Shale Opportunity Unprecedented

The recent boom in domestic shale gas provides an unprecedented opportunity to the US, even as it is in the final stages of taking a decision on its exports, which will benefit countries like India, a senior American official has said.

"The boom in domestic shale gas provides unprecedented opportunities for the United States,"Christopher Smith, Acting Assistant Secretary of Energy for Fossil told lawmakers yesterday at a Congressional hearing here. "Over the last several years, domestic natural gas production has increased significantly, outpacing consumption growth, resulting in declining natural gas and LNG imports.

"Production growth is primarily due to the development of improved drilling technologies, including the ability to produce natural gas trapped in shale gas geologic formations," he said. Today, domestic natural gas prices are lower than international prices of delivered LNG to overseas markets, Smith said, adding that as in the US, demand for natural gas is growing rapidly in foreign markets. Primarily due to these developments, Department of Energy (DOE) has begun to receive a growing number of applications to export domestically produced natural gas to overseas markets in the form of LNG, he said. Under the current regulations, US can export shale gas to those countries with which it has free trade agreements. There are currently 18 countries with which the US has in place free trade agreements that require 'national treatment for trade in natural gas' for purposes of the Natural Gas Act. They are--Australia, BahrainCanada,Chile, Colombiathe Dominican RepublicEl SalvadorGuatemala,HondurasJordanMexicoMoroccoNicaraguaOman,Panama, PeruRepublic of Korea, and Singapore. There also are two countries - Israel and Costa Rica - that have free trade agreements with the United Statesthat do not require national treatment for trade in natural gas for purposes of the Natural Gas Act.

Smith said to date, Department of Energy has granted one long-term application to export domestically-produced lower-48 LNG to non-FTA countries. That authorisation was issued in Sabine Pass Liquefaction. Testifying before the Congressional Committee,Thomas Y ChoiNational Gas Practice Leader of Deloitte LLP, said US LNG exports are unlikely to cause US prices to rise to levels of importing regions. 

Register for the March Webcast!

Don't delay in registering for Michael Thornton, CTO MicroSeismic, Inc's March webcast, A New Look at Surface and Downhole Microseismic Positional Uncertainty: A Statistics Based Approach.
 
The webcast is complimentary and will be held on March 26, 2013 at 10AM CST. The full program description is below and you may register on the MicroSeismic website now

This month's webcast focuses on the presumption that the two competing microseismic imaging techniques in use today appear at first to be very dissimilar. Downhole microseismic locations are determined from P & S wave travel-time matching, much like traditional earthquake seismology, while surface microseismic imaging is more like pre-stack depth migration of reflection seismic.

However, if one considers both techniques as maximum likelihood estimators (MLE), it is possible to show that the two are in fact quite similar. Moreover, the MLE framework provides a basis to compare the two methods in terms of the uncertainties in location estimates and sensitivity to velocity uncertainty.

U.S. Carbon Levels Fall to 1970s Levels

The U.S. will reduce carbon-dioxide emissions in 2040 to levels last seen in the 1970s as the use of natural gas and renewables increases and efficiency measures cut demand, Exxon Mobil Corp. (XOM) said.

Energy-related emissions will fall 25 percent in part because of a “pronounced shift away from coal in favor of less- carbon-intensive fuels such as natural gas,” the Irving, Texas- based company said in a U.S. energy outlook report today. U.S. coal consumption will plummet more than 65 percent by 2040 and a 5 percent reduction in energy demand will also help cut emissions, according to the report.

“Based on what they’re assuming about energy consumption, that makes sense -- we’ve already seen some of these trends happening,” Ethan Zindler, a Bloomberg New Energy Finance analyst based in Washington, said yesterday in an interview. Exxon’s figures indicate the U.S. may still fall short of President Barack Obama’s target to reduce greenhouse gas emissions 17 percent below 2005 levels by 2020, Zindler said.

Emissions from fossil fuels fell an estimated 3.9 percent in the U.S. last year, according to government data, as expanded gas production led to a 10-year low in prices. The Kyoto Protocol, an international agreement setting emissions targets, calls for member nations to reduce greenhouse gas emissions by 18 percent below 1990 levels from 2013 to 2020.

The U.S. hasn’t ratified the Kyoto Protocol and Exxon’s figures show carbon-dioxide emissions would rise to 5 billion tons in 2025 from 4.9 billion in 1990. By 2040, the U.S. would emit 4 billion tons under Exxon’s projections. Global energy- related carbon-dioxide emissions are expected to plateau around 2030, Exxon said.

The Energy Information Administration projects a 1.9 percent increase this year in energy-related carbon-dioxide emissions and a 0.7 percent rise in 2014. By 2040, it forecasts a decline of 5.1 percent from 2005 levels.

Exxon sees U.S. gas consumption increasing more than 25 percent and nuclear power use expanding as “wind, solar and biofuels also grow sharply.” Renewables will generate about 7 percent of the nation’s power by 2040, the company said.

“Oil will remain the country’s most popular fuel, but oil demand is expected to fall as American vehicles become more fuel efficient,” according to the report.

Bloomberg Vid Looks at Nationwide Shale Impact

We don't have to look far in southwestern Pennsylvania to see the economic impact of the natural gas industry in the region. But it isn't just Pennsylvania seeing that.

Bloomberg video takes a look at what is happening nationwide with the shale boom. Correspondent Alix Steel reported that 115,000 mining jobs have been created over the past five years in the U.S. — about 2,000 a month.

