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HOUSTON, Oct. 13

By Paula Dittrick
OGJ Senior Staff Writer

The American Petroleum Institute periodically briefs and trains state officials and regulators to help them better understand hydraulic fracturing and its importance to shale oil and natural gas development, API executives said during an Oct. 13 conference call with reporters.

Better coordination among industry, regulators, and representatives from academics, environmental, and community groups has strengthened responsible development of unconventional oil and gas in the Marcellus, Fayetteville, Bakken, and other plays, said Marty Durbin, API executive vice-president.

Last week, API held a 2-day hydraulic fracturing workshop in Pittsburgh that was attended by 300 people. Other workshops are planned elsewhere across the US, Durbin said. API has provided briefings to state officials in Pennsylvania, West Virginia, and Ohio. API was asked to provide training to state regulators in those states.

Durbin said hydraulic fracturing and shale energy are helping “change America’s energy landscape for the better.” He said shale development spurs economic growth and creates jobs. Development of the Marcellus shale created 72,000 jobs in Pennsylvania from late 2009 to early 2011, he said.

API has five standards on hydraulic fracturing, said David Miller, API standards director. For almost 90 years API has developed more than 600 standards that promote reliability and safety through proved engineering practices. The American National Standards Institute accredits API standards.

The API program undergoes regular independent audits to ensure compliance with ANSI rules, Miller said.

Fracing standards outlined

Of API’s five frac standards, the ones generating the most interest involve well construction and integrity (HF-1) and isolating potential flow zones during well construction (Std. 65-2), Miller said.

HF-1 addresses the drilling and completion process, and it provides guidance for cementing practices and casing centralizers. It also addresses monitoring techniques during fracing, post-fracing, and post-completion stages.

To ensure that groundwater is protected during drilling, fracing, and production operations, HF-1 outlines how operators and contractors can design and construct wells to prevent leaks through or between any casing strings.

Std. 65-2 provides best practices for isolating potential flow zones, which Miller called an integral element in maintaining well integrity.

Environmental groups and others have questioned whether chemicals used in frac fluid might migrate and contaminate drinking water. API’s HF-2 standard on water management associated with fracs outlines technical guidance on the management, treatment, and disposal of water and other frac fluids.

In the US, industry uses frac jobs on an estimated 35,000 wells/year. API estimates frac jobs on more than 1 million wells since the late 1940s.

API’s other frac standards are:

• HF-3 on mitigating surface impacts associated with fracing. It discusses protecting surface water, soil, wildlife, other surface ecosystems, and nearby communities. It also discusses the state’s role in determining reporting requirements and the regulatory impacts at federal, state, and local levels.

• RP 51R on environmental protection for onshore oil and gas production operations and leases, including frac jobs.

Original Article

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NEW ORLEANS, La. – A new study suggests that Louisiana will see a surge in green jobs in the next 10 years.

The study, conducted by the Louisiana Workforce Commission, predicts that green jobs will grow 13.8 percent by 2021, while overall job growth will increase only 8 percent.

With Louisiana’s annual growth rates expected to be 0.8 percent in 2012 and 0.9 percent in 2013, the study suggests that the Pelican State will be increasingly dependent on green technology for future economic growth.

According to Stephen Barnes, assistant professor at LSU’s Division of Economic Development, the number of green jobs created will depend heavily on public and private investment.

Critics of the study, including Don Briggs, president of the Louisiana Oil and Gas Association, contend that any surge in green jobs will require consistent government assistance.

“As the federal government falls deeper into bankruptcy and Louisiana continues to wrestle ballooning budget deficits each fiscal year, it is hard to believe that taxpayers can continue to provide consistent and long-term financing for the green industry.”

Although environmentalism is often attributed to the rise of the green movement, CEO Michael Hecht of Greater New Orleans Inc., a regional economic development group, claims that the rise in the demand for green technologies is a product of the free market.

Hecht claims that large multinational corporations like Freeport McMoRan, Kraft Foods, Dow Jones and Nike would not be involved in green efforts if the projects would not be profitable.

