By Jack Z. Smith

Star-Telegram

March 10, 2010

Original Article

HOUSTON — Shale-gas fields such as the Barnett Shale in North Texas are a “game-changer,” a “veritable shale gale” that could account for 50 percent of the U.S. gas supply by 2035, according to a study released Wednesday.

Shale gas now accounts for about 20 percent of the U.S. natural gas supply, up from just 1 percent in 2000, said Daniel Yergin, chairman of international energy consulting firm IHS CERA, which announced its study results at its CERA Week 2010 energy conference.

The shale-gas phenomenon “is long-lasting, it is powerful, it has a major impact on the North American energy picture,” Yergin said.

According to the study, environmental risks of shale-gas drilling and hydraulic fracturing on groundwater supplies are minimal because of “considerable geological separation, including impermeable rocks, between the underground fraccing sites and drinking water supplies.”

Mary Barcella, director of IHS CERA’s North American gas group, said, “The standout finding is that the shale-gas deposits are at very deep locations several thousand feet below” groundwater aquifers, so “the seal there is pretty good,” assuming a well is properly drilled.

Environmental and residents groups have expressed concern about potential pollution, including surface spills, from “produced water” that comes out of the well as a result of drilling and fracturing. Congress is considering stricter regulation of fracturing, including requiring greater disclosure of chemicals used in the process, which opens tiny fissures in rocks and allows natural gas to flow into a wellbore.

“The industry has been disposing of produced water as long as it’s been producing oil and gas” and “knows how to do it,” Barcella said.

Even when there is a surface spill of produced water, “that is still far from aquifers,” said David Hobbs, head of research for IHS CERA.

100-year-plus gas supply

The IHS CERA study said its analysis points to some 2,000 trillion cubic feet of gas discovered, mushrooming to 3,000 trillion cubic feet when adding gas deposits expected to be found in the future. That volume of gas “could supply current consumption for well over 100 years,” the study said.

In the U.S. alone, the new “unconventional” gas plays, augmented greatly by advances in horizontal drilling, have increased the resource base by more than 1,100 trillion cubic feet, the study said. Unconventional plays include gas produced from shale and tight sandstones, as well as coal-bed methane.

Barnett could be eclipsed

In 2008, the Barnett Shale became the largest gas-producing area in the U.S., but its position as the biggest-producing shale play is likely to be eclipsed in coming years by the Marcellus Shale in the Appalachian region of the eastern U.S. and the Haynesville Shale in Louisiana and East Texas, Hobbs said.

That conclusion is based on the understanding that the volume of gas in the latter two shale plays “vastly exceeds the Barnett.” But he said there remains “a lot to be done” in the Barnett, in terms of additional drilling and production.

Because natural gas is the cleanest-burning fossil fuel and can complement renewable wind and solar power to generate electricity, the bulk of the growth in U.S. gas demand will come from power generation, Yergin said. The IHS CERA study concluded that the amount of gas allocated for power generation could nearly double by 2035, from 19 billion cubic feet a day to 35 billion cubic feet.

Higher gas prices?

The global downturn has depressed gas demand and prices, which recently have been below $5 per 1,000 cubic feet, compared with highs above $13 in mid-2008. But numerous speakers at the conference said prices will strengthen somewhat as the economy rebounds and demand grows, including from new gas-fired plants that could replace old, more-polluting coal plants.

Tom Walters, president of gas and power marketing for Irving-based Exxon Mobil Corp., said the international oil giant expects that world demand for natural gas will be “almost 50 percent higher” by 2030, while overall global energy demand will increase only 30 percent. The big challenge for the petroleum industry, he said, is undertaking all the projects that will be needed to meet the rising gas demand.

March 8, 2010

Original Article

At a time when people are asking “where are the jobs,” thousands of high-paying jobs are waiting to be created in America’s energy industry. Jobs can be created today by further developing America’s natural resources such as oil and natural gas and expanding on new technologies such as hydraulic fracturing or “fracing,” a critical tool in tapping the huge potential of our country’s natural gas supply.

Instead of a comprehensive national energy policy that would create jobs, this administration and the liberals running Congress are trying to ram through a “cap and trade” national energy tax that would ship millions of jobs overseas and raise energy prices on American families. And these same people continue to threaten our energy security through attempts to put an end to critical technologies like fracturing.

