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BATON ROUGE- More regulations on drilling as it booms in our backyard.

The state wants to know the types of fluids used in hydraulic fracturing or fracking and the feds want rules on how to get rid of the wastewater that process creates.

Fracking is how crews break apart rock to release oil or natural gas. There’s a concern the fluid and wastewater could contaminate drinking water. There are a lot more rigs drilling since the Tuscaloosa Marine Shale was found adjacent to Baton Rouge.

The fear is that a tighter grip on industry will choke off chances for growth, which is what many across 150,000 acres of the shale have been hoping for for years.

Landowners across the Baton Rouge area hope new regulations at the state and federal level will add safety to the benefits of drilling.

Dan Collins, with the Tuscaloosa Marine Shale Landowners, said, “It’s good to see that the government is taking a role, but we hope that they don’t step too heavily on the operations.”

Industry shares that sentiment, at least when it comes to the state’s new rules of revealing fluids used in the fracking form of finding oil.

“Typically we don’t support additional regulations, but there’s a nationwide effort for companies to be up-front and shed more light on what the chemicals are and we don’t really have anything to hide,” said Gifford Briggs with Louisiana Oil and Gas Association.

The regulation industry doesn’t like is the one the EPA is considering now, which calls for getting rid of wastewater developed during the fracking process in a certain way.

Congressman Bill Cassidy agrees.

“I would rather they not be involved in usurping, taking away, the state’s responsibility. I think the state’s are doing a pretty good job,” said Cassidy, (R) Louisiana.

Both say following that rule could cost more for companies, leading them to spend less on more projects, which lead to more potential and more jobs.

Cassidy said, “We shouldn’t kill the goose that is laying the golden jobs.”

“That means decreased revenues to the parishes, decreased revenues to the landowners, the royalties owners, decreased revenues to the state and that’s something we certainly don’t want to see happen,” said Briggs.

Neither do the landowners of sites like this one, who feel this is the time for the shale to shine.

Word on whether the wells are any good could come in a matter of weeks.

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Louisiana will require operators to reveal chemicals used in hydraulic fracturing and provide more information on the process during permitting, the state regulator said Thursday.

Kathrine Schmidt  20 October 2011 20:54 GMT

The rush into the state’s natural-gas rich Haynesville shale play several years ago helped kick off the still-rising tide of exploiting onshore oil and gas from horizontal wells using the process known as hydraulic fracturing.

But both state and federal regulators have fallen under increasing pressure to disclose chemicals used in drilling processes, which have raised concerns among environmentalists about contamination of ground water.

“With the intense development of the Haynesville Shale and in the interest of being protective of the environment, revising our rules provides substance and transparency,” the state’s Commissioner of Conservation James Welsh said in a statement.

The Louisiana rules require the chemicals be disclosed to regulators or a public database following the completion of a well.

State and federal oversight of the practice has been the subject of heated debate as its use has spread. Federal regulators say they may issue national rules for the process in as soon as a month.

States from Texas to New York have grappled with how best to manage the issue.

In Louisiana, the decision came in the wake of a report released in March that recommended broader disclosure, in which many companies are already participating via the FracFocus website.

“The intent of the Rule is to provide transparency to ensure that hydraulic fracturing operations are conducted in a manner which is protective of the public health and the environment and to collect technical information on the hydraulic fracturing operations conducted in Louisiana,” the regulatory text says.

Don Briggs, president of the Louisiana Oil and Gas Association, which represents midsize and service firms in the state, foresaw no opposition to the rules from industry.

“Using hydrofracking as much as we have been, going on sound guidelines was a good thing,” Briggs said. Many of the companies involved, he said, “were already doing most of that disclosure.”

The requirements do not extend retroactively to chemicals used in wells that have already drilled, said Anna Dearmon, a spokeswoman for the state Department of Natural Resources.

A call to the Gulf Restoration Network, an environmental group, was not immediately returned.

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By Robert Ross

Pelican Institute

October 20, 2011

How natural gas will power the future of Louisiana is yet to be seen

NEW ORLEANS, La. – Louisiana’s natural gas has given the state an economic advantage over its neighbors, but the implementation of a thriving natural gas economy is still in its infancy.

Although people use natural gas to heat and power parts of their homes, the end game for natural gas producers is to convert Americans away from vehicles running on increasingly expensive gasoline, and incentivizing a transition to clean burning natural gas.

Currently, the U.S. has 112,000 natural gas vehicles (NGVs) on the road, while there are 13 million NGVs operating worldwide.

