Energy Companies and Environmental Groups Agree on New Fracking Standards

Aside

Original story by AP, March 20, 2013.  Reported by Cleveland.com http://www.cleveland.com/business/index.ssf/2013/03/both_sides_agree_on_tough_new.html

PITTSBURGH   — In an unlikely partnership between  longtime adversaries, some of the nation’s biggest energy companies and  environmental groups have agreed on a voluntary set of standards for gas and oil fracking in the Northeast that appear to go further than  existing state and federal pollution regulations.

The program  announced Wednesday will work a lot like Underwriters Laboratories,  which puts its UL seal of approval on electrical appliances that meet  its standards. In this case, drilling and pipeline companies will be  encouraged to submit to an independent review of their operations, and  if they are found to be taking certain steps to protect the air and  water, they will receive the blessing of the brand-new Pittsburgh-based  Center for Sustainable Shale Development.

If the project succeeds, it could have far-reaching implications for both the industry and  environmental groups. A nationwide boom in hydraulic fracturing, or  fracking, has unleashed huge new energy reserves but also led to fears  of pollution and climate change.

Shell Oil Vice President Paul  Goodfellow said this is the first time the company and environmental  groups have reached agreement to create an entire system for reducing  the effects of shale drilling.

“This is something new,” said Bruce Niemeyer, president of Chevron Appalachia. “This is a bit of a unique  coming-together of a variety of different interests.”

In addition  to Shell and Chevron, the participants include the Environmental Defense Fund, the Clean Air Task Force, the Heinz Endowments, EQT Corp., Consol Energy and the Pennsylvania Environmental Council, and the organizers  hope to recruit others.

It may be part of a trend. Earlier this  month a coalition of industry and environmental groups in Illinois  announced that they worked together on drilling legislation now pending  there. But the Pittsburgh project, which has been in the works for  nearly two years, would be voluntary.

“We believe it does send a  signal to the federal government and other states,” said Armand Cohen,  the director of the Boston-based Clean Air Task Force. “There’s no  reason why anyone should be operating at standards less than these.”

The new standards include limits on emissions of methane,  a potent  greenhouse gas, and the flaring, or burning off, of unwanted gas;  reductions in engine emissions; groundwater monitoring and protection;  improved well designs; stricter wastewater disposal; the use of less  toxic fracking fluids; and seismic monitoring before drilling begins.

The project will cover Pennsylvania, West Virginia and Ohio — where a  frenzy of drilling is under way in the huge, gas-rich Marcellus and  Utica Shale formations — as well as New York and other states in the  East that have put a hold on new drilling.

Shell said it hopes to  be one of the first companies to volunteer to have its operations in  Appalachia go through the independent review. Chevron said it expects to apply for certification, too, when the process is ready to start later  this year.

Mark Brownstein, an associate vice president with the  Environmental Defense Fund, said many oil and gas companies claim to be  leaders in protecting the environment, and “this can be one opportunity  for them to demonstrate that leadership” by submitting to an audit.

“Anyone who claims to be placing a priority on good management practice” should be rushing to sign up, he said.

The project will be overseen by a 12-member board consisting of four seats  for environmentalists, four for industry and four for independent  figures: former Treasury Secretary Paul O’Neill; Christine Todd Whitman, the former New Jersey governor and Environmental Protection Agency  chief; Carnegie Mellon University President Jared Cohon; and Jane Long,  former associate director at the Lawrence Livermore National Laboratory.

The center’s proposed 2013 budget is $800,000, with the two sides expected  to contribute equal amounts, said Andrew Place, the project’s interim  leader and director of energy and environmental policy at EQT, an  Appalachian energy company.

Mark Frankel, an expert on ethics and  law at the American Association for the Advancement of Science in  Washington, said the idea sounds promising, but it remains to be seen if the new standards are a significant improvement over existing laws. He  said there are also ethical and policy questions.

“What does it mean to have an independent board? Who’s on it? How do they get on it?” he asked.

George Jugovic, president of the environmental group PennFuture, one of the  participants, said the industry’s involvement makes this different from  past debates over fracking.

