No Big Frac’ing Deal

As excerpted from Business Insider:

Deep in the rolling tree-clad hills of Pennsylvania, on a hilltop close to a group of barns and farmhouses, Chevron's Kikta well pad can be found at the end of a narrow country lane. This is part of the Marcellus shale, 250,000 sq km (96,500 square miles) of gasfields stretching across Pennsylvania, West Virginia and New York state.

The drilling rig is 30 metres high, so large that it is hard to imagine how it could have got to the site, but it comes apart and the components fit onto lorries. It sits on an acre of flattened hilltop, along with a million-gallon reservoir to provide the huge quantities of water needed for extracting shale gas.

Vehicles and machines are poised for action. Four wells will be drilled from this one pad. The drill will first bore 7,500- 8,500 feet downwards; then the drill bit is coaxed to the horizontal and the drilling continues outwards. Gas will start rising to the wellheads, just a few meters apart, after the next task is performed: hydraulic fracturing, or frac'ing.

Shale is a hard rock made up of sediments deposited on sea and lake beds hundreds of millions of years ago. To make it give up the gas held within, it needs to be broken up. Along up to 2km of horizontal pipes 14cm wide, holes open out onto the shale. Along small sections, water, fine sand (the "propant") and frac'ing fluid are injected under high pressure.

The frac'ing fluid, which makes up about 1% of the brew, is a combination of gelling polymers of the sort found in food and cosmetics, to keep the sand suspended in the fluid as it is pumped into the well; chelants to break down the polymer and release the sand when it arrives in the fractured shale; friction reducer to keep the flow smooth; and biocide, a disinfectant that stops bacteria gumming up the well.

On reaching the shale, the mixture of water and frac'ing fluid bursts open the rock and the sand keeps the fractures open, allowing the gas to flow to the surface. The power for the operation is supplied by the engines of a fleet of trucks, so this stage of the process can be noisy. But it takes only five days to complete, and then the shale gas begins to flow and the trucks, portable offices and hoppers are taken to another site to start all over again.

After a little over a year of activity, at least half of which is taken up with planning and obtaining permits, most of the land is reclaimed, apart from a little pipework and a water tank on a small section of the original site. At Elias, a completed Chevron operation, the only sound to disturb the replanted clover meadow is a faint whooshing as gas passes to an underground pipe network. It is the sound of dollars clocking up, and it could go on for 30-50 years. The gas rushes out rapidly in the first year or so before tailing off quite fast to a third of the original flow and gradually declining thereafter.

The remarkable thing about extracting shale gas, says Bruce Niemeyer, Chevron's regional boss, is "the absence of anything remarkable going on" above the ground.

The Marcellus is not what you might expect a gasfield to look like: the views can be spectacularly beautiful. And not only is it good to look at, its gas is also cheap to develop and cheap to produce. The average cost per well is $6m-7m, against $7m-11m in the Haynesville shale, spread across parts of Arkansas, Louisiana and Texas. Moreover, the Marcellus is close to the big markets of the Atlantic coast, so the gas is cheap to transport too.

If only every gasfield were like that!

Shale Just Part of the Draw for International Investments

America's potential oil and gas growth is so great, predicts Professor Amy Myers Jaffe of Rice University's Baker Institute, that by the 2020s the capital of energy will likely have shifted back to the Western Hemisphere, where it was prior to the ascendancy of Middle Eastern mega-suppliers such as Saudi Arabia and Kuwait in the 1960s.

Statoil is just one such company to get in on the game, with their 330-foot-tall, 60,000-ton semisubmersible drill ship Maersk Developer; 150 miles out in the Gulf of Mexico, targeting Move up http://i.forbesimg.com t Move down a prospect called Kilchurn, 25,000 feet down. In June Statoil completed the Kilchurn well at a cost of some $120 million, but has not revealed results.

The Developer rig is similar to Transocean's Deepwater Horizon, but this ship is newer and more modern—it's equipped with more safety precautions and redundant systems. The Developer was the first rig to meet all the new standards required by the Bureau of Ocean Energy Management—because Statoil already had those practices in place.

"We haven't had to change the way we do business," says Jason Nye, head of Statoil's Gulf of Mexico operations.

Total, Statoil has more than $20 billion worth of oil and gas assets in the U.S. and has bet still more that drilling into America is the company's best bet for growth-Statoil CEO Helge Lund has big plans to increase its output from a current 2.1 million barrels per day to more than 2.5 million by 2020.

