Oil & Gas Production Continues to Advance From Shale Plays As Companies Notch Efficiency Gains

HBW Resources: Ollison Hydraulic Fracturing Report

Below is a summary prepared 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 development.  HBW Resources is monitoring these activities to ensure that responsible and feasible policies based on sound science are advanced.

Highlights

  • Production from Eagle Ford Shale will continue to grow in 2014, fuelling a reduction in net crude imports and driving exports of refined products in the US to pre-1990 levels
  • According to a data study based on the collection of samples from a 60-mile stretch of the Susquehanna River during an unusual five-day “weather event” last June, the Marcellus Shale impacts on that stretch of river were minimal
  • Jobs in core industries developing Ohio’s Utica shale play have increased 56 percent in two years
  • Lycoming County’s (PA) economic boom as a result of the Marcellus Shale boom: Four new hotels and more than 12 new restaurants have sprouted up. In all, about 85 to 100 businesses have been affected in some way
  • Oil and gas producers in Texas had one of their best years ever in 2013, according to the Texas Petro Index (TPI)
  • Matador Resources Company estimates $318 million or 72% of its $440 million 2014 capital budget will be directed to the Eagle Ford Shale in South Texas
  • Carrizo Oil & Gas Inc. will boost its annual drilling and completion capital by $50 million so it can complete approximately 49 net wells in the Eagle Ford Shale this year
  • According to PwC, 27 deals in the final quarter of 2013 were related to shale plays valued at $23.8 billion, up 338%. For the year, there were 79 shale deals that contributed $53.2 billion in value for all of last year, marking an additional two deals and $1.5 billion in value versus 2012
  • MarkWest Energy Partners LP plans to build 17 major processing and fractionation projects in the Midwest and Northeast
  • DCP Midstream LLC is adding around 500 million cubic feet per day (cf/d) in natural gas processing capacity in the Eagle Ford Shale and the Denver-Julesburg Basin
  • Australia’s New Standard Energy Ltd. has completed a $27 million acquisition of 5,182 net acres in the Eagle Ford Shale
  • New Brunswick Premier David Alward used his final state of the province address before the next election to urge the public to support the development of a shale gas industry
  • Mexican oil industry reforms are expected to result in an estimated $1.2 trillion of investment in the Eagle Ford shale play
  • The UAE is “seriously thinking” of importing North American natural gas
  • Families near Cuadrilla’s proposed fracking sites could be in line for benefits worth more than £6,000 each
States 

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

California
A superior court judge for Alameda County, California dismissed a lawsuit filed by several environmental groups based on the provisions of the state’s new hydraulic fracturing law, SB 4. In this lawsuit, the environmental groups sought an injunction prohibiting any new oil and gas permit approvals until the California Department of Conservation, Division Oil, Gas and Geothermal Resources (“DOGGR”) “complied with its legal requirements to evaluate and mitigate the significant environmental and public health impacts caused by hydraulic fracturing.” Oil and gas industry organizations intervened and moved to dismiss the lawsuit shortly after the new law was passed, arguing that “the regulatory framework adopted in SB 4, including new provisions for well stimulation permits and for environmental review, render plaintiff’s claims regarding the Department’s alleged past pattern and practices for environmental review of hydraulic fracturing moot.” Under SB 4, the DOGGR drafted emergency regulations allowing interim hydraulic fracturing activities until permanent regulations are enacted on or before January 1, 2015, as long as the operator provides the required information and certifications under Public Resources Code Section 3161(b). When the conditions are met, the DOGGR “shall allow” fracking and must issue permits. In its ruling, the Superior Court judge gave the “regulations substantial deference.” The judge stated that “SB 4 directs how the DOGGR must proceed regarding its environmental review of applications for hydraulic fracking, and that SB 4 is a comprehensive legislative solution that moots the claims in this case” by giving the DOGGR “clear directions to study fracking and to have regulations in place by 1/1/15.” Any “challenge to DOGGR’s policy or practice after 1/1/15 is not ripe for judicial review because the DOGGR has not yet completed its regulations.” This case is Center for Biological Diversity, Earthworks, Environmental Working Group, and Sierra Club v. California Department of Conservation, Division of Oil, Gas, and Geothermal Resources, and DOES I through X, Case No. RG12652054, In the Superior Court for the State of California for the City and County of Alameda (October 16, 2012). For more information, please contact HBW Resources.

Colorado
Many water needs in the region have been met by buying supplies from farmers and ranchers, but a Noble Energy manager said the oil and gas industry could and should stop being a part of that problem, and explained what his company is doing to get water. The large energy developer is looking to use deep groundwater wells — drawing “non-tributary water” — to meets its needs down the road, said Ken Knox, senior adviser and water resources manager for Noble, during his presentation at the Colorado Farm Show in Greeley. Wanting to avoid water that’s needed by other users, Knox said Noble is looking to have in place about a handful of deep, non-tributary groundwater wells that draw from about 800 to 1,600 feet below the Earth’s surface. Digging wells that deep is considered too expensive for farmers, Knox and others said, and the quality of water at that depth is typically unusable for municipal or agricultural uses. Oil and gas development, according to the Colorado Division of Natural Resources, only used about 0.11 percent of the state’s water in 2012 — very little compared to agriculture, which uses about 85 percent of the state’s supplies. But in places like Weld County — where about 80 percent of the state’s oil and gas production is taking place, and where about 25 percent of the state’s agriculture production is going on, and where the population has doubled since 1990 and is expected to continue growing — finding ways for an economy-boosting energy industry to not interfere with the water demands of farmers, ranchers and cities is critical.

State public health officials in Colorado have publicly disavowed the latest paper from a team of researchers whose work is routinely cited by political activist groups that want to ban hydraulic fracturing. In fact, the public could “easily be misled” by the research team’s latest work, the Colorado Department of Public Health and Environment (CDPHE) said in a statement to the media. The team of researchers, based at the Colorado School of Public Health (CSPH), is famous within the activist community for claiming that people who live within a half-mile of a natural gas wells may have an increased lifetime cancer risk. That 2012 study – which didn’t actually show any meaningful increase in cancer rates – has morphed into one of the anti-fracking campaign’s most frequently used talking points. It was even cited in a celebrity “ban fracking” video last November that targeted Gov. John Hickenlooper (D). The CSPH research team’s new paper tries to find an association between birth defects and natural gas development by studying the Colorado Department of Public Health and Environment’s birth records from 1996 to 2009. The authors do not attempt to make any causal links, but even so, the paper still carries this prominent warning, “CDPHE specifically disclaims responsibility for any analyses, interpretations, or conclusions.” For more information, please contact us.

The Colorado Senate unanimously passed, SB 14-009, a bill that would include a warning in home-purchase contracts notifying buyers whether gas drillers might have access to the property. The bill, introduced by Sen. Mary Hodge (D, District 25) would act like federal disclosure rules that, for example, warn renters and buyers that paint in their building might contain lead. The split estate bill does not require real estate agents to find the mineral titles, only to make the buyer aware that the issue — which runs contrary to many conceptions of land ownership — may affect them. For more information, please contact HBW Resources.

