how oil and gas royalty information is to be provided to lessors. The bill could allow drilling companies to use decades-old mineral leases to force current landowners to accept Marcellus Shale drilling under their property. The new legislation would only apply to people with existing oil and gas leases. It would mean heirs to leases signed decades ago for traditional drilling could be forced to accept horizontal drilling, which can extend thousands of feet from a well, even under land owned by neighbors, who also would be forced to accept the drilling.
Gov. Tom Corbett urged the Delaware River Basin Commission (DRBC) to lift a three-year moratorium on gas drilling, saying it has depressed economic growth in northeastern Pennsylvania and deprived landowners of their property rights. Corbett said the DRBC has had more than enough time to develop and implement regulations that would allow natural gas to be siphoned from the Marcellus Shale rock formation while protecting water quality in the Delaware River and its tributaries. The DRBC, which has representatives from New Jersey, New York, Pennsylvania, Delaware and the federal government, published an initial set of draft drilling regulations in 2010, and made revisions after taking public comment. Commissioners were supposed to consider adoption of the rules in 2011 but abruptly canceled the vote. It has not been rescheduled. DRBC says it’s taking Gov. Tom Corbett’s complaint about a lack of natural gas development in northeastern Pennsylvania “very seriously,” but there’s still no timetable for lifting a 3-year moratorium on drilling. At the same time, a landowners’ group in northeastern Pennsylvania is threatening to sue the DRBC over its three-year moratorium on natural gas exploration and production, saying the ban has imposed a heavy financial toll on thousands of people who leased their land for drilling, only to see the energy boom pass them by. The Northern Wayne Property Owners Alliance, one of the largest landowners’ groups in Pennsylvania with more than 1,300 families and businesses, said in a letter to the commission’s executive director that it will file a lawsuit unless the agency either schedules a vote on regulations that would allow drilling to begin, or steps aside and drops any plan to regulate the practice. The five-member basin commission is scheduled to meet Tuesday and Wednesday in Wilmington, Del. Gas drilling is not on the agenda.
Rural landowners who say they’re getting short-changed in royalty payments from gas companies in the Marcellus Shale region have gotten the attention of lawmakers in Harrisburg. The amounts involved may be surprising. The Allegheny Institute for Public Policy estimated that Pennsylvania landowners received $731 million in royalty payments last year. The company pays to drill the well and in exchange, the company and landowner split proceeds from gas produced by the well. Basically, the landowner is supposed to get the money from every eighth gallon of gas produced by the well. A 2010 court decision established that gas companies are allowed to deduct for post-production expenses, including the cost of processing the gas or transporting it to market. Gas companies have interpreted the rules regarding royalty deductions differently, though. Those who testified before the Senate committee identified Chesapeake Energy as being the most aggressive about subtracting from property owners’ checks, according to advocates for landowners. Sen. Elder Vogel (R, District 47), said the complaints he’s heard have suggested problems are limited to the one company and asked why there was no industry standard regarding how deductions would be made. The county commissioners in Bradford, Susquehanna and Sullivan counties have all passed resolutions asking the state to make it illegal for gas companies to take deductions that leave landowners with royalties less than the one-eighth share. Lawmakers in the House of Representatives are working on new legislation that would clarify state law regarding the minimum royalty payment for landowners. The legislation, which would apply to existing as well as new leases, would prevent deductions from post-production costs from reducing royalty payments below 12.5 percent, said state Rep. Matt Baker (R, District 68), one of four state representatives who are working on the draft of the legislation. Baker and the three other drafters of the bill, Tina Pickett (R, District 110), Sandra Major (R, District 11), and Garth Everett (R, District 84), say the proposed legislation is intended to directly respond to concerns by landowners who have drilling leases and whose royalty payments have decreased due to post-production cost. For more information please contact HBW Resources.
As mentioned last week, the Pennsylvania Democratic State Committee voted 115-81 in favor of a moratorium on fracking which has drawn condemnation from its most famous progeny – former Gov. Ed Rendell as well as two current candidates for Governor, including John Hanger, though he supports a ban in state forests and strict regulation on private property and Kathleen McGinty.
