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Tuesday, October 6, 2015

10/6/15 Links of the Day: Problems for Shale Drillers, OPEC & Non-OPEC Producers Could Be Ready to Cooperate and Drive Oil Prices Up, and More

EcoWatch:  Fracking Boom Goes Bust as Companies File For Bankruptcy   -   "U.S. shale production is in deep, deep trouble as the fracking boom bursts in the face of low oil prices. The September report from the oil cartel, OPEC, shows the writing on the wall. “Crude oil prices have declined more than 50 percent since last year,” says Nova Safo of NPR’sMarketplace. “Fracking companies..."

Eagle Ford Shale:  Shale Industry Shake-Up   -   "A new report generated by data company, FactSet, says that capital spending in the shale industry exceeded cash from operations by about $32 billion in the first six months of the year and is quickly approaching the deficit of $37.7 billion reported for..."

Bloomberg:  Solar & Wind Reach a Big Renewables Turning Point   -   "Wind power is now the cheapest electricity to produce in both Germany and the U.K., even without government subsidies, according to a new analysis by Bloomberg New Energy Finance (BNEF). It's the first time that threshold has been crossed by a G7 economy.1 But that's less interesting than what just happened in the U.S..."

WTOV:  $8 Million in Road Repairs on Way to Belmont County   -   "A major oil and gas company has agreed to put big money in road improvements in Belmont County. It's a more than $8 million project on 18 miles of roadway in Mead and York Townships, and it all starts Friday. "This is an improvement that would never be able to happen without the oil and gas industry," Belmont County Commissioner Matt Coffland said. On Thursday, local leaders highlighted the..."  Oil Up to $50 on Speculation Producers Getting Together   -    "Oil prices rose on Tuesday, heading for the first three-day gain in five weeks, on signals that the world’s biggest producers of crude may act jointly to support prices, which have halved over the past year. Brent crude, the global oil benchmark traded up 75 cents at the $50.00 a barrel milestone..."

Natural Gas Now:  Peer Review Abuse Flares Up Again   -   "If you thought the peer review abuse connected with the New York State health studies used to rationalize Andrew Cuomo’s politically inspired fracking denial was something new or the worst you’ve seen, you haven’t seen the new Friends of the Earth (FoE) propaganda “study” targeted at Bakken shale oil drilling. It was “peer-reviewed” by another fractivist outfit..."

Oil & Gas Journal:  NYMEX, Brent Oil Prices Rise on Lower U.S. Rig Count   -   "Light, sweet crude oil prices for November delivery rose on the New York market Oct. 5 as did Brent crude oil prices on the London market, which analysts largely attributed to cuts in US production capacity as indicated by a falling rig count. Goldman Sachs analysts now expect US production will decline 225,000 b/d in 2016..."

GreenHunter Resources:  GreenHunter Resources Reports New Record Disposal Volumes   -   "GreenHunter Resources, Inc. (NYSE MKT:GRH) (NYSE MKT:GRH.PRC), a diversified water resource, waste management, environmental services, and hydrocarbon marketing company specializing in the unconventional oil and natural gas shale resource plays within the Appalachian Basin, reported today record SWD injection volumes company-wide of approximately 15,000 barrels per day over..."

Akron Beacon Journal:   University of Akron to Study Pipeline Corrosion with Grant   -   "U.S. Sen. Sherrod Brown (D-OH) today announced $238,424 in federal funding for the University of Akron to study how to prevent or mitigate pipeline corrosion. “Pipelines run through communities across..."

Energy & Environmental Law Blog:  Recent Ohio Oil and Gas Cases   -   "Here are two recent Ohio oil and gas cases we thought you may be interested in: Feisley Farms Family, L.P. v. Hess Ohio Resources, LLC (S.D. Ohio) – The Federal District Court for the Southern District of Ohio granted summary judgment in favor of Hess Ohio Resources, LLC in a case involving the validity of an oil and gas lease. The lessor alleged..."