Connecticut
With Connecticut’s 2014 legislative session scheduled to begin, a coalition of public health groups and environmental organizations is running a series of radio and Internet advertisements to educate lawmakers and the public to potential dangers posed by the importation, processing or sale of waste materials produced by hydraulic fracturing. The radio advertising began on four stations in the Hartford and New Haven markets, said Doug Wood, associate director of Grassroots Environmental Education, a Port Washington, N.Y.-based public health and environmental group that produced the advertisements. Wood declined to say how much was being spent on the campaign or how many spots are running this week. “Our concern is that state lawmakers and public really don’t know much about this,” Wood said. “The fracking process is releasing radiation that naturally occurs underground in the Marcellus shale. Exposure to radiation and other toxic chemicals contained in fracking waste poses a significant and long-lasting threat to public health.” The groups mounting the campaign include Citizens Campaign for the Environment, CT Families Against Chemical Trespass (ConnFACT), Environment Connecticut, Environment and Human Health Inc. and the Connecticut chapter of the Sierra Club. The environmental organizations announced the formation the Connecticut Fracking Waste Ban Coalition and a website, wastefreect.org.

In effort has begun on separate fronts to give the state more control over waste products from hydraulic fracturing that gas exploration companies may want to transport, dispose of or process in Connecticut. The state Department of Energy and Environmental Protection, in the list of legislation it recommends be taken up when the General Assembly session convenes Wednesday, is seeking to have fracking waste considered hazardous waste and subject to the same labeling, permitting and handling requirements as other hazardous waste, DEEP spokesman Dennis Schain said last week. Current state law, he said, mirrors federal law, which does not consider waste materials from oil and gas exploration to be hazardous waste. Schain said there are three or four facilities, all in the western half of the state that could potentially accept fracking waste, depending on the type, how it is shipped, and other factors. But no fracking waste has come into the state as of yet, and there are no pending proposals, he said. Another initiative to address fracking waste is coming from the state Council on Environmental Quality, a watchdog agency. Among its list of recommendations for legislation the coming session is a measure that would protect the state from the “harmful effects of imported waste products generated by hydraulic fracturing.” CEQ notes that current state law contains “gaps and uncertainties” that leave the state exposed to hazardous fracking waste.

Michigan
A landowner near Pere Marquette State Forest in Cadillac, Michigan, obtained a temporary judicial stay of drilling by Encana Oil & Gas in the Forest. Citing a published report, the landowner claimed the possibility of “frack hits,” a phenomenon where fracturing from one well may breach the integrity of another well, creates an environmental risk and threatens mineral rights of adjacent owners. The landowner has also petitioned the Michigan Department of Environmental Quality to require companies to determine how far well fractures will travel before drilling. Encana has already drilled exploratory wells in the forest, seeking to tap into the Utica-Collingwood shale formation, and is seeking permits for 16 more. Under current Michigan law, Encana is required to survey the area within 1,320 feet of the well pads to determine if any abandoned wells are present. For more information, please contact us.

Montana
The Montana Environmental Information Center (MEIC) has sued Attorney General Tim Fox to gain access to certain documents related to the public position he took on hydraulic fracturing. In the lawsuit, filed in state District Court in Helena, MEIC said it wrote Fox Aug. 30, 2013, expressing concern over his position in joining some other attorneys general in a letter to U.S. Interior Secretary Sally Jewell opposing federal efforts to further regulate hydraulic fracking. Hydraulic fracking, combined with horizontal drilling, is used in oil shale development. Fox joined four other attorneys general in signing an Aug. 23, 2013, letter by Oklahoma Attorney General Scott Pruitt expressing “serious concerns with, and strong objections to, the U.S. Bureau of Land Management’s recently re-proposed rule to regulate hydraulic fracturing operations on federal and Indian lands.” The letter said the states were best equipped to design, administer and enforce laws and regulation related to oil and gas development. “This lawsuit is simply about the attorney general of Montana refusing to comply with the public records act and the Montana constitutional right to know, plain and simple,” said Jim Jensen, MEIC’s executive director. “We asked for documents and they refused to give a full disclosure. What is the attorney general hiding?” In response, Fox’s spokesman John Barnes issued this statement to reporters: “The true political nature of MEIC’s lawsuit is made evident by the fact that MEIC went to the press before notifying our office of the lawsuit, and the fact that the lawsuit singles out the Republican Attorney General’s office when both our Democrat governor and the attorney general worked together to protect Montana jobs from unnecessary federal regulation.” For more information, please contact HBW Resources.

New York
New York’s top environmental regulator said his agency has “absolutely no plans” to issue permits for shale-gas drilling during the state’s fiscal year. During a legislative budget hearing, Joseph Martens, commissioner of the Department of Environmental Conservation, was asked whether Gov. Andrew Cuomo’s $137.2 billion spending proposal includes any money for the authorization of large-scale hydraulic fracturing, the technique used with shale-gas drilling that has been on hold in New York since 2008. “None whatsoever,” Martens said. Assemblyman Robert Sweeney, D-Suffolk County, who chairs the chamber’s Environmental Conservation Committee, followed up with Martens. He asked whether that was a sign the DEC’s lengthy review of fracking — known as the Supplemental Generic Environmental Impact Statement — would not be finalized in the near future. “So does the absence of either revenue or appropriations mean that the department does not plan to finalize the Supplemental Generic Environmental Impact Statement or issue permits during the fiscal year?” Sweeney asked. Martens responded: “We have absolutely no plans to do so.”

New York’s top health regulator offered no new timetable on when his controversial review of hydraulic fracturing will be finished. Health Commissioner Nirav Shah testified for more than four hours during a recent budget hearing. Several lawmakers, meanwhile, questioned Shah about his ongoing review of high-volume hydrofracking, a much-debated technique used to help draw gas from underground shale formations, such as New York’s Marcellus Shale. Specifically, several lawmakers attempted to push Shah into revealing more about the scope of his work and his methods for the review, which has been conducted entirely in private. Shah was first tasked with preparing a health assessment in September 2012, and a decision on whether to allow high-volume fracking awaits the completion of his review. Sen. John DeFrancisco (R, District 50) asked Shah when the public can expect to see some of his work. “At what point does the public get to know what information you have presently, what information you’re gathering?” DeFrancisco said. Shah said the public will have a “full opportunity to look through all of the data” after he’s delivered his report to the Department of Environmental Conservation, which regulates the oil-and-gas industry and has been conducting its own review since 2008. DeFrancisco pressed Shah for a “ballpark” timeframe for when Shah expected to finish his work. Shah declined. “It’s not in the near future, where I can predict it,” Shah said. Shah struck a different tone than he did at a budget hearing in January 2013, when he said his work on the fracking review would be completed “within the next few weeks.” For more information, please contact us.

In a newsletter sent to its members, the Joint Landowners Coalition of New York President Dan Fitzsimmons said the group will file its long-awaited lawsuit on Feb. 14 in hopes of forcing the DEC to complete its lengthy environmental review of fracking, known as the Supplemental Generic Environmental Impact Statement or SGEIS. The group is demanding a timeline for a decision on high-volume fracking by Feb. 13 and promising a suit if the demand isn’t met. By filing in mid-February, the landowners’ attorneys are hoping to essentially have it linked with a similar but separate legal challenge by the bankruptcy trustee of Norse Energy, the now-defunct subsidiary of a Norwegian oil-and-gas company. In a draft of the lawsuit made public last year, the Joint Landowners Coalition laid out its case for a federal “takings” case, which argued the state’s de facto moratorium on large-scale fracking was an unconstitutional seizure of their land rights. But the landowners’ initial suit will be an “Article 78” proceeding, which is a portion of New York law used to challenge an act by a state agency or entity on an expedited basis. The landowner’s coalition was joined by the Kark Family Trust, which holds an oil and gas lease with Chesapeake Energy Corp.; Schaefer Timber and Stone LLC, which has an oil and gas lease with the bankrupt Norse Energy Corp. USA; and LADTM LLC. The Mountain States Legal Foundation, a group based in Lakewood, Colo., is also representing the potential plaintiffs in the case.