Shell Oil Co. has postponed a decision about purchasing property in western Pennsylvania to build a giant petrochemical plant, extending the timeline for a project by six months that’s a political touchstone for the state’s Republican governor. Shell officials confirmed that a June 30 deadline tied to the land purchase would be extended through the end of the year. Shell is assessing the prospect of producing and acquiring enough ethane out of Pennsylvania and Ohio natural gas fields to feed a “cracker” plant it wants to build north of Pittsburgh. Shell is in talks with Horsehead Corp., a Pittsburgh-based producer of zinc oxide that is closing a plant along the Ohio River north of the city in Monaca, PA. Shell would spend some $2 billion to $3 billion to build an ethylene plant that would make use of gas liquids production in the region’s Marcellus and Utica shale formations. The energy-intensive cracker would turn ethane into ethylene, a main ingredient in plastics and chemicals.
Pittsburgh based, Shale Markets, LLC, will host, “Start Doing Business in the Natural Gas Industry in PA, WV & OH…” to help businesses get into the shale oil and natural gas industry. The event is taking place at the Sheraton Four Points Pittsburgh North in Cranberry Township, on Thursday, August 15th. The purpose of this seminar is to show businesses large and small across the U.S. how to break into the industry and to prosper once in. The seminar will cover: a brief history and terminology used in the industry; a review of the supply chain to examine where each company may fit; explanation of safety/ environmental certifications and audits; show how each company can start doing business right away; discuss how social media can improve a company’s web presence; network with professionals in the industry as well as other businesses, and more. For more information please contact HBW Resources.
Schneider National, Inc., a premier provider of truckload, logistics and intermodal services, announced it is adding 60 oilfield truck drivers to support its energy business on the Marcellus Shale Formation. The company is offering a $5,000 sign-on bonus to experienced drivers to join. No oilfield driving experience is required; Schneider will provide specific training. Positions are based within a 75-mile radius of Mansfield, PA, and Wilkes-Barre, PA. Relocation assistance will be provided to interested candidates living outside of the hiring areas. Schneider drivers working on the Marcellus Shale can expect to earn up to $60,000 per year with a paid orientation and comprehensive benefits package. Most drivers will also enjoy daily time at home while transporting materials into and out of the oilfields. The sign-on bonus and relocation assistance will be offered for a limited time only. Drivers interested in applying or learning more can visit www.schneiderjobs.com or call 800-44-PRIDE (800-447-7433).
Production data for April show how fracking has shattered not only the shale rock in formations like Texas’ Eagle Ford and Permian Basin but also the myths of “peak oil” and petroleum as an energy source of the past. As Mark Perry notes on his Carpe Diem blog (see post on July 1, 2013 at 5:44pm), Texas produced an average of 2.45 million barrels a day (bpd) of crude oil in April, according to the Energy Information Administration. That’s the highest average daily output for Texas in any month since April 1985 — 28 years ago. In only 2-1/2 years, the Lone Star State has doubled its crude output, making it what Perry dubs Saudi Texas and reversing a 23-year decline that fueled speculation that the maximum rate of petroleum extraction has been, or will soon be, reached. At the current pace of output gains, Texas’ production will likely surpass 3 million bpd by year-end, pulling it ahead of Venezuela, Kuwait, Mexico and Iraq to become the equivalent of the ninth largest oil-production “nation” in the world.

The Senate Finance Committee took less than 10 minutes to approve a measure that, if the House and Texas voters agree, would direct about $900 million more a year to the state’s highways. SJR 1, a proposed constitutional amendment, was approved 12-0 and could come to the Senate floor for approval as soon as July 9, when the Senate returns from a weeklong recess of this second special session. Identical resolutions filed in the House have not yet been scheduled for committee hearings. SJR 1 would redirect oil and gas severance taxes from the state rainy day fund to the Texas Department of Transportation (TxDOT). In its current form, it specifies that the money could not be used to pay for toll roads, a stipulation added in the House during the first special session. The measure includes a requirement that the amount of money going to TxDOT would be reduced or eliminated if the rainy day fund balance were to fall below what would be a moving threshold. For the first payment to TxDOT, which wouldn’t occur until November 2014, that threshold would be about $4.8 billion
As Pioneer Natural Resources steps up its operations in the Spraberry/Wolfcamp Shale, it has partnered with another local company to help recycle frack water and produced water from its wells. Roanoke-based Fountain Quail Water Management announced the partnership Thursday with Irving-based Pioneer to set up recycling operations near Midkiff by the third quarter of 2013. Fountain Quail will set up two Nomad recycling machines right at the wastewater disposal well so they can capture much of the produced water and frack water that comes from Pioneer’s nearby frack jobs and producing wells. The water will be converted back into freshwater so Pioneer can use it in another fracture stimulation.
