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Audio: The Energy Crisis Is Over!
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PostPosted: Sat Oct 24, 2009 6:29 pm    Post subject: Audio: The Energy Crisis Is Over! Reply with quote


News Xtra - 24th October, 2009

Guest: Nick Grealy http://nohotair.co.uk/

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Unlike conventional gas production, shale gas potential is not confined to limited traps or structures, and may exist across large geographic areas. Gas is held in the shale not only in tiny pores, but also in a solid solution bound onto the rock grains. The key to producing these shales is connecting the pores through the introduction of an artificial fracture system, and lowering the pressure in the rock (through production) to allow the gas in solid solution to become gaseous and flow.

In addition to higher gas prices, the ability to undertake large scale shale gas development has followed improvements in hydraulic fracturing and horizontal drilling which allows delivery of the massive fracture treatments necessary to obtain gas flows at commercial rates.

More recently, aided by both technology and price, companies have found it economical to produce gas directly from some of the source rocks themselves, typically shales and coals.

Under the right circumstances gas has been found in sufficient volumes and been producible at sufficient rates to make these "unconventional reservoirs" key exploration and development targets. Although gas is still stored in pores and fractures as in "conventional" gas plays, in the "unconventional" shale plays these pore spaces are small and the fractures are extremely fine.

However, the rock grains also hold (adsorb) gas volumes that have never been released into the pore or fracture spaces, and will never be released (desorbed) until the reservoir pressure is reduced as a result of production. A major advantage that shale source rock reservoirs bring, is that a trap to confine the gas is no longer needed. This expands dramatically the area over which gas can be found, and moves the paradigm for establishing production away from one of location dependency (finding the traps where the gas is present) towards one of optimizing drilling, stimulation and completion techniques.

The United States Geological Survey (USGS) estimates that shale gas resources (that is technically recoverable, may be as much as twice the estimated undiscovered conventional gas resources.


Energy crisis is postponed as new gas rescues the world

Engineers have performed their magic once again.
The world is not going to run short of energy as soon as feared.

By Ambrose Evans-Pritchard - 11 Oct 2009

America is not going to bleed its wealth importing fuel. Russia's grip on Europe's gas will weaken. Improvident Britain may avoid paralysing blackouts by mid-decade after all.

The World Gas Conference in Buenos Aires last week was one of those events that shatter assumptions. Advances in technology for extracting gas from shale and methane beds have quickened dramatically, altering the global balance of energy faster than almost anybody expected.

Tony Hayward, BP's chief executive, said proven natural gas reserves around the world have risen to 1.2 trillion barrels of oil equivalent, enough for 60 years' supply – and rising fast.

"There has been a revolution in the gas fields of North America. Reserve estimates are rising sharply as technology unlocks unconventional resources," he said.

This is almost unknown to the public, despite the efforts of Nick Grealy at "No Hot Air" who has been arguing for some time that Britain's shale reserves could replace declining North Sea output.

Rune Bjornson from Norway's StatoilHydro said exploitable reserves are much greater than supposed just three years ago and may meet global gas needs for generations.

"The common wisdom was that unconventional gas was too difficult, too expensive and too demanding," he said, according to Petroleum Economist. "This has changed. If we ever doubted that gas was the fuel of the future – in many ways there's the answer."

The breakthrough has been to combine 3-D seismic imaging with new technologies to free "tight gas" by smashing rocks, known as hydro-fracturing or "fracking" in the trade.

The US is leading the charge. Operations in Pennsylvania and Texas have already been sufficient to cut US imports of liquefied natural gas (LGN) from Trinidad and Qatar to almost nil, with knock-on effects for the global gas market – and crude oil. It is one reason why spot prices for some LNG deliveries have dropped to 50pc of pipeline contracts.

Energy bulls gambling that the world economy will soon resume its bubble trajectory need to remember two facts: industrial production over the last year is still down 19pc in Japan, 18pc in Italy, 17pc in Germany, 15pc in Canada, 13pc in France and Russia. 11pc in the US and the UK and 10pc in Brazil. A 12pc rise in China does not offset this.

OPEC states are cheating on quota cuts. Non-compliance has fallen to 62pc from 82pc in March. Iran, Nigeria, Venezuela et al face a budget crunch. Why comply when non-OPEC Russia is pumping at breakneck speed?