North Carolina
A state panel recommending rules for natural gas drilling in North Carolina says wells shouldn’t be at least 650 feet from buildings, homes and water wells. The N.C Mining and Energy Commission voted 10-1 on safe drilling distances from homes, streams and other sensitive landmarks. A retired energy industry geologist on the panel said Friday the standard is too strict and should be 500 feet. New York requires a safety buffer of 2,000 feet. Pennsylvania and Colorado require 1,000-foot setbacks from buildings or waterways. For more information, please contact HBW Resources.

North Dakota
Petron Energy II, Inc. opted out of Bakken Shale Deal in North Dakota. Floyd Smith, President and CEO of Petron Energy II, Inc., stated, “Regrettably, we are opting out of the Bakken Shale acquisition because the 5% interest presented for sale by Phoenix Energy, Inc. was not accurate. Based upon our due diligence, we discovered that Phoenix owns far less than the 5% interest that was offered. This discrepancy made closing the transaction uneconomical for Petron II.” Smith further stated, “The discrepancy came to our attention during our due diligence phase. Subsequently, we contacted Phoenix Energy, Inc. and requested verification of the 5% interest in the Bakken Shale they offered. Unfortunately, Phoenix was not able to provide verification of ownership of the 5% interest to the satisfaction of the Company.”

An oil industry task force representing hundreds of companies in North Dakota pledged to make an all-out effort to capture almost all the natural gas that is being flared in the Bakken shale oil field by the end of the decade. The gas being flared as a byproduct of a rush of oil drilling releases roughly six million tons of carbon dioxide into the atmosphere every year, roughly equivalent to three medium-sized coal plants. Because of a lack of gas-gathering lines connecting oil wells to processing plants, nearly 30 percent of the gas flowing out of the wells has been burned as waste in recent months. The task force reported to the North Dakota Industrial Commission, the state regulator, that the industry could in two years improve the percentage of gas captured to 85 percent, from 70 percent, and to as much as 90 percent in six years.

Ohio
Representative Robert F. Hagan (D, District 58) sent letters to the regulators charged with overseeing the burgeoning hydraulic fracturing industry, calling on them to be proactive in protecting the health and safety of Ohio’s communities. The letters follow a recent news report that highlights the steps neighboring states are taking to prevent radioactive contamination from fracking waste. “With Ohio’s expanding fracking operations, the notion that radioactive waste could make its way into Ohio’s landfills or waterways is increasingly realistic and alarming,” Rep. Hagan said in his letter to the Directors of the EPA and ODNR. “And yet, state officials reportedly have no plans to take the same precautions that are deemed necessary by our neighboring shale states.” For more information, please contact us.

motion to dismiss has been filed in the appeal of an Athens County injection well permit. The Ohio Attorney General’s Office asked the Ohio Oil & Gas Commission to dismiss the appeal of a drilling permit that was issued for the K&H Partners injection well in Troy Twp. Top of Form
The appeal was filed with the commission earlier last month by the Athens County Fracking Action Network (ACFAN), which has said the appeal raises technical and legal objections about the adequacy of the proposed injection well to protect groundwater. According to the dismissal motion filed by Daniel Martin, an assistant attorney general in the Environmental Enforcement Section, the commission lacks jurisdiction to hear the appeal. The permit for the injection well was issued in December by the chief of the Division of Oil and Gas Resources Management. In the dismissal motion, Martin wrote that orders of the chief can be appealed to the commission, but that Ohio law “expressly states that permit issuances are not ‘orders.’” Martin also argues that the Ohio Supreme Court has upheld that permits for oil and gas wells are not appealable to the commission under Ohio law. For more information, please contact HBW Resources.

Gov. John Kasich said he told Republican leaders that if lawmakers send him a “puny” severance-tax proposal that doesn’t pass “the smell test in terms of what I think is fair,” he would veto it. “I told them, puny doesn’t work,” Kasich said of the GOP-controlled House, which drafted a new fracking tax package that is cheaper for the oil-and-gas industry than the one Kasich proposed two years ago. The Republican governor, who was speaking at the Associated Press 2014 Legislative and Political Preview Session, would not say whether he would veto House Bill 375 as proposed, but it was the first time he has threatened a veto of any kind on House Republicans’ new fracking-tax proposal, whose methodology came from the oil and gas industry.

The village of East Palestine is working out details of a suggestion to offer land to oil and gas exploration companies in bulk, with some on council wary of the process while others believe it’s a no-brainer. Councilman Don Elzer suggested in December the village combine its municipal property with residential property to offer to companies to draw more interest and get a better deal. The village cannot force anyone to offer their land for leasing and participation would be strictly voluntary. Elzer has estimated the village could earn up to $8 million in signing bonus money alone if it received $4,000 per acre for the three square acres that make up East Palestine, including vacant lots and alleys. That money would be divided among the village and landowners who agree to lease their property, he said. The village would receive money for its municipal property only and not residential property, as contracts would be awarded individually, he explained. Elzer said residents interested in offering their land would sign a letter of intent, which the village would then present to interested companies showing what amount of land is available for leasing locally. Village officials have offered the roughly 140 acres of municipal land to companies over the last few years and have yet to be offered a lucrative lease. For more information, please contact us.

Jobs in core industries developing Ohio’s Utica shale play have increased 56 percent in two years, according to the Ohio Department of Job and Family Services. The department said that employment in those industries, such as well drilling and pipeline construction, increased by 3,876 in the second quarter of 2013 compared with the same time in 2011. There were 6,873 employed in 2011, compared with 10,749 in 2013, the report said. The number of companies involved in core oil-and-gas activity increased from 591 to 720, or 22 percent. Job and Family Services uses 2011 as the base for comparisons in its quarterly shale reports. In the previous report for the first quarter of 2013, jobs had risen by 30 percent in the first quarter of 2013 compared with the same time in 2011. The average salary of shale-related jobs is $70,160 a year in core industries, the report says. Employment in ancillary oil-and-gas industries grew 3 percent.

Local area officials testified in front of the House Ways and Means Committee at the state capital recently to urge the Legislature to reserve money in a severance tax that will come back to area counties. Tuscarawas County Commissioners Chris Abbuhl and Belle Everett are among the area officials who have testified at the Statehouse, advocating to members of the House committee that Tuscarawas County needs money to support an industrial future. “I think it was received well,” said Abbuhl, president of the Board of Commissioners, about his recent testimony. “Some people had their minds made up already, but then there were others there that were taking the information and trying to make an informed decision on it. I think they’re starting to see the need for the severance tax to come back to the local, affected areas.” In his testimony, Abbuhl stated that there is concern with roads, public safety, housing and economic development, but he said he was especially concerned about water and sewer infrastructure. “With this new development of oil and gas, we have a unique opportunity through the severance tax to build our economic development portfolio,” Abbuhl told the House committee. Abbuhl also noted the importance of maintaining current infrastructure that meets requirements mandated by the Ohio Environmental Protection Agency. Everett said Road Use Maintenance Agreements (RUMAs) should provide for ongoing maintenance “beyond the initial (drilling) activity.” Everett said investments will sustain the oil and gas industry in the area. “The fact is, we’re in a unique position to see this economic boom and when our region benefits, the entire state of Ohio benefits,” she said. “So, investing in infrastructure is definitely paramount in order to keep this business to remain fluid.” For more information, please contact HBW Resources.

