Frackademia: University of Tennessee Set to Lease Forest for Fracking, Enriching Governor's Family - "8,600 acres of the Cumberland Forest owned by University of Tennessee-Knoxville will be leased off to the oil and gas industry this August in a new form of "frackademia" -- and one of the top financial beneficiaries will be the family of Republican Gov. Bill Haslam, who sits on UT-Knoxville's Board of Trustees."Frackademia" is usually thought of as "studies" conducted by university-based "frackademic" researchers and funded by Big Oil, the old "Tobacco Playbook" in action. But UT-Knoxville has taken the game to a whole new level, leasing off land it owns so that it can study "best practices" for fracking in the Volunteer State."It would create a rare, controlled environment in which experts could study the environmental impact of the controversial drilling technique, while also generating revenue to finance research," explained a New York Times article on the proposal.The deal with the oil and gas industry for the acerage includes an initial fee of $300,000, plus $300,000 per year, 15-percent royalties on any gas sold and aminimum of $35 per acre paid to UT-Knoxville.The 8,600 acres sits within the Chattanooga Shale basin, a field still untapped by the industry via hydraulic fracturing ("fracking"), the toxic horizontal drilling process through which oil and gas is obtained from shale rock basins. Atlas Energy -- purchased as a subsidiary by Chevron in Nov. 2010 -- owns 105,000 acres in the Chattanooga, a clear example the industry has its cross-hairs on the untapped Chattanooga basin...Fracking could become a major source of revenue for UT-Knoxville during a time of severe budget cuts to the UT System. In 2010, the state government slashed $56 million from the UT-Knoxville budget, following another $75 million in budget cuts in 2009 for the UT System at-large...Gov. Haslam, the former Mayor of Knoxville, took $398,110 from the oil and gas industry before his Nov. 2010 gubernatorial race victory.”” (Huffington Post)

Cuadrilla PR man admits George Osborne's shale gas revolution won’t cut energy bills - “George Osborne's plan to drive down energy prices through a shale gas revolution was dealt a blow when Britain's sole active shale gas producer said that even a boom would have a “basically insignificant” impact on prices. At a meeting for concerned residents at a potential fracking site in West Sussex, a Cuadrilla representative was asked to comment on whether shale gas could drive down customers' energy bills. “We've done an analysis and it's a very small…at the most it's a very small percentage…basically insignificant,” said Mark Linder, a public relations executive at Bell Pottinger who is also responsible for Cuadrilla's corporate development. His comments, made in a private meeting with Greenpeace, contradict Cuadrilla's public statements which hold out the prospect of notable energy bill reductions, without promising them. Giving evidence in Parliament in 2011, Cuadrilla said that shale “has the potential to lower natural gas prices (tending to reduce electricity prices”. The company's website also says shale has “the potential..to lower gas prices”. Meanwhile, the research that Mr Linder said demonstrated shale's negligible impact on price, is presented quite differently in Cuadrilla's press release on its findings. The report, by the Poyry consultancy, estimates that if shale gas production booms in the 2020s it will cut gas and electricity prices by between 2 and 4 per cent. “According to Poyry, Lancashire shale gas production could also reduce the country's wholesale gas and electricity prices by as much as 4 per cent between 2014 and 2035, which corresponds to an average saving of £810m/year,” said the release by Cuadrilla, which is chaired by former BP chief executive Lord Browne...Meanwhile, Mr Cameron has said: “We should take part in fracking because this might be a revolution and if we ignored it completely we could be giving our economy much higher energy prices than would otherwise be necessary.” A Company spokesman said: “Cuadrilla's never said it [shale] will bring down prices…We don't think it will bring down prices, although it does have the potential to.” “Security of supply is the issue. We import a large part of the gas we use at the moment. It's also about tax revenue, we will make a massive contribution there,” he added.”” (Independent UK)

Fracking Russia: Country Rules On Shale Oil, If They Can Pull It Out Of The Ground - “The U.S. is seeing a fossil fuel revival thanks to fracking technologies allowing for shale oil and gas recovery.  But Russia is the kingpin when it comes to shale oil, if they can develop the technologies required to pull it out of the ground that is. According to the U.S. Energy Information Administration (EIA), Russia now has more shale oil resources than the United States, but doesn’t compare to the U.S. in technological capabilities to drill for it...Russia has around 75 billion barrels of technically recoverable shale oil resources, followed by the United States with 58 billion barrels and China with 32 billion barrels, EIA said in their report released on Monday. The problem is that while Russian shale resources may be abundant, they are not as easily recoverable as those in China and the U.S.  Russia ranks ninth in this regard, behind Australia, which doesn’t even rank in the top 10 countries with recoverable shale oil in the first place. Unlike an earlier EIA-sponsored study that focused exclusively on natural gas, Monday’s latest global shale assessment includes shale oil. In addition, more geologic information has become available for shale formations located outside the U.S., giving EIA a better sense of what’s happening abroad.”” (Forbes)