“Buy-in from them is huge. That  provides leadership from within,” Jugovic said. “It’s very different  from someone from the outside saying, ‘You can do better.'”

Keystone Pipeline and Our Accidental Energy Independence

Aside

This morning’s NY Times features and editorial by Thomas L. Friedman titled “No to Keystone.  Yes to Crazy.”  In it, Friedman asks, “Who wants the U.S. to facilitate the dirtiest extraction of the dirtiest crude from tar sands in Canada’s far North?”  It’s a rhetorical question, of course, because Friedman thinks that Obama will soon allow the Pipeline to move forward and for that, he contends, environmentalist need to at least get something good in return.  They need to “go crazy” until they do.  “I’m talking chain-themselves-to-the-White-House-fence-stop-traffic-at-the-Capitol kind of crazy.”

Friedman says: “It’s great that shale gas is replacing coal as a source of electricity since it generates less than half the carbon dioxide.”  (It is also important to control methane from being leaked from hydraulic fracturing since that can also release C02.)   And he refers to oil economist Philip K. Verleger, Jr.’s Winter 2013 essay for Journal of International Economy:  “The End of the Oil Crises”   This sounded interesting so I looked it up.  But by accident, (This is a pun.  Read on to know why.) I found and read Verleger’s “Tale of U.S.” in the Spring, 2012 edition of the same publication.  Just as well.  The two articles are very similar.

Here’s how “Tale of US” begins.

“In little more than a decade, the United States will find itself as an energy exporter and this amazing outcome will have happened by accident. [Aha!]  The United States will then have low-cost energy supplies for decades. If oil prices remain high, America will benefit from the difference. Today, South Korea pays around $14 per million Btus for natural gas; the United States will pay less than $4. The situation is, and will be, the same in China and Europe. They will pay more, and the comparative advantage will make it possible for the United States to remain the global economic leader. I have been studying energy issues for forty years and the data are difficult to believe. But facts are facts. U.S. energy independence, as controversial as it sounds, will lay the groundwork for the New American Century. Specifically, the United States will be energy-independent by 2023, the fiftieth anniversary of President Richard M. Nixon announcing his “Project Independence.” By energy independence, I mean the United States will export more energy than it imports. In 2023, America will be exporting natural gas, petroleum products, coal, and possibly crude oil if the federal government lifts prohibitions on the latter. The United States will also be importing some oil. On balance, though, America will be a net exporter. The United States will reap enormous economic benefits in achieving energy independence by not following the approach proposed by President Nixon and his advisers. That plan can be described as the high-cost dirty path to energy independence. Nixon advocated an aggressive boost in offshore resource development, pursuit of the extraordinarily expensive fastbreeder reactor, increased coal use, and expanded shale oil development in Colorado using the very expensive techniques now at work on Canada’s tar sands. Implementing Nixon’s strategy would have saddled the United States with high-cost energy supplies and very high emissions of harmful global warming gases.  The path actually taken is very different. It might be called the low-cost clean path to energy independence.

The United States came upon this course by accident.”

The article goes on to discuss how fracking was perfected just as the energy industry was ready to turn their backs on the U.S. as a source of production and how deregulation and financial markets helped to create added incentives to pursue home-grown energy development.  There is also a nice graph showing that it costs roughly half (and for some states significantly less) to fill up with Compressed Natural Gas for CNG vehicles than it does to fill up with oil-based gas for traditional vehicles.   It also discusses CAFE standards, regulation, and renewable energies which, while in some cases beneficial, never were as successful as the “accidental” growth of the shale gas and oil boom in the U.S.

Gas Boom Projected to Grow for Decades

Aside

BY RUSSELL GOLD – WALL STREET JOURNAL

U.S. natural-gas production will accelerate over the next three decades, new research indicates, providing the strongest evidence yet that the energy boom remaking America will last for a generation.

The most exhaustive study to date of a key natural-gas field in Texas, combined with related research under way elsewhere, shows that U.S. shale-rock formations will provide a growing source of moderately priced natural gas through 2040, and decline only slowly after that. A report on the Texas field, to be released Thursday, was reviewed by The Wall Street Journal.

