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
Web: http://www.hbwresources.com 

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Highlights and Reports of Domestic and International Shale Development and Oil and Gas Extraction Using Hydraulic Fracturing

HBW Resources: Ollison Hydraulic Fracturing Report


 
Below is a summary of publicly available activities currently underway at the federal, state and international levels that could impact the use of hydraulic fracturing for oil and gas extraction.  With numerous state legislatures now in session, HBW Resources is monitoring these activities to ensure that responsible and feasible policies based on sound science are advanced. 
 
States 
 
State Legislative Update: Please see linked spreadsheet for an updated listing of state legislation dealing with hydraulic fracturing.
 
Alaska
ExxonMobil, BP, ConocoPhillips and TransCanada have selected the Alaskan town of Nikiski for a proposed LNG plant and terminal for a huge project to export natural gas from the North Slope. The companies are looking to acquire more than 600 acres to develop a large-diameter gasline and gas liquefaction plant that together could help restore Alaska as an energy powerhouse. The projects anticipated cost is between $45 billion to $65 billion or more. As the current proposal stands, natural gas will be piped from the North Slope to Nikiski, where it would be converted into liquid form and shipped via massive, refrigerated tankers for export to Asia.
 
California
If anyone had lingering doubts about where California Gov. Jerry Brown stands on fracking, the state’s top oil and gas regulator removed them. Speaking at a panel discussion on fracking, the head of California’s Department of Conservation, Mark Nechodom, said the governor backs the controversial oil-production technique. His comment came after the moderator asked each of the panel’s participants to spend five minutes discussing his or her organization’s position on fracking. “I can probably save us five minutes,” Nechodom replied. “Gov. Brown supports hydraulic fracturing.” He then stopped talking, letting his statement sink in with the audience.
 
Hydraulic fracturing operations in the waters off California’s coast break multiple environmental laws, a green group warned in a letter to two federal agencies. The Center for Biological Diversity asked the Bureau of Ocean Energy Management and the Bureau of Safety and Environmental Enforcement to halt offshore operations that use unconventional drilling, including the process known as fracking. Oil and natural gas company operations in the Pacific Ocean need to go through a supplemental National Environmental Policy Act (NEPA) analysis, the letter said. That would look at potential threats to environment and wildlife in the area, “which hosts the world’s densest summer concentrations of blue whales,” Center for Biological Diversity said. The Associated Press in August reported that companies including Venoco Inc. and Chevron Corp. have fracked offshore wells. Federal regulators have permitted at least a dozen instances of hydraulic fracturing in the Pacific Ocean since the late 1990s, AP reported, citing federal documents obtained through Freedom of Information Act requests. The letter sent to the agencies said that under NEPA, agencies not only must perform analyses prior to taking federal action but must conduct supplemental review whenever “[t]here are significant new circumstances or information relevant to environmental concerns and bearing on the proposed action or its impacts.”
 
A new series of U-T San Diego reports that illustrate in detail how fracking could change the future of California’s economy is the latest installment in a U-T San Diego-led, bipartisan effort aimed at addressing the most pressing issues facing the Golden State. “The Golden State is home to enormous oil reserves in sedimentary rock formations thousands of feet below ground known as shale. The Monterey Shale formation, beneath the Central Valley and a coastal and offshore chunk of the Los Angeles Basin, contains more than 15 billion barrels of oil that can be accessed using fracking, according to a 2011 U.S. Energy Information Administration analysis. That’s nearly two-thirds of the total oil shale reserves in the entire nation.” The main goal of the bipartisan project is to offer insights into the issues that continue to plague the state and to ignite a dialogue on how to repair these problems – from city and state financial crises to school reform, neglected infrastructure, a challenging business climate, and environmental policies.
 
Colorado
The Fort Collins City Council is formally opposed to a ballot issue that would impose a five-year moratorium on fracking within the city. Council members approved a resolution stating the proposal is not in the city’s best interests on a 4-3 vote. Members Lisa Poppaw, Bob Overbeck and Ross Cunniff were in opposition. All three said their opposition to the resolution wasn’t based so much on the controversial issue of hydraulic fracturing, or fracking, but on whether the council should take any position on a citizen-initiated ballot issue.
 
Protect Our Loveland filed a motion for preliminary injunction in 8th Judicial District Court seeking an order that would require the City Council to put an initiative related to hydraulic fracturing to the voters as soon as possible through a special election. The Protect Our Loveland initiative sought a Nov. 5 ballot measure to ask voters whether or not to impose a two-year moratorium on hydraulic fracturing, or fracking, within city limits. In court documents, Protect Our Loveland argued that the City Council’s inaction on Sept. 3 went against state statues that call for the initiative to either be adopted by the council or placed on the ballot once a final determination of petition sufficiency had been established. With a vote of 5-4, the City Council moved to defer the decision on ballot placement until a case related to the City Clerk’s approval  of the petition for the initiative was resolved, an option that had been presented among four others in a council memo from City Attorney John Duval. Deadlines to place the measure on the Nov. 5 coordinated election with Larimer County have passed, but in court documents requesting preliminary injunction from the court, Protect Our Loveland seeks a special election no later than Jan. 24, 2014.
 
The Lafayette City Council unanimously approved three resolutions outlining the city’s stances on the local items set to appear on the November ballot. Council members reserved their disdain for Ballot Question 300, which deals with oil and gas extraction within city limits. Council members, who said they don’t support the practice of hydraulic fracturing that Question 300 aims to ban, overwhelmingly opposed the ballot question based on what they described as fundamental flaws in its language. The resolution passed in opposition to Question 300 states that the question’s language illegally “attempts to effectively amend both the Colorado and United States Constitutions regarding the status of ‘persons.'” The resolution questions both the timing and need for Question 300’s objectives. The resolution acknowledges the three-year moratorium implemented by Lafayette City Council this summer on new oil and gas wells in the city, as well as the fact that no new oil and gas wells have been established in the city since it adopted comprehensive regulations in 1994. The resolution also points out that the ballot question takes away property rights, which might force the city to compensate oil and gas companies for millions of dollars in profits they could – rightfully, through state law — make from wells in the city.
 
As residents prepare to vote in November on a five-year fracking ban in Broomfield, another pro-fracking action group has joined the mix. Broomfield Balanced Energy Coalition, or BBEC, is a bi-partisan group that stated it wants to bring balance to the discussion by supporting fracking while also supporting Broomfield’s new oil and gas safety regulations. Led by former state Rep. Don Beezley, a Republican, and former RTD board member Lee Kemp, who last year ran for state Senate as a Democrat, the group plans to speak out against a fracking ban while supporting other energy methods, such as wind and solar. The group also supports Broomfield’s new agreement with oil and gas drilling company Sovereign, which imposes strict environmental and regulatory standards in order for the company to continue drilling within city limits. Similar to Broomfield’s other pro-fracking group, It’s Our Broomfield, Too, the BBEC said it opposes a fracking ban. Yet the group also wants to show that fracking is not a partisan issue.
 
Hawaii
A bill aimed at prohibiting enhanced geothermal power systems has received initial support from the Hawaii County Council. The Council voted 7-0 in support after amending the legislation to increase penalties. The Council must vote on the bill one more time, the Hawaii Tribune-Herald reported. The bill was drafted to prohibit enhanced geothermal systems, but it would apply to all forms of hydraulic fracturing.
 
Illinois
The Illinois Department of Natural Resources is moving along with implementation of the Hydraulic Fracturing Regulatory Act.  DNR has activated a new website that allows companies to register with the Department.  As you may recall, Section 1-35(a) of the HFRA requires a permit applicant to first register with the Department at least 30 days prior to submitting a permit application.  The website and registration information can be found at www.dnr.illinois.gov/mines/Pages/HydraulicFracturing.aspx.  Once the registration is accepted, companies will then be able to apply for individual fracturing permits which should occur early next year.  In terms of rule making, DNR is about two months ahead of their original time frame and draft rules are being reviewed internally.  They are planning to allow interested parties to review these rules before they are officially filed.  If DNR remains ahead of schedule, it is possible that the first permits could be issued in April, ahead of the previous June 2014 deadline.
 
New York
The Catskill, NY Town Board has been asked to prohibit use of fluids containing hydraulic fracturing materials as highway deicing agents. The request was made during a meeting, when members of the grassroots group Green Renewable Energy and Environmental Network said the ban would help protect the environment from radioactive material.
 
Unshackle Upstate has released a five-point plan for job growth and lower taxes in the parts of the state that aren’t New York City. The plan focuses primarily on eliminating or changing certain taxes and surcharges. But Unshackle officials are also highlighting the potential benefits fracking the Marcellus Shale. According to the report, developing the Marcellus Shale in New York would generate approximately $78 million in state revenue in 2014-2015 and revenues would grow in future years as natural gas development activity increases.
 
Former Secretary of State Hillary Clinton’s 80-minute lecture and discussion at upstate Hamilton College on Friday touched on dozens of issues. Late into her lecture, Sec. Clinton referred to a report that the U.S. was on track to surpass Russia in domestic oil and gas production. That’s good news, Clinton said. “What that means for viable manufacturing and industrialization in this country is enormous,” she said to the crowd of 5,800 in Hamilton’s athletic field house.
 
North Dakota
The government shutdown has thrown a wrench into management activities at the Fort Berthold Indian Reservation in North Dakota and stalled oil development on federal lands across the region. The state Department of Mineral Resources reports that Fort Berthold, located atop the resource-rich Bakken Shale in western North Dakota, had 1,004 active oil and gas wells in July. But the Bureau of Indian Affairs can no longer manage leasing and compliance without funding from the federal government, according to Interior Department spokeswoman Jessica Kershaw. Additionally, Kershaw said the federal Bureau of Land Management “will not process applications for permits to drill and will only maintain minimal staff for inspections and enforcement on currently producing wells.”
 
Leaders from the Northwest Territories are touring the booming Bakken region of Saskatchewan and North Dakota to get a taste of what might be in store if the territory’s own shale oil play takes off. David Ramsay, the minister in charge of resource development in the territory, said that the economic impact has been apparent, from the brand new trucks driving around Estevan, Sask., to the homes, roads, hotels and offices under construction south of the border. The potential jobs created by developing the Canol shale formation in the Central Mackenzie Valley would be welcome in a region plagued by high unemployment. But there are challenges well, such as a higher cost of living and increased pressure on government services.
 
Ohio
The Salem City Council voted down a zoning amendment that would have restricted shale drilling within city limits. Council agreed that the issue should be returned to the Rules and Ordinance Committee after Councilwoman Cyndi Baronzzi Dickey explained that council has no legal authority to restrict the drilling which is under the jurisdiction of the Department of Natural Resources through state level legislation. She said she believed passing the amendment would leave the city vulnerable to lawsuits that could cost the city significant money. She added that if council was passing the amendment only as a statement that may never be acted upon, then the amendment is a “waste of time and effort, and a little misleading to the citizens of Salem.”
 
Steve and Lea Harper, property owners near Seneca Lake in Guernsey County, filed suit in Franklin County Common Pleas Court to stop the Muskingum Watershed Conservancy District (MWCD) from leasing public land and selling public water for horizontal, hydraulic, high-volume slick water fracturing.  The “final straw” came last February, when the conservancy district approved the lease of Seneca Lake, the third largest inland lake in Ohio, to Antero Resources for fracking. The MWCD subsequently approved a pipeline to siphon two million gallons a day of reservoir water to sell for fracking, thus destroying the water forever to reap conservancy district profits. So far, the MWCD has made $78 million in bonus payments for leasing and projects to make hundreds of millions more in royalties plus hundreds of thousands of dollars in windfall profits by selling reservoir water. In a final attempt to avoid the lawsuit, environmental organizations and concerned citizens organized to testify to the MWCD Conservancy Court, which has a governing role over the MWCD staff and board. The court declined to hear the pleas of those organized to protest the conservancy district’s decisions. After exhausting all attempts to avoid litigation, the Harper family has petitioned for a declaratory judgment from the court asking for a determination of the legitimacy of the MWCD to engage in the risky and poorly-regulated industrial practice of fracking. The lawsuit also seeks a ruling on whether the conservancy district has violated the terms of the deed which gave federal land to the MWCD for public stewardship, and whether the Ohio Department of Natural Resources has a legal responsibility to consider environmental effects likely to be caused from fracking. The lawsuit also names the Ohio Department of Natural Resources and Antero Resources Appalachian as defendants.
 
A spending oversight panel approved a $257,287 contract yesterday for the purchase of additional seismic equipment designed to monitor activity near fracking-waste disposal wells. The state Controlling Board asked Tom Johnston, chief financial officer of the state Department of Natural Resources, a few questions before approving the deal. Once the devices are installed, he said, monitoring is a continuous process mainly done through text messaging, which alerts the department if an event occurs.
 
Ashtabula is about to benefit from the Utica shale boom, as a Texas energy company and a technology firm from Columbus plan to build a gas-to-liquids processing plant in the city. Houston-based Pinto Energy said it will spend about $300 million to build the plant, which is expected to be completed and online in early 2016. The plant would take processed natural gas from the Utica and Marcellus shale plays and convert it into diesel fuel, high-end lubricants and industrial waxes used in cosmetics, pharmaceuticals and other products. Once finished, the plant will employ about 30 people, but Pinto said it expects to employ about 400 construction workers to build it. Pinto figures the plant also will support more than 100 jobs among suppliers, contractors and others not directly involved with on-site construction.
 