In Louisiana, the energy industry is among our top employers; and we are proud to be one of the largest producers of domestic energy in the United States. Louisiana has the second-largest refining capacity in the U.S., with 2,300 active oil and natural gas platforms in the Gulf of Mexico and 19 crude oil refineries. More than 80 percent of the nation’s offshore oil and natural gas is produced off our coast.

And, more recently, our state has seen huge successes in the Haynesville Shale in northwest Louisiana. By using environmentally sound energy production technologies such as fracturing and horizontal drilling, we are safely unlocking huge amounts of clean-burning, job-creating natural gas. In fact, thanks to fracturing, which has been safely used for 60 years, Louisiana’s energy industry created almost 33,000 jobs and generated $3.2 billion into our state’s economy.

Unfortunately, this economic activity and job creation is threatened by misguided Washington policies such as “cap and trade” and billions in new, burdensome taxes on homegrown energy exploration.

Some in Washington are even working to strip energy-producing states of their ability to regulate fracturing. Turning this authority over to the Environmental Protection Agency (EPA) would threaten energy production altogether and could severely hurt job creation and economic activity at a time when we absolutely need it.

Louisiana’s Legislature formally urged Congress to ensure that fracturing remains tightly regulated by the states, as it has for 60 years. A number of other energy-producing states that share Louisiana’s common-sense approach to allow states to effectively regulate fracturing have passed similar resolutions.

Turning the regulation of fracturing over to the EPA is not only unnecessary but would represent nothing more than a one-size-fits-all power grab by those who oppose responsible, 21st-century American energy production. Louisiana, along with virtually every other energy-producing state, already has comprehensive laws in place to protect drinking water sources and ensure that shale gas production does not compromise the environment.

Because of these effective state protections — and the commitment from industry — fracturing has been used in more than 1 million wells throughout the U.S. without a single case of groundwater contamination. Not one in 60 years. The EPA confirmed this fact at a recent Senate hearing. And just weeks ago, a top EPA drinking-water official said, “State regulators are doing a good job overseeing hydrofracking, and there’s no evidence the process causes water contamination.”

Fracturing is not only a safe way of increasing our nation’s domestic energy supply, but it is a proven way to reduce our dependence on Middle Eastern oil, create good American jobs and keep energy prices stable for struggling families, senior citizens and small businesses.

The American people deserve common-sense solutions that will help redirect our weakened economy. We should promote ideas that create jobs and harness — not stifle — the American ingenuity that has helped us become the greatest nation in the world.

U.S. Rep. Steve Scalise Represents Louisiana’s 1st Congressional District And Serves On The House Energy And Commerce Committee And Energy And Environment Subcommittee. His Web Site Is Scalise.house.gov.

February 22, 2010

By Scott McKay

Original Article

It’s not a surprise, as we’ve repeatedly warned that it was coming, but last week the House Energy and Commerce Committee sent letters to eight natural gas producers questioning them about the chemicalsthey use in their “drilling mud” while engaging in the practice of hydraulic fracturing, or “fracking” – a 50-year-old procedure which combined with the innovation of horizontal drilling has unlocked vast natural gas resources in areas like North Louisiana’s Haynesville Shale.

Congressman John Fleming, M.D.

March 4, 2010

Original Article

In northwest Louisiana, we are blessed with an abundance of natural resources. Chief among them is the Haynesville Shale, one of the largest natural gas reservoirs discovered in recent history.

Some estimates have projected the Haynesville Shale contains 234 trillion cubic feet of natural gas production potential. To put that into perspective, the total consumption of natural gas in 2008 in the United States was 23 trillion cubic feet.

These estimates would make the Haynesville Shale the largest natural gas play in the United States and one of the largest in the world and the equivalent of about 18 years of U.S. oil production. The Haynesville Shale houses some of the largest producing wells in the continental United States, with some producing 10 million to 20 million cubic feet of natural gas per day.

In 2008 alone, production in the Haynesville Shale pumped $4.5 billion into Louisiana’s economy with some local governments reporting 300 percent increases in sales tax revenue. In addition, more than 32,000 jobs across multiple industries were created because of activities related to the Haynesville Shale.

