Senators Urge Approval of Keystone Pipeline

A bipartisan group of senators is asking President Obama for a meeting about the proposed Keystone XL oil sands pipeline that the lawmakers want the White House to approve.

The letter from 18 senators, led by Sens. John Hoeven (R-N.D.) and Max Baucus (D-Mont.), announced via press release Friday calls for “setting politics aside” and urges Obama to back the project.

It states:

Nothing has changed about the thousands of jobs that Keystone XL will create. Nothing has changed about the energy security to be gained through an important addition to the existing pipeline network built with sound environmental stewardship and the best modern technology. Nothing has changed about the security to be gained from using more fuel produced at home and by a close and stable ally. And nothing has changed about the need for America to remain a place where businesses can still build things.

Senate Minority Leader Mitch McConnell (R-Ky.) also signed the letter. It requests a meeting with Obama in the “near future.” The White House did not comment.

The Nov. 16 letter signals that TransCanada Corp.’s proposed pipeline, which would transport Canadian oil sands to Gulf Coast refineries, will remain a priority for proponents and foes alike.

The pipeline, in addition to transporting Canadian oil, is slated to carry oil from the booming Bakken formation in North Dakota and Montana. It would also traverse Montana.

“The election is over, people want us to work together to create jobs, and one sure way we can create jobs right now is by moving forward with construction on the Keystone XL pipeline,” Baucus said in a statement.

Hoeven said moving ahead with the pipeline would be a “big step toward American energy independence.”

OPEC Acknowledges Importance of Shale

While some, most notably the IEA, claim that shale oil will help the US become the largest oil producer in the world, OPEC has never really acknowledged the significance of tight oil in the US until now.

In the recently released World Oil Outlook 2012, OPEC wrote, “given recent significant increases in North American shale oil and shale gas production, it is now clear that these resources might play an increasingly important role in non-OPEC medium- and long-term supply prospects.”

This is a huge admission by OPEC, and one that could influence global oil markets, as previously OPEC has never been keen on new technologies such as frac’ing.

Caroline Bain, the lead commodities analyst for the Economist Intelligence Unit (EIU) stated that, “OPEC’s 2012 World Oil Outlook highlights the extent and severity of risks but takes a relatively benign medium-to-long-term view in its reference case. OPEC has lowered expectations of consumption, particularly in the OECD, over the next few years and expects OPEC’s contribution to global supply to remain relatively stable. The report discusses the advent of shale oil in the US, but unsurprisingly is somewhat cautious about its long-term implications, referring to resource uncertainty and rapid depletion rates as well as environmental concerns.”

Partly as a result of the increased production from the US, but also to do with the poor global economy, OPEC has revised its forecasts for crude oil demand. It expects the world to reduce its demand for oil from OPEC, down to 29.70 million barrels per day in 2016. As the report says, “this downward revision, together with updated estimates of OPEC production capacity over the medium-term, implies that OPEC crude oil spare capacity is expected to rise beyond 5 million bpd as early as 2013/2014.”

Act Now to Gain Benefits of Natural Gas

Reports about the game-changing nature of the country’s natural gas reserves, newly recoverable with the combination of hydraulic fracturing and horizontal drilling, seem to come out every week.

But Marc S. Lipschultz, global head of energy and infrastructure for KKR & Co., says the ability to reap the economic benefits are far from assured.

Among the key challenges, he said, are smoothing the boom-and-bust cycles in gas prices and mitigating the environmental impacts of gas drilling that limit social acceptance.

Lipschultz estimates gas production could increase by 44 percent between 2011 and 2035. But there’s a pricetag. He says it will take:

• $2 trillion in upstream investments.
• $205 billion in capital expenditures for gas infrastructure development.
• expansion of the gas transmission system by 35,600 miles and an additional 589,000 billion cubic feet of working gas storage by 2035.

The payoff could be similarly huge. Lipschultz’s paper joins other recent studies in suggesting that increased shale gas production could produce hundreds of thousands of new jobs and add to GDP. It could also save consumers $41 billion in lower gas prices in 2017, he said. That includes direct savings to natural gas consumers, indirect savings from lower electricity prices and lower prices for industrial products.

His tally suggests 330,000 additional direct jobs in natural gas, oil and natural gas liquids production, along with as many as 210,000 additional manufacturing jobs linked to the increased production of natural gas.

He also is predicting as many as 40,000 additional construction jobs.
But none of that is a given, Lipschultz writes.

He suggested four steps must be taken for all the benefits of shale gas to be achieved.

• Industry must work with regulators, the community, environmental and other stakeholders to develop appropriate regulation and “best practices” to reduce impacts and protect health and the environment. He pointed to a study announced last month in which some of the nation’s largest natural gas producers, including Anadarko Petroleum, Shell Oil Co. and ExxonMobil subsidiary XTO Energy agreed to work with the Environmental Defense Fund and the University of Texas to look at methane leaks at well sites as a positive step.

• Expanding natural-gas based transportation infrastructure, including municipal and corporate natural gas powered fleets, heavy duty trucks and consumer vehicles.