Chevron CEO: Industry must address 'legitimate' 'fracking' concerns - “The chief executive of oil giant Chevron Corp. says that oil and gas producers must regulate themselves more tightly over hydraulic fracturing to address "legitimate concerns" that the practice is unsafe and harmful to the environment. At an event for the Center for Strategic and International Studies, John Watson said the energy industry must work harder to police itself as the public learns more about so-called fracking, the controversial technique that involves injecting large volumes of chemically laced water and sand deep into the ground to release oil or gas. "There are some risks out there. Some are overstated. But we have to engage them either way," said Watson, according to Bloomberg. "Public expectations are very high, and there is no reason they shouldn't be high." Watson brought up the 2010 BP oil spill, which gushed millions of barrels of oil before it was finally capped after 87 days, the report said. And with fracking getting at previously unrecoverable oil and gas, more people are pondering the risks and possibilities of the technology. Chevron has suffered its share of accidents since 2011, including a fire at its Richmond, Calif., refinery and two deaths at a Nigerian drilling rig operated by a subsidiary. Watson and several other top executives saw their compensation cut following these occurrences, the Wall Street Journal reported.””  (Los Angeles Times)

Shale could fuel UK for 10 years, say experts – “The US government's Energy Information Administration (EIA) said in a report that it now estimated Britain’s “technically recoverable shale resources” at 26 trillion cubic feet (tcf), compared with annual UK gas consumption of about 3 tcf. The EIA also said for the first time that it believed Britain had shale oil, estimating that some 700m barrels could be extracted. The figures indicate the volumes that the UK should be able to extract from the ground using current technology, but do not take into account whether or not it will be economic to do so. The report warns of opposition to shale gas extraction in the UK and says fracking “got off to an abysmal start” after Cuadrilla caused earth tremors near Blackpool in 2011… The official figures will nevertheless be a significant boon for the industry, which has seen rising optimism on the back of a series of estimates from shale gas drillers of the volume of gas “in place” – the total amount that could be in the ground. The volume of gas that can actually be extracted is invariably much smaller. In a 2011 study, the EIA put Britain’s technically recoverable shale gas resources at a more modest 20 tcf, while a 2010 official estimate by the British Geological Survey (BGS) suggested recoverable reserves of 5.3 tcf. The BGS is working on a new study that could say there is as much as 1,800 tcf of gas in the ground. In its report on Monday the EIA said its “unrisked” estimate of shale gas in Britain was 623 tcf, while its “risked” estimate was 134 tcf. Fracking company Cuadrilla estimates there could be 200 tcf “in place” in the Bowland shale of Lancashire, while IGas recently increased its best estimate for gas in its licences in the north-west to 100 tcf… “Compared with North America, the shale geology of the UK is considerably more complex, while drilling and completion costs for shale wells are substantially higher,” it said. “While the UK’s shale resource base appears substantial, commercial levels of shale production are yet to be established.” The EIA also noted that “political opposition to shale development is greater in the UK than in Poland”, which is seen as the leader in European shale gas exploration efforts. “Hydraulic fracturing got off to an abysmal start,” it said, noting that “the UK’s first shale production test well triggered small local earthquakes”. This resulted in an 18-month government ban on fracking, which was lifted last year.”” (Telegraph UK)

EIA Says Worldwide Shale Oil And Gas Potential Is Huge – “ A new report from the U.S. Energy Information Administration lends support to the idea that a similar transformation could take place outside the United States. .. The EIA report concludes that Russia has even more technically recoverable shale oil than the United States. Three countries have more shale gas—China, Argentina, and Algeria. Geologists have long known that some shale deposits contain large amounts of oil and gas, but it’s only recently that hydraulic fracturing and horizontal drilling technology have made it feasible to extract. While other countries may have more of these resources than the United States, the impact in some of them may not be as great, or happen as quickly. It could take many years to develop resources in other countries because the geology is somewhat different—the techniques that work in the United States might not quite work elsewhere. What’s more, many countries don’t have the needed technological expertise. Some countries make it difficult for companies to set up and find ways to exploit the resources (see “China Has Plenty of Shale Gas, But It Will Be Hard to Mine”). What’s more, the United States had a lot of spare natural gas generating capacity, which made it easy to switch from coal to natural gas. In a place like China, where energy demand is quickly growing, there’s little spare capacity. Natural gas production might only serve to slightly slow the growth of electricity from coal plants, not reverse it.” (MIT Technology Review)

