Articles Posted in OIl and Gas News

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A recent “swarm” of small quakes in Irving has caused a stir and ignited a series of articles about the relation between oil and gas activity and seismic events. The quakes in Irving were strong enough to knock some books off of shelves.

After residents of the town of Azle experienced a series of quakes in 2013, residents protested in Austin before the Texas Railroad Commission, and as a result the RRC hired its own seismologist to study the problem. Most scientists have linked quakes in Texas and Oklahoma to injection of large volumes of produced water. Recently one study in Ohio linked quakes there to recent fracking of wells in the area.

Most if not all of the actual studies of recent quake activity are being done by Southern Methodist University. It has studied the quakes around Azle, and a report of its study is expected soon. After the quakes in Irving, SMU is installing seismic monitors in that area.

Stories about the quakes:

Dallas Morning News

Dallas Morning News

Dallas Morning News

CBS News

Columbus Ohio Dispatch

Fort Worth Star Telegram

New York Times

Washington Post

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Ever heard of the Groningen gas field? Neither had I, until I read a recent article in the New York Times. It is in the Netherlands, and was discovered in 1959. 

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The field is operated by a joint venture of Royal Dutch Shell and Exxon Mobil. Today, the field produces about one-third of all natural gas produced in the European Union.  It produces more gas each year than Russia recently committed to sell to China, and contributes some $16.4 billion a year to the Netherlands’ national government. According to Wikipedia, as of 2009 the field had produced 39.3 trillion cubic feet, 60% of total reserves, and production is expected to last for another 50 years. It is listed as the ninth largest gas field in the world, based on estimated recoverable reserves. For comparison, the EIA estimates total U.S. proved shale gas reserves at about 129 tcf.  Some gas field.

The NYT article reports that earthquakes linked to the depletion of the field have recently been increasing in number and intensity, and the Dutch government has required the operator to reduce production by 20% to see if that will quell the tremors. That will put more pressure on the EU to find alternate gas supplies.

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The Ohio Department of Natural Resources has imposed rules on exploration companies requiring seismic monitoring around new well sites near fault lines and quake epicenters in the Utica Shale.  According to the Columbus Dispatch, the rules require monitors at new drill sites located within 3 miles of known fault lines or areas that have experienced an earthquake greater than magnitude 2.0. Monitors cost about $20,000 each, and as many as five are needed at each well. “ODNR officials said if monitors at drilling sites detect even a magnitude 1.0 quake, fracking will immediately stop and an investigation will start. If fracking is blamed, a moratorium would be instituted 3 miles around the epicenter,” according to the article. Earlier earthquake activity near Youngstown, Ohio was attributed to an injection well, which was shut down by Ohio DNR.

Earthquakes in Oklahoma and North Texas in the Barnett Shale, and more recently in the Eagle Ford in South Texas, have been linked to injection wells, but not to hydraulic fracturing. The Texas Railroad Commission has hired a seismologist to study the matter but has not imposed any new regulations on injection wells.

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As drilling activity in the onshore US continues to grow, more and more attention is being paid to the environmental effects of exploration and production.  Media stories abound about groundwater contamination, the demand for fresh water from hydraulic fracturing, increased air emissions from exploration and production, controversy over pipeline condemnation and construction, earthquakes linked to wastewater injection, increased traffic and accidents, and effects on endangered species. Recent examples:

Air Emissions

This week The Center for Public Integrity, InsideClimate News and The Weather Channel released a report, Big Oil, Bad Air, on the effects of drilling in the Eagle Ford Shale on air quality in South Texas.  The report is highly critical of the lack of regulation by the Texas Commission of Environmental Quality (TCEQ) of emissions from oil and gas exploration and production operations in that region. Criticism of the report has already hit the media. Here is an industry response to the report from Energy in Depth, a website sponsored by industry. The TCEQ says it plans to conduct video surveillance of air quality over the region this summer

Last month, the TCEQ and the US Environmental Protection Agency settled their dispute over EPA’s requirements for reducing emissions from industry in Texas. EPA had revoked TCEQ’s air permitting authority for failing to follow EPA requirements. As a result, permitting was greatly delayed for new projects, causing industry to pressure TCEQ and the State to settle the dispute so that permitting authority could be restored to TCEQ. Texas has been in a continuing series of battles with the EPA, and has sued the agency 18 times in the last 10 years. Gubernatorial candidate Greg Abbott has touted his battles with the EPA in his campaign. (“As Texas has proven in other lawsuits against the EPA, this is a runaway federal agency that must be reined in.”)

Debate continues over whether increased production and use of natural gas reduces greenhouse gas emissions. A large part of that debate is centered around how much methane is leaked in the process of producing and transporting it to end users.

Water Use

With the ongoing drought, the exploration industry’s water use in fracing has come under increased scrutiny. The EPA is engaged in a long-term study of the effect of industry activity on groundwater resources.

