Thursday, July 26, 2012

Oil And Gas Industry Jobs: A Huge Positive

I don't mean to beat a dead horse, but the oil and gas industry is creating jobs, creating wealth, and making America more energy independent.......all without much government fact, in spite of what the government does.  Compare that to the Billions of taxpayers dollars wasted on failed "green energy" projects (Solar energy boondoggles, wind turbine folly, ethanol production from food sources like corn, and on, and on).  It does make one wonder about our leadership in Washington, D.C.

Need A Job? Energy Sector Producing More Than Oil, Gas

By Velda Addison, Associate Editor

The oil and gas industry supports more than 1.92 million jobs in the US, and it has the potential to create 1.4 million new jobs in the next 15 years.

Jamie Vazquez, president of W&T Offshore, presented the figures during the July 20 Decision Strategies’ Oilfield Breakfast Forum. Her talk was peppered with an array of statistics. There was even more informative data, left for those who attended the event, in the National Ocean Industries Association’s (NOIA) booklet that touted what the American offshore industry can do. Keeping the economy growing, putting Americans to work, and securing a reliable energy future were on the list.

Article continued here:

Hess Improves Production And Technique In Completing Bakken Oil Wells

For those interested in some of the finer details of operations in producing oil from the Bakken Formation, horizontal drilling, completions, and hydraulic fracturing, the following article is interesting and valuable.  Here is a link to the original article:

The author, Mr. Filloon does his research and seems very knowledgeable about the oil and gas industry.  I'm quite certain he obtains his information from publicly available sources.  He provides his analysis as a service to the investment community.

<>2011 Hess Southern Williams County Results

Name Date Choke Stages Water Proppant 60Day IP 120Day IP
En-Weyrauch 154-93-1918H-3 10/11 30/64 N/A N/A N/A 488 369
En-Frandson 154-93-2116H-3 8/11 28/64 38 84203 3986800 939 780
En-Weyrauch 154-93-1918H-2 6/11 22/64 22 48161 1931448 501 367
En-Weyrauch 154-93-1918H-1 4/11 22/64 22 40421 1097939 504 435
En-Weyrauch 154-93-2932H-1 12/11 38/64 N/A N/A N/A 1101 825
En-Weyrauch A-154-93-2017H-1 11/11 42/64 38 61305 3995800 653 479
En-Weyrauch 154-93-3031H-2 12/11 34/64 38 71049 3991720 1003 787
En-Weyrauch 154-93-3031H-1 12/11 30/64 38 41472 1741722 1148 837
Hess Corporation (HES) is a very large and well-run oil producer. In 1957, it discovered oil in North Dakota and has become one of its biggest players. I had previously discussed Hess and its very conservative completion methods early in 2011. At this time, Hess was using 20 to 22 stage fracs with lower amounts of water and proppant. This was also consistent with Continental Resources, Inc.'s (CLR) well design, which I covered in this article.
The table to the top of this article shows a change from these lower number of stages to 38. This is consistent with Brigham (STO), which I covered in this article. Not only was this a big move, it has improved results significantly, and in some cases doubled old IP rates. One issue I had in researching Hess' results, was its lack of documentation with respect to well design. For those specific wells, I place N/A in the appropriate space.
In the second half of 2011, it used varying amounts of water and proppant. This variance has not always produced better results with increased water and proppant, which I found somewhat puzzling. Well orientation and lateral length are different for each well, sometimes by 1,000 feet. Another finding is Hess' move to a more moderate choke, which is consistent with Newfield Exploration Co.'s (NFX) well design, which I covered here. This has also been consistent with other Bakken operators.
In the table below, we see even more changes to design as Hess has used more than 100,000 barrels of water. It has also moved to above 3.2 million pounds of proppant. This move is consistent of Brigham, Kodiak Oil & Gas Corp (KOG) and Exxon Mobil Corporation (XOM).
<>2012 Hess Southern Williams County Results
Name Date Choke Stages Water Proppant IP Rate
En-Weyrauch C-154-93-2932H-2 3/12 22/64 38 34396 1995429 60Day=911
En-Madisyn 154-94-0607H-1 5/12 27/64 38 93122 3137554 41Day=892
En-Thompson Trust 154-94-1930H-1 4/12 36/64 N/A N/A N/A 54Day=1548
En-Weyrauch A154-93-2017H-2 1/12 33/64 N/A N/A N/A 60Day=801
Ca-Halvorson 154-95-0409H-1 5/12 34/64 38 101929 3203698 32Day=1610
In summary, Hess is moving forward at a quick pace to increase IP rates and EURs. It is not surprising as many operators are spending more per well in the hopes of increasing profits in the short and long term. The surprise isn't the change, but the amount of change. Hess' move has been much quicker than others in the Williston Basin, so it is my guess that Hess believes it is important enough to make a bigger move. These results could be different in other areas such as Mountrail or McKenzie counties, but this will take more research.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Additional disclosure: IP Rates are measured in barrels of oil per day. Water volumes are measured in barrels. Proppant amounts are measured in pounds. N/A is used on any well without sufficient information. This is not a buy recommendation.

Sierra Club Speaks With Forked Tongue

So the Sierra Club is confused and promoting nonsense?  That is nothing new, they've been doing it for years (like pushing the myth of man-caused global warming down our throats).



Key Democrats To Sierra Club: You’re Wrong About Natural Gas

By Julia Bell, Researcher, Energy in Depth
As a fuel source, natural gas represents a rare combination of benefits: affordable, abundant, and clean. The White House has acknowledged this on several occasions, touting also the enormous job creation potential that responsible natural gas development can deliver.

