Are the Brits Ready to Frac?

There's nothing standing in the way of new drilling plans for shale gas resources in the country, British Energy Minister Michael Fallon said.

The British government last year lifted a ban on hydraulic fracturing, or fracking, of shale natural gas resources in light of new risk controls. Fracking operations were suspended after Cuadrilla Resources in 2011 reported minor tremors associated with natural gas operations in the country.

Fallon addressed the first meeting of a multiparty group on unconventional oil and gas before the House of Commons. The group includes representatives from industry, consumer groups and non-governmental organizations.

He said the government since December has created the right mechanisms to move forward with shale gas development.

"We announced fracking could resume with robust regulation last December and there is nothing now stopping licensees from bringing on new drilling plans," he said.

Apart from temblors, shale development is controversial because chemicals used in the process are environmental threats.

Fallon said shale would ensure energy security and offer a source of economic stimulus, provided it's done so with care.

He said more than 300 licenses are already in the hands of explorers. A new round for license applications is expected next year.

Drilling Rigs Booming in Texas

In case you were wondering whether there was really an oil Renaissance happening in Texas, the state has 838 drilling rigs – about 47 percent of all U.S. rigs and 26 percent of drilling rigs worldwide.

The Texas rigs are mostly operating in five fields across the state, according to the latest Baker Hughes Rig Count.

The Permian Basin in West Texas has 397 rigs, the Eagle Ford in South Texas has 234, the Granite Wash in the Panhandle has 44, the Barnett Shale in North Texas has 31 and the Haynesville Shale in East Texas has 19.

Eagle Ford: Chesapeake thinks it has 342 million barrels

Our neighbors continue to see an enormous amount of oil and gas activity as well. Oklahoma has 190 drilling rigs, Louisiana has 106, New Mexico has 77 and Arkansas has 15 rigs, according to Baker Hughes.

Making the Case for NG Exports

A domestic natural gas boom already has lowered U.S. energy prices while stoking fears of environmental disaster. Now U.S. producers are poised to ship vast quantities of gas overseas as energy companies seek permits for proposed export projects that could set off a renewed frenzy of fracking.

Expanded drilling is unlocking enormous reserves of crude oil and natural gas, offering the potential of moving the country closer to its decades-long quest for energy independence. Yet as the industry looks to profit from foreign markets, there is the specter of higher prices at home and increased manufacturing costs for products from plastics to fertilizers.

Companies such as Exxon Mobil and Sempra Energy are seeking federal permits for more than 20 export projects that could handle as much as 29 billion cubic feet of natural gas a day.

If approved, the resulting export boom could lead to further increases in hydraulic fracturing, a drilling technique also known as fracking. It has allowed companies to gain access to huge stores of natural gas underneath states from Colorado to New York, but raised widespread concerns about alleged groundwater contamination and even earthquakes.

The drilling boom has helped boost U.S. natural gas production by one-third since 2005, with production reaching an all-time high of 25.3 trillion cubic feet last year, according to the U.S. Energy Information Administration.

In recent months, however, production has begun to level off as the glut of natural gas keeps U.S. prices down. In response, producers have begun pushing to export the fuel to Europe and Asia, where prices are far higher.

Approval of all the projects currently under review by the Energy Department could result in the export of more than 40 percent of current U.S. production of liquefied natural gas, or LNG, which is gas that's been converted to liquid form to make it easier to store or transport.

The prospect of a major expansion of U.S. gas exports has tantalized business groups and lawmakers from both parties, and they're urging the Obama administration to move faster to approve the projects as a way to create thousands of jobs and spur economic growth. Increased exports also would help offset the nation's enormous trade deficit.

But consumer groups and some manufacturers that use natural gas oppose expanded exports, saying they could drive up domestic prices and make manufacturing more expensive. Many environmental groups also oppose LNG exports because of fears that increased drilling could lead to environmental damage

"Exporting natural gas will have serious implications for public health, the environment and climate change," said Michael Brune, executive director of the Sierra Club. "Building these terminals means lots of new fracking, and more fracking means more risks for Americans."

Bill Cooper, president of the Center for Liquefied Natural Gas, an industry group, called natural gas a safe, clean-burning alternative to coal and oil.

"LNG exports are a huge opportunity for the United States economy, our workers and our geopolitical relationships" with countries such as Japan that are seeking to import natural gas, Cooper said. "LNG exports will create jobs, increase government revenue and benefit consumers."

The administration has not said whether it will approve the projects. The issue is among the main challenges for Ernest Moniz, President Barack Obama's nominee to be energy secretary.

Federal law requires the Energy Department to determine that projects are in the public interest before granting export permits to countries that do not have free-trade agreements with the U.S.

Moniz, a physics professor and former top officials at the department in the Clinton administration, is widely seen as sympathetic to the natural gas industry. At a Senate hearing last month, he called the "stunning increase" in natural gas production a "revolution" that has led to reduced emissions of carbon dioxide and other gases that cause global warming.

A recent study commissioned by the department concluded that exporting natural gas would benefit the U.S. economy even if it leads to higher domestic prices for the fuel, as is likely.

Michigan-based Dow Chemical Co. and other manufacturers have criticized that study, saying it relied on 2-year-old data that doesn't account for increased demand for natural gas by manufacturers, trucking fleets and power plants.

Dow, which uses natural gas to power its plants and make products from plastics to pharmaceuticals, has argued against unfettered exports and said that could lead to price spikes that could harm the U.S. economy.

But John Felmy, chief economist for the American Petroleum Institute, the largest lobbying group for the oil and gas industry, said restricting trade to control prices "is bad for the economy" and could result in lower domestic investment and production, hampering jobs and economic growth.

"We cannot and should not build around a wall around United States," Felmy said.

Whether to approve natural gas exports is "a huge question that's facing the federal government right now," said Sarah Ladislaw, an energy analyst at the Center for Strategic and International Studies. Expanded exports not only could raise natural gas prices, but also could hinder development of renewable forms of energy such as wind and solar power that do more to combat climate change, Ladislaw said.

"How do you put yourself on a pathway to reduced (carbon) emissions over the longer term while not killing this golden goose which is providing low-cost energy to the United States right now?" Ladislaw asked.

Natural gas results in fewer carbon emissions than other fossil fuels such as coal or oil, but still leaves a significant carbon footprint. Environmental groups also worry that more fracking could harm drinking water supplies or cause other problems.

