Exclusive: Investors press U.S. shale oil drillers to control flaring

Reuters) - Investors representing $500 billion in assets are pushing energy companies in the shale oil rush in North Dakota and other states to disclose the amount of natural gas they burn - a practice they see as a wasteful financial risk.

"We want to encourage companies to articulate plans for resolving this issue while shale oil production is still in its relative infancy," said Karina Litvack, the head of governance and sustainable investment at F&C Asset Management.

Litvack is one of 36 investors who sent a letter to 21 oil drillers including Continental Resources Inc (CLR.N), Exxon Mobil (XOM.N), and Chesapeake Energy Corp (CHK.N) asking them to disclose the amount of natural gas they are burning off, or flaring, at shale oil operations in North Dakota, Texas, Colorado and Ohio.

While shale oil drilling has helped reverse a decades old decline in U.S. crude output, the lightening pace of new development may also have an environmental dark side. The investors and others say emissions from flaring and venting natural gas cause air problems and increase global warming.

The investors want the companies to disclose by May 1 how much flaring they are doing and to meet with them to plan ways to tackle the problem.

The practice "poses significant risks for the companies involved, and for the industry at large, ultimately threatening the industry's license to operate," they wrote in a letter to the companies.

Energy companies flare natural gas they are unable to capture and sell as they produce shale oil which is much more valuable. The practice, which had been in decline in the traditional oil business, is now soaring at shale oil formations in North Dakota and Texas where the infrastructure is not keeping up with the boom.

Techniques including hydraulic fracturing, or fracking, have given drillers in those states access to vast new deposits of shale oil. But some states, many of which are new to drilling, do not have strong regulatory systems in place.

One third of the gas North Dakota produces is flared. The amount flared per day by last July had increased 1,200 percent since 2004, when development of the Bakken shale formation began, according to the state's government.

The investors estimate flared gas in North Dakota produced 2 million tons of carbon dioxide last year, equal to 384,000 extra cars on the road. And even with low natural gas prices, the state lost about $110 million in revenue last year from the flaring, they say.

Continental, whose CEO Harold Hamm is Republican presidential hopeful Mitt Romney's top energy advisor, Exxon, and Chesapeake would not comment on the letter.

As the shale gas fracking boom in Pennsylvania and Texas helps sink natural gas prices to 10-year lows, drillers are hesitant to invest in pipelines that would capture the gas.

"Such a short sited approach raises significant concerns," said Steven Heim, a managing director at Boston Common Asset Management and one of the investors who sent the letter.

Persuading companies to build natural gas pipelines at the Bakken formation in North Dakota is no easy task as oil output there outpaces the building of even crude pipelines and much of the petroleum has to be shipped in trucks.

But some companies have been responsible, he said. EOG Resources Inc, (EOG.N), for example, put in some pipelines before they started fracking for shale oil.

(Reporting By Timothy Gardner; Editing by Sugita Katyal)

http://www.reuters.com/article/2012/03/29/us-usa-fracking-investors-idUSBRE82S03120120329

Western Pennsylvania municipalities file suit against state over new gas laws

Seven municipalities in three counties are suing the state and several state agencies in the first challenge to new oil and gas laws, according to a filing this afternoon in Commonwealth Court in Harrisburg.

South Fayette, Peters, Cecil, Mt. Pleasant and Robinson, Washington County, are joined by two municipalities from Bucks County in challenging the state's new restrictions on local land-use laws for drilling.

The municipalities — mostly growing suburbs — want to retain their rights to say where drilling can happen in their towns and under what circumstances, powers affirmed by the courts before state lawmakers voted in February to restrict those powers.

State lawmakers do not have the right to supersede the state's Municipal Planning Code, the state constitution's tool for authorizing local property rules, they claim in the suit. Several legal experts have been skeptical of that claim and the chance the suit has at overturning the new laws.

"Act 13's broad brush approach and failure to account for the health, safety, and welfare of citizens, the value of properties, adequate open spaces, traffic, congestion, the preservation of the character of residential neighborhoods and beneficial and compatible land uses, results in an improper use of the Commonwealth's police power and is therefore unconstitutional," the lawsuit states.

"By crafting a single set of statewide zoning rules applicable to oil and gas drilling throughout the Commonwealth, the Pennsylvania General Assembly provided much sought-after predictability for the oil and gas development industry.

"However, it did so at the expense of the predictability afforded to Petitioners and the citizens of Pennsylvania whose health, safety and welfare, community development objectives, zoning districts and concerns regarding property values were pushed aside to elevate the interests of out-of-state oil and gas companies and the owners of hydrocarbons underlying each property, who are frequently not the surface owners," according to the lawsuit, a copy of which the Tribune-Review obtained from lawyers in the case.

http://www.pittsburghlive.com/x/pittsburghtrib/news/breaking/s_788949.html

Explosion rocks natural gas compressor station

SPRINGVILLE TWP. - An explosion at a natural gas compressor station in Susquehanna County on Thursday morning blew a hole in the roof of the complex holding the engines, shaking homes as far as a half-mile away and drawing emergency responders from nearby counties.

