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Monday, July 21, 2014

Utica Shale Passes 1,400 Permits, Closes in on 500 Producing Wells

The latest weekly update of permitting activity in Ohio's Utica shale shows that another milestone number has been passed.

15 new permits were issued last week.  The key spot was Harrison County, with 7 of the 15 issued for wells there - all to Chesapeake Energy.  The other 8 permits were spread across 5 different counties: Belmont (2), Carroll (2), Guernsey (1), Jefferson (1), and Monroe (2).

With these 15 there have now been 1,410 permits issued for horizontal drilling in Ohio's Utica shale.  The number of wells drilled increased to 971, and the number producing jumped to 483.  The Utica rig count also increased, to 48.

View the report by clicking here.

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Links for 7/21/14: Lies About Fracking, Bans Rejected, and More

Bloomberg:  Fracking Sends Northeast Natural Gas Output to Record   -   "Record natural gas production from the Marcellus shale deposit in the Northeast is helping send U.S. output to an all-time high, as hydraulic fracturing and horizontal drilling unlocked underground supplies. Gross output from the region will average 15.235 billion cubic feet a day this month, up 28 percent from a year earlier, and..."

Natural Gas Now:  100 or So Lies About Fracking – Part I   -   "There was a news conference the other day where the usual suspects, operating under one their various aliases, the Concerned Health Professionals of NY (CHPNY), attacked natural gas yet again with a new “study.” It’s anything but a study, of course. Rather, it is a collection of allegations and anecdotes; the sort of pseudoscience we’ve come to expect from this gang. Their latest report is pompously titled as a..."

ABC News:  North Texas City Rejects Partial Fracking Ban   -   "The council governing a North Texas city that sits atop a large natural gas reserve rejected a bid early Wednesday that would have made it the first city in the state to ban further permitting of hydraulic fracturing in the community. Denton City Council members voted down the petition 5-2 after eight hours of public testimony, sending the proposal to a public ballot in November. Fracking involves..."

NOLA.com:  Fracking receives support in survey of St. Tammany West Chamber of Commerce members   -   "Nearly 70 percent of the responses to a St. Tammany West Chamber of Commerce survey about fracking expressed support for the method of oil extraction or no opposition as long as safeguards are put in place to protect the parish's drinking water. The chamber released the results of its survey as it considers taking a formal position on fracking, a controversial issue..."

Pike County Courier:  Expert: Pa. didn't address fracking health impacts   -   "Pennsylvania's former health secretary says the state has failed to seriously study the potential health impacts of one of the nation's biggest natural gas drilling booms. Dr. Eli Avila, who is now the public health commissioner for Orange County, N.Y., also says the state's current strategy is a disservice to people and even to the industry itself because..."

Fox & Hounds:  CA Fossil-Fuel Foes Want To Ban More Than Just Fracking   -   "California foes of hydraulic fracturing, or fracking, have been surprised and disappointed at their inability to get Gov. Jerry Brown or the Legislature to ban the practice. Brown’s support for a law regulating but permitting the newly improved drilling technique barely seemed to..."

Investors.com:  Shale Drilling Heads Abroad But U.S. Has Advantages   -   "Significant shale production overseas may be only a handful of years away, potentially accelerating a global transformation in energy and politics, but other countries may not be able to create the conditions that gave the U.S. its first-mover advantage. The first wells are being drilled in promising locations such as western Siberia, North Africa and the Vaca Muerta formation in Argentina, says Daniel Yergin, vice chairman of..."

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Article Details the Park Foundation's Scheme to Stop Shale Drilling

