Chesapeake Sells $1B in Shale Assets to Exco – “Chesapeake Energy (CHK) said Wednesday it agreed to sell some assets in the Northern Eagle Ford Shale and Haynesville Shale to an Exco Resources (XCO) unit. Oklahoma City-based Chesapeake, the nation’s second-largest gas producer behind Exxon Mobil (XOM), said the deal is valued at around $1 billion and brings its year-to-date asset sales to about $3.6 billion. Chesapeake has said it was looking to sell between $4 billion and $7 billion in assets this year to fill the gap between its cash flow and planned spending. The company has long-term debt of $13.4 billion and a $3.5 billion funding gap this year. On Wednesday, Chief Executive Doug Lawler said the latest deal will allow the company to fully find its 2013 capital spending budget. “Additional asset sales contemplated for later this year may reduce long-term debt and further enhance our financial liquidity,” he said in a statement. Exco will receive 55,000 net acres in the Northern Eagle Ford shale, including 120 producing wells in Texas. Those wells averaged about 6,100 barrels of oil equivalent in May. The company will also acquire Chesapeake’s interests in about 9,600 net acres in the Haynesville shale, which spans Louisiana, Texas and Arkansas. The Haynesville assets, which include 11 units operated by Chesapeake and 42 units operated by Exco, reported average daily production of about 114 million cubic feet of natural gas equivalent in May. Chesapeake noted that the impact of its asset sales on net production and capital expenditures was reflected in its May 1 outlook. Shares of Chesapeake were up three cents at $20.95 in pre-market trading. Exco shares closed Tuesday at $7.44 and were inactive pre-market.”” (Fox Business)
The Rise Of Saudi Texas: Shale And Farewell To OPEC – “ Production data for April show how fracking has shattered not only the shale rock in formations like Texas' Eagle Ford and Permian Basin but also the myths of "peak oil" and petroleum as an energy source of the past. As Mark Perry notes on his Carpe Diem blog, Texas produced an average of 2.45 million barrels a day (bpd) of crude oil in April, according to the Energy Information Administration (EIA). That's the highest average daily output for Texas in any month since April 1985 — 28 years ago. In only 2-1/2 years, the Lone Star State has doubled its crude output, making it what Perry dubs Saudi Texas and reversing a 23-year decline that fueled speculation that the maximum rate of petroleum extraction has been, or will soon be, reached. As of February, the most recent month for which international oil production data are available, Texas would be the 12th largest oil producer in the world if it were a separate country, only slightly behind Kuwait and Venezuela. This is due to an oil boom that's added the equivalent of the Bakken formation in North Dakota to the state's output in just the past 16 months. At the current pace of output gains, Texas' production will likely surpass 3 million bpd by year-end, pulling it ahead of Venezuela, Kuwait, Mexico and Iraq to become the equivalent of the ninth largest oil-production "nation" in the world. The Eagle Ford shale formation, a 400-mile-long, 50-mile-wide, crescent-shaped field in the south central part of the state, is still brimming with crude. Its production in March rose 77% from a year earlier to 529,900 bpd, the Texas Railroad Commission reported. This of course has contributed to a job boom, just as in North Dakota. Over the 12 months ended in May, Texas payrolls swelled by 325,000 positions, equivalent to a 3% annual increase. Every business day over the past year, almost 1,500 new jobs were created in the Lone Star State. A report by the University of Texas, San Antonio, showed that in 2011 alone Eagle Ford supported 38,000 full-time jobs, generated $10.8 billion in gross regional product and poured millions into state and local tax coffers. The shale oil and gas boom unleashed by fracking — short for hydraulic fracturing — has saved the Obama economy from complete collapse. "Abundant low-cost energy is stimulating a revival of manufacturing in the U.S. as well as increased American economic competitiveness," countering what otherwise is "a time of stubbornly high unemployment," notes energy expert Daniel Yergin.”” (Investor’s Business Daily)
Guess Who's Been Investing in the U.S. Shale Boom? – “In the U.S., the widespread application of advanced drilling technologies such as horizontal drilling and hydraulic fracturing has sparked a domestic oil and gas boom whose reverberations are being felt the world over. But it's not just U.S. energy companies that are investing heavily in the boom. Foreign firms are also keen to get a piece of the action. Let's take a closer look at some of the biggest foreign players investing in U.S. shale development. Chinese interest in U.S. shale - According to the U.S. Energy Information Administration (EIA), approximately 20% of the $133.7 billion invested in U.S. shale oil and gas development from 2008 to 2012 came from outside the country's borders. Of these foreign investors, China has been the most generous. Since 2008, Chinese firms have invested some $5.5 billion in U.S. shale oil and gas projects through joint-venture agreements with U.S. companies, including Chesapeake Energy (NYSE: CHK ) andDevon Energy (NYSE: DVN ) . Many of these agreements feature a commonly used arrangement known as a drilling