FERC: 2011-2012 Winter Market Assessment
The Federal Energy Regulatory Commission (FERC) has issued its assessment for the upcoming winter season (see here). There are a number of interesting charts, including this one on regional spot prices:
American Jobs
We've noted previously the problems North Dakota was having finding trained workers - a problem other states wish they had (see here, e.g.). Both the WSJ and the Philadelphia Inquirer have similar articles mentioning the need in other areas with active production (see here and here). From the Inquirer: "Run - don't walk, run - to Marcellus Shale natural gas drilling areas if you are a welder or pipe fitter or engineer or a company that can deliver such people to companies already operating in the fields."
Energy = Jobs.
PA - Study Finds Pre-Existing Water Well Impacts
With all of the claims regarding freshwater impacts from shale drilling, we thought you might find this of interest (from Essential Public Radio 90.5): "Tests of water wells near gas drilling sites generally didn't find detrimental changes in water quality, according to a new report issued by The Center for Rural Pennsylvania at Penn State University. However, scientists said more research is needed on the sources of methane in water wells. *** According to the report, many of the problems had existed before drilling even started. About 40 percent of the wells failed at least one water quality test before gas drilling started. Most of the failing grades were due to higher than accepted levels of coliform bacteria and turbidity, or cloudiness. Some wells also showed methane before drilling." (Emphasis is ours.)
Not a surprise for many in PA who have been following this issue ...
For a copy of the study itself, see here.
UGI Gathering Line
We thought some of you (particularly in PA) might be interested in this: "Since Oct. 11, the existing 60,000 Mcf-per-day capacity line has collected gas from Citrus Energy Appalachia, LLC, wells in Wyoming County, connecting them to the Tennessee Gas Pipeline in Susquehanna County. The proposed 30-mile addition would extend the line from Washington Twp. in Wyoming County to Luzerne County, where it will connect with Transcontinental Gas Pipeline. UGI Energy expects the extension to move between 200,000 to 500,000 Mcf per day of gas by 2013, serving Citrus and other producers, UGI Energy spokesman Peter Terranova said." (From the Scranton Times Tribune.)
Rig Counts
The Star Telegram has an interesting article on rig counts: "Those 'oily' plays are sending the U.S. and Texas drilling rig counts soaring. Oil production nationally and in the Lone Star State is increasing, a phenomenon that many industry veterans thought they might never again see after a steep decline in oil output that has been nearly 40 years in the making. *** Amid the new craze for crude, the Barnett Shale rig count plummeted to 53 active rigs Oct. 14, the fewest since June 11, 2004, according to information compiled by RigData."
WSJ: Shale Boom
The WSJ has an interesting article on how shale operations are impacting the industry: "Shale discoveries have reinvigorated U.S. oil and gas production that just half a dozen years ago was widely seen as in terminal decline. Today, there is a glut of cheap natural gas, and domestic oil production is rising for the first time in decades. Shale development is even spreading to other countries, such as Poland and Argentina."
WV Tax Report
Marshall University has made a comparison of taxes imposed on the natural gas industry in West Virginia and other Appalachian Basin states: "The study’s authors, a team led by MU Vice President for Business and Economic Research Calvin Kent, looked at real and personal property taxes, severance taxes, corporate income taxes and sales and use taxes as well as permits, bonds and other environmental taxes or fees." (From WOWK.) The conclusion - ... not favorable for West Virginia ...
For a copy of the study itself, see here.
Jack Hanna - "We Need the Resource"
This article is particularly interesting for those of us in Ohio: "Conservationist and TV personality Jack Hanna said he supports natural gas drilling and he's going to talk about the issue at his conservation center."
Go Jack!
Job Training
You may be interested in this article from the WSJ: "May snapped up the opportunity through his local community college, Zane State, to take a two-week, 80-hour shale exploration certification course developed by the private company Retrain America. When he graduated, he'd interviewed for three jobs and taken a position cementing wells for Halliburton that will pay $60,000 to $70,000 a year." (Emphasis is ours.)
Very nice.
USEPA Schedules Hydraulic Fracturing Wastewater Rule Development
USEPA announced yesterday a schedule to develop standards for wastewater discharges associated with natural gas production. Separate standards will be set for wastewaters associated with coalbed methane production (proposed rule expected 2013) and shale production (proposed rule expected 2014). The agency will be looking to promulgate pretreatment standards. The USEPA press release can be found here.
El Paso Bought
Very interesting: "Kinder Morgan agreed on Sunday to buy the El Paso Corporation for about $21.1 billion in cash and stock, striking one of the biggest energy deals in history, to tap into a boom in natural gas drilling and production." (From the NYT).