Kevin Book, an analyst for ClearView Energy Partners, a research and consulting firm, predicted that the administration will approve some new exports, but nowhere near the 20 projects that are pending before the Energy Department.

"Everything we see from the administration suggests they embrace the idea of a small first-allocation" of LNG export permits, Book said. "They are looking for some subset to test the market."

U.S. officials also must consider competition from countries such as Canada and Australia, where new LNG export terminals also are being proposed. The facilities cost billions of dollars and take years to complete.

Only one U.S. license has been granted so far, to Houston-based Cheniere Energy Inc. for an export terminal in Louisiana's Cameron Parish. Proposals to build plants from Maryland to Texas and Oregon are pending from energy giants such as Exxon Mobil and Conoco Phillips, as well as Virginia-based Dominion Resources Inc. and Canadian-based Veresen Inc.

The Energy Department has promised to decide on a case-by-case basis, but must finish wading through nearly 200,000 comments filed on a study last year that concluded more exports would translate to net economic benefits for the U.S.

Sen. Ron Wyden, D-Ore., chairman of the Senate Energy and Natural Resources Committee, said officials should seek a "sweet spot" for LNG exports - allowing enough to spur drilling and increase gas supplies, but not enough to create export-driven price hikes.

Under the right approach, energy companies can "make enough money to continue producing, U.S. manufacturers have an affordable, stable supply of natural gas, and the environment is not only protected, but actually benefits from greater use of natural gas and lower CO2 emissions," Wyden said.

Frac'ing Could Bring $8B to New Yorkers

Allowing hydrofracking to proceed in New York would be an economic boom that would bring $8 billion of income to Upstate New Yorkers, a new study concludes.

If New York lifts its moratorium on hydrofracking, The Manhattan Institute says, income of residents in the 28 counties that lie above the gas-rich Marcellus Shale could rise by 15 percent.

The report says Pennsylvania counties in which hydrofracking has occurred have grown faster than those without it. Nearly 5,000 wells have been hydrofractured In Pennsylvania since 2002, the report says.

"By our count, there are immediate and concrete benefits in hydrofracturing wells: more money in the pockets of the people, more tax revenue for the state," said the report, authored by institute senior fellow Diana Furchtgott-Roth. "These data deserve close attention and consideration as New York state confronts its decision."

Hydrofracking is not allowed in New York while the state Department of Environmental Conservation studied the issue. The study, begun four years ago, still awaits a report from the state Department of Health.

Among the Manhattan Institute's findings:

  • Pennsylvania counties with hydrofractured gas wells had more economic growth that counties without wells. The more wells a county had, the better its economy.
  • Between 2007 and 2011, per-capita income rose by 19 percent in Pennsylvania counties with more than 200 wells, by 14 percent in counties with 20 to 200 wells, and by 12 percent in counties with fewer than 20 wells.
  • By contrast, in counties without hydrofrackiing, income rose by only 8 percent.
  • Counties with more than 200 wells added jobs at a 7 percent annual rate; in counties with no or few wells, the number of jobs fell by 3 percent.

Shale Gas Opens New Energy Frontier

This shale revolution has turned around the industry. Today it contributes to one-third of the US gas supplies. By 2030, it might provide half.

US oil and natural gas production is increasing at its fastest rate in five decades. The Bakken formation, one of the country’s largest shale gas reservoirs, produced 0.1m barrels per day in 2007. In 2012, it produced over 1mbpd. This rapid growth is set to continue over the next decade too. But there is another, less discussed part of this story too.

Fracking involves blasting millions of gallons of water, combined with chemicals and proppants, such as sand, underground at high pressure to release trapped oil and natural gas.

The high level of water consumption in the entire process, is now a real concern.

Hydraulic fracking has already run into a potential problem there because of the long-term drought that has afflicted the Lone Star State in recent years. The problem is exacerbated because the unique geology of the Eagle Ford formation, where Texas gets much of its shale oil and gas, requires more water to frack open the product.

Water is an issue. Many say the next round of global wars could be to secure scarce water resources. A senior Canadian diplomat, once told this correspondent; ‘look, we are a water rich country. And we know it fully well; the day there is a scarcity of water next door, we would find a pistol pointed at our head, to ensure a regular supply.’

Shale gas is a black hole for water, argue Asit Biswas Julian Kirchherr in a paper, carried by Huffngton Post.

A typical horizontal shale well requires 5m gallons of water to complete, according to Chesapeake Energy, which has fracked more shale wells in Ohio than any other company.

Exploiting the resource requires and pollutes massive amounts. And because of this water footprint, France in 2011 banned hydraulic fracturing. Environmentalists also note that water used in fracking cannot be treated and reintroduced to the water supply where it eventually will cycle through to become rain.

Lea Harper, founder of the Southeast Ohio Alliance to Save Our Water, an anti-fracking organisation, said , “We cannot make more water. We can find renewable sources of energy.”

Other countries are also joining in the shale bandwagon, making the water issue acute. China is reported to have huge, un-tap huge resource.

Saudi Arabia, the world’s biggest oil exporter, is planning to drill about seven test wells for shale gas this year.

“We know where the areas are,” Minister Al-Naimi said at a conference in Hong Kong, referring to the shale deposits.

“We have rough estimates of over 600 trillion cubic feet of unconventional and shale gas so the potential is very huge and we plan to exploit it.”

However, Aramco is conceding that finding the necessary amount of water will be difficult, Amin Nasser, senior vice president of upstream at Aramco said at a conference in Manama.

Faced with this challenge, oil and gas companies have been attempting to overcome the problem by recycling fracking fluid.

Texas Tribune reported that a new technology, dubbed “waterless fracking,” could address the problem of water use in fracking operations.

A Canadian company called GasFrac is using a combination of gelled propane and butane to conduct fracking, without the use of water.

The technology is new and may cost more than conventional hydraulic fracking. And in addition to propane, some companies are also experimenting with carbon dioxide and nitrogen.

The fracking industry is still in its infancy. In order to deliver the revolution, that it has promised and in fact unleashed too, it will have to overcome many obstacles.

The water issue is just the one – that needs immediate attention – all around the globe.

MicroSeismic Presents at GeoCon 2013

MicroSeismic, Inc.  is pleased to offer three full days of technical presentations in their booth, #427, at this year's GeoCon 2013, May 6-10th. 