But for some, denying the facts about natural gas has become a profitable enterprise. The most notable example? The Sierra Club, which recently launched its “Beyond Natural Gas” campaign to stop development of this important source of energy.

 Ironically, it was also the Sierra Club that was touting the environmental benefits of natural gas just a few short years ago, back when natural gas was expensive and considered in short supply – we’ll let our readers extrapolate the meaning of that.

Nonetheless, the facts are still the facts, and it’s telling that the Sierra Club’s new efforts against natural gas not only butt heads with well-established scientific facts about the processes used to extract it, but also with folks that they used to consider their allies – including President Barack Obama, whom the Sierra Club has cheerfully endorsed for reelection.

The United Nations has even pointed out that expanded natural gas use can help the world’s poor and foster a cleaner global environment.

And just this week, the Sierra Club received even more pushback for its activism against natural gas, this time from US Rep. Ed Markey (D-Mass.) and US Sen. Ron Wyden (D-Ore.).
Discussing specifically the Sierra Club’s anti-natural gas campaign, Rep. Markey delivered a fairly clear rebuke: “I think environmentalists should want natural gas on the table as an option,” Markey said, adding later that he thinks it would “be wise for us to not take natural gas off the table.”
When Sen. Wyden was asked about the Sierra Club’s “Beyond Natural Gas” campaign, he issued a similarly unequivocal rejection: “This is what I tell environmental folks: natural gas is really important to a lot of renewables, solar and wind, ensuring that option is out there.”

In describing the environmental benefits, Wyden added, “Natural gas is the cleanest of the fossil fuels, so you start with that as your basic proposition.”

So for those keeping score at home, those acknowledging the safety and benefits of natural gas development include President Obama, the US Environmental Protection Agency, the US Department of Energy, state regulators from across the country, independent experts from respected universities, and now even prominent members of Congress who are widely recognized for their work on environmental issues. Heck, even a study funded by the Sierra Club found natural gas to be a comparatively clean source of energy.

On the other side? Hollywood, Josh Fox, and the Sierra Club.

Gee, I wonder who we should believe?

Shale......The Game Changer?


an excerpt:

One slide in his presentation showed a map of the world that highlighted areas with high energy usage. Another slide showed the location of major shale developments near those areas. “[Shale gas] basically sits right in our backyard,” he said. “It’s not just about where the resources are located. It’s also about regulatory infrastructure that’s in place that promotes the development of this resource.”

Wednesday, July 25, 2012

Shocking News.........

The following article about fracking and how the truth is distorted is not new news, nor is it shocking.  People calling themselves "environmentalists" have a long and shameful history of "distorting the facts" when criticizing or protesting everything from climate change, to mining activity, to farming, to wildlife management, and now the process of hydraulic fracturing of underground rock formations to enhance the production of oil and gas.  More often than not they resort to emotional fear tactics and leave science by the wayside.

The late, great author Michael Crichton even wrote an excellent book on the subject, titled "State Of Fear".  For more about that book go here:

Jul 17, 2008
Jul 17, 2008
Michael Crichton does not believe it is. He makes some very astute comments. Also, I highly recommend Crichton's book, "State of Fear". There is much more about Michael Crichton on this blog, do a search on his name.
Nov 06, 2008
Nov 06, 2008
Michael Crichton Gone. What a shame, what timing. His writing, his insight, his intellect remain. Do a search on this blog and read more. In tribute, a humble hats off. Peter More on Michael Crichton: Predicted Demise of MSM ...
May 02, 2007
May 02, 2007
Michael Crichton: Our Environmental Future. I wish I could post this entire speech, but I can only quote parts of it and encourage you to read it all here: In the speech ...
Aug 24, 2007
Aug 24, 2007
Michael Crichton Speech: Environmentalism As Religion. I can't post the entire speech here without his permission, but this by Michael Crichton is worth reading and saving and contemplating. He sees environmentalism as ...

Experts: Some fracking critics use bad science
PITTSBURGH (AP) — In the debate over natural gas drilling, the companies are often the ones accused of twisting the facts. But scientists say opponents sometimes mislead the public, too.
Critics of fracking often raise alarms about groundwater pollution, air pollution, and cancer risks, and there are still many uncertainties. But some of the claims have little — or nothing— to back them.
For example, reports that breast cancer rates rose in a region with heavy gas drilling are false, researchers told The Associated Press.

Fears that natural radioactivity in drilling waste could contaminate drinking water aren't being confirmed by monitoring, either.

And concerns about air pollution from the industry often don't acknowledge that natural gas is a far cleaner burning fuel than coal.

"The debate is becoming very emotional. And basically not using science" on either side, said Avner Vengosh, a Duke University professor studying groundwater contamination who has been praised and criticized by both sides.

Shale gas drilling has attracted national attention because advances in technology have unlocked billions of dollars of gas reserves, leading to a boom in production, jobs, and profits, as well as concerns about pollution and public health. Shale is a gas-rich rock formation thousands of feet underground, and the gas is freed through a process called hydraulic fracturing, or fracking, in which large volumes of water, plus sand and chemicals, are injected to break the rock apart.