There's also data to show that for every mining job, there's another three jobs that are created, Bloomberg reported.

Some of that increase is in North Dakota, where the state is seeing oil and gas production. The next big states for drilling are Oklahoma and Texas, Bloomberg said.

You can see the video here.

Reminder to Register for March Webcast!

MicroSeismic's complimentary March webcast will be held on March 26, 2013 at 10 a.m. CST. 

The webcast, A New Look at Surface and Downhole Microseismic Positional Uncertainty: A Statistics Based Approach, will be led by Michael Thornton, CTO MicroSeismic, Inc.
This month's webcast focuses on the presumption that the two competing microseismic imaging techniques in use today appear at first to be very dissimilar.

Downhole microseismic locations are determined from P & S wave travel-time matching, much like traditional earthquake seismology, while surface microseismic imaging is more like pre-stack depth migration of reflection seismic.

However, if one considers both techniques as maximum likelihood estimators (MLE), it is possible to show that the two are in fact quite similar. Moreover, the MLE framework provides a basis to compare the two methods in terms of the uncertainties in location estimates and sensitivity to velocity uncertainty.

Visit the MicroSeismic website to register

Rapid O&G Boom Surprises Even Experts

The rapid growth in U.S. oil production has surprised even industry insiders.

Forecasts that once sounded far-fetched are becoming reality. The oil production boom had been expected, but the magnitude of change in such a short period of time is a surprise. U.S. oil production is at its highest level in 20 years, while at the same time U.S. oil demand is at a 17-year low.

The International Energy Agency projects the U.S. could even leap frog Saudi Arabia and Russia to become the world's biggest oil producer by 2020.

"The view I have is the U.S. will be a lot less dependent with Canada. That will really reduce imports, combined with more fuel-efficient cars, from outside North America. We'll still be importing some, but it's certainly a rebalancing of global oil. That oil that was coming to the United States will go somewhere else and that somewhere else would be Asia," said Daniel Yergin, vice chairman of IHS. "The other place where oil demand is really growing happens to be the Middle East."

U.S. oil is already beginning to displace some imports.

"The next shoe to drop, I think, is when the new supply chains start to move substantial amounts of Bakken and Canadian oils to the East Coast, particularly the Bakken that goes head to head with West African crude," he said.

Yergin hosts the annual IHS CERAWeek energy conference, now in its 32nd year, March 4-8. The speakers list represents the world oil industry's who's who, as well as some of its biggest customers, such as FedEx CEO Frederick Smith. Key note speakers includeCNOOC CEO Farong Li; BP CEO Bob Dudley; Saudi AramcoCEO Khalid Al-Falih, and Eni CEO Paolo Scaroni.

"One big takeaway is the scale of this unfolding oil and gas revolution in the United States. The fact [that] our oil production is up 40 percent since 2008, and the economic impact it has had on jobs, manufacturing and competitiveness. I think that's a theme that's going to run through it," Yergin said.

The U.S. is expected to produce 7.3 million barrels per day this year, up from 6.4 million in 2012, according to the Energy Information Administration. As would be expected, the amount of oil the U.S. is importing is declining. Imports totaled about 7.7 million barrels per day in the month of February, down 1.2 million barrels per day from he same time last year.

U.S. oil demand for 2012 was 18.56 million barrels per day, down 2 percent from the year earlier and its lowest annual level since 1996, according to the EIA. Oil demand fell every month last year, except for May.

Hydraulic fracturing, or "fracking," has helped lead to this revolution in gas and oil production. The U.S. EIA projects there is 2,200 trillion cubic feet of gas resources in the U.S., enough for 100 years. In drilling for that gas, the industry uncovered a trove of natural gas liquids.

Horizontal drilling is not new, but the wide application of it is, and hydraulic fracturing, which uses water and sand to drill through rock formations, has been combined with it to make billions of more barrels of oil recoverable. Hydraulic fracturing, or "fracking," is also the technology behind the shale gas boom.

"When horizontal drilling got married to hydraulic fracturing, the key year was 2003," said Yergin. "That was when it was proof of concept. So for five years, it unfolded quietly with the independents. In 2008, that's when the majors got interested."

Yergin said the conference will also focus on the logistical issues affecting the industry.

"Our logistical system needs to catch up with these new supplies," he said. "Five years ago no one would have thought that North Dakota would be supplying oil to a refinery in Philadelphia."

One pipeline sure to be a topic of discussion at CERAWeek is the Keystone XL pipeline that would connect the Canadian oil sands to refineries in the Gulf of Mexico, 2000 miles away. The pipeline needs President Barack Obama's approval since it crosses the Canadian border. The State Department Friday issued a revised environmental impact statement, which basically provided no conclusive environmental reason why the pipeline should not be built.

The industry saw the statement as one less hurdle facing the controversial pipeline, which is opposed by environmentalists.

Texas and ND Lead the Shale Boom

U.S. oil production has soared to heights not seen in 20 years, largely driven by an explosion in crude harvested from Texas shale rock.

America is producing more than 7 million barrels of oil a day, the highest volume since 1992, according to figures released Thursday by the U.S. Energy Information Administration. It’s another sign of the transformation of American energy, as the nation is forecast to overtake Saudi Arabia as the world’s top oil producer in just a few years.

Texas and North Dakota are the dominant states behind the increase in oil production, with crude from the Bakken formation of North Dakota transforming that state and allowing it to pass Alaska as the nation’s second leading oil producer.