The U.S. will be the biggest driver of that growth, with production planned to more than triple from 150,000 barrels per day today to 500,000.

"There can be no doubt that America is in the midst of an energy renaissance," says global energy guru Joseph Stanislaw, who now works with Deloitte.

Soaring oil output from the Bakken Shale fields, coupled with increased deepwater output primarily from the Gulf of Mexico, has pushed up U.S. domestic oil production by 12% since 2008. This is the first increase in a quarter-century and has confounded predictions that domestic output was set on an inexorable downtrend.

In addition to Statoil, China's Cnooc has put up $2 billion for joint ventures with Chesapeake Energy and another $2.1 billion to dig into Canada's oil sands. Sinopec has done a $2.5 billion shale JV with Devon Energy and bought Canada's Daylight Energy for $2.1 billion. Malaysia's Petronas is closing on a $5.35 billion takeover of Canada's Progress Energy. And Korea's KNOC invested more than $9 billion in U.S. finds.

MicroSeismic Presents at HGS Technofest Conference

MicroSeismic's own Mike Mueller was invited to speak last week at the Houston Geological Society's (HGS) Technofest Conference, held at the Westin Galleria. Mike's presentation covered interpretation issues in microseismic technology.

Other presenters on the 10-speaker agenda included Ken Tubman of ConocoPhilips, Joe Curiale with Chevron, and Neil Stegent, Pinnacle. For more information on the event, visit the HGS website.

AGU Article Concludes Natural Gas a Smart Move!

The below is an excellent article from Geochemistry, Geophysics and Geosystems, an online journal published by the nonprofit American Geophysical Union. We encourage you to read the excerpt below and view the complete article online.

No matter how you drill it, using natural gas as an energy source is a smart move in the battle against global climate change and a good transition step on the road toward low-carbon energy from wind, solar and nuclear power.

That is the conclusion of a new study by Cornell Professor Lawrence M. Cathles, published in the most recent edition of the peer-reviewed journal Geochemistry, Geophysics and Geosystems. Cathles, a faculty member in Cornell's Department of Earth and Atmospheric Sciences, reviewed the most recent government and industry data on natural gas "leakage rates" during extraction, as well as recently developed climate models.

He concluded that no matter the timeframe considered, substituting natural gas energy for all coal and some oil production provides about 40 percent of the global warming benefit that a complete switch to low-carbon sources would deliver.

Read on for more.

Oil Sands Fact Check New Resource for Energy Education

Manufacturers, refiners, energy companies and pipeline operators that think the promise of Canadian crude is getting lost in the criticism of it have formed an initiative to promote the fossil fuel.

"If you don't stand up for yourself or aren't seen as sticking up for yourself, why should (others) stick up for you?" asked Travis Davies, a spokesman for the Canadian Association of Petroleum Producers, which is participating in the campaign.

It comes amid scrutiny of the techniques energy companies use to harvest bitumen from Canada's oil sands and the proposed Keystone XL pipeline that would deliver the crude from Alberta to Gulf Coast refineries. The opposition to oil sands development surprised some advocates, just as industry leaders were caught off guard by the recent public backlash against the hydraulic fracturing process used to extract natural gas.

Environmentalists have battled Keystone XL by focusing on concerns about its initial route through the drinking water supplies of the Ogallala Aquifer in Nebraska. Many say, however, that a larger worry is that more pipelines would expand the marketplace for oil sands crude, which generates more greenhouse gas emissions than other oil.

The new initiative, known as Oil Sands Fact Check, is battling back, with reports touting the benefits of the product and countering opponents' claims.

The campaign is the brainchild of the American Petroleum Institute, which already had been aggressively lobbying the Obama administration to permit the Keystone XL pipeline. But API has a big portfolio, writing industry standards and responding to regulatory proposals. It spent $8.6 million lobbying Congress and policymakers last year alone, according to the Center for Responsive Politics' analysis of required disclosure forms.

Oil Sands Fact Check, by contrast, is more focused on providing information, research and experts on the oil sands, said Cindy Schild, API's senior manager for downstream operations.

API is funding the month-old initiative, but members include a wide variety of trade and business groups, ranging from the Michigan Manufacturers Association and the Chemistry Council of Missouri to assorted chambers of commerce and the American Fuel and Petrochemical Manufacturers.

Similarly, three years ago, the Independent Petroleum Association of America created "Energy In Depth," a public outreach campaign that focuses on countering critics' claims about oil and gas production from shale rock formations and other tight reservoirs nationwide.