The US Energy Department expects shale to meet half of US gas demand within 20 years, if not earlier. Projects are cranking up in eastern France and Poland. Exploration is under way in Australia, India and China.

Texas A&M University said US methods could increase global gas reserves by nine times to 16,000 TCF (trillion cubic feet). Almost a quarter is in China but it may lack the water resources to harness the technology given the depletion of the North China water basin.

Needless to say, the Kremlin is irked. "There's a lot of myths about shale production," said Gazprom's Alexander Medvedev.

If the new forecasts are accurate, Gazprom is not going to be the perennial cash cow funding Russia's great power resurgence. Russia's budget may be in structural deficit.

As for the US, we may soon be looking at an era when gas, wind and solar power, combined with a smarter grid and a switch to electric cars returns the country to near energy self-sufficiency.

This has currency implications. If you strip out the energy deficit, America's vaulting savings rate may soon bring the current account back into surplus – and that is going to come at somebody else's expense, chiefly Japan, Germany and, up to a point, China.

Shale gas is undoubtedly messy. Millions of gallons of water mixed with sand, hydrochloric acid and toxic chemicals are blasted at rocks. This is supposed to happen below the water basins but accidents have been common. Pennsylvania's eco-police have shut down a Cabot Oil & Gas operation after 8,000 gallons of chemicals spilled into a stream.

Nor is it exactly green. Natural gas has much lower CO2 emissions than coal, even from shale – which is why the Sierra Club is backing it as the lesser of evils against "clean coal" (not yet a reality). The US Federal Energy Regulatory Commission said America may not need any new coal or nuclear plants "ever" again.

I am not qualified to judge where gas excitement crosses into hyperbole. I pass on the story because the claims of BP and Statoil are so extraordinary that we may need to rewrite the geo-strategy textbooks for the next half century.


Gas from shale seen as raising global supplies

Betting Big on a Boom in Natural Gas

Shale Gas Process Animations

Gas underrated as the world's future clean energy source

Climate Bill Divides Oil and Gas Industry

Analyst: Gas shale may be next bubble to burst

Natural Gas from Shale: Emerging Plays

Environmental Concerns Videos

Minds are like parachutes.
They only function when open.

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PostPosted: Mon Oct 26, 2009 7:06 am    Post subject: Reply with quote

Please forgive me for damping your optimism, but before we get too cheerful about this newfound source of energy, now that global warming has been called off, and we can all go back to consuming energy like before, I would like to point out, that the environmental impact of "fraccing" is way more serious than with conventional oil-drilling. Oil drilling was just sucking some oil through a pipe, and look at the mess they made!

Fraccing is the opposite, blowing down a hole, to force out the gas. That sounds messy doesn't it? You blow in one place and all kinds of things will be moving around underground.

As mentioned in the audio, literally millions of gallons of water are polluted with a lethal brew of nasty, carcinogenic substances and then blown down into the earth, to press out the gas.

The water may be "recycled" to a certain extent, but most of it stays under ground, polluting the ground-water. Even the water that is recovered, will not be moved very far from one drill-site. Too expensive to move millions of gallons of water. So where does the polluted water go? Can't clean it. So they'll make a lot of promises, build some fake cleaning equipment, and then just leave it there for the fish to drink.

It will come as no surprise, javascript:emoticon('Twisted Evil') that Haliburton is one of the leaders in fraccing:

"Gas Perm 1000. Can replace Methanol". Oh, so they were using Methanol. Isn't that poisonous? I don't even want to know what is in Gas Perm 1000. It probably isn't Vitamin C!

We may have a new energy-source, to help us get through this century. But god help those that live in a 100 mile radius of a drill-site. Their land will be worthless, their drinking water poisoned...
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PostPosted: Mon Oct 26, 2009 10:00 am    Post subject: Reply with quote

I agree the environmental issues need oversight and regulation.
It's just that those issues weren't the focus of the audio, though
I have linked a set of environmental videos in the post above.

It seems one key to this issue is that the risk of contamination
will depend of the specific geological characteristics of the
strata in which you are drilling. Some say the pecentage of
wells which contaminate is as low as 2%, but I don't have
confirmation on that. Clearly there must be an environmental
risk assessment imposed on all wells.