This enormous economic impact would be impossible without hydraulic fracturing, the technology that lets producers reach the natural gas. Hydraulic fracturing is a state-regulated process that involves pumping a mixture of water and sand into rock formations miles below the Earth’s surface, where the gas is trapped, to allow it to escape and flow up the well.

Hydraulic fracturing has been used for more than 60 years and is responsible for 30 percent of America’s recoverable oil and natural gas. And of wells operating today, more than 90 percent have been fractured at least once.

Democrat Reps. Henry Waxman, of California, and Ed Markey, of Massachusetts, — the same team that brought you the job-killing, tax-hiking cap-and-trade legislation — appear to be trying the same tactics on natural gas production with recent committee action aimed toward giving the Environmental Protection Agency (EPA) unprecedented power to enact oppressive regulations on hydraulic fracturing.

This action would have a far-reaching negative impact on energy producers and consumers alike, particularly in formations such as the Haynesville Shale that depend on hydraulic fracturing to produce.

Let me be clear. I support environmental responsibility and know the critical importance of protecting our drinking water.

But like many policies making their way through Congress these days, bigger, expansive and intrusive bureaucratic red tape will not make us more environmentally responsible.

For years, hydraulic fracturing has been safely and effectively regulated by individual states. In Louisiana, three different agencies have oversight related to hydraulic fracturing, and these agencies already work closely with existing federal regulations under the EPA.

I am deeply concerned that adding additional layers of regulations to hydraulic fracturing would not only result in a sharp increase in costs to small and independent producers, it would dramatically decrease output and job creation. Production would essentially grind to a halt, and billions of dollars in federal and state tax revenue would be at risk, all in the name of environmental concerns that are already being addressed.

If Congress is serious about tackling this country’s energy crisis and ending our dependence on foreign oil, then it is crucial they recognize what resources, such as the Haynesville Shale, will play in our long-term economic and national security. More burdensome federal regulation will only serve to hinder production and feed this country’s addiction to foreign energy.

John Fleming, a physician and small business owner, represents the Louisiana’s 4th Congressional District and is a member of the House Armed Services and Natural Resources committees.

February 18, 2010

By Matt Ross, LOGA

Introduction

Hydraulic fracturing, also known as “hydrofracking”, is a well-developed and refined engineering technique that results in the creation of fractures in rock formations.  Specifically, hydrofracking occurs after the drilling process has completed and a temporary wellhead has been installed.  The process involves pumping water, sand and chemicals into the wellbore under extremely high pressure.  The mixture is then forced out through perforations in the production casing into the targeted rock formation.  This pressure inevitably results in the fracturing of the shale formation.  The ultimate goal of the process is to create a “fairway” connecting the reservoir to the well and allow the released gas to flow to the wellbore.

(This image can be found at ProPublica – What is Hydrofracking?)

Hydraulic fracturing has played a significant role in the oil and gas industry for over 60 years and is responsible for 30% of America’s recoverable oil and gas.  This complex technique has become an exceptional tool in stimulating and increasing oil and natural gas production from unconventional and low permeability reservoirs.  Many may not be aware, but this process has been a part of the oil and gas industry for quite some time.  In fact, most wells drilled in the continental United States rely on the use of hydraulic fracturing to ensure optimal production.    It’s estimated that this technique has been responsible for nearly 7 billion barrels of oil and 600 trillion cubic feet of natural gas production.  The National Petroleum Council reports that 60% to 80% of all wells drilled in the next ten years will require the use of hydraulic fracturing to remain economic and profitable.

How Safe is Hydrofracking?

Recently, there has been much discussion concerning the safety of hydrofracking and its potential for groundwater contamination.  Currently, some members of Congress are pushing to place the regulation of hydraulic fracturing in the hands of the federal government under the Safe Drinking Water Act (SDWA), a law that was never intended for this purpose. It is important to note that in the 60 years of use, hydraulic fracturing has not been shown to pose any discernable risk to drinking water.  Of the more than one million wells fractured, not a single case of drinking water contamination has ever been recorded.

For decades, this process has been safely and effectively regulated by individual states.  The Interstate Oil and Gas Compact Commission (IOGCC) has reaffirmed their strong stance that the states remain the best positioned to regulate the use of hydraulic fracturing.  According to Carl Michael Smith, IOGCC executive director, “The states do a superb job of protecting human health and the environment through sound regulation.”  In his opinion, “An unnecessary shift to federal regulation of hydraulic fracturing could greatly inhibit the production of much-needed oil and natural gas resources at a time when our nation’s energy security is critical.”

