OPEC: U.S. Shale Oil to Cut Into Demand – “The Organization of the Petroleum Exporting Countries cut demand for its crude this year, citing growing production of U.S. shale oil, potentially putting the group on track to have its lowest share of the global oil market in more than 10 years. This comes as industry experts increasingly question whether the producers group, which has had a decisive influence on the oil market since the 1970s, can maintain its position amid a boom in oil production in the U.S. thanks to the introduction of shale rock drilling technology. Senior figures in OPEC initially played down the threat of the shale oil boom, but in its most recent oil market report, published Tuesday, OPEC said expected increases in North American oil production would trim another 100,000 barrels a day from the forecast demand for its crude this year, putting it 350,000 barrels a day below its level in 2012. According to calculations by The Wall Street Journal based on historical data and the current forecasts from OPEC reports, if the group only pumps enough to satisfy demand for its crude this year, it would be supplying 33.1% of expected oil demand this year, down from 35% in 2012 and the lowest level in 11 years. Demand for OPEC's own oil is now expected to fall to 29.7 million barrels a day in 2013, compared with 30.1 million barrels a day in 2012, the group said.” (Wall Street Journal)

Shale gas rush: the fracking companies hoping to strike it rich – “It may not have the romance of the 49ers or the glamour of Dallas. But the Great UK Shale Gas rush of 2013 has all the features of a modern gold rush – small players risking their investors' money and hoping that they will be the ones to strike it rich. In October, the chancellor threw his weight behind the rush, saying he wanted to "[open] up the newly discovered shale gas reserves beneath our land" and promising that the government would consult "on a generous new tax regime for shale so that Britain is not left behind as gas prices tumble on the other side of the Atlantic". The big oil and gas companies have been notably less enthusiastic about shale gas – at least in public. The British Gas boss Sam Laidlaw and Christof Ruhl, the chief economist of BP, have both separately played down the potential in the UK, describing it as not a "game-changer". So far, the UK's nascent shale gas industry has just one big player –Cuadrilla Resources, which was formed in 2007. In February 2010 it received some serious financial muscle from Riverstone Holdings through its Cayman Island joint private equity fund with Carlyle, the US asset management giant. The two investors both hold a little over 40% of Cuadrilla. This gave Cuadrilla access to the funds it needed to begin serious exploration in the Bowland Basin between Blackpool and Preston in Lancashire where it has drilled six wells. Cuadrilla used fracking to explore for shale gas. But the controversial technique, involving the hydraulic fracturing of rock, was blamed for causing two earthquakes in Blackpool and drilling was stopped. Cuadrilla has now been given government permission to start drilling again. There is no immediate sign that returns on Cuadrilla's investments so far will be quick. Cuadrilla lost £8m in the year to December 2011 and about £12m a year earlier. The 2011 losses were three times bigger than the company's revenue. With just one big beast in the shale gas jungle, it has been left to a collection of smaller and less well-known companies to make inroads.” (Guardian UK)

Shale boom adds nearly 500,000 jobs – “We don't have to look far in southwestern Pennsylvania to see the economic impact of the natural gas industry in the region. But it isn't just Pennsylvania seeing that. Bloomberg video takes a look at what is happening nationwide with the shale boom. Correspondent Alix Steel reported that 115,000 mining jobs have been created over the past five years in the U.S. — about 2,000 a month.” (Pittsburgh Business Times/Bloomberg)

Canadian Natural Weighs Shale Sale Amid Glut – “Decisions by Canadian Natural Resources Ltd. (CNQ) and Talisman Energy Inc. (TLM) to sell almost half a million acres of natural gas-soaked rock threaten to depress prices for land that drew a record premium last year. Canadian Natural may sell 250,000 acres in the Montney Shale, one of western Canada’slargest gas finds. Talisman also is seeking a buyer for parts of its 200,000-acre holding, which it estimates may be worth as much as $1.5 billion. The Calgary- based companies join other producers who are offering acreage after Exxon Mobil Corp. (XOM) and Petroliam Nasional Bhd., or Petronas as the Malaysian company is known, paid billions of dollars for stakes in the Montney. It’s undeniably a buyer’s market,” said Robert Mark, a director and analyst at MacDougall, MacDougall & MacTier Inc. in Toronto, which has C$2.5 billion ($2.44 billion) under management. “There is more up for sale than I’ve ever seen in my 12 years in the business, between land packages, joint venture opportunities and full companies.” Petronas’ $5.2 billion takeover for Progress Energy represented a 97 percent premium, the highest ever paid for an oil and gas producer worth more than $1 billion, according to data compiled by Bloomberg. Exxon paid C$2.86 billion to buy Celtic Exploration Ltd. last month, or C$6,800 an acre for its Montney holdings, according to ITG Investment Research Inc.””  (Bloomberg)

