Warburg Pincus LLC is leading a group of investors to fund up to $1.125 billion in Venari Resources LLC, a new Gulf of Mexico (GOM) deepwater explorer helmed by former Nexen Inc. executive Brian Reinsborough. The Dallas-based explorer also would be financed by Kelso & Co., The Jordan Co., and Asian investment giant Temasek Holdings. Venari, which is Latin for "hunt," plans to target subsalt reservoirs, which are pockets of oil and natural gas that had been obscured by salt layers until advances were made in seismic imaging technology. Initial investments of 10-25% are to be made in GOM exploration blocks, with Venari providing technological expertise to majority lease owners.
TransCanada's ANR Pipeline Co. is holding a nonbinding open season for potential expansion of receipt capacity on its Lebanon Lateral in eastern Indiana and western Ohio. The project would carry growing production from the Marcellus and Utica shales. "The project is intended to complement recent proposals [such as those by Dominion Transmission and Texas Eastern Transmission to move natural gas from the Marcellus and Utica shale production areas to Lebanon, OH," TransCanada said. "From Lebanon, ANR can provide transportation north to markets in Michigan, Indiana, Illinois and Wisconsin or to Gulf Coast markets and delivery points as far south as Patterson, LA." The offering indicates an initial expansion of receipt capacity of 350,000 Dth/d with the possibility of future expansion up to 620,000 Dth/d. For information, contact Andruccioli at (832) 320-5451 or Michael Wells at (832) 320-5436.
Cheap natural gas might be weighing on producers but it's been a boon for consumers and economic development, according to a report by the American Gas Association (AGA), which indicates that consumers have saved $250 billion over the last three years. "Identifying Key Economic Impacts of Recent Increases in U.S. Natural Gas Production" credits shale gas production in the United States for lower commodity prices that have translated into "huge savings" for residential and commercial customers. A typical residential customer saved more than $175 during 2010 alone, AGA said. The average commercial customer saved more than $1,100 on its 2010 annual bill. The report also details the employment impacts associated with shale basin development. Job creation directly tied to energy extraction and delivery accounted for about 150,000 new jobs in 2011, or about 9% of all new U.S. jobs that year.
Several municipalities in the Southern Tier of New York have adopted nonbinding resolutions that would allow high-volume hydraulic fracturing (fracking) if the practice is eventually allowed by state regulators. Dan Fitzsimmons, president of the Joint Landowners Coalition of New York Inc. (JLCNY), said about 19 municipalities have passed nonbinding resolutions that in effect support development of the Marcellus and Utica shales. Neil Vitale, a member of the Steuben County Landowners Coalition, a group aligned with the JLCNY, said five municipalities in Steuben County -- the villages of Addison and Painted Post, and the towns of Bath, Jasper and Woodhull -- have adopted resolutions that support fracking.
North Carolina Gov. Bev Perdue has issued an executive order calling on the Department of Commerce's Division of Energy and the Department of Environment and Natural Resources to form a work group to study hydraulic fracturing (fracking) and issue initial recommendations in six months. Meanwhile, a series of legislative proposals submitted by state Sen. Bob Rucho (R-Mecklenburg), which include creating a nine-member Oil and Gas Board and a moratorium on fracking until mid-2014, passed the muster of the state's Legislative Research Commission and have since been written into a SB 820, also known as the Clean Energy and Economic Security Act. The House version, HB 1054, was filed by state Rep. Mitch Gillespie (R-McDowell).
The Ohio House of Representatives voted 73-19 in favor of Substitute SB 315, a lengthy energy bill that sets new rules for hydraulic fracturing (fracking) in the state. Among the provisions, operators will be required to identify every water source they could potentially use during their operations, and must disclose each additive used in fracking chemicals, but are not required to disclose precise formulations. In the event of an emergency, medical personnel could receive the formulation information if necessary for treatment but would be required to keep the information confidential. The bill is to be sent to Gov. John Kasich for his signature.
