National and International Fracking News & Events

HBW Resources Hydraulic Fracturing Report (National &International)

Below is a summary of publicly available activities currently underway at the national and international level that could impact natural resource extraction, particularly related to hydraulic fracturing and shale development.  To better utilize this document, we have broken the information down by region. 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. Be sure to check each week for updates in various regions that pertain to your business operations.
 
Highlights

  • Sen. Mary Landrieu (D, LA) took over the Chairmanship of the Senate Energy & Natural Resource Committee, while Rep. Doc Hastings (R, WA 4), Chairman of the House Natural Resources Committee, announced his intention to not seek re-election
  • U.S. shale-gas production is expected to deliver an $50 billion cash infusion in the form of tax and royalty payments to strapped federal, state and local governments
  • Growth of U.S. shale oil production has and should continue to have a moderating effect on global oil prices
  • The U.S. market for fracking fluids was valued at $18.4 billion in 2012 and $26 billion for 2013. BCC Research projects the market to grow to nearly $37.3 billion by 2018, and register a five-year compound annual growth rate of 7.4% from 2013 to 2018
  • Apache Corporation announced an agreement to sell all of its operations in Argentina to YPF Sociedad Anonima for a cash payment of $800 million plus the assumption of $52 million of bank debt
  • An independent review of hydraulic fracturing in Nova Scotia will keep busy until May looking at more than 500 pieces of evidence
  • Three social action groups in Canada’s Northwest Territories have launched a petition against fracking operations in the territory
  • China has discovered a major shale gas block with a maximum daily output of 105,000 cubic meters
  • Taiwan will import 800,000 tons of U.S. shale gas every year, starting in 2017
  • Backers of shale gas scored a victory when a European Parliament committee exempted the industry from beefed-up environmental impact assessments
 
National
Sen. Mary Landrieu (D, LA) is taking over the top spot on the Energy and Natural Resources Committee, giving the oil and gas industry ally a powerful role as she campaigns for re-election. Landrieu is set to wield the committee gavel alongside another senator from the oil patch — Lisa Murkowski (R, AK) — as a result of a leadership shuffle. Landrieu has not formally outlined her priorities for the panel, but she likely would seek to advance her proposal to give states a greater share of royalties for offshore oil and gas production near their coastlines. The former energy committee chairman, Sen. Ron Wyden (D, OR) convened a hearing on the Landrieu-Murkowski revenue-sharing bill last year, but the industry-backed measure is controversial and has a relatively high price tag, two big obstacles in an election year. Landrieu stressed she would move an “inclusive, bipartisan” agenda, with a focus on creating jobs. “Everything we do will be part of helping to build the middle class and expanding opportunities for entrepreneurs in the domestic energy sector,” Landrieu said in a statement. “Increasing domestic energy production and fortifying and expanding the infrastructure that connects producers, refiners and consumers will help us achieve this goal.”
 
Rep. Doc Hastings (R, WA 4) will not seek reelection in 2014, he announced. Hastings, the chairman of the House Natural Resources Committee, was first elected to the House in 1994. “Last Friday, I celebrated my 73rdbirthday and while I have the ability and seniority to continue serving Central Washington, it is time for the voters to choose a new person with new energy to represent them in the people’s House,” Hastings said in a statement. For more information, please contact HBW Resources.
 
Sen. Ted Cruz (R, TX) detailed a plan to expand domestic energy production by beating back a slate of Obama administration regulations that he says are standing in the way of a national oil and gas boom. Decrying U.S. energy policy as stuck in the 1970s, the Texas Republican laid out the major points of sweeping legislation he is preparing to introduce in the coming weeks. “Part of the reason we see this out-of-control regulatory state is that Congress has outsourced its responsibilities — has handed it to unaccountable regulators who don’t actually have to see the American people,” Cruz said during remarks to the Heritage Action for America’s 2014 Conservative Policy Summit. The senator’s plan, which he’s dubbed the “American Energy Renaissance Act,” would prevent the federal government from undermining the American Energy Renaissance and the jobs it creates through the following measures:          
  • Prevent federal regulation of hydraulic fracturing
    • Leave regulation of hydraulic fracturing in state hands
  • Improve domestic refining capacity
    • Streamline permitting process for upgrading and building new refineries
    • Repeal the Renewable Fuel Standard
  • Improve Process to Develop Energy Infrastructure
    • Approve and allow private sector to build the Keystone pipeline
    • Remove barriers to developing and approving additional national pipelines and cross-border energy infrastructure
  • Stop EPA Overreach and the War on Coal
    • Exclude greenhouse gases from regulation by EPA and other federal agencies
    • Stop certain EPA regulations that will adversely impact coal and electric power plants
  • Force Congress and the President to Vote on EPA Regulations that Kill Jobs
    • Require both Congress and the President to approve any EPA regulation that has a negative job impact
    • Support passage of the REINS Act, separate piece of legislation not included in this bill, which would require congressional approval of all major rules and regulations.
  • Broaden Energy Development on Federal Land
    • Increase energy development on federal land
    • Provide states the option of leasing, permitting and regulating energy resources on federal lands within their borders; or
    • If states do not wish to manage energy development on federal lands within their borders, the federal leasing, permitting and regulating will be reformed to increase energy development by:
      • Streamlining permitting for development on federal lands
      • Improving certainty in the leasing and development process
      • Expanding development of energy on federal lands
    • Expand energy development in National Petroleum Reserve in Alaska
    • Expand energy development on Indian lands
    • Open up the Coastal Plain of Alaska (ANWR) for development
  • Open Offshore Exploration
    • Expand the offshore areas of the Outer Continental Shelf available for development
    • Streamline the permitting process for additional offshore exploration
  • Expand U.S. Energy Exports.
    • Expand LNG exports by facilitating permits
    • End the crude oil export ban
    • Prevent excessively broad environmental review of coal export terminals
  • Dedicate Additional Revenues to a Trust Fund for Debt Reduction
    • Direct all additional revenues generated by exploration and drilling on federal lands (excluding the share allocated to the states) exclusively to national debt reduction—“Debt Freedom Fund.”
 
