#Shale #Oil & #Gas Highlights from the #Marcellus, #Utica, #Bakken, & #EagleFord. State Regulations & Int’l Development

HBW Resources: Ollison Hydraulic Fracturing Report

Below is a summary of publicly available activities currently underway at the federal, state and international levels that could impact the use of hydraulic fracturing for oil and gas extraction.  With numerous state legislatures now in session, HBW Resources is monitoring these activities to ensure that responsible and feasible policies based on sound science are advanced.

States 

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

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Colorado
Four ballot measures put forth by residents of Boulder, Broomfield, Fort Collins and Lafayette will give voters the chance to declare timeout — and, in one case, ban new drilling and industry-waste disposal. This resistance reflects Colorado’s emergence as a battle zone for hashing out the national problem of wanting increased domestic energy production but also an environmentally sustainable future. Proponents say they’re driven by health and environmental concerns as companies operating about 51,000 gas and oil wells around Colorado invest billions to expand — including drilling near neighborhoods and rivers. For more information, please contact us.

Connecticut
Connecticut’s energy policy under Gov. Dannel P. Malloy makes it clear that the state needs to use more natural gas — a fuel that is much cleaner and, at the moment, much cheaper than other petroleum-based fuels. The owner of the Algonquin natural gas pipeline wants to provide it. Spectra Energy Corp., a Houston-based company, owns the 1,100-mile line which runs through Putnam County in New York, Danbury, Brookfield, Newtown and Southbury on its way from New Jersey to Boston. The company is proposing to increase capacity on the line. Spectra’s proposal, which must be approved by the Federal Energy Regulatory Commission, would mean replacing about 8 miles of pipeline between Southeast, N.Y., to the Interstate 84/ Route 7 interchange in Danbury. The pipeline now is 26 inches in diameter; the new pipeline would be 42 inches. It would also do the same with nearly 16 miles of line that runs through Westchester and Putnam counties in New York. The expanded line would also mean Spectra would lay a one-mile line under the Hudson River.

Michigan
The Michigan Chamber of Commerce is claiming victory in its campaign to defeat the proposed statewide ban on hydraulic fracturing gaining access to the 2014 ballot. According to the Chamber, the group gathering signatures to place the proposed ban on the ballot was only able to gather 27 percent of the minimum required number of signatures. “We applaud the thousands and thousands of Michiganders who declined to sign this harmful proposal being pushed by environmentalists who conducted a campaign short on facts and long on scare tactics,” said Michigan Chamber President & CEO Rich Studley. “This reckless attempt to hijack Michigan’s energy policy would raise home heating bills and kill jobs in Michigan.” Those who propose ballot measures in Michigan only have 6 months to collect those signatures before they are classified as “stale.” The Committee to Ban Fracking in Michigan recently reported that they had been able to gather 70,000 signatures since April, well short of the amount necessary to gain ballot access. For more information, please contactHBW Resources.

New Jersey
New Jersey’s Board of Public Utilities is weighing whether to appeal a federal judge’s ruling that shot down its plan to add more natural gas-fired power plants by having ratepayers subsidize their costs. U.S. District Judge Peter Sheridan ruled that the plan was unconstitutional, siding with a group of electricity transmission companies that objected to the additional costs they would face. The companies had sued the utilities board and CPV Power Development Inc., a Silver Spring, Md.-based firm that’s seeking to build a natural gas power plant in New Jersey. The plant is one of three planned for through the state’s Long Term Capacity Agreement pilot program. The program is a major part of a plan from Republican Gov. Chris Christie’s administration to increase power capacity in the state by offering incentives for firms to build plants in it or nearby. The administration has said it hopes that adding plants would ultimately cut the price of power for consumers because there would be more electricity generated nearby and it would be cheaper to move to New Jersey customers. But in the meantime, customers would have to pay more on the power transmission portion of their electric bills to help finance the new plants. The judge, in his opinion, said the idea of offering incentives to power producers to build in New Jersey is constitutional. But, he wrote, the way the state did it violates the U.S. Constitution by trying to have the state regulate an area that Congress determined the federal government should oversee.

New Mexico
Due to the federal government shutdown, the U.S. Bureau of Land Management is postponing its planned Oct. 16 lease sale in Santa Fe. In a statement, the BLM said the sale would have offered 17 parcels totaling 5,554 acres on public land administered by the agency in New Mexico. The BLM, responsible for managing more than 13 million acres in New Mexico, is the largest federal land manager in the state. For more information, please contact us.

North Dakota
Tesoro Logistics LP pipeline has spilled more than 20,000 barrels of crude oil into a rural North Dakota field, the biggest leak in the state since it became a major U.S. producer. The pipeline was carrying crude oil from the Bakken shale play, which has boosted North Dakota’s state production to the second-biggest in the country. The affected part of the line has been shut down, Tesoro said. The leak, first discovered on Sept. 29 in a low-lying hill 9 miles north east of Tioga, North Dakota, did not pose an immediate threat to groundwater sources, Kris Roberts, who leads the environmental response team at the state Department of Health, told Reuters.

