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We all know Arkansas is known as the Natural State. It’s a designation honoring our beauty and resources, including oil thousands of feet underground.

And right now, we’re seeing new exploration in the southern part of the state hoping to tap what’s known as the Brown Dense formation, and help lower our country’s dependence on foreign oil.

THV’s Max Seigle shows us what this formation looks like and the debate over its future potential for a boom or bust in Arkansas.

It’s a snapshot of South Arkansas’ oil boom times: The S.T. Busey well in El Dorado in 1921. Twenty years later, we find another shot from Columbia County, riding a wave flattening in the years to come as Arkansas oil production dwindled away.

But now, more than half a century later, there’s renewed interest from energy companies in South Arkansas oil fields. This map (PDF) here shows some of the latest areas of exploration in Columbia and Union counties. They want to tap a rock formation far below the oil fields of our boom times called the Brown Dense.

“This would be an opportunity for a boom in South Arkansas,” Rep. Garry Smith said.

State Representative Garry Smith from Camden is feeling optimistic about Brown Dense.

“We want the investors to stay in Arkansas, bring their money and develop their resources with the opportunity for job creation and energy independence,” Smith said.

There’s some potential gain for Arkansas but how does this all happen?

Well some clues here from this diagram showing different levels of a geological formation. Throughout geological history, oil has migrated upwards from the source rock to the upper reservoir rocks where it collects in pools of crude oil and natural gas. And now with better technologies, like fracking and horizontal drilling, energy companies want to drill down into that source rock and get oil directly from there, a place that experts refer to as that Brown Dense formation.

“This is considered the source rock of all the oil in the Gulf Coastal region in the United States,” Ed Ratchford said.

Ed Ratchford, with the Arkansas Geological Survey, shows a piece of the Brown Dense rock. He says given its dense nature, there’s only one way to attack it.

“It will have to be hydraulically “fracked” in order to get the oil from the rock,” Ratchford said.

It’s a process we’ve seen in other parts of the state like the Fayetteville Shale to harvest natural gas.

“The oil is a valuable product, it remains to be seen whether the oil can be commercially extracted from the Brown Dense zone,” Ratchford said.

Other parts of the country have found huge success with Brown Dense, like the Bakken formation in Montana and North Dakota.

“I’m listening to what’s happening in North Dakota and students graduate from high school on Friday night and go to work in the oil industry on Monday and make an excess of $60,000 a year right out of high school,” Rep. Smith said.

“And you think we could see something like that here?” THV’s Max Seigle asks.

“I definitely do,” Rep. Smith said.

Smith adds companies like Southwestern Energy wouldn’t be buying up mineral rights and building a test well if there was no promise.

“I know they are not spending their money foolishly and so from that I will tell you before year’s end we’re going to see something definitely if not sooner,” Rep. Smith said.

But Ratchford is holding back on a timeline, feeling more testing must come.

“We just don’t have enough data at this point to make an assessment to see if it’s going to be commercially-viable or not,” Ratchford said.

It’s a debate over a second chance at those “boom times.”

In a financial report out earlier this week, Southwestern Energy reports buying the mineral rights to about 520,000 acres of land in both southern Arkansas and northern Louisiana. They’ve already started testing one well site and posted a high of 103 barrels of oil a day.

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According to a report released Tuesday by David Dismukes, professor and associate executive director of the Center for Energy Studies at LSU, legacy lawsuits have led to a significant reduction in state conventional drilling activity.

The study updates work originally included in a 2005 report produced for the Louisiana Department of Natural Resources and the Louisiana Department of Economic Development examining decreasing Louisiana drilling activity and the economic impacts of that decreased activity.

Don Briggs with the Louisiana Oil and Gas Association tells 9 News something has to be done with the legacy lawsuits because they are costing the state billions.

“Really this is about legalized extortion,” said Briggs. “The vast majority of the cases that have been settled…half of them have no environmental damage whatsoever.  And then there’s 1,500 defendants you heard about.  That’s a lot of companies and individuals over the years are being sued for something they had nothing do with.”

Don Carmouche is a trial lawyer that represent about half of the plaintiff’s in those lawsuits. He says this report is a plant by “Big Oil” on the eve of the BP oil spill trial.”This is a fraud,” said Carmouche. “You look at the so-called LSU Council. It’s all oil and gas people.”

According to the report:

Cumulative legacy-induced economic impacts are estimated to have led to the reduction of:

Approximately $6.7 billion (in 2010 dollars) in decreased drilling expenditures

Close to $10.5 billion in Louisiana economic output

Over 30,000 employment opportunities in oil and gas activities and supporting jobs

More than $1.5 billion in wages for those employed directly and indirectly in the oil and gas business

The Oil and Gas association will look to the Legislature this session to change the law requiring land-owners who are given awards for damages be required to repair the land. One of the rubs is right now the landowner can take the money and not repair the land.

“That’s unacceptable,” said Briggs.

original article

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One day after LSU released a study suggesting legacy lawsuits are costing Louisiana jobs and money, attorneys for oil giant Chevron and a Vermilion Parish family were in court Wednesday over alleged environmental contamination.

