HBW Resources: Ollison Hydraulic Fracturing Report
Below is a summary collected and organized by Bo Ollison, HBW Resources’ Senior Director of Policy, 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.
2013 Election Results:
Some proposed moratoriums or bans on hydraulic fracturing in towns in Colorado and Ohio won majorities while others failed – with margins varying from wide to razor-thin. The Colorado cities of Boulder, Fort Collins and Lafayette cleared anti-fracking measures. The ballot measure in Broomfield, Colo., was extremely close, but was defeated. In Ohio, an anti-fracking proposal was voted down in Youngstown, while in Bowling Green, an attempt to create a ‘citizen’s bill of rights’ calling for, among other things, clean air and water was voted down – though the town’s council unanimously voted to ban fracking there back in September. In Oberlin, the ‘citizen’s bill of rights’ passed.
Boulder: Ballot Question 2H – Shall Ordinance No. 7907 be amended to extend the current moratorium on new oil and gas exploration until June 3, 2018 and to set legal standards and the council voting requirements for lifting the moratorium amended pursuant to Ordinance No. 7915?
Yes 77.65% 21,140 votes
No 22.35% 6,084 votes
Broomfield: Ballot Question 300 – Should Home Charter Rule be amended for 5 years so as to prohibit the use of hydraulic fracturing to extract oil, gas or other hydrocarbons within the City and County of Broomfield?
Yes 49.97% 10,253 votes
No 50.03% 10,266 votes
Ft. Collins: Ballot Issue 2A – An ordinance placing a moratorium on hydraulic fracturing and the storage of its waste products within the City of Ft. Collins or on lands under its jurisdiction for a period of five years
Yes 56.44% 23,714 votes
No 43.56% 18,301 votes
Lafayette: Ballot Question 300 – Shall Chapter II of the Lafayette home rule charter be amended to add a new section 2.3 entitled community bill of rights and obligations to (i) prohibit corporations, or persons using corporations, from extracting gas and oil within the city limits, except through currently active wells; (ii) prohibit corporations, or persons using corporations, from depositing, storing or transporting within city limits any water, brine, chemical or by-products used in or that result from the extraction of gas or oil; (iii) prohibit corporations, or persons using corporations, from engaging in the creation of fossil fuel and nuclear energy production or to create delivery infrastructure that facilitates activities related to the extraction of gas and oil; (iv) prohibit corporations, or persons using corporations, from extracting water from sources in the city for use in the extraction of gas and oil; (v) impose liability on corporations, or persons using corporations, that engage in the extraction of gas or oil extraction outside of the city limits for harm caused within the city; (vi) interpret the definition of “persons” who are entitled to certain rights and privileges of the united states and Colorado constitutions; (vii) limit the rights of corporations, or persons using corporations, that engage in gas and oil extraction to enforce state or federal law, or to challenge municipal or charter provisions; and (viii) invalidate permits, licenses, privileges or charters issued by state or federal agencies, boards or commissions that would violate the charter prohibitions?
Yes 58.98% 4,382
No 41.02% 3,048
Bowling Green: City Charter Amendment Bill of Rights, which calls for a) Right to Clean Water; b) Right to Clean Air; c) Right to Peaceful Enjoyment of Home; d) Rights of Natural Communities; e) Right to a Sustainable Energy Future; f) Right to Self-Government; g) People as Sovereign; h) Rights as Self-Executing; i) Securing and Protecting Rights: 1) It shall be unlawful for any corporation to engage in the extraction of gas or oil within the City of Bowling Green, with the exception of gas and oil wells installed and operating at the time of enactment of this Charter provision, provided that the extraction of gas or oil from those existing wells does not involve any practice or process not previously used for the extraction of gas or oil from those wells and providing that those wells are capped securely when production ceases. 2. It shall be unlawful for any corporation, or any director, officer, owner, or manager of a corporation to use a corporation, to deposit, store or transport waste water, “produced” water, “frack” water, brine or other materials, chemicals or by-products used in the extraction of gas or oil, within, upon or through the land, air or waters of the City of Bowling Green. 3. It shall be unlawful for any corporation, or any director, officer, owner, or manager of a corporation to use a corporation, to engage in the creation of fossil fuel, nuclear or other non-sustainable energy production and delivery infrastructures, such as pipelines, processing facilities, compressors or storage and transportation facilities of any sort that would violate the right to a sustainable energy future. This prohibition shall not apply to the construction, maintenance or repair of infrastructures used for delivery to residential or business retail end-users of gas or oil. 4. Corporations engaging in gas or oil extraction in a neighboring municipality, county or state, and persons using corporations to engage in gas or oil extraction in a neighboring municipality, county or state, shall be strictly liable for all harms caused to natural water sources, ecosystems, human and natural communities within the City of Bowling Green.
Yes 25.17% 1,194 votes
No 74.83% 3,549 votes
Oberlin: Initiative Petition Community Bill of Rights would ban the extraction of gas and oil, along with associated activities, including the disposal of associated wastes, into injection wells within the city and its jurisdiction.
