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Oil and Gas Roundup — June 25

June 25, 2013
TOPICS: In the news
A roundup of oil and natural gas news from around the state, nation and world:

Keystone XL pipeline protesters stage largest action yet in Oklahoma

SEMINOLE — Protesters say they shut down construction of a pump station Monday near Seminole in what they are calling their biggest action yet in opposition to the Keystone XL pipeline.

Eight people locked themselves to equipment and a work trailer on the construction site east of Seminole early Monday morning, as activists across the country began a week of protests billed as “Fearless Summer.” All events are meant to protect the country from the ravages of “extreme energy,” which includes coal mining, oil and natural development and pipelines, the activists say.

A spokesman for the Great Plains Tar Sands Resistance, which organized Monday's protest, said four people who chained themselves to an excavator decided to abandon the protest for their own safety by about 9 a.m.

One of the protesters was examined at the scene before being taken to jail, while another was treated on-site for a laceration on his arm.

Organizers acknowledged Monday's protest against the Keystone XL pipeline likely was the last in Oklahoma, but the group will continue to fight against similar pipelines that carry diluted bitumen from Canada's oil sands.

Read The Oklahoman story:

USGS finds methane in Pa. water unrelated to drilling

Weeks after the release of a peer-reviewed study that found methane is “ubiquitous” in the groundwater of Susquehanna County, Pa., a new U.S. Geological Survey (USGS) review shows this phenomenon isn’t limited to just one Pennsylvania county.  In fact, the USGS examination lends further scientific credence to the fact that methane in the Commonwealth’s groundwater is a fairly widespread occurrence — even in areas without any Marcellus Shale gas wells.

The USGS study sampled 20 water wells in Sullivan County in an area that hasn’t seen any shale development. Their results were both alarming and enlightening.  For those unfamiliar, Sullivan County is due south of Bradford County, which is the most heavily drilled county that sits atop the Marcellus Shale.

Specifically, 30 percent of the samples contained detectable levels of methane, and ten percent had levels above one milligram per liter (mg/L). In fact, measurements ranged as high as 51.1 mg/L.  What’s more?  The USGS researchers also conducted isotopic testing on the samples with the highest recorded methane levels, concluding that “the isotopic ratio values fell in the range for thermogenic (natural gas) source.” Such a finding appears to contradict Duke University’s previous research on methane in Pennsylvania groundwater which surmised that methane in groundwater was attributable to Marcellus Shale development. The Duke study alleged that the thermogenic origin of the methane suggested a link to gas wells — and yet the latest USGS findings showed thermogenic methane in pre-drill testing.

The USGS analysis also found the wells registering high levels of methane also had the highest concentrations of arsenic, boron, bromide, chloride, fluoride, lithium, molybendum, and sodium.  If these contaminants sound familiar, they should.  They, in addition to thermogenic methane, have been touted by anti-fracking activists as examples of “contamination” from shale development in nearby Susquehanna and Bradford counties. Is it possible that critics of hydraulic fracturing are peddling phony science?

Read more:

The EPA plants a story

Far be it from the Environmental Protection Agency to admit it was wrong — but late last week, it subtly withdrew from a once-flashy investigation regarding whether hydraulic fracturing contaminated groundwater in the tiny town of Pavillion, Wyo. Never has backpedaling been such an effective form of transportation.

In December 2011, the EPA released a draft report of a study it conducted in Wyoming, eliciting a furor of media attention. The New York Times reported that “chemicals used to hydraulically fracture rocks in drilling for natural gas in a remote valley in central Wyoming are the likely cause of contaminated local water supplies, federal regulators said.” The Financial Times ran a story headlined “EPA blames fracking for Wyoming pollution.” National Public Radio announced that “for the first time, federal environmental regulators have made a direct link between the controversial drilling practice known as hydraulic fracturing and groundwater contamination.” And the Salt Lake Tribune ran an editorial subtitled “EPA report shows water poisoned.”

In reality, the study conclusively proved no such thing. The research was fundamentally flawed, with the conclusion being derived less from science than from politics.

For starters, the EPA’s study was released in preliminary form, and it was never peer-reviewed. In fact, the EPA went out of its way to ensure that Wyoming’s governor and state agencies didn’t have a chance to look it over before it became publicly available. And when the study was released, the Wyoming Department of Environmental Quality and the Wyoming Bureau of Land Management both expressed significant concerns about the EPA’s conclusions.

Read the National Review article:

Vessels in the waiting waters for Eagle Ford crude oil

For months, a fleet of crude oil tanker vessels have waited in line to approach the congested public docks of the Port of Corpus Christi, Texas. The object of their shipping desire is one of the US’ hottest commodities: light, sweet and relatively cheap Eagle Ford Shale crude.

Barges and ships rotate into the loading docks around the clock, but the backlog is building, port officials said. For shippers often adrift in the waiting waters, congestion along the port has grown increasingly worse since late last year.