Texas, meanwhile, has doubled its crude production since January 2010 and is by far the U.S. oil king.

Its boom is mostly because of the Eagle Ford shale region in south Texas, said Philip Budzik, an analyst with the Energy Information Administration. The energy revolution there and in North Dakota is a result of horizontal drilling techniques and hydraulic fracturing, in which high-pressure water and chemicals are injected underground to free up pockets of oil in shale rock.

Mark Perry, an economics professor at the University of Michigan-Flint and a visiting scholar at the conservative American Enterprise Institute think tank, said Texas has become “Saudi Texas.”

“It’s kind of mind boggling how big the increase is and how fast it’s happened,” Perry said in an interview.

Texas now produces almost three times as much crude oil as the second-place state, North Dakota. Texas alone has accounted for nearly a third of U.S. oil output in the past six months, according to Perry. If Texas were a separate country, he said, it would rank above oil-rich Norway as the 14th largest oil-producing nation in the world.

Read more here:
http://www.tri-cityherald.com/2013/02/28/2293608/us-oil-is-booming-led-by-texas.html

March Webcast, Uncertainties in Surface and Downhole

The complimentary March webcast presented by Michael Thornton, CTO MicroSeismic, Inc. is entitled, A New Look at Surface and Downhole Microseismic Positional Uncertainty: A Statistics Based Approach.

The webcast will be held March 26, 2013 at 10AM CST and you must register via the MicroSeismic website to attend.

This month's webcast focuses on the presumption that the two competing microseismic imaging techniques in use today appear at first to be very dissimilar.

Downhole microseismic locations are determined from P & S wave travel-time matching, much like traditional earthquake seismology, while surface microseismic imaging is more like pre-stack depth migration of reflection seismic.

However, if one considers both techniques as maximum likelihood estimators (MLE), it is possible to show that the two are in fact quite similar. Moreover, the MLE framework provides a basis to compare the two methods in terms of the uncertainties in location estimates and sensitivity to velocity uncertainty.

Report Shows How Shale Transforming Industry

On the heels of record-low natural gas prices, a new report has focused on how the shale gas activity will affect North American companies and the economy. The report, from RBC Capital Markets and the Economist Intelligence Unit, examines how the surge in unconventional gas production is transforming sectors such as energy and transportation. It is based on a survey of industry executives and investors.

“We are entering a paradigm shift in the way that businesses and national governments look at energy, particularly as it relates to underlying market drivers, business models, risks and economic impact stemming from the shale gas boom,” said Marc Harris, co-head of RBC Capital Markets global research.

"The coming years will be transformative for companies, particularly those in the energy, infrastructure, manufacturing and transportation sectors, which will, in turn, create opportunities for both investors and corporations," added co-head Richard Talbot.

According to the findings, most exploration and production market participants believe shale gas prices have bottomed out:

  • The vast majority (87%) of survey respondents predict natural gas prices will stay the same or rise over the next two years. In fact, 73% of respondents anticipate a price increase of 10% or more in the next five years. Until then, E&P companies are moving away from dry gas and focusing instead on liquids-rich plays, such as wet gas and shale oil.

The shale gas boom is making U.S. companies think twice:

  • Companies in energy, manufacturing and transportation are reassessing underlying market drivers, business models and risks as a result of the shale gas produced. On an economywide level, respondents expect that shale gas will improve country competitiveness in both the United States (52%) and in Canada (48%).

The shale gas boom is affecting industries differently -- consider manufacturing and transportation:

  • Low cost shale gas will be especially beneficial to companies that rely on feedstock or direct energy use to compete on a global level. In industries such as petrochemicals and fertilizers, where feedstock or energy inputs can account for up to 90% of total production costs, low- priced shale gas will be a game changer. The effect on the transportation industry will be more subtle. Rather than a complete transformation to gas-based use, diversification will likely take place across the industry.

Effect on the U.S. economy:

  • According to 54% of those surveyed, shale gas could lead to natural gas becoming a significant U.S. export in the medium term. However, revenues generated from natural gas exports will not necessarily have a significant positive effect on the overall health of the U.S. economy. The implications on job creation will be positive, but energy security and environmental concerns could limit the scale of natural gas exports in the United States.

Lack of transparency remains an obstacle to investment:

  • A lack of transparency on chemicals used in fracking is a deterrent to gas-related investments, according to 25% of institutional investors who responded. While the industry does engage in some reporting on the topic, some of it remains incomplete or inaccurate and presents an issue for potential and existing investors. Improved transparency, increased environmental risk management and implementation of best practices will help the industry maintain its license to operate while at the same time capturing the benefit of production currently lost to fugitive emissions.

Infrastructure will be challenged to keep up with demand:

  • While sourcing infrastructure investment capital is unlikely to be a major bottleneck to the growth of the gas industry, regulatory risks remain prevalent. Regional pipeline supply dynamics are rapidly changing in response to changing demand. Notably, an increase in NGL demand production has created an infrastructure bottleneck in some regions, for example, in the northeastern United States.

Industry Urges DOE to Approve LNG Exports

US natural gas producers urged the US Department of Energy to quickly approve LNG export applications as DOE’s comment period on allowing US LNG exports closed. “We have plenty of gas to meet our domestic needs and still be able to export substantial amounts to markets overseas,” Erik Milito, upstream operations director at the American Petroleum Institute, told reporters in a teleconference.

