The difficulty and uncertainty in predicting natural gas resources was underscored last week when the Energy Information Administration released a report containing sharply lower estimates.

The agency estimated that there are 482 trillion cubic feet of shale gas in the United States, down from the 2011 estimate of 827 trillion cubic feet — a drop of more than 40 percent. The report also said the Marcellus region, a rock formation under parts of New York, Ohio, Pennsylvania and West Virginia, contained 141 trillion cubic feet of gas. That represents a 66 percent drop from the 410 trillion cubic feet estimate offered in the agency’s last report.  MORE

Thanks to hyperbole and misinformation, fracking opponents have convinced a lot of people that the operators who drill and then hydraulically fracture underground rock layers thumb their noses at and even hate the environment.

It’s important because unconventional oil and gas constitute an increasingly pivotal part of the world’s energy scene. In the United States, where shale gas abounds but imported energy rules the day, this is especially true.

Read the article HERE

About 141 trillion cubic feet of gas can be recovered from the Marcellus shale using current technology, down from the previous estimate of 410 trillion, the department said today in its Annual Energy Outlook. About 482 trillion cubic feet can be produced from shale basins across the U.S., down 42 percent from 827 trillion in last year’s outlook.  MORE

The industry is arguing that regulation of hydraulic fracturing should stay at the state level, where it is traditionally managed. Environmentalists disagree, saying the states’ record is spotty and tougher federal standards are needed. The Environmental Protection Agency is studying the issues, and aims for proposed rules in 2014.

Now some analysts are warning states could actually become stricter than the EPA as they seek to forestall a federal takeover.

Read more HERE

One might expect a no-drill agenda to find few friends in New York, which desperately needs the revenue and economic growth that shale gas has brought to other states. The Empire State faces a $3 billion budget gap for fiscal year 2013. According to State Budget Solutions, a nonpartisan think tank, New York’s deficits, long-term debt, and pension obligations total $305 billion. High taxes, unemployment, and a burdensome cost of living make New York Number One in emigration to other states. Governor Andrew Cuomo has described the state’s financial outlook as “grim.”

Read the article in full HERE

“This natural resource will fuel our generating plants, heat our homes and power our state’s economic engine for generations to come,” Governor Tom Corbett said. “This growing industry will also provide new career opportunities that will give our children a reason to stay here in Pennsylvania. We are going to do this safely and we’re going to do it right, because energy equals jobs.”

The plan will make sure that Pennsylvania’s economy benefits from developing this new source of wealth and energy independence, while also ensuring that the environment and natural beauty of this state are protected.

As a part of this proposal, Corbett announced a series of prudent standards related to unconventional drilling, including:

• Increasing the well setback distance from private water wells from the current 200 feet to 500 feet, and to 1,000 feet from public water systems;
• Increasing the setback distance for wells near streams, rivers, ponds and other bodies of water from 100 feet to 300 feet;
• Increasing well bonding from $2,000 up to $10,000;
• Increasing blanket well bonds from $25,000 up to $250,000;
• Expanding an unconventional gas operator’s “presumed liability” for impairing water quality from 1,000 feet to 2,500 feet from a gas well, and extending the duration of presumed liability from 6 months after well completion to 12 months;
• Enabling DEP to take quicker action to revoke or withhold permits for operators who consistently violate rules;
• Doubling penalties for civil violations from $25,000 to $50,000; and
• Doubling daily penalties from $1,000 a day to $2,000 a day.

This plan will also allow for an impact fee, which will be adopted by counties for use by local communities experiencing the actual impacts of the drilling. The fee will be used by local governments, counties and state agencies that respond to issues that arise as a result of Marcellus Shale gas drilling.

“Estimates show that this impact fee will bring in about $120 million in the first year, climbing to nearly $200 million within six years,” Corbett said. “As the number of wells grows, so will the revenue. Almost all of the money it brings in will go to benefit the places experiencing the impact.”

Each well will be subject to a fee of up to $40,000 in the first year, $30,000 in the second year, $20,000 in the third year and $10,000 in the fourth through tenth years, adding up to a potential total of $160,000 per well.