FILE - In this file photo from Nov. 3, 2010, documentary filmmaker Josh Fox speaks at a rally of protesters against Marcellus Shale drilling and hydraulic fracturing in Pittsburgh. Researchers say the claim that fracking has been linked to increased cancer rates in Texas is simply wrong. Fox, an Oscar-nominated filmmaker who uses the claim in a new film, declined to acknowledge the error when told of researchers who say he's doing a disservice to people with cancer by misrepresenting health data. (AP Photo/Keith Srakocic, File)

(A "disservice" to people is too kind.  He's lying to the public for his own personal gain.  In my mind that is despicable.  Peter)

Saturday, July 21, 2012

Boone Pickens Likes Fracking

Not that Boone Pickens has a lot of credibility left, but he is at least repeating what a lot of people active in the oil and gas industry are recognizing.  I wonder how long it will take the mainstream media, voters and the people in Washington, D.C. to catch on to the enormous changes taking place in the U.S. and around the world.  I say we have some good times coming.  We may actually be able to climb out of this massive pit of debt we are in.

Boone Pickens says we have more energy than he imagined, thanks to fracking

T. Boone Pickens, who used to regularly warn Americans about running out of oil, said Thursday the world has far more energy than he ever imagined, thanks to fracking.
Since oil and gas companies figured out how to use hydraulic fracturing and horizontal drilling techniques profitably, the amount of available fuel in the U.S. has boomed. Pickens, who runs hedge fund company BP Capital, said at a conference Thursday this boom is about to fundamentally change the world.

“You, me and the rest of America are sitting on a huge change in energy globally,” he said at the Texas Conservative Coalition Research Institute’s Energy Summit in Irving.
The Organization of Petroleum Exporting Countries “isn’t going to have near the power they have today in five years, maybe in three,” Pickens said.

Pickens, who made his fortune trying, and failing, to buy big oil companies, said: “There’s a lot more energy in the world than I ever imagined there would be.”

Hydraulic fracturing, or fracking, involves injecting water and chemicals into a well to crack the underground shale and release oil or gas. The process has boosted domestic production, annoyed people living nearby, increased air pollution in some places and worried many people about water contamination.

Pickens has been trying since 2008 to persuade Americans to stop importing oil from hostile countries and replace it with domestic energy such as natural gas. He inspired a debate about imported oil but couldn’t persuade Congress to offer incentives for truckers to switch to natural gas.
“I thought I could sell this in no time. Wrong, wrong. I could not,” he said. He said more Senate Democrats than Republicans voted for the bill.

“You all have no idea how many millions of dollars I have put into Republicans over the years, and I got six votes,” he said.

He and Railroad Commission Chairman Barry Smitherman, who interviewed Pickens at the event, agreed the U.S. doesn’t have a real energy plan. “We actually had a plan, and it was called cheap and imported,” Smitherman joked.

Instead, Pickens’ Clean Fuels company, which sells natural gas vehicle fuel pumps, is installing pumps on its own. He said the lower cost of natural gas compared with diesel is prompting truckers to make the switch.

Friday, July 20, 2012

Searching For The Truth About Fracking

Let's watch this and put forth some experienced commentary.  Informed decision-making is needed about the issue of hydraulic fracturing (fracking), not mass hysteria.

TruthlandJuly 20, 2012 | Truthland@YouTube
The natural gas industry has prepared a movie, “Truthland”, that responds to the HBO movie “Gasland”.

Thursday, July 19, 2012

Peak Oil? Not Yet, Not For A Long Time

Here is some food (or oil) for thought.  Just in case anyone wonders why ExxonMobil bought the horizontal drilling and hydraulic fracturing expertise of XTO a few years back, here's why.  This is of big-time, world class importance.  We should all pay close attention.  Don't underestimate the Russian Bear.


Meet The Oil Shale Eighty Times Bigger Than The Bakken

An oil drilling rig is seen September 29, 2010...
Drilling the Bakken. (Image credit: AFP/Getty Images via @daylife)

Everyone has heard about the Bakken shale, the huge expanse of oil-bearing rock underneath North Dakota and Montana that billionaire Harold Hamm thinks could yield 24 billion barrels of oil in the decades to come. The Bakken is a huge boon, both to the economic health of the northern Plains states, but also to the petroleum balance of the United States. From just 60,000 barrels per day five years ago, the Bakken is now giving up 500,000 bpd, with 210,000 bpd of that coming on in just the past year. Given the availability of enough rigs to drill it and crews to frack it, there’s no reason why the Bakken couldn’t be producing more than 1 million bpd by the end of the decade, a level that could be maintained for halfway through the century.

But as great as the Bakken is, I learned last week about another oil shale play that dwarfs it. It’s called The Bazhenov. It’s in Western Siberia, in Russia. And while the Bakken is big, the Bazhenov —

Wednesday, July 18, 2012

Oil Boom And Technological Miracles In North Dakota

The following is an excellent article explaining  the oil shale boom in North Dakota and the fracking process, and aimed at the lay public.

It’s not just an oil boom, it’s an industrial revolution

July 15, 2012 2:00 am
Note: This is the first of several columns Clay Jenkinson will write about his recent tour of the Bakken Oil Fields.

Last week I had the opportunity to visit the Bakken oil fields north and west of Belfield with Ron Ness of the North Dakota Petroleum Council and Blaine Hoffman of the Whiting Oil and Gass Corporation. In the course of a long day we visited two oil rigs, a fracking operation at another site, a plant that collects the gasses that would otherwise have been flared at the well sites, and several Whiting properties in the Badlands that have been reclaimed after all oil extraction at the site has been concluded. It was an amazing, and amazingly generous, tour. I am immensely grateful to have had the opportunity to see the industrial profile of the oil boom through the eyes of such remarkable and dedicated professionals.