Fracking's 'revolving door' draws a warning – “Many of Pennsylvania's policymakers, regulators and enforcement workers have come from the oil and gas industry they oversee, or they leave state jobs for industry jobs, according to a recent report that questions the impacts of such a "revolving door" on public policy decisions. A report titled "Fracking and the Revolving Door in Pennsylvania" identified 45 current or former state officials who have links to the energy industry and gas drilling and fracking regulation, including 28 who have left to take industry jobs. The 30-page report, released two weeks ago by the Public Accountability Initiative (public-accountability.org), a Buffalo, N.Y.-based nonprofit, nonpartisan research organization focused on corporate and government accountability, said that attrition from government jobs to positions in the regulated industry calls into question the commitment of those employees to enforce regulations on companies they could soon work for. Enforcement could also be hurt, the report said, when industry executives move into regulatory positions in government. According to the report, the last four governors, including Tom Corbett, have "strong ties to the natural gas industry," as do a number of administrators from previous governors' offices, and 20 DEP administrators and employees, Democrats and Republicans alike, including all five DEP secretaries since the department was created in 1995. That group includes DEP Secretary Michael Krancer, who was a judge on the state Environmental Hearing Board before his appointment as secretary. But prior to that, the report said, he was a general counsel at a utility, Exelon, that relies on natural gas, and once worked as a litigation partner at Blank Rome LLP, a law firm and lobbying group that represents natural gas interests and is an associate member of the Marcellus Shale Coalition. "The revolving door data in this report raises troubling questions about the incentives that may be guiding public officials' oversight of fracking in Pennsylvania, from governors to DEP secretaries to well inspectors." Robert Galbraith, a research analyst at Public Accountability Initiative, said in the report he authored… The report notes that Mr. Corbett received campaign contributions totaling more than $1.8 million from the oil and gas industry, and worked as a lawyer for Waste Management, a waste hauling firm that's a member of the Marcellus Shale Coalition, a lobbying organization for shale gas development… "No doubt, Pennsylvania's citizens would expect their government to draw from talented citizens when filling important positions of trust," Mr. Shirk wrote. "But, to protect our taxpayers, Pennsylvania has strict ethics and disclosure laws to guard against undue influence in the policymaking arena.”” (Post-Gazette)

Health study holding up N.Y. decision on fracking – “A health study cited by leading environmentalist Robert F. Kennedy Jr. as pivotal in helping persuade New York Gov. Andrew Cuomo to hold off on plans for limited gas drilling is likely years away from conclusions about whether the technology involved is safe, according to the project's leaders. With New York entering the fifth year of review of the process known as hydraulic fracturing, or fracking, growing calls to wait for the Geisinger Health System study to be finished could push a final decision back several more years, frustrating landowners and the industry that had hoped to begin tapping the gas reserve that lies below parts of the state… "We don't really believe that there is a fast answer here, if you're looking at the issue of health impacts," Andy Deubler, an executive vice president at Geisinger Health System in Pennsylvania, said in an interview. "You've got to have all the data before you can come to a conclusion."” (Associated Press)

Spain Shale Gas Reserves Estimated to Equal 39 Years of Demand – “Spain, a country that’s yet to produce its first shale gas, probably has enough resources of the fuel to satisfy domestic demand for at least 39 years, according to the nation’s Council of Mining Engineers. The estimated reserves of natural gas trapped in shale rock are about 50 trillion cubic feet, Fernando Pendas, a water and oil geology professor at University of Oviedo, said today at a briefing in Madrid to present the council’s findings. The estimate could double once exploration studies are finalized and more is discovered through breaking open rock using hydraulic fracturing, knowns as fracking. “If we don’t allow fracking, Spain would have missed out on a huge opportunity,” Pendas said. As many 100 companies have applied for permits to begin exploration using fracking in Spain during the past five years.”” (Bloomberg)