Yes 70.62% 1,144 votes
No 29.38% 476 votes
Youngstown: Fracking Charter Amendment which calls for a) Right to Clean Water; b) Right to Clean Air; c) Right to Peaceful Enjoyment of Home; d) Rights of Natural Communities; e) Right to a Sustainable Energy Future; f) Right to Self-Government; g) People as Sovereign; h) Rights as Self-Executing; i) Securing and Protecting Rights: A. It shall be unlawful for any corporation to engage in the extraction of shale gas or oil using the unconventional high volume, high pressure, horizontal drilling technology commonly known as “hydro-fracturing,” within The City of Youngstown. B. It shall be unlawful for any person or corporation, or any director, officer, owner, or manager of a corporation to use a corporation, to deposit, store or transport waste water, “produced” water, “frack” water, brine or other materials, chemicals or by-products used in the extraction of gas or oil, within, upon or through the land, air or waters of The City of Youngstown. C. It shall be unlawful for any person or corporation or any director, officer, owner, or manager of a corporation to use a corporation to engage in the siting within The City of Youngstown of infrastructure supporting the extraction, processing, or transportation of shale gas or oil, including, but not limited to, compressor stations, pipelines, processing facilities, storage facilities and transportation facilities. This prohibition shall not apply to the manufacture, production, sale or distribution of materials and components used in the construction of such infrastructures, but only to the actual siting and placement within The City of Youngstown of oil and gas processing facilities, compressors stations, associated pipelines, or storage and transportation facilities for use in support of the extraction of shale gas or oil. D. It shall be unlawful for any corporation or for any director, officer, owner, or manager of a corporation to use a corporation to engage in the extraction of water from any surface or subsurface source within Youngstown for use in the extraction of shale gas or oil within Youngstown. E. Corporations and persons using corporations to engage in gas or oil extraction in a neighboring municipality, county or state shall be strictly liable for all harms caused to natural water sources, ecosystems, human and natural communities within the City of Youngstown, including Meander Creek and its tributaries, the water of which is used for domestic purposes by residents of the City of Youngstown. F. Corporations engaged in activities prohibited by this Charter Section, or seeking to engage in those prohibited activities, shall not have the rights of “persons” afforded by the United States and Ohio Constitutions, nor shall those corporations be afforded the protections of the commerce or contracts clauses within the United States Constitution or corresponding sections of the Ohio Constitution. G. Corporations engaged in activities prohibited by this Charter Section, or seeking to engage in those prohibited activities, shall not possess the authority or power to enforce State or federal preemptive law against the people of The City of Youngstown, or to challenge or overturn municipal laws or Charter provisions adopted by the City of Youngstown Council. H. No permit, license, privilege or charter issued by any State or federal agency, Commission or Board to any person or any corporation operating under a State charter, or any director, officer, owner, or manager of a corporation operating under a State charter, which would violate the prohibitions of this Charter provision or deprive any City resident(s), natural community, or ecosystem of any rights, privileges, or immunities secured by this Charter, the Ohio Constitution, the United States Constitution, or other laws, shall be deemed valid within The City of Youngstown. I. Any person, corporation, or other entity that violates any prohibition of this Law shall be guilty of a summary offense and, upon conviction shall be sentenced to pay the maximum fine allowable under State law for that violation, and shall be imprisoned to the extent allowed by law. A separate offense shall arise for each day or portion thereof in which a violation occurs and for each section of this Law found to be violated. Enforcement of this article may be initiated by the Youngstown Police Department, the Director of Public Safety, or other designee of City Council. Youngstown may also enforce this Law through an action in equity. In such an action, Youngstown shall be entitled to recover damages and all costs of litigation, including, without limitation, expert and attorney’s fees.
Yes 45.14% 4,742 votes
No 54.86% 5,764 votes
The Western States Petroleum Association in a motion filed in California Superior Court in Alameda County cited provisions in SB 4 as the reason to throw out a case brought by the Sierra Club, the Center for Biological Diversity, Earthworks and the Environmental Working Group. WSPA in its paperwork refers to language in the law that environmental groups protested when it was added to the bill just before passage. Green advocates at the time said they feared it might be used as a reason to allow hydraulic fracturing without oversight. The green groups earlier this year filed a claim against the California Department of Conservation’s Division of Oil, Gas and Geothermal Resources (DOGGR), charging that the agency allowed hydraulic fracturing without requiring necessary reviews under the California Environmental Quality Act, or CEQA, a protection law. State law requires most developments to go through an environmental review addressing how they would affect land, water, species and other factors and ways to mitigate the damage. The oil and gas industry contends that fracking operations up until now have not been subject to CEQA. Environmental groups — while arguing in the court that CEQA did apply to fracking — were hopeful that SB 4 would resolve the question by mandating that oversight.
