HBW Resources Ollison Hydraulic Fracturing Report
Below is a summary prepared by Bo Ollison, HBW Resources’ Senior Policy Director, 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. Please contact us if you have any questions or would like additional information.
- The Colorado Oil & Gas Association sued the cities of Fort Collins and Lafayette claiming their voter-enacted bans on the extraction of oil and gas are preempted by state law
- Royal Dutch Shell said it has canceled a proposed gas-to-liquids (GTL) plant in Louisiana less than two years after the plan surfaced as costs rose and the company reins in spending
- The Town of Avon, NY has scheduled a public hearing for Dec. 12 as it considers a one-year moratorium on fracking
- The NC Mining & Energy Commission has come up with another potential solution to the problem of how to deal with chemicals that will be used in fracking
- Ohio House Republican leaders proposed an increase in the tax on oil and gas drilling in Ohio, months after rejecting a more robust proposal from Gov. John Kasich
- The Pennsylvania Supreme Court denied an appeal of a Superior Court decision which held that a gas lessee has no obligation to drill into the Marcellus Shale formation
- The Texas Workforce Commission officials have approved a $1.5 million Skills Development Fund grant to Weatherford U.S., L.P. and Alamo Colleges in order to provide job training to 673 oilfield workers
- Consol Energy Inc. has acquired the drilling rights to 90,000 acres, with at least half of it wet gas, in West Virginia from Dominion Resources
- “Celebrities: You Don’t Know What You’re Fracking Talking About” is the Western Energy Alliance’s response to “What the Frack,” a once-was, if that, star-studded video produced by the Environmental Media Association and released three weeks ago by Americans Against Fracking
- A report, “Why Every Serious Environmentalist Should Favour Fracking,” puts the folly of anti-fracking activism squarely in the spotlight
- The American Chemistry Council (ACC) has predicted that U.S. chemical exports will go up 45% over the next five years due to the cost advantage created by the shale gas boom
- The development of shale gas in Europe could add as many as one million jobs to the economy, make industry more competitive and decrease the region’s dependence on energy imports
- A Sinopec pilot area has realized total commercial gas output of 73 million cubic meters, marking major progress for China in shale gas development
- Noble Energy could launch a fresh appraisal of quantities in a subsea natural gas reservoir off Cyprus next year
- The U.S. Geological Survey said the Alum shale reserve area in Denmark holds an estimated 6.9 trillion cubic feet of technically recoverable natural gas
- According to research from the mining ministry of Mongolia the country has over 700bn tonnes of oil shale resources
- Poland’s new environment minister may change proposed shale gas regulations to speed up exploration of the fuel
- Russian energy firm Rosneft and Norway’s Statoil agreed to set up a joint venture to assess the viability of shale oil production in Russia’s Samara region
- British Chancellor of the Exchequer George Osborne said during an economic address his government shouldn’t turn away from shale natural gas
An analysis funded by the Post Carbon Institute (PCI) and Physicians, Scientists & Engineers for Healthy Energy (PSE Healthy Energy) questions the validity of a frequently cited number that there are 15.4 billion barrels of recoverable oil available in the Monterey Shale. That quantity is misleading, the report says, because actual production in the region is comparatively small. “If you look at the data, at least in this report, it seems that there may not be the potential to have as big of a boom as some groups might assert or what the state seems to be saying,” said Seth Shonkoff, executive director at PSE. “It doesn’t look like it will be the bonanza that it seemed when following assumptions from other shale plays over to California.” The study appears as California readies to restrict hydraulic fracturing and other unconventional drilling for oil and natural gas. The state Department of Conservation’s Division of Oil, Gas and Geothermal Resources (DOGGR) last month released preliminary regulations in response to legislation, SB 4, that Gov. Jerry Brown (D) signed into law in October. Final rules would take effect Jan. 1, 2015. The draft rules require companies when using well stimulation treatments to first obtain permits, give at least 72 hours’ notice and identify where the work will occur. They need to reveal how much water would be used and the source of that fluid. Testing of the groundwater quality in most cases must happen in advance. There are rules on reporting earthquakes near drilling and chemicals used in fracking formulas. For more information, please contact us.