Pennsylvania
Vince Matteo, president and CEO of the Lycoming/Williamsport Chamber of Commerce, rattled off a list of changes Lycoming County has seen as a result of the Marcellus Shale boom. Anadarko Petroleum Corp. and Range Resources both built regional headquarters in Lycoming County, he said. Halliburton has two locations and is now the county’s largest for-profit employer. Four new hotels and more than 12 new restaurants have sprouted up, he said. In all, about 85 to 100 businesses have been affected in some way by the boom, he said.

Dr. Md. Khalequzzaman, a professor at Lock Haven University outlined a data study based on collections of samples from a 60-mile stretch of the Susquehanna River, from Keating to Williamsport, during an unusual five-day “weather event” last June. In his view based upon the data collected, the Marcellus Shale impacts on that stretch of river were minimal, despite the upsurge in drilling activity.  Dr. Khalequzzaman said he hoped that his short-term study might be augmented by longer term efforts, as time and other resources permit, to provide a more complete picture of water quality in the Susquehanna River area, and he outlined efforts by associated university experts to share data and conclusions on a monthly basis. Dr. Khelaquzzaman has done a number of studies of water quality in this region, using teams of student researchers and volunteers to collect information. For more information, please contact HBW Resources.

A significant majority of people in Pennsylvania support the boom in Marcellus Shale natural gas drilling, according to a new poll, but many also have concerns about its environmental impacts. The Franklin & Marshall College poll found that 64 percent of respondents somewhat or strongly favor the gas drilling industry, compared to 27 percent who somewhat or strongly oppose it. But 37 percent also felt that potential environmental risks could outweigh the economic benefits of drilling, and 68 percent somewhat or strongly oppose drilling in state-owned forests. Poll director G. Terry Madonna said what struck him most about the results is “the stability in the response over the last couple of years.” “There’s a consistent narrative,” Madonna said. “The voters of the state say, yep, we like the natural gas folks, but we want it done environmentally safely.”

Texas
Oil and gas producers in Texas had one of their best years ever in 2013, according to the Texas Petro Index (TPI). As the energy industry in Texas continues to put the doldrums of 2009 behind it, the industry is helping to create many new jobs as well. The TPI, which is a composite index taken from a comprehensive group of upstream economic indicators, peaked at 295 in December. That was the fourth straight month of new record highs. The growth in 2013 was driven by crude oil production, although higher natural gas wellhead prices also lifted the bottom line, according to petroleum economist Karr Ingham, who created and maintains the TPI. It was particularly impressive given that most natural gas was recovered during oil production. For more information, please contact us.

The Pipeline and Hazard Materials Safety Administration says it has collected samples of Eagle Ford Shale crude to assess its flammability after a string of explosions involving trains carrying crude from North Dakota’s Bakken Shale. PHMSA and the Federal Railroad Administration launched Operation Classification earlier this year to study how shippers and carriers are classifying crude oil and what actions they take to understand its characteristics. As part of that effort, the agencies took samples of Eagle Ford crude in Tomball, Hope and LaGrange, PHMSA spokesman Joe Delcambre Jr. said in a written statement. They also collected a sample of crude in Port Arthur that originated from Calgary, Canada.

Research and Markets has recently published a report, ‘Unconventional Resources Analysis: Eagle Ford Shale (US Lower 48) Substantial Returns in Liquids-Rich Acreage,’ according to which Eagle Ford Shale will continue to contribute significantly towards US crude oil production growth. Production from Eagle Ford Shale – an unconventional resource play – will continue to grow in 2014, fuelling a reduction in net crude imports and driving exports of refined products in the US to pre-1990 levels. Taryn Slimm, the lead analyst covering US onshore, says: “With over 250 rigs operating in Eagle Ford, companies are expected to spend approximately $30 billion in capital this year, and nearly all of the major operators are projecting at least five years’ more drilling at the current rapid pace. The most efficient operators in sweet spots are achieving over 100% pre-tax Internal Rates of Return (IRR) with conservative pricing.” For more information, please contact HBW Resources.

Houston-based Energy Water Solutions is recycling water for Eagle Ford Shale operator EP Energy, the company announced. The movable water recycling facilities are cleaning produced water – which comes up alongside the well with oil and gas – so that it can be used for hydraulic fracturing. Energy Water Solutions said that the recycled water will help relieve pressure on the Carrizo Wilcox Aquifer, the primary water source for La Salle County. Water use has spiked with the oil and gas boom in South Texas. “For unconventional shale players like EP Energy, reducing the amount of water from aquifers that we use is important as we continue to develop new and existing plays,” said John Jensen, executive vice president of operation services for EP Energy. “We’re pleased to be working with Energy Water Solutions to implement leading-edge recycling solutions in the Eagle Ford Shale.” EP Energy is a Houston-based company with more than 97,000 acres in the Eagle Ford. The water recycling effort is near Cotulla in La Salle County, one of the busiest areas for drilling and production in the Eagle Ford region. The recycling will also eliminate trips to a disposal well, where the produced water would otherwise be pumped.

Matador Resources Company estimates approximately $318 million or 72% of its $440 million 2014 capital budget will be directed to the Eagle Ford Shale in South Texas. The company anticipates completing 49 gross (46 net) Eagle Ford wells and has plans to turn 43 gross (40 net) wells to sales in 2014. Matador expanded in the Eagle Ford in 2013 through the acquisition of 1,720 gross (1,660 net) acres.

Houston-based Carrizo Oil & Gas Inc. will boost its annual drilling and completion capital by $50 million so it can complete approximately 49 net wells in the Eagle Ford Shale this year, company officials say. Carrizo is boosting its 2014 drilling and completion capital to $600-$670 million, according to a company statement. However, it’s maintaining a previously announced land and seismic capital plan of $75 million. The additional wells mean Carrizo must complete 450 more hydraulic fracturing stages this year than it previously announced. It expects to offset the cost of roughly 250 of those with lower well costs.

Australia’s New Standard Energy Ltd. has completed a $27 million acquisition of 5,182 net acres in the Eagle Ford Shale from Magnum Hunter Resources Corp. The assets, located in Atascosa County, due south of San Antonio, contain five producing wells. New Standard began work this week on a sixth. Earlier this month, New Standard officials said the newly acquired assets have reserves of 12.3 million barrels of oil equivalent and have potential for 55 additional well locations. New Standard paid $15 million in cash plus 65.65 million shares of its stock for the Eagle Ford acreage, making Houston-based Magnum Hunter its largest shareholder and a key strategic partner, officials say. For more information, please contact us.

A spokesman for Valero Energy Corp. said the company needs to overhaul some of its refineries in Texas to handle output from the Eagle Ford shale reserve. The Valero refinery in Houston can process 160,000 barrels of oil per day while its Corpus Christi facility can handle 325,000 bpd. The company said it plans to spend $730 million to upgrade the refineries to add a combined 160,000 bpd to capacity. “We’re processing as much light sweet crude as we can at both of those facilities right now,” Valero spokesman Bill Day said in an interview published by the San Antonio Business Journal. “Because our proximity to the Eagle Ford Shale, we’d like to be processing more.” Valero’s spokesman offered no timeline for when the new capacity would be brought online.