The 11 a.m. blast at the Lathrop compressor station off Route 29 sent black and gray clouds billowing from the building for several hours, but the damage was contained to the site and no one was injured, said a spokeswoman for Williams Partners LP, which owns the Lathrop station.

Automated emergency shutdown procedures stopped gas from entering or leaving the compressors, and Williams will do a full investigation of the cause and damage as soon as it is safe to go back into the building, Williams spokeswoman Helen Humphreys said.

"The emergency shutdown equipment did work properly to isolate and minimize the incident," she said. "Emergency procedures were immediately activated. That included notifying local authorities and first responders, and evacuating all personnel."

The Lathrop station pressurizes and dehydrates natural gas from Marcellus Shale wells in the county for transport through interstate pipelines, including the Tennessee and Transco, which bring the gas to market. The station was sold to Williams by Cabot Oil and Gas Corp. as part of a deal announced in 2010 that also included a second compressor station and 75 miles of the natural gas drilling company's gathering pipelines.

Cabot spokesman George Stark said the company was working at its well sites Thursday to make sure they were not sending gas to the Lathrop station. He was unable to provide an estimate of how many wells were influenced by the interruption.

"We're working on rerouting the gas to other, operating compressor stations," he said. "We've got multiple ways we flow our gas."

In a press release Thursday, Cabot referred to the incident as a "flash fire, which extinguished itself immediately" and said it was moving approximately 365 million cubic feet of gas per day through the station before it was shut down.

"The investigation has just begun as to equipment damage, if any, the length of disruption or potential impact," Cabot CEO Dan O. Dinges said in the statement.

Colleen Connolly, a spokeswoman for the Department of Environmental Protection, said regulators were alerted to the explosion at around 11:30 a.m., and inspectors spent the afternoon monitoring air quality around the site after gas escaped from the station.

"The natural gas release valve was quickly shut off," she said. "So far, the levels are coming back acceptable, and there is no danger to the public."

The DEP has permitted seven compressor engines for the site, although it was unclear Thursday how many were running at the time of the fire.

"We're going to begin a full-scale investigation into how this happened," she said, "what was going on up there and the situation with the permits - how many compressors were operating up there and how many they were allowed to operate."

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Fracking opponents push for protection

Auburn residents Linda Zmek and Traci Fee said it's time to institute protective measures against gas- and oil-well drilling in the township.

They said they are particularly concerned with drilling into deep shale deposits, where hydraulic fracturing, with water under pressure, is used to create fractures in the rock to release oil and gas deposits.

More companies are drilling down and then horizontally to reach shale deposits, they said, and there are concerns that ground water will be contaminated in the process.

Mrs. Zmek and Ms. Fee are members of the Network for Oil and Gas Accountability and Protection.

Last week, they asked Auburn Trustees to consider a resolution not to allow hydraulic fracturing, or "fracking," in Auburn.

Mrs. Zmek said they hope Auburn will write a resolution opposing fracturing in drilling. "It would be on our books," she said.

Burton Village has written a moratorium on fracking, she said.

"When you inject in the ground, it has to come up," Mrs. Zmek said.

"The gas and oil companies are not keeping the gas locally," she added. They are shipping it overseas. So why should we allow it?

"Foreign-owned companies are taking our minerals and leaving the earth barren in Ohio with ugly wells, with the good possibility of destroying our aquifer," she said.

Livestock in the West has been damaged, and water coming from taps has caught fire, Mrs. Zmek said. "It's not something we're making up or over-reacting to."

Drillers are pumping millions of gallons of water and chemicals into the ground which is deadly to everyone's health, Mrs. Zmek said. "The water has to come up somewhere, and when it does, it runs into the streams and lakes and water reservoirs like La Due. And it goes into Lake Erie, which is a source of water for Cleveland," she said.

"They go through deep Marcellus and Utica shale and bore horizontally," Ms. Zmek said. "They could end up two miles away under someone else's property, and million of gallons of water are injected with chemicals. It's a danger to do that. It's not safe. I don't care what they say. They are endangering all of us by even wanting to drill."

The drilling companies force people into agreeing to mandatory pooling, when property owners join to provide the required acreage for a well, Mrs. Zmek said. "They promise you are going to get rich." Then they take whatever gas they can once the lease is signed, she said.

"What would it hurt to place a moratorium on drilling by the township?" Mrs. Zmek said. "If residents know of the pros and cons, no prudent person would want this. I want water to be drinkable for my great-grandchildren," she said.

