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Some big horizontal wells have begun producing in Zavala County from the Buda formation (below the Eagle Ford) that may open up Zavala County for additional wells comparable to the best Eagle Ford Wells. This Hughes well, now having a history of production for a year, shows no sign of letting up:

Hughes Heitz.JPG

Here’s another Buda well, completed by Sage Energy:

Sage Mills.JPG

Here’s a well recently completed by Texas American Resources, headquartered right here in Austin:

T.JPG

 Good news for those holding acreage in Zavala County.

 

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Here is the Washington Post’s review of Josh Fox’s sequel documentary Gasland Part II, recently shown on HBO.  I’ve previously written about Fox’s controversial criticisms of hydraulic fracturing, including a “counter-documentary” called FrackNation. In following news coverage of the growth of shale exploration and development in the popular media, I have learned that the media does not do a good job of covering complex issues like hydraulic fracturing, global warming, and gun control, issues that are easily exploited by parties on both sides of the issue by invoking scare tactics and consipiracy theories to frighten the public. I have also seen how such complex, controversial topics are politicized, like so much of public discourse today, into black and white, red and blue, with no middle ground, making it very difficult for the ordinary citizen to become informed about the facts and policy issues that political leaders should be investigating and deciding. Where is Walter Cronkite when we need him?

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I recently ran across an article on the Energy In Depth website titled “Turning Natural Gas Into Water: Hydraulic Fracturing Doesn’t Deplete Water Supplies.”  Energy In Depth is a website of the Independent Petroleum Association of America dedicated to “a research, education and public outreach campaign focused on getting the facts out about the promise and potential of responsibly developing America’s onshore energy resource base ” The article responds to an argument made by many organizations concerned about the large quantities of water used in fracing. The concern is that, while many uses of water return that water to the water cycle, water used in fracing is usually disposed of by injecting it underground, where it will never return to the water cycle.

Energy In Depth’s response to this argument is that, while injecting the used frac water — called “flowback” — does remove that water from the water cycle, the burning of the gas (or oil) produced by the wells creates more water than was used in the fracing of the wells.  So, the argument goes, fracing of wells actually “creates” new water that is added to the water cycle.  EID’s article goes on to calculate that, while a typical Marcellus gas well will remove 4 million gallons of water from the water cycle, that well will produce two billion cubic feet of gas which, when burned, will yield about 22 million gallons of “new” water.  Within the well’s first six months of production, the gas it produces will create more than 4 million gallons of water when burned as fuel.  Problem solved!

I asked a hydrologist friend of mine to look at EID’s calculations. He agreed that their math is correct, but he cautioned that the problem is not so simple.  EID’s argument assumes that the energy created by burning the natural gas from EID’s typical well would not have been created by the burning of other fossil fuels.  If, in other words, the gas is burned to create electricity, and if that electricity would have been created by burning coal if the well had not been drilled, then the net result is that water has been lost to the water cycle by injecting the flowback from the well.

EID’s argument also fails to consider local conditions. Almost all of the water used for fracing in the Eagle Ford and in the Permian Basin in West Texas is groundwater. Those groundwater resources are already being depleted much faster than they are being recharged, mostly from agricultural and municipal demand, but exacerbated by the current drought and the demands of the oil industry. Even though the burning of the oil and gas produced from those areas does produce new water molecules into the water cycle, that fact does not replenish the aquifers or increase the chances of rain in those arid parts of our state.

The US Energy Information Administration recently projected that world consumption of energy from all fuel sources would increase by 56% through 2040. Most of that increase will come from burning fossil fuels.

EIA World Energy Use.JPG

Burning all of that fossil fuel will certainly create lots of “new” water.  Is that a good thing for the environment?

Energy generation uses huge quantities of water. Nuclear plants as well as electric generation using fossil fuels require water for coolant. While that water stays in the water cycle, it is nevertheless a demand that must be met, and in Texas that demand is increasing exponentially. Only wind and solar energy need no water to generate electricity, and – even though Texas is the US leader in wind energy — wind and solar are as yet a small part of electricity production.

recent article in the Christian Science Monitor calls for recyclying of frac water. Some companies are experimenting with use of brackish (salty) water aquifers. EID and its sponsoring companies would do well to increase industry’s efforts to reduce or eliminate use of underground water in hydraulic fracturing.