Los Angeles County officials have voted to nix a plan to drill for oil on public parkland in Whittier, Calif., but they may lack authority to stop the proposal. County Supervisor Gloria Molina said plans to develop the land, which Whittier bought in 1994 using funds set aside for conservation, would set a “dangerous precedent.” The move earned swift condemnation from the city of Whittier and Matrix Oil Co., which is hoping to drill for oil on a 7-acre patch of parkland leased in 2008. Whittier and Matrix see the county stepping in where it lacks jurisdiction, a stance that could set the stage for a legal battle over the fate of the open space. Matrix estimates it can reach 20 million barrels of recoverable oil from its lease in the Whittier Hills via slant drilling, creating thousands of jobs.
The state’s oil and gas lawsuit against Longmont is set for trial Aug. 11, 2014, and is scheduled to last 15 days. The COGCC sued Longmont in July 2012, saying the city’s newly passed oil and gas rules — including a restriction against drilling in residential zones — trespassed on state authority. Longmont officials, meanwhile, say the regulations are part of a city’s traditional land use and zoning powers. Dan Kramer, Longmont’s assistant city attorney, said the city asked for 10 to 15 days due to the complexity of the issues.
An 8th Judicial District judge has rejected an injunction request from the advocacy group Protect Our Loveland to force a speedy election on the issue of whether to place a two-year moratorium on hydraulic fracturing in city limits. In a ruling signed Monday, District Judge Daniel Kaup said the courts are the final venue to determine the sufficiency of signed petitions that would place the moratorium before Loveland’s voters, meaning the 150-day window for an election to be scheduled did not open when Loveland City Clerk Terry Andrews rejected the petition appeal by resident Larry Sarner. Aided by a legal team from Denver, Sarner appealed Andrews’ decision to district court. Based on that appeal, the Loveland City Council voted, 5-4, to decline putting the moratorium language on ballots that will be counted Tuesday. Monday’s ruling means that council action cannot be reversed.
A coalition of groups dedicated to keeping New York state’s 5-year-old ban on fracking in place is demanding that the Department of Environmental Conservation withdraw its proposed regulations for new liquefied natural gas facilities, citing safety concerns and other issues. While DEC officials say the regulations are aimed at fueling stations, opponents say the document contains no limits on the size of facilities and would allow onsite conversion at gas well sites to increase ease of transportation, as well as terminals for the import and export of LNG at marine ports outside of New York City. DEC is taking public comments on its proposed LNG regulations until Dec. 4.
Hurley Town Supervisor Gary Bellows provided a copy of a proposed hydraulic fracturing moratorium. The proposed moratorium is proposed to be for a year while town officials make changes to land-use regulations. Under the moratorium there would not be reviews of “any applications for any new wells, projects or businesses involving the practices of horizontal or directional drilling or hydraulic fracturing.” The proposed moratorium would apply to “property on which is intended to have on it any well, project or business” involved in hydraulic fracturing.
Duke Energy Carolinas, in partnership with North Carolina Electric Membership Corporation (NCEMC), has filed an application for a Certificate of Environmental Compatibility and Public Convenience and Necessity (CECPCN) with the Public Service Commission of South Carolina (PSCSC) to construct and operate a 750 MW natural gas-fired combined cycle plant at the existing Lee Steam Station in Anderson County, S.C. NCEMC will be a minority owner of 100 MW of the project if constructed. A final decision to build at Lee has not been made, but Duke believes it is prudent to continue with the regulatory actions necessary to keep the project moving ahead. The utility’s request is part of a comprehensive, long-term plan to add new generation, modernize the fleet, maintain a diverse fuel portfolio, and manage customer costs while delivering a high-quality, reliable power supply.
A group of area residents is again proposing an anti-fracking ballot initiative for city of Athens voters this spring after failing to get a previous version on the November ballot. The Bill of Rights Committee had collected the requisite number of signatures to put the issue to voters this fall, but the Athens County Board of Elections sustained an objection to it in August, thereby declining to certify the initiative for the ballot. After making numerous changes to the original initiative, the BORC announced in a press release that they intend to complete a second petition drive and bring the matter to voters on May 6. The new version removes language related to the city’s “jurisdiction” under Ohio Revised Code to punish water polluters up to 20 miles upstream.
The Ohio Environmental Protection Agency (OEPA) has granted companies a one-month extension to submit information about chemicals used and stored at oil and gas drilling locations to local emergency personnel. The OEPA issued a letter saying oil and gas well owners and operators had to file documentation outlining what hazardous materials were on site above certain thresholds with the agency’s State Emergency Response Commission, county local emergency planning commissions and fire departments who cover the area. Ohio law had previously allowed this information to be filed along with state information for oil and gas companies, but the U.S. EPA recently ruled the requirements of the federal Emergency Planning and Community Right-to-Know Act had to be met separately. The reports are standard requirements for other industries handling hazardous materials, so first responders can know what they might be dealing with should an emergency arise at a site. The filing deadline for an annual report was March 1, 2013, but because oil and gas wells were notified after that date, they were given until Nov. 15. “The SERC recognizes that facilities are diligently working to compile the information needed to comply with EPCRA and is providing an extension, asking companies to submit their reports no later than Dec. 15, 2013.”