The research provides substantial evidence that there are large quantities of …

Full article at Wall Street Journal.  Login may be required.   http://online.wsj.com/article/SB10001424127887323293704578330700203397128.html?mod=rss_most_viewed_day_europe?mod=WSJEurope_article_forsub

 

AEP to Close 3 Coal Powered Plants in Continued Shift to Natural Gas

Aside

“The coal industry is cracking faster than the ice sheets, but it might not be fast enough.”

From The Washington Post.  By and http://www.washingtonpost.com/national/health-science/aep-agrees-to-close-3-coal-plants-in-emissions-lawsuit/2013/02/25/a11f1a96-7f5d-11e2-b99e-6baf4ebe42df_story.html

Feb 25, 2013 04:49 PM EST

One of the nation’s largest utilities agreed Monday to close three of its coal-fired power plants as part of a settlement with government officials and environmental groups, the latest sign of how the nation’s electricity supply is shifting away from coal.

Updating an earlier 2007 settlement, American Electric Power will stop burning coal by 2015 at three power plants in Indiana, Ohio and Kentucky and replace a portion of that supply with new wind and solar investments in Indiana and Michigan. The company will spend $5 billion to install pollution controls on plants in its aging, coal-fired fleet in the Eastern United States and cut its annual sulfur dioxide emissions over the next 12 years from 828,000 tons to 174,000 tons.

Coal plants, which supply 32 percent of the nation’s electricity, remain the largest U.S. source of both sulfur dioxide and mercury — which contribute to heart and respiratory illness — as well as carbon dioxide linked to global warming.
“We’re glad AEP is going to retire these aging dinosaurs, and urge the company to ensure an equitable transition for the workers and communities most directly impacted by these retirements,” said Earthjustice attorney Shannon Fisk, who worked on the case.According to the Clean Air Task Force, an advocacy group, closing the Tanners Creek Generating Station Unit 4 in Indiana, the Muskingum River Power Plant Unit 5 in Ohio and the Big Sandy Power Plant Unit 2 in Kentucky will prevent 203 deaths, 310 heart attacks, 3,160 asthma attacks and 188 emergency room visits annually once they stop burning coal.

By modifying the settlement, AEP will be allowed to install cheaper and less stringent pollution controls on its large Rockport coal plant in southern Indiana.

The company will now give $6 million to the eight states that, along with the Environmental Protection Agency and environmental groups, filed the original 1999 lawsuit against it to address the pollution that drifts east from AEP plants in the Midwest. The states are Massachusetts, Vermont, Rhode Island, Maryland, New Hampshire, Connecticut, New Jersey and New York. The company will also provide $2.5 million to citizen groups in Indiana so they can address air pollution.

New York Attorney General Eric T. Schneiderman noted in a statement, “Coal-fired power plants make the largest contribution to air pollution in New York’s skies.”

Sierra Club attorney Bruce Nilles, who helped negotiate the agreement, said in an interview that the result showed how a combination of market forces and environmental activism had weakened the hand of the coal industry in the United States. But he added that in the face of rising carbon emissions worldwide, environmentalists could not declare total victory.

“The coal industry is cracking faster than the ice sheets, but it might not be fast enough,” he said.

National Fuel Announces Significant Marcellus Shale Well Results

Aside

January 22, 2013 07:00 AM Eastern Time

WILLIAMSVILLE, N.Y.–(BUSINESS WIRE)–Seneca Resources Corporation (“Seneca”), the wholly owned exploration and production subsidiary of National Fuel Gas Company (NYSE: NFG)  (“National Fuel” or the “Company”), has announced initial results from six recently completed Marcellus Shale wells within its DCNR 100 tract in Lycoming County, Pa.