The oil production boom in North Dakota will continue, Gov. Jack Dalrymple said, noting that permits for an additional 7,500 wells have already been issued. The lack of infrastructure, however, is posing a challenge for the state’s energy producers, he said during Oklahoma Governor Mary Fallin’s annual energy conference. “It is essentially a race to keep up with the new production,” he said. The state produced a record 875,000 barrels of oil a day in July. Oil production in North Dakota, home to the prolific Bakken formation, could hit 1 million barrels per day (bpd) as early as at the end of this year, the head of the state’s Mineral Resources Department said. Data issued by the department showed production rose 35,000 bpd in August to more than 910,000 bpd, a fresh all-time high that far exceeds an official forecast used by the state’s budget of 850,000 bpd by the end of the year.

Ohio
Aubrey McClendon, ousted CEO of major Eagle Ford Shale player Chesapeake Energy Corp., hasraised $1.7 billion to drill in the Midwest’s Utica Shale. McClendon’s newly formed American Energy Partners said it raised the funds from private equity investors to drill in Eastern Ohio. For more information, please contact HBW Resources.

Bowling Green Mayor Dick Edwards announced a coalition between city officials, business leaders, and various Bowling Green citizens interested in preserving the city’s charter. He said they fear the charter’s integrity could be compromised by the same strong, anti-fracking sentiment they share with those who want to amend it. It aims to convince Bowling Green voters they will be adequately protected from any fears they have about fracking by an ordinance Bowling Green city councilmen approved by a 7-0 vote Sept. 9 that forbids the controversial drilling technique from being used on land in the city limits. The ordinance also forbids fracking waste fluids from being disposed inside Bowling Green. While a number of Bowling Green officials oppose the concept of fracking within the city limits, they also oppose a ballot initiative for an amendment to the city’s charter that grew among petitioners who believe the city needs to assert its right to clean water, clean air, and clean land through a community bill of rights. Members of the business community have said they believe the ballot proposal is too vague and too open to interpretation by lawyers. Taken literally, they said, it could discourage business in Bowling Green in other ways. The ballot initiative will be decided by city voters in the Nov. 5 election.

An Athens citizens group that was unable to get a fracking ban ballot initiative to voters this November is now promising to re-write its proposed ordinance and put it to voters next year. “Using the information thus obtained, (the Bill of Rights Committee) BORC intends to rewrite the proposed Ordinance, collect the requisite number of signatures, and place another anti-fracking initiative before the voters in 2014,” the BORC press release concluded.

State officials are weighing rules for storage sites containing wastewater from oil and gas drilling. The Columbus Dispatch reports that lagoons the size of football fields could store millions of gallons of water used in hydraulic fracturing, or fracking. The chemical-laced fluids are used to free gas trapped deep below the surface. Companies then clean the water so it can be used again. A spokesman for the Ohio Department of Natural Resources says the state is drafting standards for the construction of the lagoons and their length of use. The agency’s officials were directed in the state budget to establish rules and permits for them. For more information, please contact us.

Pennsylvania
The Allegheny County Airport Authority has on its agenda another cut in fees at Pittsburgh International Airport thanks to the shale-gas drilling plan. The Pittsburgh Tribune-Review reported the proposal being voted on will slice 19 cents off the fee per passenger to $13.92. It’s still higher than the median rate of $7.33 at passenger airports, but it’s also lower than it was a year ago when it was $14.66. The authority is able to reduce the fees due to the money the airport authority is receiving from Consol Energy Inc. for its proposal to drill on land owned by the Pittsburgh International Airport.

Surveying for the seismic testing process on the 9,200 acres at Pittsburgh International Airport leased as part of a natural gas development deal with Consol Energy will begin this week, officials said. Officials said they expect revenues from the deal to be about $500 million. Consol paid a $50 million bonus when it signed the deal in February, and will pay 18 percent royalties over the life of the deal. All royalty payments will go directly to the Allegheny County Airport Authority. For more information, please contact HBW Resources.

Pennsylvania’s rapid rise as a major natural gas producer since 2009 has not had a significant impact on the state’s climate future, according to a report released by the state. The climate change report acknowledged that there is a lack of data about methane emissions from upstream natural gas development and there is uncertainty over the extent to which gas has replaced other fuels in the state’s energy mix. Those factors make it difficult to assess the industry’s long-term climate impacts, the report states. Methane is a potent, though short-lived, greenhouse gas. It predicts that the role of gas in the state’s energy mix will increase with a shift away from coal and petroleum. That would reduce the emissions of conventional pollutants such as oxides of sulfur and nitrogen, mercury and particulate matter, as well as of carbon dioxide emissions, since gas burns cleaner than coal. The magnitude of the reductions will depend on how efficient the gas-fired power plants are, the report found. The climate impact assessment was released by the Department of Environmental Protection (DEP), which is required to assess climate impacts every three years under a 2008 climate law.
The Marcellus Shale Coalition has released its latest guidance document for Drilling and Completions– two of the most critical aspects of the shale development process. Developed in consultation with several of the MSC’s working committees, these Recommended Practices for Drilling and Completions are designed to provide guidance to operators. This recommended practice includes guidance in the following areas:

  • Planning. From obtaining the proper regulatory approvals, to recommendations on traffic, lighting, noise, water management and recycling, erosion and sediment controls and secondary containment, this section of the RP provides operators with a check-list of items to be considered prior to moving the rig and completions equipment into place.
  • Health and safety. All operating personnel should receive training regarding the need for, use of, and expectations regarding appropriate personal protective equipment prior to beginning work on an active location.
  • Well control. It is recommended that two mechanical barriers in the flow path be maintained, when feasible, during all drilling and completions operations. The mechanical barrier equipment includes specialised valves known as blowout preventers (BOPs). Each operator should develop specifications, testing, inspection and maintenance requirements for all BOPs and associated equipment. Operators should implement a comprehensive well control training and competency assurance programme for well engineers, rig foremen and service contractors.
  • High pressure equipment. Operators should implement methods and procedures to routinely test the integrity of all high pressure surface equipment, including the wellhead, flowlines, manifolds, piping and pump equipment. Detailed considerations are included in the full recommended practice.
  • Drilling operations. Prior to commencement of the drilling operations, operators should seek to identify the existence of active coal mines and coal seams; depth of groundwater aquifers; and other oil and gas wells within 1000 ft of the surface location and 500 ft of the horizontal portion of the wellbore.
  • Hydraulic fracturing and flow back operations. Operators should disclose the composition of hydraulic fracturing fluid additives to the extent permitted by suppliers, while respecting related intellectual property rights, and proprietary and confidential business information. To the extent practicable, operators should also monitor adjacent oil and gas wells during hydraulic fracturing. During flow back operations, operators should minimise the release of produced gases and contain produced liquids through capture (production into tanks or pipelines) or temporary flaring. Venting is discouraged.

The latest count from an oil and gas analyst finds the Marcellus Shale has lost five rigs over the past year while at the same time the Utica Shale has risen by 12 rigs. Baker Hughes Inc.’s latest data shows there are 85 rigs operating in the Marcellus Shale, down one from last week and down from the 90 operating a year ago. The Utica Shale rigs are at 38, up two from last week and up 12 from a year ago. There are 58 rigs operating in Pennsylvania, up four from last week but down eight from a year ago. Ohio’s 35 rigs are up one from a week ago and jumped 12 from 23 a year ago. In West Virginia, there were 49 rigs operating this week, last week and a year ago. For more information, please contact HBW Resources.

The Marcellus Shale Coalition blasted plans from a variety of Democrats’ gubernatorial hopefuls who say they want to increase the taxes paid by the natural gas industry for tapping the state’s natural gas reserves. Drillers in Pennsylvania pay an impact fee to the state and local governments – drillers have paid more than $400 million since the fee was imposed in 2012 – but Democrats want to increase the rate and use it to fund a range of state-level programs that have nothing to do with drilling. U.S. Rep. Allyson Schwartz, the perceived frontrunner in the race, has called for a 5 percent tax on natural gas production. “Natural gas resources belong to the people of Pennsylvania. Pennsylvanians deserve a fair deal and a lasting positive legacy for the commonwealth,” Schwartz said in announcing her plan. She estimates it would generate more than $600 million annually, which she intends to use for schools, roads and other things. The two former secretaries of the Department of Environmental Protection in the race, Katie McGinty and John Hanger, have voiced support for similar measures. Democrats seem determined to take a hard-line anti-fracking stance during next year’s campaign. The state party has already approved resolution in favor of banning hydraulic fracturing in Pennsylvania, though state lawmakers and the heads of several prominent unions criticized that decision and cited the “vital economic interest” gas drilling represents.

South Carolina
Engineers at the University of South Carolina have constructed a graphene oxide (GO) membrane less than 2 nm thick with high permeation selectivity between hydrogen and carbon dioxide gas molecules. The team, led by Miao Yu, an assistant professor in USC’s department of chemical engineering, believes that one possibility for the technology could be purifying polluted water produced by hydraulic fracturing. The advance has a range of potential applications. With widespread concerns about carbon dioxide as a greenhouse gas, the efficient separation of carbon dioxide from other gases is a high research priority. Moreover, hydrogen represents an integral commodity in energy systems involving, for example, fuel cells, so purifying it from gas mixtures is also an active area of interest. Yu also notes that the dimensions of the molecular sieve are on the order of the size of water, so, for example, purifying the copious amounts of tainted water produced by hydraulic fracturing is another possibility.