Oklahoma
Onshore US-focused junior explorer Northcote Energy reported that it plans its first horizontal well targeting the Mississippi Lime formation on its wholly-owned Mathis lease in Oklahoma before the end of the year. Northcote said the first well location has been estimated as containing proved, undeveloped (P1) reserves of 200,000 barrels of oil along with 1.7 billion cubic feet of natural gas.
 
Pennsylvania
Approximately 78 percent of the producing horizontal-drilled Marcellus Shale natural gas wells already have paid for themselves, a Penn State professor says. Terry Engelder, a professor of geosciences, said his calculations include royalty payments and are based on an average well cost of $5 million and the price of natural gas being at $3.50 per thousand cubic feet. It shows the Marcellus is not a financial disaster that some have made it out to be, he said. “Once the well is paid off, gas production greatly adds to the future cash flow of a company,” he said. As of June 30, the Department of Environmental Protection website listed 3,693 producing natural gas wells in Pennsylvania. Over the past five years, at least 4.8 trillion cubic feet of gas has come out of the Marcellus Shale in Pennsylvania, Engelder said. According to DEP statistics of the top wells, six in Susquehanna County are producing more than 20 million cubic feet of gas a day. There is an impression activity in the Marcellus has slowed down but many wells are non-producing because they are not connected to infrastructure, Engelder said. He stands by his estimate that 489 trillion cubic feet of gas is recoverable in the Marcellus Shale but he said at the present low price of natural gas it will not be economically feasible to extract all of that.
 
Pennsylvania Gov. Corbett’s latest campaign ad, Planet, focuses on the benefits of the Marcellus Shale to the state. The ad states that the Marcellus Shale industry has given back to the state in the form of more than 200,000 jobs, $1.7 billion in corporate taxes and $400 million returned to local communities.
 
Pennsylvania’s Department of Conservation and Natural Resources has awarded a contract to Penn State University to review and provide a summary of the publicly available existing geophysical data for the South Newark Basin, the shale that lies beneath most of Bucks and Montgomery counties. The contract began July 1 and will be completed by June 30, 2015. Natural gas development in this region hinges on this governmental study. The South Newark Basin was ranked the third-highest region of untapped natural gas resources on the East Coast in a United States Geological Survey report. Shortly after that report was issued in June 2012, Bucks County lawmakers, led by Sen. Chuck McIlhinney, tucked a measure into the state budget that places a moratorium on natural gas drilling within the South Newark Basin. The moratorium says the state Department of Environmental Protection cannot issue permits to drill in the South Newark Basin until the Department of Conservation and Natural Resources can study the area or until Jan. 1, 2018. During the past year, local officials and environmental leaders have been critical of DCNR, arguing that state agency has not responded to requests for an update on when a study would begin and how input from township officials and environmental groups might be included.
 
delegation of 163 Colorado business and nonprofit leaders and government types are exploring Pittsburgh for three days to learn about how the city has revitalized itself and is taking advantage of its new economy, particularly energy, medical, technology and arts and entertainment. The energy discussion was topical for the Colorado leaders — most of whom were from the Denver metro area — because, like Pennsylvania, the state is developing its own shale resources.
 
Hilcorp Energy Co. has taken legal steps to access natural gas beneath the 14.6 acres Bob Svetlak owns near the Ohio border without his consent, arguing a law more than five decades old gives it the right to combine his land with others into a drilling unit. If Hilcorp succeeds, it would be the first time in Pennsylvania’s shale boom that a driller used the tactic, and it could lead to more widespread use. Hilcorp is using a legal maneuver known as forced pooling, in which neighboring plots of land are combined into a single unit for drilling. In geologic formations deeper than the Marcellus shale, the 1961 law allows drillers to combine gas rights into pools, even if property owners oppose. Any use of forced pooling likely will ignite a public outcry. Attempts to extend broad pooling powers to Pennsylvania’s Marcellus shale drillers have been met with swift opposition — even Gov. Tom Corbett, a supporter of gas drilling, opposed the idea in 2011, calling it “private eminent domain.” Svetlak’s property is part of 3,267 acres in Pulaski and neighboring Shenango in Mercer County where Hilcorp wants to drill. The area has not attracted much drilling, but Hilcorp wants to tap the Utica shale, a geologic layer thousands of feet below the Marcellus. The company acquired the right to drill on all but 35 acres, which includes at least four properties whose owners don’t want to lease or who leased with another company, according to the Aug. 26 filing Hilcorp made to the state Environmental Hearing Board.
 
Shale-gas drilling has potential to affect aspects of life in America from immigration and trade policy to education, experts gathered in Pittsburgh said. But the government, industry and labor experts cautioned that public policy debates involving a spectrum of stakeholders need to occur in order for the United States to reap the full potential of its shale gas. “With the return of affordable natural gas and natural gas liquids in the United States, the whole world picture has changed. This is probably the single greatest opportunity we have to restore the middle class in America,” Peter Molinaro said at the Consumer Energy Alliance’s Pennsylvania Energy and Manufacturing Summit. Molinaro, vice president and senior advisor for government affairs for Dow Chemical Co., said Dow reversed a decision to close an ethylene cracker plant on the Gulf Coast and began planning for a second plant when company officials realized the wealth of shale gas discoveries. The shale boom has put Pennsylvania in competition with Alaska and Louisiana to be the country’s second-biggest gas producer. Pennsylvania drillers produced 1.4 trillion cubic feet of natural gas from the shale in the first half of 2013, according to the Department of Environmental Protection. State records show companies drill about 100 horizontal wells a month into the Marcellus, and they are now targeting the Utica shale, a deeper geologic layer. The industry has 36,100 employees in Pennsylvania. In addition to the chemical sector, industries such as aluminum, fabricated metals, fertilizer, foundries, glass, iron and steel “have been advantaged by this,” Molinaro said. A manufacturing rebound and the need to build infrastructure could require the United States to reconsider immigration policies to fill workforce needs, industry and labor experts said.

Texas
Stabilis Energy and Flint Hills Resources have announced plans to build up to five natural gas liquefiers to serve oil field operations, with the first facility planned to launch in the Eagle Ford Shale in January 2015. The first liquefied natural gas production facility will be located in George West, Texas and produce up to 100,000 gallons of liquefied natural gas per day, the companies said. They also plan to launch facilities in North Dakota and West Texas in 2016 and 2017, pending land procurement agreements. Additional facilities would come online by 2017.
 
More than a third of all new natural gas wells since 2005 were drilled in Texas, and the state uses almost four times as much water for hydraulic fracturing as any other state, according to a study by a Texas environmental group.Operators in Texas drilled 13,540 wells in 2012, and have drilled more than 33,000  since 2005, according to an Environment Texas report, which focuses on potential hazards and pollution associated with the drilling technology.
 
West Virginia
West Virginia severance tax collections are running about 15 percent ahead of last fiscal year while most other general fund revenue streams are lagging behind.  Through Sept. 20, the state had collected $95.4 million in severance taxes compared with $82.9 million at the same time last year, Mark Muchow, deputy secretary of the state Department of Revenue, told more than 200 people assembled for the annual West Virginia Economic Outlook Conference. This year’s growth comes even as taxes in fiscal year 2013 were down $63.55 million from 2012, Muchow said. Severance taxes from coal were down in 2013 while taxes from natural gas were up, he said. The same pattern was evident in the first two months of this fiscal year. Severance taxes accounted for 10 percent of the state’s general fund revenues in 2013, up from 6 percent in 2003, he said.
 
National
General Electric has announced that it has technology which can help reduce the chances of toxic waste spills during the fracking process. This technology, it claims, has the potential to cut the costs of water treatment in half. The technology is based on membrane distillation, a type of desalination. It is believed it could make it unnecessary to dilute millions of gallons of wastewater, or to transport the water for treatment or disposal. Companies reuse this water after it has been pumped underground and picked up chemicals. GE researchers estimate from pilot-scale tests that they will be able to cut fracking wastewater treatment costs by as much as 50%, but only in places where the wastewater is too salty for current methods or in very dry regions.
 
The U.S. boom in natural-gas production is luring investment from foreign manufacturers eager to tap a cheap, abundant supply of fuel and feedstocks. Companies from the U.S. and abroad have invested or are planning to invest billions of dollars through the rest of the decade in plants that would churn out chemicals, fertilizers, plastics, metals and fuel from gas. Many foreign companies, alone or in joint ventures with U.S. partners, are taking advantage of gas that costs a fraction of what it does in Europe or Asia to expand production in the U.S. Boston Consulting Group estimates that international companies will invest at least $50 billion through the end of the decade on projects that take advantage of low-price natural gas.
 
The U.S. is overtaking Russia as the world’s largest producer of oil and natural gas, a startling shift that is reshaping markets and eroding the clout of traditional energy-rich nations. U.S. energy output has been surging in recent years, a comeback fueled by shale-rock formations of oil and natural gas that was unimaginable a decade ago. A Wall Street Journal analysis of global data shows that the U.S. is on track to pass Russia as the world’s largest producer of oil and gas combined this year—if it hasn’t already. The U.S. produced the equivalent of about 22 million barrels a day of oil, natural gas and related fuels in July, according to figures from the EIA and the International Energy Agency. Neither agency has data for Russia’s gas output this year, but Moscow’s forecast for 2013 oil-and-gas production works out to about 21.8 million barrels a day.
 
The energy director with The Grattan Institute says opposition to the natural gas industry doesn’t make environmental sense. Tony Wood says the boom in coal seam and shale gas has affected the renewable energy sector, but he says that’s likely to be relatively short term. “What’s happened is there is a lot more gas than anyone thought and in the short term, at least in the USA, they’re using an enormous amount of gas as a way of reducing their emissions. Tony Wood says despite being a fossil fuel, gas has a vital role to play environmentally. “The objective isn’t to get rid of gas, or get rid of coal, or introduce renewable energy.  “The objective is to reduce greenhouse gas emissions, and to do that at the lowest possible cost over time.  “And if we can meet our environmental objective, if gas has a role to play, that should be fine.”
 
Environment America released a report, “Fracking by the Numbers, Key impacts of dirty drilling at the state and national level” that claims to quantify the impacts associated with oil and gas development in the United States, including production of toxic wastewater, water use, chemicals use, air pollution, land damage and global warming emissions.
 
More than half of Americans don’t know the recent oil boom has increased domestic energy production, according to a new poll, which also showed increased opposition to fracking. Fewer than half of respondents to the national Pew Research Center poll — 48 percent — correctly said U.S. energy production has increased in recent years. The poll also found that from March to September, opposition to the increased use of hydraulic fracturing grew from 38 percent to 49 percent.
 
International
North Africa may be “the next big opportunity” after North America for oil and gas production from shale, if drilling costs can be reduced, said Repsol (REP) SA Geological Studies Director Eduardo Negri. “The current drilling and completion costs are still high in North Africa,” Negri said. “This is something that can be worked on if service companies take special effort in preliminary evaluation steps in order to show how they can reduce costs, thinking about massive operations in the future.”
 
Argentina
Argentina is investing heavily in shale oil, hoping to ride it to energy self-sufficiency and end dependence on imports that cost billions of dollars each year. Argentina is a pioneer in shale oil exploration and now the third biggest producer of it after China and the United States, according to US figures. Its state oil concern YPF two years ago started production at Loma la Lata, a windswept Patagonian plain under which lies clay-rich soil that contains shale oil. It is part of a larger shale-rich expanse called Vaca Muerta, or dead cow. To produce it for market, unconventional oil requires the same hydraulic fracturing and horizontal drilling techniques as shale gas. And now, YPF is using its shale oil know-how to speed into operation about 200 unconventional wells in the Loma la Lata, Vaca Muerta area every year. It plans to spend $15 billion in a decade, reaching 1,500-2,000 of these wells.
 
Australia
The Australian Petroleum Production and Exploration Association (APPEA) to put forward policy initiatives to help the country maintain its international competitiveness. The Canberra-headquartered organization, which represented the country’s oil and gas production industry, stated in its “2013 Policy Priorities” that the major challenge to continued growth in Australia’s oil and gas industry is a “high-cost local environment and the emergence of new liquefied natural gas (LNG) competitors in East Africa, North America and elsewhere [which] will make it much harder to win market share and attract investment.” APPEA called for a market-based energy policy. For the industry to deliver substantial, economy-wide benefits in terms of investment, jobs, and regional development, the government “must resist calls for policy interventions that force non-commercial outcomes.” Australia’s LNG industry is a “source of comparative advantage that should be harnessed, not hindered.” Another policy priority concerns the industry access to resources. Continued development of the energy sector depends on uninterrupted access to oil and gas resources onshore and offshore and any restriction must be consistent with an “evidence-based, scientifically driven policy approach,” APPEA said. APPEA called for a reduction in red tape and green tape as Australia’s oil and gas industry suffers from duplicative and inefficient regulatory approval processes, often due to an overlap between federal and state government regimes. These cause unnecessary project delays and increased costs without bringing additional environmental benefit. APPEA noted the overlap and duplication of responsibilities between offshore regulator for environmental and safety issues National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) and the Department of Sustainability, Environment, Water, Population and Communities. The association suggested accrediting NOPSEMA as the approving authority to improve regulatory inefficiency.
 