"What we're trying to do is really just get the facts out on the benefits of oil sands, how energy is derived from oil sands and to continue to describe the opportunity, and, really, the energy security benefits and job benefits," Schild said.

Energy Development Contributes $275B to the US Economy

Energy development on federal lands contributed $275 billion to the economy last fiscal year and created 1.5 million jobs, according to a report released Monday by the Interior Department.

The Interior Department claimed its activities contributed a total of $385 billion to the economy in fiscal 2011, with energy development comprising more than 71 percent of that amount.

Oil, gas and coal production were the biggest economic drivers for Interior's Bureau of Land Management, generating an estimated economic contribution of $119.6 billion last year and supporting 558,976 jobs, according to the report. Wind energy on federal lands added $100 million in economic activity, along with 688 jobs. On-site solar construction yielded $1.4 billion in economic activity to go with 6,747 jobs.

Interior generated another $41 billion in economic activity and 290,000 jobs last year through its use of water, timber and other resources, the report said.

Petrochemicals Industry Benefits from Natural Gas Boom

The growth of natural gas production in the United States has set in motion an investment boom in the domestic petrochemicals sector that will result in American and Arabian Gulf producers competing for market share in Europe.

The shale gas revolution, which added to the supply with new production techniques, has driven down the price of natural gas, creating much better market conditions for chemical companies.

"Not very long ago, a number of clients said they wouldn't invest in the US anymore," said Jose Bustamante, a senior vice president at Fluor, an engineering and construction firm with a broad portfolio in the energy and downstream sectors. "Now, there are a number of opportunities coming up. I think we are getting into a new boom in investment in the US."

International oil companies such as Shell are also planning to expand their US petrochemicals business, with Shell planning a cracker feeding off the massive Marcellus shale gasfield in the Appalachian mountains.

"US natural gas is abundant and affordable," Marvin Odum, the president of Shell, said last year.

The market benefits simultaneously from the availability of gas, the prime feedstock for petrochemicals alongside crude oil, and the proximity to end users.

Experts predict that the shale revolution will not only turn the US into a net exporter of gas, but also lead to increasing exports of petrochemicals. This will lead to US and Gulf producers competing for market share in Europe, which is within reach of North America and the Middle East.

Continental CEO Preaches Energy Independence for the U.S.

Precision drilling, better technology and the exploitation of unconventional energy sources can make American energy independence achievable, Harold Hamm, Continental Resources CEO, told CNBC's "Squawk Box" on Tuesday.

"It comes from drilling wells," Hamm said. "You have to go out there and poke holes in the ground. And basically the technology that we have today to go down two miles, turn right, and drill two miles farther and hit your target in there, we do that every day."

New technology has opened up unconventional energy sources for exploration. "We've been producing the mobile portion of oil on earth for the past 160 years," the Continental Resources CEO said. "So now today we can go to the immobile portion and it's about a third larger than the mobile portion."

The public appears to agree that energy independence is getting closer. Citing a recent Harris poll, Hamm said nine out of ten Americans believe that energy independence is not only within our grasp in the next ten years but something we ought to strive for.

U.S. Tight Oil Production Expected to More than Double in Next 20 Years

The U.S. government published its first official forecast for booming "tight oil" production this week, estimating that shale formations such as the Bakken in North Dakota will more than double output in the next two decades.

The projections, one small part of the Energy Information Administration's updated long-term forecasts, shed light on the agency's take on the role of the oil found in low-permeability reservoirs such as shale and chalk formations, the largest new source of U.S. supply since offshore Gulf of Mexico.

U.S. output from eight tight oil prospects covered by the report will more than double to 1.23 million barrels per day by 2035 from 2011 levels, the EIA said, breaking out specific data on tight oil production for the first time in its 2012 Annual Energy Outlook.

In 2012, tight oil output will reach 720,000 bpd, or 12.5 percent of domestic production, it said.

The EIA expects tight oil to account for 20.5 percent of the 5.99 million bpd of the total it expects will be produced in the United States. The 2035 figure is lower than earlier estimates.

Tight oil output will reach as high as 1.33 million bpd in 2029 and then decline in the six years to 2035, according to the projection.

The report considers output from the Bakken, Eagle Ford in Texas, the tight oil plays in the Permian Basin of Texas and New Mexico and the Monterey shale in California, among others.