China's ragtag shale army a long way from revolution – “China's plans to unlock what could be the world's biggest shale gas reserves risk running further off track after 16 firms awarded exploration rights in the latest auction lacked one core skill - not one has drilled a gas well before. Beijing is hoping shale gas can transform the country in the same way as the U.S. boom, though to date there has been little commercial production and a target of producing 6.5 billion cubic meters of gas by 2015 in the world's biggest energy consumer looks out of reach, according to industry experts. The lack of experience exploiting shale among new firms scrambling to enter the sector will make it an even bigger challenge to get at the gas, and if they fail to deliver China will struggle to reduce its dependence on expensive imports of oil, liquefied natural gas and coal. The auction winners will have to buy in the expertise they lack, offering the prospect of lucrative contracts for specialist foreign firms such as Schlumberger (SLB.N) or Halliburton (HAL.N) for the "fracking" (hydraulic fracturing) technology to get at the gas…. China's potential is clear. The government puts technically recoverable shale gas reserves at 25 trillion cubic meters, while the U.S. Energy Information Agency has them at 36.1 tcm, in both cases larger than U.S. reserves estimated at 24.4 tcm. But China's shale deposits are mostly found deeper underground than in the U.S. and reserves are more scattered, making it difficult to adapt the technology that has worked in the United States to China's geology. Big oil firms including PetroChina and Sinopec Corp (0386.HK) working on what are considered some of the best prospects are making slow progress. They had drilled more than 60 shale wells by May 2012, mostly in the southwest Sichuan basin, but PetroChina had produced only just over 11 million cubic meters in its most promising area by November.”” (Reuters)

Venture proposes 'Bluegrass Pipeline' to the Gulf Coast – “More natural gas liquids extracted from underneath Pennsylvania will start flowing to petrochemical facilities and export markets near the Gulf Coast through a new pipeline project announced Thursday. Williams, an energy infrastructure firm, and Boardwalk Pipeline Partners LP said their proposed joint venture will build new pipelines and upgrade existing ones to provide a pathway for liquids like ethane to move from the Marcellus region in Appalachia to facilities in Texas and Louisiana. The so-called "Bluegrass Pipeline" would transport up to 400,000 barrels per day of natural gas liquids from Pennsylvania, Ohio and West Virginia to the Gulf Coast, where the liquids can either be processed by that region's bevy of petrochemical facilities or shipped to other markets.” (Post-Gazette)

Illinois fracking deal could become model – “CHICAGO -- After years of clashing over the drilling method known as hydraulic fracturing, or "fracking," the oil industry and environmentalists have achieved something extraordinary in Illinois: They sat down together to draft regulations both sides could live with. If approved by lawmakers, participants say, the rules would be the nation's strictest. The Illinois model might also offer a template to other states seeking to find a middle ground between energy firms that would like free rein and environmental groups that want to ban the practice entirely… In Illinois, it came down to "do we accept the invitation to go to the table or walk away and allow industry to write the rules?" said Allen Grosboll, co-legislative director at the Chicago-based Environmental Law and Policy Center. "For us to say we were not going to participate, and drive the hardest deal we could to protect environment, would have been totally irresponsible." The Natural Resources Defense Council supported a failed bid for a fracking moratorium last year. So with lawmakers clearly ready to allow fracking in southern Illinois, the NRDC wanted to ensure that there were significant safeguards, including making drillers liable for water pollution, requiring them to disclose the chemicals used and enabling residents to sue for damages. Talks occurred over four or five months, mainly at the Statehouse in meetings led by state Rep. John Bradley, a Democrat who lives in the area where fracking would occur. Mr. Bradley whittled negotiators down to a core group: four from industry, four from environmental groups, plus representatives of the attorney general's and governor's offices, regulatory agencies and lawmakers, said Mark Denzler, vice president of the Illinois Manufacturers' Association. That group was pared further for the toughest negotiations, including talks with outside technical experts on complicated issues, said NRDC senior attorney Ann Alexander. The deal was done by late February. It has yet to be considered by a legislative committee, which must endorse the proposal before sending it to the full House.”” (Post-Gazette)