GeoConvention 2013: Integration will pave the way for economic, environmental and energy recovery in Western Canada. Over 100 exhibiting companies and 4,000 conference attendees will convene at the Calgary TELUS Convention Centre May 6 – 10, 2013 to view new technologies, explore new business opportunities and learn from industry experts. The 2013 Convention is the ultimate opportunity to gain insight into your profession, share experiences with others and gain knowledge from industry experts.

For the ful presentation schedule, please visit the MicroSeismic, Inc. Events page on their website.

China Stalls on Shale

China's shale natural gas development is facing hurdles, experts say.

The U.S. Energy Department's Energy Information Administration reports China may hold nearly twice as much as the estimated 862 trillion cubic feet of shale natural gas in the United States, where the resource has transformed the energy sector.

China aims to produce 6.5 billion cubic meters of shale gas a year by the end of 2015 and the National Energy Administration estimates annual output to reach 100 bcm by 2020.

But so far, there has been no Chinese shale production. Research firm IHS CERA says about 60 shale exploration wells have been drilled over the past two years in the country. That's about the number of wells drilled in North Dakota every 10 days, The Washington Post reports.

"China is a newcomer to the shale gas industry," David Xu, an analyst at KPMG International, was quoted as saying by The Washington Times. "Over time, it could become one of the world's largest producers" if it learns the technology and resolves numerous obstacles to development.

Compared to more accessible areas where shale is located in the United States, in China's mountainous Sichuan Basin "the formations seem to be more faulted and folded," Briana Mordick, an Oil and Gas Science Fellow at the Natural Resources Defense Council and formerly a geologist at Anadarko Petroleum told Bloomberg.

Those characteristics, Mordick says, make it more difficult and less economic to drill long horizontal well bores associated with shale.

Most of China's shale-gas reserves also lie in remote areas where there isn't enough water for hydraulic fracturing, or fracking, the water-intensive technique used to unlock gas trapped in the rock.

Meanwhile, Chinese companies are looking to tap into U.S. expertise in shale developments for domestic development. For example, Sinopec in 2011 paid $2.2 billion for access to five shale plays in a deal with U.S. company Devon Energy Corp.

Although China has held two shale gas auctions since 2011, no foreign-funded joint ventures were awarded in either round.

But in March China approved a shale gas exploration deal between China National Petroleum Corp. and Shell.

The deal, covering 4,000 square kilometers of the Fushun shale gas block in Sichuan province is considered an important step in accelerating China's shale gas exploration activities and enhancing its drilling techniques, said Che Changbo, the deputy director of the Oil and Gas Research Center under the Ministry of Land and Resources, when announcing its approval.

More such cooperation deals "will be released gradually," Che told China Daily.

Zhou Xizhou, who heads IHS CERA's China Energy practice, says Chinese shale won't be an important domestic energy source until into the 2020s. But Martin Stauble, who heads Royal Dutch Shell's exploration and production in China, told Bloomberg that commercial development "is likely to be in a three- to five-year time frame."

Chesapeake Upping Utica Stakes

Processing constraints might have curtailed Chesapeake Energy Corp's natural gas production in the Utica shale of eastern Ohio, but that's likely to change by the second half of this year, says its acting CEO.

"We've reduced cycle times there and our efficiencies are improving," Steve C. Dixon said Wednesday during a conference call to discuss his company's first-quarter earnings. "With the pace we're on, we'll meet those objectives and significantly grow production in the last half of this year."

Chesapeake posted net income of $15 million for the quarter ended March 31, or two cents per diluted share, compared with a loss of $71 million the same period a year ago.

The energy giant reported it has budgeted 63% of its capital expenditures on well completions in the Eagle Ford and Greater Anadarko Basin shale plays this year, 11% to the Utica.

As of March 31, Chesapeake reported it's drilled 249 wells in the Utica. However, just 66 are in production while another 86 await pipeline connections.

"Processing is really the holdup," Dixon said Wednesday. Two major processing plants are under development that will tie into Chesapeake wells. Dominion’s Natrium plant in West Virginia is expected to be in operation this month and the first phase of M3 Midstream's Kensington plant in Columbiana County is scheduled to come online by June and the second phase by the end of the year.

Both processors are important to Utica production because they are needed to separate dry gas, such as methane, from natural-gas liquids such as ethane, butane and propane.

Jeff Fisher, Chesapeake executive vice president for production, reported the company's Utica wells remain on track to hit the goal of producing 330 million cubic feet equivalent per day, but overall production has remained flat since Chesapeake last provided an update April 1.

During the first quarter, net production from Chesapeake's wells averaged 66 million cubic feet of natural gas equivalent per day.

Thirteen wells were placed into commission, Chesapeake reported, with an average peak daily rate of 1,200 barrels of oil equivalent.

"We now expect the next-step change in our Utica production will occur closer to mid-year," Fisher said, once the Natrium plant is operational.

Chesapeake highlighted the performance of three wells in the Utica play. The Coe 34-12-4 1H well in Carroll County achieved a peak rate of 1,980 barrels of oil equivalent per day that included 235 barrels of oil, 470 barrels of natural gas liquids (NGLs) and 7.6 million cubic feet of gas per day.

The Scott 24-12-5 6H well, also in Carroll County, achieved a peak rate of 1,530 barrels of oil equivalent per day, consisting of 285 barrels of oil, 350 barrels of NGLs, and 5.4 million cubic feet of natural gas.

In Harrison County, Chesapeake's Henderson South well achieved a peak rate of 1,625 barrels of oil equivalent per day, which included 755 barrels of oil, 240 barrels of NGLs, and 3.8 million cubic feet of natural gas liquids.

Fisher emphasized the Coe unit exemplifies the cost efficiencies that come with drilling multiple wells from a single pad.

"We drilled six wells from a common pad," he said. The first well cost $8.5 million, including infrastructure, while the five others at the site averaged just $5.9 million to complete, or a reduction of 30% in cost.

Dixon said the company has made strides in reducing its debt and is focusing on improving shareholder value.

"Chesapeake is off to a strong start in 2013," Dixon told analysts. "We are capitalizing on drilling efficiencies wherever possible and leveraging our investments in roads, well pads, gathering lines, and compression and processing facilities."

Register Now for the May Webcast

Register now for MicroSeismic, Inc's FREE May webcast, Next Generation Downhole Microseimic Monitoring with EventPick Technology. 