“Our advantage isn’t going to last forever,” added Kathleen Sgamma, vice-president of government and public affairs at the Western Energy Alliance, who also participated. “US companies innovated with new technologies to produce our domestic gas surplus. The longer we wait, the likelier we are to lose that advantage as other countries adopt those technologies.”

DOE’s comment period was unique because it provided time for commenters’ to respond to other submissions, she noted. API, IPAMS, and others submitted supplemental comments on Feb. 25 to rebut points raised by LNG export opponents. “The opponents said demand in the study which DOE used has been underestimated,” said Sgamma. “We think production has likewise been underestimated.”

She and Milito disputed opponents’ statements that the industry wants unfettered exports. “Globally, about 100 bcfd of projects is proposed,” he indicated. “There’s a market for only about 25 bcfd. Just approving applications doesn’t mean all these projects will be built.”

Construction, transmission, and liquefaction costs also would limit exports, which in turn would keep domestic prices from rising significantly, Milito added. “The law states these exports are presumed to be in the national interest,” he said. “They already are deemed as such to countries which have free trade agreements with the United States. It shouldn’t be hard to demonstrate that non-FTA nations also qualify.”

DOE said once the comment period closes, it would begin to act on 16 applications to export US LNG to non-FTA countries in the order they originally applied. Dominion Cove Point LNG LP in Maryland is third on the list. It also submitted additional comments rebutting opponents’ concerns on Feb. 25.

So did America’s Natural Gas Alliance, which represents 27 of the nation’s leading gas producers. “There is a clear case to be made for supporting a natural gas export market. It’s an economic and environmental win,” said Amy Farrell, ANGA’s vice-president of regulatory affairs.

“Realistic export scenarios that recognize our vast domestic production potential and market forces strongly suggest long-term price stability in domestic gas prices,” she maintained.

Sgamma said more LNG exports potentially could revive dry gas production in the Green River and Piceance basins which is being shut in, and provide a market for much of the gas associated with Bakken shale crude oil production that now is being flared.

“It’s pretty clear that the more LNG we export, the more benefits there are not just to the oil and gas industry, but also to the nation’s economy in general,” she observed.

MicroSeismic Returns to CERAWeek

MicroSeismic, Inc. will be speaking at CERAWeek 2013 in Houston, TX as part of their returning alumnus panel. These presentations are dubbed the "Energy Information Pioneers" and feature companies and entreprenuers who are developing technologies and business plans that are transforming the energy future. 

IHS selects companies based on their creativity, feasibility of plan, scalability of technology and leadership team. 

IHS CERAWeek is recognized as the world’s leading forum offering insight into the energy future. Chaired by Pulitzer Prize-winning author, Daniel Yergin, IHS CERAWeek 2013 Drivers of Change: Geopolitics, Markets and the New Map of Energy, will convene an international group of over 2,000 industry, policy and financial leaders—along with leading researchers from IHS—to explore the implications for strategies and investment in an era of persistent change.

For more information, visit www.ceraweek.com.

Health Dollars Spent in the Millions to Investigate Frac'ing

The nation’s fracking boom is fueling more than just economies.>

The practice and its potential effects on public health are quickly becoming one of the most widely researched topics in America, as leading academics, well-respected health care companies, state and local governments, and many others are examining whether the drilling method can lead — or, some believe, has led — to serious health problems.>

Millions of dollars already have been spent, and much more soon will be dumped into a litany of studies looking at fracking’s impact on water and air quality and at possible links to cancer and other diseases.>

The industry argues that there are no such links; indeed, studies have shown little or no health risks or effects related to fracking. But other reports have claimed the opposite.

Many analysts believe there simply hasn’t been enough research to draw firm conclusions.>

“There’s a lot of rhetoric on both sides. You can only get at the truth if you base it on sound science, and that’s where the problem is. There’s very little sound science” on the subject, said Trevor Penning, head of the University of Pennsylvania's Center of Excellence in Environmental Toxicology.>

Mr. Penning and colleagues at the University of Texas, Harvard University and other institutions are seeking funding from the federal government to help gather that science. The center already has begun a health survey of residents in Pennsylvania’s Marcellus Shale region, home to one of the largest natural gas deposits in the world and an area where fracking is widely employed.>

Governments and leading medical companies are tackling the same questions.

Across the border in New York, Gov. Andrew Cuomo has once again delayed a decision whether to allow fracking in his state, this time citing the need for more public-health research.

Earlier this week, Pennsylvania’s Geisinger Health System received a $1 million grant to help fund what it’s calling “the first large-scale, scientifically rigorous assessment of the health effects of natural gas production.”>

“The establishment of reliable and valid data regarding the potential health impacts of Marcellus Shale gas drilling is essential for informed policy decisions,” said Glenn D. Steele Jr., the company’s president and CEO.>

The grant was awarded by the Degenstein Foundation, a philanthropic project founded by the late Charles Degenstein. The foundation funds projects in the Keystone State and lists among its goals the “conservation of nature resources and protection of the environment.”

But it’s unlikely that the Geisinger study will close the book on fracking and public health. One need only look to two recent Colorado surveys to see how researchers with similar objectives can come to wildly different conclusions.>

Last year, the Colorado School of Public Health, comprised of faculty and analysts from leading universities in the state, released a report alleging that air emissions from fracking sites may be partly to blame for acute health problems.>

But just last week, a report commissioned by the Erie, Colo., Board of Trustees and based on air samplings by the state’s Department of Public Health and Environment found that the risk of human health problems caused by those emissions is low.

