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Ailing Shale Gas Returns Force a 'Drilling Treadmill'

After studying production data from 65,000 wells from 31 different unconventional shale rock formations in 2012, David Hughes predicted big trouble ahead for North America’s unconventional hydrocarbon revolution. The prominent geologist, who has studied Canada’s energy resources for four decades, warned that shale gas and tight oil operations shared four big challenges: escalating capital costs, uneven performance and a growing environmental footprint, all followed by rapid depletion. "Shale gas can continue to grow, but only at higher prices and that growth will require an ever escalating drilling treadmill with associated collateral financial and environmental costs — and its long term sustainability is highly questionable," predicted Hughes just two years ago. Recent economic data on the industry from Bloomberg, Energy Analyst and even the International Energy Agency shows that Hughes was bang on. The tough economic news on shale, a dense rock that lies two to three kilometres underground, comes […]

Posted On : Published By : Tom Whipple
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Ailing Shale Gas Returns Force a ‘Drilling Treadmill’

After studying production data from 65,000 wells from 31 different unconventional shale rock formations in 2012, David Hughes predicted big trouble ahead for North America’s unconventional hydrocarbon revolution. The prominent geologist, who has studied Canada’s energy resources for four decades, warned that shale gas and tight oil operations shared four big challenges: escalating capital costs, uneven performance and a growing environmental footprint, all followed by rapid depletion. "Shale gas can continue to grow, but only at higher prices and that growth will require an ever escalating drilling treadmill with associated collateral financial and environmental costs — and its long term sustainability is highly questionable," predicted Hughes just two years ago. Recent economic data on the industry from Bloomberg, Energy Analyst and even the International Energy Agency shows that Hughes was bang on. The tough economic news on shale, a dense rock that lies two to three kilometres underground, comes […]

Posted On : Published By : Tom Whipple
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Exxon Fights Over Fracking With Pennsylvania Attorney General

Pennsylvania has filed charges against Exxon unit XTO Energy. Pictured, an XTO operation in the state. Corbis Exxon Mobil Corp. is fighting criminal charges over a wastewater spill in Pennsylvania with an unusual defense, contending that the state’s attorney general improperly singled the company out in an effort to stop hydraulic fracturing. Attorney General Kathleen Kane fired back on Wednesday in a court filing that calls the company’s claims "nothing more than weak attempts to obfuscate the truth." Prosecutors say Exxon subsidiary XTO Energy Inc. is criminally liable for a big leak of water that had been used in fracking in north-central Pennsylvania in 2010. The case involves the first criminal charges filed against a public company drilling in Pennsylvania’s Marcellus Shale. A spokeswoman for the attorney general said the state has convicted more than 800 individuals and companies of environmental crimes. "No single industry has been targeted," said […]

Posted On : Published By : Tom Whipple
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Fracking Guidelines Issued by API to Ease Community Fears

The oil industry’s largest lobbying group began a new effort to ease public fears about hydraulic fracturing after a legal setback in New York state and a voter push in Colorado to ban the drilling practice. The American Petroleum Institute, a Washington-based group that includes Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX) , released guidelines for improving community relations as “fracking” extends to more towns, raising concerns about pollution risks. The suggestions will help “raise the bar for the industry,” David Miller, director of standards for the group that has guided the industry on well design and preventing spills since 1924, said at a conference call with reporters today. The effort will help oil and gas companies develop “lasting relationships” with communities where drilling occurs, he said. The document reads like an etiquette guide for producers moving into rural towns to start drilling. Companies are encouraged to distribute […]

Posted On : Published By : Tom Whipple
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Shipping Firms to Add Arctic LNG Route

Shipping companies in China and Japan said they would start a regular service to carry Siberian natural gas across the Arctic Ocean to East Asia, showing how Asian demand for the fuel is reshaping global shipping routes. Wednesday’s announcement by Mitsui O.S.K. Lines Ltd. and China Shipping Development Co. offered new details of how liquefied natural gas will get from one of the remotest locations on earth— the $27 billion Yamal LNG facility being developed in western Siberia—to urban areas in China and Japan. China Shipping Development said its joint venture with Mitsui O.S.K. would spend $932 million on three LNG carriers equipped with ice breakers, to be built by Daewoo Shipbuilding & Marine Engineering Co. of South Korea. Service is set to begin as soon as 2018. Once virtually impassable, the Arctic Ocean is now attracting interest as a shipping route because global warming has reduced the ice […]