I want to pause first to worship human technology. At some point not many thousand years ago we were wandering around the African savannah plucking berries from shrubs, beating off intruders with clubs, and trying not to let the fire go out because it was so darned hard to get it started again. Today, a guy with a joystick can direct steel well pipe 12,000 feet into the earth, and then TURN a 90 degree corner (with stiff steel pipe), so that, with the same joystick, he can feel his way to a 3-15 foot vein of oil bearing shale thousands of feet away from the turn. Think about this for a moment. We can send down a straw more than two miles into the earth, through some very dense and unyielding formations, and then turn a corner and wander laterally until we reach an exceedingly narrow formation that the entire population of North Dakota could never reach with shovels if they did nothing else for the rest of their lives.

And that’s just the beginning. Then we send water and a sand-bearing goo down that endless pipe at incredibly high pressure to fracture the oil bearing shale (like a window fan blowing open the pages of a closed book). This releases the oil that is bound up in that shale.

Two quick conclusions. First, humans must really have an infinite thirst for oil—they go to such lengths and expense to get to it. Second, human ingenuity and creativity (plus the opposable thumb) are magnificent evolutionary tools. We can deposit a live man on the surface of the moon, clone a living goat, talk to someone at the other end of the planet on a device no larger than a cigarette pack, and journey to the center of the earth with a metal probe. After spending a day in the presence of any cutting edge technology, it is virtually impossible not to conclude that human ingenuity is a limitless resource that can solve virtually any problem, and that as long as the United States continues to train and turn loose the human creative spirit at current (Steve Jobs) levels, we will be the masters of the world. There would seem to be a techno-fix for absolutely everything, and yet, as Woody Allen might say, we still can’t balance the budget or get a good pastrami sandwich in Duluth.

The fracking technology is literally breathtaking. It is also very recent. It has allowed Ron Ness (and others) to project—using currently available technology—that it will be possible to recover 12-20 billion barrels of oil in western North Dakota. If that is true, the state of North Dakota alone has as much oil as the nations of Qatar or Angola, and a fifth (possibly a quarter) as much recoverable oil as the nations of Iraq and Kuwait. If we come to extract a million barrels a day, that’s three years to a billion barrels. That would seem to indicate somewhere between 20 and 60 years of steady oil extraction before the North Dakota fields play out. And this only represents currently available technology, in a field where the technology is becoming more sophisticated almost by the month.
It is going to require tens of thousands of fracking wells to get all that oil up out of the ground, not to mention storage and shipping facilities, pipelines, rail lines and spurs, refineries, plants to handle the derivatives, water storage and treatment facilities, much wider and more ruggedized roads, and a housing and amenities infrastructure that is going to stagger the imagination. Dickinson is probably going to be a city of 50,000 people (for decades), Williston more, and Watford City, Stanley, Killdeer, Belfield, and other formerly sleepy villages are going to be transformed into something never before seen on the plains of North Dakota.

You know the old Chinese curse: “may you live in interesting times.” While he was hunting in 1789, French king Louis XVI was told of the fall of the Bastille in Paris. “So it is a rebellion?” he said. “No, sire,” replied the Duke de la Rochefoucauld-Liancourt "it is a revolution."

The first and most important thing you need to know about this oil boom is that it cannot and must not be compared to the previous booms in the 1950s and the 1980s. The volume is almost infinitely greater. The amount of industrial activity a fracking well requires, as opposed to a traditional well, is greater by magnitudes. It takes approximately 2,000 truck “events” to bring a single well to production. At this point there is virtually no geological gamble in fracking. We know where the oil bearing shale is. All we have to do is thread our way to it and fracture it, and voila: black gold. In the Bakken boom, it would be more accurate to say we are mining the oil than drilling here and there in hopes of finding a pool (as in previous booms). Because fracking is a more exact science, the wells can be lined up along drilling corridors, every X-thousand feet. This creates remarkable efficiencies in service roads and pipelines, and enables the industry to collect the gasses that have previously been burned off (flared) at the wellhead. Thanks to the real or perceived global scarcity of oil, this boom is very unlikely to collapse. Indeed, this time OPEC does not have sufficient production slack to conspire to undercut the world oil price and lure us back into Saudi oil addiction.

For all of its disturbances, dislocations, and growing pains, if we manage this right and protect our people and our landscape to the maximum extent possible under the circumstances, Bakken oil is going to be one of the greatest gifts that ever came to the people of North Dakota.
It’s not an oil boom. It’s an industrial revolution.

(Clay Jenkinson is the Theodore Roosevelt Center scholar at Dickinson State University, as well as Distinguished Scholar of the Humanities at Bismarck State College and director of the Dakota Institute. Clay can be reached at or through his website,

$1 Billion Per Day Benefit To US From Oil And Gas

What have "green energy" and Obama's energy policy done for us lately, (other than waste Billions of dollars)?

$1 Billion/Day in Oil and Natural Gas Benefits
July 17, 2012 | USA Today
A Bank of America Merrill Lynch study reports that new domestic oil and natural gas production is bringing a billion dollars in benefits to the United States every day.

read more here:

Tuesday, July 17, 2012

Economic Optimism For Ohio And Utica Shale Oil And Gas

It sure looks to me like Ohio and the rest of the "Rust Belt" could use some positive economic news.  Let's hope the development of the Utica Shale (and the other shale formations) for oil and gas works out.  The area has attracted a lot of industry interest, and usually these companies do not invest the amounts of money they have been putting into leasing up acreage in Ohio without being pretty certain of success.  This is an emerging play to pay close attention to.

BP CEO: In Early Stages Of Evaluating Ohio's Shale Potential
BP PLC is in the early stages of evaluating Ohio's energy potential but believes the state--which is home to the emerging Utica shale--could be a significant contributor to the energy industry, Chief Executive Bob Dudley said Friday.