The growth of U.S. shale oil production has and should continue to have a moderating effect on global oil prices, according to a Fitch Ratings report titled “Global Impact of U.S. Shale Oil.” U.S. oil production has increased by 3 million barrels per day (mmbd) since its low point of approximately 5 mmbd in 2008. Projections have future production continuing to increase through 2019, perhaps to as much as 9.6 mmbd according to EIA estimates. The increase to date is equal to about 3% of total world consumption, which is enough to have a significant impact on world oil prices by preserving the Organization of the Petroleum Exporting Countries’ (OPEC) spare capacity. Fitch notes that rising U.S. production has offset ongoing supply disruptions in the Middle East, and raised expectations of higher future supply. Combined with other factors, this has contributed to a trend of increasing backwardation in the forward price curve for oil. While many of the benefits of the U.S. oil and gas fracking revolution accrue only to the U.S., Fitch believes all oil-consuming countries benefit from the stabilizing effect of increased U.S. output on world oil prices. This includes improvements to current account balances and lower inflation.
 
According to a new technical market research report, “The U.S. market for Fracking Fluids,” from BCC Research, the U.S. market for fracking fluids was valued at $18.4 billion in 2012 and $26 billion for 2013. BCC Research projects the market to grow to nearly $37.3 billion by 2018, and register a five-year compound annual growth rate of 7.4% from 2013 to 2018. The market for fracking fluid varies considerably based on geographic region. The fastest growth rate over the next five years will occur in the Northeast region. The region predominantly produces natural gas from the Marcellus Shale, located underneath Maryland, New York, Ohio, Pennsylvania, Virginia, and West Virginia and also from the Antrim Shale, underneath the state of Michigan. The target fuel type for harvest strongly influences the fracking fluid market. Harvesting shale oil through hydrofracking uses approximately 10 times more fracking fluid than harvesting shale gas. Specifically, the shale oil process consumes 10.1 gallons of water per 1 million British Thermal Units (MMBtu) versus 1.2 gal of water per MMBtu for the shale gas process. Thus, though there is a much greater amount of technically recoverable resources (TRR) for gas shales, the market for fracking fluid in the oil shale regions is just as attractive. The greatest external market drivers for fracking fluids include the activities of the well operators and oil services companies, and both not only drive the discovery of new shales, but also influence the type of hydrofracking technology implemented to maximize extraction. Other factors that strongly influence demand include the technological progress of water treatment and recycling of fracking fluids, and the establishment of new water supply channels and substitutes for water during the fracking process. For more information, please contact us.
 
Freezing temperatures are hampering U.S. natural gas deliveries this winter despite ample production of the heating fuel, exposing weaknesses in a supply network strained by unprecedented demand. The United States is home to some of the world’s largest natural gas deposits and supplies have flooded the market over the last five years, erasing concerns about dwindling output. But the coldest winter in decades has drained stockpiles quicker than ever, forced rationing, and pushed prices to all-time highs, revealing the difficulties of storing and transporting fuel across the continent. Unlike for crude oil, there is no government run strategic reserve that can be tapped in times of emergency. In many ways it is no surprise that supply for natural gas is strained. January saw two blasts of arctic cold, boosting heating demand for homes and businesses in most of the country to record highs. Other heating fuels like propane and fuel oil have suffered supply shortages. The severe cold has also revealed potential structural shortfalls that could push prices higher not just this summer as depleted inventories are restocked, but in coming years if investments are not made to increase storage and pipeline capacity. With nearly two months of winter left, more gas has been pulled from the 400 U.S. storage sites this winter than the whole of last winter, towards a level that many analysts consider dangerously low. Gas stockpiles at the beginning of the withdrawal season in early November topped out at 3.8 trillion cubic feet (tcf) but have since fallen to just 1.9 tcf, nearly 20 percent lower than the same time last year, and are expected to finish winter around 1.2 tcf, according to a Reuters poll. Many analysts see 1 tcf as the base level before a loss of pressure makes it harder to draw more gas from storage. Some power providers have asked customers to use alternative fuels like heating oil. Prices have risen higher as utilities scramble to buy gas in the spot market to preserve falling stockpiles, a rare move so early in the season.
 