Southcross Energy Partners has commenced construction of a new 24 inch diameter pipeline, approximately 94 miles in length in the rich gas area of the Eagle Ford shale in South Texas. The pipeline, named the Webb Pipeline, is expected to have initial uncompressed capacity of approximately 300 MMcf/d. Southcross has also initiated construction of a 5 mile extension of its McMullen Pipeline to connect to the new pipeline. The pipeline will extend from Webb County near Encinal, Texas, to McMullen County near Tilden, Texas. At Tilden, the new Webb Pipeline will connect to the extension of Southcross’ existing McMullen Pipeline. This new project will allow rich gas sourced from Webb County to flow to Southcross’ processing and fractionation complex near Corpus Christi, Texas. The project cost is estimated to be approximately $125 million.

Virginia
Virginia’s Department of Mines, Minerals and Energy (“DMME”) issued a notice that it plans to amend its Oil and Gas Regulations (4VAC25-150) to ensure that these regulations reflect current industry best practices and to expand the disclosure of chemical ingredients used in oil and gas operations, including hydraulic fracturing. The deadline for public comments is February 12, 2014. The DMME plans to hold a public hearing on the proposed action after publication in the Virginia Register. The Virginia Oil and Gas Association has petitioned the DMME to amend the Oil and Gas Regulations to require oil and gas companies to participate in Frac Focus to ensure that all chemicals used in hydraulic fracturing are fully disclosed and available to the public. “This initiative is intended to alleviate public concern that they are not aware of chemicals utilized in the fracing process. Even though this industry has been safely utilizing the fracing process for over 50 years, the Association wants to be totally transparent.” The deadline for public comments is February 26, 2014. For more information, please contact us.

National
During President Obama’s State of the Union address, the President stated, “One of the reasons why is natural gas – if extracted safely, it’s the bridge fuel that can power our economy with less of the carbon pollution that causes climate change.  Businesses plan to invest almost $100 billion in new factories that use natural gas.  I’ll cut red tape to help states get those factories built, and this Congress can help by putting people to work building fueling stations that shift more cars and trucks from foreign oil to American natural gas.  My administration will keep working with the industry to sustain production and job growth while strengthening protection of our air, our water, and our communities.” Following his speech, the President travelled to Wisconsin to visit the GE Gas engines facility in Waukesha that produces engines used in natural gas production. America’s Natural Gas Alliance President & CEO Marty Durbin released the following statement following the President’s speech, “As the president mentioned, there is great promise for natural gas in our transportation sector as trucks, trains and cargo ships transition to this clean and abundant fuel. The 1.4 million well-paying jobs that natural gas development will support in 2015 can help narrow America’s income inequality. The abundance of natural gas and its geographical diversity is bringing manufacturers back to U.S. shores, improving the economic well-being of communities across the country and enhancing energy security by using more of this clean, affordable and domestic resource.” For more information, please contact HBW Resources.

Also related to the President’s State of the Union address, according to ‘The State of the Union Fact Sheet,’ President Obama wants to work with Congress to create jobs through shale gas development. According to the fact sheet, “The President is calling on Congress to work with the Administration and State and local governments to create Sustainable Shale Gas Growth Zones, helping regions come together to make sure shale gas is developed in a safe, responsible way that helps build diverse and resilient regional economies that can withstand boom-and-bust cycles and can be leaders in building and deploying clean energy technologies.  Smart regional planning and federal technical assistance to States and local communities can ensure we develop shale gas the right way – and, at the same time, create stable communities with well-paying jobs.” It also said that, “the President announced specific ways to better focus on leveraging natural gas in manufacturing, transportation, and power generation – creating jobs, reducing costs, and reducing dependence on foreign oil.  The Administration will help States and localities coordinate review of proposed private sector projects to invest in new energy-intensive U.S. manufacturing plants relying on natural gas.  The Administration will also expand tax incentives to build fuel infrastructure and to replace oil with U.S.-produced natural gas in trucks and other transportation.”

Marcellus shale drillers need more pipelines to get their bountiful supply of gas to market, but improving the delivery infrastructure could cause them growing pains. The challenge of growing the delivery network without pressuring prices with more supply is something on the minds of industry officials. “All these supplies that we’re growing on the gas production side are at risk if we can’t connect them to markets,” Alan S. Armstrong, CEO of the Williams Cos., a pipeline and processing group, told the Marcellus-Utica Midstream Conference & Exhibition. The industry has made progress, especially in the past 18 months, at getting pipelines to more wells. But with gas production growing so fast, the pipeline investment will have to go on into the next decade and maybe longer to keep pace, experts at the conference said. That’s likely to cost about $3 billion a year — maybe more — in Pennsylvania, Ohio and West Virginia, according to several estimates.

Merger and acquisition activity in the U.S. energy sector was largely fueled last year by continued interest in shale plays, according to a new report from PricewaterhouseCoopers. PwC said deal-making accelerated throughout 2013 and signaled a strong uptick in the final three months of the year. A total of 182 deals valued at a combined $115.9 billion were announced during the full year. More M&A moves are likely on the way in 2014 as companies look for inorganic opportunities to increase shareholder value and sustain growth, PwC noted in its quarterly Oil & Gas M&A analysis. “Overall, M&A activity has been robust for a number of years in oil and gas,” said Doug Meier, PwC’s U.S. energy sector deals leader.  “We see that (trend) continuing as companies in the space focus on portfolio optimization – further investing in those assets that are generating strong returns and divesting those assets that are generating lower returns.” Meier added that PwC is working with clients to explore transactions and drive synergies. M&A in the energy industry closed out the year on a high note. There were 51 oil and gas deals with values greater than $50 million in the fourth quarter, while the combined value of those deals jumped 154% versus the third period to $41.7 billion. According to PwC, 27 deals in the final quarter of 2013 were related to shale plays. Shale deals had a combined value of $23.8 billion, up 338% sequentially. There were 79 shale deals that contributed $53.2 billion in value for all of last year, marking an additional two deals and $1.5 billion in value versus 2012. Shale M&A bucked a downward trend across the board in 2013. A year earlier, the energy sector saw 212 deals worth $152.8 billion. For more information, please contact HBW Resources.

A new report by the Environmental Integrity Project (EIP) states that, “Hundreds of large oil and gas facilities in six energy boom states — Colorado, Louisiana, North Dakota, Pennsylvania, Texas, and Wyoming – are emitting a combined 8.5 million tons of toxic chemicals each year.” EIP found that 395 facilities in the oil and gas extraction industry each emitted over 10,000 pounds of at least one toxic chemical, the annual threshold that would require reporting to the Toxics Release Inventory in other industries. Texas led the list of six states with 209 sites, followed by: Colorado (124); Louisiana (34); Wyoming (14); Pennsylvania (13); and North Dakota (1). Nearly 200 of the sites surpassed this threshold two or more years in a row. Eric Schaeffer, executive director, Environmental Integrity Project, said: “We are in the middle of an oil and gas boom, but have far too little information about the environmental consequences. Our research shows that many of these oil and gas plants emit tens of thousands of pounds of toxic pollutants every year, but that data was hard to get and incomplete. We need this industry to report that pollution to the Toxics Release Inventory where everyone can see it – just like chemical plants and other facilities have done for more than 20 years.”