The Intelligencer/Wheeling News-Register:  Rigs Down in Ohio and West Virginia, But Hopes Are Up   -   "Combined, Ohio and West Virginia have 35 natural gas rigs drilling, which is only half the 70 the two states had working in the Marcellus and Utica shales at this time last year, but optimism remains high among both industry leaders and..."

StateImpact Pennsylvania:  EPA Sets Tougher Ozone Standard, But Not Tough Enough for Some Greens   -   "After years of delay and court battles, the Obama administration released a final update to its regulation on ground-level ozone, or smog Thursday. The EPA set the standard at 70 parts per billion (ppb) of ozone, an irritant that..."

Energy in Depth:  Report: Data Indicate that Massive Improvements in Air Quality, Health a Direct Function of Shale   -   "It’s no secret by now what the shale gas (and oil!) renaissance made possible by the deployment of advanced hydraulic fracturing technology has done for the nation’s economy, its geopolitical position, and the millions of consumers and manufacturers who continue to benefit from historically low energy..."  2015 Utica Shale Capital Series   -   "Utica Summit III, presented by the Canton Regional Chamber of Commerce, The Repository, and, is scheduled for Tuesday, October 13, 2015 at The Conference Center, Kent State University at Stark. It will be a forum for high-level conversation about what is possible, now and in the future, all because of the technology that permits horizontal drilling of the shale plays in..."

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Utica Shale Permitting Speeds Up, Rig Count Holds Steady

The Ohio Department of Natural Resources has released the weekly update on permitting in the Utica shale, and for the third straight week activity remained relatively brisk.

18 new permits were issued for horizontal drilling last week, divided among four different counties.  Monroe County led the way, with six new permits.  Two of those were issued to CNX Gas, while the other four went to EM Energy.  Belmont County was the spot for five new permits (three to Rice Drilling, one to XTO Energy, and one to Gulfport Energy).  Four permits went to Chesapeake Exploration in Carroll County.  The remaining three permits were all issued to Ascent Resources for wells in Guernsey County.

This activity brings the cumulative total of permits currently issued to 2,028.  There have now been 1,606 wells drilled, and 1,018 are producing.  The Utica rig count remained the same as it was last week, at 21.

View the report in its entirety below.

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Monday, October 5, 2015

FracTracker Suggests That Utica Shale Bubble is About to Burst

FracTracker Alliance recently posted an article which looked at the claims regarding the makeup of the Utica shale play which were made by the Ohio Geological Survey and Department of Natural Resources back in 2012.  Comparing the projections with data that has become available since they were made, the author reached the conclusion that the estimates by the OGS have not held up.

A portion of the post:
Simply put, the OGS 2012 estimates:
  • Have not held up,
  • Are behind the times and unreliable with respect to citizens looking to guestimate potential royalties,
  • Were far too simplistic,
  • Mapped high-yield sections of the “play” as continuous when in fact productive zones are small and discrete,
  • Did not differentiate between per day and total productivity, and
  • Did not address brine waste.
These issues should be addressed by the OGS and ODNR on a more transparent and frequent basis. Combine this analysis with the disappointing returns Ohio’s 17 publicly traded drilling firms are delivering and one might conclude that the structural Utica Shale bubble is about to burst. However, we know that when all else fails these same firms can just “lever up,” like their Rocky Mountain brethren, to maintain or marginally increase production and shareholder happiness. Will these Red Queens of the O&G industry stay ahead of the Big Bank and Private Equity hounds on their trail?
Read the whole article by clicking here.

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Was a Small Earthquake in Harrison County Last Week Related to Shale Development?