This webcast will be led by Indy Chakrabarti, VP of Strategic Development, MicroSeismic, Inc. of May 21st at 10 a.m. 

This short webinar is an introduction and overview of microseismic acquisition and processing techniques and considerations, with a special focus on the new EventPick first arrival picking technology. The session will review optimal scenarios for surface and downhole microseismic solutions in hydraulic fracture mapping, reservoir monitoring and seismicity detection scenarios. In addition, a brief description of the differing microseismic results and uses from each of these techniques will be discussed, including source mechanism characterization and discrete fracture network generation.

Visit the MicroSeismic website to register today.

Eagle Ford Production at an All Time High

Oil production in the Eagle Ford Shale was up 74 percent in February compared with the year before.

Bloomberg News is reporting that the nine fields that make up the majority of the Eagle Ford yielded 471,258 barrels of crude a day in February. That’s an all-time high, based on preliminary data released by the Texas Railroad Commission. Gas production is dipping as drillers continue hunting oil instead of gas.

Production of condensates, or natural gas liquids, was 89,217 barrels a day in February, down from 117,789 a year earlier, according to the Bloomberg story.

Production of natural gas was 1.79 billion cubic feet a day, down from 1.87 billion the year before. Plains Marketing LP’s posted price for Eagle Ford light oil yesterday was $84.50 a barrel, compared with $88.38 for West Texas Intermediate and $107.66 for Brent.

Only Half of the Public Even Know What Frac'ing Is...

4-22-13 #2About eight-in-ten Americans (83%) identify ultraviolet as the type of radiation that sunscreen protects against. Nearly as many (77%) know that the main concern about the overuse of antibiotics is that it can lead to antibiotic-resistant bacteria.

However, only about half (51%) of the public knows that “fracking” is a process that extracts natural gas, not coal, diamonds or silicon from the earth.

Similarly, knowledge of basic scientific concepts differs greatly across questions. While most Americans (78%) know that the basic function of red blood cells is to carry oxygen to all parts of the body, just 20% could identify nitrogen as the gas that makes up most of the atmosphere.

The quiz is part of a nationwide survey, conducted March 7-10 among 1,006 adults, which also probed opinions and perceptions about science and math in education. The survey was conducted with Smithsonian magazine for an edition focusing on STEM (science, technology, engineering and mathematics) education (see “How Much Do Americans Know about Science?”).

The public underestimates how well American high school students perform on standardized science tests compared with students in other developed nations. A plurality (44%) believes that 15-year-olds in other developed nations outrank U.S. students in knowledge of science; according to an international student assessment, U.S. 15-year-olds are in the middle ranks of developed nations in science knowledge.

Nearly half of Americans (46%) say that the main reason that many young people do not pursue degrees in math and science is mostly because they think these subjects are too hard; just 22% say it is mostly because young people think math and science are not useful for their careers while 20% say it is because they think these subjects are too boring. Women (54%) are more likely than men (37%) to say that the main reason young people do not pursue math and science degrees is because they think these subjects are too difficult.

The survey asked an open-ended question about what one subject K-12 schools should emphasize more these days; 30% of respondents say math; 19% say English, grammar or writing, while 11% say science; and 10% say history, social studies or government. Overall, 45% mention some aspect of science, technology, engineering or mathematics.

Register for the April Webcast Today!

Registration is FREE and open for the April webcast, hosted by Mark McClure, Assistant Professor of Petroleum & Geosystems Engineering at University of Texas at Austin. 

The webcast will be help April 23, 2013 at 10:00 AM CST and is entitled Coupled Fluid Flow and Geomechanical Modeling of Unconventional Hydraulic Stimulation: Processing Affecting Recovery. 

Read the full presentation description below and register on the MicroSeismic, Inc. website today! 

During hydraulic stimulation in unconventional oil and gas, newly forming and preexisting fractures interact to generate complex fracture networks. We developed a computational model, CFRAC, that couples fluid flow and the stresses induced by fracture deformation in large, complex discrete fracture networks.

Modeling these processes with discrete fracture networks is useful because the stresses induced by fracture propagation and deformation are especially heterogeneous and depend on the relative locations and orientations of neighboring fractures. The model also has the capability to describe friction evolution on fractures, allowing it to directly describe the processes giving rise to microseismicity. In this talk, applications to practical problems will be given.

Different mechanisms that encourage or inhibit development of productive fracture networks will be summarized. The relationship between microseismicity and deformation will also be discussed.

Anti-Frac'ing Equals Pro Poverty

Excellent op-ed taken from the New York Star-Gazette.

I have good news and bad news. First the good news: The elected representatives of Painted Post (population 1,847) recently agreed to sell 314 million gallons of water for an astounding $4 million per year to a gas-drilling company in Pennsylvania. The money would have enabled them to upgrade the village’s aging water system and more.

The Wellsboro and Corning Railroad leased the long-vacated Ingersoll Rand Foundry from the village and agreed to build the needed infrastructure to ship the water.

The bad news is that local anti-fracking organizations are fanatically opposed to hydraulic fracturing, to economic development, and to prosperity, anywhere. Now enter the environmental lobbying Goliath, the Sierra Club, which is based in California.

The Sierra Club, along with two local anti-fracking organizations and five local plaintiffs, filed suit to stop the water sale. Their stated reasons: the trains are noisy, the engines pollute the air and might pollute the water. A state Supreme Court judge has halted the project.

Like many upstate communities, Painted Post is dying, a victim of government policies that destroy business and jobs. They’re losing population, leaving an older, poorer tax base behind. Then the Sierra Club comes to town and uses its bully tactics to slap tiny Painted Post around.

The anti-frackers can’t just say no to the gas and oil revolution which is creating prosperity everywhere gas drilling is permitted. They must offer an alternative: theirs is a fossil fuel-free New York by 2030. All we have to do is build 4,020 onshore wind turbines, 12,770 offshore wind turbines and 5 million rooftop photovoltaic (PV) systems statewide. It’s a plan only a Stalinist could love: force everyone to buy expensive energy (wind and solar) while squashing the development of affordable energy (gas and oil). Even with massive taxpayer subsidies, rooftop PV systems are still expensive and take many years to pay for themselves; that’s why they don’t sell. Just look at the rooftops in your neighborhood. See any solar panels?