• Clearer, faster and more consistent procedures for securing permits on federal lands.

• Exports of liquefied natural gas. “LNG export sales … will directly reduce our trade deficit,” Lipschultz writes. “Additionally, because the resource base is so large, these exports are expected to have only a modest impact on domestic prices while providing a steady source of demand to support expanded production and delivery infrastructure.”

Shale Revolution Turns O&G Industry Upside Down

It’s hard to believe how North America’s oil and gas industry—a conservative bastion—has been turned upside down in such a short period of time. And it’s all because of the Shale Revolution.

Look at pipelines. They cost billions, take years to plan, get approvals, sign up committed customers with take-or-pay provisions etc.—and now some are being made redundant within a few years.

But the BIGGEST change in pipelines is happening because the industry discovered a massive new shale gas deposit in the northeast US—the Marcellus Shale.

Read the full story on Oil Voice and see if you agree.

America, the New Middle East?

Predictions of U.S. dominance in the world oil market are a stunning reversal from the grim energy forecasts of a few years ago. Headlines are trumpeting that the United States could soon surpass Saudi Arabia as the world’s largest oil producer.

After 40 years of hand-wringing over foreign energy dependence and oil disruptions, the Department of Energy reports that U.S. oil and other liquid hydrocarbon production, including biofuels, will reach an average of 11.4 million barrels per day next year — just below Saudi Arabia’s level of 11.6 million barrels. Citibank projects that U.S. production could climb to 13 million to 15 million barrels per day by 2020, making North America “the new Middle East.”

These glowing reports can be credited to our truly unique, and American, system of private mineral rights, and to American ingenuity and the countless hours invested in developing the technologies used to improve oil and natural gas production. Horizontal drilling, seismic study innovations and hydraulic fracturing are producing more energy from old wells and unlocking oil and natural gas from hard-rock formations, including the Marcellus and Utica shales.

IHS Cambridge Energy Research Associates, or IHS CERA, says the shale drilling boom supports nearly 1.8 million U.S. jobs today and will create an additional 1.3 million jobs by 2020.

But there remains one great danger — new policies that could hinder U.S. oil and gas production in coming months. Unfounded claims that stoke fear of frac’ing, overreaching regulations, and a questionable water-quality study by the Environmental Protection Agency threaten to turn the bonanza into a bust if left unchallenged.

In their effort to find a link between fracturing and ground water contamination, EPA regulators tested water in three locations: Dimock, Pa., where they found no connection between fracturing and the well water troubles featured in the documentary “Gasland“; Parker County, Texas, where the EPA quietly dropped a water contamination case against a drilling company; and Pavillion, Wyo., where the agency hopes to bolster its highly criticized 2011 study.

In December 2011, the EPA reported that two ground water monitoring wells found “likely impact to ground water that can be explained by hydraulic fracturing.” In new tests, the EPA says its results are “generally consistent” with the 2011 findings, but that’s because the agency used the same flawed methodology. A separate, scientifically sound study by the United States Geological Survey (USGS) found no link between Pavillion’s ground water and frac’ing.

The EPA’s study is important because the agency is trying to build a case for new federal regulations that could delay or even stop hydraulic fracturing. According to a new minority report from the Senate Environment and Public Works Committee, the EPA is expected to deliver on its promise to “crucify” oil and gas companies in 2013.

The Groundwater Protection Council, which represents state water regulators, anticipated the federal government’s power grab and issued a report in 2009 that upheld the efficacy of state regulations. It also warned that enactment of federal fracturing regulations would be costly, duplicative “and ultimately ineffective because such regulations would be too far removed from field operations.”

New layers of rules could endanger America’s best chance for economic growth and energy security. They also could create an obstacle to increased prosperity in the region. The Ohio Chamber of Commerce says the state is likely “to see thousands of new jobs and millions in new investment,” if the IHS CERA projection is correct. Only the government can put that in jeopardy.

Energy Industry Ready to Work with Obama

Now that President Obama has been re-elected to the White House, energy industry officials are looking to see whether the president fulfills his campaign promise to increase domestic oil and gas production and the shape that his “all-of-the-above” energy policy will take in the second term.

API looks forward to working with the president to help him fulfill his campaign promise “to increase domestic oil and natural gas production that will create American jobs and strengthen our economy,” American Petroleum Institute (API) President and CEO Jack Gerard said Wednesday in a statement.

One way Obama can fulfill his promise “right off the bat” of creating more jobs is to approve the Keystone Pipeline project and “put thousands of Americans to work immediately,” Gerard said.

Obama should also acknowledge the effective role states are already playing in regulating oil and gas production and “avoid the temptation to impose duplicative and unnecessary regulations on hydraulic fracturing.”

“By following through on his own executive order to eliminate overly burdensome regulations, he can rein in EPA’s [Environmental Protection Agency] plans to impose regulatory burdens that could cost businesses hundreds of billions of dollars and chill economic growth,” Gerard noted.

The right public policies could allow the burgeoning U.S. shale boom to be a game changer for America, allowing for the creation of millions of new jobs, billions in government revenue, and stronger energy and national security, Gerard said.