In Pennsylvania, drillers must submit a water-use plan disclosing how much water will be used, where it comes from, and what effect it will have on local sources; and the plan must include water recycling. In Texas, the exploration industry’s use of groundwater is largely exempt from regulation by local groundwater districts and is placing a strain on groundwater resources in South and West Texas. There is no effort yet in Texas to require companies to recycle. The first sustained use of water recycling on a big scale has been implemented by Apache in the Permian Basin, where Apache has installed a central water recycling system. To date, water recycling is still more expensive than using groundwater in most plays. But in the Permian, where groundwater is scarce, landowners have been selling their water for as much as a dollar a barrell, making recycling more competitive.

Seismic Activity

Earthquakes linked to oil and gas activity continue to make the news. In Texas, the town of Azle has made news protesting before the Texas Railroad Commission about quakes in the Barnett Shale they say are caused by injection wells. RRC candidates have expressed skepticism about any link between the quakes and oil and gas activity.  The RRC has hired a seismologist and is studying the matter, but so far has not shut down any injection wells in the area. Increased seismic activity in Oklahoma has been linked to industry injection wells there. In Arkansas, companies have shut down two injection wells believed to be linked to more than 1,000 unexplained earthquakes in the region.

 

 

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Recent news relating to oil and gas exploration and development in Texas:

Dune Sagebrush LizardGood article on efforts of industry and State regulators to avoid problems raised by possible listing of the Dune Sagebrush Lizard under the Endangered Species Act. Here is a map of the lizard’s habitat – right in the middle of the Permian Basin.

Earthquakes in the Oil Patch — Earthquakes in and around Azle, in the Barnett Shale, have caused quite a stir.  Here’s a good article from the San Antonio News. Everyone seems to agree that the quakes are caused by injection wells, except the Texas Railroad Commission, which until recently called the connection “hypothetical”. After one of the Commissioners, David Porter, faced angry homeowners at a town hall meeting in Azle, he called for the RRC to hire its own seismologist. Azle residents are planning a bus trip to Austin to attend the next RRC conference in protest.

Open Position on Railroad Commission Draws Seven Candidates — They are Ray Keller, Stefani Carter, Becky Berger, Malachi Boyuls, Wayne Christian, Ryan Sitton, and Joe Pool Jr. Few landowners realize how important the Commissioners are to their interests, and landowners should pay attention to the race. The Commission is often a springboard to running for higher office. Barry Smitherman, currently a commissioner, is running for Texas Attorney General. The race is mostly funded by the oil and gas industry and its lobbyists.

What Do Texans Think About Global Warming?  A recent report by the Yale Project on Climate Change Communication reveals the results of a poll taken of Texans in 2013:

  • Most Texans (70%) believe global warming is happening. Relatively few (14%) believe it is not.
  • Fewer than half of Texans (44%) believe that if global warming is happening, it is caused mostly by human activities. By contrast, 31% believe it is caused mostly by natural changes in the environment, while 11% believe it is a combination of the two causes.
  • Texans think global warming is important and are worried about it. About three in four (73%) say the issue of global warming is at least somewhat important to them personally. About half (54%) are at least somewhat worried about it.
  • Though virtually all climate scientists agree human-caused global warming is happening, many Texans, like most Americans, are unaware of this fact. Nearly half (47%) believe that “there is a lot of disagreement among scientists” about whether or not global warming is happening. Fewer(43%) believe most scientists think that global warming is happening.
  • Among those who believe global warming is happening, solid majorities believe it is currently having a large or moderate influence on the severity of heat waves (84%), drought (80%), and wildfires (72%) in Texas.
  • Among Texans who believe global warming is happening, large majorities expect to see a myriad of negative effects over the next 50 years. Nearly all anticipate more heat waves (95%) and increased drought and water shortages (92%) in Texas due to global warming. More than eight in ten believe Texas will experience worse storms, hurricanes, or tornadoes (87%), declining numbers of fish and native wildlife (86%), and increased allergies, asthma, infectious diseases, or other health problems (85%) due to global warming.
  • More than half of Texans say that more should be done about global warming at all levels of government–from Congress (62%) and President Obama (57%), to Governor Perry (59%) and Texas’s state legislature (56%), to local government officials (60%). However, even larger numbers of Texans believe that citizens themselves (69%) and corporations and industry (68%) should be doing more to address climate change.
  • Over half of Texans (55%) say the United States should reduce greenhouse gas emissions regardless of whether or not other countries do the same.
  • Many Texans believe that individual action, and especially collective action, can be effective in addressing global warming. Among those who believe global warming is happening, most (89%) say their own actions would reduce their personal contribution to global warming at least a little.
  • Virtually all Texans who believe global warming is happening say that if the same actions were taken by most people in the U.S. (96%) or around the world (96%), it would reduce global warming a little, some, or a lot. A majority of Texans (58%) say that President Obama is very or somewhat believable when speaking about energy- and climate-related issues. Half (50%) say Governor Rick Perry is very or somewhat believable regarding the same issues and four in ten (43%) say he is not very or not at all believable. Fewer than half of Texans say that either Senator Ted Cruz (46%) or Senator JohnCornyn (44%) is believable regarding energy and climate issues. 