Another key is further development of the 'fracking' mix
of chemicals. Dangerous chemicals have been used but
the solution may be to develop a chemical mix whose
residue can be polymerized when its function is done,
thus plasticizing it into an inert solid.

Unless there is effective oversight, the industry will do what
industries do to max up profits: pollute like drunken sailors.

Glad you brought this up.

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They only function when open.
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PostPosted: Mon Oct 26, 2009 7:22 pm    Post subject: Reply with quote

Be careful here Fintan. Fox News coined the phrasing SOME PEOPLE SAY

You are always good with your sources and I would caution against not including them in this instance.

Not nit picking and i know I am generally quiet , but you know.

I hate to see fodder for others left here against yourself.

Pardon the intrusion please continue as if nothing happened.

Today is the Tomorrow I waited for Yesterday
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PostPosted: Mon Oct 26, 2009 7:23 pm    Post subject: Reply with quote

hi Fintan and Camagüey

i used to work in the water pollution business dealing with oil and gas wells but it has been a few years ago. i was just in contact with a friend who is still in the treatment/permitting business. here are some of her coments

I know a little about the whole Marcellus shale thing because we are trying to get clients that are in the industry. It is pretty controversial cause of the amount of water it takes to do the drilling and the lack of wastewater treatment. Draining creeks is a pretty big concern although the PaDEP has been working to get stricter regulations implemented.

Who knew that EDC was ahead of its time. I wonder if they (or Castle gas) are still in business (note: these were two plants we built in the 1980's to treat brine and product water from oil and gas wells)

The biggest problem seems to be the TDS levels that cause all the problems (not to mention all the additives). A lot of (municipal) sewage treatment plants are getting hit with new TDS limits if they accept brine for treatment. New Castle's treatment plant is one of them. . All in all I think it causes a significant impact to the environment because the operations have to be so big to since it is so expensive to get one started.

1. as you say Fintan, the fracc fluids, trade secret formulas, are just dumb chemicals "to keep solids in suspension" so they can be removed from the well. they don't know when to let go. changing will not be easy
since someone is making money selling the stuff.

2. TDS is total dissolved solids, ie, salts. the companies are trying to send the waste to municipal plants but it causes problems both with the TDS (salt) limit to the stream but also with sewage sludge. the industry needs to build it own treatment facilities

3. another thing is the need for roads to the site and oh yea, a pipeline to connect this remote place to a main line. the companies have "land agents' running around trying to sign up as many landowners as possible for as little as possible. used car salesman would be embarrassed.

4. none of these are insurmountable but there needs to be a coordinated approach that is fair to everybody. I see another Czar in the making

Birth is the first example of " thinking outside the box"
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PostPosted: Sun Mar 21, 2010 11:44 am    Post subject: Reply with quote

The influential UK Financial Times just ran an major
article examining the issues Nick Grealy mentioned
in our interview:

You need to pay to read, so I've copied
the article here for educational purposes:

A foot on the gas

With technological advancement transforming perceptions about a hitherto economically unviable energy source trapped in shale, political resistance seems to be the main hurdle to the prospect of secure, affordable and clean power.

By Carola Hoyos and Ed Crooks, Financial Times - March 17, 2010

Andrew Austin is bringing an American revolution to Britain. On a patch of farmland east of Liverpool, his company Igas has drilled one of Europe's first wells for "unconventional" gas, extracted from source rocks traditionally rejected by the industry as uneconomical.

The former investment banker hopes in the next couple of years to exploit the source that has transformed the outlook for energy in the US: shale rocks.

Igas has taken leases on 300,000 acres of shale, a sedimentary rock, across north Wales and north-west England, joining the rush of companies large and small in countries such as Poland and Germany seeking to replicate a boom in the US that has captured the industry's imagination.

"Even a year ago, if I had said I was taking licences in big slabs of shale rock, everybody would have thought I was barking mad," Austin says. "Now I get invited to five conferences a week."

The rush of European interest in shale underscores wider awareness of a transformation in the outlook for gas supplies. A surge in US production has meant that within three years the world has gone from running out of natural gas to being drowned in it.