Earlier this year, API launched its Vote for Energy campaign, through which it aimed to bring U.S. energy policy and issues to the forefront of the political discussion in the presidential race. In August, API conducted a poll, in which it found 92 percent of voters saying that energy security and domestic oil and gas production were important issues in the presidential election.

The poll results indicated that voters “clearly get” the issue of how oil and gas, and that API’s efforts to bring energy to the forefront of discussion was successful.

“With both candidates supporting more development of America’s vast oil and natural gas resources, energy is a big winner in this election,” Gerard said in a Nov. 7 statement.

Though he supported Republican presidential challenger Mitt Romney, T. Boone Pickens also congratulated Obama on his re-election.

“We should all remember, no matter how divided Americans are during the campaign season, we have one President, and we can only succeed when we come together as a nation to find solutions to our greatest challenges,” Pickens noted.

Pickens pointed out that Obama in his last State of the Union address spoke out in strong support of developing U.S. natural gas resources to reduce the nation’s dependence on OPEC oil.

“I applauded him on his call for action at the time, and I will be eager to see him turn this promise into a reality during his second term,” Pickens noted.

Western Energy Alliance President Tim Wigley said the election’s outcome would slow U.S. economic growth because of “stalled energy policies and job-killing overregulation.”

“We hope the Obama Administration will look at some of the policy ideas brought forth during the campaign, such as delegating more responsibility for oil and natural gas development to the states, and achieving a balance between regulation and economic growth, which has been missing the last four years,” Wigley said in a statement Wednesday.

Environmental groups also praised the re-election of Barack Obama as president.

“Despite the hundreds of millions of dollars the fossil fuel industry dumped into this election to elect Mitt Romney, we proved those corporations are, in fact, not people,” Sierra Club Executive Director Michael Brune noted.

“There was only one candidate in this race who doubled down on our nation’s clean energy economy,” Brune said. “There was only one candidate who consistently fought to hold oil and coal companies accountable and only one candidate who stood up for landmark protections to keep toxins out of our air and water.”

“During his first term, President Obama articulated a vision of America leading the world with a clean energy future that meets the challenge of climate disruption head-on. Today, American voters chose to give President Obama both an opportunity and a challenge of huge proportions. And the President now has four more years to put American solidly on the path to this future.”

Energy industry officials have touted expanded oil and gas production in the United States – particularly its unconventional oil and gas plays – as a means of jobs creation and a way to revive the U.S. economy. The abundance of inexpensive shale gas could allow for a renaissance in the U.S. manufacturing sector, industry officials say. However, they view the approach taken by the Obama administration over exploration and production regulations at home as impediments to that growth.

Under the Obama administration, the oil and gas industry has faced increased offshore regulations stemming from the 2010 Macondo oil spill. The industry also faces the prospect of losing tax treatments under the current tax code, including the ability to write off the cost of research done ahead of drilling a well. Obama has threatened to repeal these tax treatments, saying that industry is not paying its fair share of taxes, a notion that the energy industry and some lawmakers reject.

Increased regulations and changes to the tax laws, along with a new U.S. rule requiring oil and gas companies to report their payments to foreign governments to develop oil and gas fields, will squash exploration and production activity at home and make the industry less competitive abroad. In October, API and other business groups filed suit against the U.S. Securities and Exchange Commission to challenge the law.

Market analyst Phil Flynn forecasts that natural gas prices will rise as Obama raises taxes on oil companies, which will slow down the “historic job creating shale gas drilling” in favor of high risk, low return wind and solar.

“We are pricing in the government going after a thriving industry that has used creativity and imagination to make us energy independent,” Flynn said in a Nov. 7 statement of his outlook for the futures market.

Futures markets correctly priced in an Obama victory Tuesday “and all of the economic pain that will go along with it.” While an Obama victory would be “wildly bullish” for commodities because it would mean a vote of confidence for Fed Chairman Ben Bernanke and his policies of easing. At the same time, the market is pricing in “perhaps a decade or more of economic pain.”

“The markets are saying that under an Obama presidency, get ready for continued high unemployment, higher budget deficits, higher taxes, and higher gasoline prices and less job creation,” Flynn said. He added that Europe “is absolutely giddy with the outcome because they now will have another country moving towards their failing socialist experiment.”

When he was first elected to office, President Obama pushed for the expanded use of alternative energy sources versus oil, gas, and coal. However, in recent times he has come around to supporting the development of natural gas.

Obama has stated that the United States needs to develop every available resource of American-made energy, including oil, gas, clean coal wind, solar, biofuels and nuclear. “However, most of his realistic substance seems to focus on the new big player, natural gas,” said GHS Research analysts in a Wednesday research note.

GHS analysts note that Obama’s energy plan calls for the “safe and responsible development” of the U.S.’s 100 year gas supply, which could support more than 600,000 jobs by the end of the decade.

“Although he is no fossil fuel friend, natural gas may get a boost in the next four years despite democrats perception as strong environmentalists,” GHS noted.