In the state of Louisiana, three different agencies have oversight related to this process:

• The Office of Conservation of the Louisiana Department of Natural Resource
• Louisiana Department of Environmental Quality
• Department of Health & Hospitals

While effectively regulating this process, these agencies work closely in association with existing federal regulations under the EPA.

Haynesville Shale

In the case of the Haynesville Shale, it is important to understand exactly how deep the process of hydrofracking occurs from fresh water zones and the surface of the earth.  Fresh water aquifers are located relatively close to the surface.  In the Haynesville shale, for instance, the Carrizo-Wilcox aquifer is found at approximate depths between 200 and 600 feet.  The practice of hydrofracking takes place depths of over 10,000 feet or roughly 2 miles.  To put this into perspective, the distance between the aquifer and the process of hydrofracking is equal to about 33 footballs fields or 8 Empire State Buildings stacked on top of each other.

(Image provided by IPAA – Click here for enlarged image)

Current industry practices and existing state regulations ensure multiple levels of protection between any sources of drinking water and the production zone of an oil and gas well.  To ensure that drinking water aquifers are protected from any substance that could enter the water supply, steel casing and cement surrounds the wellbore at depths of 1,000 to 4,000 feet.

By law, the Louisiana Office of Conservation requires all oil and gas companies to set protective surface casing well beyond the water table.  For example, in the Haynesville Shale, surface casing must be set at a minimum of 1,800 feet.

(Image provided by API)

During the process of setting surface casing, the space between this first casing string and the wellbore is filled with cement.  The casing, cement specifications and cementing process are all governed by state and federal regulations as well as industry standards.  For example, oil and gas companies are mandated by law to test the viability and pressure of the surface casing.  If pressure is lost or an adequate cement bond is not achieved, the producer must start over the process of setting surface casing until a proper seal has been established.  In every case, these processes are closely supervised by all of the above mentioned state agency officials.

Hydraulic fracturing is a vital and necessary part of Louisiana’s oil and gas industry.  Our industry remains committed to safely and economically producing fossil fuels for our domestic energy needs.  Through new developments like that of the Haynesville Shale, communities have been injected with billions of dollars in capital and provided with thousands of good paying local jobs.  By strictly adhering to state regulations and industry practices, the oil and gas business will continue to be one of our most important economic engines and always strives to be good stewards of our environment.

If you would like more information regarding drilling or the process of hydrofracking please feel free to view our in-depth animated video and analysis – (Click here)

March 1, 2010

Original Article

EXCO Resources Inc. has hiked gross production to 340 MMcfd in its Haynesville shale 50-50 joint venture with BG Group PLC and has begun horizontal drilling in the Marcellus shale.

The Haynesville output, tallied on Feb. 7, came from 34 operated wells drilled with an average of seven operated rigs and compared with 7 MMcfd in the 2008 fourth quarter. EXCO-BG holds 107,800 net acres, up 22,800 net core area acres since forming the joint venture.

Net Haynesville production was 96 MMcfd as of Feb. 7 compared with 47 MMcfd in the fourth quarter of 2009 and 6 MMcfd in the fourth quarter of 2008.

Capital spending for 2010 is budgeted at $255 million net to EXCO to drill 115 operated and 23 nonoperated wells. The operated wells include 95 Haynesville shale horizontals, seven Bossier shale horizontals, six Cotton Valley horizontals, and seven wells in the Vernon, La., area. In the EXCO-BG area of mutual interest, spending will total $741 million net to the joint venture.

TGGT Holdings LLC, a 50-50 joint venture with a BG Group affiliate, had averaged throughput of more than 850 MMcfd. In the 2009 fourth quarter TGGT completed the first of four stages of a 29-mile, 36-in. header system through the Holly field area to gather and deliver the companies’ Haynesville gas to interstate pipelines.

Operations began Nov. 30, 2009, on the system, which will eventually have a capacity of 1.5 bcfd. TGGT averaged 474 MMcfd in 2009, and throughput now exceeds 850 MMcfd.