The implications are profound. Policymakers have faced a trilemma: how to make energy supplies secure, affordable and clean. Now an abundance of gas appears to provide the answer to all three problems at once. In the words of Tony Hayward, chief executive of BP, it is a "game changer" certainly for America, and quite possibly for the world.

If western politicians get it right, they could transform their uneasy relationships with suppliers in potentially troubling countries such as Russia and Nigeria, while meeting carbon reduction targets without relying on nuclear and wind power, which can deliver electricity only at vastly inflated expense. The consequences will be greatest if Europe can emulate the upsurge in US production. If it does not, the effects will still be profound.


However, there are two problems that could prevent gas from being the "long-term energy solution" proclaimed this week by Jim Mulva, chief executive of ConocoPhillips, a US oil and gas group.

One is political resistance; the other is the danger of pollution that one analyst warns could pose a "Toyota-sized" reputational risk.

Scepticism about the gas revolution is understandable because change has come so fast. Until five years ago, US policymakers and energy executives were fretting about securing enough gas to make up for the decline in the country's own, sizable production. This year, the US has overtaken Russia to become the world's biggest gas producer for the first time in nearly a decade. Technical breakthroughs that allow companies to tap gas trapped in its vast shale reserves, until recently considered impervious, have allowed it to shut its doors to imports from distant countries. The industry now thinks it can produce from those reserves for 100 years.

Furthermore, with technical developments that make it easier to export liquefied natural gas, changes in the US market can have effects thousands of miles away. As America loses its appetite for imports, LNG tankers from countries such as Qatar are re-routed to Asia and Europe.
For the latter, the prospect of increased imports of LNG and the potential for its own unconventional gas production offer reprieve from dependence on Gazprom, the Russian gas export monopoly. A recent report by the Wood Mackenzie consultancy concluded that Russia's share of the European gas market was likely to fall from 29 per cent to 24 per cent this decade because of the competition from gas originating in countries such as Qatar, Nigeria and Algeria.

The increased supply of gas, and the more cautious views of the outlook for demand growth after the recession, have also taken the urgency out of projects such as the Nabucco pipeline, the European Union-backed project to bring up to 31 billion cubic metres of gas a year from the Caspian region to central Europe. Because Russia has the world's largest reserves of gas, Europe will still find it difficult to extricate itself from the relationship with its biggest supplier. But exploiting its own unconventional gas reserves could make a big difference to the EU, its eastern members in particular.

Lower cost

The especially appealing feature of the new supplies of gas is that they could reinforce energy security at a much lower cost than other home-grown energy sources such as nuclear power or offshore wind.

In America, the benchmark price of gas is below $5 (Dh18.3) per million British thermal units; in Britain, it is about 30 pence per thermal unit. Those prices are equivalent to about $30 per barrel of oil: less than half today's crude price of about $80. Prices are so low that it is cheaper to use gas to generate electricity than coal. As the world economy recovers, prices are expected to pick up again. But rising US production is likely to put a ceiling on how far they can rise.

Gas is also the preferred fuel for power companies planning to build plants, because gas-fired designs are cheapest and quickest to construct. Combined cycle gas turbines (CCGT), the most modern and efficient plants, are a proved technology that can be built for less than $1 million per megawatt of capacity, compared to perhaps $4 million per megawatt for a new nuclear plant and $5 million per megawatt for a wind turbine located out at sea. "Gas is a very competitive option," says Fabien Roques of the IHS CERA consultancy. "Gas-fired plants are very flexible; they can back up renewables; they are very straightforward, and they are very low risk for investors."

Lower emissions

When the political commitment to curb greenhouse gas emissions is taken into account, the appeal of gas is even stronger. Gas creates about half the carbon dioxide of coal when burned to generate electricity. Indeed, one of the cheapest ways to cut emissions is to shut coal plants and replace them with gas.

Lambert Energy, the advisory firm, estimates that shutting down the EU's coal-fired power stations and replacing them with CCGT plants would cut emissions by about 20 per cent of 1990 levels, meeting the target set by European governments for 2020.

In the US, the same shift would cut emissions by 22 per cent from 2005 levels, exceeding the 17 per cent reduction proposed by President Barack Obama at the Copenhagen climate summit last December.
If it switched entirely out of coal-fired power and into gas, the EU would need about 40 per cent more gas, but higher LNG imports and some domestic shale gas production could make it possible to meet that increased demand.