Obama is seen as favoring some amount of liquefied natural gas exports from the United States. However, the fact that the Senate remains in the control of the Democrats, and that Sen. Ron Wyden (D-Ore), who will likely serve as chair of the Senate Energy Committee – and has said the United States should “reconsider rubber stamping LNG exports as part of a 21st Century energy policy,” – could pose as obstacles to LNG exports.

Eagle Ford Touted as Top Play

The Eagle Ford Shale started as a natural gas play around mid-2010, and if it had stayed that way, there wouldn’t be so much talk about it.

But as natural gas prices fell, the industry within a year had switched gears in South Texas, focusing instead on extracting the more profitable crude oil and natural gas liquids from the shale rock.

That play-within-a-play characteristic of the Eagle Ford Shale is making it a premier shale play, speakers said at the recent Hart Energy’s third annual DUG (Developing Unconventional Gas) Eagle Ford Conference in San Antonio, TX.

“The Eagle Ford Shale has emerged as the most significant opportunity for unconventionals in North America and perhaps the world,” said David Roberts, executive vice president of COO of Marathon Oil Corp.

Roberts said that as of 2006, Marathon had zero production from unconventional sources. Now liquids-rich shale plays make up 15 percent of the company’s global production, and that likely will double by 2015.

Last year it had a gross production from the Eagle Ford of 29,000 barrels of oil a day, and now that’s up to 100,000 barrels and growing.

Mark Sooby, managing director of energy investment banking of Bank of America Merrill Lynch, said the Eagle Ford is more profitable than many other plays because of its proximity to refineries.

“This is just an amazing oil story in the middle of what started as a gas play,” said Sooby.

Companies at the DUG conference said that drilling and production are getting more efficient and faster — and more profitable.

“We’re not only doing things faster, our results are getting better,” said Greg Givens, a vice president at EP Energy LLC, which plans 86 wells this year in the Eagle Ford.

Richard Mason, chief technical director of upstream with Hart Energy, said rig counts in the Eagle Ford are likely to increase a bit in early 2013 as companies start their new fiscal year and can invest more into the area. But until natural gas prices start to rise again, Mason said there won’t be a huge increase in drilling.

“That horizon is out there,” he said.

For now, pure dry gas areas of the Eagle Ford — where no oil or natural gas liquids can be produced — are likely to remain undeveloped, said Allen Gilmer, chairman and CEO of Drillinginfo.

“Nobody like dry gas,” Gilmer said. “It is the redheaded stepchild of the entire play.”

But several companies said that even as they focus on liquids production, they are hanging onto their gas acreage in anticipation of the day that natural gas prices start to rise.

Sooby said there’s generally far more natural gas available than oil in shale plays across the U.S. Finding new uses for that gas should be a priority for U.S. policy, he said.

No matter what’s being produced, Texas remains well positioned, with the Permian Basin similar to the Eagle Ford in terms of its ability to produce natural gas, oil and natural gas liquids.

All 50 States Can Benefit from Frac'ing

The oil and natural gas drilling boom that has already bought new jobs to North Dakota and Ohio will reshape the nation’s economic landscape over the next five years, according to a report issued lasy week.

Economic benefits from the activity — and the hydrocarbons pulled out of the ground — will be far flung, supporting a surge in sand mining in Wisconsin, turbine manufacturing in the Carolinas and other work far from the drilling hubs, the report concludes.

“The effects go far beyond local areas and regions with drilling,” ICF International says in the analysis it conducted for the American Clean Skies Foundation. “Industrial expansion involves facilities such as gas and liquids pipelines, gas processing plants, petrochemical plants, steel manufacturing, sand mining, ammonia production, methanol production and LNG export terminals.”

The report is just the latest to highlight the economic benefits of domestic oil and gas development. While other recent studies have focused on the broad national job and gross domestic product gains associated with the surge in domestic drilling, the new ICF International analysis highlights the effects across all 50 states.

The study also links abundant, low-priced natural gas with a domestic manufacturing renaissance. For every billion cubic feet of additional gas production per day, according to the report, there are 13,000 new drilling and pipeline jobs, plus thousands of indirect jobs in chemical plants and other gas-using facilities.

“The economic impact is widely distributed across the U.S. and has already had very large positive GDP impacts in major production growth areas,” the report says.

While drilling hotbeds of North Dakota, Texas, Oklahoma, Louisiana and others will see some of the largest GDP and employment impacts, according to the study, states such as Wisconsin and Ohio benefit from providing services to energy and pipeline companies.

Report author Harry Vidas, vice president of ICF’s oil and gas division, said the analysis “gives us considerable confidence that the economic benefits we are seeing today will last well into the next decade.” Vidas credits the long-lasting effects to the “large available resource base opened up by technological advances and the extensive business plans in place for its production and use.”

Energy companies are using horizontal drilling and hydraulic fracturing to extract natural gas and oil from dense rock formations, in a change from historic drilling practices that tapped large underground reservoirs. The hydraulic fracturing technique involves blasting sand, water and chemicals underground to free natural gas and oil trapped in the pores of the rock — releasing a whole new supply of the hydrocarbons that were previously thought inaccessible.