carry, whereby the foreign firm purchases a stake in the U.S. host company's acreage by providing an upfront cash payment and agreeing to cover a portion of the drilling cost. For instance, Chesapeake's 2010 agreement with China's largest energy company, CNOOC(NYSE: CEO ) , allowed CNOOC to purchase one-third undivided interest in a portion of Chesapeake's Eagle Ford assets in exchange for financing 75% of Chesapeake's drilling and completion expenses. Similarly, Devon Energy's (NYSE: DVN ) joint-venture transaction last year with Sinopec(NYSE: SHI ) , another large Chinese oil company, allowed Sinopec to buy a third of Devon's equity in five shale gas fields, including acreage in the Niobrara, Utica, and Tuscaloosa Marine shales, in exchange for paying $1.6 billion to cover drilling expenses in those fields. Chinese companies' main incentive in pursuing these joint-venture deals is not simply to acquire U.S. oil and gas assets for diversification purposes, but rather to gain the necessary expertise so that they can also exploit shale reserves in their native country. Other foreign investors -
In addition to Chinese companies, a host of international players are investing in the U.S. shale boom. According to EIA data, Japanese firms plowed $5.3 billion into U.S. shale oil and gas assets, while Indian companies spent $3.55 billion, and Korean firms invested $1.55 billion. Meanwhile, U.K. companies invested $3.95 billion, French firms $4.55 billion, and Norwegian companies $3.38 billion. Clearly, U.S.-based companies aren't the only ones enthusiastic about U.S. oil and gas production.”” (Motley Fool)
Shale explorer San Leon signs farm-out deal; shares rise – “(Reuters) - Poland-focused shale explorer San Leon Energy Plc said it would farm out its oilfield in the Baltic basin in Poland to privately owned Wisent Oil and Gas, sending its shares up by as much as 18.5 percent. The company said it signed a letter of intent with Wisent Oil and Gas to fund a three-stage vertical fracture of Rogity-1 well in Braniewo S concession in the Baltic basin. San Leon said Wisent would have the option to fully fund the drill and testing of a horizontal well to earn a 45 percent interest in the concession. San Leon would remain the operator following the farm out. "Its a major step for the company to get a farm-in partner but the commercialisation of shale production in northern Poland is still in early days," Macquarie Research analyst Mark Wilson told Reuters. Shares in the company were up 14.5 percent at 5.75 pence at 0833 GMT on Wednesday on the London Stock Exchange.” (Reuters)
US Schlumberger opens reservoir lab in China to support shale development – “US oil services company Schlumberger on Wednesday announced the opening of a reservoir laboratory in China's central Sichuan province to help support expanding activity in unconventional shale development.
The company's new facility in Sichuan's capital of Chengdu offers petrophysical and geomechanical services to help customers improve hydrocarbon recovery and maximize production throughout the life of their reservoirs, it said in a statement. "This state-of-the art facility offers the most advanced equipment and services for reservoir analysis and geomechanical measurements to help our customers meet their objectives over the life of their unconventional reservoirs," said Sameh Hanna, president, Schlumberger Testing Services. The facility is close to Schlumberger's existing operations facilities in Gaoxin and Shuangliu districts in the province. Service companies such as Schlumberger are expected to play an increasingly larger role in helping develop China's unconventional gas resources. One of the major challenges of shale gas development is Chinese companies' lack of technology and drilling expertise. Foreign participants could not directly participate in China's last shale gas bid round in December, and 19 blocks were ultimately awarded to 16 domestic companies, none of which had any oil and gas experience.”” (Platts)
Sand Rush: Fracking Boom Spurs Rush on Wisconsin Silica – “They look like pyramids in a cornfield, or sea dunes mottled by the summer rain. But these stockpiles hold one of the secrets to America's energy revolution. The heaps of dozer-hauled, diesel-crushed grains are pure silica sand, and the future of fracking depends on stripping hundreds of millions of tons of it. Every day since the rush began about two years ago, thousands of laden train cars rumble out of the world's unlikeliest sand castle—Wisconsin—headed for oil and gas wells from North Dakota to Pennsylvania. (See related story: "Natural Gas Nation: EIA Sees a U.S. Future Shaped by Fracking.") Strong and ancient, the grains shimmer like gems in the warm sunlight. Branded "Northern White," this pedigree of sand boasts 99 percent quartz and a compressive strength between 6,000 and 14,000 pounds per square inch. This makes the grains ideally round and durable to prop open underground shale formations fissured by horizontal drilling and hydraulic fracturing, or fracking. (See related interactive: "Breaking Fuel From Rock.") The unique region of quartz-rich sandstone extends into southeastern Minnesota, which also has seen a surge of mining activity; but Wisconsin, in part because it has nearby rail capacity for shipping, has been the epicenter of the boom. In the fracking process, sand is suspended in a chemical slurry and pumped thousands of feet underground. The