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Oil and Gas Roundup — Sept. 13

September 13, 2013
TOPICS: In the news
A roundup of oil and natural gas industry news from around the state, nation and world:

California HF bill passes state Assembly

SAN FRANCISCO (Reuters) — A hotly contested bill that would impose California's first regulations on hydraulic fracturing and other oil production practices passed the state Assembly on Wednesday, despite opposition from environmentalists and oil companies.

Fracking, or hydraulic fracturing, is the practice of injecting water, sand and chemicals underground to crack rock formations and free up oil and natural gas. The technology makes it possible for oil companies to unlock California's vast Monterey Shale deposit, which is estimated to hold 15.4 billion barrels of recoverable oil.

Under the bill, passed by a vote of 47-17, companies would be required to obtain permits for fracking as well as acidizing, the use of hydrofluoric acid and other chemicals to dissolve shale rock. Oil company executives have previously said acidizing could be even more useful than fracking in getting at the Monterey Shale reserves.

The bill would also require notification of neighbors, public disclosure of the chemicals used, as well as groundwater and air quality monitoring and an independent scientific study.

Read the Reuters story:

The Eagle Ford Shale turns five

Five years of hindsight enables us to look back and truly understand what a portentous turning-point month October 2008 was for the United States.
In that month, the following critical economic events took place:

The Bad News:

• Oct. 3 — President George W. Bush signs the $700 billion bailout bill for the U.S. financial system.

• Oct. 6 — The Dow Jones Industrial Average falls by as much as 800.06 points, its biggest intraday drop on record. The Dow closed below the 10,000 mark for the first time since Oct. 26, 2004.

• Oct. 24 — “Bloody Friday” saw many of the world’s stock exchanges experienced the worst declines in their history, with drops of around 10 percent in most indices.

The Good News:

• Petrohawk completes the first successful well in the Eagle Ford Shale, the STS #241-1H.

Without that final piece of good news, and the subsequent discovery of other massive new oil and gas shale plays around the country, October 2008 may well have turned out to have become the kickoff month of a second Great Depression.

Read more:

Feds OK gas-export hub in Maryland

Dominion Resources Inc. won U.S. Energy Department approval to export liquefied natural gas from an existing import terminal in Maryland, the fourth such project authorized by the agency amid a natural-gas glut.

The project to modify the terminal, which may cost as much as $3.8 billion, was approved pending environmental reviews, according to a statement this week.

Richmond, Virginia-based Dominion closed at $58.62, up less than 1 percent in trading on the New York Stock Exchange.

Dominion still requires approval from the Federal Energy Regulatory Commission to start construction at the facility at Cove Point, on the shores of the Chesapeake Bay, Dan Donovan, a spokesman for the company, said in an interview.

“We have financing and we’re fully subscribed by customers for capacity,” Donovan said. Final regulatory approval could come in the first quarter next year, he said.

Read more:

Oil industry challenges government’s carbon price tag

Oil industry and business groups are asking the Obama administration to rescind its new calculation of the social costs tied to emitting carbon dioxide, amid fears the estimate will broadly be used to justify controversial proposed environmental regulations.

At issue is the government’s updated “social cost of carbon,” a once little-known metric used to evaluate the cost benefits of proposed regulations, which is poised to play a big role in forthcoming mandates governing greenhouse gas emissions from power plants. The calculation aims to put a price tag on damage from emitting a ton of greenhouse gases, including lost agricultural productivity, human health impacts and more floods.

A government working group with representatives from the Energy Department, Office of Science and Technology Policy, the Council on Environmental Quality and other agencies in May bumped up the environmental price tag to $38 per ton in 2015, up from a 2010 estimate of $23.80.

But the group’s calculations and modeling have been inappropriately shielded from view, according to America’s Natural Gas Alliance, the American Petroleum Institute, the National Association of Manufacturers and other organizations that filed a petition on Sept. 4 asking the government to redo the analysis “through a transparent, public process.”

Read more:

Linn Energy to buy Permian Basin assets for $525 million

Linn Energy LLC, the oil and natural gas partnership that agreed to buy Berry Petroleum Co. for $2.42 billion, will spend another $525 million on Permian Basin assets to increase production.

The seller wasn’t identified in a statement by the Houston-based company. The purchase will add production equivalent to 4,800 barrels of oil a day in the first year. Linn will pay for the purchase with debt.

Linn jumped 13 percent yesterday, the most since December 2008, after providing an update on the Berry purchase that’s being probed by the U.S. Securities and Exchange Commission. The units are still down 21 percent this year on concern the deal won’t close as arranged. Linn agreed to buy Berry in February to raise reserves and increase cash flow to pay unitholders.

“They can’t sit on their hands and wait for this Berry deal to close,” John Ragozzino, an analyst at RBC Capital Markets LLC, said today in a phone interview from Austin, Texas. “They need to grow.”

Read more:

The Oil & Gas Weekly Follies

Each week, Forbes and Energy In Depth columnist David Blackmon will “briefly chronicle the week’s silliness, foibles, fake news and real news related to the oil and natural gas industry.”

Check it out here:

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