Texas
Kinder Morgan Energy Partners is tacking on 18 miles of lateral pipeline in the Eagle Ford Shale to carry crude and condensate from its DeWitt County, Texas station to a new facility it will build northwest in Gonzales County. The company’s $74 million pipeline addition would allow it to reach markets along the Houston Ship Channel and a pipeline that services a Phillips 66 refinery in Brazoria County. The new pipeline will be able to transport 300,000 barrels of oil equivalent per day to the new station in Gonzalez County, which will have 300,000 barrels of storage capacity, a pipeline pump station and truck offloading facilities. For more information, please contact HBW Resources.

National

The U.S. oil and gas industry added new jobs faster than the total private sector during the year that ended in June, jumping 2.6 percent over the previous year and pushing the industry’s roster past 1 million jobs nationwide, according to a new report, “TIPRO Energy Report: A Look at Employment Trends for the Oil & Gas Industry in 2013.” During the first half of 2013, the industry netted 23,700 jobs, driven mostly by extraction, drilling and support sectors, according to the Texas Independent Producers & Royalty Owners Association’s report. Overall, the industry grew 2.4 percent in that six-month period. Eight out of nine oil and gas sectors measured by the Bureau of Labor Statistics expanded this year. Only jobs in the oil and gas field machinery and equipment sector have appeared sluggish so far in 2013, according to TIPRO.

The increasing production of shale oil and gas should benefit the U.S. economy by raising the nation’s gross domestic product by an average of 3.5 percent annually through 2035, according to a report by Purdue University energy economists. The economic impact of shale oil and gas is clear: It is a game changer for the U.S. economy,” said Wally Tyner, the James and Lois Ackerman Professor of Agricultural Economics and one of the researchers. “Our results indicate that the shale oil and gas boom should have a major impact on the U.S. economy,” the researchers say, with the nation’s gross domestic product from 2008 to 2035 averaging 2.2 percent higher than its 2007 level. Without the expansion in production from shale, the GDP – the value of all of the nation’s goods and services – would average 1.3 percent lower. “That means that U.S. GDP over the entire period of 2008-2035 on average would be 3.5 percent higher each year than it would have been without the shale boom.” That amounts to an average of $473 billion per year added to the economy during the period. For more information, please contact us.

The 10th Circuit Court of Appeals declined a request from the Sierra Club and other groups for a temporary injunction against a TransCanada pipeline running from Oklahoma to Texas, the southern leg of Keystone XL. The Army Corps of Engineers, Sierra argued, violated NEPA, the Clean Water Act and the Administrative Procedure Act in approving the pipeline. But in a 2-1 split, the appellate court ruled that a lower court was right to conclude “that the threatened environmental injuries were outweighed by the financial harm that the injunction would cause TransCanada.” TransCanada said that the pipeline in question is almost complete and is scheduled to come online by the end of this year.

The Energy Information Administration’s most recent Short-Term Energy Outlook, projections for total US natural gas supply show growth of .49 bcf/d this year, to 70.5 bcf/d, and a drop of .36 bcf/d in 2014, to 70.14 bcf/d. This year’s figure represents a modest increase over last month’s forecasts: 70.44 bcf/d for 2013 and a 70.08 bcf/d for 2014. Meanwhile, the EIA has also upped its consumption forecasts for 2013, to 70 bcf/d from 69.91 bcf/d, and for 2014, to 69.42 bcf/d from 69.31 bcf/d. It anticipates increases coming from the residential and commercial sectors. For more information, please contact us.

In the next 10 years, natural gas demand in the U.S. will rise 27 percent and supply will increase by 38 percent, according to a study, “Son of a Beast, Utica Triggers Regional Role Reversal,” by Bentek Energy. The liquids-rich shale plays of Texas and the Midcontinent, including the Williston Basin, will contribute roughly 44 percent of the expected natural gas supply growth during that 10 year time period, the report also noted. Between 2013 and 2023, the U.S. will increase natural gas production to 9.1 billion cubic feet per day, the report said, one-third of which will come from the Utica and Marcellus shale formations. Over the same period, the Southeast will be responsible for roughly half of all demand growth, a number that could reach 9.4 billion cubic feet per day.

API launched a new web-based map tracking liquefied natural gas (LNG) export projects, including those waiting for approval from the federal government. According to Erik Milito, director of upstream and industry operations, approval of the multi-billion dollar export terminals could create thousands of American jobs, strengthen the U.S. geopolitical position, reduce global emissions, and help the Obama administration to meet its promise to double American exports. The online API LNG export map displays a summary of investments, exports, and jobs associated with each application to sell LNG to countries that do not have free trade agreements with the United States. Terminals are listed in the order that the DOE expects to review the projects, along with how long each has waited for approval. Also listed are the four U.S. export sites approved since 2011, as well as 63 competing sites planned or under construction in foreign nations. For more information, please contact HBW Resources.
Surging oil and gas production in new areas across the United States creates fresh opportunities and challenges for companies operating a labyrinth of North American pipelines built decades before the current drilling boom. The country needs a “rationalizing of the pipeline grid” to reflect the new energy development, said David Devine, the new chairman of the Interstate Natural Gas Association of America and the president of central regional natural gas pipelines of Kinder Morgan. Pipeline companies will play “a vital role” providing “the critical infrastructure that’s needed to link these new gas resources to new consumption markets.” The current pipeline network was constructed around former oil and gas hotbeds, with much of the grid flowing to the north and east. But oil drilling in North Dakota, natural gas production in the Northeast and the zeal for natural gas liquids on the Gulf Coast have dramatically changed the dynamic. Dozens of such pipeline realignment and conversion projects are underway:
·         Tallgrass Energy is converting the Pony Express gas pipeline — purchased from Kinder Morgan in 2012 — so it can transport Bakken formation oil to market. With the conversion and an additional 260-mile pipeline extension, Pony Express eventually will be able to send as much as 302,000 barrels of light sweet crude per day from North Dakota to the oil hub in Cushing, Okla.