A combination of horizontal drilling and hydraulic fracturing technologies have unlocked massive shale reserves in the United States and upended oil markets by adding a surplus that is now flooding the key storage hub in Cushing, Oklahoma.

Output from the Bakken and Three Forks shale in North Dakota, the most prolific tight oil prospect in the U.S., reached 545,000 bpd in April, according to data from the North Dakota Industrial Commision.

Eagle Ford output is on its way to match Bakken's, after output reached 520,000 bpd in April, according to research firm Bentek Energy.

Energy companies have also set their sights on burgeoning oil plays like the Utica shale in Ohio, whose oil output is yet unknown. The EIA's latest report does not include projected Utica production.

EPA’s Anti-Gas Bias Abundantly Clear

At a recent U.S. Senate Appropriations Committee hearing, Environmental Protection Agency Administrator Lisa Jackson justified the agency's "desire to do additional science around hydraulic fracturing ... because the public's trust in that technology we believe is also based on the belief that we are looking to bring the very best science to bear, to ensure that it remains safe."

While no one would argue with the importance of ensuring safety in responsible shale-gas or oil development, recent missteps and questionable actions by the EPA have regrettably cast doubt upon the agency's credibility and ability to put forth the "best science" to ensure the public's trust.

In addition to last month's embarrassing resignation of the EPA's Region 6 administrator for subjectively placing a bull's-eye on the oil and gas industry, the EPA also has shown an anti-gas bias in Pennsylvania with its attempts to torpedo the proposed MARC 1 Pipeline after the project gained approval from the federal Energy Regulatory Commission.

As a result, there is mounting concern that EPA officials are committed to political agendas instead of looking out for the overall best interests of the public. While this isn't new news, it's is "news" worth mentioning.

You can read the full article here, we at MicroSeismic happen to think it's worthwhile.

Oil Companies Give Back in the Bakken

As oil companies increase their presence in North Dakota, many are finding more ways to give back to local communities.

For Marathon Oil, getting involved locally and supporting the community with donations is a priority, said Terry Kovacevich, Bakken asset team manager.

"We're all trying to encourage each other to make sure we participate in the communities that we live and operate in," Kovacevich said.

Marathon is the lead contributor to the Housing Incentive Fund, with a $2.5 million contribution and has pledged $1 million toward St. Joseph's Hospital and Health Center in Dickinson.

"We felt the hospital was one big way for Marathon to show leadership in giving back to the community," Kovacevich said.

Halliburton presented a $25,000 check last week to Mercy Medical Center in Williston, the second contribution of that size to the facility.

"It's nice for us to give back to the communities where we work," said Brent Eslinger, senior manager of Halliburton's Williston district.

Matt Grimshaw, CEO of Mercy Medical Center, said Halliburton has been the largest supporter so far, and he's in conversations with other companies about contributing.

"We find them to be very receptive. They believe they need to be good community members," Grimshaw said. "We can't do this alone."

It's not just oil companies that are donating money – contributions also come from companies that support the oil industry.

Target Logistics, the largest provider of temporary crew camp housing, has given several donations, including $17,000 to the Williston Police Department toward its first K-9 unit, $5,000 to Olympic swimming hopeful Carissa Gormally and a $2,500 scholarship for the Miss North Dakota pageant. The organization also provides food for community events and invited the public to Bear Paw Lodge for a Memorial Day barbecue.

The North Dakota Petroleum Council is surveying its members to gauge how much the companies have contributed to the community.

Some examples include a $25 million donation from Hess to support education, about $4 million from companies toward Minot flood recovery and between $4-$5 million for the North Dakota Heritage Center, said Ron Ness, council president.

"I think the numbers are going to be pretty big over the past three years here," Ness said. "We're very proud of what they're doing."

Companies also are giving their time by volunteering for cleanup efforts and other projects. For example, SM Energy has logged 360 volunteer hours, according to the Petroleum Council.

Ness said he expects the community support will continue to increase.

"As companies get their foothold and they figure out where their operations are, then they get more engaged in the local communities," Ness said.

MicroSeismic, Inc. Monitored 10,000 Hydraulically Fractured Stages Since 2010

MicroSeismic, Inc. announced today a milestone achievement of monitoring over 10,000 hydraulically fractured stages since January 2010. MicroSeismic is the pioneer of surface microseismic monitoring for hydraulic fracturing and the recent groundswell in unconventional drilling is increasing the adoption of its technology.