Geologist Challenges Popular Frac'ing Myths

With debate over hydraulic fracturing or “fracing” running at a fever pitch, it seems the only thing everyone can agree on is that, for better or worse, there is plenty of natural gas down there for the taking.

Now a provocative analysis of unconventional fuel reserves in the United States aims to slap a big question mark over that assumption. In a comprehensive look at all the major shale gas plays currently being tapped across the U.S., the study focuses on the rapid decline of individual gas wells, along with entire fields, and concludes that optimistic projections for a long-running boom that will unleash cheap gas for decades to come are unwarranted.

“The hype around shale gas is just that,” said David Hughes, a geologist and former research manager with the Geological Survey of Canada who authored the study, which was release on Tuesday.

Dr. Hughes is not exactly reporting from neutral ground. The study was sponsored by the Post Carbon Institute, a California-based think tank that promotes sustainable energy. Yet, Dr. Hughes says, the numbers are there in black and white, drawn from a widely used industry database.

It’s not that shale gas isn’t abundant, Dr. Hughes says, but that fracking only releases gas from a relatively small volume of rock. And apart from a few “sweet spots,” much of the overall reserve is of relatively marginal quality. Once the sweet spots are tapped out, continuing to get gas out of the ground at the current rate is going to require a vastly ramped-up effort with attendant environmental costs. The likely outcome, he says, is a decline in production and a rise in price, which means that expectations that gas will replace coal as an economically viable, cleaner burning alternative, or enable the U.S. to become a net exporter of liquid natural gas, are off base.

“Sometimes people get caught up in talking about the size of a resource when what they really need to be thinking about is the net energy yield,” Dr. Hughes said.

Starting around 2006, U.S. shale gas production began to climb steeply, thanks to innovations in horizontal drilling and fracking – a technology that uses high-pressure fluids to crack open the shale, allowing gas to seep out.

Shale gas now accounts for roughly 40 per cent of domestic supply in the U.S. – about 9.7 trillion cubic feet per year. A projection released in December by the Energy Information Administration, a branch of the U.S. government, suggests that fraction will grow to 50 per cent of what the country produces by 2040.

But Dr. Hughes say those projections are too rosy, and fail to take proper account of the fact that most wells fall to 15 per cent of initial productivity after just four to six years. Maintaining supply in the face of such decline will require much more fracking, at the rate of more than 70,000 new wells per year by 2040, to meet the EIA projection. Increased costs and growing concerns about environmental impact could make such a level of development untenable.

The assessment is sure to meet with plenty of resistance. Daniel Whitten, a spokesman for America’s Natural Gas Alliance, based in Washington, said Dr. Hughes`conclusions run counter to several government and academic studies, “all of which forecast robust supplies of natural gas for many generations to come.” Andrew Miall, a professor of geology at the University of Toronto who provided an independent reviewed of Dr. Hughes’ report, said that while it may represent a minority opinion, it is a “clear-eyed look” at the geological underpinnings of the shale gas industry that deserves wider notice. “It shows that this isn`t a resource that flows freely,” Dr. Miall said.

Dan Arthur, president and chief engineer for ALL Consulting in Tulsa, Okla., which recently completed a report on shale gas for the Petroleum Technology Alliance of Canada, notes that Dr. Hughes is not the first expert to have raised questions about the longevity of the gas boom. However, Mr. Arthur still forecasts a robust industry going forward, buoyed in part by further technical innovation. “I figure I`m going to be busy for quite a while,” he said.

800-Mile Alaskan Gas Pipeline to be Built

Exxon Mobil Corp. (XOM), ConocoPhillips (COP), BP PLC (BP, BP.LN) and TransCanada Corp. (TRP) said Friday they plan to develop a natural-gas pipeline from Alaska's North Slope to a port where the gas would be prepared for export as part of a project expected to cost $45 billion to $65 billion.

The companies provided some details for the proposed Alaska gas pipeline in a letter to Alaska Gov. Sean Parnell.

Under the companies' plan, or "concept," an 800-mile pipeline would be built with the capacity to ship 3 billion to 3.5 billion cubic feet of gas to an area near a port where the gas would be turned into a liquid. The liquefied natural gas would be stored in tanks and loaded onto tankers from a loading jetty with two berths, according to a plan attached to the letter. In addition to those facilities, a natural-gas treatment facility would be built on the North Slope, near Prudhoe Bay, near where the gas would be produced.

The liquefaction plant would be built on a 400-acre to 600-acre site and be able to process 15 million to 18 million tons of gas a year, executives with the comapnies said in the letter.

"We remain committed to responsibly developing the State's considerable resources and will keep you advised of our progress," read the letter, which was signed by Randy Broiles at Exxon Mobil, Trond-Erik Johansen at ConocoPhillips, Janet Weiss at BP and Tony Palmer at TransCanada.

If built, the gas pipeline and export facility would be one of the largest LNG projects in the world, said Mr. Parnell, who has strongly supported development of Alaska's gas and a pipeline to ship the gas to overseas markets. As part of an agreement with the state, the companies promised to provide periodic updates on their pipeline-development plans.

"I am pleased the companies met the benchmarks," Mr. Parnell said in a statement. "I look forward to working with them as they advance this public-private partnership."