In a speech in Cleveland, Mr. Dudley said BP technicians are already on the ground "advancing a plan to safely appraise the resources" the company is prospecting in leases acquired about four months ago in the Utica and Point Pleasant shales, according to a transcript of the speech.
The executive cited estimates by the Ohio Department of Natural Resources that put the state's recoverable shale potential at up to 5.5 billion barrels of oil and 15.7 trillion cubic feet of natural gas.
"In the coming months, we expect to acquire seismic surveys, prepare a development plan and survey land for initial wells to be drilled next year," Mr. Dudley said.

BP is one of several companies seeking to tap the unconventional oil resources that have revolutionized energy production in the U.S
Production of natural gas in the neighboring Marcellus shale, which underlies several northeastern states, has revitalized formerly depressed areas by providing cheap energy for steel manufacturing and low-cost feedstock for chemical products. The oil industry hopes that the shales underlying Ohio could have large deposits of profitable crude oil.
Copyright (c) 2012 Dow Jones & Company, Inc

EnCana Success In The Mancos Shale In New Mexico's San Juan Basin

The Mancos Shale and its stratigraphic equivalents can be found containing oil and gas from New Mexico, north throught the American Rocky Mountains, into Canada, and actually up into the North Slope of Alaska.  There's no reason a lot of it can not be productive.  I think we're just seeing the tip of the iceberg.

The Next Oil Rich Shale on the Block? Encana Corp. releases first Mancos Shale results
  Encana Corp. releases first Mancos Shale

The well, Lybrook H36, yielded a 30-day initial production rate of about 440 barrels of oil per day, Encana disclosed to investors.
An Encana spokesman said the initial production was enough to warrant further development. "That's an indication that we're pleased with the results we've seen to date," Encana's Doug Hock said.

The figure is the first publicly released data from a test well targeting Mancos Shale oil.

Geologists and industry officials have expressed hope that technological advances would enable wells to reach the oil-rich shale in the San Juan Basin, an area better known for producing natural gas.

Encana is partnering with local firms, including Aztec Well Servicing Co. and Dugan Production Corp., to exploit leases in the southern portion of the basin targeting oil-rich formations. Aztec is drilling the wells, and Dugan has taken advantage of its property interests in the area.

A sharp decline in natural gas prices has driven drillers to search for oil.

"Our strategy as a company right now is to increase the amount of natural gas liquids and oil in our portfolio," Hock said. "Given that, our exploration in the San Juan Basin is a key part of that, and that's why you've seen the commitment there to explore that."

Encana has a 174,000-net-acre position in the basin, the company said.

A major firm based in Calgary, Alberta, Encana has four Mancos Shale wells producing oil and a fifth being drilled, the company disclosed. Lybrook H36 was drilled into the Gallup formation, part of the Mancos Shale, to a lateral length of 4,100 feet and at a cost of $4.3 million.

The well is located about 50 miles south of Bloomfield in Sandoval County.

At current oil prices, the well is producing more than $35,000 a day.   (Beats a government subsidy all to heck.  Peter)
The production is about 10 times what one would expect from a traditional vertical well in the Gallup formation, said John Byrom, president and CEO of D.J. Simmons Inc., a Farmington independent producer.

"I'd take it," Byrom said.

Steve Dunn, drilling and production manager at Merrion Oil & Gas in Farmington, said the results are "very encouraging."

Merrion also is active in the Mancos Shale, partnering with a larger company to drill four wells. Dunn said he cannot disclose the partner. Merrion plans to drill its wells in September, he said.

Monday, July 16, 2012

Challenging Russia With Shale Gas, Horizontal Drilling And Hydraulic Fracturing

Here's one way for Europe to get out of debt.........a novel idea......produce something natural gas and sell it for more than it costs to produce.
‎# Gator 2012-07-16 14:22
Yep, the evil capitalists of the evil empire are about to accidentally save the world, again!

Kermit said it best, 'It ain't easy being green'. No, and it must be highly embarrassing...
  • shalegasAlmost all European countries have some shale gas deposits. If hydraulic fracturing can be used on a commercial scale in Europe, the price of natural gas there will plummet(Maybe...Peter) It could force Russia to start working for a living and would have radical political repercussions. The challenge facing Gazprom is to convince nations that pay it exorbitant sums of foreign currency to forgo a technology that can save them a lot of money, create local jobs and support their political independence. This time, the mobilizing ideology is not anti-capitalism but environmentalism. Russia’s Mr. Putin has become a great champion of other countries’ environments. Gazprom and Russia pay directly or indirectly, through public-relations firms and environmentalist groups, for the creation of grand coalitions with authentic environmentalist groups. --Aviezer Tucker, The Washington Times, 13 July 2012

  • Moscow will do everything in its power to prevent shale developments for those perched close to its borders. Obviously this is all being couched in ‘environmental’ terms, but the underlying political reality is that Central European states are buckling under Russia pressure, most of whom remain entirely dependent on Moscow to keep warm in the winter.  (The caring but naive environmentalists are being duped, fooled and used again......Peter)  But by failing to take the free European shale pass, Russia now stands every chance of winning a new long terms lease of life. When they do, they’ll start thinking about developing their own enormous shale reserves that some think are around ten times larger than the entire European map. And as it just ‘so happens’, Exxon et al are already working on exactly that prospect in the giant Bazhenov and Achimov Russian fields. Phew; European shale doesn’t matter after all. We’ll have tonnes and tonnes of expensive Russian gas to keep us warm instead. Matthew Hulbert, Forbes, 12 July 2012