"The experience we have gained from all our work means our customers' jobs are done right the first time; the interpretations are grounded in science, helping to improve drainage, well spacing and completion techniques," said Peter Duncan, PhD, Founder and CEO, MicroSeismic.

MicroSeismic invented and perfected both the surface based array, (known as FracStar®) and shallow subsurface (BuriedArray™) microseismic monitoring processes. These surface acquisition methods allow customers to monitor their fracture activity across the entire field, rather than limiting them to areas with legacy downhole monitoring technology.

While the vast majority of hydraulic fracturing activity occurs in North America, MicroSeismic's 10,000 monitored fracture stages span across nine countries, including the first surface microseismic monitored wells in Poland, India, Turkey and the United Kingdom.

Full Steam Ahead for US Energy

The US House approved a sweeping energy legislative package that supporters said would facilitate development of more domestic oil and gas, and its sponsor, Rep. Cory Gardner (R-Colo.), urged the US Senate to take it up promptly.

"These bipartisan pieces of legislation make sure that we move forward on oil and gas development in the western United States and on federal lands," Gardner said.

The package of seven bills would require the US Department of Energy secretary to develop a plan for more leasing on federal land; streamline the federal drilling permit process; direct the US Interior secretary, when conducting lease sales, to offer previously unavailable acreage as at least 25% of the annually nominated total; and to require analysis of impacts from certain US Environmental Protection Agency rules and actions on gasoline, diesel fuel, and natural gas prices.

Other bills in the package would require the US Interior and Agriculture secretaries to prepare a new federal onshore energy production strategy every 4 years to guide leasing plans; the Interior secretary to hold at least one lease sale/year within the National Petroleum Reserve-Alaska, and establish a timeline for promptly considering necessary permits; and authorize the Interior secretary to hold oil and gas lease sales through Internet-based methods.

Oil and gas industry groups applauded the House's approval of the bills.

"Greater access to domestic energy resources, combined with smarter policies that boost our refining industry, will benefit consumers in the long run," said American Petroleum Institute Executive Vice-Pres. Marty Durbin. "More homegrown energy is good for all Americans."

Ohio’s Jobless Rate Down, Thanks to Utica Shale

Compared to April -- and several previous months -- Coshocton County Ohio's job prospects are looking pretty good.

Coshocton's unemployment rate was 9.3 percent for May. That's compared to 10.2 percent in April and 11.3 percent in May 2011.

In fact, the last time Coshocton saw a rate this low was in November 2008, when the rate also was 9.3 percent.

The U.S. Bureau of Labor Statistics released the latest unemployment figures Tuesday. The numbers, which are not seasonally adjusted, show lower unemployment all around, with Ohio dropping to 6.9 percent unemployment overall, and the U.S. as a whole dropping to 7.9 percent.

"I think there are opportunities out there for people looking for jobs," said Coshocton County Port Authority Director Dorothy Skowrunski. "They're predicting that June's numbers are even going to be better. It's really good news for Coshocton."

Skowrunski attributes Coshocton's lower rate to a combination of factors, including seasonal employment, businesses filling vacant positions and businesses expanding.

Utica Shale also is playing a role, Skowrunski said. So far, there only are three Utica permits for Coshocton County, according to the Ohio Department of Natural Resources, but already Skowrunski has noticed an increase in trucking jobs, she said.

If Utica activity continues to increase, that will mean even more jobs, not just for those working directly for oil and gas companies but for ancillary businesses such as hotels, restaurants and Laundromats as well, she said.

"They're gearing up for frac'ing, and they need a variety of different kinds of people to come in and fill those jobs," she said. "... Everyone's going to be competing for those employees."

Education Key to Understanding

Ohio educator Mark Baughman's students are starting to ask questions about Utica Shale, and he wants to have the answers. So Baughman went on a field trip.

The Adamsville Elementary School math and science teacher put on a bright blue hard hat and spent Thursday visiting a pipeline and supply company, an oil gathering station, a compressor station and a pump station in Marietta.

Baughman was one of about 20 teachers participating in the Ohio Oil and Gas Energy Education Program's teacher workshop. The two-day event cost about $25,000 to host, but everything was paid for through donations from oil and gas companies, said Rhonda Reda, OOGEEP executive director.

OOGEEP has hosted eight to 10 such workshops each year for the past 14 years, Reda said, "long before anyone started talking about Utica."

The goal is to improve science scores in Ohio and get students interested in scientific and energy-related careers, Reda said. Because of a lack of interest, oil and gas companies have lost two generations of workers, she said.