A small sampling of the many
anti-drilling articles financed by
The Park Foundation
From The Philanthropy Roundtable:
It’s hard to believe that natural gas was a favored fuel of leading environmental groups as recently as six years ago. In 2008, the Pew Center on Global Climate Change heralded its promise: “We also need to consider…how to better support natural gas as a bridge fuel to a more climate-friendly energy supply,” said president Eileen Claussen in a widely circulated speech.
This was a common view and had been for years. In 1997, when shale-gas reserves were beginning to be identified, the progressive D.C.-based Renewable Energy Policy Project waxed optimistic. “Natural gas is inherently cleaner than coal or oil,” the nonprofit wrote. “Since renewables will be unable to meet most energy needs for some time, gas is an essential bridge to a renewable energy era.” 
Natural gas used to be seen as a marriage of enlightened capitalism and pragmatic progressivism. It was welcomed as a relatively low-impact fossil fuel, much superior to America’s previous industrial and power-generating workhorse, coal. It was available in reserves of modest size but sufficient to carry us over until the price of alternative energies became competitive. 
But over the past few years, the rhetoric has completely changed. Sharp criticism of fracking and shale gas is now a staple of green activism. The online environmental magazine Grist regularly runs articles bashing shale gas, such as the recent “Will Obama allow fracking to endanger his own water supply?” The Nation launches anti-fracking broadsides conjuring “contaminated water wells, poisoned air, sick and dying animals, industry-related illnesses.” Earth Island Journal raises the specter of “water contamination, air pollution, global warming, and fractured communities,” and mocks Claussen’s “bridge fuel” reference, calling natural gas a “bridge to nowhere.”
The morphing of natural gas from promising next step to “worse than oil and coal,” as some activists now claim, happened almost overnight. What’s behind this abrupt turnaround? For one thing, advances in extraction technology have made gas inexpensive and caused it to be used much more extensively (usually as a substitute for coal). And while most scientists and economists see in shale gas an inexpensive fuel with relatively modest environmental impact compared to coal and oil, some environmentalists view it as a Trojan horse that is giving fossil fuel a new image—clean, abundant, not purchased from overseas tyrants—and thus a new lease on life.  
This swing against gas has been spurred by a carefully coordinated outpouring of research, media, and advocacy grants by the Park Foundation, headquartered at the epicenter of one of the most promising shale gas regions in the U.S., and home to Cornell University, the academic base for the country’s most vehement anti-shale activists.
Publications such as Grist, the Nation, Earth Island Journal, Mother Jones,American Independent News Network, Yes! Magazine, the American Prospect, and numerous other media elements have one thing in common. They have all received donations from Park in recent years to conduct anti-fracking journalism and related environmental reporting. Along with advocacy groups like Food and Water Watch, Friends of the Earth, Greenpeace, and more than 50 large and small groups, they were the recipients of anti-fracking grants from the Park Foundation that totaled $3 million in 2013. Park has a plan, and a savvy one, to kill the American shale-gas revolution.
There is much more in the article, which examines how the Park Foundation has played a crucial role in spreading the feeling that shale drilling is a danger.  Click here to read it all.

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BP Gets Approval to Plug Trumbull County Well

From the Akron Beacon Journal:
BP America has won approval from the Ohio Department of Natural Resources to plug one of its producing wells in Trumbull County. 
The company won approval on July 10 to plug its Jewett IH well in Johnston Township, said ODNR spokesman Mark Bruce. 
Last April, the company said it was abandoning its efforts in the Utica shale and putting its 105,000 leased acres up for sale. 
That was due to poor results in its Trumbull County wells in the northern section of the Utica shale. 
The company announced that it was taking a $521 million write-off for the Ohio Utica shale.
Read the original article here.

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Friday, July 18, 2014

Antero Resources Reports Mid-Year 2014 Reserves

  • Mid-year 2014 proved reserves increased by 19% to 9.1 Tcfe (13% liquids) from year-end 2013
  • Proved developed reserves increased by 37% to 2.8 Tcfe (12% liquids)
  • Pre-tax PV10 of proved reserves including hedges increased by 28% to $9.0 billion
  • 3P reserves increased by 7% to 37.5 Tcfe (15% liquids)
  • Pre-tax PV10 of 3P reserves including hedges increased by 24% to $26.4 billion
  • Utica Shale dry gas position increased to 146,000 net acres and 9.5 Tcf of net resource
Antero Resources (NYSE: AR) ("Antero" or the "Company") today announced that proved reserves at June 30, 2014 were 9.1 Tcfe, a 19% increase compared to proved reserves at December 31, 2013, in each case assuming ethane rejection. Proved, probable and possible ("3P") reserves at June 30, 2014 totaled 37.5 Tcfe, which represents a 7% increase compared to December 31, 2013, assuming ethane rejection. Antero's June 30, 2014proved and 3P reserves excluded 356 and 1,425 million barrels of ethane, respectively, due to the relationship between assumed ethane and natural gas prices which indicate ethane will be rejected as of June 30, 2014. The Company's proved and 3P reserves also excluded any reserves attributable to the Utica dry gas resource inWest Virginia or Pennsylvania.

Antero's reserves at June 30, 2014 were prepared by its internal reserve engineers and have not been reviewed or audited by its independent reserve engineers.