According to Gas and Vehicle Report, the U.S. currently ranks 14th worldwide for NGVs, well behind top ranked Pakistan, who currently has 2.9 million NGVs, and China, who ranked sixth with over 750,000 NGVs.

Passenger vehicles are an extremely small part of the U.S. market, with only one dedicated natural gas powered vehicle – the Honda Civic GX.

Gifford Briggs, vice president of the Louisiana Oil and Gas Association, doesn’t think that natural gas powered passenger vehicles will ever go to mass market in the same fashion as gasoline, but contends that there are opportunities converting city buses and similar fleets.

NGV for America, an organization representing over 100 U.S. companies promoting a switch to natural gas and hydrogen fuels, agrees with Briggs, stating that the fastest growing segment is in waste-collection vehicles, which accounts for 12 percent of total natural gas powered vehicles.

David Bieler, chairman of the Geology Department at Centenary College, says that natural gas research and development has been fixated on mass transit.

Bieler contends that buses, which are primarily powered by diesel fuel and operate in stop-and-go traffic, were an easy target for a cleaner fuel source.

Concurrently, NGV for America reported that transit buses now account for 62 percent of all vehicular natural gas uses.

In addition, the American Public Transit Association reported that 26 percent of all new transit bus orders in 2009 were for natural gas.

Shreveport’s own public transportation system, SporTran, currently runs 14 of its 46 buses on natural gas.

Gene Eddy, manager at SporTran, claims that it will be another 10 years before the entire fleet is converted to natural gas.

When operating locally the natural gas powered buses have no problems refueling, however a lack of fuel station infrastructure located between the plant that assembles the buses and their final destination poses a major problem for the NGV revolution.

Briggs says that a major hurdle for building infrastructure is the additional real estate necessary, since natural gas equipment, unlike gasoline, currently cannot be stored underground.

U.S. Natural Gas Pipelines

“For natural gas stations, storage tanks, dryers, compressors and other equipment need to be stored above ground, which takes a lot more real estate to put a station in. For a highway truck stop it wont be a problem, but for every gas station on the highway or in the middle of a city, that creates a problem.”

NGV for America claims that there are roughly 1,000 NGV fuel stations in the U.S., but only half are open to the public.

At the moment, Louisiana has five public and four private natural gas fueling stations, with an additional station opening in Alexandria in January.

Chesapeake Energy, the world’s second largest producer of natural gas, recently announced plans to fund 150 liquefied natural gas fueling stations along major U.S. corridors.

Although the infrastructure is yet to be seen, Chesapeake Energy spokeswoman Katie McCullin contends that a transition to natural gas will be beneficial for consumers.

“If Americans used natural gas as a primary transport fuel, it would save consumers about $2 on every single gallon of gas.”

Non-vehicle powered natural gas equipment, such as Dixie Chopper’s new compressed natural gas mower the Eco-Eagle, will likely be the next foothold for natural gas.

Unconventional drilling methods, such as horizontal drilling and hydraulic fracturing, have caused the price of natural gas to drop from an average of $7/million British thermal units (Btu) in 2005 to roughly $4/million Btu in 2011.

In addition, the International Energy Agency claims that the global supply of natural gas is on the rise as a result of unconventional production, and that oversupply could continue until 2030.

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Speakers expect jobs, economic boost

By Ted Griggs
Advocate business writer

The successful development of the Tuscaloosa Marine Shale will have “huge implications” for Baton Rouge and the surrounding parishes, a Devon Energy executive said Tuesday.

One can get an idea of an oil shale’s impact by looking at the Eagle Ford formation in Texas, said Harry Livingstone, exploration manager, new ventures for Devon’s Southern region.

The first Eagle Ford well was drilled there in 2008, and there are now 241 rigs drilling in the formation, Livingstone said. The shale has generated 13,000 full-time jobs and more than $500 million in salaries.

By 2020, the Eagle Ford Shale will have contributed an estimated $11.6 billion to the Texas economy and created nearly 68,000 jobs, Livingstone said. The formation is already the biggest oil boom in Texas history.

Livingstone was one of the speakers at the LSU Center for Energy Studies’ annual Energy Summit. This year’s theme was unconventional plays. Around 70 people attended.

So far Devon has drilled a vertical well and a horizontal well in the shale, Livingstone said. Work on a third well should begin shortly.

He described the first efforts as “science wells,” which will provide information that will help Devon productively drill the shale.

