Unconventional Oil & Gas Development Continues its Expansion both in the US and Internationally

HBW Resources: Ollison Hydraulic Fracturing Report

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


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

A study, “The Petroleum industry and the Monterey Shale: Current economic impact and the economic future of the San Joaquin Valley” conducted by economists Antonio Avalos and David Vera of the Craig School of Business at California State University, Fresno, suggests that developing the Monterey Shale– the 1,750 square mile underground rock formation that lies underneath the California’s unemployment-ravaged San Joaquin Valley — could create up to 195,000 direct new jobs and generate more than $22 billion in personal income for area residents.


Governor Jerry Brown said it may take as long as 18 months for California, the third-largest oil-producing state, to complete an environmental review of the oil and gas drilling technique known as hydraulic fracturing. “I think we ought to give science a chance before deciding on a ban on fracking,” Brown, a 75-year-old Democrat, told reporters following a conference in San Francisco yesterday. California’s study will become “the most comprehensive environmental analysis of fracking to date,” he said.

WPX Energy has completed its second well in the Niobrara Shale following its significant natural gas discovery in western Colorado earlier this year. WPX’s second Niobrara well was completed at the end of September, posting an initial rate of 11.8 million cubic feet per day at a flowing casing pressure of 5,700 pounds per square inch. To optimise the performance of the reservoir, the well has since been choked back substantially to 8 MMcf/d at 5,400 pounds per square inch of flowing tubing pressure. Over its first 10 months, the initial discovery well has produced 2 billion cubic feet of natural gas and is currently producing at a rate of 3.5 MMcf/d.

State regulators are signing off on a plan by Florida’s largest electric company to invest in a new 600-mile natural gas pipeline. The Florida Public Service Commission approved Florida Power & Light’s contracts to purchase natural gas from the new $3.5 billion pipeline that will join two existing pipelines. The pipeline is expected to be in service by mid-2017. It will run from southwest Alabama through Georgia and down to central Florida where it will connect to the two pipelines. Another pipeline will be built that will run from Orlando to Indiantown where an FPL facility is located. Regulators concluded that FPL — which has roughly 4.6 million customers — can save up to $450 million over the life of the natural gas contracts.

The Consumer Energy Alliance-Florida and Florida House Energy & Utilities Subcommittee Chairman Rep. Jose Felix Diaz (R, District 116) are hosting an “Overview on Natural Gas and Hydraulic Fracturing and its Impact on Florida” event on November 5, 2013 from 12:00pm – 1:30pm in Room 216-C in the Florida State Capitol. For More Information and to RSVP, Contact Kevin Doyle of Consumer Energy Alliance-Florida at kdoyle@ConsumerEnergyAlliance.org.

Starting this month, the Illinois Department of Natural Resources has set up online registration for businesses to receive permits for hydraulic fracturing operations, setting the state up to receive its first large-scale fracking operations. The U.S. Energy Information Administration predicts that shale gas production will rise to 13.6 trillion cubic feet by 2035, which represents 45 percent of all natural gas production in the nation. Just one trillion cubic feet of natural gas is enough to heat 15 million homes for one year, generate 100 billion kilowatt hours of electricity or fuel 12 million natural-gas-fired vehicles for one year.

Kansas has seen more than $1 billion in oil and gas investment over the past several years as energy companies have tried to emulate the unconventional drilling boom sweeping much of the United States. But initial production in the state’s Mississippi Lime formation has fallen short of expectations, and companies such as Shell Oil Co. and Tug Hill Operating have stopped drilling or ditched assets in Kansas. For more information, please contact us.

New regulations governing hydraulic fracturing will limit the circumstances in which a company must disclose the chemicals it uses, but Kansas Corporation Commission staff members said that emergency personnel will have all the information they may need. The KCC, which regulates the oil and gas industry as well as telecommunications, transportation and utilities in Kansas, approved rules governing how much companies engaged in drilling have to disclose about the chemicals used in hydraulic fracturing. The technique involves injecting a mixture of water, sand and chemicals into the ground to break up rock and release natural gas stored there. The new regulations require companies engaged in fracking to disclose what fluid they are using as their base, how much of it they are using, and the type and concentration of any other chemicals in the fluid. The companies must submit the information to the KCC or list it on a national registry at www.fracfocus.org. It includes exemptions for trade secrets.