Under this proposal, a county may provide for a fee credit of up to 30 percent if the driller makes approved investments in natural gas infrastructure, which include setting up natural gas fueling stations or natural gas public transit vehicles.

The impact fee revenues will be split with 75 percent being retained at the local level, with 36 percent of that number retained by the county, 37 percent distributed to municipalities that host the drilling pads and 27 percent distributed to all the municipalities within a Marcellus drilling impacted county. The distribution formula will be based on population and highway miles.

The remaining 25 percent of the fee would be divided, with 70 percent of that number going to PennDOT for road, bridge, rail and other transportation infrastructure maintenance and repair within counties hosting Marcellus natural gas development, 4.5 percent to the Pennsylvania Emergency Management Agency for emergency response planning and training, and 3.75 percent to the Office of State Fire Commissioner for training programs for first responders and for specialized equipment necessary for emergency response.

In addition, 3.75 percent will go to the Department of Health for collecting and disseminating information, and for health care and citizen provider outreach and education, and for investigating health complaints and other activities associated with shale development, 7.5 percent to the Public Utility Commission to enhance pipeline safety and increase inspections, and 10.5 percent to a restricted account at the Department of Environmental Protection to be used for plugging abandoned and unused gas wells, plus other natural gas related regulation and enforcement.

Corbett said that under this plan, counties and municipalities may use these funds on various expenses related to impacts from natural gas development, including:

• Construction, repair and maintenance of roads, bridges and other public infrastructure;
• Water, storm water and sewer system construction and repair;
• Emergency response preparedness, training, equipment, responder recruitment;
• Preservation and reclamation of surface and subsurface water supplies;
• Records management, geographic information systems and information technology;
• Projects which increase the availability of affordable housing to low-income residents;
• Delivery of social services, including domestic relations, drug and alcohol treatment, job training and counseling;
• Offsetting increased judicial system costs, including training;
• Assistance to county conservation districts for inspection, oversight and enforcement of natural gas development; and
• County or municipal planning.

Corbett’s proposal also seeks to help secure energy independence and reduce reliance on foreign oil by developing “Green Corridors” for natural gas vehicles with refueling stations at least every 50 miles and within two miles of key highways; by amending the PA Clean Vehicles Program to include “bi-fuel” vehicles (diesel and natural gas); by helping schools and mass transit systems to convert fleets to natural gas vehicles; by stabilizing electric prices by using natural gas for generating electricity; and by encouraging the development of markets for natural gas and natural gas byproducts, such as within the plastics and petrochemical industries.

The Marcellus Shale Advisory Commission issued 96 recommendations. About one-third require legislative changes; more than 50 are policy-oriented and can be accomplished within the state agencies.

The shakeup over shale gas — a newly available fuel that has overturned assumptions about energy, climate-change and geopolitics — has now stretched across the Atlantic to England. A drilling company backed by John Browne, the former CEO of BP, says it has discovered the gas equivalent of up to 35 billion barrels of oil. In oil, a find of 1 billion barrels is regarded as a supergiant.

Until now, the United States has been the epicenter of the shale gas disruption. This gas is locked into barely porous shale rock a mile and more beneath the surface of the Earth. Over the last few years, drillers have extracted the gas using a method called hydraulic fracturing, or fracking — injecting a mixture of water, chemicals and sand at high pressure into the rock — which has produced a bonanza of new supplies in the United States. Estimates are that it is sufficient to meet current U.S. consumption for a century.

Since gas emits just a third to a half the CO2 as coal, this gas glut — to the degree it results in an accelerated shift away from coal-fired to gas-fired power plants — could lower U.S. emissions of heat-trapping gases.  As for geopolitics, the gas has already had the boomerang effect of casting doubt on Russia’s economic and political leverage in Europe — Russia supplies more than a quarter of Europe’s gas, but the shale gas glut has challenged that market dominance.

All this impact has led to a search for shale gas elsewhere, especially in Europe and China.

Yet with the shale gas comes a backlash of local politics. In the U.S., drillers have been confronted with a furious protest movement of critics who say fracking contaminates drinking water supplies. In Europe, the protests have preceded any discoveries — in the summer, for instance, France banned fracking.