Shale gas set to have limited impact on global market over the next 3 years: Deloitte – “KOLKATA: Shale gas is set to remain a largely regional resource over the next one to three years with an uncertain global impact due to the increased technical challenges and higher development costs of he resource. This is according to the Deloitte Touche Tohmatsu Limited (DTTL) 2013 Oil and Gas Reality Check report.  The study focuses on the primary challenges facing the oil and gas industry including: shale gas, liquefied natural gas (LNG) pricing, resource nationalism, national oil company (NOC) expansion, and market complexity. "Despite considerable market changes, increased complexities, current challenges and new resource opportunities, there is a need to return to industry fundamentals - namely supply, demand, macroeconomic, regulatory, cost price and competitive behaviour factors - in order to understand the future direction of the oil and gas sector," said Adi Karev, DTTL Global Leader, Oil and Gas. Debasish Mishra, Senior Director, Deloitte in India said, "Although there is lot of excitement globally about new conventional gas finds and also developments in the Shale gas front, it's unlike to have any impact to improve the gas deficit scenario in India in the near term." "We expect Indian oil and gas companies to actively explore investment opportunities globally", added Debasish.”” (Economic Times)

Why India Can’t Unlock Its Shale Gas – “India is hoping to unlock its shale gas reserves, which are spread across wide and difficult to reach terrain, by inviting investments from private companies. The country is believed to have about 63 trillion cubic feet of recoverable shale gas reserves, more than 20 times the size of the country’s largest gas deposit Reliance Industries 500325.BY -0.48%’ KG-D6 block in the Krishna-Godavari basin off the eastern coast. That’s enough to run the country’s gas-fired power stations for at least 20 years at current consumption rates, according to industry analysts. But experts say it may take years for the country to access and realize profits from the valuable natural resource because of a lack of infrastructure, opposition to raising gas prices and paucity of information about exactly where to find the gas. Minister of Petroleum Veerappa Moily and his top aides have repeatedly promised that the government is on the verge of finalizing a policy on shale gas exploration. But slow assessment of the size and accessibility of actual reserves and how to price the gas, have hindered progress towards developing a roadmap for shale gas extraction… Now Mr. Moily is pushing several departments in his ministry  to make it easy for private companies to start developing the deposits. “We will need to encourage private operators. Our contracts will be simple,” a senior official in the Ministry of Petroleum told the Wall Street Journal. “We hope to have it out very soon.” In conventional oil and gas fields, India usually asks private companies to share a part of their profits from the resources, once they have recovered the cost of exploitation. But this system has become unsatisfactory in the eyes of ministers who believe private companies often exaggerate their cost estimates, petroleum ministry officials say. Now the petroleum ministry wants to switch to a production-sharing mechanism for all gas projects including shale gas, whereby private operators share a percentage of their revenue with the government from day one. Private operators say that they have no problem with this, so long as they get a free hand in gas pricing… A panel of government appointed experts, convened by the prime minister, in January proposed doubling gas prices from their current fixed rates. The proposal met with fierce opposition from end-user industries, such as power generators and fertilizer mills, who benefit from low fuel prices and are consulted by the government over any price increase. The end-users argue that fuel price rises increase their production costs but because of government controls on the price of their products they cannot raise their prices accordingly so suffer huge losses. Ajay Arora, partner and head of oil and gas at global consultancy Ernst & Young said that clarity on gas pricing will be critical for private companies before they invest in shale gas projects, so they can calculate their profit margin. India’s federal cabinet is expected to meet to thrash out a uniform price for gas within the next month… he extraction of domestic shale gas deposits will be critical to India’s aim of zero energy imports by 2030, according to another petroleum ministry official. The country currently imports 75% of its energy requirements. But even if contracts are simplified and  gas prices are freed from government control, there are other obstacles standing in the way of extraction. India’s gas reserves belong to the government rather than private landowners as in the U.S. so private operators must obtain government contracts to begin exploration instead of dealing directly with a landlord. India also needs to map out the reserves accurately. Preliminary findings show that they are spread out predominantly over eastern and western parts of the country mainly in the western state of Gujarat and eastern states including West Bengal. There are also some isolated deposits in central India. Experts say the bulk of the reserves in eastern India lack the necessary network of pipelines to transport the gas–a task that many private operators are wary about undertaking. “There are plans to have connecting pipelines and build a major highway gas pipeline,” said B.K Chaturvedi, member for energy in the government’s policy think tank, the Planning Commission.”” (Wall Street Journal blog)

