Gas Dependency Looming?

Prices have dropped to what virtually everyone says are unsustainable lows since advanced technology, using horizontal drilling and hydraulic fracturing, opened up vast new resources in gas shales around the country. In less than 10 years, shales have gone from virtually nothing to about quarter of US output in 2010, according to the US Energy Information Administration.

Cal Cooper of Apache Corp. told the NARUC conference that it is "very difficult" to see gas going "above $5 anytime soon." Shale gas' sheer abundance means worry about price spikes is needless, he said.

Learning From History
piking gas prices, most recently in 2008 when gas briefly neared $14, and many utility executives remain leery of too much dependence on natural gas suppliers.

John Bear, President and CEO of the Midwest Independent System Operator (Midwest ISO), said with the short EPA compliance schedule, generators will all be turning to natural gas in the same few years, which could mean price volatility. Some analysts have already predicted price spikes in 2015-16.

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FRACKING, FAIRNESS AND THE FUTURE

Excerpts:

"In New York, a memo from the New York Department of Transportation revealed that “Pavement structural damage done by the passage of a single large truck is equivalent to that done by about 9,000 automobiles.”xi Areas with heavy drilling are expecting 1.5 million heavy truck trips annually and could see an increase in peak hour trips by 36,000 trips per hour. A similar impact can be expected in Ohio. This type of traffic—on rural roads that aren’t designed for such loads— will quickly result in expensive maintenance costs In New York, a memo from the New York Department of Transportation revealed that “Pavement structural damage done by the passage of a single large truck is equivalent to that done by about 9,000 automobiles.”xi Areas with heavy drilling are expecting 1.5 million heavy truck trips annually and could see an increase in peak hour trips by 36,000 trips per hour. A similar impact can be expected in Ohio. This type of traffic—on rural roads that aren’tdesigned for such loads— will quickly result in expensive maintenance costs."

"The increased demand for housing has driven up rent in rural areas, which, in turn, has displaced many long-time residents. Areas that saw few homeless people have experienced a sudden increase in family homelessness and in families doubling or tripling up in their living quartersThe increased demand for housing has driven up rent in rural areas, which, in turn, has displaced many long-time residents. Areas that saw few homeless people have experienced a sudden increase in family homelessness and in families doubling or tripling up in their living quarters."

"In addition to being associated with possible health consequences, hydraulic fracturing is connected to multiple environmental concerns, such as increased air pollution and a probable contamination of local water supplies."

Read more at: http://innovationohio.org/wp-content/uploads/2012/02/Fracking-Fairness-and-the-Future-Full-Report.pdf

How Shale Fracking May Hurt Your Investment

Quick Look: Companies like Continental Resources and Chesapeake Energy are two oil companies largely engaged in shale fracking, with Chesapeake forecasting more than 50% of its revenues coming from shale. Integrated oil companies that aren't completely dependent on shale will be a safer bet for investors.

http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2012/01/26/investopedia70484.DTL

Fracking gets its own "Occupy" movement

This is a story about water, the land surrounding it, and the lives it sustains. Clean water should be a right: there is no life without it. New York is what you might call a “water state.” Its rivers and their tributaries only start with the St. Lawrence, the Hudson, the Delaware, and the Susquehanna. The best known of its lakes are Great Lakes Erie and Ontario, Lake George, and the Finger Lakes. Its brooks, creeks, and trout streams are fishermen’s lore.

Far below this rippling wealth there’s a vast, rocky netherworld called the Marcellus Shale. Stretching through southern New York, Pennsylvania, Ohio, and West Virginia, the shale contains bubbles of methane, the remains of life that died 400 million years ago. Gas corporations have lusted for the methane in the Marcellus since at least 1967 when one of them plotted with the Atomic Energy Agency to explode a nuclear bomb to unleash it. That idea died, but it’s been reborn in the form of a technology invented by Halliburton Corporation: high-volume horizontal hydraulic fracturing -- “fracking” for short.

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Opponents Blast North Lima Injection Well

NORTH LIMA, Ohio -- Julia Fuhrman Davis, a resident of Beaver Township, billed the session as "North Lima Injection Well Meeting" but the gathering of some 200 township residents Tuesday night was more like a kangaroo court.

Even before Davis called the meeting to order, the list of speakers and agenda implied a presumption of guilt. The oil and gas industry -- D&L Energy Inc. in particular -- has a callous disregard for the environment and is interested only in profits, the speakers would say. 

Her agenda began (the emphases are in the original):

"The Beaver Township injection well on Route 7, named North Star Lucky #4, will soon be receiving hazardous industrial waste waterfrom PA. A by-product of Marcellus/Utica Shale gas fracking, it contains chemicals (that cause cancer, birth defects and other health problems), salt, heavy metals and radioactive materials."

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Recommend Total signs Utica shale JV with Chesapeake

Total E&P USA Inc. signed a joint venture agreement with Chesapeake Exploration LLC and affiliates of EnterVest Ltd. in which Total acquires a stake in the Utica shale in Ohio.

Terms call for Total to obtain a 25% share in the transaction signed Dec. 30 and effective as of Nov. 1, 2011. Total paid Chesapeake and EnerVest $700 million in cash.

In addition, Total agreed to pay up to $1.63 billion during 7 years in the form of a 60% carry of Chesapeake and EnerVest’s future drilling and completion expenditures.

http://www.ogj.com/articles/2012/01/total-signs-utica-shale-jv-with-chesapeake.html

America’s hidden 60 million barrel a day industry

The biggest output of the U.S. oil and gas industry is not oil or gas but dirty water.

Every day, U.S. oil and gas producers bring to the surface 60 million barrels of waste water, with a salt content up to 20 times higher than sea water and laced with hazardous chemicals.

For the most part, they dispose of it safely, as required by federal and state laws.

Most of it is re-injected into oil and gas bearing formations to maintain pressure, or into disposal formations far below the freshwater aquifers.

Safe disposal of so much hazardous water should put into perspective some of the recent concerns about water management raised by opponents of hydraulic fracturing.

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