Now, a U.K. company called Cuadrilla Resources says it has indications that a formation called the Bowland Shale is comparable in scale to the best U.S. finds, reports Guy Chazan at the Wall Street Journal. Cuadrilla’s Dennis Carlton told Bloomberg’s Ben Farey that the thickness of the gas-laden shale — 3,000 feet in places — is up to 10 times that of the ultra-rich Marcellus Shale that underlies New York and Pennsylvania. Cuadrilla’s main investors include the hedge fund Riverstone Holdings, which is run by former BP CEO Browne.

That is just gas in place. What actually can be extracted will be much less. But the announcement caused much excitement in both directions — from those enthused that the U.S. bonanza can be repeated on the other side of the Atlantic, and groups that wish to stop it.

As the company made its announcement in the Imperial Hotel in the city of Blackpool, a small protest was held out on the street by a group called Campaign Against Climate Change, the BBC reports. WWF, an environmental group, urged the U.K. government to call a moratorium on shale gas drilling, and instead to focus its efforts on development non-fossil fuel technologies. These critics are invigorated by two earthquakes that happened in the area in June, after which the company halted drilling.

That John Browne is the money behind this venture is ironic. In his long tenure, Browne rebranded BP into the green oil company, casting the company’s name as meaning “Beyond Petroleum.” His apparently successful into shale gas goes the other direction as far as critics are concerned.

Source: The Oil and the Glory with thanks to Steve LeVine

About 45 percent favor drilling because of economic benefits and 41 percent oppose it because of environmental risks, according to the survey of 1,016 registered voters released today. The survey was conducted from Sept. 13 to 18 and has a margin of error of plus or minus 3.1 percent, the Quinnipiac University Polling Institute said in a statement. About 13 percent said they didn’t know or didn’t answer.

The strongest opposition to drilling, 47 percent, was in upstate New York, where drilling would take place, according to the Hamden, Connecticut-based institute. An estimated 84 trillion cubic feet of gas lie in the Marcellus Shale under New York and seven other states, the U.S. Geological Survey said on Aug. 23. Extraction requires injecting a mixture of water, sand and chemicals underground, known as hydraulic fracturing.

“Upstate voters, who have the most to gain in terms of jobs and the most to lose in terms of the environment, opposed natural-gas drilling, while suburban voters support it,” Maurice Carroll, director of the institute, said in the statement.

The New York Department of Environmental Conservation said on Sept. 7 it will issue draft rules for high-volume hydraulic fracturing in early October, potentially ending a state moratorium.

Source

The shale gas industry has had its collective ass kicked, and kicked hard, by Gasland and others opposed to hydraulic fracturing and needs to redefine its core messages to defuse a burgeoning negative public perception of the controversial drilling technique, the President and Chief Executive Officer of the Colorado Oil & Gas Association (COGA) said today.

“What we’ve seen in the last few years, and I hope it’s peaking, is a completely heightened public awareness around hydraulic fracturing and an increase in active opposition,” Tisha Conoly-Schuller said this afternoon. “I hate to credit the movie Gasland, but it’s really changed the conversation.”

Conoly-Schuller made her comments to a group of shale gas industry executives as the Keynote Speaker on the opening day of the “Enhancing Shale Oil & Gas Development Strategies” conference in Denver, Colorado.

The conference, organized by Marcus Evans, will continue throughout tomorrow. The conference offers industry executives a variety of workshops and panel discussions on using “drilling, completion and reservoir engineering knowledge to advance exploration and diversify shale portfolios,” according to material prepared by Marcus Evans describing the event.

Conoly-Schuller noted that the opposition to hydraulic fracturing — or “fracking” as it has come to be known in the parlance of our times — has evolved remarkably over the last few years, even though the science and empirical data related to hydraulic fracturing indicates that the practice has nothing to do with water contamination.

Shale gas industry executives credit the movie, “Gasland” with helping to shape public opinion about hydraulic fracturing, even though they say there is no proof that the practice contributes to contaminated drinking water. Image from the film, “Gasland.”