“The longest [wait] I’ve seen is about seven days,” Ray Harrison, the port’s assistant harbor master said last Friday.

On the same day, four articulated tug barges (ATBs) and two ships, all capable of handling between 100,000 to 300,000 barrels, waited for dock space to load the low-cost shale crude. A slew of inland barges was also waiting nearby.

From January through May, outbound crude shipments from the Port of Corpus Christi rose to 342,334 b/d from 264,383 b/d, according to the most recent port data regarding shipments. In January 2012, there were zero outbound crude shipments from the port.

Read more:

Bakken and Eagle Ford reach record oil output

Back in May in Wealth Daily's sister publication, Energy and Capital, I wrote about the emergence of another Bakken-type play...

Oil production in this play has grown so fast, oil pumped out of the ground here has risen from 352 barrels per day in 2008 to over 467,611 barrels per day as of January 2013.

Do the math on that: Oil production has grown 132,700% in five years' time!

But it gets even better... because this formation just announced another blowout month for April.
I'm talking about Texas' Eagle Ford Shale Formation, of course.

It's quickly gaining on its much-hyped cousin, the Bakken.

Check this out: Oil production in Texas' Eagle Ford rose 54% in April from the previous year. It reported 530,689 barrels per day for the month of April. So even from February of this year, production has grown a robust 13%.

According to a recent report by Bloomberg, “Growing production out of Eagle Ford is helping fuel a renaissance in Texas crude. The state produced 2.37 million barrels a day in March, the highest monthly level since February 1986, according to the Energy Information Administration, the statistical arm of the Energy Department. The EIA hasn't released March production data for the state.”

So based on April's numbers, production in the Eagle Ford has grown a staggering 150,663% since 2008. At this rate, Texas could be producing 2.5 million barrels of oil per day very soon. That would be its highest output since 1982.

Read more:

Columnist: In Colorado, anti-fracking activists still don't rule

Boulder County this week became the latest jurisdiction in Colorado to defy state law in a bid to placate anti-fracking activists — or fractivists, as they are sometimes called — by extending a moratorium on applications for oil and gas development.

So the county's original moratorium, now extended several times, has effectively become a drilling ban. And yet the state high court has ruled in the past that a city can't outlaw drilling — an opinion the court is likely to stand by should it rule again.

Given the sound and fury over hydraulic fracturing during the past couple of years, you might suppose the list of rogue jurisdictions such as Boulder County was quite long. But you'd be wrong.

According to government and industry officials I consulted, the list is neither long nor especially impressive.

Read more:

Columnist: Shale gas can slow global climate change

The United States has seen a remarkable run in reducing its greenhouse gas emissions over the last five years, reducing energy-related CO2 emissions from 2007 to 2012 by 12%, from six billion tons to 5.29 billion tons. While part of this reduction in emissions is attributable to a reduction in energy demand due to the economic downturn, another reason for this huge reduction is an increase in the use of natural gas for electricity.

In a story that is now familiar to most readers, the shale gas revolution in the United States has dramatically reduced the cost of natural gas. From a peak of $10.54 per million btu (mbtu) in July 2008, the spot price of gas at the well-head had fallen to less than $2/mbtu by April 2012.

Because utilities respond to price incentives, this caused fuel-switching of baseload electricity production from coal to natural gas, leading to a time in April 2012 when natural gas equaled coal as an energy source for the first time. This switch has partially been undone, with coal now producing 40% of electricity and natural gas 26% as gas prices have bounced back to $3.85/mbtu. Because burning natural gas for electricity produces half as much carbon emissions as coal, fuel switching is one of the main causes in the U.S. reduction in emissions.

These reductions have some claiming that the United States, with just a few tweaks in policy, could reduce its emissions to the point of meeting the commitments that President Obama made in 2009 at the Copenhagen conference — a 17% reduction (from 2005 levels) by 2020.

While utilities respond to prices signals, so too do coal mining companies. The reduction in domestic use of coal for electricity has reduced the production of coal (as you would expect), but it has also led coal producers to seek markets overseas.

So, while the U.S. has reduced its emissions, by exporting coal that is mined here, we are essentially outsourcing part of the emissions that would otherwise have been burned here. The atmosphere does not care where greenhouse gas emissions come from. New Energy Secretary Moniz recently praised the U.S. as “the only major industrial economy with lowering C02 emissions over the last few years” — but if we continue to export this much coal, the world will not see any actual environmental benefit.

The way, then, to actually reduce global emissions is for the rest of the world to replicate the gains we have seen on U.S. emissions by using market forces – gas should replace coal in electricity production. The way to do that is to ‘globalize’ the shale gas revolution. That means two things. First, the United States and other major natural gas producers must build and permit more liquefied natural gas (LNG) terminals. Instead of exporting dirty coal, the policy of the United States should be to export cleaner-burning natural gas.

Read the full Christian Science Monitor column by Andrew Holland:
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