Statoil announced that as of July 1st, it has assumed operatorship for all activities in the eastern part of its Eagle Ford asset in Texas which fall mainly within Live Oak, Karnes, DeWitt and Bee counties. Statoil holds approximately 73,000 net acres in the Eagle Ford. Production stands at 20,200 barrels of oil equivalents per day (boe/d) (Statoil share) from around 300 producing wells.
Spectra Energy’s Texas Eastern Transmission LP is offering capacity on its Gulf Market Expansion Project, which would give Marcellus and Utica Shale gas access to growing Gulf Coast markets in Louisiana and Texas, including for future export of liquefied natural gas (LNG). For more information please contact HBW Resources.
Chesapeake Energy Corp. announced a deal to sell off assets for $1 billion in the Eagle Ford and the Haynesville shales to Dallas-based Exco Resources. In the northern Eagle Ford Shale, will acquire about 55,000 net acres in Zavala, Dimmit, La Salle and Frio counties, Texas. The properties contain 120 producing wells that had average net daily production of 6,100 barrels of oil equivalent during May. In the Haynesville Shale, Exco will get Chesapeake’s operated and non-operated interests in 9,600 net acres in Desoto and Caddo parishes, Louisiana. Included in deal: 11 units operated by Chesapeake and 42 units operated by Exco. The average net daily production from the Haynesville properties was about 114 million cubic feet of natural gas equivalent during May.
Houston-based ZaZa Energy Corp. said it will sell 10,300 acres in South Texas’s Eagle Ford Shale formation for $28.8 million. Sanchez Energy’s SN Marquis subsidiary, also based in Houston, is the purchaser, according securities documents. The acreage is located in Fayette, Gonzales and Lavaca counties, all east of San Antonio.
West Virginia
A study by West Virginia University Public School of Health chairman Michael McCawley found only one site where there was concern, the Maury pad in Wetzel County where high levels of benzene were found. Benzene levels at the Maury pad were 85 parts per billion, compared to a normal range between one and 30 parts per billion. There was more diesel truck activity at the Maury and the trucks could have produced most of the benzene detected, said McCawley.He said benzene levels at the other drilling sites in Wetzel, Marion and Brooke counties were more like the exposure one would experience living in a city. For more information please contact HBW Resources.
The first Pavillion working group meeting since the Environmental Protection Agency announced it is handing its investigation of contaminated water to the state is Aug. 2 in Riverton. The meeting is public. It begins at 1 p.m. at the Riverton Holiday Inn at 900 E. Sunset Dr. The Wyoming Department of Environmental Quality and the Wyoming Oil and Gas Conservation Commission will give updates and describe the future investigation of pits, well bore integrity and domestic water wells.
Energy Secretary Ernest Moniz, in his first interview since taking office last month, expressed firm support for the domestic natural gas industry, both in stressing his desire to quickly approve liquefied natural gas exports and backing the role of states in regulating hydraulic fracturing. “I think in the end there has to be a very, very strong state role there” for states, Moniz said in an interview on “Platts Energy Week.” “The situations are different in different states, the geologies are different,” he said. Moniz also downplayed environmental concerns about fracking, contending that incidents such as methane leakages are “relatively small” when compared with the number of wells being drilled. “I think the issues in terms of the environmental footprint of hydraulic fracturing are manageable,” he said. “They’re challenging, but manageable.”