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Russia in secret plot against fracking, Nato chief says

The Daily Telegraph has one of those stories which makes me wonder who really believes this sort of stuff and why anyone would anyone ever bother saying it – Russia in secret plot against fracking, Nato chief says . Russia is secretly working with environmental groups campaigning against fracking in an attempt to maintain Europe’s dependence on energy imports from Moscow, the secretary-general of Nato has said Speaking at the Chatham House foreign affairs think-tank in London, Anders Fogh Rasmussen said Russia was mounting a sophisticated disinformation campaign aimed at undermining attempts to exploit alternative energy sources such as shale gas. … Greenpeace dismissed Mr Rasmussen’s comments as "preposterous". A spokesman said: "Greenpeace had thirty of its people locked up in Russian prisons last year, threatened with fifteen years in jail. "The idea we’re puppets of Putin is so preposterous that you have […]

Posted On : Published By : Tom Whipple
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U.S. natural gas output setting records

June was a banner month for U.S. natural gas production from the Lower 48 states, a forecasting unit of Platts reported. June natural gas production was up 0.3 percent from May to a total 68.1 billion cubic feet per day, the highest monthly production average on record. Data from Bentek Energy, the forecasting unit of Platts, show June’s average was 5.4 percent higher year-on-year and any records set for June should be broken at some point this month. The forecast says the economics of production in some of the shale basins in the United States should translate to a yearly production average of approximately 67.5 billion cubic feet per day. In 2009, Bentek said the United States averaged 55.1 billion cubic feet per day in natural gas production. Most of the gains have come from the Eagle Ford shale play in the southern United States and other basins like […]

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Criticism, praise erupt over New York shale ruling

A New York court decision to let cities and towns block hydraulic fracturing is a major blow to the industry, an advocacy group said. The Court of Appeals in Albany ruled in two separate cases that municipalities can use zoning laws to ban hydraulic fracturing within their borders. New York hosts a part of the Marcellus shale formations, one of the premier shale gas basins in the United States. There’s a current state moratorium on hydraulic fracturing. Karen Moreau, executive director of the New York State Petroleum Council, said that, because municipal boards can change every two years, the regulatory landscape in the state will keep energy investors at bay. "There are real losses here, and it’s a real tragedy for thousands of farmers and people in rural communities that would have realized the economic benefits that oil and gas development can deliver," she said in […]

Posted On : Published By : Tom Whipple
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Surge in Seismic Activity Tied to Oil and Gas Extraction

Scientists say that a recent surge of low-magnitude earthquakes in Oklahoma is likely the result of the underground disposal of vast quantities of wastewater generated by oil and gas extraction. Temblors in Oklahoma used to be rare. Before 2008, the state experienced just one earthquake of magnitude 3 or larger each year. So far this year the state has already witnessed 230 quakes of that size-more than the number recorded in California. "There are large regions in the state that are lighting up" with quakes, said Katie Keranen, seismologist at Cornell University and lead author of a study on the Oklahoma temblors, published Thursday in the journal Science. "It’s a very profound increase." The findings add to a growing body of evidence that various types of large-scale human activity–from coal mining and quarrying to building dams–can help to trigger quakes. In most cases, the geological processes […]

Posted On : Published By : Tom Whipple
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Oettinger: Shale gas could meet 10 percent of EU demand

Shale could eventually meet about 10 percent of the energy demand among European nations, European Energy Commissioner said. Oettinger said companies with reservations about hydrualic fracturing, the controversial drilling practice dubbed fracking, should keep all options on the table. "I estimate that Europe has the potential to secure about a tenth of our needs this way in the long term," he said Sunday . Some countries in Eastern Europe are examining their shale natural gas potential. Other countries in Western Europe, however, have placed moratoriums on the controversial drilling practice. Shale efforts in Great Britain, meanwhile, are in their infancy. European leaders are looking for ways to break the Russian grip on the region’s energy sector. Russia meets about 20 percent of Europe’s demand for gas. Oettinger in May said members of the European Union should develop stronger energy partnerships to avoid falling victim to "political and commercial blackmail." […]

Posted On : Published By : Tom Whipple