The Australian Government’s intentions to become a ‘one-stop shop’ to aid the continued development of the country’s energy and resources industry has been welcomed by key oil and gas producer BHP Billiton. Minister for industry Ian Macfarlane, who took over the role following last month’s federal election, outlined these plans during a speech at the Australian National Conference of Resources and Energy (ANCRE) in Canberra. Macfarlane described the newly created department of industry as a “one-stop shop” for several sectors in Australia, including oil and gas. He urged government and industry to now “work together collectively” and turn Australia into an energy and resources superpower.
 
Belarus
The Belarusian industrial group Belorusneft and the British company Toros will set up a joint venture to prospect and possibly extract shale oil and shale gas in the Pripyat oil-and-gas bearing basin, Belorusneft’s press service told BelTA. The source underlined the importance of the project. If successful at extracting the Belarusian company’s first shale oil and gas, the project will help determine prospects of shale oil and shale gas extraction in the country as a whole more precisely. BelTA has been told that the Belarusian-British joint venture will be set up by March 2014: time is needed to register the enterprise and get a license for the land.
 
Canada
Quebec isn’t entirely sure about this whole fracking thing. Amid reports from across the continent of groundwater pollution, air pollution, deforestation, and other environmental side effects of hydraulic fracturing, the Canadian province has placed a moratorium on the practice beneath the St. Lawrence River. That doesn’t sit well with Lone Pine Resources, a Delaware-based company that has long eyed the gas and oil that’s locked up in the Utica shale beneath the grand waterway. The company claims it spent millions to get the appropriate permits to drill, and now that the fossil fuels seem out of reach, it says Canadians need to pony up more than $250 million in compensation. The company last month submitted a claim to an international arbitration system seeking damages because of “Quebec’s arbitrary, capricious, and illegal revocation” of its “valuable right to mine for oil and gas under the St. Lawrence River.” The claim is based on Chapter 11 of the North American Free Trade Agreement, which allows private companies to sue governments when laws hurt their expected profits.
 
Malaysia’s state oil firm Petronas plans to spend $35 billion to develop shale gas assets in Canada and build a liquefied natural gas export terminal linking the country to energy hungry Asian markets, company officials said. The estimate is $15 billion higher than the figure previously announced, since it includes costs associated with drilling wells in British Columbia and taking over Canadian explorer Progress Energy Resources for $5 billion, they said.
 
Negotiations aimed at ending a week-long blockade of Route 134 in Rexton by shale gas protesters are scheduled to resume in Moncton. Premier David Alward, three members of his cabinet, and Elsipogtog First Nation Chief Aaron Sock met with about 15 representatives of the protesters for three hours Sunday in a Moncton hotel. “People had an opportunity to voice their concerns we had an opportunity to discuss what we’re focused on doing as a government,” said Alward after the meeting.
 
Ecuador
Lawmakers in Ecuador authorized the extraction of oil from Yasuni National Park, a pristine Amazon reserve. After a 10-hour debate, a loyalist congress approved President Rafael Correa’s plan by a 108 to 25 margin, with four legislators absent. Correa in August announced that he was abandoning a unique plan to persuade rich countries to pay Ecuador not to drill in the Yasuni, saying wealthy nations had failed to pledge enough money.
 
France
U.S.-based energy firm Schuepbach Energy is asking the French government for 1 billion euros ($1.36 billion) in compensation for blocking its shale gas exploration permits in France, an industry newsletter said, citing unnamed sources. French President Francois Hollande has repeatedly ruled out shale gas exploration during his presidency, confirming a ban on hydraulic fracking introduced by his Conservative predecessor. France’s top court said this summer it would examine the challenge to the ban by Schuepbach Energy, which held two exploration permits that were cancelled when the law was passed in 2011. The ruling is expected on Oct. 11.
 
India
State-run explorer Oil and Natural Gas Corp (ONGC) aims to commence commercial drilling for shale gas next year, its chairman said. “We hope to take up at least 10 wells for parameters this year and to start commercial drilling next year,” Sudhir Vasudeva told reporters. Govt approved a policy to allow state-owned companies to start exploration for shale oil and gas last month, as the world’s fourth-biggest energy consumer moves slowly to seek alternatives to expensive oil imports. Of about 356 blocks held by ONGC and Oil India Ltd, India’s upstream regulator has said 176 could hold shale resources. India could be sitting on as much as 96 trillion cubic feet (tcf) of recoverable shale gas reserves, equivalent to about 26 years of its gas demand, according to the U.S. Energy Information Administration.
 
Mexico
U.S. natural gas exports to Mexico will more than double in 3 years — from an average of 2 Bcf/d in 2013 to 4.5 Bcf/d in 2016, according to a report from Barclays Capital. The expected increase comes as natural gas demand in Mexico has been strong and is poised to accelerate further, driven by new power generation and industrial use, and enabled by “a massive expansion of the country’s pipeline network,” said the report. Eight major pipelines with a total capacity of 5.6 Bcf/d are scheduled to start operations within Mexico from 2013 to 2017, the report said. Several will deliver gas to areas currently lacking sufficient distribution infrastructure, and will spur new demand. Three of these pipelines will connect directly to the U.S. pipeline grid, and are mirrored by US expansions. Mexican demand for gas is expected to increase by 2.7 Bcf/d by 2018, of which 1.4 Bcf/d will be for gas-fired generation, according to Platts unit Bentek Energy. Mexican demand last year stood at 8.1 Bcf/d, up from 5.9 Bcf/d in 2005. To meet this demand, U.S. pipeline export capacity to Mexico is expected to increase by 4.3 Bcf/d over the next five years. Meanwhile, a report by Goldman Sachs earlier this year put the jump in export capacity at 4.8 Bcf/d by 2015.
 
Pakistan
Pakistan Prime Minister Nawaz Sharif said that his government was formulating a new policy to harness abundant shale gas reserves to address the country’s acute energy shortage. Pakistan was keen to have investment from foreign companies in energy ventures, Sharif said.
 
Poland
Some 72 percent of Poles living near shale gas exploration areas support the fuel’s extraction, according to a poll carried out by TNS Polska for the Ministry of the Environment. The poll also found that 60 percent of the respondents approve of shale gas extraction close to where they live. Shale gas extraction is opposed by 7 percent of the respondents. There were 105 valid exploration licenses as of September 1, 2013, held by 35 Polish and foreign entities. So far 48 exploration boreholes have been made. Altogether the licensees plan to make 335 boreholes by 2021.
 
Russia
Gazprom has increased its investment program for the current year by 46 percent to $32 billion, Interfax news agency reported, citing sources, heightening concerns about the state-run company’s ability to rein in rising costs. The news agency said that Gazprom has increased its planned investments to 1.03 trillion roubles ($32.01 billion) from 705 billion roubles envisaged previously, mainly due to burgeoning long-term financial costs. The new budget is to be reviewed by the board of directors on October 29. It was not immediately clear where the rise in investments came from but earlier this year Gazprom acquired 90 percent of Moscow power generation company MOEK, with a bid of around $3 billion.
 
Ukraine
A second regional council in Ukraine approved a government draft for a $10 billion shale gas production-sharing agreement with U.S. energy major Chevron, clearing the way for it to be signed. Deputies in Lviv region voted by 66-to-3 in favor of the draft, which calls for shale exploration in the Olesska field in the west of the country. A council in the neighboring Ivano-Frankivsk region, whose approval was also necessary, backed the deal last month. The Olesska deal with Chevron will be the second shale agreement in Ukraine, following one signed earlier this year with Royal Dutch Shell for exploration in Yuzivska in the east. Speaking to the council, Energy and Fuel Minister Eduard Stavytsky said that Chevron would spend several years and $350 million to assess reserves at Olesska which covers 5,260 square kilometers. Total investments including extraction after exploratory drilling could reach $10 billion, he said.
 
United Kingdom
France’s Total SA is looking at shale gas opportunities in Britain, Chief Executive Christophe de Margerie said Tuesday in the first strong sign of interest from an oil major in the U.K.’s nascent industry. Mr. de Margerie said the company is in talks to take a stake in a project in the U.K. and is also considering bidding in next year’s onshore licensing round. Inspired by the U.S. shale boom, the U.K. government is keen to boost the nation’s energy security in the face of declining domestic natural gas output.
 
UK Energy Minister Michael Fallon has said that the country could see up to 40 wells being set up in the coming years to explore shale gas potential, adding that it would be irresponsible not to let companies find out the commercial viability of the reserves, despite the worries of many environmentalists about the impact of fracking. The minister also said that he wants the UK to focus on local energy supplies as the UK has not been self-sufficient for gas since 2004.
 
The energy industry must emphasize lower bills as well as job creation if it wants UK public support for fracking, according to a consumer survey published by market research firm Viewbank. The research, conducted in the wake of high-profile protests against possible fracking for shale oil in West Sussex, England, by Cuadrilla Resources, shows that 67 percent of adults would support fracking if it delivered lower bills and 64 percent would support it if it created jobs. Around 65 percent of those surveyed would back fracking if it was proved to be important for delivering future energy needs. However, the research also showed that only 39 percent of consumers believe fracking will cut household energy bills and 42 percent believe the activity will cause environmental damage. A telling statistic from the survey was that only 16 percent of respondents would definitely support fracking near to where they live, although another 41 percent said they would need to find out more before accepting fracking in their area.
 
British shale gas driller Cuadrilla said it had quit a potential exploration site in northern England over concerns that its operations would disrupt bird life and will select an alternative site nearby. The decision to leave the site at Westby, Lancashire, means the company will consult with local residents on another suitable site to drill for shale gas deposits that could be hydraulically fractured.
 
The UK’s reserves of shale gas are not enough to make it self-sufficient in gas and will also “not be a panacea for bringing down energy bills.” That’s the conclusion of a new report that is being sent to the UK Parliament’s House of Lords Economic Affairs Committee. Conducted by Bloomberg New Energy Finance, the analysis states that the UK cannot hope the mimic the success of the shale gas boom in the US. It shows that the costs of shale gas extraction in UK fields such as Bowland in Lancashire are likely to be between $7.10 and $12.20 per MMBtu, compared to $5-6 per MMBtu for large US fields such as Marcellus and Barnett. The report states: “Our conclusion is that even under the most favorable case for shale gas production, with production reaching 4.5bn cubic feet per day in the mid-2020s, and low demand driven by a power sector emissions target of 50gCO2/kWh, the UK will not be self-sufficient in gas. “The reliance on continued imports will ensure that UK gas prices remain tied to European and world markets and so the direct impact of shale on the cost of electricity in the UK will be limited.”
 
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, 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!
 
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
Web: http://www.hbwresources.com

 
 

 

Top 50 Fracking Stories of the Week: HBW 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. 
 
Action Alert
 
At a Senate Energy & Natural Resources Committee hearing last month, Secretary Jewell announced an extension of 60 days for the comment period for the proposed hydraulic fracturing rule on federal and Indian lands. The extension will give the public a total of 90 days to comment on the proposed rule.  Comments are due on August 23rd.
 
To Submit Comments:
 
Mail:
U.S. Department of the Interior, Director (630)
Bureau of Land Management, Mail Stop 2134 LM
1849 C St., NW
Washington, DC 20240
 Attention: 1004-AE26.
 
Online:
Federal eRulemaking Portal: http://www.regulations.gov  Follow the instructions at this Web site. Comments on the information collection requirement
 
Fax: 
Office of Management and Budget (OMB), Office of Information and Regulatory Affairs, Desk Officer for the Department of the Interior, fax 202-395-5806.
 
E-mail:
 oira_submission@omb.eop.gov. Please indicate “Attention: OMB Control Number 1004-0203,” regardless of the method used to submit comments on the information collection burdens.
 
For more information please contact HBW Resources.
 
States 
 
State Legislative Update: Please see linked spreadsheet for an updated listing of state legislation dealing with hydraulic fracturing.
 
California
Activists in 15 California cities and counties have launched petition drives demanding that their local officials block hydraulic fracturing. The online petition to halt fracking in Los Angeles County, for example, had 5,546 signatures by this past Monday evening. Fracking opponents have been trying to pressure Gov. Jerry Brown into imposing a statewide ban. But so far, he has shown little interest in halting the practice, which has triggered a boom in oil and natural gas production in other states. The local petition drives, begun with the help of liberal organizing group Credo, are designed to add to that pressure. They also aim to block fracking in some of the places it is already occurring, such as Fresno, Kern and San Benito counties.
 
Colorado
The City of Loveland’s clerk said an anti-fracking group had collected enough signatures to place a two-year ban of in-town hydraulic fracturing on the fall ballot. City clerk Terry Andrews verified 2,256 signatures gathered by Protect Our Loveland. Under state law, the city council must, by Sept. 6, adopt the proposed ordinance that would stop the oil and gas extraction technique known as hydraulic fracturing within city limits for two years, or refer the measure to the fall ballot. This action follows the planning commission recommending changes (starts on page 34) to zoning rules to allow building within buffer zones around oil and gas facilities. The city planning commission Monday night voted 7-1 to recommend City Council amend an ordinance to allow some development in “no-build” buffer zones around oil and gas facilities. For more information please contact HBW Resources.