Seneca has completed six new Marcellus Shale wells on a pad located within its DCNR 100 tract in Lycoming County, Pa. These six wells had  24-hour peak production rates averaging 17.8 million cubic feet (“MMcf”)        of natural gas per day, five of which represent the highest peak production rates of any wells operated by Seneca in the Marcellus.      Treatable lateral lengths on these wells ranged between 4,292 and 5,101 feet and they were completed with 14 to 18 frac stages per well. All six wells are expected to be flowing into National Fuel Gas Midstream Corporation’s Trout Run Gathering System by the end of January.

David F. Smith, Chairman and Chief Executive Officer of National Fuel,  stated, “The success we are achieving in Lycoming County validates the prolific nature of the Marcellus in this area. With three wells reaching       peak production rates above 20 MMcf of natural gas per day, and all six reaching a combined 24-hour peak production rate of 107 MMcf of natural gas per day, these wells represent some of the most productive wells ever drilled in the Marcellus by any operator. With two drilling rigs running in Lycoming County, and without the production infrastructure constraints facing many other operators in the Marcellus, we anticipate this acreage will be a key driver of Seneca’s production growth over the next two to three years.”

Well Name Treatable Lateral Length Number of Stages 24-Hour Peak Production
          DCNR 100 3H           5,101’ 18           21.4 MMcf
          DCNR 100 6H           4,807’ 17           20.9 MMcf
DCNR 100 7H           4,840’ 17           18.8 MMcf
          DCNR 100 8H           5,054’ 18           20.2 MMcf
          DCNR 100 9H           4,292’ 14           8.0 MMcf
          DCNR 100 66H           4,845’ 17           17.7MMcf

Including these six wells, Seneca expects to have a total of 15 wells       producing into the Trout Run Gathering System by the end of January.       Additionally, 16 more wells on the DCNR 100 tract will be completed this       fiscal year, with approximately 25 more scheduled for completion in       Fiscal 2014. The Company plans to provide further details on its       Appalachian operations during its scheduled earnings teleconference on       February 8, 2013.

National Fuel is an integrated energy company with $5.9 billion in  assets comprised of the following four operating segments: Exploration and Production, Pipeline and Storage, Utility, and Energy Marketing.       Additional information about National Fuel is available at www.nationalfuelgas.com  or through its investor information service at 1-800-334-2188.

Certain statements contained herein, including statements identified by the use of the words “anticipates,” “estimates,” “expects,” “forecasts,”  “intends,” “plans,” “predicts,” “projects,” “believes,” “seeks,” “will,”  “may” and similar expressions, and statements which are other than       statements of historical facts, are “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995.      Forward-looking statements involve risks and uncertainties, which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. The Company’s expectations,  beliefs and projections contained herein are expressed in good faith and       are believed to have a reasonable basis, but there can be no assurance       that such expectations, beliefs or projections will result or be  achieved or accomplished. In addition to other factors, the following       are important factors that could cause actual results to differ       materially from those discussed in the forward-looking statements:       factors affecting the Company’s ability to successfully identify, drill       for and produce economically viable natural gas and oil reserves,   including among others geology, lease availability, title disputes,  weather conditions, shortages, delays or unavailability of equipment and       services required in drilling operations, insufficient gathering,   processing and transportation capacity, the need to obtain governmental approvals and permits, and compliance with environmental laws and       regulations; changes in laws, regulations or judicial interpretations to  which the Company is subject, including those involving taxes, safety,  climate change, other environmental matters, real property, and  exploration and production activities such as hydraulic fracturing;  changes in the price of natural gas or oil; impairments under the SEC’s  full cost ceiling test for natural gas and oil reserves; uncertainty of  oil and gas reserve estimates; significant differences between the  Company’s projected and actual production levels for natural gas or oil;   governmental/regulatory actions, initiatives and proceedings; delays or  changes in costs or plans with respect to Company projects or related       projects of other companies, including difficulties or delays in obtaining necessary governmental approvals, permits or orders or in  obtaining the cooperation of interconnecting facility operators;       financial and economic conditions, including the availability of credit,  and occurrences affecting the Company’s ability to obtain financing on acceptable terms for working capital, capital expenditures and other       investments, including any downgrades in the Company’s credit ratings  and changes in interest rates and other capital market conditions;  changes in economic conditions, including global, national or regional       recessions, and their effect on the demand for, and customers’ ability  to pay for, the Company’s products and services; the performance of the Company’s key suppliers counterparties; or economic disruptions or       uninsured losses resulting from major accidents, fires, severe weather,  natural disasters, terrorist activities, acts of war or cyber attacks.   The Company disclaims any obligation to update any forward-looking  statements to reflect events or circumstances after the date thereof.