 

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A memorial service, open to the public, will be held today for wildcatter and philanthropist George P. Mitchell – actually, three memorial services, as befits one of the great Texans of the 20th century.  The Houston Chronicle in fact named him Houstonian of the Century. By all accounts, he was not only an entreprenurial genius, but a kind and generous man, a family man, and a man who gave back to his communities in many ways.

In one of his last public interviews, Mr. Mitchell addressed the issue of the safety and environmental risks of hydraulic fracturing and horizontal drilling.  I wrote about that interview.  He said that he supports tough regulation of independent operators. “I’ve had too much experience running independents,” Mitchell said. “They’re wild people. You just can’t control them. And if it doesn’t do it right, penalize the oil and gas people. Get tough with them.”

Last year, Mr. Mitchell and Mayor Michael Bloomberg published an op ed piece in the New York Times supporting tighter regulation of the industry. What they said bears repeating. They pledged that their foundations

will support organizations that seek to work with states and industries to develop common-sense regulations that will protect the environment — and ensure that the industry can thrive.

We will encourage better state regulation of fracking around five key principles:

Disclosing all chemicals used in the hydraulic fracturing process;

Optimizing rules for well construction and operation;

Minimizing water consumption, protecting groundwater and ensuring proper disposal of wastewater;

Improving air pollution controls, including capturing leaking methane, a potent greenhouse gas; and

Reducing the impact on roads, ecosystems and communities.

The latest research, including peer-reviewed studies out of Carnegie Mellon University and Argonne National Laboratory, suggests that if properly extracted and distributed, the impact of natural gas on the climate is significantly less than that of coal. Safely fracking natural gas can mean healthier communities, a cleaner environment and a reliable domestic energy supply right now.

We can frack safely if we frack sensibly. That may not make for a great bumper sticker. It does make for good environmental and economic policy.

Not words from a stereotypical Texas wildcatter. The industry would to well to follow his advice.

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 Those who visit my blog regularly know that I love charts and graphs. Below is a Sankey diagram produced by Lawrence Livermore Labs for the Department of Energy.  Sankey diagrams are named after Irish Captain Matthew Henry Phineas Riall Sankey, who used this type of diagram in 1898 in a publication on the energy efficiency of a steam engine.  The diagram below may also be viewed here.   

In the diagram, sources of energy are on the left, uses of energy are on the right. The first remarkable thing that struck me is how much energy is “rejected.” Most of the petroleum used in transportation, and most of the fuel used to generate electricity, is rejected. A huge loss by inefficiency. Avoiding even a small amount of this inefficiency would in effect create a new source of energy.

Note also the small contributions of renewable energy sources — biomass, solar, hydro and wind — to the total. And the as-yet very small contribution of natural gas to the consumption of energy for transportation.

Livermore Sankey Diagram.JPG

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For those following the Klotzman protest of EOG’s allocation well permit (our firm represents the protestants), here are the exceptions to the examiners’ proposal for decision filed by EOG and by Intervenors Devon, Pioneer, Laredo Petroleum and BP America:

EOG Exceptions to PFD.pdf

Devon et al Exceptions to PFD.pdf

Here is a link to the proposal for decision:

2013-06-25 PFD EOG Klotzman (2).pdf

EOG has called on other operators and industry organizations to file objections to the PFD, and they have responded. Letters opposing the PFD have been filed by Diamondback Energy, Halcon Resources, EP Energy, Oxy, Crimson, XTO, Burlington, Texas OIl and Gas Association, Texas Independent Producers and Royalty Owners Association, Texas Alliance of Energy Producers, Panhandle Producers and Royalty Owners Association, and Permian Basin Petroleum Association. Clearly, this PFD has hit a nerve. A typical letter, from Marathon, claims that the PFD would “prevent the drilling of countless horizontal wells throughout the State and cause tremendous, otherwise producible, reserves to be wasted and left in the ground.” The sky is falling.