  • Enterprise Product Partners and Enbridge Inc. are expanding the Seaway Pipeline that connects Cushing and Freeport, Texas. The pipeline used to send oil north, but the two companies spent $300 million to reverse its flow and boost capacity, so as to capitalize on a bottleneck of crude in Cushing. so it will flow from Cushing to Houston. A new, parallel pipeline would further boost capacity.

·         In April, Magellan Midstream Partners began shipping crude oil through its Longhorn pipeline, after reversing its flow. The pipeline had carried refined products from Houston to El Paso.
·         Earlier this month, Pennant Midstream announced it planned to build a 38-mile pipeline to connect processing plants with natural gas liquids extracted from Ohio’s Utica Shale.

Rep. David McKinley (R, WV 1) introduced H.R. 3208 (To clarify that certain natural gas facilities are not subject to the Natural Gas Act).  The proposed legislation is intended to eliminate barriers to greater domestic use of Liquefied Natural Gas (LNG) in transportation and other end-use applications.  To do so, the proposed legislation clarifies the scope of Federal Energy Regulatory Commission (FERC) jurisdiction over facilities used to liquefy, store, and deliver natural gas. The proposed legislation would add a new subsection (e) to Section 1 of the Natural Gas Act (“NGA”) to exempt from NGA regulation any person who constructs or operates “a facility not otherwise subject to [the NGA] that liquefies, stores, processes, or delivers natural gas for vehicular natural gas or other end use purposes,” even if such person re-injects natural gas into an interstate natural gas pipeline, if that re-injection is incidental to the facility’s provision of natural gas for vehicular or other end-use purposes.  Such incidental re-injection might involve certain natural gas constituents, such as ethane, rejected from the liquefaction process as byproducts, but which the facility operator cannot consume or reprocess on site. Representatives Mike Doyle (D, PA 14), Bill Johnson (R, OH 6), and Tim Ryan (D, OH 13) co-sponsored the bill, which was referred to the House Committee on Energy and Commerce. For more information, please contact HBW Resources.

The Midwest Independent System Operator’s (MISO) Trading Hub Task Force (THTF) recentlyannounced the formation of three new trading hubs in MISO’s newly formed South Region as part of its move toward integration. The Texas Trading Hub, Arkansas Trading Hub and Louisiana Trading Hub will add to MISO’s four existing Midwest hubs and create common points for commercial energy trading in order to foster more liquid trading activity and efficient commercial transactions between all market participants. The new hubs will be operational and begin trading on December 19, when joining entities from the South Region officially integrate with MISO’s market. At this time, the newly defined hubs will appear on MISO’s Locational Marginal Price (LMP) Contour Map. The THTF conducted extensive study and research to identify a number of potential trading hubs in the new South Region. Each then underwent rigorous stress testing. In the end, the task force recommended five potential hub definitions, which were voted on by MISO members and narrowed down to the final three. For more information, please contact us.

The United States may soon claim the throne as the world’s top crude and gas producer, but America’s dependence on oil leaves the nation at risk, according to a global energy security assessment. According to the analysis by Roubini Global Economics and Securing America’s Future Energy, the nation’s heavy reliance on petroleum fuels threatens to undo U.S. gains in efficiency and oil and gas production. “Heavy oil dependence still renders the country highly vulnerable to price fluctuations in the short-to-medium term, particularly as economic growth — and fuel demand — recovers,” according to the report. While physical supplies of oil may be more dependable in the United States — particularly with hydraulic fracturing allowing production of newly recoverable crude and gas resources — the nation’s overall dependence on oil and inefficient use of it leaves the economy “exposed to high and volatile oil prices.”

A new study released today shows the harmful impacts that would result from repealing the tax deduction for intangible drilling costs (IDCs), API Director of Tax and Accounting Policy Stephen Comstock told reporters this morning. “The analysis shows an additional 190,000 Americans would be unemployed next year if the IDC deduction is repealed. That is equivalent to taking away an entire month of job creation at current growth rates. Projected industry investment in the U.S. falls by $407 billion over the ten year period, driven by a 15 to 20 percent annual reduction in future domestic drilling. The result is a significant decline in future U.S. energy supply with oil and natural gas production in 2023 coming in 14 percent below current expectations.”