However, Briggs is skeptical, pointing to the recent Solyndra scandal as an example of what the green industry will look like in Louisiana.

“Time and time again we see that companies who do not take capital risks in the market and are propped up with taxpayer cash cannot support long-term productivity or job retention. We may see a surge in green jobs, but we will most certainly see a bust as well.”

LSU researchers define green jobs as “[any job that helps] protect or restore the environment, or conserve natural resources”.

“There are over 1900 vacancies in the green economy in [Louisiana],” said Curt Eysink, Executive Director of the Louisiana Workforce Commission.

Half of the jobs require specialized training or certificates, but Eysink contends that there are hundreds of public and private training programs throughout Louisiana.

Currently, Baton Rouge has the most green jobs in Louisiana with 28 percent, followed by New Orleans with 22 percent and Lafayette 18 percent, respectively.

Much of the growth over the next decade in green technologies is expected to take place in New Orleans, where large public and private investments are planned to grow green energy, construction, water management, manufacturing and waste management technologies.

Original Article

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By Starr Spencer

Houston (Platts)–12Oct2011/511 am EDT/911 GMT

Even as rig counts have dropped in natural gas shale fields such as the Barnett in North Texas and the Haynesville in East Texas/Northwest Louisiana, production from those plays continues to climb despite persistently low gas prices, analysts say.

Historically, an area’s rig count and the rise or fall of its output showed a rough correspondence. But in unconventional plays in the past several years, new drilling mechanics and technology to wrest larger volumes of hydrocarbons from wells have changed that equation, analysts said in recent interviews.

In unconventional plays, which have proliferated both in number and activity, “the rate at which you complete wells is only loosely related to the rig count,” analyst Dan Morrison of Global Hunter Securities, said.

The chief factor that raises gas production from these wells despite a falling rig count appears to be the lag time between when the wells are drilled and when they are completed — i.e., readied for production. Companies do not always drill a well and then immediately complete it; rather, they increasingly drill wells in batches and later return to complete them.

As a result, operators may release a rig after drilling a well. But if the well is not completed, production may not begin for weeks or even months.

“We are still seeing backlogs of uncompleted wells propping up production,” said an industry analyst who did not want to be identified.

Wells “drilled in the first quarter of this year may have only recently come online,” said Morrison. “There may be that much of a lag.”

For example, he said in first-quarter 2011 a total 221 new wells came online in the Haynesville’s Louisiana side, where the play first took off. In the second quarter that plummeted to 129, he said. Yet the rig count there went from 105 to 92 during that time in what the analyst called a “pretty modest” decline in the rig count, but a “significant drop” in the number of wells that came online, he added.

According to figures supplied by Pritchard Capital Partners, which are based on Smith International rig count figures and the investment bank’s own estimates, 88 rigs were employed in the Barnett Shale at the beginning of October 2010. But at the start of June 2011, that number had slid to 69 rigs and then to 56 rigs in early October 2011.

Yet in that same 12-month period, gas production in the Barnett rose from 5.4 Bcf/d to 5.7 Bcf/d, according to figures supplied by Bentek Energy. That compares to 4.75 Bcf/d at the start of October 2009. And from early October 2010 to early October 2011, oil production along the Barnett’s northern edge grew from 75,464 b/d to 88,902 b/d, Bentek said. Bentek is a unit of Platts, a division of The McGraw-Hill Companies.

Further east in the Haynesville Shale, a peak of 181 rigs were working at the start of July 2010. At the same time a year later, that figure had fallen to 126 rigs. Last week, the count was 110 rigs — surprisingly high given gas prices that for nearly three years have stubbornly hovered in the $3-$4/Mcf range.

In July 2010, Haynesville production was 4.65 Bcf/d, yet by early October 2011, volumes had jumped to 7.58 Bcf/d, Bentek figures show. Haynesville gas is “dry,” meaning largely liquids-free.