We need jobs and growth right now, not sunshine fantasies or winded dreams. The economies of Ohio and Pennsylvania are booming because of gas drilling, and providing real jobs today. That could be us — it should be us.

Painted Post is a microcosm of the fracking debate: prosperity versus poverty, jobs versus unemployment, affordable and accessible energy versus a fantasy. The unemployment numbers peal like a funeral bell for upstate: Steuben County at 11.9 percent, Chemung County at 10.5 percent, Schuyler County at 10.5 percent. Yet the anti-frackers squash prosperity wherever they see it, even in tiny struggling Painted Post. They’re on a search-and-destroy mission. Find commerce — stop it. Find jobs — kill them. Find hope — kill that, too.

Oil&Gas Capability Summit

Reserve your seat now for Houston's Oil and Gas Capability Summit, to be held May 13-15 at the DoubleTree Hilton in Houston, TX.

Greg Burns, MicroSeismic's VP of Human Resources will be speaking on, Developing robust acquistion and retention strategies in a small-mid size company as part of the Summit.

For the full speaker line up and more details, please visit the website

U.K.'s Shale Outlook and Praise for Margaret Thatcher

Does Maggie Thatcher deserve her economic canonization? There is no doubt her voracious appetite for lower taxes, light-touch regulation and union bashing pushed Britain up the growth curve. There is also no doubt that she got a lot of help from North Sea oil production, which surged during her stint as prime minister between 1979 and 1990.

Britain’s next prime minister – whether a re-elected David Cameron or someone else – might also see an energy bonanza, but not from oil, coal, green energy or nuclear power. It would come from natural gas of the shale variety. As the North Sea runs down, shale gas is set to sprint onto the scene. Its arrival could transform not just the British economy but radically alter the geopolitics of energy throughout Western Europe.

Russia beware. Western Europe is the most lucrative market for state-controlled Gazprom, the world’s biggest gas exporter. A shale gas revolution in Britain and elsewhere in Europe would not be to its liking.

Britain has always been a respectable energy supplier in spite of its small size. The country has produced oil and gas since the mid-1850s (an oil field in Dorset produces 11,000 barrels a day). In the last century, the country became a big coal producer, though Mrs. Thatcher fixed that when she emerged on the winning side of the 1984 coal miners’ strike. Next came the North Sea and – lucky Britain – it is now gas’s turn.

Some time in the next week or two, the British Geological Survey is to release its estimate of Britain’s shale gas reserves. The speculation points to an eye-popping amount, perhaps 1,800 trillion cubic feet. Britain’s annual consumption is 3-tcf. The math suggests a 600-year supply, but the figure is highly misleading. Most of that gas, if it really exists, probably cannot be commercially produced because of geological, technological and environmental constraints. But even if 10 per cent can be pumped to the surface, the supply would be enough to keep the lights on almost until the end of the century.

The other potentially limiting factor is regulation. The American shale gas and shale oil industry went from walking pace to gallop in a few strides because landowners in the U.S. have the rights to the resources below the land. That little perk meant that the owners were motivated to cut deals with the energy companies that wanted to install drilling rigs next to the barn.

Not so in Britain, where the Crown owns the muck beneath your feet. That means the regulatory equation is far more complex and no template exists. The Crown and landowners will want big pieces of the action; so will the local government authorities, which will have the power to issue or deny the drilling and development permits. The revenue pie-chart is a work in progress and political problems are inevitable.

Getting the environmental side right is also crucial. In 2011 in Britain, an 18-month shale gas drilling moratorium was put in place after a gas flow test apparently triggered two “seismic events” – very small earthquakes. In parts of Europe, notably France, shale drilling is banned because of fears of earthquakes and groundwater pollution. To “frack” the shale, that is, crack it open to release the gas from the rock, a mixture of water, sand and chemical-laden fluids are pumped under pressure into the bore hole. What goes down must go sideways or come up.

The economic benefits, such as the possible reduction of British energy costs, and job creation, are largely unknown because the extraction costs, the revenue-sharing agreements and other factors are still guesses. But given the potential size of the resource, shale gas could pump up Britain’s deflated economy. In the United States, shale gas is bringing down average household energy costs, attracting investment from manufacturers, such as chemicals companies, that are heavy users of gas, and triggering energy gold rushes in struggling regions, like the Midwest.

Ken Cronin, CEO of the United Kingdom Onshore Operators Group, the newly formed shale gas lobby body, notes that the gas would come at an opportune time in Britain because so many other forms of energy are in decline (coal, oil), very expensive because of subsidies (wind, solar) or both expensive and in need of replacement (nuclear). “At minimum, shale gas will have an arresting effect on prices increases in the U.K.,” he says.

When any new compelling technology or industry traipses into a market like a flat-footed giant, old technologies and industries can get trampled. So who might the losers be if Britain, like the United States, goes from energy importer to energy powerhouse?

Coal producers, to be sure, would be victims. So would no-growth, high-unemployment France. If British energy costs drop, luring energy-sucking industries to Britain, and the exchequer gets fattened with tax income from gas production, the French economy would be put at a competitive disadvantage. France too is sitting on vast amounts of shale. You can bet its drilling ban will disappear the moment it figures out that what’s good north of the English Channel would be good south of it.

But it is Russia that stands to suffer most if Britain, and then France, unleash the drilling rigs. Gazprom, President Vladimir Putin’s favourite company, has treated Western Europe like a milk cow for many years. The region is responsible for 40 per cent of its profits because of the huge export volumes and the supply contracts that are linked to (high) oil prices. The gas glut is breaking the price link between the two fuels. At some point, Gazprom will have to recognize that high oil prices can no longer justify high gas-contract prices.

If Maggie Thatcher were alive – she died last Monday at 87 – she would approve of the shale gas development. She never shed a tear for old industries, nor countries that resisted change to their detriment.

Another Study Shows, Earthquakes Not Caused by Frac'ing

Hydraulic fracturing used to access oil and gas from rock and shale hasn’t caused “significant” earthquakes, according to a study by Durham University.

“Hydraulic fracturing is not a significant mechanism for inducing felt earthquakes,” Richard Davies, director of the U.K. university’s energy institute, said today in a statement. “The size and number of felt earthquakes caused by fracking is low compared to other manmade triggers such as mining, geothermal activity or reservoir water storage.”