“These early wells we are doing are not economic by any stretch of the imagination. But we figure that 50 wells into the program, costs will be such that the economics are good,” Livingstone said. “The scale of the operation will bring the costs down.”

Livingstone said one of the advantages of shale formations is their sheer size. A 1997 LSU report estimated the Tuscaloosa Marine Shale, which stretches through the midsection of Louisiana, contains 7 billion barrels of oil.

Livingstone said Devon has 250,000 acres under lease in Louisiana and is still adding to its acreage.

“We do think it’s an exciting play. We’re in there for the long term, we hope,” Livingstone said.

Livingstone and other speakers said shale plays and the hydraulic fracturing technology that allow production in the formations have radically altered the energy supply of the United States and the world.

In hydraulic fracturing, chemicals, water and sand are injected into the ground under enormous pressure, cracking the rock and propping it open. The oil or natural gas escapes through those openings.

Livingstone said the industry has known about the Tuscaloosa Marine Shale for decades, but the formation was waiting for the technology to catch up.

Fracking and horizontal drilling, which boosts a well’s recovery area, have made shale production possible.

“This is a U.S.-driven industry. The U.S. is way ahead of the rest of the planet, the recognition of the value, the asset size, the technology for fracking these wells, is all based here in the U.S.,” Livingstone said.

When the international shales take off, the equipment and expertise will come from the United States, Livingstone said. The industry should be cashing in on the demand for those services.

Allan Pulsipher, LSU Center for Energy Studies executive director, cited a National Petroleum Council report that shows the United States is now the top natural gas producer in the world.

In addition, the shales and oil sands in Canada have made North America the largest producer of oil in the world, ahead of Russia and Saudi Arabia, Pulsipher said.

The energy supply picture has completely changed in the past few years, he said.

Mike Power, manager of unconventional resources, drilling and completion for Chevron, said five years ago, U.S. production of natural gas was expected to decline steadily through 2050.

The 2010 forecast shows that by 2035, U.S. gas production will increase by 44 percent, Power said. Shale gas now accounts for 25 percent of the country’s production and will account for half of it by 2035.

The Louisiana Oil and Gas Association estimated that the economic impact of the Haynesville Shale’s, a natural gas play that crosses northwest Louisiana was some $22 billion in 2008 and 2009.

And more than a dozen similar formations have been found throughout the world, Power said.

Chevron is positioning itself to take advantage of shale plays in Poland, Bulgaria and Romania, Power said. The company expects to drill its first well in Poland by the end of the year.

But production in Europe, which imports most of its natural gas, is expected to grow much more slowly, Power said. Many of the areas lack the roads, pipelines and service companies needed to produce the gas.

Cheniere Energy hopes to capitalize on that delay by exporting liquefied natural gas from its Cameron Parish facility to markets in Europe and Asia, said Patricia Outtrim, the company’s vice president, governmental and regulatory affairs.

Cheniere has secured a U.S. Department of Energy permit to export LNG and expects to secure the others needed for the $6 billion facility in the next few months, Outtrim said. The company’s plan calls for it to secure the three additional major permits, including an order from the Federal Energy Regulatory Commission, by the end of the year.

With the permits in place, the company will move to secure long-term contracts from suppliers and then use those contracts to obtain the financing for the project, she said.

Cheniere has already spent $1.5 billion on the facility, which was planned in the 1990s, to handle imports of liquefied natural gas. At the time, domestic natural gas prices were double and triple the current price of around $4 per thousand cubic feet.

“I can’t tell you what the future’s going to bring, but we feel this facility definitely has at least a 20-year life, maybe longer than that,” Outtrim said.

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By Claire Taylor

Oil and gas men, armed with seismic graphs identifying potential finds like the Northeast Basile Prospect in Evangeline Parish and the Theall Prospect in Vermilion Parish, attempted to make deals Tuesday with investors willing to share the costs and risks of drilling.

Hundreds from the oil and gas industry gathered Tuesday at the Cajundome Convention Center for the Gulf Coast Prospect and Shale Expo presented by the Louisiana Oil and Gas Association.

Most of the companies selling and buying oil and natural gas prospects Tuesday were from Louisiana and Texas, LOGA President Don Briggs said.

Among the dozens of exhibit booths in the Convention Center, you didn’t see oil giants like Exxon and Shell, but the smaller independents.

The giants are integrated companies, Briggs said. They do everything, from drilling to producing to refining themselves. The independents work with other investors to drill, produce and refine.