Operators say that more than 100 allocation well permits have been granted to some 17 operators across the State.  According to the PFD, between April 27, 2010 and the date of the Klotzman hearing on December 3, 2012, 55 permits were approved for “allocation” wells.  During that same time period, the Commission granted 18,335 permits for horizontal wells. So for that time period, allocation well permits were three tenths of 1 percent of all permits granted. More than 4,000 permits were issued by the Commission for Eagle Ford wells alone in 2012, and some 2,000 Eagle Ford permits have been issued this year. The Commission issued a total of 22,479 drilling permits in 2012. Based on these figures, it hardly seems possible that the Commission’s decision not to issue allocation well permits would cause “tremendous reserves” to be wasted.

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The Sunset Commission’s final report on the results of its recommendations for reform of the Texas Railroad Commission can be found here. The report’s summary:

Summary of Final Results

S.B. 212 Nichols (D. Bonnen) — Not Enacted

For the second consecutive legislative session the Railroad Commission’s Sunset bill failed passage. Initially reviewed in 2011, the Railroad Commission’s Sunset bill did not pass and the 82nd Legislature continued the Railroad Commission under Sunset review for another two years.1 In 2013, the Sunset Commission again found a need for the functions of the Railroad Commission. However, with the significant and ongoing boom in oil and gas production, the Sunset Commission concluded having a more transparent and objective regulator was more important than ever. To address these concerns, the Sunset Commission recommended changing the agency’s name, limiting when Commissioners could solicit and receive campaign contributions, and requiring the automatic resignation of a Commissioner running for another elected office. The Sunset Commission also recommended several funding changes, including eliminating the statutory cap on the Oil and Gas Regulation and Cleanup Fund and creating a new pipeline permit fee to help support the agency’s pipeline safety program.

The Sunset recommendations were incorporated into Senate Bill 212. The Senate passed this bill intact, but ultimately the bill was left pending in the House Energy Resources Committee.

Although the agency’s Sunset bill failed passage for a second time, the 83rd Legislature did address a key Sunset Commission concern in other legislation by increasing, rather than eliminating, the cap on the Oil and Gas Regulation and Cleanup Fund. The Legislature also continued the agency for four years, subject to Sunset review again in 2017. One provision — requiring the automatic resignation of a Commissioner running for another elected office — was adopted by the Legislature in S.B. 219, the Ethics Commission Sunset bill, that was later vetoed by the Governor.

The following material summarizes Sunset recommendations adopted in other legislation and management actions directed to the agency that do not require statutory changes.

Continues the Railroad Commission for four years until 2017; requires the Sunset review to include an assessment of other state agencies that are able to perform the Railroad Commission’s functions; and requires the Railroad Commission to pay all costs of the review. (H.B. 1675)

Ethics

Directs the Commission to review its recusal policy, and revise as necessary to ensure
Commissioner’s awareness of, and compliance with, these requirements. (management action- non statutory)

Funding Cap

Increases the statutory cap on the Oil and Gas Regulation and Cleanup Fund from $20 million to $30 million, and increases the Fund’s floor from $10 million to $25 million. (H.B. 3309)

Mineral and Land Owner Rights

Directs the Commission to study the use and development of telecommunication technology designed to increase the transparency of, and the public’s participation in, agency hearing processes and better protect the rights of mineral owners and land owners in the state of Texas. (management action – nonstatutory)

Directs the Commission to develop a fee schedule for increased charges associated with re-filing previously withdrawn applications for forced pooling or field spacing exceptions. (management action – nonstatutory)

 

Once again, almost all of the Sunset Commission’s recommendations were not adopted, even though comments received were almost uniformly favorable. The only significant legislation that did pass was a requirement that commissioners resign to run for another office – a bill vetoed by the Governor.

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Mose Buchele has written a series of articles, also aired on KUT, about the pipeline industry’s failed efforts to make it easier for pipelines to exercise the power of eminent domain after the Texas Supreme Court’s decision in Texas Rice Land Partners, Ltd. v. Denbury Green Pipeline-Tex., LLC, 363 S.W.3d 192, 198 (Tex. 2012), about which I have written previously. Good reading. Links are below.

http://stateimpact.npr.org/texas/2013/07/17/eminent-domain-how-the-courts-are-transforming-texas-land-rights/#more-29814

 

http://stateimpact.npr.org/texas/2013/07/15/eminent-domain-in-texas-landowners-face-continued-uncertainty/

 

http://stateimpact.npr.org/texas/2013/07/16/how-changes-to-eminent-domain-failed-and-why-some-say-thats-just-fine/

 

 

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