Ohio Draft Air GP Published for Comment
Ohio EPA has published for comment its draft air pollution oil and gas well site general permit (see here for copies of the terms and qualifying criteria documents). It is intended to cover the equipment used during the production phase of a Marcellus or Utica/Point Pleasant shale well - drilling and completion activities are currently exempt (according to Ohio EPA).
Comments are due by November 28, 2011.
Note: Ohio EPA has also notified producers making inquiries about air permits about an additional permitting option associated with Ohio's air pollution control program - stating, "Because Ohio EPA has only recently determined that an air permit is necessary and believes that the final general permit will be available before any case-by-case permit could be issued, Ohio EPA is exercising its discretion not to penalize a company for failing to obtain an air permit before installing an oil and gas well as long as the company applies for the general permit within thirty (30) days of the general permit becoming available."
They have asked for notification and even prepared a sample letter to use. Nice.
More from the NYT
We've noted previously the NYT's "environmental reporting" on the E&P industry (see here and here, e.g.). Now, a different strategy: "But the boom — brought on by an advanced drilling technique called hydraulic fracturing, known as fracking — has brought problems too. While the gas companies have created numerous high-paying drilling jobs, many residents lack the skills for them. Some people’s drinking water has been contaminated. Narrow country roads are crumbling under the weight of heavy trucks. With housing scarce and expensive, more residents are becoming homeless. Local services and infrastructure are strained."
North Dakota
Yesterday, we noted for you several recent articles regarding local production in the Basin. We thought, therefore, we would note a couple for you on production outside the Basin - and in particular in North Dakota:
- North Dakota Likely to Overtake California Oil Production. "North Dakota will likely leapfrog California and may even overtake Alaska in the next year—far outpacing earlier industry predictions—to become one of the nation's three biggest oil-producing states, a government regulator said." (From San Jose Mercury News.)
- Oil Boom Too Much of a Good Thing? "New drilling technology has freed up vast reserves of oil in the Williston Basin of western North Dakota, fueling an economic bonanza that has become a flat-out gold rush. As the rest of the country desperately tries to skirt a double-dip recession, North Dakota boasts a $1 billion budget surplus and the nation's lowest unemployment rate. ***. Schools are rushing to hire more teachers. Towns are adding more cops. *** But so many workers have flooded the oil patch that many long-time residents and officials are beginning to complain about something most places in the country could barely comprehend: Too much prosperity; too much rapid growth." (From the Star Tribune.)
Appalachian Basin Stories
We thought you might be interested in the following articles on local production here in the Basin:
- PA Infrastructure Incentives. "Gov. Tom Corbett says Pennsylvania's natural gas infrastructure needs a boost if the demand for the fuel is going to grow."
- PA Marcellus Gas Case Heads to High Court: "A case raising doubts about whether Pennsylvania's booming natural gas industry has the right to extract the methane from the thick shale more than a mile beneath countless properties is being appealed to the state's high court." (From Forbes.)
- Steel Industry Benefits from Local Drilling. "A natural gas drilling boom in Pennsylvania is helping the economies of Rust Belt cities long accustomed to bad news. Drilling requires steel — lots of it — and that has manufacturers expanding and hiring new workers." (From NPR.)
- Land Rush a Boon for Eastern Ohio. "While drilling in the Utica is in its infancy, the land rush has been an economic boon. Mary Catherine Nixon is the recorder in Ohio's Belmont County, just 10 miles from Wheeling, W.Va. On a given day, Nixon says she's collecting $1,400 in copying fees alone from the two to three dozen mineral rights researchers who have camped out in her offices for months." (From NPR.)
Dominion - Export LNG?
The WSJ has an interesting article on Dominion Resources, Inc.'s efforts to export LNG from its Cove Point facility: "The terminal, Dominion Cove Point on the Chesapeake Bay in Lusby, Md., is well-situated to export gas from the prolific Marcellus Shale and the promising Utica Shale formations, Dominion's chairman and CEO, Thomas Farrell II, said in a statement."
[Note: Subscription may be required.]
Wayne Forest Drilling
Wayne National Forest auction coming to Ohio: "The U.S. Bureau of Land Management plans to lease out 3,302 acres in the Wayne, most of it near Nelsonville in Athens County, to the highest bidders during a Dec. 7 mineral-rights auction." (Columbus Dispatch article). And naturally the skeptics are coming too: "Nathan Johnson, attorney for the Buckeye Forest Council, said a drilling technique called hydraulic fracturing, or fracking, poses a threat to the forest and its wildlife."