Inexpensive natural gas will have a greater impact on U.S. manufacturing over the next several years than is commonly assumed, giving the U.S. a powerful — and unique — cost advantage that will benefit a wide range of industries across the full value chain, from feedstock to finished goods. This cost advantage has already started to boost investment and employment and will persist for at least five years, according to new research released by The Boston Consulting Group (BCG). While other studies have assessed the positive economic impact of rising U.S. production of natural gas on the domestic energy sector and on industries such as petrochemicals that use natural gas as a raw material, the new BCG analysis finds that virtually every manufacturer in the U.S. is poised to benefit — directly or indirectly. Low U.S. electricity prices in natural-gas-fired plants, for example, are already encouraging investment in energy-intensive industries such as steel and glass. Not yet visible are the advantages that makers of intermediate products, such as plastic-resin pellets, and makers of finished goods, such as plastic toys and plastic auto parts, will reap from cheaper inputs. Even in less energy-intensive industries, cheap natural gas will shave 1 to 2 percent off of U.S. manufacturing costs as the benefits eventually flow downstream through the value chain. The energy cost advantage is amplified by the fact that overall U.S. manufacturing competitiveness is already improving owing to relatively low labor costs compared with those of other developed economies, rapidly rising wages in China, and high productivity, as explained in previous BCG publications. The research is part of the firm’s ongoing Made in America, Again series produced by its Operations and Global Advantage practices. By 2015, natural gas will account for only 2 percent of average U.S. manufacturing costs and electricity will account for just 1 percent, according to BCG estimates. By contrast, natural gas will account for between 5 and 8 percent of manufacturing costs in Japan and in Europe’s major exporting economies, where it is more expensive, while electricity will account for between 2 to 5 percent in Japan and Europe. Cheap energy will also help further narrow the cost gap between the U.S. and China, where natural gas and electricity combined will account for 6 percent of manufacturing costs. For more information, please contact HBW Resources.
 
The Energy Information Administration said technological advances will increase the output of U.S. shale formations such as the Eagle Ford, even as it predicted the country’s overall crude oil production will decline. By implementing cutting-edge technology and experimenting with new processes, operators in domestic shale plays likely will surpass earlier production estimates, the information arm of the U.S. Department of Energy said in a monthly report. “Exploration and production companies are drilling many wells and constantly experimenting with new techniques to hydraulically fracture the tight formations,” EIA writes. “Technological innovation may cause a faster rise in drilling productivity than currently forecast.” As a result, EIA says it expects producers will overshoot the agency’s onshore estimate of 5.7 million barrels per day (bpd) for 2013 and forecast of 7.1 million bpd in 2015.
 
While the January jobs report was a disappointing for the national economy, it brought good news about growth in oil and gas. About 206,000 employees worked in the oil and gas extraction sector in January, about 1.8 percent more than in December, according to the Bureau of Labor Statistics. Nationwide, total employment was relatively stagnant at a seasonally adjusted 137.5 million. The employment story was positive across sectors of the energy industry. Manufacturing of petroleum and coal products had 112,700 employees on payrolls, a 1.6 percent increase from December. The chemicals sector grew by 1.2 percent to 796,100 people. Growth in coal mining was modest comparatively, with employment increasing just 0.2 percent to about 80,400 in January. The industry has been expanding rapidly in recent years, as the United States has experienced a boom in oil and natural gas production. Since January 2013, jobs in oil and gas extraction have increased by 6.6 percent.
 
Industrial and domestic waste materials are viable alternative sources of raw materials for engineering proppants — particles used to open rock fractures — for use in shale gas and oil recovery, according to Penn State material scientists John Hellmann and Barry Scheetz. Writing in the current issue of American Ceramic Society Bulletin, the researchers describe innovative approaches for engineering high-performance ceramic proppants from waste streams including mixed glass cullet, mine tailings and even drill-cuttings from shale gas wells themselves. According to Industrial Minerals, a market leading resource for minerals intelligence, each year more than 30 million tons of proppants are used in hydrofracturing, and demand is projected to increase to 45 million tons by 2017. Engineering proppants from waste materials offers not only a savings in costs but the additional environmental benefit of diverting millions of tons of waste from landfills. For more information, please contact us.
 
Recent advances in horizontal drilling and hydraulic fracturing techniques are being used to unlock vast stores of natural gas from underground shale-rock formations across the U.S. For government budgets, which were hammered by the drop in tax revenue resulting from the recession, this has created an unexpected and badly-needed windfall: In 2010, U.S. shale-gas production delivered an $18.6 billion cash infusion in the form of tax and royalty payments to strapped federal, state and local governments, according to a report by IHS. By 2013, those annual revenues are expected to hit $50 billion. Cumulatively over the next 25 years, unconventional gas development across the lower 48 states will generate nearly $1.5 trillion in tax and royalty payments—enough to put a significant dent in government deficits at every level. “By fully embracing America’s energy opportunity, we can accelerate growth, create millions of new jobs, free ourselves from some less-than-stable global suppliers, and create huge new revenues for government, which will help reduce budget deficits,” said Thomas J. Donohue, president and CEO of the U.S. Chamber of Commerce, in his 2013 State of American Business address in January. Skeptics have questioned projections of the shale-gas industry’s production levels and economic impacts. Through 2011 and 2012, critics accused the industry of exaggerating production figures and the potential of the Marcellus Shale, in particular, where the natural gas rush began around 2008.
 