Wall Street experts say well economics motivate producers to keep drilling for gas when prices have sifted into the mid-$3s/Mcf. Even at lower prices, analysts say operators still receive good rates of return from gas drilling in the Haynesville and Barnett, as well as other gas fields such as the Fayetteville Shale in Northwest Arkansas and the Marcellus Shale in Appalachia. The Marcellus especially is close to desirable Northeast US markets where premiums to the Gulf Coast Henry Hub price can be $0.50/Mcf or more, experts said.

But the lag in well completions is not the full story on why output from gas plays continues to rise. Upstream companies that increasingly become expert at finding a play’s “sweet spot” is another reason for increasing production, particularly in the Barnett Shale where activity persists a decade after the play became an industry hot spot, John Bookout, managing director of energy for big equity capital investor Kohlberg Kravis & Roberts, said.

“The variability across the Barnett is so great,” Bookout said. And in the Haynesville, “a lot of wells drilled early on were in non-core areas. Now you see the whole area’s much better understood.”

Original Article

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BASTROP, La. — Mineral leasing activity in Morehouse Parish now includes previously existing wells in addition to new land.

Records filed with the Morehouse Parish Clerk Court on Sept. 27 show Sehoy Energy LP of Shreveport assigned to Union Royalty Co. Inc. of Monroe its interest to oil, gas and mineral leases totaling 480 acres and 17 wells in Morehouse Parish.

Gifford Briggs, vice president of the Louisiana Oil & Gas Association, said the assignments “could just be part of general mineral leasing activity.

“It’s not a clear indication [they plan to start operating old wells], but with the increased activity, it would make sense. Any time mineral leases are acquired, it’s a good indication [of future exploration].”

Records filed in Caddo Parish on Sept. 28 and subsequently filed with the Morehouse Clerk of Court show five wells and mineral leases totaling 21,816 in Morehouse Parish were included in a mineral transfer between parties in Richmond, Va. and Lake Park, Fla. The two parties transferred an undivided 1/2 interest in numerous wells and mineral leases in 10 different parishes.

In Morehouse, the transfer includes three wells operated by Cargas Operating Co., two wells operated by Tensas Delta Exploration Co. and an interest in “80 percent of the oil or petroleum and 50 percent of the gas and all other minerals of every kind, lying in and under” properties in the northwestern side of Morehouse adjoining the Union Parish border

Original Article

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Written by

Adam Duvernay

America’s quest for energy independence has encompassed many technologies and resources, but none has the local visibility of natural gas.

The Haynesville Shale has boosted the local economy, but pulling natural gas from the ground is only the first step. The true value of the region’s most abundant natural resource will one day be judged by how effectively it powers the American way of life.

The United States imports more than 60 percent of the oil it uses, but 98 percent of the natural gas used by the U.S. is produced in the U.S., according to the U.S. Energy Information Administration.

People use natural gas daily to heat and power parts of their homes, but the holy grail of natural gas development is to help replace hundreds of millions of U.S. vehicles running on expensive and dirty gasoline.

Only one dedicated natural gas-powered passenger vehicle — the Honda Civic GX — is manufactured and sold in America. The car starts at $26,155, according to Honda.

Waste-collection vehicles, such as garbage trucks, account for about 12 percent of total vehicular natural gas and are the fastest-growing NGV (natural gas vehicle) segment, according to statistics from NGV for America, an organization representing more than 100 U.S. companies promoting the switch to natural gas and hydrogen fuels.

Adding natural gas fleet

Bossier City maintains four garbage trucks operating on natural gas, Bossier City spokesman Mark Natale said. Next year, the city plans to purchase 30 trucks and cars that can run on gasoline or natural gas, Natale said.

Shreveport also operates at least three garbage trucks running on natural gas.

So far, natural gas vehicle research and development has been primarily focused on mass transit, said David Bieler, chairman of the Geology Department at Centenary College. Due to the exhaust from mostly stop-and-go traffic and diesel fuel, buses were an easy target for a cleaner fuel source, Bieler said.