The American Security Project has released a report, “America’s Energy Choices for 2014,” regarding the choices America faces regarding energy production and consumption, predicting that 2014 will be a year of continued upheaval for America’s energy system and laying out the choices to ensure the vitality of the U.S. economy, national security, and the global environment. The report developed three critical policy considerations surrounding the United States’ energy choices: energy security, economic stability, and environmental sustainability. These areas are examined in terms of fossil fuels, nuclear power, and renewable power. The report focuses on the tradeoffs of these resources and recommends that policymakers consider the ability of a country to act in its foreign policy independently of how it uses energy domestically, how energy affects the health of the economy over the long-term and when the production and use of an energy source causes undue external harm. For more information, please contact us.

The theme for the energy industry in 2014 is global economic growth, and how the industry will accomplish this goal is through its talent. But this year in business will find it increasingly difficult to attract, retain and develop their talent. Skills gaps, rising costs and tougher competition will define the energy industry’s barriers to growth this year, according to a report conducted by DNV GL. A shortage of skilled professionals is a top worry for all regions, the report, Challenging Climates: The Outlook for the Oil and Gas Industry in 2014, noted, but especially in regions where manpower isn’t lacking but the necessary skills set is. “This year, for the first time in more than five years, employees are in charge,” noted Josh Bersin, principle and founder of Bersin by Deloitte, in his predictions report. “High-performing employees will start to exert control. Top people with key skills (engineering, math, life sciences, and energy) will be in short supply.” This skills shortage hinders the industry from growing. One way of improving productivity is by maximizing the skills and contributions of people in the workplace, which in turn improves organizational performance. For more information, please contact HBW Resources.

Exxon Mobil Corporation announced enhancements to its U.S. oil and natural gas portfolio managed by subsidiary, XTO Energy Inc., through separate agreements in the Permian Basin in Texas and Utica shale in Ohio. “These transactions underscore our commitment to developing high-margin liquids growth in areas such as the Permian, while also efficiently funding development of our extensive domestic natural gas resource in emerging plays such as the Utica,” said Randy Cleveland, president of XTO Energy Inc. Through an agreement with Endeavor Energy Resources, L.P., XTO will fund development to gain substantial operating equity in approximately 34,000 gross acres in the prolific liquids-rich Wolfcamp formation in Midland and Upton counties. Endeavor will continue to operate shallow production while XTO will drill and operate horizontal wells in the deeper intervals. The agreement increases XTO’s holdings in the Permian Basin to just over 1.5 million net acres, enhancing the company’s significant presence in one of the major U.S. growth areas for onshore oil production. In a separate transaction involving its holdings in the Utica shale, XTO signed an agreement with American Energy – Utica, LLC (AEU) following a competitive bid process. The agreement will enable AEU to earn approximately 30,000 net acres of XTO’s Ohio leasehold in Harrison, Jefferson and Belmont counties. XTO will continue to operate in a core area of approximately 55,000 net acres, optimizing development by using proceeds from the transaction to fund 100 percent of near-term development costs.

MarkWest Energy Partners LP plans to build 17 major processing and fractionation projects in the Midwest and Northeast, adding to its big midstream oil and gas presence in the region. In a recent operational update on its Utica and Marcellus projects, the natural gas processing facility and pipeline developer said it has brought seven new projects online in the past four months: five cryogenic processing plants and two fractionation facilities. Cryogenic processing plants separate natural gas liquids, and fractionation plants separate those liquids into the valuable butane, ethane and propane parts. The 17 future projects will take place at nine locations in Ohio, Pennsylvania and West Virginia.

DCP Midstream LLC is adding around 500 million cubic feet per day (cf/d) in natural gas processing capacity in the Eagle Ford Shale and the Denver-Julesburg Basin, two the nation’s most active regions for natural gas liquids. DCP recently started up its 200 million-cf/d Goliad plant in the Eagle Ford Shale, which the company unveiled plans for a little over a year ago. The Goliad plant is DCP’s seventh in the Eagle Ford. It connects to the Sand Hills NGL pipeline to Mont Belvieu, east of Houston. The pipeline is a DCP joint venture with Phillips 66 and Spectra Energy. Additionally, DCP officials say the company will build a 200 million-cf/d facility in Colorado’s Denver-Julesburg basin and increase capacity at an existing plant nearby to 160 million-cf/d from 110 million-cf/d. For more information, please contact us.

Brazil

Brazilian output of oil and natural gas rose to its highest level in nearly two years in December as new fields came on line to replace declining output from older areas, the country’s oil regulator ANP said. Forty-six companies produced 2.62 million barrels of oil equivalent per day (boepd) from Brazilian on-shore and offshore fields in the month, the highest daily average since February 2012, the ANP said in a statement. Output was 1.5 percent more than a year earlier and 1.7 percent higher than in November. Production was aided by a record output of natural gas in the month, the ANP said. For more information, please contact HBW Resources.

drop in natural gas prices caused by a shale gas boom in the U.S is hurting Brazilian petrochemical company profits by reducing pricing power and making them less competitive, the head of the construction and industrial conglomerate Grupo Odebrecht SA said. Braskem SA in which Odebrecht has a majority stake and its partner, Brazil’s state-controlled oil producer Petróleo Brasileiro SA are discussing a cut in the domestic natural gas price to bring Braskem’s costs more in line with those in the United States, Odebrecht Chief Executive Officer Marcelo Odebrecht said at a Credit Suisse Group event. Braskem is Latin America’s No. 1 petrochemical company. Petrobras, as Petróleo is commonly known, is the principal source of domestic and imported natural gas in Brazil. Petrochemical producers around the globe are contending with increasingly competitive US rivals, who have seen the cost of gas plunge as output of gas from unconventional shale reservoirs grows. Those lower costs have boosted US exports and driven down prices worldwide. Petrobras charged local distributors $8.22 per million British Thermal Units (MBTU) of domestic natural gas in the third quarter. The benchmark US Henry Hub price in the quarter was $3.55 MBTU, 43 percent less than in Brazil. While prices have risen to about $4.91 MBTU in the US, they are still 40 percent below Brazilian levels. Prices helped cause Brazilian exports of styrene, polystyrene and ethylene fall 7.6 percent in 2013 while imports jumped 21 percent. Cheaper Brazilian natural gas would make it easier for Braskem and other producers to cut their prices, helping maintain export levels and make their products more competitive at home.

Canada
Enbridge Gas Distribution has been given clearance to go ahead with a $686.5-million pipeline expansion project in Greater Toronto. And Union Gas has been granted approval to proceed with another $423 million of projects in the GTA that will help it move gas to customers in eastern Ontario, and improve reliability on its system. The Ontario Energy Board released the decision. Construction is expected to begin in late 2014 and finish in October 2015. The decision was greeted with disappointment by green groups, who had argued that better energy conservation measures could eliminate the need for the projects.