The Colorado Oil & Gas Association sued the cities of Fort Collins and Lafayette claiming their voter-enacted bans on the extraction of oil and gas are preempted by state laws regulating those resources. The association seeks court orders permanently blocking the bans, according to copies of the complaints it provided. The bans violate the state’s Oil and Gas Conservation Act, which requires uniform regulation, according to the complaints. Colorado’s Supreme Court has held state law preempts local regulations when an issue is comprised of mixed state and local concerns.
Broomfield’s five-year moratorium on fracking passed by a margin of 20 votes, the Broomfield Enterprise reports. The ban on the drilling technique used by oil and gas companies initially failed by 13 votes, but then a recount showed it passed by 17 votes. The final tally was determined after the slim margin of victory triggered an automatic recount under state law. The recount has triggered a lawsuit, which was filed by the Broomfield Balanced Energy Coalition, a group that opposed the anti-fracking ballot issue. The lawsuit filed in Broomfield District Court alleges Broomfield’s elections division didn’t provide the group access for its election watchers during the ballot count. The Broomfield canvass board certified the recount of Question 300, which bans fracking in Broomfield for five years. For more information, please contact HBW Resources.
Houston-based garbage giant, Waste Management Inc. announced that it’s building a compressed natural gas station at its hauling facility in West Melbourne and soon will be converting its local fleet to run on that fuel instead of diesel. Two results of the conversion: quieter vehicles and less pollutants. The company will have 35 natural gas trucks in operation by February and 45 by the end of next year. “Compressed natural gas is one of the cleanest fuels currently available for use in heavy-duty trucks,” said Amy Boyson, a Waste Management spokeswoman. Waste Management’s move to convert its fleet to natural gas, which started five years ago, comes as natural gas grows more popular as an alternative to traditional fuels like gas and diesel.
Royal Dutch Shell said it has canceled a proposed gas-to-liquids (GTL) plant in Louisiana less than two years after the plan surfaced as costs rose and the company reins in spending. The project, which would have converted natural gas to diesel, jet fuel and other refined products, was expected to cost more than $20 billion, a Shell spokeswoman said, up from the minimum $12.5 billion price tag estimated in September. Converting natural gas to diesel looked like an attractive option last year when record high production pushed natural gas prices to decade lows. Expected increases in natural gas demand for power generation and for export overseas has since helped bolster prices
New rules governing hydraulic fracking, a process used to extract natural gas from deep wells, will tighten regulations over an industry that’s been operating in the state for nearly 100 years. With the fairly recent advent of high-volume hydraulic fracturing — a controversial method for extracting natural gas from the ground through high-pressure injection of large amounts of water mixed with chemicals and sand — the Department of Environmental Quality (DEQ) decided it was time to update the rules regulating the industry. In a hearing before the state House Energy and Technology Committee, DEQ spokesman Brad Wurfel said the large deposits of natural gas deep below Michigan’s surface will play an important role in the state’s future. More than 60,000 oil and gas wells have been drilled in Michigan, and 12,000 of those were drilled through fracking methods. About 15 wells using the newer more controversial fracking method have been drilled in the state, and 52 applications for that type of well have been submitted to the DEQ. For more information, please contact HBW Resources.
Farmers shot down a proposal to oppose hydraulic fracturing, the deeply divisive natural gas drilling process that has split New Yorkers from tables to farms. The decision from delegates of the New York Farm Bureau was no surprise. The 25,000-member group has a strong voice in Albany and has long-supported hydrofracking as a way to improve economies for individual farmers and the state’s rural counties. Some farmers who live near the Pennsylvania border, where fracking is allowed, say they see jobs and money overflowing from the wells. Many are frustrated that Gov. Andrew Cuomo hasn’t made a decision on whether to allow fracking just a few miles north.