Shale gas could mean $13M in development per well, study says – “A new study on shale gas in New Brunswick shows the industry could generate $13 million in development opportunity per well. Each well would also create about 21 full-time jobs, according to the report by Deloitte released in Fredericton on Monday. "That's a significant amount of money and a significant amount of jobs," said Susan Holt, president of the New Brunswick Business Council, which commissioned the $90,000 report, along with Futures NB… "Building relationships with developers and learning about that supply chain to understand how they contract, when they go out, who they look for in suppliers … that kind of work should be done now in order to be ready, should the industry go ahead to participate in that opportunity," she said. Holt said 72 businesses took part in a survey for the study, which started four months ago. More than 90 per cent said they were willing to participate in shale gas development in New Brunswick, while 55 per cent showed they have the capability, she said. Some of the Industries with strong opportunities include: equipment rental, transportation, professional services, such as surveying and environmental approvals, as well as pipeline installation, the study found… Still, there are critics, such as Jim Emberger, of the Opposition to Shale Gas Coalition. "These economic studies show that localities that have shale gas development do worse economically than their sister counties who are right next door to them who don't have shale gas. Because it's a classic boom-bust economic model," he said. The study comes after a week of anti-shale gas protests and several arrests in Kent County, where SNW Resources Canada is conducting seismic testing. The company is trying to determine if it is economically feasible to set up a shale gas industry in the region.”” (CBC)

Missouri Lawyer Brings Nuisance Claims to Fracking Arena – “Six Pennsylvania families who sued Chevron Corp. (CVX) and units of The Williams Companies Inc. and WPX Energy Inc. (WPX) over hydraulic fracturing-related claims have turned to a Missouri lawyer who has used nuisance allegations to win cases against commercial animal feed operations. The Fayette County residents last week alleged in a state court lawsuit that the energy companies’ fracking efforts leaked methane and polluted water, while their employees intimidated them and even ruined a breeding stock of Black Angus cows. The focus of their lawsuit, however, isn’t the property damage so much as the offensive byproducts of the operations, a legal tactic that has begun to gain traction as courts consider the application of nuisance law to the natural gas boom. “You avoid some of the really difficult causation issues,” Kate Sinding, a senior attorney with the Natural Resources Defense Council, said in an interview, referring to the difficulty in proving specific damages in fracking cases. “You could show an interference with use of and enjoyment of one’s property without conclusively demonstrating that a gas company for example had contaminated a particular water well.” Nuisance suits are based in part on the loss of such use and enjoyment of property, often through noise, odors or vibration, as opposed to physical damage like poisoned water. The attorney for the families, Charlie Speer, of Speer Law Firm P.A. in Kansas City, claims such litigation in the fracking context may face an easier path through courts because it doesn’t rely on scientific evidence… Nuisance claims like those filed by the Fayette County residents are growing in popularity, lawyers said, as more plaintiffs include them in complaints containing a spectrum of environmental allegations against drillers and distributors. “I call them quality-of-life lawsuits,” Speer said in an interview. “I consider these to be private property rights cases and everybody in this country understands private property rights and values them.” Nuisance complaints tied to fracking have been filed in at least 10 different states, including several in Pennsylvania, said Josh Galperin, associate director at Yale Law School’s Center for Environmental Law & Policy… “In the case of natural gas drilling, harms stem from actions on and off private property, so the landowners and neighbors tend to present a series of legal claims, and nuisance is typically one,” Galperin said. If plaintiffs in nuisance cases “can show that there has been some substantial and unreasonable damage to the use and enjoyment of their property, they will be entitled to damages. The trick is how a judge or jury will weigh ‘unreasonableness.’ That turns on whether the utility of the activity outweighs its harm.” In 1999, Speer said he filed similar lawsuits against two hog farms in northern Missouri on behalf of a group of residents who said the smells and runoff from the factories constituted an “unreasonable use of their property.” A jury awarded $5.2 million to 52 plaintiffs. Speer said he has tried about a dozen cases since then on behalf of about 500 plaintiffs around the country. He said he lost one, which was partially overturned on appeal and ended up in a settlement… Among the plaintiffs in Speer’s suit is Joseph Bezjak, a 75-year-old beef farmer, who said he agreed in 2010 to let Laurel Mountain Midstream Operating LLC, a subsidiary of Williams, run a 16-inch gas line across his 700-acre farm for $20 a foot of pipe. Last year, the company tore down a fence on his property, leading to the interbreeding of cattle and ruining the Black Angus stock Bezjak had developed over 40 years.”” (Bloomberg)

WindStax has windmills for a variety of unexpected places – “Inside a 10,000-square-foot shop in the Strip District, there's a windmill being built to go to the unlikeliest of places: a Kansas oil field. Once there, it will power pump jacks and other well-site electronics, eliminating the need for noisy generators that use diesel fuel. And the bats and birds of Kansas can rejoice: This isn't a turbine windmill that spins through the air in giant circles (and has proven fatal to flying animals), but a contained vertical model that stands tall rather than wide. The windmill is from the first product line of WindStax, a renewable energy firm selling windmills for unexpected spaces such as rural plains or congested city blocks. The company, founded by serial entrepreneur Ronald Gdovic, recently moved from a garage operation in Apollo into an industrial space on Smallman Street right across the street from a Pacific Pride gasoline station… The vertical windmills -- which come in 20-, 40- and 53-foot-tall models and generate electricity by charging a battery -- are the latest example of an energy sector seeking "microgrid" engineering and moving away from the large-scale utility operations of the past. They are entering a market for minis that has been shaped by environmental concerns and government officials who think smaller distribution systems are less likely to cause massive blackouts. WindStax customers, in turn, haven't been traditional consumers. They've ranged from oil drilling operations in the middle of nowhere to doomsday preppers who believe going off the grid is the best preparation for the apocalypse. So far, the firm's most effective advertising has been right outside its door where a 20-foot-tall, 1,500-pound model generates electricity for the office inside. The sidewalk attraction has garnered so much interest that the staff jokes about renaming the model the "What the heck is that?" machine… "A lot of these wells are in rural areas, so sometimes the electrical infrastructure of that general area isn't good," said Justin Herman, chief executive officer of Independence, Kan.-based Intrepid Energy. Getting electricity out to sites by using generators can quickly cost more than $1,000, he said. Still, Mr. Herman was skeptical of the WindStax model when he first heard about it. "I'm an oil-and-gas guy," he said. "I had a bit of a 'good for you' attitude." When the $12,500 model arrives this summer, Mr. Herman plans to take potential landowners debating doing business with him to see it. Eventually, he wants to market the windmills as part of his lease package, and hook up the wind power to the homes that sit near the well sites. "Why not turn the oil-and-gas field into a wind farm?" he said.”” (Post-Gazette)

More anti-shale gas protesters arrested in Kent County – “Anti-shale gas protesters were arrested on Sunday after equipment owned by SWN Resources Canada was damaged, according to a government official. The reasons for the arrests on Sunday are conflicting, however. While a government official says the arrests were prompted after protesters damaged equipment, demonstrators say three people were arrested because they were not keeping far enough away from the equipment. "I clarified with the police officers that it was about 150 feet, which was the length of one and a half telephone poles. We looked and we were being told with their arms out, corralling us, telling us to go, to move,” Rish McGlynn said. McGlynn said she saw three people arrested at about 4 p.m., but she plans to return to the site to protest as long as the trucks are there. No one from the RCMP has been available to comment on the arrests. SWN Resources Canada is conducting seismic testing in Kent County to determine if it is economically feasible to set up a gas industry in the region. A company official said in April it estimates there is a 10 per cent chance of SWN Resources being able to establish shale gas production in New Brunswick. Anti-shale gas protesters were once again protesting seismic testing along Highway 126 on Sunday. Similar protests in Kent County have been held for about a week. Last week, three other people were arrested at a similar anti-shale gas rally in Kent County. A truck owned by a contractor for SWN Resources was also seized last week at a protest. Many protesters are worried the seismic testing will lead to a shale gas industry that could damage the environment. The New Brunswick government announced a series of legal and regulatory reforms earlier this year intended to give the province some of the strictest oil and natural gas exploration rules in North America. Premier David Alward has said companies should be able to explore to see if there is enough of a resource available to create a shale gas industry.” (CBC)

Centrica poised to seal shale gas deal with Cuadrilla 'within weeks' – “The owner of British Gas has been in negotiations with the company's controlling owners, Riverstone Holdings, the private equity firm, and AJ Lucas, the Australian engineering group, for months but is now understood to be just weeks away from agreement. The deal would see Centrica buy a minority stake in Cuadrilla's Bowland shale licence, which the company has said could contain 200 trillion cubic feet (tcf) of gas. Only a fraction of that is likely to be recoverable, but industry experts say that could potentially still provide an important source of gas for the UK as North Sea reserves dwindle. Centrica itself has sounded a note of caution, with chief executive Sam Laidlaw saying in January it would be at least a decade before the UK saw any shale gas production and that, even then, it would not be “the game changer we’ve seen in North America”. Securing the backing a major partner like Centrica would be a significant boon to Cuadrilla, which has already courted controversy after causing two earth tremors while fracking near Blackpool in 2011. Cuadrilla, which would remain operator of the licences, will need to secure various permissions before it is allowed to resume fracking. The process has provoked fierce local opposition in some areas. Analysts said the potential value of a stake in the licence was hard to calculate given it is at such an early stage of development. Ministers are keen to pick up the pace of shale gas exploration in Britain and are likely to welcome the involvement of Centrica, which has turned its back on a string of other UK investments in recent months. The company frequently cites its investment in the UK as a justification for the profits made by its British Gas business. Centrica is primarily focusing its expansion on the US, where it is looking to increase both its customer numbers and its oil and gas production.” (Telegraph UK)