From The Intelligencer/Wheeling News-Register:
The earthquake struck the Moorefield Township area, about 10.5 miles southwest of Cadiz, just after 11:30 pm A universal earthquake tracker rated the quake at 2.1 on the Richter scale, meaning it was not very strong. The Richter scale indicates that earthquakes rating 2.0 to 2.9 are classified as minor and are generally felt only slightly. They also do not cause damage to buildings, and more than 1 million tremors of that magnitude occur every year. 
"There was no effect to people's homes," Wilson said. 
Wilson said the Emergency Management Agency was on alert for flooding in the Moorefield and Piedmont areas Tuesday due to the recent heavy rains. They heard about the quake by checking in with 911 dispatch. 
Wilson said he could not speculate about whether the earthquake was related to fracking, or hydraulic fracturing related to the natural gas industry. The nearest gas well pad is located on Kennedy Ridge Road and owned by Ascent Resources. Wilson said the online image of the earthquake's location was reported to Ascent.
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Commissioners in Wayne County Are Opposing the Rover Pipeline

From the Akron Beacon Journal:
The Wayne County commissioners are opposing the $4.2 billion Rover Pipeline across northern Ohio. 
The commissioners unanimously urged the Federal Energy Regulatory Commission to reject plans for two new natural gas pipelines because the project would create a public safety risk in southern Wayne County and could jeopardize the county’s strong farming economy. 
A recent study determined there are spots in southern Wayne County with radio dead spots and lapses in service for firefighters and first responders that the county is working to correct, said commissioners Scott Wiggam, Jim Carmichael and Ann Obrecht. 
Construction of the pipeline and resulting increased traffic in that area is “cause for concern” and will place residents at increased risk, the commissioners said in a recent two-page letter filed with the federal agency that oversees interstate pipelines. 
Wayne County’s protest is unusual because the project has generally won strong support from political and business leaders along the route, although some neighbors are unhappy.
Click here to read more.

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Energy in Depth Counters Claims in Gaswork, New Film by Josh Fox

Oil and Gas Worker Safety: What You Need to Know
by Katie Brown, Energy in Depth

The same documentary filmmaker who brought us the fraudulent flaming faucets and hoses of the Gasland series is returning with a new short film that suggests oil and gas companies don’t care about their workers, and that they routinely put their employees’ lives in direct danger in order to make big profits.  That film, Gasworkcreated by Josh Fox, is set to premiere on MSNBC on October 1st.
To be clear, no death or injury on the job is ever acceptable, and employee safety is and will always remain the top priority in the oil and gas industry.  The industry recognizes its work is not done until it achieves a zero injury rate in the workplace. But as most people will acknowledge, no energy development – or indeed any industry – is risk free. That is a reality that Fox and other anti-fracking groups refuse to acknowledge, and as a result, their advocacy on this issue seems more geared toward securing headlines than in having a constructive dialogue about safety.
Considering the multiple errors and deceptions of Josh Fox’s previous films, it’s likely thatGaswork will be more of the same. In light of that, let’s have a look at the facts regarding worker safety in the oil and gas industry.
Fact #1: Oil and gas industry has a far lower work risk rates than most industries
Again, while no fatality is acceptable, oil and natural gas development is safer than many other lines of work.  The Bureau of Labor Statistics’ (BLS) data show that construction, transportation and warehousing, agriculture, forestry, government, professional and business services, manufacturing, retail trade, leisure and hospitality, wholesale trade, and education and health services had more fatal injuries than the oil and gas industry in 2014.
EID_Fatalities2015 final (2)

BLS has not yet published its 2014 data for nonfatal injuries and illnesses.  However, its latest data show that injuries significantly declined by 15 percent from 2012 to 2013. BLS finds the incidence rate for oil and gas is 1.3 per 100 full-time workers, which is less than half the national rate of 3.5 per 100 full-time workers across all industries and government. Again, industries like fishing, bartending, and taxi and limo drivers had far higher injury rates. Further, from 2011 to 2012, the injury rate for oil and gas fell 33 percent.
These numbers led the chief of the Occupational Safety and Health Administration (OSHA), David Michaels, to state, “This industry has stepped up to the plate” in driving down workforce injuries to levels not seen in several years.