Occidental Petroleum Corp. announced that it has reached a definitive agreement to sell its Hugoton Field assets to an undisclosed buyer for pre-tax proceeds of $1.4 billion. This sale was approved by the Board of Directors as part of Occidental’s strategic review to streamline and focus operations where it has depth and scale in order to better execute the Company’s long-term strategy and enhance value for shareholders. The Hugoton Field properties comprise interests in more than 1.4 million net acres in one of the largest natural gas fields in the United States, spanning southwest Kansas, the Oklahoma panhandle and eastern Colorado. Occidental’s average net production from the Hugoton Field properties in 2013 was approximately 110 million cubic feet equivalent per day, of which approximately 30 percent was oil. Occidental anticipates the transaction will be completed by April 30, 2014, subject to regulatory approval and transaction adjustments. Proceeds from this transaction will be used to partially fund the announced increase to the Company’s share repurchase program.
 
Oil and gas pipelines and the government agencies that regulate them are making progress in improving safety and responses by emphasizing greater involvement at all levels, the National Association of Regulatory Utility Commissioner’s Natural Gas Committee learned on Feb. 10. “All sectors of the industry have embraced the goal of zero accidents through continuous improvement,” Jeffrey Wiese, associate administrator for pipeline safety at the US Pipeline and Hazardous Materials Administration, said at the session during NARUC’s 2014 Winter Committee Meetings. “Regulators don’t operate pipelines,” Wiese said, adding, “Our job is to influence those who do. Some of this involves enforcing regulations, but a lot of it involves working together.” Within the companies, he said PHMSA has found that “management has to walk the walk, and not just talk the talk,” adding, “But there also has to be commitment at lower levels.” For more information, please contact HBW Resources.
 
The EPA is vastly underestimating the amount of climate-warming methane that leaks into the atmosphere in North America from sources including natural gas operations, according to a study, “Methane Leaks from North American Natural Gas Systems” published in the journal Science. But the leaks are not enough to erase the climate benefits of switching from coal to natural gas for power generation, the researchers say, although they say the benefits in some cases will be “small” or nonexistent. The standard approach to estimating total methane emissions is to multiply the amount of methane thought to be emitted by a particular source, such as leaks at natural gas processing plants, by the number of that source type in a region or country. The products are then totaled to estimate all emissions. The EPA does not include natural methane sources, like wetlands and geologic seeps. The natural gas infrastructure has a combination of intentional leaks, often for safety purposes, and unintentional emissions, like faulty valves and cracks in pipelines. In the United States, the EPA established the emission rates of particular gas industry components, from wells to burner tips, in the 1990s. One possible reason leaks in the gas industry have been underestimated is that emission rates for wells and processing plants were based on operators participating voluntarily. One EPA study asked 30 gas companies to cooperate, but only six allowed the EPA on site. It is impossible to take direct measurements of emissions from sources without site access.
 
ICF International has released its first-quarter 2014 Detailed Production Report. The report, a new information product offered by ICF, provides a complete outlook for US and Canada natural gas, natural gas liquids (NGL), and oil production through 2035. The report’s production projections are linked to ICF’s Natural Gas-Strategic Outlook, which provides additional insight into the future of the North American natural gas market. The report contains many findings that will be of interest to oil and gas producers, field services companies, and the investment community. Some projected trends from the current report are:
  • In the short run, reduced gas-directed drilling activity will continue to slow gas production growth from “dry” gas plays such as the Haynesville Shale, the Greater Green River Basin, the Barnett Shale, and the Fayetteville Shale. However, these plays are likely to rebound as market growth firm gas prices.
  • Conversely, liquids-rich plays have fared much better in the relatively low gas price environment that persisted throughout much of 2013. Consequently, US NGL production, which has increased by more than 600,000 barrels per day during the past five years, is expected to continue to grow and will likely double by the end of the projection.
  • In today’s relatively high oil price environment, output from the unconventional oil plays, such as the Bakken, the Cline, the Niobrara, and the Eagle Ford, are likely to continue to grow.
  • While high oil prices could promote growth of bitumen production in Western Canada’s oil sands, continued delays in construction of new crude transport capability present risks.
 
ICF International has released its outlook for U.S. and Canada natural gas, natural gas liquids (NGL), and oil production through 2035 for oil and gas producers, field services companies, and the investment community. In the short run, reduced gas-directed drilling activity will continue to slow gas production growth from “dry” gas plays such as the Haynesville Shale, the Greater Green River Basin, the Barnett Shale, and the Fayetteville Shale; however, these plays are likely to rebound as market growth firms gas prices, according to ICF. Conversely, liquids-rich plays have fared much better in the relatively low gas price environment that persisted throughout much of 2013. Consequently, ICF predicts that U.S. NGL production — which has increased by more than 600,000 barrels per day during the past five years — will continue to grow, likely doubling by the end of 2035.

Backers of shale gas scored a victory when a European Parliament committee exempted the industry from beefed-up environmental impact assessments. The Parliament’s Environment Committee overwhelmingly approved an update of EU law overhauling how and when environmental impact assessments, or EIAs, are performed, calling for more public input on projects ranging from bridges and ports to intensive livestock farming. The updated law includes strengthened rules to prevent conflicts of interest in the EIAs while restricting exemptions and taking new environmental factors such as biodiversity and climate change into account when carrying them out. But a bid by members of European Parliament to include the early stages of shale gas exploration within the new EIA regime was left out at the urging of Britain, Poland, Lithuania and a handful of other EU member nations that are making big bets on shale gas.” Despite Parliament’s requests, mandatory environmental impact assessments for the extraction and exploration of shale gas, regardless of the expected yield, were not included in the agreement,” the committee said in a statement. The law initially included mandatory completion of the full EIA procedure at each stage of shale gas projects, including during the exploration of phase. Polish MEPs, however, objected, contending it would hamper research on potential deposits, and was removed over the objections of Green Party members. The measure now goes to the full House during the March 10-13 plenary session in Strasbourg. For more information, please contact us.