The House Subcommittee on Energy and Power has scheduled a hearing for Tuesday, July 9, 2013 to focus on H.R. 1900, the Natural Gas Pipeline Permitting Reform Act. The Natural Gas Pipeline Permitting Reform Act, sponsored by Rep. Mike Pompeo (R, KS 4) would modernize the federal review process for natural gas pipeline permit applications. The legislation seeks to facilitate the construction of new natural gas pipeline projects by modernizing the permitting process and expediting approvals. It would spur job growth and provide greater certainty for interstate natural gas pipeline projects while preserving the critical environmental review processes necessary for each natural gas pipeline project.
The EPA will host two public webinars providing on a summary of recent workshops within its Hydraulic Fracturing Study Group in Tuesday, July 16. “Water Acquisition Modeling: Assessing Impacts through Modeling and Other Means” will be held at 1:00pm EST while, “Well Construction/Operation and Subsurface Modeling” will be held at 3:00pm EST.
Western governors have unveiled a regional 10-year energy “vision” that stresses cooperation among states in interstate projects such as transmission lines, increased oil production and modernization of pipeline infrastructure.Among goals of the plan are to put the United States on a path to energy security by increasing North American oil production, ensuring energy is clean, affordable and reliable by providing a balanced portfolio that includes renewable, traditional and nontraditional resources and increase energy productivity associated with electricity and natural gas. For more information please contact HBW Resources.
State regulators continue to be the primary overseers of shale natural gas development, but because of the speed at which the boom shifted — and continues to shift — the energy marketplace, the dynamic environment has created challenges for the energy industry and all of the stakeholders involved, according to, “The State of State Shale Gas Regulation” a report by Resources for the Future (RFF).
Steptoe and Johnson has published a study, “Below the Surface -The Legal Challenges of Shale Gas Production” which “set out to map the legal issues, trends and expenses below the surface of shale production” and found that on average, shale developers spend $3.4 million annually for litigation in shale plays. It found that areas that decision-makers of shale activities find the most challenging include: “Title and real estate, transactions, litigation, regulatory and environmental–in that order. When asked which matters require the most help from outside counsel, litigation is first, followed by title and real estate, and then private financing and related securities.” The study also found that 67 percent of respondents use litigation or trial to defend against suits; 65 percent use pre-trial settlement; and 56 percent said environmental disputes are of the most concern.
United Parcel Service Inc. will purchase 285 more natural-gas powered trucks in 2014, covering every new heavy-duty vehicle purchased for its small-package delivery business, its chief operating officer said. The purchases will build on a previously announced buy of 700 natural-gas trucks, said David Abney, the Atlanta-based company’s chief operating officer. UPS sees liquefied and compressed natural gas as a “bridge fuel” over the next decade, he said. UPS is also building nine additional natural-gas filling stations, Abney said. Three will be in Tennessee, which has a favorable regulatory environment and a year-round supply of natural gas available for transportation, he said. The world’s largest package-delivery company is also vowing to reduce diesel soot emissions 75 percent by 2020 and smog-forming nitrogen oxides by 60 percent. The company’s alternative-fuel trucks have logged 300 million miles since 2001 with a goal of reaching 1 billion by 2017. Through better information, route planning and telematics, UPS trucks drove 364 million fewer miles between 2001 and 2012, Abney said. UPS fleets travel about 2.9 billion miles a year. UPS now operates 2,723 alternative-fuel and alternative-technology vehicles, he said. The 285 additional natural-gas powered tractors and nine fueling stations the company has planned represent an investment of $75 million.
Procter & Gamble Co. is converting as much as 20 percent of its for-hire truck shipping to natural gas vehicles. Starting next month, the Cincinnati-based consumer-goods company will work with eight transportation carriers to achieve the goal within two years. The effort, according to P&G, should reduce greenhouse gas emissions by nearly 5,000 metric tons — equal to the amount produced by 1,000 passenger vehicles in a year. The project’s initial phase calls for converting 7 percent of P&G’s North America for-hire transportation network to natural gas powered trucks. The move involves 16 states with an average length of haul of more than 280 miles, including two 1,000-mile truck lanes.The for-hire arrangement is in addition to P&G’s 22 natural gas vehicles.