Rep. Sean O’Brien (D, District 63) and Rep. Dave Hall (R, District 70) introduced legislation that wouldprovide tax incentives for entities that buy or convert vehicles to compressed natural gas (CNG), establish a sales tax reduction for those who purchase electric vehicles and create a five year phase in of a motor fuel tax on compressed natural gas that will match the current tax on gas and diesel. Under the proposal, the incentives would be self-funded by already existent oil and gas taxes on companies in Ohio. In addition, the grant and incentive programs would be phased out after a five-year period. The bipartisan legislation was co-sponsored by 60 representatives, including House leadership from both parties.
Regulators are working on an environmental agreement with a Warren County water treatment plant targeted by a federal lawsuit and accusations it is polluting the Allegheny River, the state Department of Environmental Protection said. Testing found radiation in the water 150 miles upstream of Pittsburgh. Waste Treatment Corp. in Warren said it is trying to find the source and contends it is not coming from fracking waste. The environmental group Clean Water Action sued Waste Treatment in federal court, accusing the company of dumping illegal amounts of wastewater from oil and gas drilling into the river near Allegheny National Forest. Arnold and DEP spokesman Gary Clark said the company is not discharging wastewater from hydraulic fracturing, or fracking, the process used to get gas from Marcellus shale. The company sends that water to a nearby injection well.
Violations issued to oil and gas operators in northwest Pennsylvania continue their upward climb even as violations statewide fall to the lowest levels seen since the peak of the Marcellus Shale natural gas boom. Statewide, violations per well averaged .51 in 2012. While still above 2005-06 levels, the number has declined every year since 2009, when 1.41 violations per well were recorded by the Pennsylvania Department of Environmental Protection.
A spate of new compressed natural gas stations is in the works in southwestern Pennsylvania at a pace that could double the number of places available in the region to fill up CNG-powered vehicles within two years. A joint venture between Washington, Pa.-based Shale Hotels Inc. and Coolspring, Pa.-based “O” Ring CNG Fuel Systems LP, which builds stations, is planning a facility in Bentleyville, Washington County, just down the street from the Best Western and Holiday Inn Express hotels where odd-hour breakfasts and boot-washers service the rig crowd. Many companies in the Marcellus Shale industry are converting their fleets to run on CNG. There’s potential for two to four more such stations through the partnership with “O” Ring. There are five public CNG stations in southwestern Pennsylvania: EQT’s Strip District facility, Giant Eagle’s Crafton and Cranberry locations, American Natural’s Station Square station, and Waste Management’s Clean-n-Green station in Washington. Another six stations to the north and east of the city are within an hour and a half drive, including four public stations owned by “O” Ring. At least three other CNG stations are planned in the region.
Oil and gas drillers are beginning state-mandated inspections of all of their working wells this fall, more than two and a half years after the requirement was adopted but not implemented. The rule added to Pennsylvania’s oil and gas regulations in February 2011 requires companies to inspect all of their operating wells for signs of leaks and corrosion four times a year and submit the results to the state annually.
Duke Energy Carolinas, in partnership with North Carolina Electric Membership Corporation (NCEMC), has filed an application for a Certificate of Environmental Compatibility and Public Convenience and Necessity (CECPCN) with the Public Service Commission of South Carolina (PSCSC) to construct and operate a 750 MW natural gas-fired combined cycle plant at the existing Lee Steam Station in Anderson County, S.C. NCEMC will be a minority owner of 100 MW of the project if constructed.
Phillips 66 is planning to build a liquefied petroleum gas export terminal in Freeport, Texas, a $1 billion push to tap international markets for refined products used in gasoline blending and heating, the company said. The oil refiner said it plans to assemble an export capacity of 4.4 million barrels per month by 2016, about the size of eight very large gas carries. Phillips 66 expects to build the facility, which is in early engineering design stages, at its marine terminal in Freeport. The company’s Sweeny complex in Old Ocean, Texas, and its Gulf Coast Fractionators facility in Mont Belview, Texas, would provide the new facility’s supply of liquefied petroleum gas.
The myriad oil and gas wells perforating the Eagle Ford Shale and other Texas shale plays could be a source of hot water used to generate clean electricity, a Southern Methodist University scientist says. New steam-engines allow water from deep within well sites — often above the boiling point — to produce both power for utility companies and revenue for well operators, says Maria Richards, a researcher at Southern Methodist University’s Geothermal Laboratory. Companies, Richards says, have the potential to generate energy both from the hot water beneath the earth’s surface and by capturing heat from heavy equipment they use at well sites.
The Legislature’s Joint Revenue Interim Committee has rejected a proposal that would have subjected flared natural gas in Wyoming to the state severance tax. The proposal failed on an 8-2 vote after the committee heard testimony that lawsuits might be filed to challenge such a tax. A report compiled for the committee estimated that removing the current flared gas exemption would result in about $300,000 in revenue per year from the 6 percent state severance tax on gas.