The Town of Avon has scheduled a public hearing for Dec. 12 as it considers a one-year moratorium on fracking. The meeting is scheduled for 7 p.m. in the Town Hall, 23 Genesee St. The town board will consider public opinion and comment about a proposed local law calling for a one-year moratorium and prohibition within the town of Avon of natural gas and petroleum exploration and extraction activities, underground storage of natural gas an disposal or treatment of natural gas or petroleum extraction, exploration and production wastes. For more information, please contact us.
A ban on spreading hydraulic fracturing waste on roadways and using county roads to ship “fracking” wastes into the county for treatment is expected to be come up for vote Dec. 12 by the Erie County Legislature. A petition with 3,845 signatures supporting the law also was presented. Legislature Chairwoman Betty Jean Grant, who is the sponsor of the bill, wants Erie County to join 15 other counties in the state that have passed similar legislation. The measure also calls for a ban on high-volume fracking on county land, which is not considered a major issue because the Marcellus Shale “sweet spot” for fracking is outside Erie County in the Southern Tier, roughly from Allegany to Broome counties.
The N.C. Mining and Energy Commission has come up with yet another potential solution to the thorny problem of how to deal with chemicals that will be used in fracking. The commissioners want the chemical data to be safeguarded in an “electronic lock box” that could be accessed digitally in the event of a chemical spill or other accident. For more than a year, commissioners have tried to decide how to handle situations in which energy companies claim that chemical cocktails used in shale gas exploration are competitive trade secrets and must be shielded from the public. State lawmakers, who will have final say over fracking standards, have warned they will not tolerate safety rules that threaten the prospects for energy exploration in North Carolina.
The Carroll County Extension office will host a workshop Dec. 19 to help landowners understand the financial and tax implications of oil and gas leases and royalties. The meeting will be at Carrollton High School cafeteria from 7 to 9 p.m. The workshop, “Financial and Tax Implications of Oil and Gas Leases/Royalties in Northeast Ohio,” will feature David Marrison, Ohio State University Extension associate professor. He will discuss the financial and tax implications of Utica and Marcellus Shale leases.
House Republican leaders proposed an increase in the tax on oil and gas drilling in Ohio, months after rejecting a more robust proposal from Gov. John Kasich. The bill, HB 375, includes an increase in the “severance” tax on drilling but at a lower rate than what Kasich proposed. Some of the increased tax is offset by a new commercial-activities tax exemption and income-tax credit for those paying the new tax. In all, Rep. Matt Huffman (R, District 4) the bill’s sponsor, said the bill is estimated to raise $1.7 billion over 10 years. The proposal would divide the new revenue three ways: for oil and gas drilling regulation; for a fund to clean up Ohio’s more than 5,000 uncapped “orphan” wells; and for annual statewide income-tax cuts. Under the bill, oil and gas is taxed at 1 percent for the first five years of production, then rising to 2 percent if the well is producing at a high level. For more information, please contact us.
MPLX, the master limited partnership formed by Marathon Petroleum Corp. (MPC) last year to operate and acquire midstream assets, has plans for a new 49-mile pipeline that will carry crude oil, condensates and natural gas from the Utica Shale in Southeast Ohio to MPC’s refinery in Canton. Currently, MPLX is evaluating right-of-way options for the $140 million Cornerstone Pipeline, as it will be called. Gary Peiffer, president of MPLX and executive vice president of MPC, discussed the new pipeline during an investor day presentation, telling analysts that the company will focus more intently on its midstream business going forward. Cornerstone will start at Markwest Energy Partners’ cryogenic processing plant in Cadiz, then head to M3 Midstream’s fractionator in Scio, and on to its cryogenic plant in nearby Leesville before it terminates at MPC’s refinery in Canton. Peiffer said the line is expected to generate $20 million of EBITDA annually. For more information, please contact HBW Resources.