Florida
Florida Power & Light Company (FPL) demolished its 1960s-era Port Everglades Power Plant in Hollywood, Fla., to make way for a new, clean energy center powered by American natural gas. Construction of FPL’s Port Everglades Next Generation Clean Energy Center will begin in the first quarter of 2014 at the same location of the now-demolished power plant. The new, cleaner and more efficient power plant will begin serving customers in June 2016. The high-efficiency facility will generate enough electricity to power about 260,000 homes and businesses using 35 percent less fuel than the original plant. This improved fuel efficiency will result in the savings of hundreds of millions of dollars in fuel costs – all of which will be passed along to FPL customers, dollar for dollar. For more information please contact us.
 
Kansas
Kansas utility regulators are considering new rules to require oil and natural gas companies to disclose some information about the chemicals they use in hydraulic fracturing. The rules would require companies to disclose the chemicals they use in hydraulic fracturing. The information would have to be listed on a Kansas Corporation Commission (KCC) database or in an existing online industry database. Companies could avoid disclosing all of the details if the chemicals they used were a trade secret. Those substances still would have to be disclosed to the KCC and other state and local officials if there’s a problem, even if it’s not an emergency.
 
Louisiana
Goodrich Petroleum has entered into a definitive agreement to purchase a 66.7% working interest in producing assets and approximately 277,000 gross acres in the Tuscaloosa Marine Shale in the US for $26.7 million. The remaining 33.3% working interest owner in the producing assets and leasehold has elected to retain its interest and participate with the company in developing the assets. The acquisition is subject to customary due diligence and is expected to close on or before August 22, 2013. The gross oil production associated with the properties averaged approximately 750 barrels of oil per day for March 2013. The Company plans to fund the acquisition with its senior credit facility, which along with available cash had approximately $190 million of available liquidity pro forma at March 31, 2013. Upon closing of the transaction, the Company’s borrowing base will increase by $18 million to $243 million.  
 
Maryland
The Marcellus Shale Safe Drilling Initiative Advisory Commission, assembled by Gov. Martin O’Malley (D) in 2011, has been considering the Comprehensive Gas Development Plan (CGDP) since last year and will eventually make recommendations to state officials to require the CGDP submittal, make it voluntary or scrap the idea altogether. John Quigley, an environmental consultant who previously headed Pennsylvania’s Department of Conservation and Natural Resources, presented a report, “The Case for Maryland’s Proposed Comprehensive Gas Development Plan Program,” to a Maryland advisory panel. With a CGDP requirement, drillers would have to submit a design addressing all land “on or under” proposed exploration or production, as well as the proposed locations of well pads, roads, pipelines and other natural gas facilities. For more information please contact HBW Resources.
 
Michigan
State Sen. Rick Jones (R, District 24) is pushing tax incentives to prompt construction of a new oil processing facility in the state. Sen. Jones is not talking about a plant the size of the sprawling Marathon refinery in southwest Detroit, the only one in Michigan. Jones wants one of those small, so-called “portable” refineries being pioneered in oil-rich North Dakota. “It would be a smaller, leaner, cleaner operation that would make gasoline for the Michigan market,” said Jones, who filed his legislation Wednesday. “I’d use the Michigan Strategic Fund to give them a 10-year property tax and business tax abatement. We’d also help them find a suitable place to build.” Motor fuel and natural gas production are major growth segments for the U.S. economy as a result of huge new deposits and new extraction techniques in North America. Another refinery might not lower pump prices but still could be a good strategic move creating new jobs for Michigan.
 
State Rep. Mike Callton (R, District 87) is hosting a town hall meeting on Monday, July 29 to discuss hydraulic fracturing of oil and gas wells. Rep. Callton will be joined by representatives from Michigan Oil and Gas Producers; Michigan Department of Environmental Quality and the Michigan Environmental Council. The panel will speak about the history of fracking and its current utilization for providing natural gas. Comments and questions from the audience will be encouraged. The meeting is free and open to the public, and will run from 7 p.m. to 9 p.m. at the Barry County Commission on Aging, 320 W. Woodlawn Ave. in Hastings.
 
Minnesota
The Department of Natural Resources and Minnesota Pollution Control Agency put out requests for comment as they determine a plan to conduct rulemaking related to sand mining rules. The Legislature ordered the agencies to develop regulatory standards. Both agencies say new rules are months away from completion. For more information please contact us.
 
New York
Seven months after a tanker ran aground in December, tankers hauling Canada-bound crude oil have resumed navigating the Hudson River. The Bahamian-flagged vessel Afrodite took on crude at the Port of Albany on Wednesday in preparation for its third round trip to the Irving Oil Co. refinery in St. John, New Brunswick. The tanker can store up to 230,000 barrels of crude, primarily drawn from North Dakota’s Bakken Shale. The Afrodite is about 25 feet narrower than the Stena Primorsk, which damaged its hull after crashing into some rocks on its debut voyage to St. John late last year. Since that incident, midstream services company Buckeye Partners LP shipped crude along the Hudson by barges, which hold less oil than tankers but typically have shallower drafts that make them less likely to run aground. Much of the crude transferred to tankers at the Port of Albany arrives from the Bakken Shale via rail.
 
The Town of Marbletown joined the list of more than 170 localities around the state that have enacted bans or moratoriums on hydraulic fracturing, using its liquid drilling wastewater or any other aspect of shale gas development. For more information please contact HBW Resources.
 
North Carolina
The state Senate approved, HB 74 the Regulatory Reform Act of 2013, that would give select members of the Mining and Energy Commission the authority to review any “trade secret” claim made by energy companies before the chemicals used in fracking are brought out to a drill site and pumped into the ground. The legislative proposal came after James Womack, chairman of the Mining and Energy Commission, sent a strongly worded letter to lawmakers complaining about earlier efforts by a Senate committee to create a loophole for energy companies to avoid disclosure. The loophole would have allowed energy companies to use a trade secret claim if they didn’t want to disclose chemicals they deemed to be sensitive or competitive. The N.C. Mining and Energy Commission, which is writing 120-some rules to govern fracking, had vowed to write one of the nation’s strictest chemical disclosure standards: full disclosure of all chemicals used to frack in the state, providing maximum protection to the public and to the environment. Under the legislative proposal, review of trade secrets would be strictly controlled. The corporate secrets wouldn’t be accessible to the public, while Mining and Energy Commissioners would have access on a limited basis.
 
Ohio
Ohio bonding and liability requirements are insufficient to cover the cost and damage from a drilling accident or problems in the developing Utica shale and need to be raised, two groups said. Environment Ohio and Policy Matters Ohio held a teleconference to release the report, “Who Pays the Cost of Fracking?” that looks at Ohio’s shortcomings. It was done by the Environment Ohio Research and Policy Center.
 
Rockies Express Pipeline LLC (REX) has announced that it has executed a binding precedent agreement with an unnamed Utica Shale producer who wants to transport up to 200,000 Dth/d of processed Utica production through REX to markets in the Midcontinent.Pending satisfaction of certain conditions in the agreement, the processed gas will enter into REX through a newly constructed 14-mile residue header being installed by REX at the tailgate of MarkWest’s Seneca Processing Complex in Noble County, Ohio. The new facilities, which are expected to be in service in late 2013, will add significant natural gas supply to the east end of REX for transport to points west or east.
 
After the “community bill of rights” failed in the May primary election, a group of anti-fracking activists are back at it, trying to put the initiative on the November ballot. The bill was defeated in May by a margin of 57 percent to 43 percent. The proposed charter amendment would ban compression stations and pipelines from being installed within city limits in addition to banning any type of fracking operations or disposal wells for wastewater from fracking. The bill does include one change in language compared to the previous version. It exempts manufactured products, including the sale of components and materials used in oil and gas exploration, from the proposed ban. The Mahoning Valley Coalition for Job Growth and Investment will be brought back together to oppose the bill a second time. The coalition includes business leaders, along with local Republican and Democratic party leaders who opposed the bill. For more information please contact us.
 
The Muskingum Watershed Conservancy District has approved a new water sale from Seneca Lake to a Utica shale driller. The agency’s governing board, meeting at Atwood Lake last week, approved a deal for August through October with Colorado-based Antero Resources. The board agreed to reduce the maximum per-day amount of water being sold from 2 million to 1.5 million gallons because of drier conditions in those months. Antero will pay $6 per 1,000 gallons. The deal sets a maximum amount of 138 million gallons of water, officials said.
 
The Ohio State University’s researchers want to install and study a gas well in eastern Ohio to study the process of hydraulic fracturing, or fracking. The shale drilling well would be built on university owned land in Noble County. The plan would open the school’s Eastern Agricultural Research Station to shale drilling and would provide an opportunity to closely examine how fracking alters the environment and assess possible pollution risks to the air and groundwater. Ohio State’s Shale Water Management Research Cluster is researching ways to estimate the impact of water withdrawals from lakes and streams as well as how to treat waste fluids that bubble out of fracked shale wells. The university owns 780 acres of mineral rights at the Noble County research station. For more information please contact HBW Resources.
 
The Athens County Board of Elections has certified signatures needed to place a hydraulic fracturing ban on the Nov. 5 general election ballot in the city of Athens. Approximately 780 signatures were submitted to Athens City Auditor Kathy Hecht earlier this month, then forwarded to the elections board for certification. The title of the proposed ballot issue is “The Athens Community Bill of Rights and Water Supply Protection Ordinance.” The legislation would also ban activities associated with fracking such as the procurement of millions of gallons of fresh water, use of undisclosed chemicals, and the disposal of fracking waste in Class II injection wells. The ordinance would advise communities upstream from Athens that “industrial accidents and unwanted chemical events which cause pollution of Athens’ drinking water will be prosecuted to the full extent of the law, citing ORC VII 743.25, which authorizes any municipality to prosecute water supply polluters upstream to a distance of 20 miles.
 
Pennsylvania
A landmark federal study on hydraulic fracturing, or fracking, shows no evidence that chemicals from the natural gas drilling process moved up to contaminate drinking water aquifers at a western Pennsylvania drilling site, the Department of Energy told The Associated Press. Although the results are preliminary — the study is still ongoing — they are a boost to a natural gas industry that has fought complaints from environmental groups and property owners who call fracking dangerous. Eight new Marcellus Shale horizontal wells were monitored seismically and one was injected with four different man-made tracers at different stages of the fracking process, which involves setting off small explosions to break the rock apart. The scientists also monitored a separate series of older gas wells that are about 3,000 feet above the Marcellus to see if the fracking fluid reached up to them.
 
Natural gas companies fixed or are repairing at least 413 miles of state roads in Susquehanna, Wyoming and Wayne counties, a Times-Tribune review of state Department of Transportation records show. In one example, more than $1 million in natural gas impact fees will be used to pave and repair 25 of Williamsport’s streets this fall and next year, enabling the city to get twice as many projects done as in years before, city officials said. “We’re doubling the amount of investment because of Marcellus Shale impact fees,” said John Grado, city engineer and director of community and economic development. Gas impact fees, those derived from taxes on local gas wells, will enable more to be done and less dependence on the city’s general fund, community development block grants or liquid fuels allocations, he said. For more information please contact us.
 
Texas
For every one job created on a drilling rig in the Permian Basin by the hydraulic fracturing craze taking over in West Texas, two jobs will be generated in Houston’s downtown skyscrapers, Bob Perryman, a Texas economist, told the Business Journals recently.
 
Oil production in Texas’s Eagle Ford shale formation rose 58 percent in May from the prior year. The nine fields that make up the majority of Eagle Ford yielded 581,923 barrels of crude a day, according to preliminary data released by the Texas Railroad Commission, which oversees oil and gas drilling in the state. The fields produced 368,770 barrels daily in May 2012. February output was revised to 574,032 barrels a day from the preliminary report of 530,689, the commission said. Production totals typically increase in subsequent months as the state receives revised, corrected or late reports. Growing production out of Eagle Ford is helping fuel a renaissance in Texas crude.
 
Magnum Hunter Resources has sold its properties in the Eagle Ford Shale’s oil-rich Gonzales and Lavaca counties for $401 million. A wholly-owned subsidiary of Penn Virginia Corp. made the purchase for $361 million in cash and $40 million in Penn Virginia common stock. The properties involved in the sale included 19,000 leasehold acres and Magnum Hunter’s operating and non-operating interests in wells in Gonzales and Lavaca counties. For more information please contact HBW Resources.
 
Lubbock’s Board of Health wants the city to hire its own inspectors to oversee new oil and gas fracturing ventures expected to come to town years from now, according to a presentation made to the City Council. The council held a brief work session at the end of its meeting to receive a presentation of health board recommendations for dealing with public health concerns related to new horizontal drilling and fracking operations. Employing inspectors on the city payroll is one of several changes the board is asking the city to consider.
 
Utah
A coalition of conservation groups has filed a ‘request for agency action’ challenging the Utah Department of Air Quality’s June 21 approval of a new oil refinery in Green River, Utah that would affect local and regional air quality and facilitate oil shale and tar sands mining in the Colorado River Basin’s Green River Formation.
 