Liquefied natural gas is powering four coal-haul trucks at mines in the Powder River Basin, and Wyoming Gov. Matt Mead would like to see more of them. Mead’s energy strategy adviser, Rob Hurless, said a $150,000 study is underway to figure out how to create and sell LNG. LNG is created from natural gas, a plentiful resource in Wyoming, but sells at higher prices. The study will look at potential consumption of LNG for high-horsepower equipment engines such as mine haul trucks, railroad locomotives and large pipeline compressor stations. Many of those run on diesel but could potentially save companies money if owners switched to LNG if gas prices remain lower than oil over the long term, Hurless said.
The Wyoming Supreme Court is scheduled to hear oral arguments Nov. 20 over whether the public has the right to obtain lists of chemicals used in hydraulic fracturing or if those ingredients are corporate trade secrets that may be shielded. The Wyoming Oil and Gas Conservation Commission adopted its first-in-the-nation fracking chemical disclosure rule three years ago. The rule requires companies that frack in Wyoming to provide the commission with lists of the chemical ingredients in the fracking fluids they use. The idea is that if groundwater pollution ever occurs near an oil or gas well, the commission — which oversees oil and gas development in Wyoming — would be better able to determine if fracking played a role.
Researchers from West Virginia University and the Ohio State University have been awarded a National Science Foundation grant through the Division of Environmental Biology to study the microbial biodiversity found in deep underground shale formations. Paula Mouser, Ohio State assistant professor in civil, environmental and geodetic engineering, is the principal investigator on the study proposal, “Microbial Biodiversity and Function of Deep Shale and its Interfaces.” Shikha Sharma, WVU assistant professor in geology, is principal investigator for WVU’s side of the research project. Ohio State’s share of the research award, $1.65 million, will use a metagenomics-based approach to examine microbial life and function in a rarely examined habitat: kilometer-deep black shale, a critical component of the U.S. energy portfolio. Sharma will receive $351,000 to probe the chemical and isotopic biomarkers that microorganisms leave behind during their growth and respiration process. Biomarkers will be studied from within deep shale cores and in laboratory enrichment studies that help link microbial gene presence to metabolic function.
The EPA sent out an email related to their Federal Register Request for, “Information to Inform Hydraulic Fracturing Research Related to Drinking Water Resources.” The comment period ends Friday, November 15, 2013. The email states, “While the EPA is conducting a thorough literature search, there may be studies or other primary technical sources that are not available through the open literature. Interested persons may provide scientific analyses, studies, and other pertinent scientific information, preferably information which has undergone scientific peer review. The EPA will consider all submissions but will give preference to all peer reviewed data and literature sources.”
The Occupational Safety and Health Administration’s proposed silica rule could cost the hydraulic fracturing industry more than any other industry, according to a Bloomberg Government analysis. The proposal would impose the highest costs on companies that provide fracking services as a percentage of its annual revenue, compared with other sectors, the analysis found. The annual estimated compliance cost per fracking worker potentially exposed to silica would also be much higher than for workers in other industries. OSHA did not initially consider the economic impact of the proposed silica rule on the fracking industry, said Bloomberg Government quantitative analyst Miguel Garrido, who authored the analysis of the silica rule’s impact. Written comments regarding OSHA’s proposed silica rule can be submitted until January 27, 2014.
The federal government is still wading through more than a million public comments filed on its plan to tighten standards for drilling on public lands, with “no date certain” for finalizing those mandates, Interior Secretary Sally Jewell said. Although it would apply only on public land under the Interior Department’s control, the proposal would be the first major federal rule governing the hydraulic fracturing technology now being used to harvest natural gas and oil across the United States. The proposed rule would set new standards for the integrity of wells to ensure groundwater is isolated from fracturing fluids and flowing hydrocarbons. Companies also would be required to have water management plans for handling any liquids that flow back to the surface, in response to concerns that the material can be contaminated with naturally occurring radioactive substances found underground. The federal government estimated the rule would hike costs by as much as $5,011 per well, but an industry-commissioned study concluded that the added cost would be about $97,000.
The Coast Guard published proposed rules to allow barges to transport wastewater in bulk; thus, providing companies an alternative to storing the waste at the drilling site or transporting it by rail or truck to remote facilities. The Coast Guard regulates the shipment of hazardous materials on the nation’s rivers and classifies cargoes for bulk shipment. “[U]nder certain circumstances a bulk liquid hazardous material may be transported by a tank vessel if it is a ‘listed cargo’ (listed in any of several specified tables in Coast Guard regulations, [wastewater], however, cannot be treated as a ‘listed cargo’ because the specific chemical composition of [wastewater] varies from one consignment load to another and may contain one or more hazardous materials . . . , including radioactive isotopes such as radium-226 and radium-228.” Under the proposed rules, in order to carry wastewater, a barge owner must request approval from the Coast Guard prior to shipping, provide additional information and comply with new policies. Comments will be accepted through November 29, 2013.