UT Concludes that Fracing Reduces Water Use.  Researchers at the University of Texas have concluded that hydraulic fracturing actually reduces the amount of water used, by making it easier for generators to switch from coal plants to gas-fired plants, which use less water. “The bottom line is that hydraulic fracturing, by boosting natural gas production and moving the state from water-intensive coal technologies, makes our electric power system more drought resilient,” said Bridget Scanlon, senior research scientist at the University of Texas’s Bureau of Economic Geology and the lead author on the study. Meanwhile, a report from the San Antonio Express News says that water use for fracing in the Eagle Ford Shale has greatly exceeded expectations;  between 2011 and 2013, operators at 3,500 Eagle Ford wells reported using nearly 44,000 acre-feet of water — more than 153,000 San Antonio residents would use on one year.

Micro-Windmills May One Day Power Your Smart Phone.  This from Forbes. Here’s a photo:

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StateImpact Texas has published a series of good articles about the growing evidence that the huge quantities of wastewater being injected in the Barnett Shale field are causing earthquakes — some of sufficient intensity to cause significant damages. Lawsuits have been filed in Johnson County to recover for the damage.  StateImpact’s most recent article can be found here. Links to all of StateImpact’s articles on earthquakes caused by oil and gas activity are here.

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WoodMackenzie has recently come out with its 2013 ranking of the world’s twenty largest oil companies, and their change in production over the last ten years:

Twenty Biggest Oil Companies3.JPG

(BOE is barrels of oil equivalent.)  As you can see, most are state-owned companies. Russia re-acquired its privately-owned companies. Saudi Arabia has increased its production 28% in the last 10 years.  Iran, despite the embargo, has increased its production by 24%, in part because of increased export of natural gas. Venezuela’s production has suffered from politicization of its national oil company. Shell’s efforts to increase production by acquiring a position in U.S. shale plays has not been successful. BP has sold off a substantial part of its production. China has invested big-time to fuel its economy. And the world economy has managed to survive $100 oil.  For comparison, the total world production in 2010 was about 137 BOE/day. These top twenty companies together produced about 60% of that total.

For a good article on these numbers, see Forbes’ article, The World’s Biggest Oil Companies – 2013, here.

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Last week I attended the State Bar Annual Advanced Oil, Gas and Energy Law Conference in Houston. This year is the 75th anniversary of the Oil, Gas and Energy Section of the Texas Bar (older than the State Bar itself), and there was a special dinner to honor the occasion, at which Daniel Yergin spoke.  He is the author of the Pulitzer-prize-winning book The Prize, a history of the global prusuit of oil, money and power — a great read. More recently Yergin published his follow-up, The Quest: Energy, Security, and the Remaking of the Modern World, updating the history of global energy production and demand from the first Gulf War to the present.

Some tidbits from Yergin’s talk:  politically, the biggest risk to the industry is the opposition to hydraulic fracturing — not a big issue in Texas, but a huge issue in eastern states and California — and the pressure for increased federal regulation of drilling.  The biggest practical challenges to the industry in the US are dealing safely with wastewater from oil and gas operations, and, in some parts of the US, the industry demand for fresh water for fracing. Once again, peak-oil predictors have been proven wrong, by the triumph of technology.  Texas has long been a leader in the industry not only because of its abundance of natural resources but also because of private ownership of oil and gas and the development of the legal theories and framework for the industry by the Texas bar and courts in the 20th century. 

To see Yergin’s “world energy timeline, click here.

I highly recommend Yergin’s books – hugely informative and very readable.

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Range Resources

Range Resources’ battle with the Lipskys and Alisa Rich continues, now in a confusing appeal of the trial court’s order denying the Lipskys’ and Rich’s motion to throw out Range’s counterclaim under the Texas law prohibiting so-called Strategic Lawsuits Against Public Participation, or SLAPPs.  http://www.star-telegram.com/2013/04/02/4745433/appeals-judges-return-range-suit.html

Earthquakes and Disposal Wells

Earthquakes caused by disposal wells continue to make the news.

http://www.fool.com/investing/general/2013/04/02/1-big-risk-that-has-energy-companies-quaking.aspx 

http://news.yahoo.com/oil-addiction-not-fracking-caused-2011-oklahoma-earthquakes-172400184.html 

http://www.bloomberg.com/news/2013-03-26/oklahoma-earthquake-in-2011-tied-to-wastewater-wells-in-fracking.html 