New Brunswick Premier David Alward used his final state of the province address before the next election to urge the public to support the development of a shale gas industry. Alward said his Progressive Conservative government will push ahead to help create a shale gas sector, adding that the cost of not moving forward is too great. “To not take advantage of this opportunity would be one of the most irresponsible things a government could do,” Alward told a business audience in Fredericton in a prepared speech. “This is New Brunswick’s time.” For more information, please contact HBW Resources.

study of treated hydraulic fracturing wastewater in Debert, Nova Scotia states it is safe for disposal. A provincial study into the wastewater at Atlantic Industrial Services was released at a public meeting in Truro. Approximately 80 people gathered to hear the results, which stated the wastewater meets Health Canada and the Canadian Council of Ministers of the Environment guidelines to be released into water. “The tests … show that the wastewater poses a minimal risk to the health of Nova Scotians and our environment,” said Environment Minister Randy Delorey, adding the tested material was flowback wastewater from 2007 and 2008. The minister said while the wastewater is safe for disposal, no action will be taken until the department gives final approval. No date was indicated. Tests were carried out at Becquerel and Saskatchewan Research Council labs for naturally occurring radioactive materials. The waste was also tested for sodium chloride and general chemistry at Maxxam Analytics in Halifax and for proprietary chemicals at Precision Petroleum Labs Inc. in Houston. Precision is the only lab in North America that conducts such tests, said Delorey. For more information, please contact us.

Colombia
Canacol Energy Colombia S.A. has acquired a right to an 80% interest in each of the COR 4 and COR 12 Exploration and Production contracts located in the Upper Magdalena Basin of Colombia. The new contracts are located adjacent to the Corporation’s existing COR 39 and COR 11 E&P contracts and are prospective for both shallow conventional oil exploration targets within the Guadalupe sandstone reservoirs, and deeper non-conventional oil exploration targets within the thick Cretaceous Villeta – La Luna shale. Charle Gamba, President and CEO of Canacol, commented, “With the acquisition of these two contracts the Corporation has increased its position within this developing shale oil play in the Magdalena Valley of Colombia to over 545,000 net acres, giving Canacol the second largest shale position in Colombia after Ecopetrol, the state oil company. With several important near term catalysts on the horizon this year with respect to shale oil exploration on the part of both Canacol and other operators in Colombia, this pre-emptive acquisition consolidates the Corporation’s position in this high potential play at very attractive metrics ahead of these important catalysts.” Canacol Colombia acquired a right to an 80% interest in each of the COR 4 and COR 12 contracts from Rio Bravo Commercial Enterprises S.A. and Petromont Colombia S.A. respectively, in consideration for (i) a total payment of $15 million ($7.5 million for each block) payable entirely in newly issued common shares of the Corporation (the “Share Consideration”), (ii) agreeing to fund the vendors’ remaining 20% share of exploration commitments in the first two phases (unified into a single phase in the case of COR 12) of each of the contracts, (iii) granting a 3% overriding royalty to the applicable vendor for each block, and (iv) agreeing to the payment of a one-time bonus totaling $5million in the event that any one of the two blocks is subsequently successfully farmed out by Canacol Colombia to a third party. For more information, please contact us.

France
A split over France’s ban on shale gas development has emerged within the government, with one minister supporting an experimental type of “clean fracking.” French Minister for Industrial Renewal Arnaud Montebourg, a member of President Francois Hollande’s Socialist Party, is calling on the president to reconsider his opposition to hydraulic fracturing due to what he calls the emergence of environmentally safer methods to extract natural gas trapped in shale rock. Despite Hollande’s public reiteration in July of opposition, on environmental grounds, to any exploitation of shale gas during his tenure, Montebourg has renewed his efforts to push for a change in policy — touting a potential of a type of fracking that uses fluoropropane, rather than a mix of water and chemical additives, to break apart underground rock formations. A report published by the French weekly Le Canard Enchaine indicated Montebourg is backing a proposal to allow local governments to decide whether they want to allow fracking by employing fluoropropane, a non-flammable liquid used as a propellant in inhalers and fire extinguishers, as an alternative to the banned techniques. The fluoropropane method is being developed by EcorpStim but has yet to be tested in France. Le Figaro reported a study published in November by the French Parliamentary Office for Evaluation of Scientific and Technological Choices found that while costly, the use of fluoropropane has the advantage of “removing 100 percent of the industrial risks.”

India
India’s state-run refiners are snapping up Latin American oil after upgrading their plants, reaping the benefit of cheap prices for crudes that have lost their market in the U.S. to shale oil. Decades-old crude trading routes are being redrawn as the U.S. cuts its dependence on imports through a boom in shale oil, forcing Latin American exporters to tap buyers as far away as China and India – markets growing enough to soak up their surplus supplies. These Latin American crudes are often heavy grades, which, without elaborate refining, tend to produce higher quantities of low-value products such as fuel oil, used to run ships’ engines. For Indian buyers, these crudes offer the chance to earn a return on the billions of dollars spent in improving their plants, enabling profits to be boosted in a regime which makes them sell products at state-capped prices. India is the world’s fourth-biggest buyer of crude and 80 percent of its needs are met by imports, making cheap supplies crucial as its economy gropes with power shortages and it spends billions subsidizing fuel for millions of its poor. For more information, please contact HBW Resources.

Mexico
Mexican oil industry reforms are expected to result in an estimated $1.2 trillion of investment in the Eagle Ford shale play that runs along the Texas-Mexico border, with much of the work expected to go to Houston-based firms and other U.S. energy companies, Birmingham, AL-based BBVA Compass said.
In a conference call, BBVA economist Marcial Nava said that the border region, which is home to some 38 million people, will see about one-third of the money that’s expected to flow into the Mexican oil industry since the government voted last month to open up the industry to private investment. “Mexico’s energy reform will bring more economic activity, which will help all the Texas border cities to reduce the disparities between rural border towns and big cities like Dallas and Houston,” Nava said.

Morocco
San Leon Energy has signed a Memorandum of Understanding with Chevron Lummus Global, to exclusively cooperate in respect of the oil shale upgrading technology required to produce high quality synthetic crude oil from the raw shale oil in San Leon’s Timahdit oil shale License Area, Morocco. The MoU will result in a detailed evaluation by CLG focused on implementing proven proprietary CLG technology on the raw shale oil produced at the proposed Timahdit Plant to be designed and delivered in cooperation with Enefit Outotec Technology, a joint venture of oil shale energy company Enefit and mineral and metals processing technology group Outotec. The proposed Timahdit Plant, as described in the Initial EOT Evaluation Study, will be built using the latest “Enefit280” process and EOT’s experience.

New Zealand
Hydraulic fracturing technology would have to be used to get oil out of the ground in Wairoa. A resource consent application to drill down to 3500 meters, further than ever before, is about to be lodged with the Hawke’s Bay Regional Council. The drilling would show whether there was enough oil to justify the huge cost of hydraulic fracturing. NZ Energy development manager Ian Brown told the regional council yesterday that the shale the company was targeting lay 3500 meters under the Earth’s crust and would need to be hydraulically fractured using water and chemicals under high pressure, to extract the oil. For more information, please contact us.