A new report, “Hydraulic Fracturing Markets by Resource and Well Type – Global Trends & Forecasts” has been released by RnRMarketResearch. The report estimates the hydraulic fracturing market in terms of volume and value. The volume of this market is estimated in terms of million hydraulic horse power (million hhp) and value in terms of $million. This has been broken down into component regions and further split into countries. The hydraulic fracturing market is mainly concentrated in North America, where many leading oil field service companies – Schlumberger (U.S.), Halliburton (U.S.), Baker Hughes (U.S.), and other medium and small players – operate. While the North American hydraulic fracturing market is reaching maturity, the Rest of the World’s (ROW) market is still in its infancy. Australia, China, and Poland are expected to lead the ROW hydraulic fracturing market. Apart from the regions mentioned above, other areas are not expected to show a very significant moment in the forecast period of the report i.e. 2012 to 2017. Hydraulic fracturing will prove beneficial for the developing countries such as India, China, and Brazil. As the energy demand in these countries is increasing, fulfilling this demand domestically will enhance their economic growth.
 
The Arctic region holds significant untapped oil and gas resources, but Arctic development faces major competition from unconventional oil and gas resources and other alternative hydrocarbon sources, according to a panelist speaking at the Arctic Technology Conference in Houston. Oil and gas exploration is not a new phenomenon in the Arctic. Approximately 500 wells were drilled above the Arctic Circle in the 1970s and 1980s. The oil and gas industry and academia have conducted extensive research and development into Arctic exploration and production, including full-scale modeling and testing. According to the U.S. Geological Survey’s 2008 Circum-Arctic Resource Appraisal, the Arctic contains 412 billion barrels of oil equivalent, 25 percent of the world’s oil and gas resources. The decline in oil prices in the mid-1980s prompted the oil and gas industry to abandon Arctic drilling. The Exxon Valdez incident of 1989 didn’t help the industry’s image in terms of Arctic oil and gas activity. Today, global oil and gas companies are refocusing their exploration and production efforts on the Arctic due to high oil prices in real and normal terms; the fact that oil and gas resources are becoming harder to replace due to resource nationalism; and incentives within Russia to encourage development, Edward Richardson, analyst with London-based Infield Systems, told conference attendees. “Oil and gas companies are turning to the Arctic to fill their hopper with discoveries for the next generation of projects,” said Richardson. As a result, capital expenditures for Arctic exploration and production are expected to grow between 2014 and 2018. However, some spending plans earmarked for 2017-2018 could be delayed until the early 2020s. Much of the planned capital expenditures for Arctic oil and gas activity will focus on Norway, northeastern Canada, the Russian sub-Arctic and the Russian Arctic Shelf. From 2014 to 2018, $3.4 billion is expected to be spent in Norway, $3.2 billion in northeast Canada, $3.2 billion in the Russian sub-Arctic, and $2.7 billion on the Russian Arctic shelf.
 
Argentina
Apache Corporation and its subsidiaries announced an agreement to sell all of its operations in Argentina to YPF Sociedad Anonima for cash payment of $800 million plus the assumption of $52 million of bank debt as of June 30, 2013. YPF paid a $50 million deposit on the transaction, which is expected to be completed in the next 30 days. The transaction is subject to customary post-closing adjustments. “Over the past year, Apache has taken decisive steps to focus its portfolio on repeatable and profitable long-term growth in areas where the company has industry-leading positions, such as its deep inventory of liquids-rich drilling opportunities onshore North America and international assets generating large free cash flows. This transaction is consistent with that strategy,” said G. Steven Farris, chairman and chief executive officer. According to Miguel Galuccio, YPF CEO, “This is an excellent opportunity to add to YPF assets an active operation with significant reserves of conventional gas and non-conventional resources.” For more information, please contact HBW Resources.
 
Argentine state-run oil company YPF said that it had signed a memorandum of understanding for Malaysian energy company Petronas to invest in its massive Vaca Muerte shale formation. Under the preliminary agreement, the companies would jointly develop a 187-square-kilometer (72-square-mile) swath of Vaca Muerta in the southern Patagonia region, YPF said in a statement. YPF, which was nationalized in 2012 through a seizure of Repsol’s majority stake in the company, has been seeking international partners to help it develop Vaca Muerta. Vaca Muerta is considered one of the world’s biggest known deposits of unconventional energy, with 661 billion barrels of oil and 1,181 trillion cubic feet of natural gas resources, according to YPF.
 
Australia
Western Australia’s Department of Health has outlined its concerns about the emerging unconventional gas industry, saying it could be a risk to water supplies and the atmosphere if handled poorly. Giving evidence to a Parliamentary inquiry today, two of the department’s senior officials said hydraulic fracturing, or “fracking”, potentially posed several dangers to public health. However, the agency said it was “happy” with how the Department of Mines and Petroleum was managing the development of new regulations that would govern fracking in Western Australia. The Health Department said it was most worried about the risk of contamination to groundwater or surface water supplies in the event the chemicals used in the fracking process escaped into the environment.
 