Californians uneasy about fracking's safety, lack of oversight – “As energy companies seek to plumb vast reserves of underground oil in California through the controversial drilling technique known as fracking, voters are concerned about its safety and uneasy with the state's lack of oversight, according to a new poll. More than half of voters — 58% — say they favor a moratorium on the process of injecting chemicals deep into the ground to tap oil and natural gas deposits embedded in rock until an independent commission has studied its environmental effects. More than seven in 10 say they either want the process banned outright or more heavily regulated, according to the poll by the USC Dornsife College of Letters, Arts and Sciences and the Los Angeles Times. Voters' concern about the environmental and safety implications of fracking, also known as hydraulic fracturing, surfaced repeatedly. Almost three in five voters said fracking should be prohibited in areas immediately surrounding sources of groundwater. And by a 15-point margin, a majority of voters backed tax incentives for companies with a record of operating safely. Despite California's reputation as a trendsetter in environmental protection, it lags behind other parts of the country in the extent to which it has demanded oversight of the drilling method. Energy firms are permitted to keep secret the mix of chemicals they use to extract the oil and gas, the state is not given explicit notice of when and where fracking is taking place, and the rules in place to protect groundwater are not as strict as in some other states. California's unique geography, however, positions the state for a fracking boom. One of the world's largest deep-shale oil reserves, accounting for roughly two-thirds of such oil reachable by fracking nationwide, runs mostly underground through a swath of the state from Modesto to south of Bakersfield. In March, USC released a study, funded in part by a grant from the Western States Petroleum Assn., concluding that a full expansion of fracking would generate hundreds of thousands of jobs and billions of dollars in new tax revenue. Yet although energy firms have resisted tighter regulation, the poll findings suggest that more government oversight may be the path to public acceptance. Lawmakers have proposed several measures that would bring more government scrutiny to the process, as well as put a stop to it altogether until it can be studied further. "Voters are suspicious of fracking," said Dan Schnur, director of the Jesse M. Unruh Institute of Politics at USC. He said Californians want energy companies "to abide by stricter regulations." Nathan Hayes, 31, an unemployed Grass Valley resident, said he made up his mind that fracking was unsafe when he saw a YouTube video that activists had posted showing someone lighting his tap water on fire, blaming fracking nearby for the problem. "Look up flammable water on YouTube and you will find it," he said. "It doesn't seem like these companies are willing to take responsibility for what they are doing to the planet. There should at least be studies. And the companies doing the fracking should be paying for them." The prospect of more intense drilling in seismically sensitive areas also has put some Californians on edge. Among them is Alicia Hernandez, 68, a retired university clerk in Goleta… The poll results suggest that views on fracking in many cases flowed from existing concerns about the environment. Among Latinos, a group of voters traditionally worried about the environment, 55% favored an immediate and outright ban on fracking that could be lifted only by the Legislature — a view shared by only 42% of whites. Sixty-four percent of Latinos sanctioned a moratorium that could be lifted only after an environmental study; a lesser 56% of whites shared that view. In the Central Valley, which would experience the most job growth from a fracking boom, voters overwhelmingly supported doing more of it, 49% to 32%. An expansion was least popular in the Bay Area, where 60% oppose more fracking and only 25% support it. Los Angeles County is also heavily opposed, 45% to 33%. The geographic split echoes the traditional divide on offshore oil drilling, another measure meant to increase the domestic supply of fuel, and for the same reason: Coastal California has long been skeptical of anything perceived as threatening to the environment. The reluctance among Californians to embrace more fracking runs against a national trend of support for the drilling process, according to Drew Lieberman of Greenberg Quinlan Rosner, the Democratic half of the polling team. He said those voter concerns could leave oil companies in California vulnerable to having their plans upended if a well-organized, well-funded political campaign against the process should emerge. But the poll also suggests that voters would support a fracking expansion if they could be made to feel the process is safe — most likely through more government regulation — and would lead to lower energy prices. A majority, 56%, say they support allowing fracking if it will reduce the cost of gasoline and electricity, nine points higher than the percentage that said fracking should be used to decrease the use of other fuels, like coal. Given the choice of a fracking ban, more regulation of fracking or continuing the status quo, the largest group of voters, 41%, favored more regulation of the process. Less than one in five voters felt that no additional regulations were required.”” (Los Angeles Times)