The Athens City Council unanimously resolved to join opposition to the state’s granting of a permit for a new oil and gas drilling waste injection well for eastern Athens County near Torch, R-12-13. The West Virginia-based K&H Partners submitted a permit application to the Ohio Department of Natural Resources (ODNR) in late July, seeking to open the well on a site near one of its existing injection wells. Opponents of this and other injection wells express serious concerns about the risk of air and water contamination from wastes that contain toxic chemicals.
Utica Shale permits for horizontal wells topped 1,000, according to the Ohio Department of Natural Resources. Statistics released show the state had issued 13 permits and had 42 rigs operating in the Utica as of Nov. 30, bringing the permit total to 1,006. Carroll County remains the most active Utica drilling county in the state with 352 permits and 142 producing wells. By comparison, the number of permits in Stark County has stayed at 13, with the last being issued in July 2012 for a well in Pike Township. The county’s two producing Utica wells are in Marlboro and Osnaburg townships.
The Pennsylvania Supreme Court denied an appeal of a Superior Court decision which held that a gas lessee has no obligation to drill into the Marcellus Shale formation. In Caldwell v. Kriebel Resources Co., LLC, et al., filed in 2012 in the Clearfield County Court of Common Pleas, Case No. 2012-14-CD, 2012 WL 8745184 (C.P. Clearfield County, Aug. 3, 2012), the plaintiff landowners sought a declaratory judgment that would allow them to terminate their lease agreement with the defendant gas company. The company had drilled a series of shallow wells on the plaintiffs’ property, which produced gas in paying quantities, but did not drill deeper wells into the Marcellus Shale formation. The Court of Common Pleas dismissed the suit, holding that the company was developing the property as required by the lease. Id. The court also rejected plaintiffs’ argument that minimum royalty payments should be based on the natural gas potentially available in all strata underlying the property, finding instead that a well should be deemed to have produced in paying quantities if it resulted in any profit whatsoever. For more information, please contact HBW Resources.
County governments are considering leasing public land or mineral rights for shale gas drilling to raise money. Beaver County commissioners have begun marketing county land, including 1,400 acres in its biggest park, for drilling as it struggles with its finances. Allegheny County last month received a proposal from Range Resources and Huntley and Huntley to drill underneath Deer Lakes Park. Officials in Washington and Butler counties are looking, too. “There’s an opportunity for money, but on the other hand, we’re stewards of this land,” said Doug Hill, executive director of the County Commissioners Association of Pennsylvania. “I wouldn’t say there’s a county saying, ‘OK, we need cash. Let’s go and sign a lease.’ A lot of this is exploration, seeing if it’s a good fit for the county.” For more information, please contact us.
Two of Gov. Tom Corbett’s nominees to head state environmental agencies were grilled about oversight of Marcellus Shale drilling as they cleared a hurdle in their Senate confirmation process. Dallas resident Ellen Ferretti, the acting secretary of the Department of Conservation and Natural Resources, was asked by Democratic senators about the impact of a major shift in agency funding sources and the moratorium on additional leasing of state forest land for natural gas drilling. Christopher Abruzzo of Hershey, acting secretary of the Department of Environmental Protection, was asked about state monitoring of potential air and water pollution near gas wells and compressor stations and public notification about gas pipeline projects. Ms. Ferretti and Mr. Abruzzo won a favorable recommendation vote from the Senate Environmental Resources and Energy Committee for their nominations. The action sets the stage for a confirmation vote next week in the Senate. Both have been acting secretaries for their respective agencies since last spring.
The Philadelphia City Council heard testimony from the brass of gas companies pushing for Philadelphia to use natural gas and other alternatives to fuel the city’s municipal fleet. Administrators from the city’s Office of Fleet Management, local gas-industry providers and private companies already undergoing fleet conversion testified during a hearing before the Committee on Global Opportunities and the Creative/Innovative Economy yesterday in City Hall. Councilman David Oh, chairman of the committee, offered a resolution that explored converting Philadelphia’s slowly dwindling and “gas-guzzling” fleet of vehicles to run on compressed natural gas and other fuel alternatives. He said taxpayers could see long-term savings because natural gas costs roughly half the going rate for traditional gasoline.
Dallas city council members participated in a public hearing on a proposed gas drilling ordinance, DCA 123-003 (starts on page 1,049), to amend Gas Drilling and Production Regulations. The issue has been discussed at city hall for three years, and all sides feel the issue of hydraulic fracturing or ‘fracking’ is about to reach its climax. The proposed Dallas ordinance is relatively restrictive and went through months of arguments with the Plan Commission. The proposal would, “adopt a new minimum separation requirements from the gas drilling and production use and identified protected uses and amends provisions regulating the operations of a gas drilling and production use.” A vote on the ordinance is expected during the Dec. 11, 2013 meeting.
EnerVest Ltd. said it would sell Permian Basin assets to a subsidiary of Denver-based QEP Resources Inc. for $950 million. The deal with QEP Energy Co. is expected to close by Jan. 31. Houston-based EnerVest acquired in September 2012 the majority of the properties, which includes acreage and producing wells in Martin, Andrews and Crockett counties in West Texas. The properties’ current net production is about 6,700 barrels of oil equivalent per day, of which approximately 68 percent is crude oil, QEP Resources said in a statement.
Abraxas Petroleum Corp. said that it has reached an agreement to sell its interest in a portion of its Eagle Ford Shale acreage in McMullen County to an undisclosed buyer for $73 million. The deal is subject to closing conditions and will have an effective date of Dec. 1, the company said. The assets in the sale comprise about 1,200 net acres and 3.7 million barrels of proven reserves. The acreage produced 655 barrels of oil equivalent per day, net to Abraxas, during September. For more information, please contact HBW Resources.
Renewable energy could supply more than 40 percent of Texas electricity by 2032, according to a report, “Exploring Natural Gas and Renewables in ERCOT Part II.” Wind and solar energy are projected to contribute 25 to 43 percent of total power generation in the next 20 years, benefiting from technology improvements and compatibility with natural gas, The Brattle Group said in a report on natural gas and renewables, prepared for the Texas Clean Energy Coalition. And for those concerned that the surge in renewables will dampen natural gas’ prospects, researchers said that the two forms actually have a mutually beneficially relationship. Natural gas plants can be fired up quickly, to replace renewable energy when generation conditions are poor, making them an important part of a shift increased renewable energy. “You see growth in both forms of generation,” said Peter Fox-Penner, chairman of The Brattle Group, discussing the results of the study in a webcast. “When you have so much additional generation and it comes from gas and renewables, you could say that once is displacing the other, but we mostly see them growing together.”
Texas Workforce Commission officials have approved a $1.5 million Skills Development Fund grant to Weatherford U.S., L.P. and Alamo Colleges in order to provide job training to 673 oilfield workers. Alamo Colleges will train field engineers, operators and technicians as well as mechanics and equipment operators. Once their training is completed, these workers will earn an average wage of $17.34. For more information, please contact us.
Consol Energy Inc. has acquired the drilling rights to 90,000 acres, with at least half of it wet gas, in West Virginia from Dominion Resources. Southpointe-based Consol said it would pay $190 million for the Marcellus Shale and Upper Devonian drilling rights to Dominion’s gas storage fields in Lewis and Harrison counties. It paid 50 percent when the deal with Dominion closed last week and will be paying the rest as it’s drilled. Noble Energy, which is the joint venture partner in Marcellus Shale drilling with Consol, will have 50 percent rights. Dominion will still own the storage fields.
If Hollywood celebrities don’t like hydraulic fracturing, then maybe they should stop flying in jets, heating their swimming pools and undergoing plastic surgery, according to a video recently released. “Celebrities: You Don’t Know What You’re Fracking Talking About” is the Western Energy Alliance’s response to “What the Frack,” a once-was, if that, star-studded video produced by the Environmental Media Association and released three weeks ago by Americans Against Fracking. View the video here.
A report, “Why Every Serious Environmentalist Should Favour Fracking,” puts the folly of anti-fracking activism squarely in the spotlight. The report, authored primarily by University of California-Berkeley physics professor Richard Muller, comes to a sobering conclusion: “Environmentalists who oppose the development of shale gas and fracking are making a tragic mistake.” The reason is because natural gas provides a solution for two major worldwide environmental concerns: air pollution and greenhouse gas emissions. For its ability to provide an affordable energy source that can also address these problems, the authors conclude that “shale gas is a wonderful gift that has arrived just in time.” The report focuses heavily on the local air quality benefits of shale gas, which could be especially effective in places like China that have rapidly growing economies, and by extension a great need for affordable and abundant energy. As the report notes, shale gas “provides a solution to the pollution,” observing it’s “amazing” that local air quality benefits are “not more widely addressed by environmentalists.” The report focuses mostly on shale gas and local air quality, but the reduction in greenhouse gas emissions made possible by shale gas is also addressed. The authors find that “both global warming and air pollution can be mitigated by the development and utilization of shale gas,” owing to the fuel’s ability to reduce carbon dioxide emissions, as well as low methane leakage rates. For more information, please contact us.
The American Chemistry Council (ACC) has predicted that U.S. chemical exports will go up 45% over the next five years due to the cost advantage created by the shale gas boom, putting pressure on higher-cost competitors in Europe and Asia. The shale revolution has caused a boom in U.S. production of natural gas liquids used as chemical feedstocks such as ethane, which has minimized costs. U.S. producers also face cheaper electricity and gas costs compared to Europe. According to the ACC, international chemicals companies have announced 136 potential investments in the U.S. worth about $91bn. For more information, please contact HBW Resources.
Production of natural gas in the Marcellus region, located in Pennsylvania and West Virginia, is expected to exceed 13 billion cubic feet per day (Bcf/d) this month, based on estimates in the U.S. Energy Information Administration’s latest Drilling Productivity Report (DPR). The Marcellus region, which produced less than 2 Bcf/d as recently as 2010, is expected to provide 18% of total U.S. natural gas production this month. The rise of Marcellus production in both absolute terms and as a share of total U.S. production is a key development in a rapidly evolving U.S. natural gas market.
The boom in oil and natural gas drilling from shale means the nation’s railroads are handling more unit trains of crude oil and shipments of sand used in hydraulic fracturing, a vice president for BNSF Railway Co. said. Dean Wise, vice president of network strategy for the Fort Worth, Texas-based railroad, said his company also launched a pilot project to study locomotives powered by liquefied natural gas. It’s still early, but the effort could put a dent in BNSF’s $4 billion annual bill for diesel fuel. Railroads carry freight for all sectors of the economy, handling shipments of grain and coal to automobiles and building materials, he said. BNSF operates more than 32,500 route miles in 28 states and two Canadian provinces. “Many of you might think of railroads as a nostalgia play,” said Wise, who spoke to the Rotary Club of Oklahoma City. “But we are now the heart of the U.S. supply chain.” On a ton-per-mile basis, railroads carry 43 percent of the nation’s good and commodities, with trucking at 31 percent. They are followed by waterways and pipelines, both at 13 percent. Wise said freight transportation costs amount to 8.5 percent of the nation’s gross domestic product. That compares favorably to China, where freight transportation costs take up 22 percent of the country’s GDP. Railroads are now competing directly with pipelines for crude oil shipments. Part of that is a result of the rapid growth of the Bakken tight oil formation in North Dakota. Wise said a typical unit train has 100 to 120 cars of crude, which he called “rolling pipeline.”
The development of shale gas in Europe could add as many as one million jobs to the economy, make industry more competitive and decrease the region’s dependence on energy imports, according to a new study. The research, commissioned by the International Association of Oil & Gas Producers and carried out by the independent consultancies Poyry Management Consulting and Cambridge Econometrics, has quantified for the first time how much Europe’s economy could benefit from domestic shale gas production. Shale gas could add a total of 1.7 trillion to 3.8 trillion euros to the economy between 2020 and 2050. For more information, please contact us.
The government of Botswana has quietly allowed international companies to explore for natural gas in some of the country’s most sensitive national parks using the drilling method of hydraulic fracturing, according to a new documentary released in South Africa. After initially denying the claim, Botswana’s government last week admitted that some hydraulic fracturing — known as fracking — had taken place during coal-bed methane exploration. Government spokesman Jeff Ramsay said prospecting licenses had been granted in many parts of Botswana, including in the Central Kalahari Game Reserve, but did not elaborate. He acknowledged that fracking had occurred in some areas in the past, but offered no details about when or where. He said authorities were adhering to environmental regulations. For more information, please contact HBW Resources.
The provincial government is cracking down on the treatment of fracking wastewater in Nova Scotia. New legislation tabled Dec. 2 will prevent companies from importing wastewater generated by hydraulic fracturing into Nova Scotia. “Nova Scotians are deeply concerned about the risks posed by fracking wastewater,” said Environment Minister Randy Delorey, in a press release.
A Sinopec pilot area has realized total commercial gas output of 73 million cubic meters, marking major progress for China in shale gas development, an official statement said. The average output per well stood at 150,000 cubic meters per day in Sinopec’s pilot zone in the Fuling District of southwest China’s Chongqing Municipality, the National Energy Administration said in a statement. “We should fully understand the significance of shale gas development in ensuring China’s energy security and optimizing energy structure, and intensify efforts in promoting shale gas development,” the statement said. The country should build more pilot zones for shale gas development, intensify technological research and domestic equipment production, and offer more government support for the sector, it said. According to a shale gas plan for 2011-2015, China aims to produce 6.5 billion cubic meters of shale gas annually by 2015.
Noble Energy could launch a fresh appraisal of quantities in a subsea natural gas reservoir off Cyprus next year, and look for new hydrocarbon sources in the same area, officials said. The company discovered quantities of natural gas in a deepwater offshore well south of Cyprus in late 2011. An appraisal drilling to verify the 2011 find has yielded on average 4.1 trillion cubic feet (tcf) of gas, Noble’s Israel partners Delek Drilling and Avner Oil Exploration said on Dec. 1. That was lower than the 5 tcf announced in October soon after the conclusion of the appraisal on the well.
The U.S. Geological Survey said the Alum shale reserve area in Denmark holds an estimated 6.9 trillion cubic feet of technically recoverable natural gas. The USGS study of Denmark is its first-ever assessment of the shale natural gas potential there. For more information, please contact us.
Mexican senators will present a bill to open up Mexico’s energy sector to greater private investment, clearing the way for a vote by the full Senate, a top ruling party senator said. Opening up the state-run energy sector is a cornerstone of President Enrique Pena Nieto’s economic reform drive and his officials have argued that more private investment is needed to lift flagging oil output in Latin America’s No. 2 economy. The Senate issued a 295-page reform proposal that goes much further than most had expected in opening Mexico’s oil and gas fields to international investment. The proposed constitutional amendment would break the decades-old monopoly that Mexico’s national company, Petroleos Mexicanos, or Pemex, has enjoyed, requiring it for the first time to compete potentially with other companies for projects.
According to research from the mining ministry of Mongolia the country has over 700bn tonnes of oil shale resources. This could go a long way towards easing the current dependence on oil and fuel imports supplied by Russia. The state report has conveyed over sixty oil shale deposits in a number of areas of the country including the Tov, Ovorkhangai, Dundgobi and Omnogobi districts. State news agency Montsame reports that Ulaanbaatar has already made initial steps towards developing the country’s reserves. It signed a five-year exploration agreement with Genie Energy – based in the US – earlier this year. For more information, please contact HBW Resources.
Poland’s new environment minister may change proposed shale gas regulations to speed up exploration of the fuel after holding talks with investors and government members. “If I decide that amendments are needed, I intend to present a final version within weeks, not months,” Maciej Grabowski, appointed to the post on Nov. 27, said at his first news conference. “Investors have been waiting for this for a very long time and they won’t speed up works without stable regulation.” The ministry’s proposals last year for a state-run fund to participate in exploration ventures raised objections among investors searching for the fuel as well as other cabinet members. Meanwhile, drilling has slowed and foreign companies including Marathon Oil Corp. and Talisman Energy Inc. left Poland this year. Discussions with investors will address the role and supervision of the state-run fund as well as investors’ concerns about new regulations, Grabowski said. Disagreements between the Treasury and Environment Ministries over the state fund, called NOKE, have delayed works over the shale gas regulations, newspaper Parkiet reported on Sept. 9.
The development of U.S. shale gas extraction to tap previously inaccessible reserves is not proving to be a game changer for Qatar, according to QNB Group. Fracking techniques have been refined only over the last decade to make U.S. shale gas commercially viable. This has virtually eliminated the need for the U.S. to import liquefied natural gas (LNG), including from Qatar. The drop in demand from the U.S., however, has been replaced by strong demand from Asia, particularly from Japan after the Fukushima nuclear accident in March 2011. As a result, QNB Group expects global LNG demand to remain strong over the next decade. Qatar is therefore unlikely to lose its leading role in the global energy market for years to come.
Russian energy firm Rosneft and Norway’s Statoil agreed to set up a joint venture to assess the viability of shale oil production in Russia’s Samara region, the firms said. The two companies will run a three-year pilot program and assess the potential for commercial production. Rosneft will hold 51 of the venture while Statoil will hold the rest. For more information, please contact HBW Resources.
British Chancellor of the Exchequer George Osborne said during an economic address his government shouldn’t turn away from shale natural gas. Osborne delivered his so-called Autumn Statement, offering his latest assessment of the state of the British economy. He said the British economy is expected to grow by 2.4 percent next year, compared with the current rate of 1.8 percent. On energy issues, the chancellor said he was proposing a new tax allowance to encourage investments in the country’s emerging shale natural gas sector. “The country that was the first to extract oil and gas from deep under the sea should not turn its back on new sources of energy like shale gas because it’s all too difficult,” he said in his address. The British government in 2012 lifted a ban on hydraulic fracturing, a controversial practice known also as fracking. A ban was enacted after small tremors were reported during fracking operations. The British Geological Survey in June estimated the Bowland shale formation in the north of the country contains 1.3 quadrillion cubic feet of natural gas. A government report said shale could ensure energy security for a country where net natural gas imports are on pace to increase from 45 percent of demand in 2011 to 76 percent by 2030. Shale gas firms would have to pay a tax of just 30 percent on profits from any shale gas they produce in the UK, compared to the current 62 percent tax that is levied on hydrocarbon production by conventional means on the UK Continental Shelf. Osborne’s statement confirmed this while also announcing an allowance for shale gas development projects equal to 75 percent of the capital spend on these projects. Osborne also highlighted the government’s work with the oil and gas industry to introduce a scheme to ensure that local communities benefit from hosting shale gas projects. He confirmed that local communities will be guaranteed to received GBP 100,000 ($160,000) for every fracked well sit during the exploration phase and at least one percent of revenue – up to as much as GBP 10 million ($16 million) over the lifetime of a project – during production. For more information, please contact us.
For additional information, please contact Bo Ollison with HBW Resources. His contact information is below.
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