The Council on Foreign Relations has a paper out today, “The Shale Gas and Tight Oil Boom: US States’ Economic Gains and Vulnerabilities” that looks at concerns about U.S. energy imports in light of the huge increases in shale oil and gas production in recent years, and how increased domestic production can affect the economies of shale-centric states. “Reduced energy use has lessened the vulnerability of the U.S. economy to oil price shocks. A similar phenomenon is seen at the state level, with many state economies having diversified away from energy-using industries,” write Stephen Brown of the University of Nevada at Las Vegas and Mine Yücel of the Federal Reserve Bank of Dallas. “At the same time, the growing prominence of energy production can make states with small, undiversified economies more susceptible to an economic downturn during an energy price decline.” For more information, please contact HBW Resources.

Dealing a potential blow to the Obama administration and environmentalists, the Supreme Court agreed to consider limiting the Environmental Protection Agency’s power to regulate greenhouse gases. The court accepted six separate petitions that sought to roll back EPA’s clout over carbon dioxide emissions from power plants. That could signal the court’s dissatisfaction with a 2012 ruling by the nation’s second most powerful court – the federal appeals court for the District of Columbia Circuit – affirming the agency’s authority. The decision to accept cases brought by Texas, the U.S. Chamber of Commerce, energy producers and others represented a potential victory for groups that customarily enjoy considerable sway at the conservative-leaning court. The justices limited their consideration of the new case to one question: whether EPA’s regulation of motor vehicle emissions triggers new permitting requirements for stationary sources as well, such as power plants.

International


European Union lawmakers voted narrowly to force energy companies to carry out in-depth environmental audits before they deploy a technique known as fracking to recover natural gas from shale rock. The rules were narrowly approved by the European Parliament, which is meeting this week in Strasbourg, France, and still must undergo another round of voting in the Parliament once an agreement on final language is reached with European Union governments. Shale gas projects that do not use fracking would not be covered by the rules, which update environmental legislation in Europe. Members cast 332 votes in favor of giving Andrea Zanoni, an Italian member of the Parliament from the Alliance of Liberals and Democrats, a mandate to negotiate a final deal with European Union governments over the final text of the fracking measure. There were 311 votes against, and 14 abstentions. The rules would update legislation that requires environmental impact assessments only for natural gas projects that extract at least 500,000 cubic meters each day. Many shale projects yield less than that amount and some lawmakers wanted to tighten the rules. For more information, please contact us.

Opening up to shale oil and natural gas in Europe could ensure long-term energy security for the region, an executive at French energy company GDF Suez said. New drilling technologies for shale have led to major increases in U.S. oil and natural gas production. GDF Chief Executive Officer Gerard Mestrallet told delegates at the World Energy Congress in South Korea the shale “revolution” has changed the landscape of energy markets. Europe, meanwhile, is looking for ways to break Russia’s grip on the regional energy sector. Europe gets about a quarter of its natural gas from Russia. Mestrallet lamented European governments were closing gas-fired power plants while at the same time expressing reservations about shale.

Angola
Angola, Africa’s largest oil producer after Nigeria, is imposing a consumption tax on petroleum companies that will raise some costs by as much as 10 percent, according to government documents. The law, which comes into effect with its publication, requires companies to follow a tax schedule that adds five percent to most services and supplies and double that for equipment rentals, a presidential decree showed. Angola set up a special tax reform branch in 2010 to work with government ministries on increasing revenue and closing loopholes in a bid to simplify taxation. The southwest African country, a member of the Organization of Petroleum Exporting Countries, pumped about 1.74 million barrels a day in September from offshore fields, according to data compiled by Bloomberg.

Canada
Korea Gas Corp (KOGAS) is considering selling 5 to 10 percent of its stake in the LNG Canada project, in which it currently holds 20 percent, the KOGAS chief executive said at the World Energy Congress. LNG Canada is a joint venture involving Shell Canada Ltd, KOGAS, Mitsubishi Corp and PetroChina Co Ltd that is to build and operate a liquefied natural gas (LNG) export terminal in Kitimat, British Columbia, according to the LNG Canada web site.

China
Recon Technology, an oilfield service company provider operating primarily in China, has announced the successful deployment of a new automation product for extraction of shale using a highly specialized supervisory control and data acquisition system (SCADA). This comes on the heels of the introduction of Baker-Hughes fracturing technology to China Petroleum and Chemical Corporation’s Zhongyuan Oilfield. Based on the unique characteristics of various shale gas strata, the SCADA system was developed by Recon to monitor and control the operation of on-site equipment to optimize automation through the use of an intelligent production process that is expected to provide a powerful new tool for the delivery of a safe and efficient method of a shale based gas field production.

Shale gas will come to play a more important role in China’s energy mix in the long term, said IHS Cambridge Energy Research Associates Chairman Daniel Yergin at a seminar on energy boom in North America. “China has great potential for shale gas but it will take perhaps five to 10 years to develop, due to the lack of infrastructure and logistic capabilities,” Yergin told Xinhua. He added that Chinese energy companies among others are learning the necessary technologies from their American counterparts to unlock the unconventional energy including shale oil and gas. For more information, please contact us.