The success of the shale revolution will be slow to replicate outside the United States because of limited access to drilling equipment and skilled personnel, according to influential oil analyst Leonardo Maugeri. Maugeri has produced an assessment of the U.S. oil industry, “The Shale Oil Boom: A  U.S. Phenomenon.” But he is too pessimistic about the potential for shale production in the rest of the world and its role in restraining medium-term and long-term oil prices. Citing Baker Hughes, Maugeri notes that more than half of the world’s drilling rigs are employed in the United States. Ninety percent of them are equipped to drill horizontal wells, and almost all oil and gas wells in the United States are now fractured to stimulate production. In the rest of the world, by contrast, fracturing is used on fewer than one well in 10. This leads him to conclude that shale is likely to remain a uniquely U.S. phenomenon for a while. For more information please contact HBW Resources.
A report, “Partnering Natural Gas and Renewables in ERCOT” from The Brattle Group argues widespread suggestions that abundant supplies and low prices for natural gas are pushing out wind and solar, focuses too much on installation costs and ignores the advantages that keep renewable capacity competitive, as well as the significant synergies between gas and renewables. In the short term, despite low gas prices, renewables are called upon first, especially in competitive markets, because they have the lowest variable costs. In real-world day-to-day operation, gas and renewable capacity complement each other to a degree sufficient to push out other options. Texas’s large wind capacity has resulted in substantial ramping episodes that need to be backed up by gas-fired generation. In 2009, the report notes, ramping events averaged five hours, and ranged from 4,613 MW up to –4,788 MW down. Added renewable capacity offers an important hedge against fuel gas price increases. While up-front costs of gas-fired capacity are lower, future fuel prices are uncertain, and gas has historically been quite volatile. The variable costs of renewable capacity are known, because the costs are almost entirely up-front.
The former forecasting head of the Organization of Economic Cooperation and Development (OECD) believes the shale gas revolution could spark a slide in oil prices over the next 10 years. In a report written with Puma Energy, Dr. John Llewellyn described the invention of ‘fracking’ to extract the gas as ‘game changing technology’. As a consequence Llewellyn would not be surprised to see the price of oil fall to around $50 a barrel between now and 2020.
A group of oil-pipe makers led by United States Steel Corp. filed a U.S. trade complaint against competitors in nine nations, alleging goods from those countries were sold in the U.S. market below cost and, in some cases, benefited from government subsidies. The U.S. coalition made the complaint with the International Trade Commission in Washington. Countries named in the complaint are India, Korea, the Philippines, Saudi Arabia, Taiwan, Thailand, Turkey, Ukraine and Vietnam. Producers including U.S. Steel won U.S. duties averaging 86 percent on Chinese pipes used in oil and gas wells, after complaining in a similar case brought in 2009 that they were being hurt by below-market prices for Chinese products. The latest case, if successful, would be a “landmark record win for the U.S. steel industry” because it would create a defense against imported oil-pipe products, said Michelle Applebaum, managing partner at consultant Steel Market Intelligence in Chicago. For more information please contact HBW Resources.
Capex SA, the Argentine natural gas and power producer, will drill its first shale well this month, Chief Financial Officer Claudia Biasotti said.  The well will be in the company’s Agua del Cajon gas field, part of the VacaMuerta shale formation in Neuquen province. Capex has an agreement with Houston-based Halliburton Co. (HAL), for the hydraulic fracturing of 11 wells. Capex is also seeking to boost the price at which it sells newly discovered gas to the government by potentially recreating a power-rate compromise it reached on May 31. Under that agreement, Capex said it wouldn’t sue the government for a decade of frozen rates in exchange for a higher electricity tariff. The company is holding talks with the Argentine government about a similar deal that may triple the price it gets for the new gas.