"We're all doing this on our own money. We don't have money, but the oil and gas companies do," she said.

Mrs. Fee said, "This is horizontal, large-scale drilling, which is new to us. It's the large-scale fracking that we're concerned with. It's a mix of water and chemicals. There's a lot of concern for the air, water and property values."

Protective measures are needed, she said. "We're willing to work with Township Trustees to do something that protects our properties. We're offering to help on this," she said.

"Fracking is a threat to the water aquifer. We're on well water, and, if our water is affected, our homes are worthless," Ms. Fee said.

She also noted that property owners who sign leases for drilling could be in violation of their mortgage agreements.

The bigger concerns involve health, water, air and property values, Ms. Fee said.

"It is a complex issue," she said. "We want to continue to bring awareness to people," Ms. Fee said. "People should understand the magnitude of the risk. People really have to ask questions about the kind of wells being put in."

http://www.chagrinvalleytimes.com/NC/0/4099.html

Wyoming: Environmentalists sue over fracking fluid

Environmentalists are suing the Wyoming Oil and Gas Conservation Commission, saying the regulatory agency hasn't done enough to justify honoring requests by companies to keep the public from reviewing ingredients in hydraulic fracturing fluids.

The groups Powder River Basin Resource Council, Wyoming Outdoor Council, Earthworks and OMB Watch sued in Natrona County District Court on Monday. They allege the commission denied their state open records requests to review fracking fluid ingredients.

Hydraulic fracturing involves pumping water, sand and chemicals into oil and gas wells to crack open fissures. Wyoming has required oilfield service companies to disclose to state officials the ingredients in their fracking fluids since 2010.

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Mohican Advocates oppose fracking

MANSFIELD -- The Mohican State Park, Malabar Farm State Park, Mohican Memorial State Forest and Pleasant Hill Lake continue to be threatened with drilling for oil, fracking and commercial logging operations.

The Ohio State Legislature voted in 2011 to make it possible for the state to lease out the state parks and forests for such operations.

"We think that was a terrible mistake and we're going to try to get them to reverse themselves," Eric Miller, a member of the Mohican Advocates, a grassroots group of volunteers working to preserve the state parks, said Saturday at Gorman Nature Center.

About 100 people attended the rally.

Miller said the ''terrible mistake'' is that Ohio has relatively few state parks and they play an important role in the quality of peoples' lives.

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Fracking Controversy Hits Medina County Homes

GRANGER TWP., Ohio — Mark Mangan held a metering device near his backyard well and listened to an alarm go off.

It registered one hundred percent “LEL,” or lower explosive level.

“That means, if we light a match right now,” Mangan said, “it’ll go boom.”

Mark and his wife, Sandy, have no idea how big or small such a possible explosion may be.

But they blame the drilling of two nearby oil and gas wells a few years ago.

“It’s a beautiful spot,” Mark said of his rural home, “but now, I just want to get the hell out of there.”

The two wells in question have since been “fracked” – that is, highly-pressurized chemicals have been injected into the ground to help with the recovery process.

But the Mangans blame the initial drilling for their problems, and say they quickly contacted the Ohio Department of Natural Resources (ODNR) about the issue.

“We thought they were going to be an advocate for the people,” Sandy Mangan said.

ODNR declined to do an on-camera interview, but said in a statement that it had conducted “extensive testing” and has “conclusively determined” that the Mangans’ water problems are “not related to those (oil and gas) wells.”

Sources tell the Fox 8 I-Team that the Ohio Inspector General is looking into the issue.

Officially, Deputy Inspector General Carl Enslen said the office will neither confirm nor deny the existence of any inquiry.

In a report, ODNR indicated that a “drought” may have been a factor.

But a Cleveland State University expert, Dr. Philip DeGroot, said a drought would not cause the sudden drop in water pressure that the Mangans reported that they experienced.

Dr. DeGroot, who was hired by the Mangans and one other family to do a preliminary analysis, said such a drop is normally caused by a more traumatic event such as an earthquake.

“You could cause fracturing where fractures didn’t exist, so something like (an earthquake), something that would be a high-pressure underground activity.”

The Mangans said it wasn’t an earthquake, but oil drilling that caused the problem.

But, in a report, ODNR said it found no evidence of the chemicals used in oil drilling in the drinking well at the Mangans’ home.

And the operator of the oil and gas wells said the Mangans were having water issues before the drilling began.

The Mangans vehemently deny that, and say they don’t know what the future holds.

“We have no idea what we’ve been exposed to,” Mark said.

And they have no idea how much danger may be still lurking in their well.

http://fox8.com/2012/03/26/i-team-fracking-controversy-hits-medina-county-homes/