A study of data compiled by the Pennsylvania Department of Environmental Protection that showed that the percentage of wells with pollution events has declined, thanks at least in part to the state's regulation of hydraulic fracturing (fracking), was not "peer-reviewed," as it was originally described, according to an editor's note issued since the study's release. "This description may have given readers an incorrect impression," according to the note, which was added to a press release about the fracking study that was issued by researchers at the University at Buffalo's (UB) Shale Resources and Society Institute (see NGI, May 21). "The story has been edited to more accurately describe the process by which the report's authors gathered comments before finalizing their report." Drafts of the report "were reviewed by several individuals with expertise in related areas [including Andrew Hunter, a lecturer at Cornell University's School of Chemical and Biomolecular Engineering; Brigham McCown, a former U.S. Department of Transportation executive and consultant with United Transportation Advisors; George Rusk, a regulatory specialist at Ecology and Environment Inc.; Scott Anderson, senior policy adviser with the Environmental Defense Fund's energy program; and Robert Jacobi, co-director of the Shale Resources and Society Institute and UB professor of geology, who provided comments to the authors," according to the editor's note.
New Mexico regulators have completed initial hearings based on requests from the state's Independent Petroleum Association (IPA) and Oil and Gas Association (OGA), which are seeking administrative changes on rules for handling natural gas and oil drilling production waste, otherwise known as pit rules. IPA and OGA representatives told the state Oil Conservation Commission that their costs are rising to comply with the rules, and ranchers expressed environmental concerns. Last fall the industry groups took steps aimed at revising regulations established in 2008 to handle the waste (see NGI, Oct. 10, 2011). Hearings are to continue June 20 in Santa Fe, NM.
Railroad Commission of Texas (RRC) Commissioner David Porter said the state has to mitigate the impact of numerous gas flares as Texas develops oil and gas reserves from shale plays. Porter, who also is founder and chairman of the Eagle Ford Task Force, said he has studied solutions to reduce flaring and venting associated with production, which has increased in the state and elsewhere. His initiative includes ensuring operators comply with RRC flaring and venting rules; amending rules to comport with increased shale production, similar to amended water recycling rules; reviewing flaring technologies to encourage the use of efficient, energy-saving flares; working with other state regulators to streamline emission rules, monitoring and reporting; working with Texas electrical energy regulators to identify opportunities for using excess gas as a source of fuel for power generation; and studying a pilot program to use gas as a source of power for on-lease operations instead of flaring the gas.
Members of the Pennsylvania General Assembly have begun considering House Bill 2399, which among other things would provide $25 million each fiscal year to the Pennsylvania Department of Community and Economic Development (DCED) for the Marcellus Shale Job Creation Tax Credit. The bill, which would amend Titles 58 (Oil and Gas) and 72 (Taxation and Fiscal Affairs) of the Pennsylvania Consolidated Statutes, was referred to the House Committee on Environmental Resources and Energy. In addition to the tax credit, the legislation provides for distribution of the unconventional gas well fee imposed under Act 13 and imposes additional duties on the DCED. Under the job creation tax credit portion of the legislation, companies would be eligible to receive tax credits if they demonstrate to state officials financial stability and their proposed projects' financial viability; express an intent to maintain operations in Pennsylvania for five years from the date they submit tax credit certificates; and they conform with industry laws and regulations.
Sen. Lisa Murkowski (R-AK) pitched the U.S. ambassadors of Japan and South Korea on the benefits of importing natural gas from Alaska's North Slope during a dinner at the Japanese ambassador's residence in Washington, DC. Both Ambassador Ichiro Fujisaki of Japan and Ambassador Choi Young-jin of South Korea expressed interest in a potential Alaska natural gas pipeline and liquefied natural gas (LNG) project to deliver energy to Asian markets, she said. "They recognize the ample opportunities for investment that exist in Alaska. Japan and South Korea are almost completely dependent on imports to meet their energy needs, so Alaska's vast natural gas resources represent a very real energy security benefit," Murkowski noted. As the ranking Republican on the Senate Energy and Natural Resources Committee, she has seized every opportunity to promote exports of Alaska's 35 Tcf of gas to Asian markets. Murkowski raised the issue earlier in May with Japan's Prime Minister Yoshihiko Noda and separately with members of Japan's Parliament. Japan is seeking an energy resource to replace the nuclear power generation the country shut down after last year's 9.0-magnitude earthquake, tsunami and emergency at the Fukushima Daiichi nuclear plant. South Korea is the second largest importer of LNG in the world behind Japan. South Korea relies on imports to meet nearly all of its natural gas demand, which has almost doubled over the past decade.