How shale energy is bringing America and China together – “Despite their constant squabbles, there is one area of industry where America and China are tentatively making friends. That is the field of shale energy, where the controversial drilling technology known as “fracking” is used to pump water into shale rocks to remove oil and gas. Because the US has a huge amount of untapped shale reserves and leads the world in extraction technology, it may be the on the verge of total energy independence. China also has great prospects in shale, with gas reserves that may even be bigger than the US’s and Canada’s combined.  But it lacks the expertise to turn its reserves into energy. So Chinese companies are chasing investments (paywall) in America’s shale industry to access technology that can help it turn its reserves into energy. Chinese oil giant CNOOC has spent billions investing in shale projects operated by America’s Chesapeake Energy. And more Chinese companies are marshalling cheap loans from Beijing government-backed banks to strike similar partnerships, according to Bloomberg. China definitely lacks America’s shale extraction expertise, says Neil Beveridge, a Hong Kong-based analyst at research house Sanford Bernstein. He adds that Chinese companies are pursuing investments in US projects to “access technology and then apply those technologies to China.” That idea is not guaranteed to work. ”As investors in projects, Chinese companies can attend meetings, see work programs and budgets, and generally access a lot of data,” says Beveridge. But what Chinese companies cannot glean from meetings is the engineering experience  that is needed to capably extract energy from shale and that the US has built up over the last two decades.”” (Quartz)

Fed survey: Pa. shale gas boom regions robust - “PITTSBURGH — A Federal Reserve survey of regional economic trends says activity coinciding with the Marcellus Shale natural gas boom in Pennsylvania has been robust. The Fed's latest Beige Book, a snapshot of business conditions in the agency's 12 regional bank districts, notes that eastern and central Pennsylvania banks in shale gas areas in the agency's Third District "described customers paying down loans with royalty money and avoiding further debt by paying cash." In the Fourth District, which includes western Pennsylvania and Ohio, the survey says shale gas activity is expanding at a robust pace, while conventional oil and gas was steady. "Shale gas producers expanded payrolls, while employment at conventional oil and gas firms was flat," the Fed noted… Meanwhile, the boom also is creating some local economic worries. "Dealers in the eastern part of the District are apprehensive about losing technicians to the shale gas industry, which may put upward pressure on wages," the Fed said. Bryan Routledge, a professor at Carnegie Mellon University's Tepper School of Business in Pittsburgh, cautioned that the Beige Book contains anecdotal information about business trends, not hard numbers. "But it is interesting that people are mentioning shale," Routledge said, calling the report a good example of how the Fed can get snapshots of possible new economic trends. The Fed noted that the boom is about more than just drilling. Manufacturers and processors are starting to expand in the Fourth District, using the natural gas both for power and to make other consumer goods. "Beyond the gas fields, energy projects are attracting substantial investment interest and loan opportunities for larger banks," the Fed noted. On the other hand, the Fed said, coal production fell in the Fourth District and "was expected to decline further with a shift in demand toward low-priced natural gas and stricter environmental regulations."” (Wall Street Journal)

Top New York Republican Senator tries to stop potential fracking moratorium from reaching Senate vote- “Senate Deputy Majority Leader Thomas Libous, R-Binghamton, said his goal is to “make sure no (moratorium) bill passes the Senate.” Libous, a staunch fracking supporter whose district sits within the gas-rich Marcellus Shale formation, said he doesn’t want to see the issue on the Senate floor for a vote. “I’m going to try to make sure that it doesn’t,” he said Thursday. “I feel that strongly on that issue.” Libous’ comments came a day after the state Assembly passed a bill that would prohibit drilling in the Marcellus and Utica shale formations until May 15, 2015. On Tuesday, Sen. David Carlucci, D-Clarkstown, Rockland County, introduced a similar but separate bill in the Senate. Carlucci is a member of the Independent Democratic Conference, which shares control of the chamber with the GOP. Opponents of fracking -- who say the technique could cause irreparable environmental harm -- are hoping the IDC may be able to get a vote on a moratorium. Supporters -- who point to gas drilling’s economic and energy benefits—will be leaning on the GOP to block it. Carlucci on Thursday said his bill would ensure a decision on fracking isn’t made on an “arbitrary timetable.” His legislation would tie a moratorium to the completion of two outside studies of shale-gas drilling’s impacts: one from the U.S. Environmental Protection Agency and the other from Geisinger Health System.”” (Democrat and Chronicle)

Washington Rotating Control Heads Inc. taps into the Marcellus Shale market – “Joyce Mayernik and her sister Denise Johnston are the first to admit they felt overwhelmed when they took over Washington Rotating Control Heads Inc. two years ago…By the time the sisters took over, Washington County had earned the nickname "mini-Odessa, Texas" thanks to the drilling boom in the Marcellus and Utica shales that lie thousands of feet below their shop near downtown Washington, Pa…Soon after taking over, Ms. Mayernik had to turn to YouTube to learn about the drilling process. Now, two years later, the business has brought on six new full-time employees, increasing its total workforce to 22 full-time employees, to handle the growing business…First, the company started the six-month process of becoming certified by the American Petroleum Institute. Certification from the industry group can be a dealbreaker for large companies who use the stamp of approval to weed out possible subcontractors…Second, they started an offshoot called Arch Rentals LLC, an equipment rental service that will launch on April 1 and service operations within a 200-mile radius of Washington County…Business has grown about 10 percent year-over-year since 2008, said Ms. Mayernik. The private company declined to release more specific revenue figures. Its parts have been used by drillers around the world -- one recently finished diverter costing about $50,000 sat in the shop this week ready for a client in Africa and operations manager Rick McGinney took a call from Oman on Monday.” (Post-Gazette)