high-pressure fluid cracks open the shale rock. Sand flows into these fractures and "props" them open like trillions of tiny marbles, allowing dislodged crude oil or natural gas to seep out. Consumed by the bargeful, "proppant" sand is cheap, heavy, and essential. One fracked well in the Marcellus shale region, for example, can slurp several million pounds of it. A single fracked well can require 10,000 tons of industrial silica sand, according to Minnesota's Department of Natural Resources. Ceramic beads and other man-made alternatives exist, but they cost more to make and transport. So an estimated 30-40 million metric tons of frack sand will be mined this year. That's a double-digit increase from last year and the year before that. Although Texas and Illinois top the list of U.S. industrial sand producers, thanks to their large processing operations, most of the sand for fracking will come from the Midwest, primarily the red-hot mines of Wisconsin and Minnesota. "I've never seen anything like this, but I'm getting kind of used to it," said Thomas Dolley, a mineral commodity specialist for the U.S. Geological Survey… According to USGS, sales of frack sand increased by 77 percent between 2010 and 2011. The industry is valued at more than a billion dollars in the United States alone. A frack sand company, U.S. Silica, went public on the NYSE for the first time last year. "Some people tell me this is going to blow over," said Dolley. "But for the foreseeable future I don't see production tapering off." "It came so quickly," said Thomas Quinn, a former dairy farmer in Downing, Wisconsin. A new 400-acre frack sand facility has been proposed near his rural home. While many in his village have voiced opposition, neighboring Glenwood City could "balloon annex" the land needed to build the site. "I fell in love with this area because of the hills," said Quinn. "If this thing is approved I'll live 500 yards away from a sand stockpile." In Wisconsin—which produces no oil or natural gas—companies like Preferred Sands LLC, which has two locations near Eau Claire, tout a six-track rail network and sand reserves of up to 30 million tons. Other states mine sand, but the bluffs and ridges in Wisconsin are uniquely accessible—denuded by time, and uplifted by an arching landmass. The sandstone outcrops of prime frack interest lie in what geologists call the "driftless area": a unique bubble in Wisconsin that was spared from glaciation during the last ice age. In other words, these outcrops were never smashed and buried under glacial debris, as was the bedrock in much of the rest of the state. So they are easy to find and excavate. "The sand is so valuable because Mother Nature has done the work for us," said Dolley of the USGS… ust as communities have been divided over fracking, the sand boom has drawn battle lines all its own. "Industrial sand mining has been a solid job creator and economic contributor to Wisconsin for more than a century," said Rich Budinger, president of the Wisconsin Industrial Sand Association. "We owe our long and successful history here to a deep respect for the land, our neighbors, and our communities." Budinger cites thousands of new jobs and investments across the state. "We can operate safely and protect the environment while generating significant and very real positive economic impact," he said. The sand boom has resurrected dying rail lines. Where sand is hauled by truck, local governments have insisted companies contribute to local infrastructure so citizens aren't left with the bill for ravaged roads. But in rural and unzoned areas, oversight may be a mirage. Regulations envisioned for backyard quarries are being stretched to accommodate thousand-acre frack sand facilities. Perhaps most controversially, permits for ambient silica dust lack guidelines for the public. Residents like Quinn fear the invisible, glass-like shards that can drift from processing yards and uncovered train cars. Some experts agree. "Our short-term measurements ... of the 'fine' particulates associated with cardiovascular disease, lung disease, and lung cancer around frack sand mines and processing plants are higher than the background regional values reported" by the government, said Crispin Pierce of the University of Wisconsin-Eau Claire. Pierce said he is concerned the government does not require monitoring of fine particulates or silica "at the rapidly proliferating sand mines, truck and train transport routes, or processing plants" created by the frack sand boom. The tug of priorities is leading to controversy. Small towns and villages like Downing, Wisconsin, are facing big decisions, and neighbors are arguing. "This community is divided in ways I've never seen," said Quinn. Fresh investment and fresher salaries are winning the hearts of some locals, while others decry the out-of-town license plates and gobbling machinery. Many landowners have been grateful for the opportunity to unload unproductive acreage. Others, fearful of the dust that's being kicked up, shutter the kitchen windows when winds change. Gatherings held in school gyms debate the potential impacts on both property taxes and small-town tranquility. (See also: "Bakken Shale Oil Boom Transforms North Dakota.") "In the end, I hope we have the core strength and core values to manage the pressure and money coming from outsiders," said Quinn. In 1847, David Dale Owen, ogling the ores in "one of the richest mineral regions yet known in the world," could not have foreseen the gold blowing beneath his feet.”” (National Geographic)