The vision of a gas-based energy system, cheap, clean and secure, is a seductive one. It will not be easy, however, to turn it into reality.

The primary problem is politics, according to Philip Lambert of Lambert Energy. "There is only one thing that can stand between natural gas being the affordable, quick and material answer to the environmental challenge posed by the globalisation of energy use — and that is political unwillingness to accept gas as the fuel of choice."

In part because of concerns about excessive reliance on Russia, EU governments have committed themselves to renewables such as wind power, promising to derive 20 per cent of Europe's energy from those sources by 2020. As a result, the industry is being pushed away from the lowest-cost options for emissions reduction to higher-cost technologies such as offshore wind.

In the US, opposition to an increased use of natural gas comes not only from the politically powerful coal lobby resisting any erosion of its position but also from policymakers and Congress, largely focused on supporting renewables and nuclear power.

Policymakers on both sides of the Atlantic have been slow to accept that the outlook for gas supplies has been transformed.

At the CERA Week industry conference in Houston recently, Steven Chu, the US energy secretary, spoke positively about shale deposits but highlighted the role of gas as merely "a key enabler of renewable energy".
Gunther Oettinger, the new European commissioner for energy, also stresses the value of renewable energy. Welcoming forecasts that the EU was on course to meet its renewable goal for 2020, he said: "Our task will be to help all member states not only to reach the 20 per cent target but to go beyond."

That political pressure damages confidence in future demand for gas and risks choking off the investment needed to guarantee supplies. It may also weigh against the construction of new gas-fired power stations because investors will worry about whether the plants will run only when other forms of power, such as wind, are unavailable. "Investors need to work out how gas plants will remain profitable post-2020," says Roques.

Environmental concerns

The other problem is the potential environmental impact of shale gas production. Water, sand and chemicals are pumped into the ground under pressure, to crack the shale and create gaps so the gas can flow out.
In the US, this process of fracturing, or "fracking", has already caused concern among environmental campaigners and some politicians worried about possible contamination of ground water.

Michael Zenker of Barclays Capital, warns: "If fracturing was halted, there would be a serious dent in the supply outlook for North America."
He does not expect environmental concerns to slow the growth of the US industry, although he acknowledges they could be a "reputational" risk.
In more densely populated and often environmentally sensitive European countries, however, those worries could be much more of a problem.

Wolfgang Ruttenstorfer, chief executive of Austria's OMV, one of the companies exploring the potential of shale gas in Europe, says: "I don't want to create these kind of hopes and fantasies that lack final results, so I'm extremely cautious whether [shale gas] will be an option at all."

Russian apprehensions

Alexander Medvedev the head of Gazprom's international business, who is watching the effect of shale gas nervously is counting on environmental concerns to derail ambitions to bring shale gas technology to Europe. If things go his way, then there is a risk that Russia's grip on European energy could tighten, not ease.

While shale gas may fail to take off in Europe, however, the most important revolution could come in China, which relies on coal for 81 per cent of its rapidly growing electricity needs and on gas for only 1 per cent.

Beijing is keen to change that balance to reduce carbon and sulphur emissions, which are suffocating its big cities, and also wants to secure more of its fuel supplies at home. Last year the government signed an agreement under which the US government will help China assess its shale gas potential.

In the long run, China and the US agreeing that natural gas is the fuel of the future may well prove to be more important than their failure to come up with binding emissions targets at Copenhagen last year.

3 The pressurised mixture causes the natural fissures and layers in the rock to crack

4 Sand particles hold the fissures in the shale open allowing natural gas to flow up the well

$5 per million British thermal units is the benchmark price of gas in the US.

22% emissions cut possible in the US — when compared with 2005 levels — by shifting to power generation facilities relying on combined cycle gas cycle turbines.

20% reduction in emissions from 1990 levels that can be achieved by replacing the EU's coal-fired power stations with combined cycle gas turbines.