API Steps Up Keystone XL Support

The oil industry and some union workers are stepping up their campaign for the Keystone XL pipeline, as the Obama administration nears a decision on whether to approve the controversial $7 billion project.

The American Petroleum Institute is planning to run new advertising making the case for the pipeline, tap some 12 million in grassroots supporters to get involved in the issue and use social media to amplify the arguments that the project could support jobs and economic activity in 49 states.

“We’ll be advertising, making presentations at events around the country and calling on allies and potential allies — including business and labor leaders, veterans, educators and others — to write to the president and Congress urging approval of the project,” said API President Jack Gerard.

Gerard declined to specify how much API would spend on pro-Keystone campaign but described planned ad buys as “significant.”

Sean McGarvey, president of the AFL-CIO’s building and construction trades department, said union workers would be raising their voices too.

Organized labor has been divided on the issue. But McGarvey predicted more unanimity as workers recognize the potential jobs tied to the pipeline project.

“I expect the labor federation within the next couple weeks to come out affirmatively in support of this pipeline,” McGarvey said.

The State Department is finishing a environmental assessment of the pipeline, pegged to its new route around sensitive areas in Nebraska, before concluding whether the project is in the “national interest.” Although the State Department had said it was on track to make its final decision in March, that timeline could be derailed if the government first accepts public comments on the environmental review.

Gerard said there’s no need to wait. Obama could approve the pipeline “today if he wanted to,” Gerard said, noting that the project has already been through previous environmental analyses and public comments.

The Obama administration rejected a cross-border permit for the northern portion of the Keystone XL pipeline early last year, after the State Department concluded it needed more study after the Nebraska reroute.

Separately, TransCanada Corp., is already moving ahead with construction of the southern leg of the pipeline, including the stretch through Texas, which does not hinge on the State Department’s decision.

Environmentalists argue that Keystone XL could contribute to climate change by expanding the marketplace for Canada’s oil sands crude. Because the bitumen in Canada’s oil sands is harvested through mining and energy-intensive steam-assisted techniques, it may have a higher carbon footprint than conventional crude.

But pipeline advocates reject opponents’ assertions that diluted bitumen from Canada is significantly dirtier than the crudes from Venezuela and other nations that it would likely displace in Gulf Coast refineries.

Supporters of the project also say the pipeline would give the U.S. greater access to crude from a North American ally and provide a new transportation option for surging oil harvested in Montana and North Dakota.

As Gerard and McGarvey spoke to reporters Wednesday, 48 activists were arrested during a peaceful protest in front of the east gate of the White House. Some handcuffed themselves to the White House fence with cable ties proclaiming “Reject KXL Pipeline.”

The protesters included actress Darryl Hannah, Sierra Club Executive Director Michael Brune 350.org founder Bill McKibben, civil rights activist Julian Bond and Texan Jerry Hightower, whose land is in the pipeline’s path.

In a joint letter, the activists said they had “a moral obligation to stand for immediate, bold action to solve climate disruption.” And the activists stressed that they weren’t protesting the president, but instead, “are here to encourage and support him.”

“President Obama has the executive authority and the mandate from the American people to stand up to the fossil fuel industry and to reject the Keystone XL tar sands pipeline right now,” the activists said. “We risk arrest because a global crisis unfolds before our eyes. We have the solutions to this climate crisis.”

API on Wednesday released new polling data that showed 69 percent of American voters support building the pipeline, and 83 percent believe it would strengthen the nation’s energy security. The poll of 1,001 registered voters was conducted by Harris Interactive.

Gary North Named VP of Worldwide Sales

MicroSeismic, Inc. (MicroSeismic) announced today that Gary North has been promoted to Vice President of Worldwide Sales. In this role, he will be responsible for the development and implementation of MicroSeismic's worldwide sales strategy.

"I am pleased to announce Gary's new position with MicroSeismic," said Terry Jbeili, COO of MicroSeismic. "He brings a wealth of experience to the role and given Gary's intimate knowledge of our products and services coupled with his impressive sales background and strong leadership skills, he will undoubtedly help drive the adoption of microseismic monitoring as a completions optimization tool in unconventional plays."

Gary joined MicroSeismic in 2011. His 32 year career includes experience leading sales and marketing, mergers and acquisitions, operations, risk management and spanning specialties ranging from oil and gas to staffing and recruiting, electrical utility and safety and risk management. Most recently, Gary was Sales Director in charge of MicroSeismic's Southern and Central US sales. Prior to MicroSeismic, he was Vice President of Sales for Zonar Systems.

"This is an exciting time for MicroSeismic. We celebrate our ten year anniversary this year and continue to develop new technology to provide enhanced services and solutions to our clients on a consistent and reliable basis," said Gary North, VP Sales for MicroSeismic. "We have a strong sales group with extensive experience and I look forward to working with my team and our customers to find ways in which MicroSeismic can help optimize their completions and ultimately deliver real value."

Gary earned a Bachelor of Administration with a minor in chemistry from the University of Cincinnati. He is an active member of the Society of Exploration Geophysicists, Society of Petroleum Engineers and Rotary International.

Erie's Air is Just Fine

The exciting official review of CDPHE's air quality study has just been released. OK, so it's not so exciting, but that's good, isn't it?

Once again, Erie's air and water have shown to be clean -- very clean in fact.

The Town of Erie has just presented the third factual analysis of the second air quality test in less than a year, and with optimal results. The analysis was done by the Pinyon Group, recommended by activists themselves -- you can't be more fair than that.