EXCO-BG increased the operated horizontal rig count to 13 in the Haynesville and plans to raise that to at least 14 for the rest of the year. It also plans to run at least one operated horizontal rig in Appalachia throughout 2010. Current companywide rig counts are 17 operated and four nonoperated.

As EXCO sold assets and reorganized around the shale plays in 2009, it added 242 bcf of gas equivalent (bcfe) of proved reserves through the drill bit and produced 128 bcfe. The majority of the new reserves resulted from 2009 Haynesville horizontal development where the company ran an average of six operated rigs for the year and completed 25 operated wells.

EXCO cut the average gross cost of an operated Haynesville horizontal well 25% to $9.5 million in 2009 and expects 2010 well costs to continue at or below that level. Drilling days were cut nearly in half from 72 days for the early wells.

Under new Securities and Exchange Commission rules, EXCO added an average of 2.5 offsetting proved undeveloped locations with average gross reserves of 6.6 bcf for each producing well drilled. Under the former rules, it would have added an average of 1.6 offsetting proved undeveloped locations.

EXCO-BG is investing in two major water projects. One will enable it to use discharge water from an industrial plant as a key water source for hydraulic fracturing. This will lessen the impact on local water supplies, reduce truck traffic, and provide an environmentally safe option for water procurement.

The joint venture also has a salt water management project to transport service water and gather produced water across its acreage, reducing truck traffic and handling water much more efficiently and more cost effectively.

EXCO-BG’s first horizontal Haynesville well, Oden-30H6 in DeSoto Parish, La., has sold 3.2 bcf in its first year on production. The JV’s average operated well IP in the DeSoto area is 22.8 MMcfd.

EXCO is encouraged by Bossier test results in four vertical Haynesville wells from 2008 and is drilling its first horizontal Bossier well with seven Bossier horizontals planned in East Texas and North Louisiana in 2010.

It has greatly reduced activity in the Cotton Valley, Hosston, Travis Peak, and Pettet conventional horizons but does plan a six-well horizontal testing program in Cotton Valley in DeSoto and Caddo parishes to check the feasibility of a larger program in 2011 and beyond. It plans 28 mainly Hosston recompletions in DeSoto.

EXCO holds more than 654,000 net acres in Pennsylvania and West Virginia, of which 343,000 are believed prospective for Marcellus and Huron shale gas and 186,000 are in the overpressured Marcellus fairway. Negotiations are under way for a further 42,000 net acres.

The 2010 capital budget is $154 million for drilling, land, seismic, midstream expansion, and operations. About 70% of the fairway acreage is held by shallower production in Clinton-Medina and stacked Devonian sandstone, Devonian shale, Berea shale, and other horizons.

By BRETT CLANTON

Houston Chronicle

March 1, 2010

Original Article

BP has made a joint- venture deal with privately held Lewis Energy Group that will expand the British oil giant’s position in the U.S. natural gas business and find it entering a fast-emerging field in South Texas, according to a person familiar with the situation.

Under the deal, BP will take a 50 percent stake in 80,000 acres of the Eagle Ford Shale play and is acquiring additional acreage in smaller pending deals, the person said.

Company officials are expected to announce the venture in London today at BP’s annual strategy presentation to investors and analysts.

Daren Beaudo, a BP spokesman in Houston, declined to comment. Officials with San Antonio-based Lewis could not be reached for comment.

The deal would be the latest in a string of similar moves by major oil companies to enter or expand in unconventional rock formations in the U.S., where huge amounts of natural gas have been discovered in recent years.

In December, Exxon Mobil Corp. said it would acquire Fort Worth’s XTO Energy in a deal valued at $41 billion. A month later, France’s Total agreed to pay $2.3 billion for 25 percent of Chesapeake Energy Corp.’s acreage in the Barnett Shale play in North Texas, and the companies said they may jointly develop acreage in the Eagle Ford Shale and in several Canadian natural gas plays.

Royal Dutch Shell, Norway’s Statoil and others have also written big checks for access to North American shale plays, and so has BP.

In 2008, BP did two deals with Oklahoma City-based Chesapeake, worth nearly $3.7 billion, that gave it access to unconventional reserves in Oklahoma and Arkansas.

Oil companies are looking to expand holdings of natural gas amid stricter environmental laws and forecasts that use of cleaner-burning fuel will grow in coming years.

The Eagle Ford, which starts near the Mexican border and extends east below San Antonio across a string of counties, is considered one of the hottest unconventional gas prospects in North America. But exploration there is in earlier stages than other large U.S. shale plays.

BY DEBORAH B. BERRY

GANNETT WASHINGTON BUREAU

MARCH 1, 2010

Original Article

WASHINGTON — U.S. Rep. John Fleming is blasting Democrats on a House committee for launching an investigation into the safety of hydraulic fracturing.

“The same team that brought America the job-killing, tax-hiking cap-and-trade legislation appear to be at it again,” Fleming, R-Minden, said in a speech last week on the House floor.

Rep. Henry Waxman, D-Calif., chairman of the Energy and Commerce Committee, recently wrote to eight oil and gas companies, questioning them about the chemicals they use for hydraulic fracturing, a process that uses pressure from water-based fluids to extract natural gas from shale.

Waxman said it’s important to determine the environmental impact of the process, particularly on drinking water. Environmental groups have raised concerns about chemicals used in the process.

Some lawmakers have proposed legislation to regulate the process, and the federal Environmental Protection Agency plans to study it.

Fleming, a member of the Natural Resources Committee, said the actions could have a “far-reaching negative impact” on consumer and energy producers, including Haynesville Shale.

He said that in 2008, production in the Haynesville Shale pumped $4.5 billion into Louisiana’s economy and created more than 32,000 jobs.

He said the extra federal regulation would increase costs, reduce production and eliminate jobs.

“Production would essentially grind to a halt, and billions of dollars in federal and state tax revenue would be at risk,” he said.

Don Briggs, president of the Louisiana Oil and Gas Association, called the investigation into fracturing a “witch hunt.”

February 24, 2010

News Release

Contact:

Mary Anthony

(318) 210-1736

mmslouisiana@gmail.com

EnCana Oil & Gas (USA) Inc. is in search of high school seniors who exhibit a solid academic record, embody community involvement and leadership, and plan to pursue a post-secondary education related to the oil and gas industry.

Scholarship recipients will be awarded a maximum of $10,000 – $2,500 per year for up to four years. Scholarships will be awarded annually to qualified graduating seniors where EnCana has active operations, including the following Parishes: Red River, DeSoto, Caddo, Bossier, Sabine and Natchitoches.

“Our goal is to invest in our future workforce by providing scholarship funds for either a two-year diploma, certificate in a trades program, or a four-year college degree,” said Joyce Witte, EnCana community investment advisor. “EnCana’s scholarship program provides the resources for our youth to advance their education, and enhances the quality of developing a sustainable workforce. We all benefit.”

The student must declare a field of study in petroleum, chemical, mechanical or environmental engineering, geology, geophysics, or technical/trade programs such as Oil & Gas Process Technology or Land Administration.

Last year’s scholarship recipients were Hunter Fulton of North DeSoto High School, Derrick Moran of Red River High School, and Leigh Ann Hauser of Airline High School.

All qualified seniors are encouraged to submit an application. The scholarship is awarded directly to the student, and can be used for any college-related financial need, including tuition and fees, textbooks and rent.

Final selections of the scholarship winners will be made by individual school districts. For eligibility, application deadlines and more information about EnCana’s Scholarship Program, please check with your school or e-mail communityinvestmentusa@encana.com.

###

For Immediate Release:

Chesapeake Energy

February 22, 2010

CHESAPEAKE ENERGY DONATES VEHICLE TO VOA VETERANS PROGRAM

WHAT: Chesapeake Energy will be donating a 2006 Ford F-150, formerly of Chesapeake’s work fleet, to the Volunteers of America (VOA) of North Louisiana.

WHEN: Tuesday, February 23

10 a.m.

WHERE: VOA of North Louisiana offices

360 Jordan St.

Shreveport

Google Map

WHY: The VOA of North Louisiana has recently completed renovations on the facilities that will house the Veterans Transitional Living Program. The donated truck will be used to aid the 56-bed facility as it offers food, shelter and support to homeless veterans.

WHO: Charles Meehan, President and Chief Executive Officer, VOA of North Louisiana

Kevin McCotter, Chesapeake’s Senior Director of Corporate Development, Haynesville Shale

Volunteers and those benefiting from the VOA of North Louisiana