Canada
Three social action groups in Canada’s Northwest Territories have launched a petition against fracking operations in the territory after oil giant ConocoPhillips began exploration without an environmental review. A horizontal hydraulic fracturing (fracking) exploration near Tulita, Northwest Territories, was allowed by the National Energy Board and the Sahtu Land and Water Bard. The petition was created in an attempt to have the Legislative Assembly use its authority under the Mackenzie Valley Resource Management Act to subject any fracking applications in the territory to an environmental assessment — which includes public hearings. Currently the petition is up on the assembly’s website, in a section called e-petitions, where people, community groups, and organizations can raise issues, bring them to the Assembly and allow it to consider the need for change within the territory. It has garnered 136 signatures since it launched on Friday. Other companies have applied for fracking exploration in the Sahtu region. Legislative Assembly Member Norman Yakeleya, a Sahtu Dene, said that there is still more to learn about the impacts of fracking, but insists the energy board did their due diligence, and that communities will reap the benefits of development. “We have oil and gas exploration, we have a number of companies that want to come into our communities and look for oil. They have committed dollars,” said Yakeleya. The social action groups are hoping the petition will gain traction and get the government to look deeper into the environment effects of fracking. The petition will remain open to signatures until March 7.
 
Nine people starting an independent review of hydraulic fracturing in Nova Scotia will keep busy until May looking at more than 500 pieces of evidence. The panelists laid out ground rules at their first meeting Wednesday at Dalhousie University in Halifax. The goal is to “make sure that we take every possible impact of hydraulic fracturing into account from all perspectives,” said Cape Breton University president David Wheeler, directing the review. That is a big task for an industry that operates all over the world and has been the subject of intense debate for years. The panel also wants to be transparent about its conclusions, but it will not make the meetings public. So it has chosen an approach of debating furiously in private and then releasing the results through a series of exhaustive papers. The panel members will write or commission papers on different aspects of fracking: waste water, for example, or health or economic effects. Each paper will draw on dozens of other documents and sources. The panel will read drafts, edit them at their remaining five meetings and then release them publicly as they go along. “That cycle should play out for probably seven or eight papers,” said Wheeler. “And then those papers will become the basis of much of the final report.” The estimated cost of the review is $100,000, with an added $35,000 for the aboriginal consultation. The panel members are paid a small honorarium of around $1,500 each. For more information, please contact us.
 
Enbridge Inc.’s plan to expand the capacity of its Canada-to-U.S. Alberta Clipper pipeline by 120,000 barrels per day has hit a snag, the company said, as getting a U.S. presidential permit for the project is taking longer than expected. Enbridge, Canada’s largest pipeline company, which also reported a lower-than-expected quarterly profit on Friday, said it no longer expects to get the permit amendment for the Alberta Clipper expansion in time to start pumping more oil at midyear, as it had planned. Enbridge is no longer saying when it expects to get the go-ahead for the project, which involves adding pumping capacity to the existing Alberta Clipper line, which now carries 450,000 barrels per day from Hardisty, Alberta, to Superior, Wisconsin. Once a routine administrative matter, getting presidential permits for pipelines that cross the U.S.-Canada border have become politicized as environmental groups battle TransCanada Corp.’s Keystone XL pipeline project and the expansion of production at Canada’s oil sands.
 
The International Institute of Concern for Public Health (IICPH) called for a moratorium on hydraulic fracturing. IICPH, “strongly believes that the Precautionary Principle should be invoked and applied to the practice of fracking for fossil fuel. Where there are threats of serious or irreversible damage, lack of full scientific certainty should not be used as a reason for postponing measures to prevent environmental degradation. In the case of hydraulic fracturing, there is potential for serious or irreversible harm, from toxicity of fracking chemicals and waste effluent that contaminates food supply, air, soil, surface and ground water; from radioactive chemicals released by uranium-bearing rock; and from seismic events triggered by the explosive force used in the fracking process. Therefore, we strongly call on governments where this practice is occurring or contemplated, to pronounce a moratorium on both seismic testing and mining for gas/oil in shale beds, to protect public health and environment from further harm and to ensure that further study is undertaken.”
 
China
China has discovered a major shale gas block with a maximum daily output of 105,000 cubic meters in its southwest province of Guizhou, as the country looks to make use of modern technology to meet its rising energy needs. The official Xinhua news agency, citing the Chinese Ministry of Land and Resources, said refiner Sinopec discovered the shale gas well located at a depth of 4,417 meters, the deepest so far in the country. The ministry added that the discovery marks a major breakthrough in China’s deep shale gas drilling. The project is named Dingye-2HF and is situated in Xishui county of Guizhou province. It is expected to have an average daily output of 43,000 cubic meters, according to the ministry. Another shale gas block that was located in Fuling District of southwest China’s Chongqing Municipality, yielded an output of 150,000 cubic meters per day in 2010. In 2013, China produced more than 2 million cubic meters of shale gas per day. By 2030, unconventional oil and gas production is expected to account for one-third of the country’s total production. According to a shale gas plan for 2011-2015, China aims to produce 6.5 billion cubic meters of shale gas annually by 2015. For more information, please contact HBW Resources.
 