Tremors aren’t the only concern about the method, known as fracking, according to a Greenpeace statement. “Communities have also expressed concern about noise, disruption, traffic, falling house prices and a general industrialization of the English countryside,” Lawrence Carter, an energy campaigner for the environmental group, said in the statement.

Cuadrilla Resources Ltd. drilling caused two tremors in 2011 in northwest England, leading to an 18-month moratorium on fracking, which uses water, chemicals and sand to blast underground rock and release trapped fuel. The government lifted the ban in December and is preparing tax breaks to encourage drillers as it seeks to expand domestic energy sources amid declining North Sea fossil fuel production.

The Durham study of hundreds of thousands of fracking operations since 1929 found the process has the potential to reactivate dormant faults, the university said.

“We cannot see every fault underground and therefore cannot completely discount the possibility of the process causing a small felt earthquake,” Davies said. “But there are ways to further mitigate against the possibility; the oil and gas industry can avoid faults that are critically stressed and already near breaking point.”

Earthquakes caused by mining can range from 1.6 to 5.6 in magnitude and reservoir-filling can trigger tremors of as high as 7.9, according to the study. In comparison, fracking can cause movements of 1 to 3.8 magnitude, it said.

In the Netherlands, two quakes measuring 3.2 and 2.7 struck the gas-rich Groningen area in early February. The tremors near Blackpool in the U.K. two years ago were 2.3 and 1.5.

Foreign Firms Investing in US Shale

Foreign investment in U.S. shale oil-and-gas plays is on the rise, according to data released Monday by the U.S. Energy Information Administration (EIA).

Of the $133.7 billion spent on U.S. shale ventures between 2008 and 2012, joint ventures with international partners accounted for about $26 billion — roughly 20 percent.

EIA said the activity, “highlights a renewed trend toward foreign joint ventures” as the recent domestic energy boom — propelled by advancements in drilling technology — has drawn interest from abroad.

In 2008, foreign investors struck deals in U.S. shale plays worth about $2 billion over their lifetimes. That figure spiked to about $9 billion in 2010, and hit around $7.5 billion in 2012.

The deals are mutually beneficial, EIA said. “Both U.S. and foreign companies benefit from these deals. U.S. operators get financial support, while foreign companies gain experience in horizontal drilling and hydraulic fracturing that may be transferable to other regions,” it said.

Fracking is the drilling practice that sparked the recent uptick in U.S. energy production. The method injects a high-pressure mixture of water, sand and chemicals into tight shale plays to access hydrocarbons.

EIA said recent investments in shale plays were either acquisitions of U.S. companies by foreign firms or joint operations. Most involved purchasing a portion of the U.S. firm’s shale acreage and agreeing to pay for drilling extra wells within a certain period of time.

While the Marcellus Shale that spans the Appalachian Basin on the East Coast has attracted the most foreign investment, international companies last year parked most of their dollars in the Utica Shale that stretches from Ohio to New York.

The analysis touches on Republican and industry arguments that the domestic energy revolution has been an economic driver.

While most plays are on state and private lands, they want to expand drilling to federal domains, calling it a potential boon for jobs and federal revenues.

President Obama has so far resisted, saying sufficient drilling opportunities already exist.

And while proponents want more access, many Democrats and green groups are pushing back. While the industry says fracking is safe, opponents contend it pollutes groundwater and releases heat-trapping methane into the air.

Energy Secretary Nominee Backs Natural Gas

President Barack Obama’s choice to lead the Energy Department pledged to increase use of natural gas Tuesday as a way to combat climate change even as the nation seeks to boost domestic energy production.

Ernest Moniz, a physics professor at the Massachusetts Institute of Technology, said “a stunning increase” in production of domestic natural gas in recent years was nothing less than a “revolution” that has led to reduced emissions of carbon dioxide and other gases that cause global warming.

The natural gas boom also has led to a dramatic expansion of manufacturing and job creation, Moniz told the Senate Energy Committee.

Even so, Moniz stopped short of endorsing widespread exports of natural gas, saying he wanted to study the issue further.

A recent study commissioned by the Energy Department concluded that exporting natural gas would benefit the U.S. economy even if it led to higher domestic prices for the fuel.

Sen. Ron Wyden, D-Ore., chairman of the Senate energy panel, called the DOE study flawed and said it relied on old data and unrealistic market assumptions.

Moniz said he is open to reviewing the study to ensure that officials have the best possible data before making any decisions.

“We certainly want to make sure that we are using data that is relevant to the decision at hand,” he said.

Many U.S. energy companies are hoping to take advantage of the natural gas boom by exporting liquefied natural gas to Europe and Asia, where prices are far higher. Nearly two dozen applications have been filed to export liquefied natural gas, or LNG, to countries that do not have free trade agreements with the United States.

Business groups support LNG exports as a way to create thousands of jobs and spur more U.S. production.

Consumer advocates and some manufacturers that use natural gas as a raw material or fuel source oppose exports, which they say could drive up domestic prices and increase manufacturing costs. Many environmental groups also oppose LNG exports because of fears that increased drilling could lead to environmental problems.

Natural gas results in fewer carbon emissions than other fossil fuels such as coal or oil. But environmental groups worry that drilling techniques such as hydraulic fracturing, or fracking, could harm drinking water supplies or cause other problems.

Alaska Sen. Lisa Murkowski, the panel’s senior Republican, pushed Moniz to support gas exports, which she said would boost her state’s economy.

Moniz said he supports exports as a general rule but would decide applications on a case by case basis, based on a “transparent, analytically based” review.

“I believe the Natural Gas Act kind of suggests that one should move forward with licenses unless there is a clear public-interest issue” against a project, Moniz said, adding that he would consider the cumulative impact of previously approved applications, which could affect the price and supply of natural gas in a particular region.

Moniz endorsed Obama’s “all of the above” approach to energy and said that if confirmed, he also would push for renewable energy such as wind and solar, along with coal and nuclear power.

“The president is an all-of-the above person and I am an all-of-the above person,” Moniz said.

Lawmakers from both parties appeared receptive to Moniz, who served as a DOE undersecretary in the Clinton administration. Moniz, 68, leads the MIT Energy Initiative, a research group that gets funding from BP, Chevron and other oil industry heavyweights for academic work aimed at reducing greenhouse gases blamed for global warming. He has advised Obama on numerous energy topics, including how to handle the country’s nuclear waste.