American Clean Skies Foundation CEO Gregory Staple said the report captures the bigger picture surrounding domestic production.

“This report helps us put a face on the large economic stimulus that shale gas production has provided for America,” Staple said in a statement.

The not-for-profit foundation aims to advance America’s energy independence and backs using natural gas, renewable power and greater efficiency to achieve a cleaner, low-carbon environment. Its board of directors includes oil and gas executives, including Chesapeake Energy Corp. CEO Aubrey McClendon and GHK Exploration founder Robert Hefner.

Natural Gas Insulated PA from Recession

Natural gas drilling has helped insulate Northeastern Pennsylvania from a nationwide recession that started in 2008, though the effects have been much more pronounced in counties experiencing active gas production, according to an updated study released last week by a local economic think tank.

The study by the Institute for Public Policy and Economic Development updates a 2008 report that examined the economic impact of the Marcellus Shale in Northeastern Pennsylvania, specifically the 10th Congressional District, and other shale plays in Texas and Arkansas.

It measures that impact through changes in population, income, housing prices and unemployment.

“Data presented for the 10th Congressional District showed how a region suffering from population loss and job loss began to display economic growth and strength at (a) time when other parts of the country were in a severe recession,” the study concludes. “However, more detailed analysis of employment show an area divided by core drilling counties and non-drilling counties, which further magnifies drilling impacts.”

The institute’s director, Teri Ooms, said that “when you pick the numbers apart, it’s obvious that the counties that have the wells are the ones that are seeing the direct impact.”

In 2011, the unemployment rate was 5.9 percent in Bradford County and 7.6 percent in Susquehanna County, while in Lackawanna County and Luzerne County, which lack significant drilling, unemployment remained above 9 percent.

But Ooms said unemployment was high in those counties long before the drilling boom, and the study does not “point the finger” at the gas industry for contributing to unemployment.

Rather, areas on the border of natural gas drilling should consider strategies to capitalize on the industry’s presence.

“We need to have people think a little more strategically; a little more regionally during economic development planning,” Ooms said. “It’s not getting money from the state through the impact fee, but focusing on job generation, not just through a vendor network through the gas drilling industry but actually looking at the maximum amount of gas that could be used in other businesses that will want to relocate here because the cheap gas is here.”

Ooms said the institute is seeking funding to develop such an economic development strategy.

“We would research the types of industry that use natural gas in their processes or are heavy natural gas users in general,” Ooms said. “Target them for relocation.”

Pro-gas industry group Energy In Depth touted the report as evidence of the Marcellus Shale’s positive impact in the region.

“No one can read this report and not come away with the conclusion Marcellus Shale development is good for Northeastern Pennsylvania — all of it,” said John Krohn, spokesman for Energy In Depth. “We might also add there are other studies, of the Eagleford Share region, for example, that show how to implement the policies suggested by the Institute, which would allow places such as Scranton and Wilkes-Barre to further enhance their economies with shale.”

Methane Emissions from Natural Gas Lower than Expected

A survey prepared for two U.S. natural gas trade groups claims greenhouse gas emissions from gas production are lower than expected.

A 57-page report prepared by engineering company URS Corp. and environmental consultancy The Levon Group for the American Petroleum Institute and America’s Natural Gas alliance says greenhouse gas emissions from natural gas production are lower than previous estimates.

ANGA Executive Vice President Tom Amontree said the scientific study was drafted to reinforce a position that natural gas is a clean energy option for the United States.

The study says methane emissions from natural gas production are at least 53 percent lower than estimates provided by the U.S. Environmental Protection Agency. The URS-Levon study examined 91,000 wells from 20 different companies, compared to the 8,800 in an EPA survey.

“Industry has led efforts to reduce emissions of methane by developing new technologies and equipment, and these efforts are paying off,” Howard Feldman, API director of regulatory and scientific affairs, said in a statement.

API has described as unscientific recent EPA findings that chemicals associated with natural gas production in underground shale formations were detectable in groundwater monitoring wells.

IHS Study Shows $500B from Shale

The shale oil and natural gas sector in the United States could contribute nearly $500 billion to the U.S. gross domestic product by 2035, an analysis states.

A report from research company IHS says growth in unconventional oil and gas production in the United States could be a key driver in future economic growth.

Daniel Yergin, author of the report, said the boom in oil and gas production from shale plays in the United States is redefining the country's energy sector.

"The United States currently has the highest rate of growth in crude oil production capacity in the world and is virtually self-sufficient in natural gas, except for some gas from Canada," he said in a statement. "This is a stark contrast from when, prior to the unconventional revolution, it was expected that the U.S. would soon become heavily dependent on gas imports."

Oil production from unconventional plays for 2012 is expected to reach 2 million barrels per day and attain the 4.4 million bpd mark by 2020. In terms of unconventional gas, production could account for as much as 75 percent of the natural gas production in the country -- about 76 billion cubic feet per day -- by 2035.