  • Geologically, the chances of finding shale gas in Europe are every bit as good as in America. France, Poland, Britain and Ukraine look promising, and decent quantities may yet be found in other countries. America’s EIA puts Europe’s recoverable reserves on a par with America’s. But there the similarities end. Perhaps the most important difference is in property rights. In America individuals generally own the minerals under their property. Since a gas strike will make them rich, they will generally be enthusiastic about extracting the stuff. In Europe mineral rights mostly belong to the state. --The Economist, 14 July 2012

  • You may not have noticed, but there is something happening to the American electricity supply that we've never seen before. Not in 1973 or 1950 or even in 1900. As long as Americans have made electricity, they've gotten more of it from coal than from any fuel. While petroleum and natural gas have played huge roles in our energy system, coal's been responsible for more than 65 percent of the fossil-fuel electricity we've generated for most of the last 50 years. But natural gas is in the process of overtaking coal as the top fuel in America -- and fast. The energy system, as you can see in the chart, tends to change slowly. But just look at the last three years in the chart below. That's the kind of growth that you tend to see in the high tech industry, not energy. That's an honest-to-goodness hockey stick. --Alexis Madrigal, The Atlantic, 13 July 2012

  • Here’s a tester for you. Which raft of energy policies gets proven ‘greener’ results? Is it the anti-fossil fuel, cap-and-trade regulatory regimes of socialist Europe? Or is it the path of technological innovation set by the ‘evil’ capitalists in the Kyoto-eschewing Bush White House? In what has to be the irony of ironies, Europe’s consumption of coal grew by 3.3 percent in 2011. Over in the United States in 2012, however, coal burning to generate power continued to decline, primarily due to America’s switch to shale gas. U.S. levels of carbon emission are currently plummeting; a feat Europe has no chance of matching, not least as coal use is on the increase. It’s a situation that ought to bring the whole raft of EU market-interfering policies geared to reducing carbon emissions into sharper focus. Policies that can only be characterize by three S’s: sheer synchronized stupidity. --Peter Glover, Energy Tribune, 13 July 2012

  • With China having put shale gas near the top of the government agenda for energy security concerns, the scramble for this game-changing unconventional gas is gathering momentum. The Ministry of Land and Resources said that more than 70 companies have shown their interest in participating in the country's much talked about second tender for domestic shale gas blocks, which is estimated to kick off this month or next. The ever-growing shale gas fever in China, buoyed by the United State's revolutionary breakthroughs in the sector, has turned the new sector that has yet to take off into a new gold rush for companies in the country. --Zhou Yan, China Daily, 16 July 2012

  • The French government may review its position on shale gas as part of the planned mining code revision, Les Echos reported, citing unidentified industry ministry officials. Energy Minister Delphine Batho will hold talks with non- governmental organizations and there could be some progress on the issue by the end of the month, the daily business newspaper said. The previous French government passed a law last year banning hydraulic fracturing of shale though “experiments aimed solely at scientific research” are still allowed, the newspaper said. --Steve Rhinds, Bloomberg, 16 July 2012

  • Policies governing the European Union's drive towards a low- carbon economy should not lose sight of the need to retain the bloc's industrial base, Energy Commissioner Guenther Oettinger said in a newspaper column on Monday. Oettinger, a German national, echoed rising concern about runaway power prices in his home country, where subsidising of fast-expanding green power is burdening industrial and household consumers. --Reuters, 16 July 2012

More Evidence That Fracking Not Harmful

It is very important to understand that every oil and gas well is different.  It is equally, if not more important to realize the geology of every area where these wells are being drilled is different.  There are a great number of variables affecting an area's groundwater and its usage.  There are many naturally occurring "contaminants" in ground water.  It is far from perfectly pure like the TV advertisements.  Because of all these variables, there is no "one-size fits all" definition of how a well can be drilled, horizontally or otherwise, fracked (the process of hydraulic fracturing of the underground rock formation) and used to produce oil and or natural gas.

The fact is, millions of wells have been drilled all over the United States, not to mention the world, millions(?) have been fracked, and very little of this activity has harmed the ground water being used for human activity.  The few horror stories occurred in the early stages of development, decades ago.  Even the terrible accident in the Gulf of Mexico two years ago is a rarity and occurred under unique circumstances.  Facts are facts.  If we can get past the politically-motivated, ideological fear-mongering taking place in the mass media, we'll see that fracking can be done in a safe and productive manner.

Duke study determines hydraulic fracturing likely had no role in elevated salinity of Marcellus area water

The underlying geology seems likely to be the cause of brine and methane migration into drinking water, as the Duke team found elevated levels of methane contamination in drinking water wells located within a kilometer of hydraulic fracturing, but found no evidence of contamination from fracturing fluids."These results reinforce our earlier work showing no evidence of brine contamination from shale gas exploration," said Robert Jackson, co-author of the study.  Article here

Good News From The Marcellus

News of a great new well is always welcome.  Congratulations Consul!

Consol says Pennsylvania Marcellus well is its most prolific

Washington (Platts)--13Jul2012/323 pm EDT/1923 GMT

Consol Energy said Friday that a Marcellus Shale well it drilled in Westmoreland County, Pennsylvania, achieved a peak 24-hour production rate of 17,900 Mcf, the highest of any well in the company's history.
The Pittsburgh-based company also said it drilled 17 Marcellus wells in the second quarter and placed 18 online.

Consol said its 2012 gas production guidance is 157 to 159 Bcf net to Consol, with third-quarter gas production expected to be 40 to 42 Bcf.