EPA’s Abandoned Wyoming Fracking Study One Retreat of Many – “When the Environmental Protection Agency abruptly retreated on its multimillion-dollar investigation into water contamination in a central Wyoming natural gas field last month, it shocked environmentalists and energy industry supporters alike. In 2011, the agency had issued a blockbuster draft report saying that the controversial practice of fracking was to blame for the pollution of an aquifer deep below the town of Pavillion, Wy. – the first time such a claim had been based on a scientific analysis… The study drew heated criticism over its methodology and awaited a peer review that promised to settle the dispute. Now the EPA will instead hand the study over to the state of Wyoming, whose research will be funded by EnCana, the very drilling company whose wells may have caused the contamination. Industry advocates say the EPA’s turnabout reflects an overdue recognition that it had over-reached on fracking and that its science was critically flawed. But environmentalists see an agency that is systematically disengaging from any research that could be perceived as questioning the safety of fracking or oil drilling, even as President Obama lays out a plan to combat climate change that rests heavily on the use of natural gas. Over the past 15 months, they point out, the EPA has:
· Closed an investigation into groundwater pollution in Dimock, Pa., saying the level of contamination was below federal safety triggers.
· Abandoned its claim that a driller in Parker County, Texas, was responsible for methane gas bubbling up in residents’ faucets, even though a geologist hired by the agency confirmed this finding.
· Sharply revised downward a 2010 estimate showing that leaking gas from wells and pipelines was contributing to climate change, crediting better pollution controls by the drilling industry even as other reports indicate the leaks may be larger than previously thought.
· Failed to enforce a statutory ban on using diesel fuel in fracking.
“We’re seeing a pattern that is of great concern,” said Amy Mall, a senior policy analyst for the Natural Resources Defense Council in Washington. “They need to make sure that scientific investigations are thorough enough to ensure that the public is getting a full scientific explanation.” The EPA says that the string of decisions is not related, and the Pavillion matter will be resolved more quickly by state officials. The agency has maintained publicly that it remains committed to an ongoing national study of hydraulic fracturing, which it says will draw the definitive line on fracking’s risks to water. In private conversations, however, high-ranking agency officials acknowledge that fierce pressure from the drilling industry and its powerful allies on Capitol Hill – as well as financial constraints and a delicate policy balance sought by the White House -- is squelching their ability to scrutinize not only the effects of oil and gas drilling, but other environmental protections as well. Last year, the agency’s budget was sliced 17 percent, to below 1998 levels. Sequestration forced further cuts, making research initiatives like the one in Pavillion harder to fund. One reflection of the intense political spotlight on the agency: In May, Senate Republicans boycotted a vote on President Obama’s nominee to head the EPA, Gina McCarthy, after asking her to answer more than 1,000 questions on regulatory and policy concerns, including energy…” (ProPublica)
Josh Fox's Gasland II to expose power politics of fracking – “Pictures of flames shooting out of a tap in Josh Fox's Oscar-nominated first film about the natural gas boom helped make fracking a household word in America. Gasland Part II, scheduled to air on HBO on 8 July, aims to expose the money and political power driving the rush to gas – although it does also feature pictures of a homeowner in Texas lighting his garden hose on fire. "This isn't just about fracking at all anymore. This is about our system of government, and this is about climate change," Fox said in a telephone interview. "If what we are seeing all across America is people able to light their water on fire, why hasn't our government done anything about it, why have our regulatory agencies failed to protect us?" The answer, in brief, is the millions energy companies spent on political candidates and on lobbying Congress, Fox said. The oil and gas industry has spent $780m (£511m) on lobbying since 2008, according to theOpen Secrets website… "We are talking about 1 to 2 million wells in the United States. This is transformative for huge sections of our country. The oil and gas industry has leased a combined total land mass bigger than California and Florida combined," he said. "The industry is controlling huge sections of the US now." Or as Steven Skyler Lipski discovered in the second film after moving into his dream house in Texas, with its lavish rooms and remote-controlled waterfall: "Just because you have a nice house doesn't mean that they aren't going to drill underneath it." The film, like the original Gasland before it, follows a number of families who lost their water supply – and eventually their homes – to the gas boom. Those direct experiences of poisoned wells and other impacts from fracking are now backed by scientific findings.