While Moniz encountered little opposition Tuesday, some environmental groups have protested his selection, citing his close industry ties at MIT and his support for fracking, in which large volumes of water, plus sand and chemicals, are injected underground to release trapped oil and gas.

Wenonah Hauter, executive director of the environmental group Food & Water Watch, ridiculed Moniz’s comments about a natural gas revolution.

“The only revolution taking place in regards to natural gas is the movement in the United States to reject it and those who advocate for it,” she said.

New Shale Developments Make Russia a Top Contender

Russia, the world’s second largest oil producer after Saudi Arabia, has been in a declining state for some years now, its economy is weak, its population is shrinking, and its geopolitical power is not what it once was; add to all that the fact that its oil industry is quickly set to enter decline, and the future does not look too promising.

The FT has reported good news for the Kremlin. According to Leonid Fedun, the vice-president of Lukoil,‘Russia, the world’s second-largest oil producer after Saudi Arabia, will be able to maintain crude output of 10m barrels a day for years to come as output from western Siberia’s Bazhenov Shale offsets declines in the country’s mature oilfields.’

The Bazhenov fields are estimated to be five times larger than the Bakken shale play in the US, so Russia looks set to have a long and healthy future if they can be successfully developed. Russian companies don’t currently have the technology to set up horizontal drilling rigs sued in the US shale boom, and are therefore pushing the Kremlin to offer further tax breaks before any exploration is begun.

The US is pleased that Russia is set to begin extracting its shale reserves, as more oil on the world markets will help to keep prices low, reduce dependence on the Middle East, and increase security of global supplies. The Russians also tend to become more malleable politically when their finances are tight, which is likely to occur if the oil companies are granted their tax breaks.

MicroSeismic, Inc. Completes Surface-Based Fracture Monitoring in Poland

MicroSeismic, Inc. (MicroSeismic) announced today the completion of their first FracStarTM microseismic monitoring program in Poland this past weekend.  This is the tenth country in which MicroSeismic has monitored well stimulation activity.

MicroSeismic has installed its FracStar and BuriedArrayTM monitoring programs in all major shale plays in the United States as well as Canada, United Kingdom, Argentina, Mexico, Australia, China, India, Hungary, Turkey and now Poland.

The Polish government estimates the amount of shale gas reserves in Poland is between 346 billion cubic meters to 768 billion cubic meters.  This establishes Poland as one of the largest holders of gas reserves in Europe.  This substantial gas reserve will assist Poland and Europe to achieve strategic objectives in diversifying gas supply beyond Russia.  

MicroSeismic installed the FracStar, which is able to cover a 12-40 square kilometer area, to provide microseismic monitoring, mapping and analysis for hydraulic fracturing of a customer’s exploration and field development program.  

“This is truly a momentous year for MicroSeismic.  Not only is this our ten year anniversary, we recently installed our 40th BuriedArray and now we are working in 10 countries,” said Peter Duncan, Ph.D., Founder and CEO of MicroSeismic.  “MicroSeismic’s FracStar service is where we began and with the recent introduction of our patented PSET 4.0 processing technology, it remains the standard for microseismic detection services, worldwide.”

The FracStar geophones are spaced across 10-12 radial arms and can number in the thousands. Stations can be deployed using standard cabling technology or wirelessly to minimize field operation time and reduce cost. 

This enables MicroSeismic to monitor primary, secondary and tertiary recovery activity, in a variety of reservoir conditions.  FracStar is capable of imaging events to about -3.0 magnitude, about the energy release of a human heartbeat. MicroSeismic’s proprietary PSETTM 4.0 processing techniques are highly resilient to surface noise sources enabling MicroSeismic to consistently deliver high-accuracy event location in the horizontal and vertical directions over the entire monitored volume. Using real-time monitoring services, customers can adjust pumping rates and the type of proppant and fluids they are using during the fracturing activity to optimize the completion.  

Texas Comes in Second for Personal Income Growth, Thanks to Shale

While no state came anywhere close to North Dakota for average personal income growth last year, Texas was a respectable second-place finisher, according to estimates released Wednesday by the U.S. Bureau of Economic Analysis.

North Dakota, which is enjoying an energy boom and, consequently, a building boom, led the nation in personal income growth in 2012, according to the bureau. Personal income is the before-tax income received by every resident from all sources, including wages, rents and transfer payments.

Average personal income in North Dakota increased by 12.4 percent in 2012, compared with 2011. That marks the fifth time in the past six years that North Dakota has recorded the nation’s fastest-growing personal income.

Skills shortage: Major workforce shortage pounding energy industry

In Texas, average personal income increased by 4.8 percent in 2012, making it the second-fastest in the U.S.

For Texas, the biggest contributor to earnings growth came from the construction industry, said David Lenze, an economist with the bureau in Washington, D.C. Construction income grew 11.6 percent in Texas during 2012, compared with 5.4 percent nationwide.

The U.S. average personal income increased by 3.5 percent in 2012, according to the bureau. That is slower than the average growth in 2011, when personal income nationwide grew by 5.2 percent.

Personal income data is not adjusted for inflation; consumer prices rose 1.8 percent in 2012, compared with 2.4 percent in 2011.

Big bonuses: Luring top oil talent demands perks

The state with the slowest personal income growth? South Dakota. It recorded a loss of 0.2 percent in 2012, in large part because of the effect of last year’s drought on farm income. That same drought also hurt the economic fortunes of Nebraska, Kansas and Iowa, according to the bureau.

While North Dakota and Texas are growing the fastest in average personal income, they don’t rank as high when it comes to per-capita personal income.

In that category, which divides a state’s total personal income by its population, Connecticut is No. 1 at $58,908. Texas is No. 25 at $41,471, which is below the U.S. average of $42,693. Mississippi comes in last at $33,073.

ANGA Encourages States to Play a Role in Natural Gas Promotion

When energy executives formed America’s Natural Gas Alliance four years ago, the goal was convincing politicians and the public to embrace the fossil fuel as a cleaner-burning, abundant alternative to oil and coal.

But now natural gas producers are a victim of their own success, and the challenge is growing demand, the incoming CEO of the industry’s leading trade group told FuelFix Wednesday.

A drilling boom in the Northeast, Arkansas and other parts of the country has led to a glut of natural gas, with supply outpacing domestic use of the fossil fuel that serves as both a power source and building block for other chemicals.