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PostPosted: Sun Mar 21, 2010 12:41 pm    Post subject: Reply with quote

hi Fintan,

here in Marcellus Shale Land things have been pretty busy
here's three articles this past week in the Pittsburgh paper.
everyone is trying to get a handle on what it means


EPA to study water pollution from Marcellus shale drilling
Thursday, March 18, 2010
By Don Hopey, Pittsburgh Post-Gazette

All the drilling, water withdrawals and water pollution associated with the rapid recent development of Marcellus shale gas in Pennsylvania and four other Appalachian states has attracted the attention of the U.S. Environmental Protection Agency.

The EPA announced today that it will conduct a comprehensive $1.9 million study to investigate "the potential adverse impact that hydraulic fracturing may have on water quality and public health."

The fracturing, or "fracking," is a process that injects millions of gallons of water mixed with chemicals and sand into a gas well under great pressure to create horizontal and vertical cracks in the thick black shale lying 5,000 to 8,000 feet beneath three-quarters of Pennsylvania and parts of New York, Ohio, Maryland and West Virginia.

The fracking process releases the natural gas from the shale, but the EPA said there are concerns the process may degrade surface and ground water and pose a threat to human health and the environment.

The EPA is in the early stages of designing a hydraulic fracturing research program. Dr. Paul Anastas, assistant administrator of EPA's Office of Research and Development, said the research will be conducted in a "transparent, peer-reviewed process, with significant stakeholder input."

The Marcellus shale could hold as much as 363 trillion cubic feet of natural gas, enough to supply the nation's gas needs for up to 15 years. The gas bonanza has resulted in a boom in well permitting and construction. Statewide, approximately 2,500 Marcellus shale gas well drilling permits were issued from 2007 through 2009 by the state Department of Environmental Protection, which projects another 5,000 permits will be issued this year.

Don Hopey: dhopey@post-gazette.com or 412-263-1983.


PUC sets hearing on Marcellus shale pipes
Thursday, March 18, 2010
By Don Hopey, Pittsburgh Post-Gazette

The Pennsylvania Public Utility Commission is holding a special hearing as part of efforts to clarify and possibly expand its role in regulating burgeoning Marcellus shale gas well and gas pipeline development.

The hearing by the commission on April 22 in Harrisburg is expected to examine a host of safety issues, including whether the PUC has jurisdiction over the pipelines that will transport gas pulled from the 5,000- to 8,000-foot-deep shale layer beneath three-quarters of the state.

Tyrone Christy, PUC vice chairman, said development of the state's shale gas field or "play," thought to hold as much as 363 trillion cubic feet of natural gas, raised numerous issues about the commission's core regulatory functions and scope.

"We believe that these issues need to be examined and these questions answered sooner rather than later so that we can fully protect the public while not stifling economic growth," Mr. Christy said in a hearing notice last week.

Jennifer Kocher, PUC spokeswoman, said the PUC has regulatory jurisdiction over "public utility pipelines," defined as pipelines transporting gas or oil within the state for compensation.

"But if a drilling company uses its own pipelines to transport the gas it produces, then there's a question about our jurisdiction," Ms. Kocher said. "We're looking at that issue, at our safety jurisdiction, safety issues and the role of the PUC."

Matt Benson, a spokesman for the Pennsylvania Oil and Gas Association, said the industry trade group hasn't addressed the pipeline regulation issue and is taking a "wait and see position" on PUC regulation. He said the group, along with gas producers, hopes to be offered an opportunity to testify at the hearing.

Ms. Kocher said the PUC hasn't had any reports of gas line explosions, but the commission is examining the issue because of the rush of gas development. Estimates are that the Marcellus shale in Pennsylvania and parts of New York, Ohio, Maryland and West Virginia could hold enough gas to supply the nation's demands for 15 years.

State Department of Environmental Protection regulators say 5,000 new Marcellus shale wells could be permitted this year in Pennsylvania, double the number permitted in the state over the last two years.

"There's an enormous amount of development going on and a big increase in the amount of pipelines," Ms. Kocher said. "Our concern is the safety of those lines and who will oversee it. That's unclear right now."

State legislation would be needed to authorize any expansion of the PUC's regulatory role.

On a related Marcellus shale regulatory matter, the PUC increased its transportation enforcement activities in five northeastern counties last month after receiving complaints that well drilling and tanker trucks were operating without PUC certification.