RRC figures show that wastewater pumped into disposal wells in Texas increased from 46 mllion barrels in 2005 to nearly 3.5 billion barrels in 2011.

http://www.bizjournals.com/dallas/news/2013/03/27/company-that-recycles-fracking-water.html?ana=twt

Oil Spill Trial

The huge trial to determine liability for the 2010 Gulf of Mexico oil spill continues. The judge threw out all claims against Cameron, the maker of the blowout preventer on the well, finding no evidence to support any claim against it. http://fuelfix.com/blog/2013/04/03/gulf-oil-spill-judge-throws-out-remaining-claims-against-cameron/

Keystone Pipeline

Here is a good article from the Washington Post explaining the facts and politics of the Keystone Pipeline.  http://www.washingtonpost.com/blogs/the-fix/wp/2013/04/03/the-keystone-xl-pipeline-and-its-politics-explained/

CSSD Performance Standards

A coalition of exploration companies and environmental organizations has created a new orgainzation and published performance standards for drilling and fracturing horizontal wells in the Marcellus. The new organization, the Center for Sustainable Shale Development, includs as partners the Environmental Defense Fund, Chevron, the Clean Air Task Force, Consol Energy, Shell, the Pennsylvania Environmental Council, and others. The Center’s website is http://037186e.netsolhost.com/site/.  Its new performance standards are here:  http://037186e.netsolhost.com/site/wp-content/uploads/2013/03/CSSD-Performance-Standards-3-27-GPX.pdf  They include best practices for protecting water resources and eliminating use of fresh groundwater and surface waters in hydraulic fracturing; recycling of flowback and produced water; use of closed-loop systems for drilling fluids; best practices for casing and cementing of wells; reduction of venting or flaring of gases in the drilling process; emissions standards for pumps and motors used in drilling. Other companies are being encouraged to sign onto the goals of the standards.  See http://www.forbes.com/sites/raphaelbostic/2013/04/04/the-marcellus-agreement-please-frack-responsibly/ 

In West Texas, companies are increasingly using brackish water for fracing.

http://www.texastribune.org/2013/03/28/brackish-water-fracking-rising-amid-challenges/?utm_source=texastribune.org&utm_medium=alerts&utm_campaign=News%20Alert:%20Subscriptions 

There are increasing complaints about air quality in the Eagle Ford.

http://sacurrent.com/news/the-sour-side-of-life-in-south-texas-39-eagle-ford-shale-1.1463271?pgno=5 

And confusion reigns among Texas groundwater districts about if and how to regulate groundwater pumping for frac water. 

http://www.texastribune.org/2013/03/13/fracking-groundwater-rules-reflect-legal-ambiguiti/

Meanwhile the Obama administration has issued new proposed rules for hydraulic fracturing on public lands:

http://www.nytimes.com/2012/05/05/us/new-fracking-rule-is-issued-by-obama-administration.html?_r=0 

http://www.forbes.com/sites/christopherhelman/2012/05/04/new-federal-fracking-rules-look-reasonable-enviros-not-satisfied/

The Top Five Facts Everyone Should Know About Oil Exploration

Another good article from Forbes:  http://www.forbes.com/sites/quora/2013/04/03/what-are-the-top-five-facts-everyone-should-know-about-oil-exploration/  Did you know that about 40% of all seaborne cargo is oil? Also see http://www.instituteforenergyresearch.org/2010/02/16/a-primer-on-energy-and-the-economy-energys-large-share-of-the-economy-requires-caution-in-determining-policies-that-affect-it/

Exxon Oil Spill in Arkansas

A reminder that oil pipelines sometimes break: 

http://www.pennenergy.com/articles/pennenergy/2013/04/pipeline-rupture-spills-crude-oil-into-arkansas-neighborhood.html?cmpid=EnlDailyPetroApril22013

ExxonMobil%20pipeline%20spill.jpg

 

Basses Sue Chesapeake for Unpaid Royalties

Chesapeake seems to be trying to get out of its debt problem by refusing to pay royalty owners what they are owed. 

http://www.star-telegram.com/2013/03/14/4703401/ed-bass-other-plaintiffs-sue-chesapeake.html?storylink=addthis#.UUNicT-hTqs.twitter;

http://media.star-telegram.com/smedia/2013/03/14/16/22/epxLU.So.58.pdf

Texas Railroad Commission

Commissioners at the Texas Railroad Commission seem to have problems getting along with each other. http://stateimpact.npr.org/texas/2013/03/26/bickering-erupts-among-texas-oil-regulators/ But they did pass new rules intended to make it easier for companies to recycle frac water. http://www.bizjournals.com/dallas/news/2013/03/27/company-that-recycles-fracking-water.html?ana=twt 

 

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