IHS says unconventional energy activity will add $247 billion to gross domestic product in 2012, an amount expected to reach $475 billion by 2035.

America to Produce More Fossil Fuels than Ever Before

University of Michigan economics professor and American Enterprise Institute scholar Mark J. Perry has posted two graphs showing just how far America's fossil fuel production has come.

First, production is at an all-time high — nearly 62 quadrillion BTUs, an increase of about 12 percent from 2005. That's enough to meet approximately 13 percent of the entire world's energy needs, according to the Department of Energy. View the graphics on the Business Insider website.

Final Reminder: Register for the October Webinar

Carl Neuhaus, Petroleum Engineer for MicroSeismic, Inc will present October's complimentary webinar tomorrow at 10 a.m. entitled, Integrated Microseismic Monitoring for Field Optimization in the Marcellus Shale.

Full program description is below. Register online now.

This webcast focuses on an integrative analysis of hydraulic fracture treatments conducted in the Marcellus Shale. The presentation determines how various factors related to the specific reservoir geology in the Marcellus and to what extent the variability of hydraulic fracture treatments impacted the microseismic results. It analyzes stress changes in the reservoir indicated by focal mechanisms to help explain the asymmetry of the microseismicity about the wellbore. Finally, the initial production results are compared to reservoir and engineering parameters to determine if the variability in the microseismic results is due to engineering differences or to spatially-varying reservoir properties.

Op-ed to SF Examiner Encourages Frac'ing

Dave Quast, California Director of Energy In Depth, published this op-ed to the San Francisco Examiner this week. Excellent, informed opinions are always a welcome read!

When the recent debate over hydraulic fracturing in California first got started, Gov. Jerry Brown made a statement that’s worth recalling: “California is the fourth-largest oil producing state and we want to continue that.” Fortunately, we have the resources and the technology to ensure we remain a leading energy producer.

The Monterey Shale, a geological formation roughly 2 miles beneath parts of California, contains as many as 15 billion barrels of oil. That’s enough home-grown energy to eliminate California’s need for overseas oil for 50 years, create thousands of jobs, boost the economy, and send billions of dollars of new tax revenue to state and local governments. To produce this oil, which was previously inaccessible, California’s oil and gas companies may combine advanced drilling methods with hydraulic fracturing, a technology that’s been safely used more than a million times across the United States since the 1940s without incident.

Despite its impressive track record, activist groups with extreme anti-industry views — such as Washington, D.C.-based Food & Water Watch — want hydraulic fracturing banned as a de facto means of putting the oil and gas industry out of business, and millions of oil and gas workers out of their jobs. These groups claim that fracturing technology is unsafe, but that is simply untrue.

Just ask the Obama administration and its expert advisers.

“There’s a lot of hysteria that takes place now with respect to hydraulic fracking,” Interior Secretary Ken Salazar told Congress earlier this year. “It can be done safely and has been done safely hundreds of thousands of times,” says Salazar, who oversees oil and gas activity on roughly 700 million acres of federal lands, including 47 million acres in California. According to Stanford University geophysicist Mark Zoback, an adviser to Energy Secretary Steven Chu, “the mystery surrounding hydraulic fracturing has actually been exacerbated and people have been paranoid, really for no reason.”

This paranoia includes the mistaken belief that fracturing shale contaminates groundwater and causes damaging earthquakes. “Fracturing fluids have not contaminated any water supply,” Zoback says. As for earthquakes, Zoback says the seismic energy released by the process is “about the same amount of energy as a gallon of milk falling off a kitchen counter,” and the National Academy of Sciences recently concluded fracturing “does not pose a high risk for inducing felt seismic events.”

Because it is safe, activist groups have to make fracturing sound scary by claiming the process is minimally regulated, or worse, unregulated. Not according to the U.S. Department of Energy, which says fracturing is regulated “under a complex set of federal, state and local laws that address every aspect of exploration and operation.” States are the “No. 1 regulator,” says White House energy adviser Heather Zichal, and according to U.S. Environmental Protection Agency Administrator Lisa Jackson, “states are stepping up and doing a good job.”

In California, there are strict regulations for oil and natural gas wells — requiring multiple layers of steel and cement casing to protect groundwater. Oil and gas companies are working constructively with regulators and lawmakers in Sacramento on measures that will strengthen the state’s oversight of hydraulic fracturing and give the public more information about how it’s done. In fact, California’s oil and gas companies have already started disclosure using FracFocus, the same registry endorsed by many other states with mandatory disclosure regulations.

Here’s what the industry opposes — a ban or a moratorium based on fear mongering from anti-industry ideologues, dishonest filmmakers and misguided celebrities, instead of facts. And the facts show hydraulic fracturing is not a threat to California, it is an opportunity.

October Webinar: Integrated Microseismic Monitoring for Field Optimization in the Marcellus Shale

A reminder to register for the October MicroSeismic webinar, Integrated Microseismic Monitoring for Field Optimization in the Marcellus Shale, hosted by Carl Neuhaus, Petroleum Engineer with MicroSeismic, Inc. This complimentary webinar will be held October 23, 2012 at 10 a.m. CST.