Louisiana oil and gas producers should get some relief from what they believe are outsized judgments granted in legacy lawsuits. HB 618, which is essentially identical to SB 443, another bill favored by the industry (see NGI, April 16), passed the state Senate unanimously and were both expected to be heard before the end of May. HB 618 allows a producer to accept liability for the cost of remediating environmental damage while not accepting liability for private claims and additional remediation. It is intended to curb legacy lawsuits for punitive damages by lawsuit-happy landowners and trial lawyers, the industry claims.
The Ben Franklin Shale Gas Innovation & Commercialization Center's (SGICC) Shale Gas Innovation Competition recently awarded top honors to two new technologies. Polymics Ltd. won for a lightweight, reusable, leak-proof mat system to contain mud and fluids during pad construction. Partnering with Polymics were Minuteman Environmental Services and Chesapeake Energy Corp. The Thomas D. Larson Pennsylvania Transportation Institute at Pennsylvania State University was awarded for a "patch box" system to retrofit diesel truck fleets to use natural gas. The Hybrid & Hydrogen Vehicle Research Lab partnered with the institute on its efforts. The competition was sponsored by the Marcellus Shale Coalition, Little Pine Resources, Chesapeake, First National Bank and Schlumberger Ltd. The 12 finalists' presentations are available online.
In about 18 months the U.S. Geological Survey (USGS) should be able to tell the energy industry, and everyone else, just how productive the Three Forks formation, which lies below the Bakken Shale, might be. Last October USGS began a two-year study of the Bakken and the Three Forks formation, which lies above it (see NGI, May 30, 2011). Six months in, much work has been done. "To date, we've looked at a large number of cores from both the Bakken and Three Forks formations, about 50 cores to date from both the USGS Core Research Center and the North Dakota Geological Survey at Grand Forks [ND]," USGS's Stephanie Gaswirth, a research geologist, told NGI last week after speaking at the 20th Williston Basin Petroleum Conference in Bismarck, ND. "One of the things that we're working on is how much Bakken oil has saturated the Three Forks and how far beyond the limits of the Bakken Shale does this Three Forks have oil in it?" Gaswirth said.
Propane player NGL Energy Partners LP has signed merger agreements with two High Sierra (HSE) entities, creating a diversified company through a cash and stock deal valued at $693 million, less assumed net debt. Under the agreement, Tulsa-based NGL Energy would exchange stock and contribute cash for equity in High Sierra Energy LP and general partner High Sierra GP LLC, both based in Denver. The deal is expected to close in June, at which time NGL Energy said it expects the equity portion to total $433 million and the cash portion about $150 million. The deal is contingent upon several factors, including the approval of HSE shareholders.
Goodrich Petroleum Corp. confirmed that a recently drilled well in the Tuscaloosa Marine Shale (TMS) of Louisiana and Mississippi had an initial production (IP) flow rate exceeding 1,000 boe/d. Encana Corp.'s Encana-Anderson 17H-1 well (in which Goodrich has a 5% working interest) in Amite County, MS, had a 72-hour IP rate of 1,082 boe/d (975 b/d of oil, 425 Mcf/d of gas) on a 15/64 choke with 2,119 psi flowing casing pressure. Canaccord Genuity Energy Research said the well could recover about 550,000 boe and expects Goodrich to run a three-rig program in the play and drill about 20 wells per year.
Recent technology advances in efficiency management, unconventional fossil fuels and clean energy "have fundamentally changed the energy game and redrawn the global energy map," according to a white paper by Joseph A. Stanislaw, an independent adviser to Deloitte LLP. Venture capitalists invested $275 million in start-ups that make software and other technologies to manage energy use in 2011, a 75% increase compared with 2010, Stanislaw said. Renewable energy is expected to be an $800 billion global market by 2015, nuclear power "is growing at a pace not seen in decades" and energy storage is poised for major technological breakthroughs, according to the report. Limiting the energy industry's growth are public concerns about environmental issues, rekindled by the Macondo blowout in the Gulf of Mexico, the Fukushima nuclear incident in Japan and the ongoing debate over hydraulic fracturing. The keys to energy success for governments will be the development of "visionary and stable" national energy policies, construction of state-of-the-art national energy infrastructure, and "deep, long-term commitments" to research and development. After that, governments need to "get out of the way and let the players in the energy game determine which technologies win and which lose."