The workshop was focused largely on natural gas drilling, but OOGEEP also advocated for other types of fuels and energy careers, Baughman said.

"Their big thing is careers," he said. "They're pushing us to get kids involved now so they can get jobs."

Alliance Petroleum Vice President of Operations Marty Miller organized the field trip for the teachers. Miller has been working in the oil and gas industry for 33 years, he said.

For him, the workshop was all about education.

"Most people in America don't really get a true perception of what the oil and gas industry really is all about. ... What's important is to figure out how to let people see the real side of it rather than maybe a perceived side of it," he said.

Most of the technology for the horizontal drilling and hydraulic fracturing is not new, it's just on a much larger scale than what was used in the past, Miller said.

Dresden Elementary School teacher Renee Bright is excited to take what she learned from the workshop back to her classroom. For fifth- and sixth-grade science, she's required to teach about renewable and nonrenewable forms of energy. Bright already has visited a solar and ethanol plant and a wind farm, so it was time to learn more about Utica, she said.

"I just love this energy stuff. The more you see, the more you want to know," she said.

At the end of the workshop, each teacher got a box of experiment materials to take home. Bright plans to recreate parts of the workshop with her students, she said.

Rosie the Frac’er!

Members of the Women's Energy Leadership Coalition from jobs-hungry upstate regions appeared Tuesday at the Capitol to support natural gas development as a way to increase growth.

The gathering of Southern Tier and Central New York residents was designed to send the message to lawmakers as well as Gov. Andrew Cuomo that shale gas drilling has supporters, participants said.

"The people in this group have really felt disenfranchised for the past four years," said Karen Moreau, executive director of the state Petroleum Council, which joined the Independent Oil & Gas Association in backing the effort.

The natural gas reserves held in the Marcellus and Utica shale formations in the economically depressed areas has drawn keen interest from natural gas companies offering landowners cash for drilling leases.

The gathering — the latest by pro-frac'ing voices — was meant to rebut protests to the technique. Some who participated spoke of the need for jobs and economic development in rural areas.

Others said they feared criticism from neighbors who oppose frac'ing.

"I got very strong pushback and was quiet for a while," said Uni Blake, a toxicologist and environmental scientist who lives near Cooperstown in Otsego County.

Blake has since spoken on behalf of the drillers association at legislative hearings on frac'ing.

The need for jobs and economic development prompted her to speak out, Blake said.

“Truthland” Launches TODAY!

"Truthland", a factual alternative to "Gasland" launches later today.

This is the movie created by one woman from rural Pennsylvania who decided to find out the truth behind hydraulic fracturing — for her family, for her community, for herself.  Watch the movie online and hear what some of the experts she interviewed along her journey had to say.

Utica Shale Growth Has Potential to Generate Pipeline, Jobs

The oil and gas energy industry relies on pipelines to deliver the fruits of its labor to market. Pipelines require manufactured steel and people to place and weld them. If the Utica Shale proves to be as bountiful as hoped, Ohio will need a lot of them.

This will benefit Ohio consumers and businesses by virtue of cheaper transportation costs for natural gas. There are no public plans for any additional large transmission pipelines, similar to the Rockies Express in 2009, through Ohio, according to the Public Utilities Commission of Ohio and the U.S. Federal Energy Regulatory Commission. There is a proposed pipeline for ethane, a natural gas liquid found in shale, called the Appalachia-to-Texas Express Pipeline.

However, there are 236 approved Utica Shale wells, capable of producing massive amounts of gas, liquids and oil. One Chesapeake Energy well pumped 725 times as much gas in 2011 as the average producing well in the state.

Experts say not to expect more high-capacity interstate lines, but instead miles of gathering lines that will feed into Ohio's existing network. Transmission pipelines will not keep pace with drilling, which is expected to gather steam in the next year or two.

"That would be unlikely," said Charles Mason, an economics professor at the University of Wyoming. "You can drill a well and get it going pretty quickly. You can't get a pipeline up and running that fast."

The largest refiner of oil in the Midwest, Marathon has a contract for 1,000 barrels per day, and all of it is trucked in, company spokesman Shane Pochard said.

"We're in the pretty early stages of (the Utica Shale) coming online, so the fastest and quickest way to begin running it is by truck," Pochard said. "Ideally, as the play grows and matures, pipe would be preferred. It's the most efficient way to get oil into the refinery."