 A full description of the webinar is below. You may register on the MicroSeismic website.

Program description:
This webcast focuses on an integrative analysis of hydraulic fracture treatments conducted in the Marcellus Shale. The presentation determines how various factors related to the specific reservoir geology in the Marcellus and to what extent the variability of hydraulic fracture treatments impacted the microseismic results.

It analyzes stress changes in the reservoir indicated by focal mechanisms to help explain the asymmetry of the microseismicity about the wellbore. Finally, the initial production results are compared to reservoir and engineering parameters to determine if the variability in the microseismic results is due to engineering differences or to spatially-varying reservoir properties.

Utica Shale Numbers are In!

Drilling companies beginning to explore the Utica Shale got a piece of good news  when the U.S. Geological Survey estimated the rock formation in Ohio, Pennsylvania and other states holds enormous reserves of natural gas and oil.

Releasing its first estimate of the Utica, the USGS calculated the shale formation holds about 38 trillion cubic feet of undiscovered, recoverable natural gas, 940 million barrels of oil and 9 million barrels of natural gas liquids like ethane and propane.

The Utica lies beneath the Marcellus Shale, where energy companies have drilled thousands of unconventional gas wells in Pennsylvania in recent years. The Marcellus is considered to be 1 of the richest natural gas reserves in the world.

Drillers are just beginning to tap into the deeper Utica. Pennsylvania and Ohio have issued 452 Utica well permits to date, and 178 wells have been drilled, according to the most recent state data.

The geological survey's Utica estimate covered parts of Maryland, New York, Ohio, Pennsylvania, Virginia and West Virginia.

Such estimates are highly variable and subject to revision. The USGS estimated last year that the eight-state Marcellus region contains some 84 trillion cubic feet of undiscovered, recoverable natural gas, far more than its 2002 assessment of just 2 trillion.

"As more (Utica) wells are drilled and more production data is assessed, reserves figures will likely increase," said Steve Forde, vice president of the Marcellus Shale Coalition, a drilling industry trade group. He hailed the Utica as "another game-changing opportunity."

Domestic production of shale gas has soared in recent years as drillers perfected a technique called hydraulic fracturing, or fracking, and combined it with horizontal drilling to reach previously inaccessible reserves deep underground. The production boom has resulted in lower prices for consumers while stoking concerns about water and air pollution. The drilling industry says its practices are safe.

Bakken Housing at a Premium

The Bakken Oil Field in North Dakota is the largest oil discovery on American soil in the last 40 years. But now that Bakken oil production has rocketed from 3,000 barrels to 600,000-plus per day in just six years, oil workers are flooding the state for jobs and finding no where to live.

The modern day "gold rush" has left oil companies scrambling for suitable housing and North Dakota farmers grumbling about the influx of strangers. The Bakken boom could mean great things for the Midwest economy, but the new workforce must find houses for their families first.

"Right now, the majority of workers are crammed into small man-camps that are crowded, poorly insulated, expensive and temporary," says Stephen H. Watkins, CEO of a capital market called Entrex.

Better alternatives, however, are on the way.

"With some help from us at Entrex and the capital raised from our Top-Line Income Generation Rights Certificates, the new Bakken Housing Group can provide safer, cleaner housing for oil workers," says Clint Loman, Managing Member of Bakken Shale Housing LLC.

Bakken intends to construct multiple well-maintiained, family-friendly housing facilities around the region. Instead of paying for a mattress per night, workers can rent a three-bedroom unit on a month-to-month or yearly lease.

Local experts are predicting at least a 30-year window of drilling success in the Bakken, which could mean promising gains for the long-term real estate market. Officials already say North Dakota is second only to Texas for domestic oil production.

The explosive growth has oil companies and investors salivating over the profit potential. Not to mention the big picture goal of getting the U.S. to depend more on national resources and less on foreign oil.

Bakken Shale Housing chose to help finance their expansion with real estate investors by using a TIGRcub security structure. According to Watkins, Entrex is an alternative to the Wall Street capital markets that have trouble supporting certain companies."

Expanded Drilling May Help Cut Deficit

A new industry-backed report says expanding fossil fuel production and energy efficiency measures could help close the deficit and foster North American energy "self-sufficiency."

The Consumer Energy Alliance, a coalition of oil companies and groups representing energy-consuming industries such as chemical manufacturing and trucking, will release the report later this week.

The report says opening more U.S. and Canadian onshore and offshore lands to drilling could bring in $803 billion in revenue for the federal government and create 1.4 million jobs by 2030.

That, along with demand-reducing technologies such as wind power and biofuels, as well as policies such as vehicle fuel economy standards, would bring North America closer to energy self-sufficiency, it said.

“In order to significantly and effectively lower U.S. imports of overseas crude, the United States must focus on both decreasing the demand for transportation fuels and increasing North American supply of fuel,” the report said.

One of the biggest hurdles to achieving energy self-sufficiency is the ability to tap “undiscovered, technically recoverable oil resources,” the report said. The report cited a 2011 Congressional Research Service report that said 134.5 billion barrels of oil and 1,176.2 trillion cubic feet of natural gas could be locked away in currently unreachable deposits.