France
France’s constitutional council upheld a ban on the energy extraction process known as fracking, two days after the European Parliament voted to require full environmental reports from companies that want to establish hydraulic fracturing sites. French President Francois Hollande had promised to maintain the ban imposed by his predecessor in 2011, even though France had been named among the most promising European countries for shale gas extraction. The French, who rely largely on nuclear energy, fear the environmental costs of hydraulic fracturing are too steep.

Japan
Japan’s Tokyo Gas Co. has revealed it is moving the focus of its upstream gas investments to North America, driven from other producing countries such as Australia by rising costs. Japan is the world’s largest consumer of liquefied natural gas and Tokyo Gas’ latest move follows a growing trend among Japanese companies over the past few years of buying into North American shale gas projects to secure future exports of the deep-chilled fuel. Tokyo Gas has already become a buyer of gas from the Cove Point project on the east coast of the US and in March this year made its first direct investment in US shale, agreeing to buy a 25% stake in a Texan venture from Quicksilver Resources Inc. For more information, please contact HBW Resources.

Lithuania
Lithuania should revise laws on shale-gas works that led Chevron Corp. to abandon its bid for exploration rights, Prime Minister Algirdas Butkevicius said. New environmental approval procedures and plans to raise taxes on shale hydrocarbons were behind the U.S. energy company’s decision to withdraw its lone bid in a tender for exploration rights, Butkevicius said. “It’s worth a fresh look at those laws with an eye to preparing and eventually announcing a new tender,” the prime minister said on Laisvoji Banga radio in Vilnius, the Lithuanian capital. “I can’t say how long that might take.” The Baltic nation wants to develop shale resources as an alternative to energy imports from Russia. Some local communities oppose the technology as environmentally unsafe. The government is negotiating with and suing Russia’s Gazprom OAO, the country’s only natural-gas supplier, seeking to reduce what it calls “unfair” prices.

Mexico
As the Mexican Congress debates reforming its constitution to allow more foreign participation in Mexico’s oil and gas development, companies are eagerly anticipating new business opportunities to emerge south of the border. Mexico is sitting on huge untapped potential in the Gulf of Mexico and on its portion of the Eagle Ford Shale, with oil and gas resources left untouched there because the state-owned energy company lacks the technology and know-how to get at them. But in a speech hosted by Rice University’s Baker Institute, Eduardo Pérez Motta, former chairman of the Mexican Federal Competition Commission, reminded U.S. energy companies that a change to the Mexican Constitution is just the first step toward a return of U.S. and foreign participation in oil and gas exploration and production there. Companies would be wise to put off any investment decisions until the new rules are spelled out and adopted by the government, he advised. But he also said companies should be prepared to move quickly once the secondary law is in place, arguing that it will be “much better to be first.”

Norway
Norway’s gas output is expected to rise in 2014 as its biggest gas field, Troll, is due to be back at full production from next October following a near two-year outage, the draft national budget showed. Gas output from Western Europe’s main supplier is expected to rise to 110 billion cubic meters (bcm) in 2014 from 107 bcm forecast in 2013, the document presented to parliament said.

Poland
The Ministry of Economy and Ministry of Environment want to implement new regulations imposing fines on companies deemed to be carrying out their shale gas extraction projects too slowly. Companies which hold shale gas licenses have slowed down their work considerably in recent months, doing only the bare minimum which license agreements require them to. Meanwhile, shale gas companies are reluctant to invest in exploration in Poland due to the lack of necessary legislation. Without sufficient regulation, it is unclear whether shale gas extraction will be profitable at all. For more information, please contact us.

Romania
The biggest Romanian producer of natural gas, state-owned Romgaz, plans to offer 15 percent of its shares for sale in a stock market debut this year, the company said. The initial public offering (IPO) is part of a wider privatisation plan agreed between Romania and the International Monetary Fund, which has led aid deals for the country since 2009. In 2012, Romgaz produced 5.7 billion cubic metres of natural gas and is also the largest underground gas storage operator.

Saudi Arabia
Saudi Arabia is pushing to boost its oil production capacity by 1.75 million barrels per day by 2017 and is fast-tracking shale gas exploration, analysts say. The kingdom is recalibrating its energy industry to meet the challenge of the United States’ unprecedented production surge from its vast shale oil holdings that threaten Saudi Arabia’s role as the world’s leading oil producer. Saudi Arabia’s unlikely to produce much shale gas or oil this decade, in large part because of a shortage of water needed for the process of hydraulic fracturing, or fracking, to access the hydrocarbons embedded in rock formations. But the original plan for the state-owned oil monopoly, Aramco, to start exploration in 2020 has been rushed forward seven years. Unconventional gas reserves are almost completely untapped in the Middle East. But in March, Oil Minister Ali Naimi estimated Saudi Arabia has 600 trillion cubic feet of shale gas, more than double the kingdom’s proven conventional reserves. For more information, please contact HBW Resources.