“Quagmire” Hope Lies on Shale’s Shoulders

Excellent article in the Houston Chronicle this week that applauds the local decisions of ExxonMobil to expand in Baytown, creating hundreds of jobs. Why the expansion? Shale gas of course! Read on for more:

The term of art widely used to describe today's struggling economy is that it's "facing headwinds."

In our battle to reduce unemployment, control the national debt and deficit, and restore our economy to robust health, we're said to be encountering stiff headwinds. They're blowing against us from the eurozone, which is in its own economic disarray, from Washington, D.C., where gridlock prevents bipartisanship that might yield economic solutions, and from the Middle East and China for a host of reasons.

It's good to be in Houston, where a dynamic energy industry is successfully navigating these headwinds and actually tacking ahead to a future where fairer winds may prevail. The latest example is Exxon Mobil's decision to expand its petrochemical complex in Baytown, creating 10,000 construction jobs and 350 permanent jobs at the plant.

The common denominator driving these projects is the abundance of natural gas from shale rock that has dramatically changed the nation's energy picture over the past several years. The availability of cheap natural gas has also made possible the export of liquefied natural gas from domestic gas reserves.

These steps are being taken against a backdrop of possible global recession and uncertainty about policy-making in this country that has kept an estimated $2 trillion to $3 trillion in private capital on the sidelines. With a close presidential election coming in November, that uncertainty is likely to continue through the end of 2012.

These decisions to push ahead not only reflect positive changes in the natural gas sector, but the kind of boldness and calculated risk-taking for which the oil patch has long been known. As Houstonians, we applaud these choices, not only for the benefits they bring to the regional economy, but for the larger benefit they will bring to a recovering national economy.

It seems clear to us that the energy industry is positioning itself to lead the United States out of economic quagmire and into a new era of prosperity built on the wise use of abundant domestic fuel resources.

The industry deserves support for this bold approach!

West VA Sees the Benefit of Shale Gas Boom

An increase in mining — including the Marcellus Shale natural gas play — has turbocharged the West Virginia economy. The Mountain State's economic growth was the third-highest in the U.S. during 2011, outpacing all but North Dakota and Oregon.

West Virginia saw a 4.5 percent increase in gross state product — which measures the economic output of a state — in 2011, far exceeding the slight growth recorded in Pennsylvania and Ohio during the same time period. The data was released Tuesday by the U.S. Bureau of Economic Analysis.

Pennsylvania saw 1.2 percent growth in economic production in 2011; Ohio saw an increase of 1.1 percent. That places Pennsylvania and Ohio in the middle of the pack in terms of growth, although both states have much more in economic production than West Virginia.

The big story in West Virginia? Mining. It was responsible for 3.89 percentage points of the 4.5 percent growth, the Bureau of Economic Analysis said.

"West Virginia was driven by some strong growth in the mining sector," said Cliff Woodward, an economist with the bureau. "It's almost the entire growth rate."

The Bureau of Economic Analysis data is preliminary, and it doesn't break out whether the mining increases are from coal or natural gas in the Marcellus or Utica Shales, although West Virginia has significant operations in both. That data will come in at a later date.

That mining is contributing greatly to the West Virginia economy is no surprise to Don Rigby, executive director of the Regional Economic Development Partnership based in Wheeling, W.Va. The liquids-rich and wet gas plays of the Marcellus and Utica shales include West Virginia, which gives it a good position in the industry's move toward liquids-rich and wet gas due to pricing.

API Declares “Time of Celebration”

"This is a time of celebration," said Jack Gerard, American Petroleum Institute president and CEO, at the Oklahoma Independent Petroleum Association's annual meeting.

"It's a game changer. We're not just talking about producing energy. We're talking about job creation, economic recovery and energy security. There's never been anything like this in the energy industry before."

Gerard said the industry represents 300,000 direct and indirect jobs in Oklahoma with a median salary of $83,000 a year.

"You contribute $42 billion a year to the Oklahoma economy," he said.

The country's oil and natural gas industry has boomed in recent years as new technology and drilling techniques have allowed producers to recover vast amounts of oil and natural gas from tight rock that previously could not be harvested economically.

"It has been a tremendous revival of energy resources in North America," said Steve Trammel, industry relations senior manager at IHS, a Colorado-based data company for the energy industry.