Cyprus
China is looking at playing a role in Cyprus’ multi-billion-dollar plans to develop the island’s natural gas reserves, including possible investment in a liquefied natural gas (LNG) export terminal. Cyprus hopes to attract large investors to take a stake in its gas fields, an option which a Chinese delegation is in Cyprus to discuss. “There is very strong interest from China… in energy, in the whole value chain, upstream, downstream and midstream,” Cypriot Energy Minister George Lakkotrypis told Reuters. He said the Chinese delegation includes China Shipbuilding Industry Corporation. He said delegates were interested in the development of an LNG export terminal, including potentially a floating LNG facility (FLNG). “The Chinese delegation will also discuss taking a stake in Cypriot gas fields,” a source with the delegation told Reuters. China is seeking to access new gas sources around the world as its energy demand rises and the government encourages industry to move to cleaner gas from coal. Italian energy major ENI is also interested in Cyprus’ gas fields, and is set to sign a memorandum of understanding (MOU) with the government over the construction of an LNG export terminal. ENI has already signed an exploration and production-sharing contract with the government to search in three offshore areas, with exploration expected to begin in the second half of this year. In hopes gas can buoy the economy, which was rescued by an international bailout in March 2013, Cyprus has been planning the Vasilikos LNG export plant since U.S.-based Noble Energy discovered the Aphrodite field. The estimated $10 billion needed to build the LNG export terminal and infrastructure would be the largest investment in the island’s history. However, the project was thrown into doubt when drilling results revealed smaller reserves than initially hoped. Mean reserve estimates were reduced to 5 trillion cubic feet (140 billion cubic meters) from 7 tcf, which is not enough to justify building the LNG project unless more gas is found. The plans also face opposition from Turkey, which has said it would oppose any attempt to pre-sell Cypriot gas before a settlement over the divided island is found.
 
Ireland
The founder of shale gas firm Cuadrilla is planning a venture to frack in the Irish Sea, the BBC has learned. Dr. Chris Cornelius believes there are large volumes of offshore shale gas that could be extracted. Dr. Cornelius’ new firm Nebula Resources was awarded three licenses in the Irish Sea last month by the Department for Energy and Climate Change and hopes to begin exploration soon. “Certainly offshore shale gas is a new concept, and there’s no reason with the UK’s history of offshore development that we can’t develop these resources offshore,” he told the BBC. No longer involved with Cuadrilla, he now hopes to drill the world’s first offshore shale gas wells. The area covered by the Nebula licenses stretches west from Blackpool into Morecambe Bay, and is not far from the site where Cuadrilla has announced plans to drill and fracture two new onshore gas wells. Based on existing geological data, Dr. Cornelius believes that a considerable quantity of gas is in place – up to 250 trillion cubic feet, which would be more than Cuadrilla’s estimates for its onshore resources. There is also the possibility of finding oil. The British Geological Survey has estimated that the UK’s total offshore shale gas resources could be between five and 10 times the size of the resources available onshore.
 
Jordan
Jordan Energy and Mining Ltd /Karak International Oil have completed an interim fund raising through a rights issue underwritten by Sentient Group funds. This takes the Sentient interest in JEML to 58 percent. According to Chris Nurse, CEO, “We are very pleased that Sentient has demonstrated its continued confidence in Karak as a leading player in the oil shale sector in the Hashemite Kingdom of Jordan. The production of liquid hydrocarbons from indigenous resources will create employment and greatly benefit the balance of payments and economy of Jordan. Sentient is engaged with management and is a strategic partner for the development of the resource.” Karak International holds a concession over 35 km2 of the Lajjun deposit that contains approximately 300 million barrels of oil with a stripping ratio averaging 1:1; production is planned to increase progressively to 38,000 barrels per day. Karak also has a Memorandum of Understanding under which it is exploring a further 32 km2 area of oil shale at Al Nadiyya. For more information, please contact us.
 
Lithuania
President of Lithuania Dalia Grybauskaite expects that shale gas of the United States will reach Europe in several years. Lithuania could acquire it through the Liquefied Natural Gas (LNG) terminal in Klaipeda, which is planned to be completed in 2014.“I really hope that, maybe not at once, but especially when after two or three year shale gas from the U.S. reaches Europe, we will be very happy that Lithuania was the first to build an LNG terminal in the Baltic countries and region. Since in two and three years, the revolution of cheaper gas from shale fields will reach Europe as well,” said Grybauskaite in an interview with radio LRT. The leader of the country regards the LNG terminal as being of the same importance as Butinge Oil Terminal and is convinced that this project will have much influence in negotiation with all potential gas suppliers to Lithuania. “The project itself helps reducing prices for heating; it makes impact on negotiations with Gazprom as well. There is no wonder that as the project is about to be completed, Gazprom began speaking to us in a different way,” said Grybauskaite.
 
Poland
San Leon Energy has signed a Letter of Intent with Baker Hughes Poland to jointly begin to develop the Siekierki Gas Field1, a shale gas field in Poland. The companies plan to start gas production from four existing wells. Under the proposed agreement, it is envisaged that Baker will provide all funding necessary to recomplete and bring the wells into production. The Companies have now entered an exclusivity period during which the final work scope and commercial terms will be negotiated and agreed.
 
In order to spur foreign investment in Polish shale gas reserves, Prime Minister Donald Tusk announced that thegovernment would scrap plans to create a government owned and operated fund that would hold stakes in all shale gas licenses. Several companies were concerned that the proposed fund would muddy the understanding of the government’s rights in exploration projects. Poland is currently Europe’s most active country in exploring its shale gas potential and its legislature is expected to consider a new law to promote development in the next few weeks. For more information, please contact HBW Resources.
 