The company, which is also a major Appalachian coal producer, said its gas division for the first time used water from coal mines for hydraulic fracturing. The three-well Morris 14 pad in southwestern Pennsylvania was fracked with a 10% blend of mine-sourced water. The pad came on line in early July and was producing at an initial rate of 18,000 Mcf/d.

--Rodney White, --Edited by Linsey Isaacs,

Saturday, July 14, 2012

Electricity Generation: Some Realistic Perspective On The Issue

Sometimes it is good to step back and take a good look at the big picture.  The following article summarizes the issue relative to coal very well.  Forget all the emotional and political rhetoric and grasp the reality of the situation, in this case the fuels that are available and being used to generate electricity, which after all, is possibly the most important factor in making modern civilization possible.  Do these realities reflect the goals and actions of our political leaders?  You tell me.

The World's Most Hated Energy Source Could Make You a Fortune

It's abundant, it's cheap, and it's found just about everywhere...
It accounts for about 40% of the planet's electricity usage -- more than natural gas, nuclear, wind, solar and geothermal combined.

It's the world's most preferred fuel for electricity generation, and people hate it... Even children don't like it. They're told if they misbehave, they could find a "lump of this" on Christmas morning.
If you haven't figured it out yet, I'm talking about coal. But before you tell me how the black rocks are the biggest threat to the planet since the last great meteor strike, hear me out.

There's no denying that coal gives off unwelcome pollutants. But plant efficiencies and technological advances have dramatically blunted the environmental impact -- and clean coal development continues to progress.

Still, many investors have been sold on the theory that coal is yesterday's energy source, not that of tomorrow. We're constantly told that fossil fuels are quickly becoming obsolete, and the future belongs to cleaner alternatives such as wind and solar power.

Don't believe it.

Don't get me wrong, I wholeheartedly support the pursuit of renewable energy sources (particularly those that are economically viable without taxpayer subsidies). But coal is still the king of the energy hill -- and it won't be knocked off for a long, long time.

Will coal eventually give way to other fuel sources? Probably. But it won't happen in the next quarter-century. In fact, the Energy Information Administration (EIA) is expecting global coal consumption to actually rise by 50% -- from less than seven billion tons in 2010, to 10 billion tons in 2030.
But before I get into the investment opportunity, let me briefly address the environmental aspect -- nobody likes the image of a factory belching pollutants into the sky.

I know coal isn't going to win any green awards. But much of the bad reputation is undeserved. The industry has actually made great strides in response to stringent air quality standards imposed by the U.S. Environmental Protection Agency (EPA) and other regulatory bodies.

Since 1980, U.S. coal consumption has risen by almost 80%, yet sulfur emissions have been slashed by 40%. The development of selective catalytic reduction (SCR) systems has eliminated 90% of nitrogen oxides (NOx). And there are all sorts of scrubbers to trap particulates and trace elements.
These and other innovations have greatly reduced coal's effect on climate change. And that's important, because the global economy would quickly shut down without coal.

Now, I've said before that affordable natural gas is displacing some coal-fired generating capacity. That's true in the United States, but that's not the case overseas. On a global basis, coal has been the fastest-growing fuel since 2000.

In China alone, coal is credited with providing power access to 450 million people in the past 15 years, according to the World Coal Association.

And consumption is projected to rise, not fall. Thanks to surging demand from Asia (which accounts for two-thirds of global usage), coal will meet 44% of the world's electricity needs by 2030, up from 40% today. And it's a thicker slice of a pie that grows bigger every year.

Europe is also becoming more reliant on coal in response to high natural gas prices and a backlash in some quarters against nuclear power. In India, imports of thermal coal soared more than 30% last year. And China is planning to build 600 megawatts of coal-fired power generation over the next 25 years. This increase represents more than the current coal generating capacity in the United States, Europe and Japan, combined.

Even 100 megawatts of additional capacity would require an additional 330 million metric tons of coal. China already burns far more than it can produce. In fact, the country had to import 182 million tons last year to cover the deficit.

And power generation is only half of the big picture...

Coal has several other important uses, most notably steel production. The world's mills produced 1.4 billion metric tons of steel in 2010. That production used up 720 million tons of metallurgical coking coal, which is used to make steel.

This means 50 pounds of this key raw ingredient are needed to make every 100 pounds of steel. And you can't build much without steel. The World Steel Association is forecasting 5% production growth in 2012, which would mean an extra 50 million tons of coal usage.

Add it all up, and you can see why the world is headed for a coal super-cycle over the next two decades. Global consumption reached a record 7.5 billion tons last year. And this number is headed higher. In fact, the IEA says the increase in coal consumption in the next 25 years will be more than double that of crude oil.

Action to Take -->
This rise in demand will unlock numerous opportunities, from companies such as Fuel Tech (Nasdaq: FTEK) that help cut plant emissions to South Africa's Sasol (NYSE: SSL), a pioneer in the coal-to-liquid (CTL) fuel space.
So keep your eyes on what's going on in the coal sector. By the looks of it, the black rocks won't be going anywhere for some time to come.

-- Nathan Slaughter
P.S. -- Although he is an expert in the area, oil and gas is far from the only arena Nathan is profiting from. Scarcity & Real Wealth aims to profit from the rarest and most valuable assets on the planet -- precious metals, agricultural commodities, energy, and other natural resources. These critical inputs are in short supply, yet worldwide demand is on the rise, making these assets some of the best investments on Earth. You can learn about one important supply/demand imbalance Nathan has found that will be making headlines next year by visiting this link (and without having to watch a lengthy video).
Nathan Slaughter does not personally hold positions in any securities mentioned in this article.
StreetAuthority LLC does not hold positions in any securities mentioned in this article.
This article originally appeared on

Thursday, July 12, 2012

The Permian Basin, Born Again

In the Permian Basin, drilling and production is rising while the price of oil is falling.  That is good for some, not so good for others.  All told, it looks to me that by combining "horizontal" drilling with careful and selective hydraulic fracturing, the future looks bright for increasing activity and production, which is good for everyone.