Shale, refinery needs make sweet crude less prized - LONDON — In future, light low-sulphur crudes will command a much smaller premium over heavy sour grades, as booming shale production in the United States and growing demand from Asian refineries upend traditional pricing relationships in the physical oil market. Journalists and analysts have traditionally characterised light sweet crudes as “high quality” and heavy sour ones as “low quality,” with light crudes more scarce and valuable than their heavy sour counterparts. That simple characterisation no longer holds true. The marginal barrel supplied to the market comes from North American shale plays and is light and sweet, while the marginal barrel demanded by refiners comes from the new complex mega refineries in Asia, equipped with crackers, cokers and desulphurisation equipment, and is much heavier and sourer. The result is a growing mismatch between the crude slate on offer from oil producers and that demanded by refiners. Conventional premiums for light sweet crudes were the result of specific circumstances: (1) strong demand for gasoline rather than diesel; (2) limited refinery capacity to process heavier molecules; (3) limited capacity to strip sulphur from feedstock; and (4) limited supplies of light sweet crudes compared with abundant supplies of heavier and more sulphurous oils. Each of these factors has now shifted substantially. It was only a matter of time before the shift in crude supplies and refinery demand transformed the traditional pricing relationships between different crude grades. The market for light sweet oils is now increasingly oversupplied, while heavy sour grades are seeing stronger demand. Conventional premiums for light sweet crudes have eroded, and in some cases light crudes are even trading at a discount. The price adjustment will continue until it makes sense for Asia’s complex refineries to start buying light sweet crudes and forego the technological advantage of utilising their cokers and desulphurisation units fully… Simple refineries preferred low sulphur (sweet) crudes, but as more refineries have invested in hydrotreating units that strip sulphur from feedstock by reacting it with hydrogen, the advantage for sweet crudes has reduced and the price premium that they command has fallen. Light sweet oils may always have a small advantage over heavy sour ones because conversion and desulphurisation require extra energy and add to refineries’ operating costs, but the margin is likely to be much smaller than before.”” (Financial Post)

Drilling the Utica Shale: Boom or bust? – “Staggering potential or shattering disappointment. Depending on who’s talking, last year’s Utica Shale oil and natural gas production was one or the other, or somewhere in between. The numbers released by the Ohio Department of Natural Resources last month are subject to debate, and the perception that wins out could influence what happens next. The state reported that 87 Utica wells produced more than 600,000 barrels of oil and 12.8 billion cubic feet of natural gas during 2012. Put another way, less than one percent of the producing wells in Ohio accounted for 12 percent of the oil and 16 percent of the gas. Those numbers come with several caveats. The oil flowing from the wells is about 85 percent of the value of standard crude, and the state didn’t differentiate between “dry gas” — the methane burned as fuel — and the more sought after “wet gas” that contains natural gas liquids such as propane, butane and ethane. Also, none of the wells were in production for a full year, as companies have kept the taps closed until pipelines and processing plants are available to handle the flow. Still, ODNR estimates the state will have 362 Utica Shale wells producing by the end of this year, and could top 1,000 wells by 2015. “We believe the Utica Shale play in Ohio is the real deal, and that it has already brought unprecedented growth in oil and gas production, and it’s going to produce staggering amounts of oil and gas in the future,” ODNR Director James Zehringer said after the report’s release… Even if the oil-bearing acreage west of Interstate 77 isn’t developed in the next five or 10 years, or ever, the Utica Shale already has created jobs, wealth and business opportunities and spurred the investment of billions of dollars in infrastructure, he said. “None of that was occurring a few years ago,” Kaminski [Canton Regional Chamber of Commerce’s director of energy and public affairs] said. “We think that’s tremendous.”… Tom Stewart doesn’t buy Zehringer’s statement that the 2012 numbers show a “staggering” amount of oil and gas in the Utica Shale. “I think that’s hyperbole,” said Stewart, executive vice president of the Ohio Oil and Gas Association. He calls the results “moderate.” “Perhaps some day there will be staggering amounts of oil and gas, but it’s not happening right now,” Stewart said. Not only did the report examine just 87 wells, it didn’t include the rate at which those wells will decline over time, or the cost to replace production — two vital pieces of information for drillers and investors. “You just can’t look at a well and say, ‘Shazam! Look at that great well,’” Stewart said.”” (New Philadelphia Times Reporter)