Over the years, studies have found growing evidence of contaminated drinking water from leaking gas wells and disposal ponds. Diesel fumes from the truck convoys barrelling down rural roads to well pads have compromised air quality. Scientists confirmed gas industry wells had set off earthquakes from Ohio to Arkansas. Meanwhile, researchers found high releases of methane – a far more potent gas than carbon dioxide – from natural gas wells and installations, undercutting claims of a climate change benefit. Those studies and the release of the original Gasland in 2010 helped merge isolated local protests against fracking – in Wyoming, in Pennsylvania, even in the home state of modern fracking, Texas – into a national movement. Protests against fracking, fanned in part by Fox's first film, turned some of the big environmental groups off the idea that natural gas could be a "bridge fuel" to a cleaner energy future. But as Fox discovers in his second journey through America's Gasland, the rising protests and growing evidence of the risks of fracking have not yet translated into major policy shifts. Barack Obama in his speech last week on climate change continued to promote natural gas as a "bridge" fuel from coal. New York City's mayor, Michael Bloomberg, is also pushing for gas, despite his concern for climate change. Fox blames the power of the oil and gas industry. Gasland Part II goes on to trace how initial hopes of imposing rigorous safety and environmental controls on the industry were frustrated by the industry's political and financial influence. Investigations by the Environmental Protection Agency into contaminated water wells at Dimock, Pennsylvania, faded away. The EPA also dropped its plans for an independent investigation of poisoned wells in Pavilion, Wyoming. "We have seen state agencies, local agencies, even the EPA be controlled by politics, and when it becomes a matter of politics, the science just magically disappears," Fox said. "Investigations get rolled back and buried." Even the stories of poisoned water and flaring water hoses are being forced underground. Over the past few years, gas companies have bought out the properties of home owners whose water was contaminated by fracking fluids, in return for non-disclosure agreements,according to an investigation by Bloomberg news. Fox's solution? Protest – along the lines of what activists have been doing in New York State. "Why we are not seeing action is because of a system of entrenched influence that has been going on for decades," he said. "But the fracking movement has great possibilities for continuing this re-invention of democracy."” (Guardian UK)
Fracking Independence Day: Frontline Group SAFE Appeals for Support and Action – “The fracking rush in the heartland may have been unleashed by ill-conceived regulatory measures last month, but frontline organizations and citizen groups in southern Illinois are not throwing in the towel -- or even taking vacations this summer. Welcome to Fracking Independence Days. One of the most effective and outspoken citizen groups on the frontlines in the region, SAFE -- Southern Illinoisans Against Fracturing Our Environment -- has embarked on an ambitious plan to meet the frackers head on. "SAFE has a major role in not only fighting for a healthy clean environment," SAFE activist Tabitha Smith Tripp told me, "but also that of re-educating people of their basic rights and how to interact with our government at even the local level." In a long line: SAFE plans to follow up its nearly two-year volunteer grassroots campaign and post-regulatory fiasco fracking manifesto and incorporate as a 501c3 non-profit, broaden its alliances with other extraction-impacted communities, educate property owners and rural citizens on community rights, and the short and long term risk of fracking and to take the lead in monitoring water and air permits and activities, initiate legal challenges and defend its communities, Shawnee National Forests and watersheds from out-of-state fracking companies. In essence: All that's necessary to ensure fracking-free independence in southern Illinois. .. Deeply rooted residents in southern Illinois are no strangers to the recklessness and devastation of extraction industries: Absentee coal companies have left the region in ruin for decades, with over 1,300 abandoned and toxic mines, destroyed farms, forests, and hundreds of miles of now contaminated waterways; an oil rush in the 1940-50s left behind tens of thousands of abandoned toxic wells; and unchecked logging resulted in deforestation and erosion in the state's unique Shawnee National Forest. Now caught up in the exploding coal exports market on the Mississippi River, Illinois is also slated to be targeted for expanding oil pipelines. Add a fracking boom to this explosive mix. Enough, says SAFE. The days of extraction mayhem are over. For the first time in decades, with generations of experience, southern Illinois has seen an emergence of citizen groups willing to take on fracking, Big Coal and reckless logging operations, and are now calling for a new movement for a just transition to clean energy manufacturing and development, community rights and water and forest protection. I did this interview with Tabitha Smith Tripp, who has taken a leadership role in SAFE and frontline-based anti-fracking activism on a national level. Tripp also played a key role in the recent legislative battle in Illinois to pass a moratorium instead of flawed fracking regulations. Check out her testimony in front of Gov. Pat Quinn's office here…”” (Huffington Post)