“We are looking at the opportunities for natural gas demand,” said Martin Durbin, who will take over as chief executive of America’s Natural Gas Alliance on May 1.“There’s an incredible opportunity at the state level to help on the demand side.”

State policies can promote the use of natural gas as a source of electricity, especially as utilities look for alternatives to coal and options for buttressing intermittent renewable power. Some state and local governments also are transitioning their fleets of buses, trucks and cars to natural gas-powered vehicles.

“The states provide an incredible advantage and opportunity for us to get the message out,” Durbin said, “and also work creatively with them on opportunities to better utilize the natural gas resources that we have.”

GM chief: Feds to back natural gas fueling stations

Meanwhile, the Energy Department is poised to decide whether to grant export licenses to more than a dozen companies that are seeking to sell natural gas to companies that don’t have free trade agreements with the United States. Natural gas producers are eager to get access to foreign markets where the fossil fuel sometimes fetches prices three to five times higher than in the U.S.

At the same time, other federal agencies are considering regulations to govern the hydraulic fracturing process that is key to unlocking natural gas (and oil) supplies nationwide. The Interior Department’s Bureau of Land Management is set to unveil a newly revised proposed rule governing fracturing on federal lands, with mandates for chemical disclosure and well design. The Environmental Protection Agency is conducting a multi-year study of the relationship between hydraulic fracturing and water.

As federal and state drilling regulations advance, the natural gas alliance’s member companies will have to continue to reach out to local communities and assure the public they can operate safely, Durbin said.

“We need to make sure we’re appropriately getting that message across and being very straight up with the communities where we are operating,” Durbin said.

Hydraulic fracturing: Commission eases rules to encourage water reuse for fracking

Durbin is no stranger to these issues, having spent more three years as the American Petroleum Institute’s top lobbyist, following a 16-year stint working for the chemical industry’s top trade group. He also is a veteran of Capitol Hill, where he worked for Democrats in the House and Senate.

Durbin is set to take ANGA’s helm from Regina Hopper, who stepped down as chief executive of the natural gas alliance in February, after one of the group’s founding members Chesapeake Energy CEO Aubrey McClendon announced his retirement. Greg Pensabene of Anadarko has been serving as the natural gas alliance’s interim CEO.

Apache Corp. CEO G. Steven Farris, ANGA’s chairman, said Durbin will bring “industry knowledge and experience, political acumen and deep background running successful advocacy campaigns” to the job.

At ANGA, Durbin will be tap into a stream of revenue from the some of the nation’s biggest natural gas producers, including such companies as Anadarko Petroleum Corp., Cabot Oil and Gas, Newfield, and Noble Energy. The trade group has devoted its dollars to television ads and other campaigns in recent years.

“You’ve got member companies who are very committed to the mission here and are willing to putting the resource in to getting the message out to make sure we’ve got the right policy at the federal level and the state level to take advantage of this opportunity,” Durbin said.

America’s Natural Gas Alliance spent some $5.7 million in lobbying over the past two years, according to public disclosure forms filed with the federal government and analyzed by the Center for Responsive Politics.

While Durbin suggested he didn’t anticipate major changes or a dramatic restructuring at the alliance, he said he sees a new “opportunity now to see what do we really need to be focused on, how can we enhance that focus and make sure that natural gas plays an even more prominent role in the economy.”

ExxonMobil Pushes for Keystone XL

Oil giant ExxonMobil is making the case that the nonbinding Senate vote in support of the Keystone XL oil sands pipeline wasn’t simply political theater. An ExxonMobil executive took to the company’s blog Tuesday evening to highlight Democratic support for the pipeline in the 62-37 vote. Seventeen Democrats joined Republicans Friday in favor of TransCanada Corp.’s project. Pipeline backers are using the Democratic support to try and increase political pressure on the White House to support the pipeline, which would bring oil from Canadian oil sands projects to Gulf Coast refineries.“Critics were quick to note that the Senate’s action won’t green light the pipeline. ... Since authority for approving the pipeline rests with President Obama, they argue, the vote was symbolic.

Move along, nothing to see here,” writes Ken Cohen, ExxonMobil’s vice president of public and government affairs.

“Just because it was symbolic, however, doesn’t mean it’s not significant. Indeed, what makes Friday’s vote so important is the degree to which it represents strong and growing support for the project among elected Democrats — 17 of whom voted for the measure — as well as Republicans,” he wrote.

“Big Oil may have bought themselves this meaningless vote, but the decision on the Keystone XL tar sands pipeline remains where it’s been all along — with Secretary [of State] Kerry and President Obama,” said League of Conservation Voters President Gene Karpinski after the vote. Similarly, Natural Resources Defense Council Executive Director Peter Lehner said afterward that “their symbolic vote doesn’t change the law or the truth about this dangerous project,” and noted the final decision rests with President Obama.  But Exxon’s Cohen noted that a vote on Keystone last year garnered 56 backers, while the addition of six Democratic supporters upped the tally on Friday. He writes that the growing support “seems to reflect a growing national consensus about the project,” and pointed to a Fox News poll that showed wide backing.

Latest Eagle Ford Numbers Reflect Positive Impact

Last year, the Eagle Ford Shale had a $61 billion impact and supported 116,000 jobs across a 20-county swath of South Texas – a once sleepy region increasingly defined by an oil and gas boom.

The latest numbers from an ongoing University of Texas at San Antonio study continue to show a ballooning financial effect as the industry races to drill oil wells in the region.

The results of the study were released Tuesday at a meeting of the Eagle Ford Shale Caucus at the Texas Legislature, a group of South Texas lawmakers hoping to bring attention to the road, water, health and other infrastructure needs brought on by the influx of workers and truck traffic into the region.

America’s Natural Gas Alliance, an industry trade group, paid for the study.

It calculates both the direct economic impacts of oil and gas exploration in the region and the so-called indirect and “induced” economic activity.

The direct impact alone is enormous: the study counts more than 46,000 people directly employed thanks to the oil field last year.

The study paints a picture of a future South Texas that in many ways revolves around the oil and gas industry.

So far, more than 5,400 Eagle Ford wells have been permitted by the Texas Railroad Commission, but by 2022, the study expects more than 24,000 wells in the region.

Even as the field matures and fewer people work on drilling sites, there still will be thousands processing, transporting and refining that oil and gas, and everyone from attorneys to restaurant employees working along the way.

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