Ninety to 95 percent of the oil and gas produced in Louisiana is done so by independents, some of them located in Lafayette, Briggs said. Among the local independent companies in attendance Tuesday were Badger Oil, PetroQuest Energy, Shelf Energy, PetroQuest Energy and Optimistic Energy.

Not all present at Tuesday’s event were traditional independent oil companies. Representatives with J.M. Burguieres Company in Franklin were among those with drilling prospects hoping to sign on partners Tuesday.

The company is an old family land trust created in 1877. It started with three plantations in St. Mary Parish farming sugar cane but got into the oil and gas business when those products were found on their property, said Russell Walters, director of environmental services.

In December or January, the Burguieres Company will be planting thousands of cypress trees on 700 acres of land it owns on either side of the Cypremort Point bridge in St. Mary Parish, Walters said. Another 600 acres will be planted in 2012, he said.

The family is focused more on utilizing and protecting land through agriculture, Walters said. Advances in directional drilling and other technology make it easier to drill for oil and gas with less damage to nature, he said.

The Louisiana Office of Mineral Resources was trying to interest participants Tuesday in prospects owned by the state. The state owns navigable waters, so it can issue leases and collect royalties on oil and gas produced from those leases, Byron Miller, with the Office of Mineral Resources, said.

The state has close to 2,000 active leases today and conducts lease sales using sealed bids every month, Miller said. To find out more about the lease sales, visit http://dnr.louisiana.gov/.

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By RUSSELL GOLD And RYAN DEZEMBER

Shale is rocking the U.S. energy industry to its core.

The technique of cracking open shale rock to release oil and natural gas has spurred hundreds of billions of dollars worth of deals, including Monday’s $4.4 billion proposed purchase of Brigham Exploration Co. by Norway’s Statoil ASA. And it has delivered enormous profits and revenues to those in its midst, including Halliburton Co., which reported a record $6.5 billion in third quarter revenue.

Shale discoveries have reinvigorated U.S. oil and gas production that just half a dozen years ago was widely seen as in terminal decline. Today, there is a glut of cheap natural gas, and domestic oil production is rising for the first time in decades. Shale development is even spreading to other countries, such as Poland and Argentina.

The shale boom has already minted a half-dozen new billionaires comparable to the riches brought by the Internet.

“You certainly have to record the discovery and the exploitation of resources from both oil and gas shales as one of the great wealth creators in American history,” said Ralph Eads, vice-chairman of investment bank Jefferies & Co., which has advised on more than $75 billion worth of shale deals over the last three years. “It looks to be the economic equivalent to any of the big technology innovations.”

The discoveries have been such a disruptive force in the energy industry that companies that navigated this change successfully are now ascendant.

Many of those that didn’t are disappearing quickly. The shale frenzy has helped push the total value of U.S. oil and gas deals beyond $292 billion over the last two years, according to financial-data provider Dealogic.

On Sunday, Kinder Morgan Inc. said it was buying rival El Paso Corp. in a $21.1 billion deal. It was a major bet by pipeline giant Kinder Morgan that the glut of new shale gas will not be short-lived and billions of dollars will need to be invested in distribution systems.

But it is also a reflection on El Paso, which spent years cleaning up its financial results after a disastrous strategic pursuit of Enron-like energy trading and was too slow to embrace changes in the industry.

Statoil’s purchase is the latest move by a foreign oil company to snap up shale properties in the U.S.—Brigham’s oil-producing assets in North Dakota’s Bakken Shale field. Foreign companies, as well as oil behemoths such as Exxon Mobil Corp., have opened their wallets for U.S.-based companies that invested in shale production early.

They are motivated to buy production assets and the employees who know how to tap into shales.

Meanwhile, companies that pioneered shale, such as Chesapeake Energy Corp., have been able to capitalize on their experience and get others to pay for their drilling. Since 2008 Chesapeake has sold stakes in five shale fields for nearly $12.8 billion as buyers are willing to pay top dollar for a chance to learn from it.

Cracking open shale is a much more intensive, and expensive, process than traditional onshore drilling. Oilfield service companies, such as Halliburton, Baker Hughes Inc. and Schlumberger Ltd., have struggled to keep up with the demand while profiting handsomely.

On Monday, Halliburton reported record revenue and operating income, driven by surging demand for its hydraulic fracturing services. It attributed the gains in large part to frenzied activity in Texas and North Dakota shale formations.