"We've increased enforcement all over the state," said Ms. Kocher.

Roadside truck inspections, in partnership with the State Police, have occurred in Bradford, Sullivan, Susquehanna, Tioga and Wyoming counties. Trucking companies must have PUC certificates and proof of insurance if transporting commodities such as sand, water or stone related to the well-drilling operations.
Don Hopey: dhopey@post-gazette.com or 412-263-1983.

Read more: http://www.post-gazette.com/pg/10077/1043759-113.stm#ixzz0ipjex15N


Consol in $3.5B gas deal
Cecil firm buying 500,000 acres in Marcellus shale

Tuesday, March 16, 2010
By Elwin Green, Pittsburgh Post-Gazette

A multibillion-dollar deal announced Monday could place coal giant Consol Energy solidly within the ranks of major natural gas producers.

The Cecil company has agreed to pay $3.5 billion to Dominion Resources Inc. of Richmond, Va., for its Appalachian natural gas exploration and production business.

The deal, slated to close by April 30, will add 1.64 million acres to Consol's footprint, with about 500,000 acres in the so-called "fairway of the Marcellus shale," the portion of the natural gas reserve running northeast from central West Virginia through southwestern Pennsylvania.

Consol's new total of 750,000 acres in the Marcellus shale should put it in third place behind Range Resources, of Fort Worth, Texas, and Chesapeake Energy, of Oklahoma City, each of which has leased well over a million acres in the Marcellus.

The Consol purchase will include more than 9,000 producing wells in Pennsylvania and West Virginia, with net annual production of 41 billion cubic feet.

J. Brett Harvey, Consol president and CEO, said the acquisition will transform the business into "a leading diversified energy company."

The seed for that transformation was planted in 2006, when Consol spun off subsidiary CNX Gas as a standalone company. Consol holds about 83 percent of CNX Gas shares.

CNX Gas, created to exploit the methane released as a byproduct of coal mining, later joined the fray of companies rushing to acquire Marcellus acreage after horizontal drilling was introduced to the region. Now CNX Gas has about 250,000 Marcellus acres.

Consol plans to pay for the deal by issuing between $2 billion and $2.5 billion of new stock, and between $1.5 billion and $2 billion of debt.

While issuing new stock could dilute the value of existing stockholders' shares and taking on new debt carries the risk of hurting credit ratings, analysts generally saw the deal as one that would benefit the company in the long term.

"Shale gas is likely to be a game changer for the U.S. energy mix and this deal positions [Consol] for the new energy reality," according to a J.P. Morgan research note.

Investor response was mixed. Consol shares fell 10 percent to $48.85 from Friday's close of $54.33, while CNX shares rose more than 16 percent to $30.46, from $26.23. Dominion's stock price barely moved and closed at $39.71, up from $39.69.

Alay Patel, Wood Mackenzie analyst for upstream research, noted the deal is only the latest in a string of Marcellus shale megadeals, beginning with the 2008 agreement between Chesapeake Energy and StatoilHydro, in which the Norwegian energy giant paid $3.375 billion for a 32.5 percent stake in Chesapeake's Marcellus assets.

In August, Dallas-based Chief Oil and Gas along with Fort Worth private equity firm Tug Hill Inc. sold 30 percent of jointly owned Marcellus interests to Canadian oil and gas producer Enerplus Resources Fund for $406 million.

Just last month, Anadarko Petroleum Corp., of The Woodlands, Texas, sold a 32.5 percent stake in its Marcellus assets to Japanese conglomerate Mitsui & Co. for $1.4 billion.

The key difference between those deals and this one, Mr. Patel said, is that in those cases the buyer was a non-U.S. company in search of more than land or gas. Those deals gave buyers "access to shale gas extraction expertise. In the end, they can apply the same technology to shale gas plays the world over."

For Consol, it's not about gaining expertise. It's about the land and the gas.

For expertise, Consol need look no further than CNX Gas. The company is expected to turn over the operations of the new business to CNX. Mr. Harvey said with the purchase of Dominion's operations, CNX is raising its 2015 target for natural gas production from 200 billion cubic feet -- twice the current production -- to 350 million cubic feet.

Monday's announcement also hinted at the possibility Consol will seek to acquire the 17 percent of CNX that it does not own, bringing the company entirely back into its fold.