Key findings from Black & Veatch’s “Strategic Directions in the North American Natural Gas Industry” report show an industry embarking on a period of sustained growth driven by low-cost shale gas resources. However, for the economy to fully realize its benefits, industry leaders will have to address the challenges of a rapidly evolving U.S. energy market. “The report’s findings show that stakeholders across the value chain must work together and compromise on key issues,” said Peter Abt, Managing Director of Black & Veatch’s Oil & Gas strategy practice. “The general consensus is that more pipeline capacity is needed. How this capacity is financed – and who pays for it – is the area of disconnect. Without pipeline investment, the natural gas industry’s growth will slow and consumers could see dramatic price swings.” The good news for the industry, however, is that growth is expected to continue. More than 95 percent of natural gas industry leaders stated they were “optimistic” or “very optimistic” in their general outlook towards future industry growth.
A U.S. energy drilling boom is revolutionizing the niche market for liquefied petroleum gas (LPG), bringing down global prices and challenging established exporters in the Middle East. The changes are the latest sign of the global impact of a drilling renaissance in the United States that has already hit oil and natural gas. And like oil and gas, it is U.S. LPG producers who are set to gain the most, while established exporters may struggle with new competition in a suddenly altered landscape. While LPG has been trading for many decades, the U.S. production boom is now attracting big trading houses on a larger scale.
The Senate Environment and Public Works Committee held a hearing on the greenhouse gas footprint of the U.S. natural gas drilling boom. The Oversight subcommittee will hear from a senior Environmental Protection Agency official, Sarah Durhan, Director of the Office of Atmospheric Programs within the Office of Air and Radiation as well as other experts, Dr. David Allen, the University of Texas; Mark Boling, Southwestern Energy Company; Dr. Vignesh Gowrishankar, Natural Resources Defense Council; Darren Smith, Devon Energy Corporation; and Dr. A. Daniel Hill, Texas A&M at a hearing on “Fugitive Methane Emissions from Oil and Gas Operations.” The hearing focused mostly on the recent University of Texas study of methane emissions related to natural gas production.
A current expansion of the Panama Canal could allow close to 90% of the world’s LNG vessel fleet to pass through by 2015, providing significant potential time and cost savings to LNG buyers and producers, a Panama Canal Authority executive said. Currently the canal, which links the Pacific and Atlantic oceans, can accommodate only 8.6% of the world’s existing LNG fleet, and about a quarter of the current orderbook for vessels on order. This will rise to 88% of the global fleet by 2015 and close to 100% of the orderbook by then, according to Silvia Marucci, Senior Specialist for the liquid bulk segment at the Panama Canal Authority, in a presentation to the Gas Asia Summit as part of Singapore International Energy Week. Compared with the route using the Suez Canal, a vessel travelling from the Gulf of Mexico to Asia via the Panama Canal would save about 5,300 nautical miles each way, shaving off 11 days from its journey, Marucci said. A vessel travelling from the US West Coast to Bilbao in Spain will likely save 12 days of travel one way using the Panama Canal compared with the Suez Canal, she added.
EU Climate Commissioner Connie Hedegaard believes shale gas could be an energy and climate “game changer,” speaking at a meeting held by the London-based Green Alliance think tank, Hedegaard said the EU needed to discuss the role fracking could play in boosting the EU’s energy mix. The EU’s package of climate targets is due to be released in mid-January, and will decide on the EU’s direction up to 2030. The EU has so far been successful in keeping to its 2020 targets. In October, MEPs voted for new EU laws which would require the fracking process to face the level level of environmental regulation as drilling for oil. These standards would apply to full scale extraction, but not for initial exploration. Supporters of the technology accused the EU of trying to stifle the emerging industry. But she warned against seeing fracking as a silver bullet that would solve Europe’s energy problems.
Armour Energy has become the first Australian company to flow gas from shale using the hydraulic fracturing technique that has revolutionized US energy markets. Armour announced it had successfully received continuous gas flows from the well in the Lawn shale formation in north-west Queensland. Armour announced that it was the first successful gas flows in Australia from a horizontal fracked well, which is the drilling technology that has driven the US shale revolution.
Oil and natural gas wells in Canada are expected to fall 1.5 percent in 2014 as increased use of hydraulic fracturing and horizontal drilling reduces the number of wells producers require. Canadian drilling next year will total 10,800 wells versus the 10,960 expected this year, the Petroleum Services Association of Canada said. “Large-scale use of these kinds of technologies is creating a trend to fewer wells overall,” Mark Salkeld, chief executive officer of the Calgary-based industry group, said in the statement.
Two oilsands projects set to begin producing in 2017 will add a potential 260,000 barrels per day to Alberta’s bitumen output. Just before a conference call to discuss the approval of the $15.1-billion 180,000-bpd Fort Hills oilsands mine project, Royal Dutch Shell announced it had decided to proceed with its 80,000-bpd thermal in situ Carmon Creek project, with an estimated cost of $3 billion.