Qatar
Qatar’s liquefied natural gas industry crossed another key milestone recently when it replaced Yemen as Thailand’s biggest supplier of LNG in 2013 as the Southeast Asian country’s imports of the fuel rose 45%. Currently, Qatar is the largest exporter of liquefied natural gas (LNG) in the world with a capacity exceeding 77mn tonnes a year. It is also home to the world’s third biggest natural gas reserves. The importance of the LNG segment in particular and the energy industry in general to Qatar is quite evident from the hydrocarbon sector’s contribution to national economy. A recent report by QNB showed the hydrocarbon sector, which consists of crude oil and raw gas production, perked up and expanded to a better-than-expected 1.8% year-on-year in the third-quarter of  2013 owing to higher production of natural gas due to LNG facilities coming back to full operational capacity after some downtime for maintenance over the last year. But over the next few years, Qatar may see increasing competition in the global LNG market with new production facilities coming online in Australia and North America.
 
Taiwan
Lin Sheng-chung, president of Taiwan’s state-run oil and gas company CPC Petroleum, said that the country will import 800,000 tons of shale gas every year, starting in 2017. According to Lin, “Prices for natural gas go up and down every now and then. US gas is a lot cheaper than from the Middle East so this could be a good deal.” Initially shale gas will come from Louisiana and later from ports that are close to the Pacific coast as this could save transport time by around two weeks. CPC is also in talks with companies like Exxon Mobil, Shell, Chevron and Petronas regarding developing shale gas in the US. It is possible that $1 billion are invested in a project in which CPC will own about 5 percent stake.
 
United Kingdom
Plans to explore for shale gas on a site in a national park located southwest of London have been temporarily put on hold by the local authority after the application received an unprecedented number of responses. The British government is strongly supporting the development of shale gas by offering favorable tax terms as it seeks to reduce dependence on gas imports. Opposition to the unconventional drilling method has been growing in Britain, however, on grounds that it is harmful to the environment and that one project had triggered earth tremors. The South Downs National Park Authority has requested oil and gas explorer Celtique Energie Weald to submit more details on noise and geological aspects of its application to drill for oil and gas and, if found to be present, later extract shale gas on a site at Fernhurst. “National Park will be submitting a request for further information,” the authority’s chief executive, Trevor Beattie, said at a planning meeting, according to his speech sent to Reuters. “This will put the Fernhurst application on hold whilst the applicant provides the additional information we require.” A spokesman for Celtique Energie said the company was planning on submitting the additional information requested and that it was normal practice for an authority to seek further details. The application received an unprecedented number of comments, a spokeswoman for the national park authority said.
 
Britain must streamline shale gas planning rules to cut delays or it will fail to achieve significant output and will miss out on potential tax revenues, energy consultancy Poyry said. The country is in the early stages of exploring for unconventional gas to counter growing dependence on imports and a government-commissioned geological study has estimated it could have shale resources equivalent to several hundred years of demand. The government, eager for tax revenues and new jobs, is supporting shale gas by offering favorable tax rates and promising returns for communities that host exploration. But Poyry warned that red tape was unnecessarily delaying shale gas development. “If the regulatory and permitting process is not made more efficient, then it may not be possible to achieve shale gas production at any scale,” Poyry analysts said in the report, which was also given to members of the economics committee in the House of Lords, parliament’s second chamber, last week. Poyry estimated it takes around 6-8 years for a shale gas developer to start commercial production in Britain after receiving a license – if there are no legal challenges. The recommended time is around four years, Poyry said. The consultancy suggested creating a one-stop-shop for shale gas permitting to cut down on timing and allow for a potentially high demand in well applications over the coming years. Poyry analysts estimate that by 2024 around 100 new wells will need to be approved each year to pave the way for significant shale gas production. For more information, please contact us.
 
INEOS Europe AG has announced a new ethane purchase agreement with CONSOL Energy in the USA. Ethane will be transported through the Mariner East infrastructure and imported by sea for use in INEOS’ European cracker complexes. Supplies will start from 2015. “This contract adds to our supply portfolio providing for long-term sourcing of advantageously priced US ethane for our European crackers. It will allow us to continue to consolidate the competitiveness of INEOS’ ethylene production in Europe.  We are excited about our new business relationship with CONSOL Energy and look forward to future opportunities between our companies” commented David Thompson, INEOS Procurement & Supply Chain Director. INEOS is the first company to establish seaborne intercontinental ethane transportation, having earlier announced the completion of agreements with Sunoco Logistics for capacity in the Mariner East pipeline and terminal system, with Range Resources for the purchase of ethane, with Evergas for the construction of new customized vessels and with TGE Engineering for the construction of a new tank in its Rafnes cracker. INEOS is presently conducting engineering studies for the construction of an ethane terminal in Grangemouth.
 
 
 
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
Web: http://www.hbwresources.com
Twitter: @BoOllison

HBW Resources Contact Information
 
If you have any general questions, please contact us anytime. Previous versions of the HBW Ollison Hydraulic Fracturing Report and other reports can be viewed on the Intelligence Tab on the HBW Resources website at:http://hbwresources.com/intelligence/.  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
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