Wyoming
Twenty households east of Pavillion are getting cisterns, or water tanks, for clean drinking water, paid for by the Wyoming Legislature after residents complained that hydraulic fracturing in the area contaminated their water. The Casper Star-Tribune reports that the water tanks are coming because lawmakers last year set aside $750,000 to supply them. The residents live in a 23-square-mile area east of Pavillion, in the Pavillion gas field. Each household participating in the project will get a pair of polyethylene tanks buried side-by-side. Each tank will have capacity for 1,750 gallons of water.
 
National
 
A landmark federal study on hydraulic fracturing shows no evidence that chemicals from the natural gas drilling process moved up to contaminate drinking water aquifers at a western Pennsylvania drilling site, the Department of Energy told The Associated Press. After a year of monitoring, the researchers found that the chemical-laced fluids used to free gas trapped deep below the surface stayed thousands of feet below the shallower areas that supply drinking water, geologist Richard Hammack said. Although the results are preliminary — the study is still ongoing — they are a boost to a natural gas industry that has fought complaints from environmental groups and property owners who call fracking dangerous. The study done by the National Energy Technology Laboratory (NETL) in Pittsburgh marked the first time that a drilling company let government scientists inject special tracers into the fracking fluid and then continue regular monitoring to see whether it spread toward drinking water sources. The research is being done at a drilling site in Greene County, which is southwest of Pittsburgh and adjacent to West Virginia. NETL estimates that its final report will be completed by the end of the year. For more information please contact us.
 
Rep. Bill Flores (R, TX 17) introduced H.R. 2728, the “Protecting States’ Rights to Promote American Energy Security Act.” The House Natural Resources Committee’s, Subcommittee on Energy and Minerals had a hearing on this proposal yesterday. The panelists included: Catherine Foerster, Chair and Engineering Commissioner, Alaska Oil and Gas Conservation Commission; Christi Craddick, Commissioner, Railroad Commission of Texas; John Rogers, Associate Director, Utah Division of Oil, Gas & Mining; and Lois Epstein, Arctic Program Director, the Wilderness Society. The bill would exempt states with existing hydraulic fracturing regulations from the proposed BLM rule. The Energy Producing States Coalition submitted a letter in support of the legislation. For more information please contact HBW Resources.
 
House Science Committee Chairman Lamar Smith (R, TX 21) is weighing legislation to alter the scopeof the Environmental Protection Agency’s (EPA) study on the impact of oil-and-gas hydraulic fracturing on drinking water. Smith, who said the EPA has been “complicit” in efforts to undercut gas production enabled by hydraulic fracturing, said he fears the study’s design does not put risks in their proper context. The Subcommittee on Environment and Subcommittee on Energy held a joint hearing to discuss “Lessons Learned: EPA’s Investigations of Hydraulic Fracturing.”

The proposed Bureau of Land Management hydraulic fracturing rule could cost about $345 million annually to implement, according to a new economic analysis commissioned by the Independent Petroleum Association of America and Western Energy Alliance. This may be relatively good news for producers, though, since this cost estimate comes after the rule was revised from its original May 2012 proposal. Before the U.S. Department of the Interior incorporated public comments into its initial proposal, analysts at John Dunham & Associates said the rule could have cost industry nearly $1.3 billion annually. According to the Western Energy Alliance the cost of the second version of the rule is lower than the first because the new rule eliminated a requirement to regulate well maintenance; revised Bureau of Land Management estimates on the number of impacted wells; the reduction of permitting times; and “type well” provisions that will require operators to run full testing only on representative wells in a field. BLM has estimated the rules it proposed in May would cost drillers only $12 million to $20 million per year.
 
Senate Commerce Chairman Jay Rockefeller (D, WV) is looking into oil and gas transportation safety issues following the recent oil train disaster in Quebec and a 2012 pipeline blast in West Virginia. He’s asked GAO to ‘examine the impact of shale oil and gas development on transportation infrastructure and safety,’ in particular how infrastructure has changed as domestic oil and gas production in recent years has increased. Canadian officials have found 42 bodies and are still searching for five more at the site of the July 6 train disaster in Lac-Megantic, Quebec.
 
Natural gas prices were up nearly 60 percent in the first half of 2013, compared with the same period last year, but they were still too low to inspire new drilling in much of the country, according to the U.S. Energy Information Administration. Contracts for future delivery of natural gas currently are selling at about $3.70 per million British thermal units, just below the $3.75 average for natural gas in the first half of 2013, the agency said. In 2012, natural gas sold for an average of $2.39 through the first half of the year, the agency reported. The 57 percent jump in prices was enough to push many power generators to switch from burning natural gas to using coal, since it is more economic at current prices, the agency said. But $3.70 is by no means a high price, remaining too low to be of interest for most producers hoping to make a profit, said James Sullivan, senior analyst for Alembic Global Advisors, which has been tracking natural gas prices. Natural gas prices would likely have to be near $5 to encourage more drilling for the resource, with most companies believing that producing it would not be profitable below that range, Sullivan said.
 
Natural gas is helping cut emissions. But gas use will have to peak in 2030 to meet emissions reduction targets for combating climate change, Darryl Banks and Gwynne Taraska of the Center for American Progress write in a paper out today. “In the near term, we should use the expansion in natural gas to aggressively drive coal from the market, given that natural gas burns more cleanly than other fossil fuels and is currently available and affordable. The natural-gas expansion, however, needs to be managed safely and sustainably and without overbuilding long-term electricity-generation capacity that would then need to be retired.” For more information please contact HBW Resources.
 
Sen. Jim Inhofe (R, OK) has introduced S. 1355, which would remove a cap on CAFE-related credits for producing dual-fuel natural gas vehicles. “My bill would ensure NGVs are given equal treatment with electric vehicles,” said Inhofe.
 
The U.S. Department of Justice has started an antitrust investigation of the pressure-pumping business, a key component of the oil and gas industry practice of hydraulic fracturing, Baker Hughes Inc said in a filing with the Securities and Exchange Commission. Baker Hughes said it received a “civil investigation demand” from the DOJ under the Antitrust Civil Process Act. The request sought information relating to the U.S. pressure-pumping market beginning May 29, 2011.
 
International
 
Algeria
The Algerian Minister of Energy and Mines, Youcef Yousfi, and Eni’s CEO, Paolo Scaroni, met in Algiers, Algeria where they discussed future developments of cooperation between Eni and Sonatrach, a government-owned energy company, for the exploration and development of shale gas. The two companies have finalized a Memorandum of Understanding and will bring together their experience in the exploration and production of unconventional hydrocarbons.
 
Brazil
With the discovery of shale gas reserves in Brazil and plans to auction drilling rights there, a delegation is visiting Pennsylvania to see how its drilling boom has turned the state into one of the leading natural gas producers in the U.S. The group of Brazilian business and energy industry professionals hopes to learn from the state’s experience and to explore the possibility of exports to Brazil. The group is meeting with Pennsylvania regulators and drilling companies and touring a drilling site in western Pennsylvania.
 
Chile
Empresa Nacional del Petroleo (ENAP), Chile’s state oil company, reported that they have found gas through a “successful experiment” using hydraulic fracturing on the Tierra del Fuego island. The find was from wells drilled in 2012 and 2013, utilizing injection of water, sand and chemicals to facilitate the flow. The overall productivity has yet to be determined but ENAP is interested enough to be investing $100 million in the Magallanes region this year. For more information please contact us.
 
China
PetroChina and U.S. energy company Hess Corp have signed China’s first joint agreement to develop a shale block – an 800 square kilometer block in the Santanghu basin, located in the region of Xinjiang – as well as to conduct a joint study. For more information please contact HBW Resources.
 
Hungary
Hungary may be sitting atop shale gas assets totaling 2 trillion cubic meters, but for now Minister of Rural Development Sándor Fazekas is still taking a cautious stand on fracking. For Fazekas, the key issue on the meeting’s agenda for Hungary was the question of shale gas extraction, and as the minister pointed out, the resources found in Makó are of “extraordinary value” to the country. However, Fazekas did emphasize that “it is very difficult to estimate the possible environmental danger posed” by fracking and “the extraction of shale gas also requires the establishment of many more wells, which brings up questions related to landscape protection and conservation,” among other issues.
 
Ireland
Three companies currently hold options licenses to assess whether hydraulic fracturing would be viable in parts of Ireland. However, they won’t get the go-ahead from the Government unless the Environmental Protection Agency’s report, due next year, comes out in favor of fracking. Energy and Natural Resources Minister Pat Rabbitte refused to condemn the practice and hinted that it could be a viable option in Ireland. He explained, “The study will settle the science on this and that we can then make evidence-based decisions on our future.”
 
Poland
The debate over potential profits and possible environmental harms of hydraulic fracturing is being played out in a far more immediate confrontation in the east Polish village of Zurawlow. A group of farmers and residents are occupying a plot of land to prevent Chevron, which is backed by the state, from exploring for shale gas. The citizens of Zurawlow once supported the proposal to drill in the “Grabowiec concession,” a gas-rich region running beneath southeast Poland, in the hope that it would create much-needed jobs in the region. Opinion changed when two families’ well water turned black after Chevron’s seismic tests in 2010.
 
Saudi Arabia
The negative impact of shale gas on the GCC won’t be significant for at least another 20 years, citing the high cost of shale gas and projected growth in Asia’s oil consumption, Kuwait-based Asiya Investments said in its new report titled “Shale gas impact on the GCC”. The report indicated that GCC oil exports weight shifted from US to Asia. OPEC projects that China’s imports of crude oil will outpace the U.S. crude oil imports by 2014, as its rising refining capacity is propping up demand. The rest of Asia will also play an important role in keeping oil demand high. Furthermore, even if the US is able to tap its reserves adequately, and would shift from being the world’s leading importer of oil to a net exporter by 2017 and become energy independent by 2030, the lost demand for oil from the U.S. will be offset by Asia.
 
South Korea
Yoon Sang-jick, the South Korean minister of trade, industry and energy, recently met with heads of energy companies in Sejong City and encouraged to take part in the global development of shale gas, the country’s Yonhap News Agency reported. According to the minister: “We must quickly set up a strategic plan to join the global efforts develop shale gas when considering the impact the development of shale gas in the North American region will have on our petrochemical firms.”He added that South Korea’s petrochemical companies could suffer a significant setback if American competitors set up production facilities using shale gas. To curtail this, the minister recommended that the government and local energy firms consider establishing overseas facilities that will develop and produce natural gas, including shale gas. The government also agreed to jointly develop new technologies and production facilities for the petrochemical industry in order to have competitive prices. For more information please contact us.
 
United Kingdom
The UK House of Lords Economic Affairs Committee has launched an inquiry into the “Economic Impact of Shale Gas and Oil on UK Energy Policy” and is inviting written evidence on the issue to be received by September 30th. Questions the committee is seeking evidence on include:
·         How much scope is there for shale gas and oil to be used in the UK? Over what timeframe?
·         How will the costs, including those on the environment, of accessing the UK’s shale gas and oil compare to those of other energy sources?
·         What is the potential impact of shale gas and oil on the local economies in areas where development is possible?
·         What forms of electricity generation is shale gas likely to displace and by how much?
·         What impact will shale gas and oil have on household energy bills?
·         What effect will the use of shale gas and oil have on carbon emissions compared to other combinations of energy sources?
·         Will shale gas and oil increase UK energy security?
·         What lessons can be learnt from the US experience of shale gas and oil?
 
The UK government has announced plans for a shale gas ‘pad’ allowance, which will see the tax on revenue that companies make from producing shale gas reduced from 62% to 30%. The plans arebased on existing allowances for oil and gas production which aim to support almost £14 billion of investment next year and are being touted as the most generous shale incentives in the world. Under its plans, the tax break would apply to a proportion of the income generated from shale gas production. What that proportion is will be determined after a consultation. The government has also confirmed plans to give communities that host shale gas sites £100,000 per site, and up to 1% of all revenues from production. For more information please contact HBW Resources.
 
British water company United Utilities said it was in the early stages of discussing what natural gas company Cuadrilla may need for a fracking campaign. “We are having very early engagement with Cuadrilla to try to understand their requirements,” the spokeswoman was quoted as saying Saturday by The Daily Telegraph. “The fact that we are a large landowner in the northwest means we could possibly help with site selection.”
Protestors have blocked a lorry from entering a site where Cuadrilla is due to start test drilling for shale oil after receiving an Environment Agency Licence earlier this week. A small group of activists have remained at the site since early this morning and police are attending the scene. Cuadrilla have been transporting drill parts onto the site near Balcombe, West Sussex, since Tuesday and planned to begin operations on Monday. The local anti-fracking group, which has been joined for the demonstration by environmental protestors from further afield, has mounted a growing campaign over the past year, citing fears of pollution from gas flaring, disruption from lorries carrying fracturing liquids through the village and the possible pollution of local water courses. For more information please contact us.
 
Water UK, which represents major water suppliers, has published a series of concerns about fracking and warned that failure to address them could “stop the industry in its tracks.” Ministers hope the process, which involves pumping water, sand and chemicals into the ground to extract gas trapped in rocks, could unlock a major new source of gas for Britain and bring down household energy bills.
 
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

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.
 
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
Web: http://www.hbwresources.com

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.
 
States 
 
State Legislative Update: Please see linked spreadsheet for an updated listing of state legislation dealing with hydraulic fracturing.
 
California
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.
 
Colorado
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.

Kansas
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.
 
Michigan
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
 
Minnesota
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.
 
Ohio
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.
 
Pennsylvania
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).
 
Texas
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.
 
Wyoming
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.
 
National
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.
 
International
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.
 
Argentina
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.
 
Australia
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
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.
 
Indonesia
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.
 
Lithuania
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.
 
Mexico
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.
 
Poland
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.
 
Russia
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.
 
Scotland
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
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.
 
Ukraine
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
E-mail:bollison@hbwresources.com
Web:http://www.hbwresources.com
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!
 
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
Web: http://www.hbwresources.com
Twitter: @mzehrhbw

HBW Ollison Fracking Report

The Ollison Fracking Report
Friday, May 17th, 2013 


Ollison Fracking Report–Tracking Unconventional Oil and Gas Development

 
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. 
 
State Legislative Update
Please see linked spreadsheet for an updated listing of state legislation dealing with hydraulic fracturing.
 
States
Arkansas
A new study by scientists at Duke University and the U.S. Geological Survey (USGS) finds no evidence of groundwater contamination from shale gas production in Arkansas. The scientists sampled 127 shallow drinking water wells in areas overlying Fayetteville Shale gas production in north-central Arkansas. They analyzed the samples for major and trace elements and hydrocarbons, and used isotopic tracers to identify the sources of possible contaminants. The researchers compared the chemical composition of the contaminants to those found in water and gas samples from nearby shale gas drilling sites.
 
Colorado
Boulder County Commissioners considered a proposal related to imposing a transportation fee for oil and gas activities. The proposal recommended that Boulder County implement charging oil and gas companies a $700 “road deterioration” fee for each well pad, a $16,600 fee for each well and a $4,000 per well “safety fee” to mitigate concerns such as heavy oil and gas traffic. Commissioner Elise Jones moved that fees totaling $37,900 per well with certain exceptions, including that they be re-examined no less than every three years. The Commission agreed to the proposal.
 
Wilderness Workshop, a Colorado environmental group, is appealing BLM’s decision to suspend 25 oil and gas leases in the Thompson Divide pending a new study of potential environmental impacts. Although the leases were due to expire this month, BLM stated that, it may choose to void, extend, or renew the leases after the study is completed. Until then, the lessees cannot develop the leases. Wilderness Workshop argues that BLM should have just allowed the leases to expire as they were never developed and characterizes the lease suspensions as a “bailout” of the companies. The appeal is to the BLM State Director and then may be appealed to the Interior Board of Land Appeals.
 
Illinois 
HB 2615, introduced by Rep. John Bradley (R, District 117) which would regulate horizontal hydraulic fracturing in Illinois is ready to move forward. Following months of negotiations, the legislation stalled in March after a last-minute amendment was added to require unionized well contractors at each well site until drillers themselves were licensed. The move caused a coalition of business, labor, construction, transportation and agricultural organizations to pull their support for the bill. A compromise was reached this week that removes the union requirement. That language has been replaced with a tax credit that would flow to oil drillers who use local labor.
 
Kansas
Fracing helps Kansas oil production reach highest level since 1990s. Kansas produced 43.7 million barrels of oil in 2012, up about 5 percent from the 41.5 million it produced the year before. The greatest increases in oil production were in counties atop a limestone rock formation in southern Kansas, with production in Harper and Comanche counties increasing by more than 70 percent between 2011 and 2012.
 
Minnesota
An amendment, sponsored by Sen. Matt Schmit (DFL, District 21) which would block excavation of frac sand within a mile of any trout stream in southeastern Minnesota was heading towards a vote late last week. The trout stream measure already has failed two close votes at the committee level, including one in the Senate Environment and Economic Development Committee. A compromise was reached earlier this week when lawmakers agreed to create a new Department of Natural Resources permit for companies hoping to mine silica sand in certain sensitive areas in southeastern Minnesota. The compromise would require a hydrological study and DNR permit for any mine within a mile of a trout stream but not springs.
 
New York
Sen. Cecilia Tkaczyk (D, District 46), joined by opponents of the natural gas drilling technique known as high-volume hydraulic fracturing, announced that she would introduce S 5123A to ban “the treatment, discharge, disposal, transportation or storage” of hydraulic fracturing waste products in New York state.

 
North Dakota
H.R. 767, sponsored by Rep. Kevin Cramer (R, ND), which would allow oil and gas companies that want to drill on federal land in the Dakotas the ability to participate in a pilot program designed to speed processing of permit applications.  Similar legislation was introduced by Sen. Hoeven (R, ND) in the US Senate and has been passed by the Senate Energy and Natural Resources Committee.
 
Ohio
The Finance Committee of Salem City Council voted to recommend splitting the $1.3 million in shale lease money for leasing city-owned land for mineral rights. The split will be between capital improvements, paying off debt and placing the rest in a discretionary fund for council projects.  
 
Trumbull County Commissioners approved an agreement to sell up to 200,000 gallons of water a day to an oil and gas company. The agreement will allow Halcon Resources to pump water from the southeast water district supply to its Vienna Township drilling site. Halcon will pay $10 per 1,000 gallons of water but will only access the water during low demand periods throughout the day. 
 
The Athens City Council is considering a proposal that would create a resource extraction and waste disposal monitoring and mitigation system. The proposal is scheduled to be introduced next week by Councilwoman Chris Fahl. The proposal would create a new chapter of Athens City Code to “protect the health, safety and welfare of residents by generating funds” for a number of activities such as air and water contamination monitoring, spelling out spill planning and notification requirements, giving the city the authority to test disposal waste for harmful chemicals, establishing a fee for all resource extraction and related waste disposal, and establishing the Athens Monitoring, Mitigation and Environmental Fund. Operators of injection wells or drilling sites would also have to supply certain background information to the city service-safety director such as a listing of all key employees under the proposed legislation.
 
The Cincinnati City Council approved a resolution supporting a statewide ban, HB 178 introduced by Rep. Denise Driehaus (D, District 31) and Rep. Robert F. Hagan (D, District 58), on the disposal of toxic waste from hydraulic fracturing in injection wells. Cincinnati enacted a citywide ban on all deep-well injection of wastes in 2012.

Wyoming
Governor Matt Mead (R) unveiled a new statewide energy strategy, Leading the Charge, that proposes that the oil and natural gas industry sample groundwater sources before drilling wells in an effort to better pinpoint pollution sources if contamination occurs. Gov. Mead also left open the possibility of adding post-drilling groundwater monitoring, after wells have been in operation, to ensure the operations do not contaminate groundwater. The strategy also calls for the increased production of compressed natural gas and liquefied natural gas “as a transportation fuel.”
 
National
Rep. Pete Olson (R, TX 22) wrote an op-ed for The Hill where he stated, “Hydraulic fracturing, commonly called fracking, and horizontal drilling are the technologies that have revolutionized our ability to access oil and gas previously thought inaccessible. Fracking has been conducted safely for more than 50 years under a sound state regulatory process. New drilling based on these technologies has flourished on private lands, while access to federal lands lags behind, mired in red tape. And now, the Interior Department is writing stricter new rules for fracking on federal lands, while the Environmental Protection Agency (EPA) conducts a massive study on fracking that could lay the ground work for comprehensive federal regulations covering both public and private lands. If they are successful, it would add more layers of bureaucracy to the process, further slowing down production. Instead, we can keep capitalizing on this combination of home-bred technologies by continuing to enforce commonsense state-based regulations on drilling practices.”
 
Rep. Diane DeGette (D, CO 1) and Rep. Chris Gibson (R, NY 19) reintroduced the Fracturing Responsibility and Awareness of Chemicals Act (FRAC Act), HR 1921. The Act would require disclosure of the chemicals used in fracing fluids and would remove the oil and gas industry’s exemption from the Safe Drinking Water Act. Rep. DeGette has introduced the FRAC Act in each Congress since 2008, but this year marks the first time it has been introduced on a bipartisan basis. The bill was referred to the House Energy and Commerce Committee.
 
Shale oil production could revolutionize global energy markets, reducing oil prices and bolstering the economy globally, but its impact will vary on a country-by-country basis. A recent report from PwC, “Shale Oil – the Next Energy Revolution” examines how the development of shale oil worldwide might impact oil prices and the economy worldwide.
 
EPA released its updated draft proposal for hydraulic fracturing on public lands. The updated draft proposal maintains the three main components of the initial proposal: requiring operators to disclose the chemicals they use in fracturing activities on public lands; improving assurances of well-bore integrity to verify that fluids used during fracturing operations are not contaminating groundwater; and confirming that oil and gas operators have a water management plan in place for handling fluids that flow back to the surface. The updated draft proposal will be subject to a new 30-day public comment period. If interested in providing comments, they can be emailed toOIRA_Submission@omb.eop.gov. When commenting, please indicate “Attention: OMB Control Number 1004-0203”
 
 
EPA issued a direct final rule that identified 15 chemical substances that will require notice prior to manufacturing, importing or processing for an activity designated as a significant new use.  These chemicals were flagged pursuant to the Toxic Substances Control Act (TSCA) significant new use rules (SNURs). The notices, referred to as Significant New Use Notices (SNUNs), must be submitted to EPA 90 days before a listed chemical is manufactured, imported, or processed for an activity designated as a significant new use. While chemicals in the rule include those that can be employed in a broad range of uses, of particular interest is the listing of one compound, quaternary ammonium compounds, bis(fattyalkyl)dimethyl, salts with tannins (generic), used in natural gas and oil well drilling and hydraulic fracturing to eliminate bacteria in the water that produce corrosive by-products.
 
The Environmental Protection Agency cancelled a teleconference of the Hydraulic Fracturing Research Advisory Panel which was to provide an opportunity for independent expert members of the ad hoc panel to provide comment on EPA’s study of the potential impacts of hydraulic fracturing on drinking water resources.
 
International
A new paper by A.T. Kearney forecasts that Ukraine and Poland have a good chance of becoming the leading European countries in the extraction of shale gas by 2035. The paper expects the shale gas production to amount to 58bn cubic meters by 2035, which is more than 12 percent of the total gas consumption in the EU in 2011. By 2035, the production of shale gas is supposed to make 45 percent of the total gas production in the region.
 
Argentina
Chevron Corp. will become the first major oil company to partner with YPF SA to develop shale oil and a final deal is expected in July. Miguel Galuccio, chief executive officer of YPF, and Ali Moshiri, Chevron’s head of Latin America, Middle East and Africa, visited the Patagonia shale formation and met with Neuquen’s governor Jorge Sapag. The fields for the $1.5 billion joint venture comprise an area of 180 miles in southwestern Argentina.
 
Australia 
Chevron Corp. has finalized a deal to farm into shale gas acreage in central Australia’s Cooper Basin owned by local upstream player, Beach Energy. Chevron has paid Beach $36 million for a 30% stake in the PEL 218 permit in South Australia and $59 million for 18% of ATP 855 in Queensland. The permits are known as the Nappamerri Trough gas ventures.
 
Brazil
A delegation comprised of the Brazilian government and business leaders travelled to Pennsylvania to learn more about the Marcellus Shale and related business opportunities at an event hosted by the State of Pennsylvania and K&L Gates.
 
Canada
The Quebec government has tabled legislation to impose a moratorium on hydraulic fracturing for shale gas in the Lowlands of the St. Lawrence River. The moratorium, which could last up to five years, would remain in place until a new legislative framework for hydrocarbon exploitation in the province is set up. The tabled bill proposes stiff fines, from $10,000 to $6 million, for individuals or companies caught violating the moratorium.
 
Indonesia
Indonesia’s state-owned energy firm PT Pertamina signed an agreement to explore and develop shale gas in the northern part of Sumatra Island, potentially tapping 18.56 trillion cubic feet of reserves.
 
Poland
Poland will adopt a new, more investor-friendly law on shale gas exploration activity by the end of June, Environment Minister Marcin Korolec said. The new regulations are meant to ease bureaucracy in the sector. Poland will also create state operator that will take part in energy consortia. Poland has issued more than 100 shale gas exploration licenses, with some 40 test wells being in operation currently, though none is expected to start producing gas before 2015. The announcement seemed to contradict a statement earlier in the week by the Deputy Environment Minister Piotr Woźniak.
 
The Polish government does not want to support foreign investments in the shale gas sector, Rzeczpospolita wrote quoting reports from a meeting between Deputy Environment Minister Piotr Woźniak and a group of foreign investors and diplomats. According to press reports, “the Polish government has no intention of investing into shale gas and does not want to support cooperation with US and Canadian firms.” Two North American energy companies have withdrawn from Poland in recent weeks. Marathon Oil from the US and Canada’s Talisman Energy are in the process of selling their Polish assets.
 
United Kingdom
Britain is on track to “accelerate” its shale gas program, according to Michael Fallon, the energy minister, as he confirmed a new licensing round for oil and gas explorers will take place next year. The Government will next year launch the UK’s 14th onshore licensing round, he said, announcing that engineering consultancy AMEC has been hired to do the environmental assessment of plots’ suitability for exploration.
 
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
 
Contact Information
If you have any general questions, please contact me anytime. Previous versions of the HBW Ollison Fracking Report, the HBW Greenfield Offshore Energy Report, daily updates and new Member profiles can be viewed at:  http://www.mzehrhbw.wordpress.com. Hope you all have a great day!
 