After completing an intense program of community engagement over the past six months, the Petroleum Services Association of Canada released a hydraulic fracturing code of conduct in Calgary. The 11 service firms who do most of the fracking in Canada committed to “reduce water consumption, provide communities with information on fluid additives, develop increasingly environmentally friendly technologies, establish clear health and safety practices, and respond quickly to local concerns about fracking operations.”
The National Energy Board approved the drilling and hydraulic fracturing of two horizontal wells20 kilometres south of the town, on the west side of the Mackenzie River. The approval means ConocoPhillips will be the first company to horizontally fracture the promising Canol shale formation. Companies that have explored the formation believe it may be the source of oil at Norman Wells, a field that has produced more than 260 million barrels oil. Exploration companies have pledged to spend $534 million exploring the formation.
Newfoundland Natural Resources Minister Derrick Dalley has declared a moratorium on fracking in the province. Dalley announced that the government will not approve fracking onshore and onshore-to-offshore hydraulic fracturing pending further review. Dalley said the government will be doing public consultation before it develops any policy for fracking.
Encana Corp, Canada’s largest natural gas producer, said it will cut about 20 percent of its workforce, slash its dividend, and focus future spending on just five regions rich in oil and gas liquids as it looks to move away from low-value natural gas production.
The National Energy Administration (NEA), China’s energy regulator, has said it wants to make shale gas one of the country’s strategic emerging industries and will provide subsidies and tax breaks for companies interested in its development. The policy will be effective immediately. According to Xinhua, the Chinese news agency: “The shale gas industry policy aims to explore shale gas resources in a reasonable and orderly manner, secure healthy development of the industry, increase natural gas supply, assist energy conservation and emission reduction, and safeguard national energy security, according to a bulletin posted on the administration’s website.” According to U.S. Energy Information Administration estimates, China has the world’s largest shale gas reserves, about 36 trillion cubic meters. The country wants to increase its annual shale gas output to 6.5 billion cubic meters by 2015, a big jump from its 2013 output which was 200 million cubic meters.
Anadarko Petroleum Corp is considering the sale of its holdings in oil and gas projects in China in a deal that could be valued at about $1 billion, sources familiar with the matter said, as it eyes plouging money back into the U.S. market. Anadarko, which owns about a 35 percent interest in production and development projects in China’s Bohai Bay, joins a list of U.S. oil companies seeking to raise cash to invest back home. At least two other U.S. oil companies, including Newfield Exploration Co Ltd and Hess Corp, have put part of their Asian oil and gas fields on the block this year.
France continues to evaluate technological developments regarding shale gas, despite having outlawed hydraulic fracturing, so far the only way of producing gas from shale rock, a spokesman for the industry redevelopment ministry said. Monitoring the practice of shale gas production and the regulatory frameworks elsewhere in Europe, particularly the UK, and how effective they are, does take time, Benjamin Gallezot warned, but he said France has the industrial base needed for shale gas production. However, he said, industry in France is feeling the pinch of high gas prices. “Gas prices in the US are well below European Union levels, and the petrochemicals industry is disappearing,” he said. “Getting natural gas production at home could be to our advantage.”
Italy’s Eni has agreed to pay up to $52 million to jointly explore and develop US shale oil acreage in the Delaware Basin with US shale player Quicksilver Resources, the Italian company said. Under the deal, Eni will earn a 50% share in 52,500 acres (212 sq km) held by Quicksilver in the Leon Valley area, located in Pecos County some 800 km northwest of Houston, Texas. In return for a 50% interest in Quicksilver’s acreage, Eni said it will pay up to $52 million representing 100% of the drilling, completion and seismic costs. The agreement will also give Eni half of Quicksilver’s interest in another 7,500 gross acres located in the Leon Valley area, it said.
The production of shale gas in Italy has never been taken into consideration, the Italian industry ministry said, clarifying earlier comments from minister Flavio Zanonato.
The National Iranian Oil Company (NIOC) has signed a $49.8 million deal with a privately owned but unnamed company to conduct seismic testing in western Iran’s Kermanshah province, where shale oil and gas could potentially exist, according to Shana, Iran’s news agency. Under the deal, 1,100 kilometers will undergo seismic testing, a process which can take up to 14 months.
U.S. Energy Secretary Ernest Moniz said in Tokyo that he hopes U.S. gas supplies will start flowing to Japan in a few years, and he pledged that US regulators were processing applications for LNG export projects as quickly as possible. The Department of Energy has approved four applications to export a total of 6.37 Bcf/d of LNG to countries without free trade agreements, such as Japan. Two of the approvals went to projects in which Japanese companies have tolling agreements: Freeport LNG in Texas and Cove Point LNG in Maryland. “We know that many in Japan are extremely happy with these developments, looking forward to LNG exports to Japan,” Moniz said during a lecture hosted by the Sasakawa Peace Foundation. “I do just want to provide a little caution in terms of time frame.”