Proved Reserves

As of June 30, 2014, proved reserves increased by 19% from year-end 2013 to 9.1 Tcfe, of which 87% were natural gas, 12% were natural gas liquids ("NGLs") and 1% was oil. The Marcellus Shale accounted for 94% of proved reserves and the Utica Shale accounted for the remaining 6%. Of the 1.5 Tcfe of proved reserves added in the six months ended June 30, 2014, 1.3 Tcfe was attributed to the Marcellus Shale. NGLs and oil increased by 49 million barrels and 6 million barrels, respectively, due to Antero's drilling program targeting liquids-rich locations in the Marcellus and Utica Shaleplays. Positive performance revisions of 85 Bcfe were primarily due to improved Marcellus well performance from shorter stage length ("SSL") completions offset by the reclassification of 23 dry gas locations, representing 199 Bcfe, from proved undeveloped to the probable category due to the SEC's five-year development rule.

Approximately 26% of Antero's 488,000 net acres of current leasehold in the Marcellus and Utica were classified as proved at June 30, 2014. Based on Antero's successful drilling results to date, as well as those of other operators in the vicinity of Antero's leasehold, the Company believes that a substantial portion of its Marcellus and Utica Shale acreage will be added to proved reserves over time as more wells are drilled. Antero's estimated Marcellus and Utica proved reserves and undeveloped locations are primarily booked assuming 660 foot and 1,000 foot interlateral distance, respectively.

Proved developed reserves increased 37% from year-end 2013 to 2.8 Tcfe at June 30, 2014. The Company added 59 Marcellus wells to proved developed reserves in the six months ended June 30, 2014. Virtually all of the wells utilized SSL completions and had an average estimated ultimate recovery ("EUR") of 1.9 Bcfe/1,000 feet of lateral (12% liquids) which is consistent with previous estimates. Out of the 689 gross proved undeveloped Marcellus locations, 251, or 36% of the total, are booked assuming SSL completions.

Antero added 22 Utica wells to proved developed reserves in the six months ended June 30, 2014, consisting of 4 rich gas (1100-1200 Btu), 2 highly-rich gas (1200 to 1225 Btu), 3 highly-rich gas/condensate (1225 to 1250 Btu) and 13 condensate (1250 to 1300 Btu) wells. The wells located in the rich gas and highly-rich gas regimes had an average EUR of 2.6 Bcfe/1,000 feet of lateral (14% liquids) and 2.8 Bcfe/1,000 feet of lateral (21% liquids), respectively. The wells located in the highly-rich gas/condensate and condensate regimes had an average EUR of 1.9 Bcfe/1,000 feet of lateral (26% liquids) and 1.1 Bcfe/1,000 feet of lateral (35% liquids), respectively. These EURs are consistent with previous estimates.

The percentage of proved reserves classified as proved developed increased to 30% at June 30, 2014 as compared to 27% at year-end 2013. Proved undeveloped reserves increased by 13%, primarily as a result of the successful execution of Antero's Marcellus Shale development drilling plan. Antero's 6.3 Tcfe of proved undeveloped reserves will require an estimated $5.8 billion of development capital over the next five years, resulting in an estimated average development cost for proved undeveloped reserves of $0.92 per Mcfe.

SEC prices for reserves were calculated as of June 30, 2014 on a weighted average Appalachian index basis and were $88.82 per Bbl for oil and $3.95 per MMBtu for natural gas. Using SEC prices, the pre-tax present value discounted at 10% ("pre-tax PV10") of the June 30, 2014 proved reserves was $8.5 billion, excluding the value of the Company's natural gas and oil hedges. Including the value of Antero's hedges as of June 30, 2014 and usingSEC prices, the pre-tax PV10 value of proved reserves was $9.0 billion, a 28% increase over year-end 2013. The pre-tax PV10 value of proved developed reserves was $4.4 billion excluding the value of hedges and $4.9 billionincluding the value of hedges, a 41% increase over year-end 2013.

Summary of Changes in Proved Reserves (in Bcfe)

Balance at December 31, 2013

7,632

Extensions, discoveries and additions

1,531

Performance revisions

85

Price revisions

11

Estimated Production

(152)

Balance at June 30, 2014

9,107

3P Reserves

As of June 30, 2014, 3P reserves increased by 7% from year-end 2013 to 37.5 Tcfe, of which 85% were natural gas, 14% were NGLs and 1% was oil. The Marcellus, Utica, and Upper Devonian Shale comprised 26.4 Tcfe, 6.4 Tcfe and 4.7 Tcfe of the 3P reserves, respectively. The 7% increase in 3P reserves was driven primarily by the leasehold addition of 22,000 net acres in the Marcellus Shale core in northern West Virginia and 13,000 net acres in the Utica Shale core in southern Ohio, including 6,363 net acres associated with Antero's previously announced Piedmont Lake lease acquisition.