Are we over doing it? Especially considering there has never been any real sign or evidence of a problem?

Consider this; last year at this time, a controversial political activist group and followers emerged to incite fear and angst in the community with highly misleading and emotionally charged rhetoric about hydraulic fracturing of oil and gas wells. Out-of-state lobby and special interest groups had descended upon the town, regularly sending teams of petition pushers to knock on doors.

Public officials in Boulder were shouted down, while angry, loud activists ran down and intimidated people who didn't agree with or think like them.

All of this press is based on allegations and accusations that were missing one essential thing -- any proof.

Swiftly and responsibly, the Erie Town Board and staff set out to cut through the hype and get to the facts, and that we did.

Here's what we found: in ongoing, daily tests over the last decade, municipal water shows no signs of incursion from any industry. Air tests from NOAA show we have trace propane levels 1,000 fold below EPA minimum concern levels (on a side note, that is 10 times the level in coastal Pasadena, which has virtually no propane, but is often referenced).

Colorado Department of Public Health's air quality tests conducted at the Canyon Creek well during frack and finish phases, show element and pollutant levels that are anywhere from "not present" to well within acceptable limits. To put it in context, the well produces roughly 500 times fewer emissions than pick-up and drop-off activity at the nearby school parking lot. Finding out the well site is safer than an elementary school should be important information to concerned residents.

So the answer is no. Regularly obtaining and monitoring facts and the truth is not overkill, it's essential. This comprehensive data provides peace of mind and quality of life for those who still value the facts over innuendo. Don't think extremists will simply disappear, though. The truth angers deceivers. There will still be the occasional cleverly worded statements that don't exactly say anything but insinuate everything (after all, deception is the hallmark of such groups).

One thing you can count on, though, is for a majority of those in town hall to be vigilant in keeping the facts available to you the citizens, and common sense policies in place to serve your best interests. That's the Erie way.

Eagleford Midstream Projects Gear Up

An oil and gas midstream service company is in the early stages of developing a project on the Port of Corpus Christi’s Harbor Island property near Port Aransas, company and port officials said Tuesday.

Kilgore-based Martin Midstream Partners, which provides transportation, storage and terminal services to oil and gas companies, wants to develop the entire 250-acre site, said Scott Southard, vice president for commercial development.

The company remains quiet about project details and has yet to file for permits but is looking to take advantage of Eagle Ford-related shipments and could bring about 50 jobs on refinery-type pay scales, Southard and Doug Towns, another Martin executive, said.

The project would represent new life for the former site of an Exxon and Fina crude oil storage facility. The port acquired the property in the 1990s and has been cleaning it up for years, removing more than a dozen 80,000-barrel tanks, thousands of feet of pipes, and residual petroleum.

Flint Hills Resources acquired it from Exxon and traded it to the port for another property in a transaction worth $8.7 million.

Port commissioners approved leasing the property to Martin Midstream for six months at $175,000 so the company can study the site and apply for permits. If they decide to purchase, the property would be put up for bid, port Managing Director Frank Brogan said.

Project development could take about three years, depending on growth of Eagle Ford Shale activity, Southard said.

Martin Midstream operates a crude oil terminal on the port’s inner harbor.

REI CEO Nominated as Next Interior Secretary

President Barack Obama announced Wednesday that he is nominating Sally Jewell, president and CEO of the outdoor and recreational retailer REI, to replace Ken Salazar as Interior secretary.

Obama called Jewell a “strong and capable leader,” saying she’s “an expert on the energy and climate issues that are going to shape our future. … She knows the link between conservation and good jobs.”

At a 15-minute White House rollout with the president, Jewell said she was “humbled” and “energized” by the appointment.

“I’m going to do my best to fill those big boots of yours,” Jewell told Salazar. Drawing laughter from the audience, she added, “But I think I might get lost in your hat.”

The pick, first reported by The Washington Post, would be well-received by environmental groups yet also offer something for the oil and gas industry: Jewell is a board member of the National Parks Conservation Association and was a young petroleum engineer at Mobil before it merged with Exxon.

Reminder to Register for February Webcast

Don't forget to register for February's free webcast, improving Event Location Accuracy with Anisotropic Velocity Models, hosted by Carl Neuhaus, Petroleum Engineer, MicroSeismic, Inc. 

The webcast will be held February 19, 2013 at 10:00AM CST.

For more details and to register for the presentation, visit the MicroSeismic website.

MicroSeismic Kicks Off 10 Year Anniversary!

MicroSeismic kicked off their 10 year anniversary last night with a birthday cake and a champagne toast led by President and CEO, Peter Duncan. MicroSeismic's key management were in attendance, as well as members of the trade media. 

World Oil featured the celebration on their website's home page today

The evening's festivities were the first of many such events that will be held throughout the year in MicroSeismic's honor. 

Attend February's FREE Webcast!

If you missed January's webcast, you'll want to make sure you attend in February. Join us on February 19th at 10 a.m. CST as Carl Neuhaus, Petroleum Engineer, MicroSeismic, Inc. presents, Improving Event Location Accuracy with Anisotropic Velocity Models.

This month’s webcast focuses on the application of an anisotropic velocity model in determining microseismic event locations from surface-acquired passive seismic data. The Thomsen parameters ε and δ were determined to accurately locate calibration shots to their known location. Hydraulic fracture events where then imaged and compared to their locations derived from processing incorporating an isotropic velocity model. When compared directly to calibration shot locations derived with an isotropic velocity model, we will show that the absolute average error in calibration shot positioning in all directions was improved by almost 30% and hypocenter events from the hydraulic fracturing treatment depicted a more dense and confined zone of microseismic activity.