South Africa
South Africa’s cabinet proposed new regulations to govern exploration for shale gas, an important step in opening up an industry that could provide new energy supplies for Africa’s largest economy. The draft regulations provide mechanisms for the assessment of the potential environmental impact of any proposed activities, for the protection of fresh water resources, and for the co-existence of shale gas exploitation and the Square Kilometer Array (SKA) project. South Africa last year lifted a moratorium on shale gas exploration in its Karoo region, where fracking might tap what is believed to be some of the world’s biggest reserves of the energy source. “Not only does the potential of shale gas exploration and exploitation provide an opportunity for us to begin production of our own fuel, but it also marks the beginning of the reindustrialization of the South African economy,” Mineral Resources Minister Susan Shabangu said in a statement. “By embarking on this process presented by hydraulic fracturing for the production of shale gas, we bring the country a step closer to the achievement of our objectives,” she said. Developing just a 10th of South Africa’s estimated resources could boost the economy by 200 billion rand ($19.56 billion) a year and create 700,000 jobs, a study, commissioned by Shell and carried out by research firm Econometrix, said last year. The proposed regulations have been published in South Africa’s government gazette and the public has 30 days in which to comment on them. The technical regulations provide for the following:

1.       Assessment of the potential impact of the proposed activities on the environment;
2.       Protection of fresh water resources;
3.       The protection of biodiversity, palaeontology and the broader environmental impact in line with the objectives of outcome 10 of Government;
4.       Mechanisms for site-specific buffer zone determination for the co-existence of shale gas exploitation and the Square Kilometer Array (SKA) project.

The technical regulations are applicable to both onshore and offshore exploration and production operations. They further address crucial elements of the hydraulic fracturing process under the following chapters:
Site assessment, selection and preparation: this relates to site selection and preparation, taking into consideration resources that must be availed for hydraulic operations and the resources in respect of which necessary protection must be afforded such as the provision for the development of mechanisms for coexistence with the SKA observatory.
Well design and construction: this relates to well design in terms of well casing standards to ensure non-contamination of natural environmental and water resources.
Operations and management: makes provision for the management of the hydraulic fracturing process, including the disclosure of fracture fluids to be utilised and the testing of the structures to ensure they can sustain the pressures to be imposed.
Well suspension and abandonment: this chapter addresses issues related to the closure and rehabilitation of the operation. For more information, please contact us.

Turkey
The Turkish branch of Royal Dutch Shell and the Turkish Petroleum Corporation (TPAO) are set to drill the first shale exploration wells in Turkey. The wells will be drilled in the eastern province of Diyarbakir later this month, according to officials from the Ministry of Energy. Shell will reportedly be in charge of operations at the wells, which will be 3,000 metres deep. Shell will initially drill two wells and, if shale gas is found, the company will open more than 20 wells in the region. It is also hoped that petroleum will be found during the exploration.

United Kingdom
Greenpeace has launched a legal challenge to halt fracking in England, claiming drilling under people’s homes without permission is unlawful. “Under English law, if you own land, your rights extend to all the ground beneath it. That means if someone drills under your home without permission it is trespass,” said Greenpeace senior campaigner Anna Jones. The action is based on a test case from three years ago when former Harrod’s owner Mohammed Al Fayed successfully argued at the High Court that a company drilling for oil under his Surrey estate had trespassed. However, the government last month released a consultation proposing to amend the law to allow drilling under homes even when companies do not have residents’ permission. Under current proposals, communities will be offered payments of £100,000 per drill site and one per cent of revenues from production, which could amount to between £5m and £10m per well over 25 years. The move is the latest effort by campaigners to curtail the development of the UK’s nascent fracking industry, which critics argue uses huge amounts of energy and water, causes earth tremors, and can pollute local water sources with chemicals – claims the industry rejects arguing the technique has been used safely in the UK for 25 years. Green groups are so concerned that a boom in shale gas development will lock the UK into fossil fuel infrastructure and undermine investment in renewables. For more information, please contact HBW Resources.

The U.K. government is keen to explore shale gas as an alternative domestic energy supply, and the country’s Select Committee on Economic Affairs held its first session hearing evidence from experts on shale gas and the possible impact of its extraction. The questions being explored during the hearing included: How much scope is there for shale gas and oil to be used in the UK? Over what timeframe? How will the costs, including those on the environment, of accessing the UK’s shale gas and oil compare to those of other energy sources? What is the potential impact of shale gas and oil on the local economies in areas where development is possible? What effect will the use of shale gas and oil have on carbon emissions compared to other combinations of energy sources? Will shale gas and oil increase UK energy security? What lessons can be learned from the US experience of shale gas and oil? What impact will shale gas and oil have on household energy bills? Prior to the hearing, the Committee released, “The Economic Impact on UK Energy Policy of Shale Gas and Oil.

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

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