Based on the results from SSL completions, Antero has increased the number of locations assuming SSL from 1,768 gross undeveloped 3P Marcellus locations to 1,893 gross undeveloped 3P Marcellus locations, or 62% of the 3,057 total gross undeveloped 3P Marcellus locations. Importantly, 25.5 Tcfe of Antero's 26.4 Tcfe 3P reserves in the Marcellus, or 97%, were classified as proved or probable (2P), reflecting Antero's extensive delineation and development activities in the Marcellus Shale.

Using SEC prices, the pre-tax PV10 of the June 30, 2014 3P reserves was $25.9 billion, excluding the value of the Company's natural gas and oil hedges. This represents a 27% increase from the pre-tax PV10 of the year-end 2013 3P reserves. Including the value of Antero's hedges as of June 30, 2014 and using SEC prices, the pre-tax PV10 value of 3P reserves was $26.4 billion, a 24% increase over the pre-tax PV10 of the year-end 2013 3P reserves including Antero's hedges.

The table below summarizes Antero's estimated reserve volumes using SEC pricing, broken out by operating area.   (CLICK HERE TO VIEW THE ORIGINAL RELEASE WITH THE TABLE PROPERLY FORMATTED)

Article Says Fracking is Leading to Increased Fossil Fuel Subsidies

Fossil fuel subsidies have
been a target of activists
From Grist:
You probably know that the U.S. government subsidizes fossil fuel production. But here’s something you probably don’t know: Those subsidies have recently increased dramatically.  According to a report released last week by Oil Change International, “Federal fossil fuel production and exploration subsidies in the United States have risen by 45 percent since President Obama took office in 2009, from $12.7 billion to a current total of $18.5 billion.” We are, as the report observes, “essentially rewarding companies for accelerating climate change.” 
At first glance, this seems strange. Why would there be such a big increase under a Democratic president who has committed his administration to combatting climate change, and who has even repeatedly called for eliminating exactly these kinds of dirty energy subsidies
The short answer: fracking. The fracking boom has led to a surge in oil and natural gas production in recent years: Oil production is up by 35 percent since 2009, and natural gas production is up by 18 percent. With more revenues, expenditures, and profits in the oil and gas industries, the value of the various tax deductions for the oil industry has soared. So, for example, the deduction for “intangible drilling costs” cost taxpayers $1.6 billion in 2009, and $3.5 billion in 2013.
Read much more by clicking here.

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Thursday, July 17, 2014

Number of Utica Shale Producing Wells Increases Slightly on Latest ODNR Report

The latest weekly update from the Ohio Department of Natural Resources on Utica shale activity is now available.  After a very slow week leading up to the 4th of July holiday, permitting picked back up a bit last week.

13 new permits were issued.  Guernsey County was the hot spot, with 4 of the permits for wells there.  Belmont and Harrison counties were each the site of 3 new permits, while Jefferson, Monroe and Trumbull counties were the locations for 1 new permit each.

After this week of activity the total permit count now stands at 1,397, poised to cross the 1,400 milestone on next week's report.  The number of wells drilled is now 953, and the total producing wells climbed a few from last week to 476.  The Utica rig count is 45.

View the report by clicking here.

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Shale Boom is Making America Indispensable on Global Energy Scene

From Financial Times:
Prospects are bright here and in a few other countries including Canada. As the gush of crude from North America strengthened, analysts predicted it would send prices tumbling and open a new era of cheap fuel. It has not happened. 
That is because the great advances in US shale have coincided with political upheaval in big oil-producing countries. Political instability in Libya, Iraq and Venezuela has stoked concerns about disruption and threats to future supplies. International sanctions on Iran have also reduced the global supply of oil, and Nigeria’s industry is plagued by theft. 
Were it not for the new production in the US, which has cut the country’s imports sharply, there would probably be talk of another world oil crisis. As a global energy supplier, it is, in the words of Madeleine Albright, the former secretary of state, the “indispensable nation”. 
The rise of Eagle Ford has been spectacular. The advances in horizontal drilling and hydraulic fracturing, or “fracking”, which were first used to extract natural gas from shale, have in the past four years been applied here to produce oil, with remarkable results. Eagle Ford produced just 15,000 barrels of crude oil per day in 2010, but 838,000 b/d in the first four months of this year, according to the Railroad Commission of Texas, the state regulator.
Read the whole article by clicking here.

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