Poland
Poland appealed to foreign energy explorers in a last-ditch attempt to secure investment in Europe’s biggest shale-gas deposits after Exxon Mobil Corp., Marathon Oil Corp. and Talisman Energy Inc. quit the country. Environment Minister Maciej Grabowski, appointed in November, met investors and told them he’ll remove regulatory hurdles in an effort to stem the exodus, according to Parker Snyder, president of industry body the Poland Shale Coalition. “It’s a definitive departure from the previous leadership, that was at best neutral and at worst hostile to foreign investors,” Snyder said in an interview at a European gas conference in Vienna. “He is very open to dialogue. Things are definitely getting more positive.” Poland, ranked as Europe’s biggest holder of shale gas by the U.S. Energy Information Administration, has sought to revive exploration after foreign investors withdrew citing regulatory and tax concerns and poor well results. Two months ago Premier Donald Tusk fired the deputy minister in charge of drawing up shale regulations and nominated Grabowski to take the reins. The prospects for the shale industry in Poland, where the number of wells drilled fell about 50 percent last year, may be getting brighter after San Leon Energy Plc reported successful tests at a site last week. Poland could see its first commercial shale gas as early as this year, Grabowski said Jan. 9. For more information, please contact HBW Resources.

Russia
Houston-based oilfield services company Halliburton signed a partnership agreement with Gubkin Russian State University of Oil and Gas to aid in the development of Russia’s unconventional oil and gas resources. The partnership will allow Gubkin to offer its students and industry personnel real-world experience in unconventional resource development. By partnering with Halliburton, Gubkin will be positioned to create “a collaborative framework” to strengthen its education curriculum and learning environment and to prepare students to contribute more to their employers upon graduation, Mikhail Silin, university vice rector overseeing innovation activity and commercialization of new developments, in a Feb. 3 press release. The company will provide senior technical and management staff to serve on Bugkin’s industry Advisory Boards, and will provide the foundation material for Gubkin’s unconventional curriculum that will provide the basis for student and industry training. Halliburton also will work with Gubkin to explore basic applied research opportunities in conventional and unconventional resource development, assist university students with projects, and pursue research and development opportunities with Russian industry partners. The company is positioned to provide the most recent ideas in unconventional development as well as state-of-the-art research and development solutions for the Bazhenov in Russia, said Brady Murphy, Halliburton’s senior vice president of business development, in a Feb. 3 press statement. Russia is estimated to have as much as 680 trillion cubic meters (24 quadrillion) of unconventional resources, including natural gas from shale, sandstones, and coalbeds, Halliburton said. These resources include the Bazhenov formation in Siberia. The U.S. Energy Information Administration estimates that 75 billion barrels of technically recover shale oil resources may lie in the Siberian Bazhenov shale formation.

United Arab Emirates
Abundant supplies of natural gas — unlocked by hydraulic fracturing and horizontal drilling — are helping to lower home heating bills, create millions of jobs, boost American manufacturing, and deliver tangible environmental benefits. And yet for all of the known benefits of shale, the scale of its transformative power may not have been fully understood. In a historic moment for American energy, a leader from the United Arab Emirates — a member of OPEC — announced that the UAE is “seriously thinking” of importing North American natural gas. As Reuters reported, “The United Arab Emirates, a Gulf OPEC oil producer, said it was looking at the possibility of importing natural gas from North America, in what would be one of the most striking developments since the start of the U.S. shale boom. The United States and Canada are producing record amounts of gas from shale rock formations, pulling down North American prices to levels that have attracted the interest of foreign buyers.”

United Kingdom
Drilling for shale gas should take place “all over rural parts of the UK,” Owen Paterson has declared. The Environment Secretary says Britain must cash in on gas trapped in rocks deep underground to “create prosperity and jobs”. He said shale has already dramatically reduced gas prices in the US, now a net exporter of energy, and it would be done safely in Britain. “The opportunities here are enormous,” he said during questioning by a House of Lords committee. “I would like to see shale gas exploited all over rural parts of the UK.” For more information, please contact us.

Less than one in four people support fracking in Britain despite attempts by energy companies to offer compensation and other benefits to communities affected. Since the Balcombe protests, the public has started turning its back on the new industry with support dropping from 40 percent last summer to under 25 percent now. Concern about contamination of ground and drinking water and the environmental impact of the latest dash for gas has seen public support for the industry continue to decline. A third of Britons saw shale gas as an alternative source of cheap fuel last summer but now only just over a fifth saw it as so. The Nottingham University survey is the eighth since March 2012 and the latest since the September 2013 survey after the Balcombe protests. The survey has so far tracked changes in the awareness of shale gas, and what they believe to be the environmental impacts of its extraction and use as well as its acceptability as an energy source. The prospect of the contamination of drinking water has been a key concern of the protestors, and the negative rating for shale gas on water contamination has increased from -10.5 percent to -16.4 percent in the January survey, reversing a declining trend seen between March 2012 and July 2013. For more information, please contact HBW Resources.

The Chairman of Cuadrilla, Lord Browne has said that it will be another five years, during which 20-40 fracking wells will have to be drilled, before the viability of a UK shale gas industry can be determined. So far, Cuadrilla has spent GBP 100 million on exploration and only fracked one site. Lord Browne, who was talking on the sidelines of a fracking debate held by think tank Policy Exhcnage, said that: “We have an idea of the UK’s potential for shale – what we now need to do is figure out how much we can produce economically and how fast, which means wells need to be drilled and need to be fracked – there is no other way to do it. It is in the national interest of the UK to do something that is good for the UK and fits into the bigger picture [of combating climate change globally]. The US has done this and I find it extraordinary that we should step to one side and let the US and others get on with it. It is a national imperative,” he added.

Egdon Resources and its partners Blackland Park Exploration Limited and Stelinmatvic Industries have signed an agreement with Total in respect of the UK Onshore Petroleum Exploration and Development License PEDL209 located in Lincolnshire. The license covers an area of 64 square kilometers and is located adjacent to licenses PEDL139/140 (the subject of the recently announced farm-in by Total) and PL161/162 where Egdon has further interests. The license is located in the eastern part of the Gainsborough Trough geological basin. Under the terms of the agreement, Total will have an option to farm-in to PEDL209 exercisable until 31 December 2015, and will earn a 50% interest in the license by paying 100% of an exploration program of up to GBP 13.47 million which would include seismic acquisition and the drilling of a well.  Egdon will continue to be the operator of PEDL209 with Total becoming the operator following the carried work program.

A group of landowners in a national park are denying permission for a company to drill under their properties, in the latest moves to oppose controversial “fracking.” Residents near the village of Fernhurst, West Sussex, in the South Downs National Park, are launching a “legal blockade” against drilling under their land. Solicitors acting on behalf of the group have written to oil and gas company Celtique Energie and energy secretary, Ed Davey, to say they explicitly deny permission for the firm to drill horizontally under their properties from a proposed well on land leased from a local landowner. Campaigners say the move could be replicated across the country by communities opposing fracking. It comes as the government considers changing trespass laws to make it easier for companies to drill under people’s homes. For more information, please contact HBW Resources.

Families near Cuadrilla’s proposed fracking sites could be in line for benefits worth more than £6,000 each, with just 130 households expected to see the “lion’s share” of up to £800,000 promised to local communities, the company has disclosed.  The shale gas explorer announced plans to frack for shale gas next year at two sites near Roseacre Wood and Little Plumpton, between Blackpool and Preston. It had promised local communities £100,000 for each well that is fracked and says it wants to frack up to four wells at each site. Francis Egan, chief executive, told the Telegraph that “the lion’s share” of those benefits were expected to go to the communities in immediate proximity to the drilling sites. Cuadrilla said there were just 130 households in the immediate locality of the two sites – in the communities of Roseacre, Little Plumpton and Great Plumpton.

Additional Information

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

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

HBW Resources Contact Information

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

Thanks,

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