Ireland-based Falcon Oil & Gas Ltd. reported that Hess Australia (Beetaloo) Pty Ltd. (Hess) has forfeited its rights to earn 62.5 percent in three of the permits in northern Australia’s Beetaloo Basin as it did not commit to drilling the five wells by the agreed deadline of 10 p.m. on June 28. Hess was granted the rights to farm-in to the three permits in accordance with the Participation Agreement of April 28, 2011. This was amended Aug. 2, 2012 to give Hess more time to make a decision on its drilling commitment in the Beetaloo permits. Falcon’s Board rejected a late request by Hess to defer the election date again. Falcon owns the four exploration permits covering approximately 7 million acres (approximately 28,000 square kilometers) in the Beetaloo Basin. RPS Energy, in its independent Competent Person’s Report dated Jan. 1 estimates gross un-risked recoverable prospective resource (play level) potential of 162 trillion cubic feet of gas and 21,345 million barrels of oil (P50) for Falcon’s Beetaloo Exploration Permits.
China is reconsidering its most recent Five-Year Plan’s target for natural gas because of the challenges in developing shale gas resources, according to a China energy sector source. The 12th Five-Year Plan for the world’s second-biggest economy set ambitious targets for domestic natural gas, according to The 2013 China Greentech Report: China at a Crossroads. From a baseline of contributing 4 percent of China’s energy mix in 2010, the plan called for natural gas to provide 8 percent of the mix in 2015 and 10 percent in 2020.
Global oilfield services company Schlumberger has announced the official opening of the Schlumberger Reservoir Laboratory in Chengdu, China. The 32,000 sq. ft. facility will offer rock analysis services to support expanding exploration activity in unconventional shale plays and is the newest addition to the Schlumberger global network of reservoir laboratories. The laboratory offers an integrated suite of petrophysical and geomechanical services to help customers improve hydrocarbon recovery and maximize production throughout the life of their reservoirs. For more information please contact HBW Resources.
New Zealand Oil & Gas indicated that the rig used to drill the Parit Minyak-2 (PM-2) exploration well, located in the Kisaran PSC in onshore Sumatra, is being moved to the Parit Minyak-3 (PM-3) drill site. Drilling at PM-3 is expected to begin before the end of July. Meanwhile, fracture stimulation of the Pemantang 4 formation in the PM-2 well is scheduled for late August/September 2013.
Dalia Grybauskaitė, president of Lithuania, spoke during the EU summit last week, and when asked about shale gas, said she believes that the US will soon start exporting cheap shale gas which will mean that “the gas sector will look different and we, Europeans, need to be prepared for it because today energy prices in Europe are absolutely uncompetitive. We are paying a lot and this jeopardizes our recovery and development. We need to invest into interconnecting ourselves and into the security and diversification of supply. This means also to be able to accept liquid gas from anywhere, from Norway or the United States,” she said, adding that “we don’t want to be dependent on Russian supply, for example.” She also said that she realizes that there are concerns over the safety of fracking, but it is essential to do so in order to find out what the true potential of shale gas in the country is: “To not know what kinds of resources we have ourselves is a huge and a very costly mistake.”In May it was reported that the Lithuanian parliament had amended its shale exploration laws which now require an environmental impact study, limited use of radioactive and toxic materials and rules for waste storage.
The U.S. shale gas boom is shaping up to be an important competitive advantage for manufacturers – in Mexico. U.S. natural gas exports to Mexico hit a record last year, helping hold down the country’s energy costs as its industry grew rapidly. Planned new pipelines that will enable further rapid growth in imports from the U.S. will strengthen and lock in that advantage, and help to give Mexico a competitive edge over other emerging economies for as long as North American shale production remains strong. China’s manufacturing labor costs overtook Mexico’s last year because of its high rates of wage inflation, and its energy costs are also significantly higher. By 2015, China’s total manufacturing costs will be about 95 per cent of US levels, with gas contributing about 4 percentage points of that, while Mexico’s will be just 89 per cent, with gas at just 1 percentage point, according to new research from the Boston Consulting Group.
San Leon Energy has announced that it will start the process of fracking its first well in the Polish Baltic Basin for shale gas on 29th June and expects to share results with the market by the middle of August. According to chief executive Oisin Fanning, “I think this is a very key summer for Poland. I think by the time the summer’s finished I’d be surprised if you don’t see 10 to 15 fracks done at least.” He said that that a vertical frack has the added advantage of costing about a third of the price of a horizontal frack, and gives an idea of flow rates. For more information please contact HBW Resources.