Michigan has been one of the hardest hit states since the 2008 economic crash. The cities of Detroit and Flint are considered the most dangerous cities in the United States. Detroit is notorious for its urban and suburban decay, and the growing rate of poverty and unemployment continues to plague the state. But the Antrim shale could be a saving grace – if there is enough investment. If the Antrim is developed, it could foster 46,000 jobs by 2020. The Antrim went from 1,446 permits in 2006 to just 43 in 2011. Within the past two years, Chevron was the only major energy company to increase gas production in Michigan. The area is a fairly seasoned hotspot, with over 9,000 wells drilled throughout the region. The play is known for its shallow composition – making the area an inexpensive endeavor. Production was at 131 bcf in 2008 but slowed to 85 bcf in 2011. If natural gas prices rise to $5 or above, you could see much more investment and drilling activity in the future.

New Mexico
New Mexico has asked oil and gas operators in the northwestern counties of McKinley, Rio Arriba, Sandoval and San Juan to report within 30 days any past instances of unintended communication between adjacent wellbores. Such communication, which happens when hydraulic fracturing at one wellbore affects a nearby wellbore, can pose a threat to “heath, safety and environment,” the state’s Oil Conservation Division said in a notice posted to its website on Oct. 22. The communication may also affect a company’s rights to produce oil or gas without waste. The notice was posted after a fracking operation by Encana Oil & Gas (USA) Inc. repeatedly affected conventional oil wells owned by Parko Oil LLC between July and September. On Sept. 30, the Parko Oil well was hit by a frack and spilled 200 barrels of oil and toxic produced water.

New York
State officials are giving the public another month to weigh in on a proposal to allow new liquefied natural gas facilities in the state for the first time in 40 years. The comment period on the proposed regulations had been slated to end on Nov. 4, but it’s been extended until Dec. 4. For more information, please contact HBW Resources.

North Dakota
North Dakota, the nation’s No. 2 oil producer behind Texas, recorded nearly 300 oil pipeline spills in less than two years, state documents show. None was reported to the public, officials said. According to records obtained by The Associated Press, the pipeline spills — many of them small — are among some 750 “oil field incidents” that have occurred since January 2012 without public notification. Dennis Fewless, director of water quality for the state Health Department, said regulators are reviewing the state’s policies for when to publicly report such incidents after a massive spill was discovered last month in northwestern North Dakota by a wheat farmer.

Gov. Jack Dalrymple (R, ND) and Alliance Pipeline announced the completion of an 80-mile pipeline to carry natural gas from Tioga to Sherwood, where it connects to the company’s natural gas line in northwest North Dakota that carries the gas to Chicago. The Calgary-based company said construction on the $170 million project began a year ago and was completed last month. The 12-inch pipeline is capable of transporting more than 126 million cubic feet of natural gas and natural gas liquids daily.

Miami University may be steeped in tradition, but its legacy of generating electricity by burning coal is one it looks forward to ending. The school is well on its way to a coal-free future with an ambitious,multi-stage project that would heat and cool 40 percent of the Oxford campus using a geothermal system and while converting the rest of campus to natural gas. A utility master plan approved last year calls for the elimination of coal use by 2025, a tall order for a sprawling campus that educates more than 17,000 students annually, using its own coal plant to fuel steam boilers through miles of underground piping. The geothermal system is expected to be more than four times as efficient as the old model that uses cooling towers and steam boilers to sate the campus’s vast appetite for heating and cooling buildings and water, not only for people but for computer banks and laboratories. The geothermal conversion is estimated to cost $58.5 million (including upgrades to what is now the coal-fired power plant) compared to $42.5 million to expand and maintain current heating and cooling facilities. Most campus buildings are heated by steam radiators and will need to be retrofitted with larger hot water pipes for the geothermal system. But the operating and maintenance costs will be $750,000 to $1.5 million less annually starting in 2025. For more information, please contact us.