U.S. businesses and consumers are becoming more frugal about their energy consumption, even as the economy slowly begins to recover, according to a survey issued by the Deloitte Center for Energy Solutions. Businesses are paving the way by targeting average reductions in energy consumption by nearly 25% over the upcoming three-to four-year period, while 81% of the consumers surveyed said they took extra steps to cut their electric bill over the past year and 93% said they will use the same amount of electricity or less in the future, according to the annual "reSources 2012" survey by Deloitte and strategy/marketing firm The Harrison Group, which polled more than 600 business decision-makers and more than 2,000 household decisions-makers.
Few companies have energy or water strategies, and fewer still have integrated energy-water strategies -- "a glaring omission" -- according to a white paper issued by a pair of independent advisers to Deloitte LLP. The world isn't running out of energy resources, "just the most easily accessible ones," Joseph A. Stanislaw and Will Sarni wrote in "No Water, No Energy; No Energy, No Water," which was released at the Deloitte Energy Conference in Washington, DC. At the same time, "water scarcity is becoming a significant risk." The energy industry is particularly dependent on reliable water supply -- to turn hydropower turbines, cool thermal power generation facilities, clean and process coal, and in hydraulic fracturing operations, for example. Meeting future energy and water needs "is expected to require a radical rethinking of how to use resources," Stanislaw and Sarni said. On the energy side of the equation the solution involves reducing water consumption in traditional energy production and a move toward energy sources that are inherently less water intensive, they said.
Two earthquakes that recently shook the area around the East Texas town of Timpson were unlikely to have been caused by natural gas drilling or drilling waste disposal activities, according to the Railroad Commission of Texas (RRC). Timpson residents felt a 4.3 magnitude earthquake after experiencing a 3.9 magnitude quake the week before. Elsewhere in the country, drilling waste disposal or injection wells have been blamed for seismic activity. "Commission staff have inspected commercial disposal wells within the vicinity of these minor seismic events in East Texas. No Railroad Commission rule violations were found, and the wells were operating within their permit conditions," said RRC spokesperson Ramona Nye. "With more than 30,000 injection and disposal wells, Texas has a long history of safe injection, and Railroad Commission staff has not identified a significant correlation between seismic activity and injection practices. Commission regulations require injection be confined to a permitted interval, and if faults, stratigraphy, or any other geologic phenomena are identified as a concern, they are evaluated.
Mexico's state-owned electric utility, Comision Federal de Electricidad (CFE), is reportedly seeking bids from private companies to build about 1,460 miles of natural gas pipeline in the northern part of the country. According to Bloomberg, CFE CEO Antonio Vivanco said the utility would "pay around $3 billion to expand its natural gas network in four contracts for the states of Sonora, Sinaloa and Chihuahua." Bloomberg also reported that CFE said pipeline operators already operating in the country, including Calgary-based TransCanada Corp. and France's GDF Suez SA, were among potential bidders for the project's 25-year contract. The utility said the bidding process would end in the fall, with the winning bidders announced in October.
Inspectors with the Pennsylvania Department of Environmental Protection (DEP) found methane gas in three residential water wells and two streams in Bradford County. DEP has launched an investigation to determine the source. DEP spokesman Kevin Sunday told NGI the agency was notified about methane in three private water wells, two tributaries of Towanda Creek and a wetland in Leroy Township on May 19. Sunday said Chesapeake Energy Corp. -- which has two wells on its Morse well pad about one-half mile away from the incident area -- installed the methane alarms and is providing water to all three residences. Meanwhile the DEP began taking isotopic samples from Chesapeake's wells to determine if the methane had in fact migrated from the company's two wells. Sunday said the wells have been drilled, constructed and hydraulically fractured but were not currently in production.
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