We'll see ...
Eagle Ford
Given our last post regarding North Dakota and the Bakken, we thought we'd point you to this article on the Eagle Ford from the Corpus Christi Caller-Times: "All the talk about Eagle Ford being big is an understatement. *** Since Petrohawk Energy Corp. drilled the first significant well into the formation in La Salle County in 2008, the rush of drilling companies to stake their claims across the 400-mile-long, 50-mile-wide strip of southern and central Texas has brought investment and jobs."
Not bad.
PA Fees
Pennsylvania is considering some significant fees on drilling in the state according to this article in the WSJ: "Pennsylvania Gov. Tom Corbett proposed a fee on natural-gas drilling of as much as $160,000 a well in an effort to find a middle ground between public support for assessing drillers in the booming Marcellus Shale basin and a campaign pledge not to impose taxes." (Emphasis is ours.) It seems as if everyone is looking for a piece of the pie these days ...
See also this article in the Philadelphia Inquirer.
Chemical Giants Find Shale Attractive
The Columbus Dispatch has a good article on the potential growth for the chemical industry in Ohio due to the Utica: "New natural-gas discoveries in Ohio could spell more jobs in spinoff industries from large-scale industrial chemical plants that could feed and foster additional manufacturing, industry representatives say."
Nice.
ND Oil Production
The WSJ has an interesting article on how North Dakota is ahead of the economic curve due to its energy industry: "Mr. Hamm [founder and CEO of Continental Resources] believes that if Mr. Obama truly wants more job creation, he should study North Dakota, the state with the lowest unemployment rate in the nation at 3.5%. He swears that number is overstated: 'We can't find any unemployed people up there. The state has 18,000 unfilled jobs,' Mr. Hamm insists. 'And these are jobs that pay $60,000 to $80,000 a year.' The economy is expanding so fast that North Dakota has a housing shortage. Thanks to the oil boom—Continental pays more than $50 million in state taxes a year—the state has a budget surplus and is considering ending income and property taxes."
NY Proposes Hydraulic Fracturing Regulations
The New York Department of Environmental Conservation (NYSDEC) has proposed new regulations related to the use of high-volume hydraulic fracturing as part of a State Pollutant Discharge Elimination System (SPDES) general permit. From the NYSDEC website:
NYSDEC has made a tentative decision to issue a SPDES general permit that will authorize point source discharges from high volume hydraulic fracturing (HVHF) operations to, in or over waters of the State. The SPDES general permit requires a Notice of Intent submittal to NYSDEC in order to discharge under this general permit. Permittees must develop a comprehensive Stormwater Pollution Prevention Plan (SWPPP) and implement control measures that minimize the discharge of pollutants to waters of the State. The NYSDEC reserves the right to require any applicant seeking coverage under this General Permit to apply for an individual SPDES permit. The General Permit has five year permit.
Public comments are due December 12, 2011.
NSPS Public Hearing
We've noted previously a U.S. EPA rulemaking proposal designed to to reduce air emissions from oil and gas operations. Here is an article from Forbes.com on the public hearing recently held in Texas on the issue: "The agency is proposing standards to curb hydraulic fracturing, or 'fracking,' by requiring operators to capture and sell natural gas that now escapes into the air. Thursday's EPA hearing was held in a region with a vast area of urban drilling atop the natural gas-rich Barnett Shale. The EPA's proposal would apply new pollution control standards to about 25,000 gas wells that are hydraulically fractured each year. *** While industry representatives touted the jobs and prosperity that drilling brings, critics argued it's not worth the environmental risk of toxic spills, scattered drill site explosions, tainted drinking water and polluted air."
Ohio Articles
At the end of September, Ohio Governor John R. Kasich held an Ohio Energy Summit to lay the foundation for a comprehensive state Energy and Economic Development Policy. Since that time, there have been a number of related articles that you might find of interest:
- Oil and gas energy's pay day: $500 billion (the Times-Reporter);
- Drillers snapping up rights leases in Ohio (part of a three-day series run by the Columbus Dispatch);
- Buckeye Oil Billions Will Unleash an Ohio Manufacturing Tech Boom (Forbes). The article here begins well: "A prediction. The Ohio Valley is on track to become a hotbed of innovation. And one which will almost certainly focus on 21st century manufacturing. The catalyst for this seemingly counter-intuitive claim? Money. Black gold. Ohio is about to be awash in both." Let's hope the author is right!