Contacts

National Fuel Gas Company Analyst: Timothy J.  Silverstein  716-857-6987

Media: Karen L. Merkel  716-857-7654

Marcellus Shale Production Growth to Continue in 2013

Aside

EQT Corporation (EQT) is the first significant Marcellus-focused operator to release its 2012 results and reserve estimates during this earnings season. Some of the operating metrics and forecasts contained in the report may be of interest to investors following the Marcellus and the natural gas sector in general…  (Please click on the title to be taken to the Seeking Alpha website for the full story.)

Shale Revolution Shakes the World

Aside

Robert Manning: Shale Revolution Shakes the World
By Robert A. Manning
October 22, 2012

A senior fellow at the Atlantic Council, Manning questions U.S. energy policy and its impact on the economy.
For all the attention the Shale Revolution has garnered, we are only beginning to see its longer-term impact — and not only in reshaping the energy landscape and raising energy policy questions. The Shale Revolution is also an emerging factor enabling US economic revitalization and impacting long-term geopolitical interests.
Shale gas is dramatically altering the US energy mix. According the US Energy Information Agency (EIA), natural gas now rivals coal for electricity production (coal, 34%, gas, 32% in May), with the added benefit of helping to reduce GHG emissions (1.7% in 2011). Yet at the same time, lower prices of gas is also changing the economics of wind, solar and further dampening that of nuclear.
Indeed, the Shale Revolution raises a number of questions about US energy policies, starting with those surrounding the lack of more uniform regulatory policies to ensure safety:
•In light of the rise of natural gas realities, does it make more sense to rethink subsidies to wind and solar and instead give more priority to building a nationwide smart grid network (which would ultimately benefit solar and wind)?
•Is gas substantial and long-term enough to warrant serious efforts to actively consider converting transport from gasoline to natural gas – for fleets, if not for private vehicles?
•Will the move from coal to gas for electricity spur efforts to develop carbon sequestration technology so that it becomes cost-competitive, enabling clean coal to compete with gas and renewable as a source of electricity?
•With the US now the world’s largest gas producer, whether – and to what extent – to allow gas exports?

Certainly, stranded gas in Alaska, for example would find ready markets in Japan and elsewhere in East Asia.
Then there is the broader impact on the US economy. In addition to enabling the US to reducing dependence on oil imports from 60% to 42%, unconventional gas (shale, tight sands and coalbed methane) is supporting one million jobs –projected to grow to 1.4 million jobs by 2015, according to an IHS study. Shale is spurring US manufacturing in downstream industries – petrochemical, chemical, metals and other energy-intensive industries. A Price WaterhouseCooper (PWC) study projects that the benefits from shale could allow US industry to lower raw materials and energy costs by $11.6 billion and create approximately one million more jobs by 2025.
Lastly, there are the geopolitical ramifications of the Shale revolution with Russia and Iran the apparent losers. With shale allowing US gas to sell at 75% below what Gazprom charges E.European customers, the most important cog in Putin’s State capitalist crony system may be at risk. Gazprom has been forced to lower prices to Europe and is being investigated by the European Commission for price fixing. The result will likely increase pressure on Gazprom to lower prices. Already Gazprom’s market value has shriveled from $365 billion in 2008 to $120 billion today and major projects such as the Shtokman gas project in the Arctic have been cancelled. As Gazprom has been a veritable cash cow enabling Putin to build and sustain his ruling network of cronies, Gazprom’s uncertain fate raises intriguing questions about Russia’s future as a petro-state. [3]
Robert A. Manning is a Senior Fellow at the Atlantic Council.