Shale Study Shows Consumers Have Saved Billions

Whether we're talking about the creation of 600,000 new jobs, the lowering of carbon emissions, the lessening of our dependence on foreign energy, or the nearly $250 billion in savings for natural gas customers—the development of natural gas from shale is reinvigorating our nation, and giving a boost to our economy while it's at it.

And with development occurring right now in more than two dozen U.S. states — from Ohio's Utica shale to south Texas's Eagle Ford play — it's no surprise that the benefits of responsible production are being felt across the nation.  But according to a new report by the American Gas Association (AGA), the impact of natural gas development on the pocketbooks of American consumers may be a lot more remarkable than even we had previously thought.

As AGA highlights in its new report, states actively developing their own natural gas resources have seen record-breaking production while creating thousands of jobs and economic benefits in their wake. And as a result of this increased production, America's economy is back on its feet, creating savings, revenues, and jobs along the assembly line.  According to AGA, production has led to:

  • Savings of almost $250 billion for end-use natural gas customers over the past three years,
  • $175 in savings for an average residential customer in 2010,
  • $1,100 to the average commercial customer in 2010,
  • And the creation of 334,000 jobs in industries reliant on natural gas over the past two years.

As AGA points out: "Not only do these savings benefit the gas customers, but there is a ripple effect on the economy when consumers spend some of these savings." While savings increase at home, Americas manufacturing base has rebounded, capitalizing on an inexpensive, abundant, and clean-burning resources, while putting people back to work and keeping industries in the U.S.

With shale development placing prosperity on our nation's doorstep once more, communities across the country – from the Marcellus to the Eagle Ford – are finding new opportunities to benefit from natural gas production. As studies from IHS CERA, Pricewaterhouse Coopers, Penn State, MIT, IEA and others have highlighted before, the nation sits upon a "golden" age of natural gas, with countless opportunities surrounding development at every turn.

Independent Study Finds No Impact from Marcellus Shale Gas Activities to Water Sources

The Environmental Protection Agency (EPA) is currently conducting a national study to determine if hydraulic fracturing has any impact on drinking water sources. As part of a larger study, the EPA is conducting five focused retrospective studies in separate areas across the country including Bradford County, Pennsylvania.

Samples were taken in Bradford County during the study's first round of sampling in October and November 2011.

In a collaborative effort, Chesapeake Energy Corporation consultants collected split samples with the EPA from 15 individual drinking water sources for analysis by accredited laboratories. Chesapeake then commissioned WESTON Solutions, Inc. to critically evaluate the results and compare them with more than 4,000 historic and baseline groundwater samples in the area.

Approximately 310 of these samples came from the United States Geologic Survey's public databases and predate any Marcellus Shale natural gas development activity in the area. Based on the data evaluated, WESTON has concluded these drinking water sources have not been impacted by Marcellus Shale natural gas development activity – including hydraulic fracturing.

View the complete findings here.

Shale Boom Helps to Lower Carbon Dioxide Emissions

The International Energy Agency says the shale gas boom in the U.S. has led to a domestic decline in carbon dioxide emissions as generators use more low-price natural gas over coal, the Financial Times reports.

Greenhouse gas emissions, says the IEA, have dropped off nearly 5 million tons in five years, which is more than any other country the agency examined.

The power industry has changed gears and seen a "major shift," from using coal as a power source to using natural gas, and the transportation industry has become more fuel efficient, said Fatih Birol, chief economist for the international agency.

This means the explosion in U.S. shale gas production has caused a seismic change to the energy industry, cutting the price of natural gas to its lowest point in a decade.

According to the publication, coal use dropped off 19 percent and gas use jumped 38 percent — a relevant figure because plants that run on gas produce half the carbon dioxide that a plant that runs on coal does.

Congressman Tout Frac’ing Education

Congressman Mike Conaway and Congressman Francisco Canseco will bring their "American Energy and Jobs Tour" to the Permian Basin of Texas, starting with a tour of a drilling rig and hydraulic fracturing site in Upton County.

Conaway and Canseco, joined by Doc Hastings, chairman of the House Natural Resources Committee and Congressman Randy Neugebauer, will then hold a roundtable discussion to discuss how businesses of all sizes and scope are affected by increasing energy prices.

The congressmen are part of the House Energy Action Team, whose members will spread out across the country to promote an all-of-the-above energy agenda. They will cite the Permian Basin, which provides two-thirds of Texas' crude oil and 17 percent of the entire nation's crude, as being threatened by over-regulation and environmental policies and how it must be protected from such costly regulations to promote economic growth, job creation and energy security.