California's Anti-Fracking Ideologues Look A Gift Horse In The Mouth – “The world knows of California’s unemployment, spending, and budget problems.  With over $1 trillion in public debt, the Golden State’s fiscal situation is surely challenging.  Amazingly, a giant gift was laid at California’s doorstep in the form of abundant oil fields accessible by fracking.  Rather than promote the budget-soothing jobs and the tax revenue that comes with it, California Democrats have lined up to stop it. California is the land of misplaced priorities, highest-in-the-nation taxes and even higher regulations.  Recently, the California Public Policy Center, relying primarily on official reports prepared by the State Controller and State Treasurer, determined that “the outstanding debt owed by California’s state and local governments, using responsible actuarial assumptions, is almost certainly in excess of $1.0 trillion.” That $1 trillion in debt compares to a state economy of approximately $2 trillion and a state budget of about $100 billion.  Much of that debt is unfunded pension and medical liabilities for government employees – a problem that is getting worse, not better. To make matters even worse, California’s reported unemployment remains among the highest in the nation. It is important to remember that the unemployed pay fewer taxes and use more government benefits.  The best way to reverse that dynamic is with a growing economy. So what is California to do?  Apparently kick a gift horse in the mouth. According to a state report, California Monterey Shale formation may exceed 15 billion barrels of oil, which is the equivalent of five years of U.S. oil imports.  More importantly, at least to California, nearly three million jobs could be created in the next seven years and nearly $25 billion in state and local tax revenue could be realized IF – if the state permitted access to the oil through fracking. (Hydraulic fracturing, or “fracking,” is the process of drilling and injecting fluid into the ground at a high pressure to fracture shale rocks, releasing natural gas inside.) Of course, this is not just an academic discussion.  The state with the lowest unemployment in the country at 3.3%, North Dakota, faced this issue already.  According to the Bloomberg Economic Evaluation of States data, “North Dakota’s economy has outpaced every state since the recession ended in 2009, with the fastest growth in personal income, tax revenue, jobs and home prices.” California Democrats appear uninterested in such numbers.  Instead, they have lined up to prevent access to the Monterey oil and the jobs and tax revenue that goes with it.  No less than 10 anti-fracking bills are making their way through the legislature.  Most are designed to slow down, if not ultimately stop, the oil extraction by fracking. A cottage industry has emerged, manned by environmentalists, over the alleged horrid dangers of fracking, which now rests on top of the phalanx of global warming alarmists in California.  Simply Google “California” and “fracking” and you can get a glimpse.  Of course, facts are an optional accessory for the environmentalists and their Democrats in this fight.  Evidence of ground water contamination from fracking is as scant as rationality in the California State Capitol, which continues to push budget-busting high-speed rail in the face of zero rider demand…”” (Forbes)

Illinois must adopt 'fracking' rules, hire experts – “CHICAGO (AP) — High-volume oil and gas extraction probably won't begin in earnest in Illinois until next year because the state first must adopt rules and hire dozens of new employees to help regulate an industry eagerly pushing into new territory. Gov. Pat Quinn promised a quick signature on a measure the Legislature approved last week that would impose the nation's strictest regulations on hydraulic fracturing, or "fracking," which he says would create thousands of sorely needed jobs in southern Illinois. But it will take three to six months for the Illinois Department of Natural Resources to adopt rules to mirror the Legislature's regulations. The agency must hire more than 50 engineers, inspectors, lawyers and other experts for its regulatory program. And companies that want to drill first must register and qualify to frack in the state before applying for a permit. All that will take many months and perhaps as long as a year, industry and environmental groups said. "I think that fracking should not move forward in Illinois until the whole process ... is completed," said Henry Henderson, director of the Natural Resource Defense Council's Midwest office. His group helped negotiate the regulations, which stemmed from an unusual collaboration between lawmakers, regulators, industry and environmental groups. "There is a significantly serious process before us to ensure the technology to enforce the rules is in place," he said. DNR Director Marc Miller said the agency must spend about $5 million to get the program off the ground. The Legislature included $6.1 million in the state budget for the next fiscal year, which begins July 1, but Miller said the agency has enough financial flexibility to begin hiring right away. Drillers will pay an $11,000 fee to the DNR for each permit, but it will be a while before the agency collects enough money to make the program self-sufficient, Miller said. "In order to do this well, we will need to have these people on board to carry out," the regulations, he said. "We will need many more people than in the past to do the work and do it well." That's partly because energy companies, which already have leased hundreds of thousands of acres, are eager to begin fracking, but also because the legislation requires that the DNR issue a permit within 60 days of receiving an application… Until now, Illinois had no regulations specifically aimed at high-volume fracking. Companies didn't even have to say what method they used to extract oil and gas, so the DNR had no way of knowing whether it had begun or how extensively. State records indicate that at least one company has begun high-volume fracking. The regulatory bill creates a template for the DNR's rules. Among its provisions: Oil and gas companies must test water before, during and after drilling, and are held liable if contamination is found after drilling begins. It also requires companies to tell the DNR what chemicals they use and control air pollution, provides for public hearings and allows residents to sue if they believed they had been harmed. Miller said the DNR will adopt rules as quickly and thoroughly as possible but acknowledged "it will take time." Illinois Manufacturers Association Vice President Mark Denzler said it likely will be nine months to a year before fracking can begin. Meanwhile, companies still are leasing land and getting other matters in order so they can apply for permits and begin drilling as soon as possible, he said. "You're not going to have a glut or a rush on the first day," Denzler said. Nonetheless, some drillers already are asking how soon they might be able to apply for permits, said Brad Richards, executive vice president of the Illinois Oil and Gas Association. He said he has "cautioned people not to expect (fracking) to emerge overnight" and he would expect perhaps dozens — not hundreds — of new wells next year. "I think it will take a while for this to ramp up," he said. "Companies are going to be very deliberate" about engineering and geological studies, meaning that "full-scale development is still probably a few years away." The industry is eyeing the New Albany Shale formation in southern Illinois, where they hope that significant oil deposits lie 5,000 feet or more below the surface.”” (AP)