Consol attempted to acquire CNX two years ago, with an all-stock deal offering .4425 share of Consol -- then worth about $35 -- for each share of CNX. That offer was rejected.

The two companies consolidated their management in January 2009.

While many natural gas companies have swarmed into the Marcellus, Consol is the only major coal company to make the natural gas play a key part of its growth strategy.

Such an approach may prove especially advantageous as the Obama administration continues to press for "clean energy." In a meeting with key congressional leaders last week, President Barack Obama said he would still like to see a price set on carbon emissions.

An energy bill that included cap and trade provisions was passed by the House last year, but the Senate version remains in committee, leading to speculation that carbon pricing may emerge -- not as a provision of new legislation but as an expansion of current Environmental Protection Agency regulations.

However it happens, carbon pricing could reduce profit margins for coal producers and increase them for natural gas producers because of the differences in emissions by the two energy sources.
Elwin Green: egreen@post-gazette.com or 412-263-1969.

Read more: http://www.post-gazette.com/pg/10075/1043083-28.stm#ixzz0ipj7G2gr

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PostPosted: Mon Mar 22, 2010 12:53 pm    Post subject: Reply with quote

Interesting articles, thanks.

So, now the EPA are taking a look......

They have a right and responsibility.

But here's a paragraph from the article I posted above:

Alexander Medvedev the head of Gazprom's international business, who is watching the effect of shale gas nervously is counting on environmental concerns to derail ambitions to bring shale gas technology to Europe. If things go his way, then there is a risk that Russia's grip on European energy could tighten, not ease.

Now if Gazprom are worried about the effect of Shale Gas on them,
then clearly there are a lot of oil and political interests also worried.

It's clear that Shale Gas is getting a lot of momentum.

So, will political considerations govern the EPA's moves?
Will the environmental issues become a political football?

One to watch, for sure.

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They only function when open.
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PostPosted: Fri Jun 04, 2010 11:36 am    Post subject: Reply with quote

I hope this doesn't require a "nuke option" to contain


Marcellus Shale Well Blowout Prompts Evacuations

There is a developing story out of Clearfield County involving Marcellus Shale drilling and evacuations.

According to an official with Clearfield County's Emergency Services, authorities are evacuating part of the state forest in Lawrence Township after a Marcellus Shale well blowout.

It happened late Thursday night. No one was hurt, but the blowout is still not contained.

Natural gas and thousands of gallons of untreated water are spewing from the well.

Department of Environmental Protection spokesman Dan Spadoni says the accident happened when unexpectedly high gas pressure in the newly drilled EOG Resources well prevented crews from containing it.

Spadoni said the polluted water hasn't reached a waterway.

Emergency officials are continuing the process of trying to contain the site.

The Federal Aviation Administration issued a flight restriction in the immediate area shortly after 11 a.m.

Spadoni says there are no homes within a mile.

Stay with KDKA for the latest details.

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PostPosted: Mon Jun 07, 2010 1:56 pm    Post subject: Reply with quote

oh, dear I hope this isn't a trend


n 7, 2010 12:50 pm US/Eastern
7 Injured In W. Va. Gas Well Explosion

Seven people were injured in a gas well explosion in Moundsville, W. Va. Monday morning.

On the heels of a gas well blow-out in Pennsylvania last week, there was a similar incident in West Virginia today.

Seven workers were injured when a Marcellus Shale gas well exploded around 1:30 a.m. just outside of Moundsville.

Medical officials were going to fly the victims to Pittsburgh hospitals, but helicopters were grounded by fog.

There is no word on how badly the workers were injured, or what caused the explosion.

Homeland Security and Emergency Management Director Jimmy Gianato says Pittsburgh-based Chief Oil and Natural Gas was drilling the well when the explosion occurred.

see this article about problems with high pressure oil and gas wells


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PostPosted: Mon Jun 07, 2010 6:19 pm    Post subject: Reply with quote

and i hope all this isn't to take the focus off goldman hearings.

just cos things are fucked up doesn't mean it isn't progress...
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PostPosted: Tue Jun 22, 2010 3:21 pm    Post subject: Reply with quote

if you have tv and cable you could have watch this last night


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