Oberlin city voters on Nov. 5 will decide whether to approve a community bill of rights banning the practice of hydraulic fracturing. According to Oberlin City Manager Eric Norenberg, Issue 16 was developed and presented to voters by citizens without consultation from the city. Information provided to the League of Women Voters Oberlin Area by Citizens for Safe and Sustainable Energy, says Issue 16 is an ordinance prohibiting most corporate and gas extraction as well as the storage, transportation and depositing of oil and gas drilling waste product within Oberlin city limits. If passed, Issue 16 would prohibit injection wells or any other deposit extraction wastes or byproducts within the city. The ordinance would also prohibit the siting of extraction, production and delivery infrastructure within the city.

A new report on economic development in Ohio’s shale gas region lists projects valued at more than $12 billion, and there’s more on the way, says Bricker & Eckler LLP attorney Matt Warnock with the law firm’s shale tax force. There are 84 projects on Bricker’s eight-page list. They include oil and gas projects such as MarkWest’s $1.5 billion investment in processing facilities and ones in other industries, including the $1 billion steel pipe mill V&M Star built in Trumbull County, and an $800 million natural-gas fueled power plant planned in Carroll County by Advance Power Services Inc.

A Michigan-based energy company has given up a six-year battle to drill for natural gas in southeastern Pennsylvania’s upper Bucks County, citing opposition from local government. Terry Bela, manager of Arbor Resources, told The Philadelphia Inquirer that Nockamixon Township’s elected officials “made it impossible for the company to move forward.” Arbor had signed hundreds of leases with landowners to drill exploratory wells, but Nockamixon Township fought the plan, arguing that the land wasn’t zoned for heavy industry. For more information, please contact us.

South Fayette officials received a request last week from Range Resources-Appalachia LLC and Cuddy Partners LP to go before the zoning hearing board in December to challenge the validity of the oil and gas ordinance and to seek relief from its rules. The 2010 ordinance bans surface drilling in areas zoned for homes, schools, parks and farms. Drilling is permitted as a conditional use in industrial and commercial areas. Natural gas driller Range Resources of Cecil, and property owner Cuddy Partners of South Fayette, have a lease agreement for a well pad, production equipment, access road and pipeline on 400 acres bordered by Cecil Sturgeon Road and Millers Run Road.

A Pennsylvania federal judge, US District Judge A. Richard Caputo, ruled that a physician did not have standing to challenge a new state law allowing drilling companies to require doctors to sign confidentiality orders before disclosing the chemical make-up of hydraulic fracturing fluids workers have been exposed to on the job.

In an effort to shed pure gas assets, Bill Barrett Corp. has agreed to sell its West Tavaputs natural gas property located in the Uinta Basin, Utah to an undisclosed buyer for $371 million. The price includes roughly $46 million for the purchaser’s assumption of the lease financing obligation for compressor units on the property. Cash proceeds of approximately $325 million will be adjusted at closing for an effective date of August 1, 2013 and for transaction costs. Proceeds will be applied to reducing outstanding debt under the company’s revolving credit facility. The transaction includes approximately 35,000 net acres, 300 producing wells, 265 billion cubic feet equivalent net proved reserves (based on year-end 2012) and 68 MMcfe/d net production (based on the second quarter of 2013).

The board for the state agency that preserves land through easements voted to revisit a policy that could allow a method of oil and gas exploration known as hydraulic fracturing on conservation land. The board of trustees for the Virginia Outdoors Foundation voted 5-1 to stop approving easements that could allow fracking as long as it meets certain conditions. The board is delaying any such approvals until its June 2014 meeting and will look into “whether they want to explicitly forbid this practice in the future,” foundation spokesman Jason McGarvey said.

With five refineries, Washington has long received crude oil from Alaska and elsewhere by ship, barges or pipelines. But ports and refiners are increasingly turning to trains to take advantage of a boom in oil from North Dakota’s Bakken region. Three terminals — in Anacortes, Tacoma and Clatskanie, Ore. — are already receiving crude oil by trains. Other facilities are proposed at the ports of Grays Harbor and Vancouver, and at refineries. Together, the 10 projects would be capable of moving nearly 800,000 barrels per day, said Eric de Place, policy director at Sightline Institute. “It’s a lot of oil that we’re talking about moving by train in Washington. It raises new questions about how the state can handle a spill.” The Washington Energy Facility Site Evaluation Council is reviewing a proposal by Tesoro Corp. and Savage Cos. for a terminal at the Port of Vancouver to handle up to 380,000 barrels a day of crude oil. Oil arriving by train would be unloaded, stored temporarily and then loaded onto marine vessels to be shipped to refineries on the West Coast. For more information, please contact HBW Resources.

West Virginia
An upswing in drilling activity in the Marcellus Shale gas field was reflected in a 20 percent jump in statewide oil and gas industry employment last year (document starts on page 128), a report from the Workforce West Virginia Investment Council shows. From 2011 to 2012, oil and gas employment increased by 2,123 jobs, to total employment of 12,666, the report to the legislative Joint Committee on Government and Finance states. During the period, the average wage for oil and gas industry workers increased by nearly $5,500, to an annual average wage of $75,580 in 2012. Employment in sectors supporting the oil and gas industry also grew in 2012, particularly in the oil and gas pipeline and storage tank construction sector. Employment in that sector grew 105 percent, from 2,021 jobs in 2011 to 3,941 in 2012. Average annual wages increased 13 percent, to $81,250.

According to documents filed in the Ohio County Clerk’s office, Chevron assigned 29 separate agreements to Chesapeake for drilling. The parcels range in area from as little as 1 acre to as much as 258 acres, with most of the acreage found in the northern portion of the county. Chevron took over most of these leases from AB Resources, NPAR and TriEnergy Holdings in early 2011, records indicate.

SB 349, a bill that would scale back local sand mine regulations amounts to an unwarranted attack on small government and could put people who live around the operations at risk, the measure’s opponents told lawmakers. The bill’s chief Senate sponsor, Tom Tiffany (R, District 12) said the measure would shift regulatory authority to the state and eliminate an emerging patchwork of restrictive local ordinances. Wisconsin’s sand mine industry has boomed over the last few years with advances in hydraulic fracturing, which uses sand mixed with water and chemicals to extract natural gas and crude oil from rock formations. The number of mines in the state grew from five in 2010 to 105 as of April, according to the Legislative Fiscal Bureau. The bill would prohibit local governments from establishing sand mine regulations under so-called police powers, which give them broad authority to regulate health, safety and welfare. They could still regulate the mines under their zoning authority, but new zoning requirements wouldn’t apply to existing operations. For more information, please contact us.

The United States is on track to overtake Middle Eastern powerhouses Qatar and Saudi Arabia inexports of natural gas liquids, according to Sanford C. Bernstein & Co. Foreign NGL deliveries, including propane, butane and isobutane, averaged a record 550,000 barrels per day for the United States in July. But Bernstein Research projects annual exports could quadruple by 2020 as shale gas production surges and a new expansion of the Panama Canal offers cheaper access to Asia.

A new GE study, “the Age of Gas & the Power of Networks,” says that gas is back and becoming a focal point of global energy supply and demand. “Natural gas… is positioned to rival coal consumption as well as take share from oil on the global stage,” say the study’s authors Peter C. Evans and Michael F. Farina. They write that gas will also increasingly complement wind and other renewable energy sources in power generation. Evans and Farina say that utilities, global businesses, homes and also trains, trucks and other means of transportation have already embraced natural gas. The analysts expect that gas consumption will grow by more than a third from its current level by 2025. They estimate that international trade in liquefied natural gas (LNG) will increase by 70 percent in this decade alone.

A shift by utilities to cleaner burning natural gas helped carbon pollution from power plants fall over the last three years, according to data released by the EPA. EPA began reporting data gathered from 8,000 facilities across the largest pollution-emitting industries on greenhouse gas in 2010. Since, power plant carbon emissions have declined 10 percent. The drop in emissions is attributed to a decrease in coal production for electricity generation and less electricity production. Emissions fell by 4.5 percent from 2011 to 2012.

According to a report, “North America leads the world in production of shale gas,” by the U.S. Energy Information Administration (EIA)/ Advanced Resources International (ARI), despite the fact that many countries have drilled exploratory wells, the US and Canada are the only major producers of commercially viable shale gas. China is also producing commercially viable shale gas, but this contributes less than 1% of the natural gas production in the country. In 2012 shale gas accounted for 39% and 15% of natural gas production in the US and Canada respectively. Shale gas dry production in the US averaged 25.7 billion cubic feet per day in 2012, and in Canada shale gas dry production averaged 2.0 billion cubic feet per day from its two major shale plays. The potential for more production from the Canadian shale plays is limited by pipeline infrastructure. China was ranked the largest holder of shale resources out of the countries that have so far been assessed for recoverable shale resources. The Chinese government has yet to officially report on shale gas production.

The National Center for Policy Analysis (NCPA) recently released an issue brief, “How fracking helps meet America’s energy needs,” that highlights the critical role hydraulic fracturing has played in the rapid transformation of our energy outlook – a transformation from scarcity to abundance.  As NCPA points out, this is also just the beginning: the United States has the capacity to continue rapidly increasing oil and gas production, provided the federal government removes onerous regulatory barriers and refrains from imposing new ones. NCPA details just how big of a game-changer horizontal drilling and hydraulic fracturing have been: “many analysts argued that oil was nearly tapped out, and that America needed to plan for a post-petroleum future,” the issue brief observes. “Now, however, natural gas has taken the stage…Natural gas could not play this role without the vast reserves fracking opens up every day.” Fifteen years ago, it was assumed that America only had 60 years of natural gas supplies at then-current consumption levels.  Today, we have 100 years or more – and that’s with even higher natural gas demand.  In fact, the Marcellus Shale could contain 1,307 TCF – even at a 30 percent recovery rate that’s enough to meet 14 years of our present demand. And that’s just in the Marcellus. For more information, please contact us.

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, “Assessment of the Economic Impact of the Shale Oil and Gas Boom,” by Purdue University energy economists. That amounts to an average of $473 billion per year added to the economy during the period. Restricting gas exports increases the magnitude of the annual gains to $487 billion, according to the report. The shale boom has other benefits to the economy, including substantially increasing employment and reducing oil and natural-gas prices, the report states. On average each year from 2008 to 2035, oil prices would be 7 percent lower and gas prices 12 percent lower than they would have been without the increased production. Further, if gas exports are restricted, prices of natural gas would drop by 24.1 percent and the economy would gain $13.3 billion, according to the report. That pales in comparison to a U.S. economy of $15 trillion, the report notes, but the analysis shows that restricting the exports “provides a small but positive benefit.”

The United States, followed by Canada, leads the world in producing natural gas from shale formations as the practice of hydraulic fracturing spreads, the U.S. government reported. Shale gas accounted for 39% of all natural gas produced last year in the United States, compared to 15% of that in Canada and less than 1% in China, according to data from the Energy Information Administration. The main reason for the recent U.S. boom in natural gas production — up more than a third since 2005 — is the cost-effective combination of horizontal drilling and hydraulic fracturing. For more information, please contact HBW Resources.

House Democrats want the Obama administration to finalize tough guidance for hydraulic fracturing operations that use diesel to develop oil and natural-gas resources. The top Democrats on the Energy and Commerce Committee and its Oversight subcommittee told the White House Office of Management and Budget (OMB) in a letter that the guidance is long overdue. Without rules of the road from the Environmental Protection Agency (EPA), they write, energy developers have been unrestrained. “Diesel fuel is toxic and should not be used in fracking without careful environmental review under the Safe Drinking Water Act,” Reps. Henry Waxman (D, CA 33) and Diana DeGette (D, CO 1) told OMB Director Sylvia Mathews Burwell in the letter.  “We urge you to review EPA’s guidance expeditiously so that the agency can finalize strong, clear guidance for permit writers for the remaining cases in which drilling companies opt to use hydraulic fracturing fluids containing diesel fuel.”

Southeast Asia is expected to import around 40 million tons per annum (mtpa) of liquefied natural gas (LNG) by 2025, accounting for 13 percent of total demand in the Asia Pacific, Qatargas CEO Sheik Khalid bin Khalifa al-Thani said at the Singapore International Energy Week. Qatargas supply its first LNG cargo to Thailand – the company’s first to Southeast Asia – in 2011. Indonesia came next in 2012, while Singapore and Malaysia followed this year. Qatargas also plans to open a Southeast Asia representative office in Bangkok, Thailand, Khalid added. For more information, please contact us.

Algeria’s energy minister says a new oil field containing an estimated 1.3 billion barrels has been discovered. Youcef Yousfi told the state news agency that the discovery near the large oil fields in the southern region of Hassi Messaoud is one of the most important in the last 20 years. He added the state oil company, Sonatrach, will rely on unconventional techniques to extract 50 percent of the reserves, including hydraulic fracturing. The field will be exploited in the next three to four years following the necessary studies, the report added.

ConocoPhillips and Santos Ltd., developing separate liquefied natural gas projects in Australia at a cost of more than $40 billion, agreed to share pipelines and exchange gas to reduce costs and duplication. The projects in Queensland state will build two pipeline connection points and sign gas-swap agreements, according to a joint statement from Adelaide-based Santos and ConocoPhillips’s partner, Sydney-based Origin Energy Ltd. ConocoPhillips and Origin are building a A$24.7 billion ($24 billion) project to liquefy natural gas for shipment to Asia, while Santos is developing an $18.5 billion development. Australia, forecast to become the world’s largest supplier of LNG with seven projects under construction, is facing rising costs that threaten expansions. Without the agreement, the projects would need 140 kilometers (87 miles) of additional pipelines and multiple connection points to send their gas to plants on Curtis Island for processing for export, according to the statement.

Real Energy is undertaking an IPO ahead of a planned listing on the Australian Securities Exchange (ASX) by the end of Q4 2013. The aim of the IPO is to raise $10 million by issuing 40,000,000 shares at $0.25 per share, plus 1 attaching loyalty option for every 2 shares subscribed. The option has a strike price of $0.30 per share and an 18 month expiry, vesting 120 days after IPO if the subscriber remains on the share register during that period. Real Energy holds over 2 million acres (100% owned) of prime exploration acreage adjoining existing oil and gas fields in the world-class, onshore Cooper-Eromanga basins in Central Australia.

Critics are raising alarms that oil and gas companies are getting a “free ride” from the provincial government for billions of litres of water used every year for hydraulic fracturing. The B.C. government released a proposal for the new Water Sustainability Act, which would replace the province’s century-old Water Act. Companies conducting fracking operations in B.C. pay a water rental fee to the province of $1.10 per 1,000 cubic metres. According to a B.C. Oil and Gas Commission annual report, a total of 7,054,704 cubic metres of water was used for hydraulic fracturing in 2012. That’s about 2,800 Olympic-size swimming pools. Nestlé’s total water withdrawals last year in B.C. amounted to 265 million litres – a little less than four per cent of the total water used for fracking in B.C. The Water Sustainability Act proposal is up for public engagement and discussion until Nov. 15. For more information, please contact HBW Resources.

Chevron announced the successful conclusion of the initial exploration phase by its Canadian subsidiary, Chevron Canada Limited, in the Kaybob area of the Duvernay play, located in west-central Alberta, Canada. Chevron Canada successfully concluded the initial twelve well exploration drilling program in the liquids-rich portion of the Duvernay shale play. Five wells have been completed and are tied into production facilities, and an additional four wells are waiting on completion and tie-in. The company’s acreage is well positioned in the condensate-rich and volatile-oil portion of the play. Liquids yield for the completed wells range from 30 to 70 percent with initial production rates up to 7.5 million cubic feet of natural gas per day and 1,300 barrels of condensate per day.

Chinese companies are aiming to cut costs and enhance efficiencies as they become more familiar with shale gas development in the country, delegates at an unconventional gas conference said. State-owned Sinopec has been focused on the gas-rich Sichuan Basin, where it already has experience working on complex fields with high sulfur in tight reservoirs, particularly with its Puguang and Yuanba projects. Its main shale development is the Fuling project in the Sichuan Basin in Chongqing covering up to 500 sq km. Sinopec said in March that it hoped to reach 1 billion cubic meters/year of production capacity at the project by 2015. The cost of drilling a well in China is around Yuan 80-90 million, compared with about Yuan 20 million in the US, adding that using domestic drilling equipment will cut costs by about 25% to a third, while drilling modular, factory-like wells could help cut costs further. The Ministry of Land and Resources, which organizes the shale tenders, is also considering allowing foreign companies to take part directly in the bid round, he said. The ministry offered 20 blocks spanning 20,239 square km (7,814 sq miles) across eight provinces and cities in the second bid round a year ago. Foreign firms were not permitted to participate in the bid round, although the winning companies were free to bring in both local and foreign partners. Nineteen blocks were eventually awarded to 16 companies, none of whom had any prior oil and gas experience. The ministry acknowledged in July this year that many of the companies lacked skilled and technical personnel and had limited financial resources. Coupled with the complex geology, the companies’ progress was slow. For more information, please contact us.

Chinese oil giant Sinopec Corp is for the first time pumping shale gas from test wells in commercial quantities in what it hopes will be a breakthrough in the development of a badly needed new energy source. Stymied by the cost of drilling and complexity of tapping shale gas, China has struggled in its bid to revolutionize its energy supplies and unlock what may be the world’s largest shale gas reserves by emulating the frenetic exploration and production of the U.S. shale boom. But the state-owned firm’s Sinopec Jianghan unit has more than doubled its 2015 output target for the key shale area of Fuling in the country’s southwest after successful pilot drilling, hoping to cut costs through measures such as drilling numerous wells at once and recycling fracking liquids.

Chinese oil companies have been on a global shopping spree—especially in the rejuvenated North American oil industry. Since 2008, the companies have spent $44.2 billion to acquire U.S. and Canadian energy firms as well as oil and gas fields, according to merger-tracking firm Dealogic. That is more than these large, state-owned Chinese companies spent in Africa, Latin America, Europe or any other part of the world. But experts say the Chinese are interested in Western technology advances, seek large-scale oil and natural-gas assets and may want to reduce China’s dependence on oil imports from the Mideast, particularly Iran. Chinese oil companies have also run into trouble in less politically stable countries, such as Libya and Sudan.

Cairn India is looking for a partner to explore shale resources in the Rajasthan block. The firm is hoping for a policy regime to allow companies to produce hydrocarbons from unconventional fields. The firm’s CEO P Elango said, “At Rajasthan, we see the presence of tighter gas and oil resources, which lend themselves tremendously well to Shale gas exploration. We are constantly studying how to drill and explore Shale from blocks in Rajasthan. In fact, we are very keen to partner with some of the best global names to carry this out.”

State-run gas utility GAIL India Ltd plans to buy 19 cargoes of liquefied natural gas (LNG) by March, out of which 9 will be bought from the spot market, its chairman said. The company sells 6.5 million tonnes per annum (mtpa) of LNG locally, sourced from Qatar’s Rasgas under a long-term contract and through small deals with GDF Suez and Spain’s Gas Natural Fenosa. B.C. Tripathi told reporters GAIL is also looking for “good” shale gas assets in the United States. LNG is expensive in Asia at about $17 per million British thermal units (mBtu), as it is linked to oil, while a boom in U.S. shale gas output has pushed down prices there to below $4 per mmBtu. For more information, please contact HBW Resources.

Mazda has made huge gains in its competitive set with the introduction of its Skyactiv technologies, and the Japanese automaker appears to have no plans on slowing down. While we’re still waiting for the Mazda6 Skyactiv-D diesel to go on sale in the US, Mazda announced that it will debut new Skyactiv-Hybrid and Skyactiv-CNG versions of the Mazda3 (standard US-spec model shown above) at next month’s Tokyo Motor Show. There are no details for the Mazda3 Skyactiv-CNG Concept, which is a bi-fuel version of the car running on both gasoline and compressed natural gas. As this car’s name suggests, the CNG model is a concept vehicle, and there is no indication that Mazda plans offering such a model here in the US.

Lithuania plans a new tender for shale hydrocarbon exploration rights and will revise licensing terms after Chevron Corp. withdrew as sole bidder from a previous contest. The Lithuanian Geology Service was instructed by a tender commission “to assess the changed legal and tax environment and present the documents to organize a new tender,’ Vice Environment Minister Daiva Matoniene said in a statement on the ministry’s website in Vilnius, the capital. The rights for the sale are to explore and produce shale hydrocarbons in the western Lithuanian region of Silute-Taurage. The Baltic nation wants to know if its shale resources are sufficient to be an alternative to energy imports from Russia. For more information, please contact us.

San Leon Energy PLC said it has taken the next steps towards vertical hydraulic fracturing at the Gdansk W concession in Poland’s northern Baltic Basin. The oil and gas production company, with operations in Europe and North Africa, said the 221,000 acre site experienced initial vertical frac tests recently, including a fracture stimulation and flow potential tests of shale opportunities at the site. San Leon said that design work has now been completed, materials and services have been ordered, and mobilization of the technology units to prepare the well for the fracs will commence shortly.

Russia’s Novatek reported that it has started production at its Urengoyskoye field on its Olimpiysky block in the Yamal-Nenets autonomous region. Novatek said four production wells have been completed at the field, of which three wells are already producing natural gas. Novatek added that the field has proved natural gas reserves of 21 billion cubic meters (742 billion cubic feet) and that its production capacity is estimated at one billion cubic meters (35.3 billion cubic feet) per annum.

South Africa
South Africa plans to issue licenses permitting exploration of shale-gas reserves in the first quarter, Mineral Resources Minister Susan Shabangu said. The country published proposed regulations for hydraulic fracturing on Oct. 15, a year after lifting a ban on the drilling process known as fracking, as it seeks to tap as much as 485 trillion cubic feet of resources in the semi-arid Karoo region. Royal Dutch Shell Plc and other explorers have applied for permits to explore the Karoo. South Africa, which imports 70 percent of its crude-oil needs, estimates shale gas may generate 1 trillion rand ($100 billion) of sales within three decades, helping bring it closer to supplying its own energy demand. The draft rules require drillers to meet American Petroleum Institute standards governing the type of equipment used and the disclosure of chemicals. The move to pursue exploration follows a shale boom in the U.S.

Tanzania, a hotspot for natural gas exploration, invited bids for eight blocks and said it would take a stake of up to 75 percent in each of the new production-sharing contracts. Tanzanian President Jakaya Kikwete said the government would consider selling stakes held by the state-run Tanzania Petroleum Development Corporation (TPDC) in production-sharing agreements to Tanzanians through initial public offerings (IPO). The bidding round launched on Oct.25 will run until May 15, 2014.

United Kingdom
British Prime Minister David Cameron announced a probe into U.K. energy suppliers’ profits and competition between them and pledged to cut green levies as both his government and Labour bid to show they have plans to deal with inflation-busting price increases. Three of the “Big Six” companies, Centrica Plc (CNA), SSE Plc (SSE), EDF Energy Plc, EON SE, Iberdrola SA’s Scottish Power Ltd. and RWE AG (RWE)’s Npower unit, that dominate Britain’s energy market have announced gas and electricity price increases of about 10 percent over the past two weeks, almost four times the rate of inflation.

Britain must simplify regulations governing shale gas extraction to speed up the development of an energy source that has helped to transform the U.S. market, Prime Minister David Cameron said. “On fracking, we do need to take action across the board to help enable this technology to go ahead,” Cameron told a news conference in Brussels after a meeting of European leaders. “There is a worry people are going to have to go through so many different permits in order to start fracking that they simply won’t bother, so we need a simplified system.” Under pressure to do more to bring down rising consumer energy costs, Cameron has repeatedly urged the country to “get behind fracking”, a technology he says would bring down bills and create tens of thousands of jobs. For more information, please contact HBW Resources.

Additional Information

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

Bo Ollison
HBW Resources
2211 Norfolk Street, #410
Houston, TX 77098
Tel: 713-337-8810
E-mail: bollison@hbwresources.com
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, the HBW Greenfield Offshore Energy Report, the Forsgren Environmental Report, and daily updates and new Member profiles can be viewed at the new Intelligence Tab on the HBW Resources website at: https://hbwresources.com/intelligence/.  Hope you all have a great day!


Michael Zehr
HBW Resources
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