July 10, 2012

Rising production in the Permian basin

graph of Monthly Permian Basin rig count and oil production, as described in the article text
Sources: U.S Energy Information Administration, based on Baker Hughes and HPDI, LLC.
Notes: Graph includes rig counts through June 2012 and oil production through December 2011. Active rigs include rigs drilling for both crude oil and natural gas.

The source for the crude oil production data series published on July 10 was websites of the Railroad Commission of Texas and the New Mexico Energy, Minerals and Natural Resources Department. On July 11 the source was changed to HPDI, LLC, because HPDI, LLC collects both that data and production data that has not yet been processed by the Railroad Commission of Texas.

The Permian Basin—a long-time oil and natural gas producing region in west Texas and eastern New Mexico—is showing signs of new life. The active rig count has grown from 100 rigs in mid-2009 to over 500 rigs in May 2012. According to data from HPDI, oil production from the Permian has increased fairly steadily over the past few years, reaching the 1 million barrels per day (bbl/d) threshold in 2011—the first time since 1998.
graph of Spot prices of WTI and Midland crude oil, as described in the article text
Sources: U.S. Energy Information Administration, based on Bloomberg.

Growing oil production in the Permian Basin and other Texas plays, most notably the Eagle Ford shale, may be starting to strain existing takeaway capacity and is creating a need for Texas oil to serve more distant refineries. While new pipeline projects are scheduled to come online, current transportation constraints have caused Permian crude oil, which is priced in Midland, Texas, to sell at a significant discount to WTI beginning in January 2012.

A Glimmer Of Hope, Brought To Us By The Oil And Gas Industry

I hope Mr. Hanson is correct in making the following observations and predictions.  He is an accomplished Professor and world historian.  I follow his writings regularly.  He offers more reason for optimism than I have read in a long while.  I hope some people in power are paying attention.

The World is Changing Minute by Minute
We are witnessing a seismic shift in global affairs. The shake-up is a perfect storm of political, demographic and technological change that will soon make the world as we have known it for the last 30 years almost unrecognizable.
Read entire article here:
Some key points:
"Horizontal drilling and fracking have made oil shale and tar sands rich sources of oil and natural gas, so much so that the United States may prove to possess the largest store of fossil fuel reserves in the world -- in theory, with enough gas, oil and coal soon never to need any imported Middle Eastern energy again. "Peak oil" is suddenly an anachronism. Widespread American use of cheap natural gas will do more to clean the planet than thousands of Solyndras.
If the United States utilizes its resources, then its present pathologies -- massive budget and trade deficits, mounting debt, strategic vulnerability -- will start to subside. These new breakthroughs in petroleum engineering are largely American phenomena, reminding us that there is still something exceptional in the American experience that periodically offers the world cutting-edge technologies and protocols -- such as those pioneered by Amazon, Apple, Google, Microsoft, Starbucks and Walmart."
And finally:
"Who would have thought that a few fracking innovators in Texas would change the world's carbon footprint far more than did Nobel laureate Al Gore -- while offering a way for the U.S. to be energy-independent. Or that Angela Merkel, not the European Union, would run Europe. Or that Arabs would be overthrowing Arabs, as oil-rich Israel idly watched."

The Weather May Be Hot, But The Battle Over Fracking Is Really Heating Up

There is a full-court press being mounted by the Obama Administration, using the Environmental Protection Agency (EPA), and the  whole gamut of environmental extremists, to shut down or at least severely inhibit and control the entire fossil fuel industry, not just natural gas drilling and production.  They care nothing about the economic health of the country, or the world for that matter.

Read on.  This irrational nonsense about the "dangers" of fracking needs to be challenged by everyone, on every level.  In particular, go to the following article and read the comments.  I like this one:

5. spinoneone
We know, from her own comments and admissions, that Lisa Jackson has a mission with regard to the production of any carbon fuel – stop it at all cost. So, one can reasonably assume that the “conclusion” to the Congressionally mandated report has already been written. Now EPA needs to scramble around and find some supporting evidence and data.
  • Bingo. There’s the real agenda. There’s a convergence of interest between the rich moonbat left and OPEC to stop fracking. It’s got nothing to do with fracking itself. Fracking is not the issue, and never was.

Study: EPA’s Probe Into Fracking’s Effect on Drinking Water Isn’t So Clean

PLUS: Celeb anti-frackers to descend on D.C. to demand Congress end the shale extraction technique altogether.
Bridget Johnson
July 10, 2012 - 3:50 pm
An industry-funded independent investigation of the Environmental Protection Agency’s long-running probe into the effects of hydraulic fracturing found numerous flaws in everything from the EPA’s scope to its lack of consultation with oil and gas companies.
“The study released today by Battelle—a highly respected independent science and technology organization—identifies numerous concerns with EPA’s ongoing hydraulic fracturing study,” said Rep. Andy Harris (R-Md.), chairman of the House Science, Space, and Technology Subcommittee on Energy and Environment.
The 166-page Battelle study, submitted to the American Petroleum Institute and America’s National Gas Alliance, focused on the 2010 urging of a House conference committee that the EPA “carry out a study on the relationship between hydraulic fracturing and drinking water using a credible approach that relies on the best available science, as well as independent sources of information.”

continued here: