Original Article

By MATTHEW DALY Associated Press

Published: 9/10/2010  2:23 AM

WASHINGTON – The Environmental Protection Agency asked nine “fracking” service providers Thursday to disclose the chemical components they use in the drilling technique for tapping reserves of natural gas in shale formations.

The agency said the information was important to its study of the controversial drilling practice known as hydraulic fracturing or “fracking.” Crews inject vast quantities of water, sand and chemicals underground to force open channels in sand and rock formations to allow oil and natural gas to flow. The EPA is studying whether the practice affects drinking water and public health. Drilling companies have largely sought to protect their chemical formulas as proprietary. Environmentalists are concerned that the chemicals, some of which are carcinogens, will taint underground water. The EPA’s review of fracking comes as gas drillers swarm to the lucrative Marcellus Shale region in the northeastern U.S. and blast into other shale formations around the country. Fracking is exempt from federal regulation. The process is touted as the key to unlocking huge reserves of clean-burning natural gas. Supporters say the practice is safe, noting that it is done thousands of feet below ground, much deeper than most water sources. They also point out that authorities have yet to link fracking to contaminated drinking water. The EPA said in March that it would study potential threats to human health and water quality from fracking. Read more from this Tulsa World article at http://www.tulsaworld.com/business/article.aspx?subjectid=49&articleid=20100910_49_E2_CUTLIN364632&rss_lnk=5

“By sharing information about the chemicals and methods they are using, these companies will help us make a thorough and efficient review of hydraulic fracturing and determine the best path forward,” EPA Administrator Lisa Jackson said. “Natural gas is an important part of our nation’s energy future, and it’s critical that the extraction of this valuable natural resource does not come at the expense of safe water and healthy communities.” Letters were sent to nine leading national and regional hydraulic fracturing service providers: BJ Services, Complete Production Services, Halliburton, Key Energy Services, Patterson-UTI, RPC Inc., Schlumberger, Superior Well Services and Weatherford. Chris Tucker, a spokesman for Energy In Depth, a Washington group that advocates for the energy industry, said the EPA study offers an important opportunity to demonstrate that fracturing technology is safe, efficient and well-regulated by the states. “If EPA believes it needs specific information to ensure its study draws on the best science and data available, we’re hopeful the agency can coordinate with our members to ensure it has everything it needs, and uses that information in an appropriate way,” Tucker said. The EPA requested that the information be handed over within 30 days and asked the companies to say within seven days whether they will comply. If not, the agency said, it is prepared to use its legal authority to force the companies to provide the information. In Pennsylvania, where the Marcellus Shale is being pursued in a modern-day gas rush, state legislators and environmental regulators are pushing for a law to require drilling companies to disclose what’s used at the well sites. “We have a broad right to know about the use of chemicals and discharges of any sort into the environment,” said John Hanger, Pennsylvania’s environmental protection secretary. Read more from this Tulsa World article at http://www.tulsaworld.com/business/article.aspx?subjectid=49&articleid=20100910_49_E2_CUTLIN364632&rss_lnk=5

Original Article

The Energy Department on Thursday is expected to report an increase of 56 billion cubic feet to 60 billion cubic feet in natural gas inventories for the week ended Sept. 3, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.

The Energy Information Administration — the statistical agency of the Department of Energy — releases its weekly report at 10:30 a.m. EDT.

Natural gas inventories held in underground storage in the lower 48 states increased by 54 billion cubic feet to about 3.106 trillion cubic feet for the week that ended Aug. 27. The level was 5.8 percent more than the five-year average, the government said.

Original Article

By Adam Hornung

Without a doubt, this country currently faces the most difficult economic climate that we have seen in decades. Our leaders at all levels of government should be focused on creating new, good-paying jobs and developing innovative ways to stimulate the economy, but instead the Obama administration and Senate Democrats are proposing legislation that will do just the opposite.

Shortly before the U.S. Senate’s August recess, Finance Committee Chairman Max Baucus introduced an amendment that would repeal Section 199 of the IRS tax code for oil and natural gas companies. Section 199 was placed in the tax code in 2004 as part of the American Jobs Creation Act as a way to encourage employment in the manufacturing sector. Now Sen. Baucus is proposing that we remove this job creation incentive in order to pay for the small business jobs bill, a move that seems counter-productive.

The reality is that removal of Section 199 for oil and gas companies will not only cost jobs, it will cost the American people in the form of higher energy prices. The repeal of this tax code results in a multi-million dollar tax increase on the energy industry, and no industry, no matter how successful, can take such a strike without cutting corners elsewhere. The corners that will be cut in this case are reasonable energy prices.

Economist Andrew Chamberlin of the Institute for Energy Research has conducted a study on the repeal of Section 199. His analysis shows that a repeal of this tax credit would result in the loss of more than 635,000 jobs, would increase our reliance on foreign oil and reduce household earnings by

$35 billion over the next decade. How can Congress even consider such a costly measure as a reasonable means of paying for a jobs creation bill? We are not in a position to mortgage 635,000 jobs on a jobs bill that isn’t guaranteed to create one single job.

If the repeal of Section 199 weren’t enough, President Barack Obama has proposed in his 2011 budget that Congress further change the way we tax the foreign profits made by U.S. oil and gas companies. Currently, if a U.S. company is operating overseas, then they receive a tax credit for income taxes paid in the other countries in which they operate. For 25 years, this is how the system has worked in order to prevent the double taxation of these “dual capacity” taxpayers who are making profits overseas yet reinvesting the income at home in the United States. Obama now wants to remove this tax credit without regard for the dire consequences it will produce.

The United States is one of the few countries in the world that even levies taxes on overseas income. The countries that do tax overseas income all have the same kind of tax credit as the United States. Repealing the “dual capacity” tax credit would place American companies at a disadvantage faced by no other company in the world.

Slapped with heavy taxes, oil and gas companies will be forced to pass costs on to consumers. That means gas prices far above $4 a gallon, soaring bills to turn on our lights at night and deeper digs into the pockets of the average consumer. I hear from people and clients every day, including small- business owners, who simply cannot afford increased energy prices or increased prices on necessary goods.

These issues in Washington are Nebraska issues and they have a direct impact on our local economies. For instance, there are businesses, like Evertson Companies in Western Nebraska and Tenaska in Eastern Nebraska, which have invested millions right here in Nebraska from national and international oil and gas production. These investment dollars have created hundreds of jobs in this state and have provided an influx of revenue that has been instrumental in keeping unemployment down and our state financially stable. The proposed tax increases will directly affect these Nebraska businesses by decreasing funds available for investment. The result is a loss of jobs, a stifling of future job creation, and an increase in the cost of production of basic goods and services for families. Nebraska can’t afford these Washington tax increases.

Adam Hornung, a Lincoln attorney, was elected to the Lincoln City Council in 2009.

Original Article

By Vickie Welborn

As predicted several years ago, water has become a critical limiting factor as the natural gas industry expands from one shale play to the next, according to Gary Hanson, director of the Red River Watershed Management Institute at LSU-Shreveport.

Hydraulic fracturing is required in all of the gas shale plays and it is crucial that industry continues to work with northwest Louisiana communities and voluntarily use predominantly surface water or the Red River Alluvial Aquifer instead of the limited Carrizo-Wilcox groundwater for fracing.

“By addressing our water concerns in a proactive manner and allowing development to proceed in a responsible way, we are a model to other areas of the country where unfortunately, fear, instead of facts, is driving resistance to shale gas development,” Hanson said.

As a result of Louisiana’s success, Hanson has been invited to several water and energy venues in the Southwest and on the East Coast to share the story and lessons learned. In one of the sessions set next month in Pennsylvania, Hanson will be joined by Lt. Gov. Scott Angelle, state conservation Commissioner Jim Welsh and Mike Mathis of Chesapeake Energy.

Other conferences will be in Houston, Pittsburgh and Baltimore. The Baltimore event in October, sponsored by the Water Research Foundation, is pulling together experts to evaluate water quality concerns related to hydraulic fracturing. One of the speakers will be Robert W. Puls, director of research for the Environmental Protection Agency’s Ground Water and Ecosystem Restoration Division.

“It is a real honor to be asked to participate in this expert workshop formed to evaluate hydraulic fracturing and gas shale development,” Hanson said.

As an example of what other area’s of the nation are facing, Hanson notes in the Marcellus Shale, which stretches into Pennsylvania and New York, poor groundwater aquifers exist and major river systems are being used for well stimulation.

New York has a drilling moratorium in place, and “well-meaning groups have incited the public to a point that regulators and scientists, whom I have spoken with, say it is basically impossible to get out objective facts about gas well drilling and hydraulic fracturing. Their greatest concerns are landscape change, excessive water use and fears that fracing may contaminate their drinking water and environment. Facts, not fear, should drive the development efforts,” Hanson said.

In south Texas, the Eagle Ford play is drawing a lot of interest from the oil and gas industry. It extends 250 miles from southeast of Austin to the Mexican border.

In much of the play, existing deep water wells are being utilized for drilling and stimulation because it’s too expensive to drill water wells. In areas near the border, no groundwater exists, so limited surface water is used. Also, encounters with Mexican drug runners and human traffickers make it dangerous for water transfer specialists to work there.

“Caddo, Bossier, DeSoto and Webster parishes, as well as the Red River Waterway Commission, Sabine River Authority, city of Shreveport, Metropolitan Planning Commission and LSUS should be commended for their efforts to preserve and protect our water resources here in northwest Louisiana,” Hanson said.

The state’s Legislature and Department of Natural Resources acted in a proactive manner by developing groundwater legislation here in Louisiana about six years before the Haynesville boom started. Recent water policies, including the newly adopted surface water use law, are being driven by the Haynesville activity.

However, DNR’s approach shows “institutions that are typically considered rigid and inflexible can in fact become flexible and adaptive with the right leadership,” Hanson added. “In an unprecedented manner, but typical of his hands-on management style, Scott Angelle (interim lieutenant governor) has chaired numerous and lengthy Ground Water Commission meetings throughout the state. This has given Louisiana residents, statewide, the opportunity to attend and have their water concerns heard.”