Register today on our website

Frac'ing Goes Global

Frac'ing is going global.

The U.S. energy industry clearly still leads the way on the revolutionary drilling method that has upended global energy markets, but the rest of the world is beginning to catch up as nations seek to replicate American success in oil and natural gas development.

Taking the lead in Europe, Poland plans to begin producing shale gas using hydraulic fracturing, commonly known as frac'ing, as soon as next year, the country’s treasury minister said recently. More than 100 exploration concessions to more than two dozen companies have been awarded, and the Polish State Geological Institute estimates that the country’s shale gas deposits may secure domestic production for at least 25 years. Britain has lifted a moratorium on frac'ing that was imposed after a previous operation was blamed for sparking an earth tremor.

Argentina, the largest producer of natural gas in South America, is eyeing the practice on a significant scale to better exploit its supply.

Frac'ing uses water, sand and chemicals to break underground shale formations and release fuel. The technique has been key to economic revivals in localities across the U.S. and has helped domestic oil and gas production skyrocket. International competitors now want in on the action.

“Everybody around the world has taken notice the past few years. They’re taking notice and starting to wonder if they can get a part of the same energy revolution that we have here,” said Daniel Simmons, an energy scholar at the Institute for Energy Research, a Washington-based think tank and research organization.

In November, the independent Beijing-based publication Caixin reported on a secret Chinese white paper saying the Asian superpower is planning a “huge frac'ing industry” and that “the model for China’s anticipated success is the U.S. shale gas sector.”

The same month, Fort Worth, Texas-based FTS International Inc., a leading frac'ing equipment company, announced the signing of joint venture deals with partners in Saudi Arabia and Brazil.

Saudi Arabia, in particular, has reason to examine U.S. drilling success. The International Energy Agency recently reported that American oil production will surpass Saudi Arabia’s to become the globe’s single biggest producer of oil and natural gas as soon as 2020, putting North America on track to becoming energy-independent.

Frac'ing offers a similar path for nations such as Poland, which are dependent on foreign suppliers they do not fully trust.

“That’s what is driving them to look for shale gas in that part of the world, so they get out from under the Russians’ thumb when it comes to energy,” Mr. Simmons said. “Some of those countries that are really dependent on Russian natural gas are much pro-hydraulic fracturing.”

February Webcast Registration is Now Open!

Join Carl Neuhaus, Petroleum Engineer, MicroSeismic, Inc on February 19, 2013 at 10AM CST for a free webcast; Improving Event Location Accuracy with Anisotropic Velocity Models.

This month’s webcast focuses on the application of an anisotropic velocity model in determining microseismic event locations from surface-acquired passive seismic data. The Thomsen parameters ε and δ were determined to accurately locate calibration shots to their known location. Hydraulic fracture events where then imaged and compared to their locations derived from processing incorporating an isotropic velocity model. 

When compared directly to calibration shot locations derived with an isotropic velocity model, we will show that the absolute average error in calibration shot positioning in all directions was improved by almost 30% and hypocenter events from the hydraulic fracturing treatment depicted a more dense and confined zone of microseismic activity.

FrackNation Well Received

Natural gas drilling supporters gathered in Susquehanna County on Tuesday night to view the television premiere of a documentary aimed at rebutting environmentalists' claims about the risks of hydraulic fracturing.

The globetrotting film, which takes aim at Josh Fox's 2010 anti-drilling documentary "Gasland," gives Northeast Pennsylvania a prominent role. It features Wayne County farmers who joined together to draft a protective lease, Dimock Twp. residents who say methane infiltrated their water wells long before gas drilling began nearby, and a Montrose dairy farmer who calls the gas well on his property "the best cow on the farm."

Unlike industry-funded films meant to counter the arguments in "Gasland," "FrackNation" was funded by about 3,300 nonindustry donors through the online fundraising platform Kickstarter. In it, filmmaker and journalist Phelim McAleer interviews scientists who refute claims that fracking contributes to cancer, earthquakes or flammable faucets and confronts anti-drilling activists about the economic damage caused by drilling bans in the U.S. and abroad.

Clifford Root, a Tioga County landowner, said during a commercial break that he thought the film represented voices that have not been heard enough.

"These farmers are telling the truth," he said, "that they wouldn't be able to make it without some help."

The royalty owners group encouraged the three dozen people in the crowd to begin speaking, tweeting and posting their perspectives online.

"FrackNation" presents a withering picture of a Dimock couple who argued that their water was contaminated by drilling and blames them for instigating an ongoing drilling ban in a portion of the township. But Mr. McAleer opens himself to the same criticism he levels at Mr. Fox - that he "didn't include relevant reports" about naturally occurring methane in "Gasland" - because he does not explain that Pennsylvania environmental regulators imposed the ban after they found high levels of methane had channeled from faulty gas wells into 18 water supplies.

Drilling is still on hold there because regulators have not yet determined that the methane levels are low enough to meet the terms of a state enforcement action against the driller.

The "Gasland" creators issued a statement saying that Mr. Fox refused contact with Mr. McAleer because he "persistently harassed" and misrepresented Mr. Fox and has "a long history of baiting environmentalists, denying climate change and willfully spreading misinformation."