“The flaming faucet — that was disproven by the Colorado Oil & Gas Authority,” Conoly-Schuller said. “The methane in that well was naturally occurring. People have been lighting their water on fire in that area for 100 years. Josh Fox knows this and he has never admitted it — and he’s working on Gasland II.”

Today, she explained, those opposed to hydraulic fracturing can no longer be characterized as environmental extremists because the movement has gone mainstream. She credited Fox, the producer of the movie, Gasland, which helped to coalesce opposition to fracking, with playing a large role in that shift.

As a result, Conoly-Schuller continued, the industry needs to change not only its messaging, but how it delivers its key talking points.

“We need to change,” Conoly-Schuller said. “We’re talking to moms and dads and grandmothers who are worried about the safety of the water their children are drinking, and that’s an emotional issue. It hits a chord. We need to be sensitive to that. We’re not on engineering and scientific turf anymore, we’re on emotional turf, and we need to get our point across.”

Conoly-Schuller told the executives that COGA had recently completed some polling around the issue of how the public perceives hydraulic fracturing and the shale gas industry.

The news, she said, was not good.

“The public is skeptical of anything we say,” she said. “The favorable perception of the oil and gas industry polls at seven percent — that’s lower than Congress. The public does not believe us. We need someone else delivering our message for us.”

Conoly-Schuller went on to outline a set of recommendations that she said would help the industry improve its public perception. Her recommendations included:

•    identifying other messengers to carry positive messages about oil and gas to a skeptical public; university professors, she said, polled the highest and are well positioned in that regard.
•    broadening the sources of information for executives — “We have sources we are comfortable with,” she said, “and the reinforce our views. We need to go beyond that, even if it makes our blood boil, so we can learn the language used by our opposition and learn what they think. These nuts make up about 90 percent of our population, so we can’t really call them nuts any more. They’re the mainstream.”
•    respecting industry critics — “Historically, the industry has been dismissive of its critics,” she said. “We have to understand that they are well-intentioned and believe in what they are doing
•    recognize the emotional nature of the discourse — “It’s ineffective to respond to emotion with science. We need empathy and we have to recognize that emotional is not irrational.”
•    reframe the issue of hydraulic fracturing in economic terms — “We need to talk about how energy is the building block of our economy.”
•    engage in dialogue about hydraulic fracturing more broadly — “Engage with people with people not necessarily to change their minds, but to learn what they know and think. That will inform what works.”
•    reposition the industry to appeal more broadly to young people — “The issue is serious, but we shouldn’t take ourselves so seriously. We need to become much more clever. Our industry is going to have to become hipper.”

In that respect, Conoly-Schuller said, industry executives and communicators are going to have to become well versed in the use of social media and online tools.

“People that like South Park are our audience,” she said, “and we need to figure out how to talk to them. We need to figure out what works and how to get it out to them.”

Conoly-Schuller closed her remarks by urging each of the executives to get on Facebook.

“That’s your homework because that’s where they are, the people who are talking about this, the people we need to reach,” she said.

With thanks to NaturalGasWatch.org

NaturalGasWatch.org has been designated the “Official Blogger” of the Enhancing Shale Oil & Gas Development Strategiesconference, and is not receiving any compensation from the industry in exchange for writing about the event.

The deal that will give Hess half of Consol’s mineral rights to about 200,000 acres, envisages Hess paying Consol $59 million at the time of its closure in October while Hess will invest another $534 million in its operation over the next five years.

Consol and Hess intend to start drilling in the next few weeks, with a plan to deploy 2 drilling rigs in 2012, 3.5 rigs in 2013, and an average of 5 rigs in 2015.

As per the deal, Hess will operate 80,000 acres in Jefferson, Harrison, Guernsey and Belmont counties, while Consol will operate the remaining areas including its acreage in Portage, Tuscarawas, Mahoning and Noble counties.

Hess will arm the JV with its strong technical and operational expertise and undertake drilling in areas thought to be rich in liquid natural gas, which is more valuable in the marketplace, Consol, based in Canonsburg, Pa. said.

The gas-rich Utica Shale lies much below the Marcellus Shale though the Utica formation extends a large area, from New York south to Tennessee, and west to Lake Erie.