#Fracking & #Shale Development Highlights In the US & Internationally: Report by @BoOllison

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.

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

The California Air Resources Board (ARB) proposed more than 100 amendments to the regulationsgoverning the state’s greenhouse gas cap-and-trade program. Some of the most important amendments include:  Natural Gas Suppliers: California’s cap-and-trade requirements will be expanded to cover natural gas and transportation fuels beginning in 2015. The proposed amendments establish specific compliance obligations for natural gas suppliers and specify a formula according to which they would receive an allocation of free emission allowances from the ARB but be required to auction off a percentage of those allowances to auction. The California Public Utilities Commission would determine how the proceeds of those auctions can be used (including the extent to which proceeds must be passed through to ratepayers/customers). For more information, please contact us.

Berkeley chef Alice Waters was joined by dozens of other chefs and food experts in the launch of a petition asking Gov. Jerry Brown to declare a moratorium on fracking in California. Potential future fracking is “putting California’s scarce and precious water resources and most prized farmland at serious risk,” the organic food pioneer said in a letter inviting fellow chefs to sign. The petition contends the practice hurts farmers and agriculture by depleting water supplies, increasing water costs and polluting groundwater. 92 chefs, restaurant owners, winemakers and authors had signed the petition, according to Food & Water Watch spokeswoman Alice Ghosh.

Federal agencies responsible for overseeing oil and gas operators in waters off the coast of California are not aware of all hydraulic fracturing activities, and jurisdictional boundaries remain unclear to staff members at the highest levels in the agencies, according to documents obtained through a recent Freedom of Information Act request. Federal waters are under the jurisdiction of the Bureau of Safety and Environmental Enforcement (BSEE) and the Bureau of Ocean Energy Management (BOEM). Those two agencies oversee oil and gas production in waters starting three nautical miles off the coast. The State Lands Commission (SLC), in partnership with the California Department of Conservation, Division of Oil, Gas and Geothermal Resources (DOGGR), oversees the waters within the three-mile mark. Hydraulic fracturing, also known as fracking, is the controversial well-completion technique that blasts chemicals, water and sand into underground rock formations to release the oil or gas trapped in them. Although Coastal Commission jurisdiction only extends to three miles off the coast, it can assert its authority if it decides work beyond the three-mile mark affects marine mammals or water quality.

Shell has decided to shut down its Mahogany Research Center in Colorado’s Western Slope which was set up in 1982 for the purpose of turning oil shale rock into liquid by heating the rock in situ and pumping it out. For more information, please contact HBW Resources.

A proposal to impose a five-year moratorium on the common yet controversial oil field practice within Fort Collins and on city-owned land is on the Nov. 5 ballot. The idea is to place a hold on fracking while the state conducts studies on its impacts on public health and property values. The City Council, which is divided on fracking, is scheduled to consider resolutions, Resolutions 2013-084 and 2013-085, urging voters to either support or oppose Question 2A. The discussion would be an opportunity to hear the issue aired out again.

In a motion filed in 8th Judicial District Court, Protect Our Loveland has requested to intervene in the lawsuit that seeks invalidation of its petitions for a ballot initiative on hydraulic fracturing in Loveland. Through its attorneys, Protect Our Loveland has argued that the group should be included as a defendant in the lawsuit filed earlier this month by Loveland resident Larry Sarner. In that suit, Sarner seeks appeal of a decision made by City Clerk Terry Andrews that that the nonprofit group met requirements to put a two-year moratorium on hydraulic fracturing, or fracking, within the city limits on the November ballot. After a split City Council decided on Sept. 3 to wait for the outcome of Sarner’s lawsuit before putting the measure on the ballot — all but eliminating the possibility of it being placed on the Nov. 5 ballot — Protect Our Loveland organizers began exploring legal options.

State authorities are tracking 14 “notable releases” of oil and an additional 12 releases of “produced water” related to the September floods that closed about 2,000 oil and gas wells north of Denver. State regulators had inspected more than 70 percent of the sites, according to a spokesman for the Colorado Oil and Gas Conservation Commission. The state said that:
•        The 14 “notable releases” are two more than the last update on Sept. 26.
•        A total of 1,042 barrels, or 42,764 gallons, of oil was spilled from tanks or equipment damaged by the floodwaters that ravaged northern Colorado in September. That’s up from a total of 37,380 gallons reported on Sept. 25.
·         The reported spills are roughly equivalent to three conventional storage tanks that can hold 300 barrels, or about 6.6 percent of an Olympic-sized swimming pool.
•        It’s also tracking 12 reported spills of “produced water,” which is groundwater that comes from wells carrying small amounts of dissolved hydrocarbons. Produced water is separated from oil and natural gas, and stored in tanks at a well site for disposal or recycling. The state says there are 413 barrels, or 17,350 gallons, of produced water from the floods.
•        It’s also tracking 16 locations with evidence of a minor release, such as a sheen; that’s two additional locations since the last update on Sept. 26.

Environmental groups 350 Pensacola and 350 North Florida are inviting the public to participate inGlobal Frackdown 2 with a local initiative called Don’t Frack Florida Campaign on Oct. 19. The event is 10 a.m. to 1 p.m. at West Florida Public Library, 239 North Spring Street. The agenda consists of a discussion of hydraulic fracturing, the public health and environmental impacts associated with the practice, introduce the statewide campaign and address how the community can become engaged in the initiative to ban the practice in Florida. The event will then view Gasland, sponsored by Food and Water Watch, and follow up with a discussion of the movie. The Don’t Frack Florida initiative is a partnership between 350 Pensacola, 350 North Florida, and Earth Ethics Inc.

At the state Legislature’s first hearing on fracking, Environment Massachusetts presented petitions from more than 11,700 residents calling on Beacon Hill to ban the drilling process, which the group claims has polluted drinking water and made nearby residents sick in other states. The petitions support for H.788, a bill introduced by state Reps. Peter Kocot (D, 1st Hampshire District) and Denise Provost (D, District 27) to ban fracking and the processing of its related waste water in the Commonwealth. For more information, please contact HBW Resources.

New Jersey
With the recent passage of a hydraulic fracturing ban by the Highland Park Borough Council, “the intent is to have other municipalities follow suit” and ban hydraulic fracturing municipality by municipality since the state legislature has not been able to pass laws regulating the process. The municipality of New Brunswick has already taken up the call. A proposed ban on hydraulic fracturing,Ordinance No. O-091301, has been read in council and will be discussed at a public hearing in New Brunswick on October 2, 2013. For more information, please contact us.

New York
New York regulators proposed rules that would allow new storage and truck fueling stations for liquefied natural gas to be built in the state for the first time since a 1973 explosion that killed 40 workers at a Staten Island storage facility. The Department of Environmental Conservation said the first permits would likely be issued for smaller facilities supplying fuel to long-haul and fleet trucks that use liquefied natural gas as a cheaper substitute for diesel. The state’s 1973 moratorium on the siting of new liquefied natural gas storage facilities was lifted in 1999 for all locations except New York City. But DEC hadn’t drafted the regulations needed to allow the siting of new facilities until now. The state’s only three facilities, all in New York City, were grandfathered in when the moratorium was imposed. Public hearings on the regulations have been scheduled for Oct. 16 in Syracuse and Oct. 30 in Albany. Public comments will be taken until Nov. 4.

North Carolina
North Carolina energy commissioners issued a full-throated defense of hydraulic fracturing and saidlawmakers should consider easing the state’s regulations. Charles Holbrook of the N.C. Mining and Energy Commission likened tough fracking standards to “Bigfoot regulation” in the group’s meeting in Raleigh. North Carolina currently requires drilling companies to test all drinking water wells within 5,000 feet of a fracking site, a much greater distance than in most states. The Mining and Energy Commission is drafting about 120 rules that could change the testing limit to 1,500 feet and relax other standards to attract more oil and gas investment.

North Dakota
North Dakota’s Bakken shale formation will surprise investors, analysts at Goldman Sachs wrote in a note. “We came away from our trip to North Dakota last week with greater confidence in our outlook that Bakken production/completion activity will likely exceed Street expectations,” the analysts said. During the Goldman trip, producers and drillers were “uniformly confident” in resource expansion, efficiency gains, and potential for improving well performance in the coming years, the analysts said. Production “can continue to grow substantially,” easing concerns that emerged after moderate growth in the first half of the year, they said. “We see production growth of [130,000 barrels a day to 210,000 barrels a day] through 2016,” above the average of 110,000 barrels a day for the six months to July, they said. Goldman spread the love to other shale formations: U.S. oil production growth will be driven by Bakken, which straddles North Dakota and Montana, south Texas’s Eagle Ford, and west Texas’s Permian, they said. Colorado’s Wattenberg, while also favored, will have less of an impact, they said. For natural gas, the Marcellus Shale and associated gas from the above plays will be the drivers, they said. For more information, please contact us.

North Dakota’s daily oil production will double to 1.6 million barrels by 2017, Department of Mineral Resources Director Lynn Helms said in a taped address to oil county and industry folks. Helms also discussed the increasing need for well maintenance water, which he predicts will eclipse the need for fracking water, and new exploration in the Tyler Formation at the annual meeting of the North Dakota Association of Oil and Gas Producing Counties. Helms labeled flaring as the No. 1 challenge for state regulators, and said he’s begun a conversation with the North Dakota Industrial Commission about policy changes that could help decrease flaring. For more information, please contact HBW Resources.

Minnesota-based utility Allete and North Dakota governor Jack Dalrymple are joining forces to promote the idea of an “energy corridor” dedicated to the transportation of oil, gas, power and water. The proposition comes amid a rash of derailments of trains carrying hydrocarbons to market from the Bakken region of North Dakota, which sits on the northern edge of the Lower 48 US states, not far from the Canadian border. Dalyrmple and officials from Allete announced the concept at the state Capitol in Bismarck. They are looking to establish a “right of way” next to Allete’s existing electric transmission line from western North Dakota to Duluth, Minnesota, where as oil, gas and other products could be shipped to market.

Shale drilling continues apace in Pennsylvania and West Virginia and is ramping up in Ohio, and the Buckeye State’s geology has proven suitable for injection wells that can isolate the contaminated water permanently. A federal grant that has put Columbus-based research giant Battelle on the joblooking for safe disposal sites is a tremendous boon. Battelle’s track record and reputation lend confidence that researchers will find and identify the safest sites for what has become a necessary headache. Using a $1.8 million grant from the U.S. Department of Energy, awarded through a panel of industry and academic officials, Battelle is poring over geological mapping data and core samples from Pennsylvania and West Virginia, as well as Ohio. Shale drilling has the potential to benefit Ohio tremendously if its environmental risks are closely managed. Making waste disposal safe should be a top priority, and Battelle’s work could prove invaluable. For more information, please contact HBW Resources.

Oil and gas companies are being told for the first time to give county officials and local fire departments information about the toxic chemicals drillers use to fracture shale. Ohio officials sent a memo this month notifying companies that a federal right-to-know law trumps a 2001 state law that allowed them to send the information exclusively to the Ohio Department of Natural Resources. The memo “puts oil and gas companies on notice that they will have to comply with the federal requirements,” said Chris Abbruzzese, a spokesman for the Ohio Environmental Protection Agency. The decision marks a victory for environmental advocates, who have long demanded that more light be shed on the chemicals used in fracking, a process in which millions of gallons of water, sand and chemicals are pumped underground to crack shale and free oil and gas trapped within it.

Another piece of the pipeline puzzle in the Utica shale play is to be put in place with a $60 million project by Pennant Midstream LLC, a joint venture between affiliates of NiSource Inc. and Hilcorp Energy Co. Pennant said it will build a 12-inch natural gas liquids pipeline that will connect a cryogenic processing plant in New Middletown in Mahoning County to a facility near Kensington in Columbiana County. It will have an initial capacity to deliver approximately 90,000 barrels a day. Pennant said the new pipeline, which will serve the northern end of the Utica play, is expected to be completed by July 2014. For more information, please contact us.

Texas-based TransCanada ANR Pipeline System has announced two open seasons to gauge marketinterest in securing capacity on the Lebanon Lateral in southwestern Ohio. That line will become bi-directional. That connection will open up the Midwest and Gulf Coast markets for Marcellus and Utica shale producers, the company said. The lateral runs from Lebanon, Ohio, into Indiana where it connects with an existing line. That line extends from the Detroit area south to Patterson, La. Reversing the Lebanon Lateral and adding the Glen Karn project will primarily use existing infrastructure, with needed modifications, to transport up to 750 Dth per day by November 1, 2015, the company said. The Lebaon Lateral reversal is targeted for in-service by March 1, 2014, and will get natural gas from the Dominion Transmission Inc. interconnection at Lebanon, Ohio, and provide transportation to the ANR system. The company said an unnamed anchor shipper has already subscribed to 100,000 Dth per day for 10 years. ANR is soliciting bids for the remaining 250,000 Dth per day capacity.

Hess Corp. says it will vigorously challenge a federal court ruling that could allow several hundred property owners in Jefferson, Harrison and Belmont counties to renegotiate their oil and gas leasesfor higher up-front payments. U.S. District Judge Algenon L. Marbley in Columbus ruled that a lease executed in 2007 on a 228-acre dairy farm in Jefferson County had effectively lapsed because there’d been no wells drilled or gas produced, leaving the property owners free to negotiate with other companies should they so choose. According to the suit, filed in U.S. District Court for the Southern District of Ohio’s Eastern Division, Stephen and Melissa Griffiths were approached by landsmen from Mason Dixon Energy in 2007 to sign over their oil and gas rights. The signed leases were then transferred to Marquette Exploration, which has since been acquired by Hess. A “delay rental” provision included in the contract, however, stipulated that if drilling didn’t begin within 12 months of the date the lease was executed, the company could extend the duration, but only in 12-month increments and only during the primary lease term. The delay payments amounted to an additional $5 per acre, per year. No oil or gas has been drawn from the Griffiths’ farm. Attorney Christopher Gagin, though, called it a “big win” for landowners, who had received roughly $6,500 in upfront payments when their oil and gas lease was executed in 2007. That same 228-acre property could bring them as much as $1.5 million or more at today’s rates.

Sen. James Ferlo (D, District 38) introduced SB 1100, which would impose a moratorium on new hydraulic fracturing permits until the seven-member Well Drilling Study Commission established in the bill can review and analyze a wide range of issues, including water source protection, air quality regulations, disclosure of chemicals used in fracking and the permitting process. The bill was referred to the Environmental Resources and Energy Committee. For more information, please contact us.

In 2008, when U.S. natural gas demand outstripped supply, National Fuel Gas officials looked toward securing gas from the Arctic, Gulf of Mexico, Canada and the Rocky Mountains, wondering how it would provide gas for its customers. Now, the Northwestern Pennsylvania utility gets 80 percent of its supplies from right underneath its market area from the Marcellus Shale. The company is cutting back on pipeline capacity and would consider eliminating out-of-state gas all together were it not for a regulatory guideline requiring somewhat diverse sources of power. The low price of local gas has prompted gas utilities to break supply contracts for higher-priced gas from elsewhere, usually the Gulf of Mexico and Louisiana, to switch to cheaper natural gas. Equitable, a gas utility serving southwestern Pennsylvania, gets 100 percent of its supplies locally – from Pennsylvania or West Virginia.

Plans for construction of a natural gas pipeline from southeastern Pennsylvania into Maryland and passing through southern Lancaster County have been abandoned. The (Lancaster) Intelligencer Journal/Lancaster New Era said the 88-mile Mid-Atlantic Express pipeline would have carried gas from Eagle to a Baltimore terminal, where it was to be liquefied for transport overseas. The pipeline was approved by the Federal Energy Regulatory Commission in 2009. For more information, please contact HBW Resources.

A group of Philadelphia business and political leaders wants to develop an ambitious Marcellus Shale natural gas pipeline to the city to fuel the growth of energy-intensive industries. The informal group is in the early stages of exploring a project that would connect Pennsylvania’s booming natural gas fields directly to Philadelphia. The project would involve uniting a consortium of big industrial buyers with Marcellus gas producers to agree to long-term commitments that would guarantee financing for the pipeline’s construction. Philip L. Rinaldi, chief executive of Philadelphia Energy Solutions, the former Sunoco refinery in South Philadelphia, identified himself last week as the chairman of the group, which would work under the umbrella of the Greater Philadelphia Chamber of Commerce. Rinaldi said the group includes the leaders of Sunoco Logistics L.P., the Philadelphia pipeline company that operates large fuel terminals on the Delaware River, and Braskem America, the subsidiary of a Brazilian industrial firm that bought Sunoco’s chemical unit in 2010. For more information, please contact us.

Shaughnessy Naughton, looking for an edge against her Democratic primary opponent, is using her science background to call for a permanent ban on natural gas drilling in Bucks and Montgomery counties. “This is a big issue here as we rely on the Delaware River,” Naughton said in a telephone interview. “It’s an important part of our environment in that it provides drinking water to 15 million people.” She said her evidence-based research shows “there’s still too much we don’t know” about the chemicals used in drilling and the health hazards they present. Until more is known, “we shouldn’t be issuing any more (state) permits,” she said. The 8th District Democratic candidate, who’s running against Kevin Strouse for the right to take on Republican Congressman Mike Fitzpatrick, said she used research and her background as a chemist to develop a five-point plan to address drilling in the state and the process known as fracking to release the gas. It includes a 5 percent fee on energy companies, with a portion of the money going to finance clean energy projects in the commonwealth. In addition, companies would sign a binding agreement to pay a 12.5 percent share of actual sales to landowners. As a congresswoman, she would amend the Safe Water Drinking Act to expand federal legislation on fracking and require drillers to submit to federal SWDA standards. She would also introduce legislation to ban fracking in the Delaware River basin. Naughton criticized Strouse for being supportive of natural gas drilling. For more information, please contact us.

Lt. Gov. Jim Cawley took a veiled swipe at Attorney General Kathleen Kane for criminally prosecuting an ExxonMobil subsidiary that had already agreed to pay a fine related to a 2010 Marcellus Shale wastewater spill. At a natural gas industry conference in Philadelphia, Gov. Corbett’s lieutenant questioned the “basic fairness” of disciplining a drilling company twice for the same accident. The attorney general’s announcement Sept. 10 of charges against XTO struck a nerve with the industry. XTO agreed in July to settle civil charges with the U.S. Justice Department by paying a $100,000 fine and spending about $20 million to upgrade its wastewater-management practices, an agreement federal officials called a model for the industry.

The U.S. Court of Appeals for the Third Circuit affirmed a lower court ruling that the U.S. Forest Service lacked the authority to enter into a settlement agreement with environmental groups in which the agency imposed a drilling moratorium in the Allegheny National Forest pending a multi-year environmental impact study. The court held that the Forest Service lacked control over private mineral rights owners’ access to surface lands and that the moratorium was a “sea change” in agency policy that could not be accomplished by a settlement agreement but required notice and comment rulemaking. Further, the court held, requesting approval for developing private mineral rights does not require environmental review for the entire forest, as environmental groups argued.

A proposed $6 million natural gas pipeline for Clarksville has hit a snag. A Kentucky county wants access to the gas being transported on it before granting approval. Todd County, Ky., officials won’t grant approval for the line without being able to tap into its contents. Clarksville Gas & Water General Manager Pat Hickey told The Leaf-Chronicle granting anyone access to the pipeline would increase administrative costs by $100,000 a year. For more information, please contact HBW Resources.

Natural gas that will eventually flow from Quicksilver Resources wells at the giant racetrack, Texas Motor Speedway, in far north Fort Worth should contribute to the surge in U.S. gas production, which has driven down prices domestically and could eventually provide relief for Japan. Quicksilver plans five wells at the current drill site on the edge of the racetrack’s sprawling parking lot, plus two additional drill sites on the west side with similar numbers of wells planned. It will also drill under the speedway from the east side of Interstate 35, something it did when it drilled at Alliance Airport. Under an agreement reached in 2008, the Fort Worth Sports Authority and the speedway will share royalties from production on the property, with much of the money going toward improvements at the facility.

vapor compressor-driven membrane distillation (MD) system designed to help reuse water in the hydraulic fracturing process has been put through its paces in Texas. A joint demonstration project from US firm GE Power & Water and Germany company Memsys has seen 200 hours of continuous operation at a Texas-based commercial disposal well. The project reportedly showed that MD combined with vapor compression can handle the high-salinity produced waters associated with unconventional gas exploration and production. Results reported from the two partners included: 100% process uptime without any noticeable decline in performance or need for cleaning; stable performance with brine concentrations near saturation; lower energy consumption compared to conventional technology and high distillate quality.

A California liquefied natural gas producer is set to build a production plant in North Texas that could initially produce 86,000 gallons of fuel per day. Applied Natural Gas Fuels said the plant in Midlothian, about 30 miles south of Dallas in Ellis County, would fire up in 2015 seeking to attract buyers in high-horsepower, trucking, oil and gas and similar industries that normally consume diesel fuel. The company said it has secured the North Texas land and begun seeking required permits. The facility will have five liquefiers, each with daily production capacity of 86,000 gallons per unit, but the company will start up the liquefiers one at a time as the market develops, said Shawnt Hartounian, a spokesman for the company. For more information, please contact us.

Halliburton recently had the official opening of its new San Antonio Operations Center to serve the growing needs of the South Texas Eagle Ford Shale and surrounding markets. The 150 acre, 400,000 square-foot facility is strategically located in Southern Bexar County within the Eagle Ford operations area. It is located seventeen miles north of the city limits of Pleasanton. The facility isn’t far from the Atascosa-Bexar County line. The operations center currently supports five of the company’s product service lines, including Production Enhancement, Boots & Coots, Cementing, Baroid, and Wireline and Perforating. The Completion Tools business line will move to the facility in 2014. The center comprises a 10,000 square-foot state of the-art laboratory and real-time operations center, a 112,000 square-foot truck maintenance shop, a wireline and perforating facility, a mud plant and a double-sided cement bulk plant. For more information, please contactHBW Resources.

Dallas’ draft proposed fracking law, DCA123-003, a long-awaited proposal to outline how natural gas drilling should be regulated within city limits, which would amend Chapter 51A, “Dallas Development Code: Ordinance No. 19455” to amend gas drilling and production regulations. Environmental groups such as the Sierra Club and Texas Campaign for the Environment say the just-released proposal shows they’ve won some important victories. The draft ordinance says drillers must stay at least 1,500 feet away from protected use areas, which is what environmentalists have been pushing for. But the buffer doesn’t apply to those companies that want to go ahead and drill on parks, playgrounds and golf courses. “If a gas drilling and production use is located on a public park, playground, or golf course, no minimum spacing is required from protected uses located on the public park, playground, or golf course. The minimum spacing requirements from protected uses off public park, playground, or golf course apply.”

Seminole Energy Services LLC has acquired Native American Marketing LLC’s oil-logistics business and will expand into several oil formations including the Eagle Ford Shale, officials say. Seminole serves more than 500 producers and has midstream assets across the country, including compression and rail operations and 1,000 miles of pipeline. In conjunction with the acquisition, Seminole will expand into thriving, oil-rich formations including the Eagle Ford and West Texas’ Permian Basin.

A review of air quality in the Barnett Shale using data from the Texas Commission on Environmental Quality finds that emissions related to natural gas production are below levels that would pose health concerns. Written by ToxStrategies, the study, “Evaluation of impact of shale gas operations in the Barnett Shale region on volatile organic compounds in air and potential human risks,” was funded by the Barnett Shale Energy Education Council, an industry group. It was published in the journal Science of the Total Environment. The study looked at 4.6 million measurements of targeted chemical compounds captured by seven monitors at six sites in the area from 2000 to 2011. Those monitors, part of a TCEQ network, either automatically sample the air once an hour daily or collect one air sample for 24 hours every sixth day. For more information, please contactHBW Resources.

Crude oil shipments from the Port of Victoria in south Texas hit a record of over 60,000 barrels per day in August, the port director said on Monday, as more Eagle Ford shippers turn to coastal barges to move oil beyond Houston. Nearly 1.9 million barrels left Victoria last month, an average of 60,357 barrels per day (bpd) and a rise of nearly 10 percent from July’s 55,000 bpd average, said Jennifer Stastny, executive director of the port. She also said that September “started off very strong.” The barges, which carry an average of 30,000 barrels, head east along the inland Gulf Intracoastal Waterway (GIWW) to refineries in Texas and Louisiana. Over 70 barges loaded at Victoria in August.

Rock River Resources will build a small refinery and facility for shipping crude by rail in Utah, providing new transportation and local refining for the growing oil production in the state, the company announced. The $320 million project will be built in three stages, with the rail facilities coming on line first, followed by a microrefinery in Green River, Utah. The microrefinery will have a capacity of 10,000 barrels a day and will process local crudes and condensates into fuel oil, diesel and jet fuel.

eBay, a giant of the web, told the world that its newest data center runs entirely on fuel cells fed with natural gas — technology that’s not only cleaner and more efficient than the aging power grid, but also more reliable. Located in South Jordan, Utah, the new facility uses the grid only for backup. Built by a NASA-spinoff called Bloom Energy, the facility’s fuel cell units create electricity by mixing natural gas with oxygen and then running it through a patented chemical process. The gas streams straight to the data center through Utah pipelines, and the fuel cell units sit just a hundred feet from the facility’s computer servers. This means very little power is lost in transit. And according to a study by researchers at the University of Illinois at Urbana-Champaign, such a fuel cell setup is ten times less likely to fail than grid-powered alternatives. Over the course of a year, the study found, the system will likely go down for only 6 minutes, compared to as much as 10 hours with a traditional topology. For more information, please contact us.

West Virginia
With natural gas drilling operations starting up in a number of areas, some are starting to see an increase in employment as development begins and wells are being set up to tap into the Marcellus Shale deposit. According to WorkForce West Virginia, during the first quarter of 2013 there was six units in Wood County doing oil and gas extraction with 20 employees paying a total of $161,918 with an average weekly wage of $622.77. In other area counties:
* Calhoun County had 12 units doing oil and gas extraction with 52 employees paying a total of $436,797 with an average weekly wage of $646.15.
* Doddridge County had seven units doing oil and gas extraction with 51 employees paying a total of $948,417 with an average weekly wage of $1,430.46.
* Pleasants County had four units doing oil and gas extraction with 28 employees paying a total of $374,749 with an average weekly wage of $1,029.54.
* Ritchie County had 21 units doing oil and gas extraction with 158 employees paying a total of $1,724,258 with an average weekly wage of $839.46.
* Roane County had 27 units doing oil and gas extraction with 105 employees paying a total of $733,660 with an average weekly wage of $537.46.
* Gilmer County had nine units doing oil and gas extraction with 149 employees paying a total of $1,671,203 with an average weekly wage of $862.77.

EQT Corp. is suing six West Virginia property owners who subverted the company’s plans to put five gas wells on a 1,000-acre farm by sinking water wells on the site first. Under state law, gas companies can’t drill within 250 feet of an existing water well or spring used for human consumption. Now Pennsylvania-based EQT wants a judge to issue an injunction ordering the landowners to plug and abandon the water well, and drop their construction plans for the cabin. Its lawsuit, filed Tuesday in U.S. District Court in Clarksburg, says EQT told three families in July 2012 that it wanted to drill, and no water wells were present at the site at the time. Nor was a water well present in July 2013, EQT said. But on Sept. 13, workers discovered two water wells near the site of its planned gas well pad. EQT says the defendants only drilled to stop the gas wells, and they acted “with unclean hands.” It calls their actions improper and unlawful. For more information, please contact HBW Resources.

The Lower 48 states produced 74.52 billion cubic feet per day of natural gas in July, up 2.5% from figures in the same month in 2012, according to the Energy Information Administration. This is the highest recorded figure since tracking commenced in 2005. Texas posted the largest gain at 1.7%, or 0.38 billion cubic feet per day, because a carbon dioxide plant that was off-line in June was operational again in July, the EIA said. Output from the Gulf of Mexico was up 3.5%, or 0.12 billion cubic feet per day, as scheduled maintenance and repairs occurring in June were completed. Production in Louisiana and Wyoming decreased by 3.0%, or 0.20 billion cubic feet per day, and 1.9%, or 0.11 billion cubic feet per day, respectively, as many operators reported shut-ins for maintenance, the EIA said. Output from so-called other states — or those outside the traditional producing areas of Louisiana, New Mexico, Oklahoma, Texas and Wyoming — saw an increase of 0.9% or 0.24 billion cubic feet per day, primarily because of new wells in the Marcellus Shale.

Sixteen state chambers of commerce sent a letter to EPA Administrator Gina McCarthy to reinforce a request that EPA continue to allow state regulators to take the lead on hydraulic fracturing related regulations. This signers of the letter include: Business Council of Alabama; the Alaska Chamber; the Arkansas Chamber of Commerce; the Illinois Chamber of Commerce; the Indiana Chamber of Commerce; the Kansas Chamber of Commerce; the Kentucky Chamber of Commerce; the Louisiana Association of Business and Industry; the Michigan Chamber of Commerce; the Montana Chamber of Commerce; the New Mexico Association of Commerce and Industry; the Greater North Dakota Chamber of Commerce; the Ohio Chamber of Commerce; the Pennsylvania Chamber of Business and Industry; the Texas Association of Business and Chambers of Commerce; the Virginia Chamber of Commerce and the West Virginia Chamber of Commerce.

The SPE-166113-MS paper, “A Day in the Life of a Barrel of Water:  Evaluating Total Life Cycle Cost of Hydraulic Fracturing Fluids,” was presented by Robin Watts, Oil & Gas Technology manager of Linde LLC, at the Tuesday, October 1, session on Fluid and Environmental Considerations. In her paper, Watts examines the total life cycle costs of hydraulic fracturing fluids, comparing water-based and energized solutions. She also evaluates when fracturing fluids energized with carbon dioxide (CO2) or nitrogen (N2) can be used to reduce water volume for more economical hydraulic fracturing. It also evaluates how the selected fracturing fluid can affect productivity. Hydraulic fracturing requires 2.5 to 5 million gallons of water per well, and water acquisition, management and disposal represent major costs for producers. Linde’s energized solutions, using CO2 or N2, allow producers to reduce the total volume of fluid needed for hydraulic fracturing by up to half, reducing costs while improving productivity, safety and environmental impact. For more information, please contact us.

A New Way to Frack: One leading alternative that is gaining traction with some companies is fracking with liquefied petroleum gas (LPG). This technology was developed in Calgary, Alberta by Gasfrac Energy Services a few years ago, and allows fracking to be done with propane, butane or pentane – or mixtures of those gases – as a substitute for water. Gasfrac initially used propane, but the company now uses butane and pentane, as well. These gases are already found in natural gas wells. The blend can be designed and fine-tuned for the particular flowback characteristics of a given well. Because it does not use water, the LPG technology shows promise as a substitute for hydraulic fracturing, and could possibly reduce the general level of criticism that fracking generates, particularly in dry counties. Wells as deep as 10,000 feet have been fracked using the LPG technology, Gasfrack told Rigzone.  Energy sector interest in this method has been growing, and about 2,100 fractured wells using this technique are in the ground, with test wells under way in Texas. The most obvious advantage of LPG or gas fracking is that water is not needed, but Gasfrac pointed to other advantages of the new technology, as well. The technology is safe for the worker and removes the need to clean up the site following completion of the job, Gasfrac told Rigzone. There is little or no flaring when fracturing with the company’s LPG technology, and 100 percent of the fluid used in fracturing is recoverable for sale later.

Hydraulic fracturing has unlocked vast amounts of oil and natural gas from shale rock in the United States, and has the potential to do the same around the globe. But fracking also consumes huge quantities of water, which it contaminates with a heady mix of toxic chemicals, a problem that threatens to slow this expansion.GE says it has a technology that could help—an energy-efficient process that could cut the cost of water treatment in half. The technology could also decrease the chances of toxic waste spills. For more information, please contact HBW Resources.

Shale wells could be the perfect place to permanently dispose of carbon dioxide, according to researchers at the University of Virginia. Andres Clarens, a civil and environmental engineering professor, said the pores created by hydraulic fracturing could, after the well is depleted, have enough volume to hold carbon emissions from power plants and industrial factories. “As long as we kept pressure in the well after we capped it, that CO2 would stay there and it wouldn’t be mobile,” Clarens said. “That would keep a lot of CO2 out of the atmosphere. Way more than we ever thought possible.” He estimates it would take about two years to fill a fracked well with CO2. Clarens worked to study production numbers in Marcellus Shale natural gas wells in Virginia. They found that formation alone could store 10.4 to 18.4 gigatons. A gigaton equals one billion metric tons.

The Environmental Protection Agency last week announced stringent limits on greenhouse-gas emissions from newly constructed power plants, which is likely to drive utilities from coal to cleaner-burning natural gas. Under the proposed rules, coal-fired power plants must keep carbon emissions below 1,100 pounds per megawatt hour, forcing utilities to invest in pricey emissions-trapping technologies or shift to another power source. Analysts estimate that natural gas is likely to hit $4.50 per million British thermal units by 2020 — compared with this past Tuesday morning’s price of $3.57 per million Btu. That potential upswing comes after oversupply forced gas prices down to a 10-year low of $1.82 per million Btu in Spring 2012. For more information, please contact us.

The U.S. Environmental Protection Agency (“EPA”) sent its draft guidance for hydraulic fracturing that uses diesel fuels to the White House Office of Management and Budget (“OMB”) for review, over a year after the public comment period closed. EPA issued the draft guidance after it agreed in a settlement to take down from its website language stating that companies were required to obtain injection permits under the Safe Drinking Water Act before using hydraulic fracturing fluid containing diesel fuels. Environmental groups largely welcomed the guidance but wanted a formal rulemaking with more restrictive measures. Industry groups have stated that service companies no longer use diesel fuels in hydraulic fracturing fluid, but are concerned that EPA may pursue enforcement actions against companies that used diesel fuels in the past.

rise in output of North American tight oil will not trouble OPEC, the group’s secretary general said, maintaining his view that the new supply source will not significantly impact the group’s market share. Abdullah al-Badri, attending the annual Oil and Money conference in London, referred to forecasts of rising production of tight oil, also known as shale, but said that would not be a problem for the 12-member OPEC. The Organization of the Petroleum Exporting Countries, skeptical of information available, has been looking more closely at shale oil this year. It decided in May to carry out its own investigation on shale’s potential. Already, the U.S. shale boom has altered the landscape of oil trade. For example, OPEC members Nigeria and Algeria have seen demand for their crude fall in the U.S., the world’s top consumer, because of growing domestic supply. For more information, please contact HBW Resources.

Algeria expects to double its gas production in the next seven to 10 years after making a number of significant oil and gas finds in maturing and new fields, Energy and Mines Minister Youcef Yusfi said. OPEC oil producer Algeria is a major supplier of gas to nearby Europe, although strict licensing terms have seen major investments freeze up in recent years and oil and gas output begin to decline. The North African country had also made headway in evaluating the potential for unconventional technologies that have prompted a shale boom in the United States, with studies finding 300-500 trillion cubic feet of tight oil and more than 700 tcf of shale gas in Algeria, he said. Sparse interest in the last upstream licensing round spurred the government to pass an amended hydrocarbon law in January but the changes may not be sufficient to counter the prospect of greater security costs after the attack on the In Amenas gas plant in the deep south killed 40 oil workers early this year. Analysts say the law does not go far enough to encourage new investment or open up opportunities for shale gas production. Yusfi said his country was working on the next round of exploration licences but did not give details about the blocks or the terms that would be on offer, though he did say that largely unexplored offshore areas could be included.

Linc Energy Ltd., seeking a shale exploration partner in central Australia, is in talks with two groups, including a U.S. oil services company, that are interested in helping to develop its prospects. The company expects to start a five-well drilling program at the shale oil properties in South Australia’s Arckaringa Basin in February at an initial cost of A$15 million ($14 million). The company, which hired Barclays Plc to help find a shale oil partner, said earlier this year that it had been contacted by companies from North America to India interested in funding the development.

Prime Minister Shinzo Abe said Japan and Canada have agreed to cooperate more closely on shipments of natural gas as the country seeks new energy supplies after the Fukushima nuclear disaster. Abe, speaking to reporters in Ottawa at a joint press conference with Prime Minister Stephen Harper, said Canada is a stable source of energy and can provide gas at competitive prices. Abe said the two countries will hold “ministerial level consultations,” without providing details. Japan paid an average price of $15.74 per million British thermal units for liquefied natural gas in July, according to data from LNG Japan Corp. That compares with an average of about $3.64 for U.S. natural gas futures traded in New York. Japan, the world’s biggest LNG buyer, imports almost all its energy. Canada is the world’s fifth largest producer of natural gas, the country’s Natural Resources Minister Joe Oliver said this month. Exxon Mobil Corp., the world’s largest energy company by market value, asked Canada in June for permission to export 30 million metric tons of LNG a year from the nation’s westernmost province of British Columbia. For more information, please contactus.

Oil-sands deals are getting done at the slowest pace in nine years as the Canadian government’s heightened scrutiny of investments by foreign state-owned companies hinders transactions. Industry Canada officials are now vetting deals that don’t require approval under the nation’s foreign-takeover law, according to two people who have advised on transactions involving state-owned companies. Even foreign investors not usually deemed state owned are being asked to prove they aren’t controlled or influenced by government, including whether the state has the power to appoint directors, said another person familiar with the process. The federal government is also probing more proposed acquisitions involving state-owned firms to see if they pose a threat to national security, said Julie Soloway, a partner at Blake, Cassels & Graydon LLP in Toronto. The government, which already vets foreign takeovers above C$344 million, also said it will “carefully monitor” deals involving state-owned enterprises in the world’s 11th-largest economy, and will “act to safeguard Canadian interests” when it appears that such acquisitions will “undermine the private sector orientation of an industry.” All foreign investors are also now being asked a set of questions on state control, including whether a state owns a third or more of the investor’s voting rights and whether a government has the power to appoint managers and members of the company’s board, said one of the people familiar with the talks. For more information, please contact HBW Resources.

New Brunswick’s minister of energy, Craig Leonard said during the Maritimes Energy Association conference in Halifax that the shale gas industry could revive the economic fortunes of his province, yet some people aren’t willing to hear a reasoned argument about its merits. During his speech, Leonard said New Brunswick currently only has about 30 natural gas wells producing 10 million cubic feet per day, but there are about eight trillion cubic feet that could be recovered from various shale rock formations.

China National Offshore Oil Corp expects to add five liquefied natural gas receiving terminals by 2015, doubling its total capacity to 35-40 million tonnes per year (tpy), a senior company official said. The expansion from four terminals currently, with a receiving capacity of 18.7 million tpy, will enable China’s top offshore oil explorer to import more LNG to meet strong demand growth in the country. China, the world’s top energy consumer, aims to raise the share of natural gas in its energy mix to 8 percent by 2015 from 5 percent now to cut emissions from coal and lessen dependence on oil imports.

A French court will decide next month whether a ban on the oil- and natural-gas-drilling technique known as fracking violates the constitution after Schuepbach Energy LLC called the law unfair. France banned fracking in 2011 and canceled shale-exploration licenses held by companies including Schuepbach and Total SA (FP), the country’s biggest oil company, after protests by environmental groups. The ban has proved divisive, pitting Industry Minister Arnaud Montebourg, who backs drilling for unconventional resources as a way to create jobs, against Environment Minister Philippe Martin. The government will maintain the ban even if the current law is struck down in court, Martin told a parliamentary hearing this month. The court will render its decision Oct. 11. France and Poland have the greatest potential for recoverable shale gas in Europe, the International Energy Agency has said. For more information, please contact HBW Resources.

Citing the “increasing appetite” for crude at Indian refineries, India’s minister for petroleum and natural gas has requested long-term supplies from Venezuela. M. Veerappa Moily met with Rafael Ramirez, Venezuela’s minister of energy and mines, who led a delegation to India for a review of cooperation in the hydrocarbons sector. Indian representatives cited difficulties related to pricing and signing of term contracts for importation of crude from Venezuela. And, for Indian companies working in the Venezuelan exploration and production sector, delayed dividend payments to joint venture partners were noted. Ramirez encouraged Indian companies to increase participation and invited them to attend a meeting in Venezuela Oct. 7-9. Ramirez assured his audience that all issues would be discussed in detail to arrive at mutually acceptable solutions.

Oil India is set to bet big on the shale oil and gas race, and will appoint a new consultant to advise on its shale strategy in north-east India. Oil India and Indian Oil jointly purchased a 30% stake in Carrizo Oil and Gas’ shale assets for $82.5 million in October last year. Oil India is looking to take on a consultant to chart the firm’s exploration and production of shale across the north east, following initially disappointing reports of shale formations in the region. For more information, please contactus.

Indonesia is encouraging the United States to invest in shale gas exploration in the Southeastern Asian country. Energy and Mineral Resources Minister Jero Wacik said the government hopes the United States will transfer technology to develop shale gas, following on the success of the U.S. natural gas boom. “The U.S. government has successfully developed shale gas. Indonesia also possesses potential reserves of shale gas; thus, we are asking them to launch shale gas exploration in our country,” Jero said in a statement. Indonesia has estimated shale gas resources of 574 trillion cubic feet in Sumatra, Kalimantan, Papua and Java, the ministry says. State-owned oil firm Pertamina in May was awarded the country’s first shale gas project, the Sumbagut block in North Sumatra, estimated to contain 18.56 trillion cubic feet of shale gas. The company has committed to spend $7.8 billion for exploration of the block.

Pipelines are carrying twice as much natural gas to Mexico as they did in 2010, according to federal data, helping to push U.S. gas exports to the highest level since the Energy Information Administration began tracking them in 1973. The U.S. still imports more gas than it exports, and its shipments to Mexico account for a little less than 3% of U.S. production. But rising exports to Mexico are bringing the U.S. closer to becoming a net exporter of natural gas, and could provide a meaningful boost to domestic gas prices, some analysts say. U.S. gas shipments are a boon to Mexico, which faces a shortage of the fuel amid booming industrial demand and its own dwindling output from conventional gas fields. Despite Mexico’s vast untapped deposits of gas in shale-rock formations, it likely would take years for the country to unlock those reserves. In the meantime, importing U.S. gas by pipeline is far cheaper for Mexico than burning oil or buying ocean-borne cargoes of liquefied natural gas. Companies on both sides of the U.S.-Mexico border are investing to meet this demand. The potential for rising exports to Mexico is a bright spot for the U.S. natural-gas producers that have boosted gas production to the highest level in U.S. history, far outstripping domestic demand.

While searching for carbon dioxide storage sites, Norwegian mining company Store Norske hit gas in Svalbard, a remote Arctic archipelago in the country, at a depth of 700 metres and analysis of the gas shows that it could have come from shale rock. It now wants to determine whether the gas can be exploited for commercial purposes.

There may be a shale oil deposit in Russia’s Siberian region larger than the Bakken. One estimate suggests that the dense rock could contain as much as 100bn barrels of recoverable oil, making it five-times larger than North Dakota’s Bakken shale, the engine of America’s oil renaissance. Exxon Mobil is investigating and oil service firms are “shipping equipment, technology and drilling crews from the Bakken and the Eagle Ford in Texas to Siberia, in what is becoming a full-scale west-east technology transfer.” For more information, please contact us.

Thailand’s PTT Exploration & Production PCL, the country’s flagship petroleum explorer, may invest in North American shale gas and Myanmar deep-water projects as part of its plan to nearly double its output by 2020. PTT Exploration, which hit the headlines last year when it outbid Royal Dutch Shell PLC and spent $2.2 billion to acquire Cove Energy PLC, owner of 8.5% of a huge Mozambique gas field, is looking for more overseas purchases to help meet rising energy-consumption needs at home as there are limited domestic opportunities to increase its reserves. The company, which owns or has stakes in 45 projects in 12 countries, has a target to produce 100,000 barrels of oil equivalent a day by 2020 from future acquisitions, on top of the 500,000 BOE a day from existing ventures, representing 8% annual growth. Current output is 340,000 BOE a day, with 80% of this from domestic oil and gas fields.

United Kingdom
Britain’s first green energy company, Ecotricity, has announced that the gas it sources for its customers will be free of gas from fracking. Ecotricity’s ‘Frack-Free Gas’ promise is to never buy fracked gas for supplying to householders and businesses in Britain – so customers will avoid supporting the fracking industry with their energy bills. For more information, please contact HBW Resources.

Additional Information

For additional information, please contact Bo Ollison with HBW Resources.  His contact information is below.

Bo Ollison
HBW Resources
2211 Norfolk Street, #410
Houston, TX 77098
Tel: 713-337-8810
E-mail: bollison@hbwresources.com
Twitter: @BoOllison

Contact Information

If you have any general questions, please contact me anytime. Previous versions of the HBW Ollison Hydraulic Fracturing Report, the HBW Greenfield Offshore Energy Report, daily updates and new Member profiles can be viewed at: https://hbwresources.com/intelligence.  Hope you have a great day.


Michael Zehr
HBW Resources
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E-mail: mzehr@hbwresources.com
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