Friday, October 2, 2015

Utica Shale Makes Ohio’s Appalachia Region Nation’s Fifth Fastest Growing Economy

by Jackie Stewart, Energy in Depth

Ohio’s prolific Utica Shale exploration and production has transformed one of the most economically depressed areas in the Appalachia Region – Belmont, Marshall and Ohio counties – into the fifth fastest growing economy in the nation, according to new statistics by the U.S. Department of Commerce.
The data show that the Gross Domestic Product (GDP) of finished goods and services produced among the Wheeling Metropolitan Statistical Area grew by 9.5 percent from 2013 to 2014, only to be preceded by San Angelo, Texas, Midland, Texas, Lake Greeley, Colo. And Lake Charles, L.a. Shale development accounted for the vast majority of the economic growth in the Wheeling Metropolitan Statistical Area, an area which included some of the best Utica wells. That doesn’t even take into account upcoming spending slated for the region, including a new $5.7 billion ethane cracker plant in Belmont County!
This news is driving elected officials from across party lines to express their excitement. Senator Lou Gentile (D), who represents the 30th District of Ohio, stated:
“I think it’s tremendous. I’m going to work diligently to keep pushing this forward to see that this becomes reality, and this will have a regional economic impact.”
Shale development has driven economic development in southeast Ohio’s river communities in ways that folks would never have dreamed of a decade ago. A simple drive into St. Clairsville, Ohio tells the story of how a town can be changed practically overnight. Oil and gas development has boosted hotels, retail stores, and restaurants in that area. Three more additional hotels are slated for construction around the Ohio Valley Mall and Plaza as well. Retail and service companies, like these new stores bring regional impacts and opportunities for jobs of all shapes and sizes. Even a Starbucks, has been built, prompting the Belmont County Commissioners to see nothing but positive economic impacts from all that’s going on. As Belmont County Commissioner Mark Thomas said,
“The trickle-down effect of people going out to shop is huge in terms of creating new development and tax revenue is huge.”
Hotels and temporary housing are not the only good news, either. As many folks are locating to Ohio or landing jobs which have created the need for permanent housing in the area as well,debunking a notion that shale related jobs are not going to local workers. As Belmont County Commissioner Mark Thomas said,
“There is now work on a new subdivision south of the Belmont Hills Country Club. We are going to need housing for short-term construction workers. But we are also going to see more permanent housing for people who may move into the area for long-term careers.”
Speaking of permanent infrastructure, let’s not forget as back to school season kicks off here in Ohio, students and teachers may notice new science labs, school buildings, and scholarship programs.  Each of these improvements are a result of the significant investment that Ohio’s oil and natural gas industry has devoted to local schools—not only by way of their substantial contribution to the local tax base but also through new apprentice and training programs.
We certainly agree with Senator Gentile that this news is absolutely “tremendous.”
Copyright Energy in Depth. Reprinted with permission. View article in its original location here:

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Federal Judge Says Rules for Fracking on Federal Land Can't be Enforced

From Bloomberg:
A U.S. judge in Wyoming has blocked new rules that tighten controls over fracking on federal lands, granting a measure of relief to producers who would have faced higher costs at a time when profits already are strangled by low crude prices. 
The order by U.S. District Judge Scott Skavdahl puts a temporary hold on the most closely-watched effort by the Obama administration to ensure that hydraulic fracturing doesn’t contaminate water supplies. While the rules apply only to federal lands, they are designed to spur states to follow suit, magnifying the impact and potentially slowing development of oil and natural gas resources. 
Skavdahl said the government’s Bureau of Land Management lacks the authority to control fracking.

Republican Rob Bishop, chairman of the House Committee on Natural Resources, approved of the ruling as “the right decision because it stops the Obama Administration from shoving this harmful policy down the states’ throats,” in a statement issued by his office. Bishop said the federal rule would cause “major harm” to the industry and to states if implemented.
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