The Australian government gave Japan a reassurance at an energy ministers’ meeting that Australia will continue to be the most reliable supplier to the world’s largest LNG importer, Australian industry minister Ian Macfarlane told Platts. Speaking after meeting Japan’s Minister of Economy, Trade and Industry, Toshimitsu Motegi, in Tokyo, Macfarlane who oversees both the energy and mining sectors, said he told his counterpart that Japan would “not find more reliable suppliers” than Australia even if Tokyo may try to diversify its supply sources. The latest ministerial level meeting comes after Australia overtook Malaysia to become the largest supplier of LNG to Japan in 2012, accounting for 18.2% of Japan’s total imports of 87.3 million mt in 2012. Japan’s imports of 15.9 million mt from Australia last year grew 13.9% from 2011, compared with a year-on-year rise of 11.2% for total imports.
Despite the promise of the Mexican Eagle Ford Shale, the high costs and low potential returns likely will deter Mexico’s national oil company from developing those resources for decades to come, an industry expert said. Petroleos Mexicanos, or Pemex, is not likely to develop its shale gas resources because of the high number of wells needed, high labor costs and the company’s lack of experience, said Luis Miguel Labardini, a partner with Mexican energy consulting firm Marcos y Asociados.
Russian energy company Gazprom said it wasn’t ready to examine the shale natural gas potential in the country because of abundant conventional reserves. The board of directors at Gazprom met in Moscow to survey the prospects for shale natural gas production. “The meeting participants affirmed that at the moment shale gas production in Russia would be inexpedient due to the abundance of conventional gas reserves with their recovery cost being considerably lower than the estimated cost of shale gas production,” the company said in a statement. “In addition, it was pointed out that shale gas production was related to considerable environmental risks.”
Spain’s government set local ground rules for oil and gas drillers to use hydraulic fracturing, in an effort to spur shale-exploration projects by endorsing the contested technology that they need. The 1998 law on oil exploration was changed to specifically include the water-intensive drilling technique in new legislation published. The measure also modified a 2006 law so that fracking projects nationwide must meet environmental-impact rules. That means they will be scrutinized for potential impacts on aquifers to air quality. Spain is one of Europe’s most energy-poor nations, importing about 99 percent of its oil and gas needs. While its traditional fields are few with scant output, the advent of finding fossil fuels using fracking technology has sparked interest by drillers from Spain’s Repsol SA to San Leon Energy Plc of Dublin and Heyco Energy Group Inc. of Texas. The changes give more legal certainty to exploration companies, said an official of one of their industry groups, Shale Gas Espana. There have been 70 licenses given to explore for oil and gas, according to Shale Gas Espana. The energy companies aren’t required to disclose whether they are looking into shale or only at conventional hydrocarbon deposits. Much of the most sought-after shale deposits are north in or near the Basque region.
Tanzania has introduced new production sharing agreement (PSA) terms that experts said toughen some of the conditions for energy firms seeking to explore and develop the east African nation’s big gas prospects. The “Model Production Sharing Agreement” document, detailed the bonus to be paid by firms to the state on signing a contract, specified capital gains tax obligations and outlined a new royalty structure that one expert said meant higher fees by contractors in some offshore areas. The model agreement for 2013, released by the state-run Tanzania Petroleum Development Corporation (TPDC), introduces a minimum signature bonus payment of $2.5 million and a production bonus of at least $5 million payable when production starts. The agreement also sets a royalty rate of 12.5 percent of total oil or gas production for onshore or shallow operations and a 7.5 percent royalty rate for offshore production.
The risks to public health from emissions caused by fracking for shale oil and gas are low as long as operations are properly run and regulated, the British government’s health agency said. Public Health England (PHE) said in a review that any health impacts were likely to be minimal from hydraulic fracturing, which involves the pumping of water and chemicals into dense shale formations deep underground. Since there is currently no fracking in Britain, the PHE report examined evidence from countries such as the United States, where it found that any risk to health was typically due to operational failure.
Ukraine signed a $10 billion shale gas production sharing deal with Chevron, Reuters has reported, which will include exploration at the Olesska site in western Ukraine, following a majority of deputies in the region voting in favor of exploration. The agreement will see an initial investment of $350 million by Chevron to determine the commercial viability of the shale reserves at Olesska. It is estimated that total investments, including extraction, will be approximately $10 billion.
Ukrainian Prime Minister Mykola Azarov said his country was seeking ways to develop shale gas production in a bid to reduce its dependence of costly natural gas from Russia. “We set a goal to significantly reduce our dependence on supplies from Russia, and we expect that shale gas reserves will allow us to produce 10 to 20 billion cubic meters of gas per year,” Azarov said during his meeting with Victoria Nuland, the U.S. assistant secretary of state for European and Eurasian affairs. To unlock its shale gas potential, Ukraine wants to learn from the U.S. extensive experience in unconventional gas development, Azarov said. Ukraine, with Europe’s third-largest shale gas reserves of 1.2 trillion cubic meters, imports more than half of its gas from Russia. Kiev plans to start shale gas production by 2017.
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