Shell Sees Major Advance in China Shale Output Within Two Years – “SINGAPORE—Royal Dutch Shell RDSB.LN +0.57% said it may be less than two years away from a major advance in shale gas production in China, bringing the country closer to being the first outside of North America to cash in on technology that has transformed the U.S. energy industry. Unlocking the gas trapped inside China's shale rock reserves, the world's biggest, would provide much needed energy supplies to the energy-hungry economy and help cut down on expensive imports of gas. It would also provide a windfall for Western energy giants that provide the complex hydraulic fracturing technology. Shell is on track to have spent $2 billion by the end of this year exploring the central province of Sichuan, and has drilled nearly 30 wells in joint-venture projects with China National Petroleum Corp. "Mid-decade we will be able to decide" on the so-called final investment decision that will determine whether to go into full commercial production, said Maarten Wetselaar, head of Shell's integrated gas operations world-wide, excluding North America. The multinational energy company is already producing tiny amounts of shale gas as part of its exploration work, and it pumps this into Sichuan's natural-gas network. How quickly output can be ramped up after further investment is unclear. Beijing has set an ambitious target of producing 6.5 billion cubic meters of shale gas annually by 2015, and as much as 100 billion cubic meters by 2020, from nearly zero now. Getting the Shell project into operation will be critical in meeting those goals.” (Wall Street Journal)

PTI breaks ground for $3.5 million gas, oil technology center – “Eight shiny new shovels were wielded by eight VIPs wearing suits and white hard hats, each emblazoned with three black letters -- PTI -- during a groundbreaking ceremony Feb. 26 for Pittsburgh Technical Institute's $3.5 million energy technology center that will house courses in oil and gas electronics. Construction is part of the North Fayette schools' mission of "preparing students for high-paying, in-demand jobs," said Greg DeFeo, PTI president, adding that school officials attended conferences and "talked to people who hire" before starting construction and planning new courses and degrees…The two new programs "will support the energy industries with a pipeline of skilled individuals," Mr. DeFeo said. "Research suggests a high demand in Western Pennsylvania for electronics professionals at compressor stations, at energy facilities and on pipeline projects, who have the skills to monitor the extractions, storage and transmission of this natural resource." Jobs are being "created by the exponential growth surrounding the exploration and development of Marcellus Shale and, in the future, Utica Shale," says PTI brochures. Student interest and employer reactions" to the new programs "has been strong." About 200 students are expected to enroll in the new programs in 2013. (Post-Gazette)

Fracking moratorium approved by NY State Assembly – “The Democrat-dominated State Assembly on Wednesday approved a two-year moratorium on high-volume hydraulic fracturing from the Southern Tier to the Catskills until there is "conclusive scientific evidence" on possible health and environmental risks. The measure is largely symbolic at this point because the politically divided Senate hasn't shown signs of backing a moratorium. Gov.Andrew M. Cuomo 's administration has been weighing regulations for the natural gas drilling technique, but has missed several self-imposed deadlines for reaching a conclusion. Assembly Democrats said the state shouldn't rush a decision about fracking in the Marcellus and Utica shale. Conventional drilling, which uses shallower wells and far less water than high-volume fracking, has gone on for decades in New York and other states…Assembly Democrats cited concerns about drinking water and climate change, and the handling of chemically laced wastewater that is generated during drilling. The Assembly bill requires the State University of New York to conduct a public health study. Fracking supporters, including struggling upstate landowners who have been waiting five years for New York to finalize fracking rules, say the experience of other states shows environmental and health concerns are unfounded. They also note that President Barack Obama supports natural gas as a clean fuel. Senate co-leader Dean Skelos (R- Rockville Centre ) believes state environmental and health agencies "should be allowed to complete their study so the governor can make an informed and final decision as soon as possible," spokesman Scott Reif said.”” (Associated Press)