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Oil and Gas Roundup — April 7

April 07, 2014
TOPICS: In the news
A roundup of oil and natural gas industry news from around the state, nation and world:

Shale gas boom leaves wind companies seeking more subsidy

Wind power in the U.S. is on a respirator.

The $14 billion industry, the world’s second-largest buyer of wind turbines, is reeling from a double blow -- cheap natural gas unleashed by the hydraulic fracturing revolution and the death last year of federal subsidies that made wind the most competitive of all renewable energy sources in the U.S.

Without restoration of subsidies, worth $23 per megawatt hour to turbine owners, the industry may not recover, and the U.S. may lose ground in its race to reduce dependence on the fossil fuels driving global warming, say wind-power advocates.

They place the subsidy argument in the context of fairness, pointing out that wind’s chief fossil-fuel rival, the gas industry, is aided by the ability to form master limited partnerships that allow pipeline operators to avoid paying income tax. This helps drive down the cost of natural gas.

“If gas prices weren’t so cheap, then wind might be able to compete on its own,” said South Dakota’s Republican Governor Dennis Daugaard.

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State drilling rig tally rises by five to 193

The number of drilling rigs actively exploring for oil or natural gas in Oklahoma rose by five this week to 193, Baker Hughes Inc. reported Friday. The tally is up 14 from a year ago, when it was 179.

Nationwide, the net number of active drilling rigs rose by six this week to 1,818, said Houston-based Baker Hughes. The total is up 80 rigs from a year ago. Of the rigs operating this week across the U.S., 1,498 were exploring for oil, 316 for gas and four were miscellaneous.

Friday on the New York Mercantile Exchange, benchmark U.S. crude oil for May delivery rose 85 cents to close at $101.14 a barrel. Natural gas fell 3.1 cents to close at $4.439 per 1,000 cubic feet.

Water recycling companies getting a foothold in the Eagle Ford

At a freshly-cleared 11-acre site, oil-field water flows from tank to tank. It starts off opaque and yellowish, heavy with salt, iron, manganese, calcium and residual oil.

But after about a day, it’s so clear a jar of it looks like tap water — and it’s clean enough to reuse in oil-field operations.

Water — and how it’s sourced — has been an increasingly hot topic in the oil patch. Drilling a well in the Eagle Ford Shale and other so-called “tight” formations requires several million gallons of water.

But Cobb & Associates, which recently opened a site just south of Pearsall, is among the companies cleaning up oil-field water and saying it can compete with the cost of pumping fresh water from a well. It uses a proprietary process that causes any solids in the water to coagulate, clumping together and falling to the bottom.

“We can take the salt water their wells are already producing and clean it up,” said Jeremy Roberts, yard manager with Cobb’s Pearsall location. “The technology is there. There’s virtually no reason for the oil companies to use all of the freshwater they’re pumping out of the ground.”

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Colorado energy group on hydraulic fracturing: 'We just point to the science'

The battle for and against oil and gas development continues in Colorado.

Several environmental groups in Colorado have been pushing proposals or ballot measures on the natural gas drilling practice known as "fracking."

One such group is Citizens for a Healthy Fort Collins, which wants a statewide ballot in November to give Colorado cities "local control" over oil and gas drilling in their communities, namely fracking.

In an Op-ed ahead of a successful moratorium vote in Fort Collins last November, Citizens for a Healthy Fort Collins campaign manager Kelly Giddens wrote that oil and gas emissions are "polluting our air even more than car emissions." Giddens added that "there are increasing numbers of reports of serious health impairments experienced by people living in proximity to fracking activities."

"We just point to the science," responds Jon Haubert of Coloradans for Responsible Energy Development (CRED). "We point to academic or scientific studies that have been done that either explain why water can be lit on fire. In most cases, it's naturally occurring. It's been happening for a very long time. People in the areas are very aware of it, but it's sensational, and it gets people's attention."

Haubert adds that fracking is regulated in Colorado.

As for the idea of any statewide ban on the practice, Haubert points to a study from the Business Research Division of the Leeds School of Business at the University of Colorado Boulder that shows that a statewide fracking ban would "result in 93,000 fewer jobs, $12 billion in lost gross domestic product and an annual reduction of $985 million in tax revenue for local and state governments between 2015 and 2040."

— One News Now

‘The Boom’: A tale of the Barnett Shale and beyond

Wall Street Journal energy reporter Russell Gold is the author of "The Boom: How Fracking Ignited the American Energy Revolution and Changed the World," which goes on sale Tuesday. Gold’s book is arguably the most readable and best-researched volume looking at hydraulic fracturing and its impact on the development of U.S. oil and gas supplies.

Gold, 42, has covered energy for the Journal since 2002, working for a time in the paper’s Dallas bureau and now living in Austin. The Philadelphia native accepted a reporting job at the San Antonio Express-News in 1996 and “hasn’t strayed from Interstate 35 since,” he said.

Much of "The Boom" takes place in North Texas, where the Barnett Shale, horizontal drilling and fracking ushered in a new way of producing oil and gas. Gold spent time with George Mitchell, whose dogged efforts in Wise County finally unlocked the secret to forcing shale to give up its hydrocarbons.

The Star-Telegram interviewed Gold last week by phone. What follows are excerpts from his book and an edited transcript of his comments.

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