“While the production of these resources is technically feasible, economic conditions and other factors may limit how quickly these resources come online,” the report said.

Oct. Webinar: Integrated Microseismic Monitoring for Field Optimization in the Marcellus Shale

Registration for the October MicroSeismic webinar, Integrated Microseismic Monitoring for Field Optimization in the Marcellus Shale, is now open. This is a complimentary webinar and will be held October 23, 2012 at 10 a.m. CST.

The webinar will be presented by Carl Neuhaus, a Petroleum Engineer with MicroSeismic, Inc. A full description of the webinar is below. You may register on the MicroSeismic website.

Program description:
This webcast focuses on an integrative analysis of hydraulic fracture treatments conducted in the Marcellus Shale. The presentation determines how various factors related to the specific reservoir geology in the Marcellus and to what extent the variability of hydraulic fracture treatments impacted the microseismic results.

It analyzes stress changes in the reservoir indicated by focal mechanisms to help explain the asymmetry of the microseismicity about the wellbore. Finally, the initial production results are compared to reservoir and engineering parameters to determine if the variability in the microseismic results is due to engineering differences or to spatially-varying reservoir properties.

Investing in Natural Gas

We've known for a while about huge gas deposits encased in shale. In the past five years, though, huge advances in frac'ing technologies have changed the economics of gas recovery.

And while the media have focused on the potential environmental impact of frac'ing, as the technology improves, even more gas will become accessible. Money magazine published an excellent article this week on how to sort through the myriad investment choices around natural gas.

We encourage you to read the full article.

Ohio Poised to Benefit from the Utica

To the Editor:

Anti-hydraulic fracturing activists gathered in nearby Ithaca last week as part of the Global Frackdown Day to challenge the safety and environmental impact of hydraulic fracturing. The fact is, hydraulic fracturing has been used safely for more than 60 years. Recent advances in hydraulic fracturing technology have unlocked unprecedented amounts of natural gas. So abundant is natural gas on this continent that there's enough to supply America's electricity needs for the next 575 years at current usage, according to the Institute for Energy Research's North American Energy Inventory. The Public Policy Institute estimates that if New York were to produce its portion of the Marcellus Shale, more than 37,000 new jobs would be created each year that may pay more than $79,000 annually - more than twice the average private sector wage in upstate New York.

The discredited film ''Gasland'' and flawed Environmental Protection Agency groundwater studies recanted by EPA administrator Lisa Jackson herself have resulted in some confusion among the public. Far from an environmental threat, cleaner-burning natural gas was a major contributor to a drop in U.S. energy related carbon dioxide emissions, according to the U.S. Energy Information Administration's June energy report.

Anxiety evoked by new technology is nothing new. Yet New Yorkers should not allow unsubstantiated fear to reverse the train of progress.

Tom Pyle
President, Institute for Energy Research
Washington, D.C.

Pro Frac’ing Sentiment Out of NY

Excellent op-ed this week from Tom Pyle, President, Institute for Energy Research out of Central New York. We encourage you to read the full letter below, or online.

NY Educational Organization Offers Frac’ing Course

Natural gas drilling using hydraulic fracturing, or frac'ing, is banned in New York State. But that hasn't stopped an upstate New York educational organization from offering training courses for work in natural gas fields.

For $1,000, students can enroll in the five week Gas Industry Careers course that teaches technical skills used in natural gas extraction, like basic welding and rough terrain forklift driving.

Dick Lindhorst, coordinator of adult job training for the Broome-Tioga Board of Education Services, says job seekers in his region near the Pennsylvania border will be prepared when the frac'ing ban is lifted – and he's confident it soon will be.

"Certainly any jobs at this point particularly those that pay above the normal level will help," Lindhorst said, referring to the challenging job market.

The average weekly income for a worker in oil and gas extraction is $1,576, according to the latest jobs report from the Bureau of Labor Statistics. That's a 21% increase from July 2007 – before the recession and the oil and gas booms in places like North Dakota and Pennsylvania.

The income for oil and gas workers is also the highest of any job in the BLS's mining and logging category. In fact, it's part of the reason that mining and logging is a higher paying industry sector than financial activities, according to the BLS. Employees in financial activities include accountants, bank tellers, and commodities sales agents, among others.

Understanding Microseismic Positional Uncertainty: Next Week's Webinar

There's still time to register for the complimentary September webinar, Understanding Microseismic Positional Uncertainty, led by Mike Mueller, VP Technology Development.

The webinar is Tuesday, Sept. 25th at 10 a.m. For more information or to register, visit the MicroSeismic website.

Article Compares Natural Gas Development to Indoor Plumbing

An article on the Energy in Depth website this week compares the development of natural gas to early railroads, electricity and indoor plumbing. How you might ask?  Well, each of those major Victorian age innovations spurred entire industries, replaced old ways of doing things and greatly improved people's everyday lives.

Read this engaging, full article on the EID website.