Russian President Vladimir Putin called on gas exporting countries to come up with a single pricing mechanism and resist EU market rules. The Gas Exporting Countries Forum meetings are designed to group the natural gas producers into a tight-knit community of nations resembling the OPEC oil cartel. Putin said that it was imperative for the countries to defend the practice of tying gas prices to those of oil and fighting the more temperamental nature of the spot market. He also defended long-term contracts that bind clients to purchase gas within a specific price range for a number of decades and which Russia has recently been forced to abandon under pressure from some European states.EU nations in particular abhor the link between the price of oil and gas because of the expanding supplies of the latter that have come in recent years thanks to the booming liquified natural gas (LNG) market.
The only fracking licenses for gas extraction in Scotland are going to be dropped. Australian-owned Dart Energy is in discussions with the Scottish Environment Protection Agency over ending its permits for two sites near Canonbie in Dumfries and Galloway. That would mean that, in contrast to England, no hydraulic fracturing to extract underground shale gas would be allowed in Scotland. Huge shale reserves were identified across northern England last week by the British Geological Survey, with strong backing from the Westminster government. Abandoning fracking in Scotland could help pave the way politically for Dart’s plans to exploit coal-bed methane using other techniques at Airth, near Falkirk, and at Canonbie, where the company is working with the Duke of Buccleuch’s estate.
Turkey’s Energy Minister TanerYıldız, said it would be another 7 years before the country can exploit its shale gas reserves as it can take anywhere between 3-15 years to study the feasibility of a shale project as well as to garner enough international investments. He also said that the ministry is planning on sending a committee to North America to learn about the process of shale development while also preserving the environment.
JKX Oil & Gas reported Tuesday that it has started its multi-stage frac operation on well R-103 on its Rudenkovskoye license in Poltava, Ukraine. The well was drilled to a total depth of 15,225 feet into the Rudenkovskoye Devonian sandstone reservoir with a horizontal section of just over 3,280 feet at a true vertical depth of 11,975 feet, according to JKX. The operation, which consists of nine stages, is expected to take around 40 days to complete, with initial flow expected in mid-August. JKX said that Schlumberger, the frac contractor, plans to inject more than 1,200 tons of proppant, supported by up to 35,000 barrels of frac fluid.
United Kingdom
package of community incentives were unveiled by the government– designed to overcome sometimes strong local opposition to “fracking”, the technique that has unlocked vast reserves of shale gas in the US. Shale companies will pay communities £100,000 per well where fracking takes place and 1 per cent of revenues once production starts. Ministers said new guidelines would be issued on the planning and permitting regime to make the approval process for fracking clearer and more streamlined. It also launched a consultation on tax incentives to encourage shale exploration. For more information please contact HBW Resources.
London Mayor Boris Johnson said he’s open to fracking for gas under the U.K. capital to meet the city’s demand for energy.  The headroom between energy supply and demand will drop to just 2 percent in two years, which will force some industries not to operate at peak times, Johnson said. The U.K. government said June 27 that shale-gas fields in northern England are potentially big enough to meet demand for 47 years. The countryside south of Britain’s biggest city may hold 700 million barrels of recoverable shale oil, according to the U.S. Energy Information Administration. Johnson said, “It is time for maximum boldness in energy supply.” He added, “If reserves of shale can be exploited in London we should leave no stone unturned, or unfracked, in the cause of keeping the lights on.”
The ‘Unconventional Gas Conference – Minimising Environmental Impact, Moving Development Forward’ is a one-day shale gas conference and networking event which will take place on September 26th, 2013, in London at an undisclosed hotel in Russell Square, central London. For more information on the event, please check out the events brochure.
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
Twitter: @BoOllison
Contact Information
If you have any general questions, please contact us anytime. Previous versions of the HBW Ollison Hydraulic Fracturing Report, the HBW Greenfield Offshore Energy Report, the Forsgren Environmental Report, and daily updates and new Member profiles can be viewed at the new Intelligence Tab on the HBW Resources website at: http://hbwresources.com/intelligence/.  Hope you all have a great day!
Michael Zehr
HBW Resources
1666 K Street, NW, Suite 500
Washington, DC 20006
Direct: 202-429-6081
Cell: 202-277-3927
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