The emergence of shale energy—and widespread use of hydraulic fracturing—has raised red flags. U.S. regulators are looking into what companies say about the gas they’ve found to determine if they are misleading investors. Environmentalists and local governments are concerned that the process is ruining aquifers and air quality. They are calling for more oversight.

But the industry is wagering billions that shale energy is sustainable and can be exploited without political intervention.

“Shale is clearly the engine driving the train for the foreseeable future—but it is not a 100% certain bet,” said energy analyst John Olson. While the gains in oil and gas production are real, he notes that little is known about how these wells will perform over decades.

How shale has created winners and losers is on display in places such as Oklahoma City. Kerr-McGee Corp. was once the most important corporate presence in the city. But the oil company never took a plunge into shale and was acquired by Anadarko Petroleum Corp. in 2006.

Devon Energy Corp., meanwhile, made a major shale acquisition in 2001—and today is completing a new 50-story headquarters. On the other side of town, Chesapeake rode shale from obscurity to become a company with a market value of $18 billion that holds drilling leases on an area the size of Indiana.

Other industries and government officials are rethinking the implications of this sudden abundance of gas and increasing supply of oil. In the early 2000s, the chemical industry was mothballing U.S. plants and shifting overseas where gas was cheaper. Today, Dow Chemical Co. and others are building new world-scale facilities along the Gulf Coast because of the inexpensive energy available. In the Rust Belt, steel makers are building new mills to meet the demand for pipes needed to tap shale discoveries.

The impact of shale has reached into many aspects of U.S. life, creating millionaires of some landowners in drilling zones and creating thousands of jobs even as the rest of the economy was shedding them. On Wednesday, the Texas Rangers play in its second consecutive World Series. The club’s success can be tied, in part, to an increased player payroll covered by its two new owners: Bob Simpson, whose shale-focused XTO Energy was acquired by Exxon Mobil in 2009 for $25 billion, and Ray Davis, a former pipeline executive.

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Louisiana’s oil and gas industry is at the heart of our state’s economy. Through the exploration and production of both onshore and offshore natural resources, Louisiana plays an essential role in providing the necessary energy it takes to fuel our nation. As one of the largest contributors to our country’s energy production and infrastructure, our state leads the way in technological advancements and innovation in the oil and gas sector.

The cutting edge of oil and gas technology and potential prospects across the state are put on display at the Louisiana Gulf Coast Oil Exposition (LAGCOE) and the Gulf Coast Prospect and Shale Expo (GCPSE). These events provide an excellent opportunity for industry to showcase the future of technology and energy development in our state.

On Tuesday, the Louisiana Oil & Gas Association (LOGA) will hold the 2011 GCPSE at the Cajundome Convention Center in Lafayette. This event creates a one-day dynamic marketplace for the buying and selling of oil and gas prospects while highlighting all aspects of conventional and non-conventional exploration.

The GCPSE provides an unmatched opportunity for industry networking and allows a venue for companies and individuals to market gulf coast and other regional prospects. The event usually brings nearly 1,000 attendees each year and is a great opportunity to see our state’s future of potential sources of energy production.

For decades, the Acadian region has served as the hub of our state’s oil and gas industry, and it’s only fitting that one of the largest oil and gas expositions would be held in the Lafayette area. For nearly 30 years, LAGCOE has served as one of the premier oil and gas technology expos across the country.

Held biennially at the Cajundome and Convention Center in Lafayette, the event draws more than 15,000 attendees, will showcase 755 indoor and outdoor exhibit spaces from over 400 leading companies across the country.

On October 25-27, LAGCOE will hold it’s 28th edition of the popular event.

The theme of this year’s event is a “Spotlight on New Technology.” Exhibitors will be given the opportunity to present a brief overview of their recent innovations or technological advancements in the oil field service sector.

The event will allow companies a great opportunity to exhibit new technology to industry representatives and leaders. All current LAGCOE exhibitors and sponsors are eligible to participate in this new program.

LOGA is doing its part by unveiling our newest vehicle that runs on Compressed Natural Gas (CNG).

As a leader in thepromotion of CNG vehicles and fueling infrastructure across the state of Louisiana, we at LOGA want to showcase to the public that filling up your car or truck on natural gas is a lot easier than you think.

We encourage you to come by and visit with our staff and find out how CNG is affordable, reliable, and within your reach.

The GCPSE and LAGCOE are excellent events that display what our state has to offer. Both events enable industry to drive exploration and bring attention to innovative advancements in technologies that help make operations safer and energy more affordable for everyone.

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