Transit buses now account for 62 percent of all vehicular natural gas uses, according to statistics from NGV for America.

The American Public Transit Association reported 26 percent of all new transit bus orders in 2009 were for natural gas, and about 18 percent of buses in 2009 ran on natural gas.

Locally, SporTran now runs 14 of 46 buses on natural gas, SporTran Manager Gene Eddy said. It will be at least another 10 years before the entire fleet is converted to natural gas, but that is the end goal, Eddy said.

At a transit conference in New Orleans this week, Eddy said at least a fourth of the venues there were dedicated to natural gas mass transit systems.

SporTran buses have their own pumping station in Shreveport and travel only locally; however, when they travel from the manufacturer to the city, they experience one of the major problems affecting the growth of American NGVs — fuel station infrastructure.

Infrastructure needs

There are only about 1,000 NGV fueling stations in the U.S., and only about half are open to the public, according to NGV for America statistics.

“If you’re only driving around town, there wouldn’t be a real problem with a natural gas-powered vehicle,” Bieler said. “But on a long trip, filling up would become more difficult. There are infrastructure issues if we want to switch to wholesale natural gas transportation. We’d need stations along the interstates.”

There are five public and four private natural gas fuel stations in Louisiana, most in Shreveport-Bossier City and Baton Rouge. On Monday, Lott Oil Co. announced it would install a natural gas pumping station in Alexandria, and it is expected to open by January.

Chesapeake Energy announced, as part of its “Energy Independence Plan,” it would invest $150 million in “clean energy fuel corporations” and fund 150 liquefied natural gas fueling stations along major U.S. corridors, spokeswoman Katie McCullin said.

“If Americans used natural gas as a primary transport fuel, it would save consumers about $2 on every single gallon of gas,” McCullin said. “But right now, the infrastructure isn’t there, and we’ll need to change that to move forward.”

There are about 112,000 NGVs on U.S. roads today, placing the nation 14th worldwide — less than 1 percent — in number of operating NGVs, according to statistics from the May 2011 edition of the Gas Vehicle Report, a monthly international natural gas publication.

Pakistan ranked No. 1 with about 2.9 million NGVs, 21.56 percent of the world’s NGVs, followed by Iran with about 2.1 million NGVs, 15.67 percent, according to the Gas Vehicle Report. China ranked sixth with 754,659 NVGs, 5.71 percent, according to the publication.

There are no Western nations ranked in the top 10 list of worldwide NGVs.

Fueling the future

Nonvehicle natural gas-powered equipment will likely follow the success of NGVs, Bieler said. It is still cheaper to buy gasoline-powered equipment and vehicles than those that operate on natural gas.

“Habits die hard,” Bieler said. “The cost to the consumer and efficiency will have to be examined before it is totally accepted.”

But there wouldn’t be such serious investment in the resource if companies didn’t see its future, he said. As the costs narrow with gasoline and diesel, fuel costs and environmental concerns should make natural gas increasingly attractive as an all-around fuel source.

The Eco-Eagle, manufactured by Dixie Chopper, is the world’s first compressed natural gas-powered mower. The machine operates on two CNG tanks holding a combined 9 gallons of fuel and capable of covering more than 6 acres per hour, according to the manufacturer.

“I think it’s a good machine overall, I really do,” said Gary Ponder, owner of Ponder Power Equipment in Bossier City. “With anything new like this, people are going to be skeptical at first. But we’ve had people who have mowed with it, and they like it.”

Although Ponder said the CNG mower has a little less power performance than a normal gas-powered mower, its frame and engine are essentially the same as a traditional machine. A cleaner-burning fuel source means less pollution and less contaminants in the engine, he said.

Ponder hasn’t sold one yet, he said, but he sees the future in the fuel source.

“The technology is there,” Ponder said. “Really, it’s where the whole nation should go. It may not happen in my lifetime, but one day, everything will run on natural gas.”

Original Article