Thanks,
 
Michael Zehr
HBW Resources
1666 K Street, NW, Suite 500
Washington, DC 20006
Direct: 202-429-6081
Cell: 202-277-3927
E-mail: mzehr@hbwresources.com
Web: http://www.hbwresources.com

 

Today in DC: HBW Resources Daily Washington Update

Monday in DC:

Back to Work:
 
The House and the Senate will be back in session this week after a week of recess.  The Senate will be completing work on the Marketplace Fairness Act, providing a legal framework for collecting taxes on certain on-line purchases, and is expected to consider legislation reauthorizing the Water Resources Development Act.  The House will be considering legislation providing additional flexibility for employers dealing with overtime payments and another bill prioritizing federal payments should Congress fail to pass a debt ceiling increase.
 
The majority of the action will continue to occur in the committees where oversight of the FY2014 Budget request continues.  Work on immigration reform will begin in the Senate Judiciary Committee this week, and Senator Reid has announced that he intends to use the entire month of June to consider the issue on the floor.  He expects to use July for some mixture of minimum wage increase and appropriations bills. 
 
The House will use the end of May and most of June to consider a series of energy bills, ranging from proposals to expedited consideration of the Keystone XL pipeline and expanding domestic production, to efforts to support energy exports and restrict the regulatory activities of the EPA.
 
Although the timing is uncertain, the Chambers will have to address the debt ceiling again at some point in the next few months.  With tax reform legislation still in the formative stages, the potential that such a proposal could be tied to the debt ceiling is unlikely, but not out of the realm of possibility.
 
Other Items of Interest:
 
Chairman of the Senate Energy and Natural Resources Committee Urges Action on Efficiency:  US Sen. Ron Wyden (D-OR), Chairman of the Senate Energy and Natural Resources Committee sent a letter to President Obama urging the Administration to encourage the use of Energy Performance Savings Contracts (EPSCs).  Energy Savings Performance Contracts allow government agencies to pay for energy efficiency upgrades through the savings in their energy bills, without any upfront cost to taxpayers. Energy-efficiency advocates have voiced concerns about the slow pace of approvals for some energy saving contracts in recent months. The administration has set a goal of signing $2 billion worth of ESPCs by 2014. To date, federal agencies have entered into $500 million of agreements toward that target.
 
Chairman Boxer Schedules Committee Vote on Nomination of Gina McCarthy: Sen. Barbara Boxer (D-CA), the Chairwoman of the Senate Environment and Public Works Committee announced that the Committee would consider the nomination on May 9th. Senator Vitter (R-LA) and other Republicans on the EPW Committee had recently urgedthe Chairwoman to refrain from taking up the nomination until all the questions submitted had been addressed. In her announcement, Senator Boxer voiced support for the nominee and said that she had completed and answered over a thousand questions submitted to her by Members of the Committee.
 
New Report Released on Economic Benefits of LNG Exports:  The Small Business and Entrepreneurship Council (SBE Council) released a new report showing liquefied natural gas (LNG) exports will benefit the U.S. economy and spur job creation. The report highlights how the natural gas industry has helped stimulate employment and small business growth across the country in recent years, especially in those states with expanded production. Looking at the vast economic benefits natural gas production has brought to our economy, the report asserts that increasing LNG exports will expand opportunities for small businesses to grow and create jobs.
 
Senators Request GAO Study of Fusion Reactor:  A bipartisan group of energy policy leaders in the U.S. Senate sent a letter to the Government Accountability Office requesting an investigation of the cost and feasibility of the International Thermonuclear Experimental Reactor and its effect on U.S. fusion programs. The International Thermonuclear Experimental Reactor (ITER) is a fusion research demonstration reactor currently under construction in southern France, jointly financed and managed by the European Union, India, Japan, China, Russia, South Korea and the United States. The United States has committed to fund 9.1 percent of the project’s cost, as well as contribute hardware and personnel. That cost has ballooned in recent years, and is a threat to other research efforts in a constrained budget environment. 
 
Sec. Jewell Tours Offshore Rig:  Last Friday, DOI Sec. Sally Jewell visited an offshore drilling rig and production platform in the Gulf of Mexico.  She was accompanied by Bureau of Safety and Environmental Enforcement (BSEE) Director Jim Watson and a BSEE Gulf Region inspector on the visit, which included seeing first-hand LLOG’s drilling operations onboard the ENSCO 8502 rig, approximately 120 miles southeast of New Orleans, LA. There she observed a cementing operation for a production well and was briefed on LLOG’s development plan for the area. She also visited Chevron’s deepest producing facility in 6,500 feet water depth, a semi-a submersible platform approximately 125 miles southeast of New Orleans, LA. There she toured the production equipment and discussed Chevron’s deepwater strategy for exploration and development in the Gulf of Mexico.  Additional information on her trip can be viewed here.

HBW Ollison Fracking Report:  See the latest updates on news and policy at the state, national and international levels affecting the use of hydraulic fracturing for oil and gas development.  A copy of the report can be viewed here.  
 
Notable Hearings and Events:
 
EPA Hydraulic Fracturing Research Meeting:  On May 7th and 8th, the Environmental Protection Agency (EPA) will hold a meeting of the Hydraulic Fracturing Research Advisory Panel to provide an opportunity for independent expert members of the ad hoc panel to provide comment on EPA’s study of the potential impacts of hydraulic fracturing on drinking water resources, May 7-8. The event will be available via webcast athttp://www.epa.gov/sab]
 
BLM Appropriations Budget Hearing:  On May 7th and 9:30 AM in B-308 Rayburn, the House Appropriations Committee Interior, Environment, and Related Agencies Subcommittee will hold a hearing on the budget for the Bureau of Land Management. Neil Kornze, principal deputy director of the Bureau of Land Management will be testifying.  Additional information can be found on the Committee website:http://appropriations.house.gov.
 
Senate Hearing on Helium Legislation: On May 7th at 9:30AM in 366 Dirksen, the full Committee will hold a hearing on H.R.527, the “Responsible Helium Administration and Stewardship Act,” to complete the privatization of the Federal helium reserve in a competitive market fashion that ensures stability in the helium markets while protecting the interests of American taxpayers. Tim Spisak, deputy assistant director for minerals and realty management in the Interior Department’s Bureau of Land Management; Walter Nelson, director of helium sourcing and supply chain for Air Products and Chemicals, Inc.; David Joyner, president of Air Liquide Helium America, Inc.; Carolyn Duran, senior materials manager for the Intel Corporation; and Moses Chan, professor of physics at Pennsylvania State University, will testify at the hearing. Additional information can be found here.
 
Hearing on Scientific and Environmental Issues Regarding the Keystone XL Pipeline:  ON May 7th at 10 AM in 2318 Rayburn, the House Science Committee Energy Subcommittee and Environment Subcommittee will hold a joint hearing on “Keystone XL Pipeline: Examination of Scientific and Environmental Issues.” Lynn Helms, director of the North Dakota Industrial Commission’s Department of Mineral Resources; Brigham McCown, principal and managing director of United Transportation Advisors LLC; Paul “Chip” Knappenberger, assistant director of the Cato Institute’s Center for the Study of Science; and Anthony Swift, attorney in the Natural Resources Defense Council’s International Program, will testify.  Additional information can be found here.
 
Discussion on Natural Gas Exports:  On May 7th at 10AM, the American Enterprise Institute for Public Policy Research (AEI) will hold a discussion on “America’s Natural Gas: Should Exports be Restricted?
Indian Ambassador to the United States Nirupama Rao; Claude Barfield, resident scholar at AEI; Ken Ditzel, principal at Charles River Associates; David Montgomery, senior vice president of NERA Economic Consulting; Wallace Tyner, professor of agricultural economics at Purdue University; Benjamin Zycher, visiting scholar at AEI; and Arthur Brooks, president of AEI, will participate in the discussion. The event will be streamed live onhttp://www.american.com/watch/aei-livestream.
 
Hearing on US Energy Exports: On May 7th at 10AM n 2123 Rayburn, the Energy and Commerce Committee Energy and Power Subcommittee will hold a hearing on “U.S. Energy Abundance: Exports and the Changing Global Energy Landscape.” The Honorable J. Bennett Johnston, Chairman Johnston & Associates; Honorable Byron Dorgan, Co-Chair Bipartisan Policy Center; Mr. James Bradbury, Senior Associate, Climate and Energy Program, World Resources Institute; Mr. Michael Breen, Executive Director Truman National Security Project; Mr. Mike Halleck, President Executive Columbiana County Board of Commissioners; and Ms. Amy Jaffe, Director, Energy & Sustainability, UC Davis Graduate School of Management; will testify.  Additional information about the hearing can be found here.
 
Sec. Jewell to Testify on FY2014 Budget Request:  On May 7th at 10:30 AM in 124 Dirksen, the Senate Appropriations Committee Interior, Environment, and Related Agencies Subcommittee will hold a hearing on “FY2014 Budget Request for the Department of the Interior.” Interior Secretary Sally Jewell; Deputy Interior Secretary David Hayes; Assistant Interior Secretary of Policy, Management and Budget Rhea Suh; Deputy Assistant Interior Secretary Pam Haze of the Office of Budget, Finance, Performance and Acquisition, will testify.  Additional information can be found on the Committee website:http://appropriations.senate.gov.
 
Hearing on DOI Hydraulic Fracturing Rule: On May 8th at 10AM in 1324 Longworth, the House Natural Resources Committee will hold a hearing on “DOI Hydraulic Fracturing Rule: A Recipe for Government Waste, Duplication and Delay.”  Additional information about the hearing can be found here.
 
Senate Committee Considers Hydropower Legislation:  On May 8th at 11:30 in 366 Dirksen, the Senate Energy and Natural Resources Committee will hold a full committee markup of S.306, the “Bureau of Reclamation Small Conduit Hydropower Development and Rural Jobs Act”; S.545, the “Hydropower Improvement Act of 2013”; S.761, the “Energy Savings and Industrial Competitiveness Act of 2013”; H.R.267, the “Hydropower Regulatory Efficiency Act of 2013”; and H.R.678, the “Bureau of Reclamation Small Conduit Hydropower Development and Rural Jobs Act.”  Additional information on the markup can be viewed here
 
House Committee Holds Hearing on EPA’s Budget Request:  On May 8th at 1PM in 2359 Rayburn, the House Appropriations Committee Interior, Environment, and Related Agencies Subcommittee will hold a hearing on the budget for the Environmental Protection Agency (EPA). Acting EPA Administrator Bob Perciasepe will testify.  Additional information about the hearing can be found here.
 
Senate EPW Committee to Consider McCarthy Nomination:  On May 9th at 9:15 AM in 406 Dirksen, the Senate Environment and Public Works will hold a full committee hearing on the nomination of Gina McCarthy to be administrator of the Environmental Protection Agency.  Additional information on the meeting can be found here.
 
Hearing on Grid Reliability: On May 9th at 9:30 AM n 2123 Rayburn, the House Energy and Commerce Committee Energy and Power Subcommittee will hold a hearing on “American Energy Security and Innovation: Grid Reliability Challenges in a Shifting Energy Resource Landscape.”  Additional information can be found here.
 
Member of the Day: US Rep. Steve Stivers (R-OH) 


 
Committee Assignments: Financial Services
 
Contacts:
Chief of Staff: Adam Khun
Legislative Director: Jesse Walls
Twitter: @repstevestivers
 
Experience:  Rep. Stivers attended college at Ohio State University; he earned a Bachelor of Arts degree in Economics and an MBA.  Rep. Stivers worked for Bank One for seven years and the Ohio Company for three years before being elected to the Ohio State Senate. He held the state senate seat from 2003 through 2008.  Rep. Stivers joined the Ohio National guard in 1985 and currently holds the rank of colonel.  In 2004-2005, Rep. Stivers served as a Battalion Commander in support of Operation Enduring Freedom.  After an unsuccessful bid for Congress in 2008, Stivers beat the one term, democrat incumbent in 2010.  Currently, Rep. Stivers is serving his second term in Congress. 
 
Importance: Rep. Stivers is a member of the Financial Services Committee where he primarily works on banking, insurance, housing, and consumer protection legislation. However, Rep. Stivers has taken interest in veterans and military issues as well as energy policy.  Last Congress, Stivers authored legislation that would have opened untapped oil resources in the Outer Continental Shelf.  In turn, revenues from offshore drilling leases would have increased and the new funds could have been used to fund infrastructure projects.  The bill passed the House, but did not get signed into law. 
 
If you have any questions, please give me a call anytime. Previous updates and Member profiles can be reviewed at: http://www.mzehrhbw.wordpress.com. Hope you have a great Monday!
 
Thanks,
 
Michael Zehr
HBW Resources
1666 K Street, NW, Suite 500
Washington, DC 20006
Direct: 202-429-6081
Cell: 202-277-3927
E-mail: mzehr@hbwresources.com
Twitter: @mzehrhbw

HBW Resources: Ollison Fracking Report


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HBW Resources: Ollison Fracking 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.

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

States
California
Democrats on the California Assembly’s Natural Resources Committee approved three bills, including a moratorium on hydraulic fracturing by oil and natural-gas producers until the state assesses health and environmental concerns. The vote on AB 649, introduced by Assemblyman Adrin Nazarian (D, District 46) would ban fracking and require state regulators to determine whether and under what conditions fracking could be permitted. The Committee also approved AB 1323, introduced by Assemblywoman Holly Mitchell (D, District 54) which would ban fracking and require state regulators to determine under what conditions fracking could be permitted. The third bill approved by the Committee, AB 1301, introduced by Assemblyman Richard Bloom (D, District 50) would amend the “Safe Drinking Water, Water Quality and Supply, Flood Control, River and Coastal Protection Bond Act of 2006” by halting fracking until oversight rules are in place. All three bills were passed on a party line vote of 5-3 and have been referred to the Assembly’s Appropriations Committee. Within the California Senate, the Environmental Quality Committee approved SB 4, introduced by Sen. Fran Pavley (D, District 27) which would mandate water quality testing and another independent study to address health and safety issues; direct the state’s Division of Oil and Gas and Geothermal Resources to adopt regulations by Jan. 1, 2015 requiring oil companies to disclose what fluids they use in fracking, while providing trade secret protection for the chemical formulas. The vote was 6-2.

Colorado
Commissioners in Arapahoe County approved a working agreement with oil and gas drillers that would expedite issuing hydraulic fracturing permits. Under the deal, energy companies could sign a memorandum of understanding holding them to stricter guidelines than state regulations. The agreement states that if a company will agree to certain pre-determined standards contained in the MOU, then that company will be able to utilize a shorter and less costly administrative permitting process. However, if a company does not want to sign the MOU, then they will be subject to the Use by Special Review process.

Michigan
State officials held public meetings this week in Troy, Muskegon and Traverse City to try and educate residents on what they say are misconceptions about fracking.  This outreach is in advance of the upcoming public auction on May 9 to lease oil and gas rights to private companies that want to explore drilling on state-owned land. Up for bid are 5-year leases on 37,652 acres of land in 17 counties.

Mississippi
Governor Bryant signed into law, HB 1698, introduced by Rep. Angela Cockerham (D, District 96) which reduces Mississippi severance tax on hydraulically fractured wells from 6% to 1.25% for the first 2 ½ years of production. The move is meant to encourage development in the state’s Tuscaloosa Marine Shale formation.

New Mexico
The County Commission of Mora County, located in Northeastern New Mexico, became the first county in the United States to pass an ordinance banning all oil and gas extraction. TheMora County Community Water Rights and Local Self-Government Ordinance establishes a local Bill of Rights – including a right to clean air and water, a right to a healthy environment, and the rights of nature – while prohibiting activities which would interfere with those rights, including oil drilling and hydraulic fracturing or “fracking,” for shale gas.

North Dakota
Governor Dalrymple signed HB 1134, sponsored by Rep. Todd Porter (R, District 34). Rep. Al Carlson (R, District 41), Rep. David Drovdal (R, District 39), Sen. Kelly Armstrong (R, District 36), Sen. Stanley Lyson (R, District 1) and Sen. Rich Wardner (R, District 37). The bill grants a two-year tax exemption for gas that converted to electricity or processed into marketable liquids at drilling sites.

Ohio
For leasing a little more than 63 acres, the Barnesville Exempted Village School District will get $362,602 in its initial lease payment. Antero Resources donated another $37,500 to the district, increasing the total payment to $400,102. Most of the acreage leased to Antero is located under the Barnesville high and middle school campuses. However, residents and students need not fear that there will be drilling rigs popping up beside the schools. This is because Antero will use the horizontal drilling method, which will involve drilling wells outside the village limits before turning the shafts to reach the gas under Barnesville. The funds will be placed in a capitol projects fund, which could be used to fund repairs to buildings, new technology investments, boilers, etc.

The economic benefits of fracking to release natural gas and oil from deep shale deposits are the focus of a new TV ad that is also posted online by the Ohio Oil and Gas Association, the industry’s leading voice in the state. According to the ad, nearly 40,000 jobs have been created in Ohio based upon the development of new wells.

On behalf of the coalition, No Frack Ohio, Buckeye Forest Council Executive Director Cheryl Johncox sent a letter to the Center for Sustainable Shale Development stating that, “This industry ploy simply puts green lipstick on a pig. It in no way represents the thousands of groups around the nation fighting against this dangerous industry.”

Rep. Denise Driehaus (D, District 31) and Rep. Robert F. Hagan (D, District 58) introduced HB 148 that would make it illegal to dispose of oilfield waste in deep underground injection wells and would also prohibit the use of oilfield brine on roads.

Pennsylvania
The Pennsylvania State Supreme Court has decided there is no need for a scientific debate over whether shale and the natural gas contained within it fall under the definition of “minerals” for the purposes of deed reservations. Instead, under the Dunham Rule, requires courts interpreting deed reservations that do not specifically mention shale or natural gas to rely only on the layperson’s understanding of what a mineral is: a substance of a metallic nature.

Gas drilling isn’t to blame for a high-profile case of methane contamination in northeastern Pennsylvania, state environmental regulators declaredAnti-fracking celebrities visited the Susquehanna County village of Franklin Forks in January as part of a tour of natural-gas drilling sites. There, they met with Matthew and Tammy Manning, who blame the high level of methane in their well water on a natural gas driller, WPX Energy. But the state Department of Environmental Protection said its 16-month investigation shows WPX isn’t responsible for high levels of methane and other contaminants in the private water wells at three homes. The methane in the residents’ wells is naturally occurring shallow gas — possibly from nearby Salt Springs State Park — and not production gas from the Marcellus Shale formation, DEP said.
Texas
The impact of the recent boom in shale drilling is hard to miss in some remote Texas towns, where hotels and homebuilders scramble to keep up with the influx of oil and gas workers. But the most significant effect from the boom may be seen in the state’s coffers. Taxes on oil and gas production have soared past estimates from the state’s comptroller’s office for fiscal 2012. And with production expected to continue to rise over the next several years, the economic benefits will continue. James LeBas, a fiscal consultant who also works as a lobbyist for the Texas Oil and Gas Association, estimates that oil and gas interests paid about $12 billion in taxes in Texas in fiscal 2012, up from $9.25 billion in 2011 and $7.4 billion in 2010. That included taxes on property, sales and production, as well as the franchise tax and indirect items like taxes on motor fuels.

Virginia
The U.S. Forest Service is considering whether to allow horizontal drilling for natural gas, in the George Washington National Forest. The George Washington National Forest’s decision will likely become part of the nation’s debate about a national energy policy.

National
The Environmental Protection Agency (EPA) has dramatically lowered its estimate of how much of a potent heat-trapping gas, methane, leaks during natural gas production. According to the report, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2011, 145 million metric tons of methane was released by natural gas drilling in 2011, a more than 20 percent drop from previous estimates. The second largest factor, which accounts for another 137 million metric tons of methane released, is enteric fermentation, followed by landfills which account for 103 million metric tons. The EPA estimates that methane accounts for only nine percent of greenhouse gases.

The EPA extended its deadline for the public to submit data and scientific literature to inform EPA’s research on the potential impacts of hydraulic fracturing on drinking water resources from April 30, 2013 until November 15, 2013. EPA is extending the deadline in order to provide the public with more of an opportunity to provide feedback to the Agency. EPA’s Hydraulic Fracturing Research Advisory Panel will be providing feedback on the study’sprogress report in a public meeting on May 7-8, 2013 at the Westin Arlington Gateway in Arlington, VA. The meeting can be viewed via webcast.

The House Committee on Science, Space and Technology’s subcommittees on Energy and Environment held a joint hearing reviewing federal hydraulic fracturing research activities. In his recent budget proposal, President Obama requested $38 million to continue research on hydraulic fracturing. Lawmakers questioned what the funds would be used for and asked why the federal government missed a January deadline to submit a multiyear draft plan for researching hydraulic fracturing.  On April13, 2012, President Obama signed Executive Order 13605 which set up a multi-agency task force to focus on “unconventional domestic natural gas resources.” Separately, the Energy Department, the Interior Department and the EPA teamed up to research the impact of fracking.

A new report from the National Parks Conservation Association, National Parks and Hydraulic Fracturing, looks at how the hydraulic fracturing boom may impact national parks.  The National Parks Conservation Association recommends that policymakers require a measured, thoughtful approach to fracking, especially near national parks and in their surrounding landscapes. They recommend that the National Park Service be engaged as a formal cooperating agency and comprehensive environmental reviews should be required when oil and gas drilling is proposed in the airshed, watershed or connected landscapes that surrounds national parks. The report also recommends that the BLM’s final fracking rules require that producers disclose to the public the chemicals to be used in a frack job before drilling begins, and that all flowback waters be stored in closed-loop containers and treated before they are allowed to re-enter public waters.

A recent report from the Western Organization of Resource Councils, Gone for Good, states that oil and gas extraction practices are removing at least seven billion gallons of water from the hydrologic cycle each year and that continued fracking could potentially lead to shortages of water.

An estimated $65.5 billion was invested drilling an estimated 10,173 U.S. shale oil and natural gas wells in 2011, according to American Petroleum Institute’s 2011 Joint Association Survey on Drilling Costs. The investment number represents an 87.6 percent increase in shale drilling expenditures from 2010 levels and more than half of an estimated $124.8 billion spent on all new wells drilled in 2011. The number of estimated shale wells drilled in 2011 is 43.8 percent more than in 2010.

The U.S. Geological Survey released updated oil and gas resource assessment for the Bakken Formation and a new assessment for the Three Forks Formation in North Dakota, South Dakota and Montana. The assessments found that the formations contain an estimated mean of 7.4 billion barrels (BBO) of undiscovered, technically recoverable oil. The updated assessment for the Bakken and Three Forks represents a twofold increase over what has previously been thought. The USGS assessment found that the Bakken Formation has an estimated mean oil resource of 3.65 BBO and the Three Forks Formation has an estimated mean resource of 3.73 BBO, for a total of 7.38 BBO, with a range of 4.42 (95% chance) to 11.43 BBO (5% chance).

The House Natural Resources Committee, led by Chairman Doc Hastings (R, WA 4), announced a hearing for May 8th on the proposed hydraulic fracking rule.  Since November 2010 when the Administration mentioned possible new federal regulation of hydraulic fracturing, the committee has conducted oversight hearings on the issue highlighting the harm such regulations could have on economic growth and energy development.  The latest hearing is in response to a report in The Hill newspaper that the Interior Department would be releasing its new proposed rule within weeks.

A new report from Ceres, Hydraulic Fracturing & Water Stress: Growing Competitive Pressures for Water, concludes that industry efforts underway, such as expanded use of recycled water and non-freshwater resources, need to be scaled up along with better water management planning if shale energy production is to grow as projected. According to the report, significant portion of fracturing takes place in regions of the country currently experiencing water shortages and prolonged drought conditions.

International
Argentina
Eduardo Eurnekian, tapping a fortune of at least $1.3 billion, has pledged $700 million in two deals to hasten a definitive partnership with Argentine government-owned YPF SA to develop its Vaca Muerta fields. After his $500 million preliminary accord with YPF in October, last week he paid about $200 million for 81 percent of Cia. General de Combustibles SA, an oil producer and shareholder in pipelines to YPF’s first operating shale-gas well.

China
The U.S. Energy Information Administration has estimated that China’s technically recoverable shale gas resources could be 50 percent bigger than those in the United States, where shale has transformed the energy sector. China’s 12th five-year plan aims to boost natural gas to 8 percent of national energy use by 2015 up from its current 4 percent. Chinese firms such as Sinopec have invested in the U.S. to learn the shale business. The 2009 announcement of the “US-China Shale Gas Resource Initiative” by President Obama and Chinese President Hu Jintao, in which the U.S. government has tried to promote shale development in China by focusing on resource assessment and technology exchange has not provided the technology transfer necessary to fully develop China’s shale. One of the biggest challenges to shale development is the Chinese regulatory system.

Russia
The Russian state-owned energy company, OAO Gazprom, that once held sway over European natural-gas markets has lost its grip as booming U.S. shale-gas production has led European customers to seek out other sources of energy. Europe is Gazprom’s most lucrative market. The company supplies about one-quarter of the European Union’s natural gas via a network of pipelines. Gazprom said Tuesday its net profit declined by $6.5 billion, or 15%, in 2012, as sales to the EU fell by about 9%. The company’s current struggles are affecting Russia’s economy because it accounts for over 10% of export revenues.

Saudi Arabia
Middle East and North Africa (MENA) oil producers have for years seen a gas crunch coming and for some it has already arrived. However, a number of states in the region—oil exporters and importers alike—have been developing effective programs to find and exploit gas deposits. Saudi Aramco has started drilling wells in its northwest region to tap Silurian shale. To date, only one such well has been stimulated by hydraulic fracturing. But that is likely to change, with 30 drilling rigs due to be deployed in the Red Sea Tabuk and Midyan basins during 2013.

United Kingdom
The House of Commons’ Energy and Climate Change Committee released its 7th report, “The Impact of Shale Gas on Energy Markets” urged ministers to “get on” and support fracking. The report states, “The UK should learn the lessons of the US experience, including creating a favourable climate for companies to operate in, while ensuring environmental damage is avoided.”

The government’s paper on “community benefits” will propose policies that aim to persuade locals to drop their resistance to fracking in northwest and southeast England, where the largest shale-gas deposits are found. The biggest incentive being discussed is cheaper household energy bills for people in the area.

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

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

Thanks,

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