A legacy lawsuit is litigation filed by landowners and families over environmental contamination on their property left behind by oil and gas activity, usually decades ago. They often involve small oil and gas companies that purchased operations from larger, major companies which held leases on the affected land.

On Tuesday, David Dismukes associate executive director of the LSU Center for Energy Studies, released a report, “The Impact of Legacy Lawsuits on Conventional Oil and Gas Drilling in Louisiana.” The study, a follow-up to a 2005 LSU study, found a significant correlation between negative perceptions about legacy lawsuits and conventional oil and gas drilling in Louisiana.

Dismukes’ report concludes that legacy lawsuits cost the state $6.7 billion in decreased drilling expenditures and more than 30,000 jobs.

It should be noted that the advisory council for the LSU Center for Energy Studies includes Don Briggs, president of the Louisiana Oil and Gas Association; Chris John, president of the Louisiana Mid-Continent Oil and Gas Association; and representatives of oil and gas companies.

Don Carmouche, a Baton Rouge attorney who has prevailed in dozens of legacy lawsuits, said Tuesday the study is flawed because much of the work was done prior to

Act 312 of the 2006 Louisiana Legislature.

On Wednesday, Carmouche referred The Daily Advertiser to the “Global Petroleum Survey 2011″ by the Fraser Institute. More than 500 oil and gas executives and managers were asked about barriers toinvestment.

Sixty-three percent of respondents said Louisiana’s legal system is not a deterrent to investment, 22 percent said the legal system encourages investment and 15 percent said the state’s legal system is a mild deterrent to investment.

It should be noted, however, that Louisiana was ranked 14th in its overall score in 2011. Mississippi was No. 1 and Texas was No. 5.

New Orleans attorney Stuart Smith represents a Vermilion Parish family that intervened in a lawsuit between oil giant Chevron and the smaller Hilcorp Energy Company over contamination on their land at the Henry Hub.

He was in court Wednesday in Abbeville before retired 15th Judicial District Judge Byron Hebert trying to expand the scope of his access to documents that may or may not shed light on the case.

One of the things Smith wants to learn is when the companies knew radioactive material was present.

Carol Wood, an attorney representing Chevron, argued that Smith doesn’t have a case regarding the property and is trying to expand his reach.

“Anything else is irrelevant and confusing to the jury,” Wood said.

Hebert denied the landowners’ request to expand the scope of discovery in the case.

The trial is set for October.

original article

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See LSU Study:  http://www.enrg.lsu.edu/node/479

FOR IMMEDIATE RELEASE: Baton Rouge, LA-Today, David E. Dismukes, Ph.D., at the Center for Energy Studies at Louisiana State University released a study titled, “The Impact of Legacy Lawsuits on Conventional Oil and Gas Drilling in Louisiana”. This study updates research originally conducted in 2005 by the Louisiana Department of Natural Resources and the Louisiana Department of Economic Development indicating that legacy lawsuits are having a negative impact on Louisiana conventional drilling activity.

Don Briggs, President of the Louisiana Oil and Gas Association said this morning, “This LSU study is the second non-partisan study released in 2012, the first study having been conducted by the Louisiana Department of Natural Resources, that clearly lays out the facts that Legacy Lawsuits are merely court-sanctioned extortion where there is no need for remediation in most cases. This legalized extortion takes place at the expense of companies that drilled on a given piece of property, sometimes dating back several decades, with little or no proof from the landowner that any environmental damage to the property even exists. Dr. Dismukes’ indisputable research estimates that Legacy Lawsuits have led to the loss of nearly 1200 new wells in Louisiana, translating to an astounding $6.8 billion dollars in lost drilling investments. ”

Briggs continued by saying, “In addition to lost wells and billions of dollars of lost investment, this LSU study highlights the outrageous fact that Louisiana has lost over 30,000 jobs as a result of these frivolous suits. Legacy Lawsuits will only continue to force companies into needless bankruptcy and livelihoods will be destroyed all due to environmental lawsuits that merely line the pockets of trial lawyers.”

Louisiana Department of Natural Resources released data in their 2012 study for the House Natural Resources and Environment Committee showing the number of cases brought about through ACT 312. (ACT 312 was signed into law in 2006 to ensure that the dollars awarded by Legacy Lawsuits are properly used to remediate environmental damages allegedly caused by drilling sites.) DNR’s research shows that 210 of 271 cases were brought to the courts with NO environmental data submitted to the Louisiana Office of Conservation, which is required by ACT 312. Out of 64 notices of settlement filed, only three have been remediates. The most astonishing figured is that 35 of the 64 settlements (over 54%) required no further action to meet regulatory standards.

For Press Inquiries Contact:

Ragan Dickens – (318) 861-6505 -Ragan@loga.la

Communications Director

Louisiana Oil & Gas Association (LOGA)

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Negative perceptions associated with legacy lawsuits against oil and gas companies for environmental damage sometimes caused decades ago are costing Louisiana jobs and money, an LSU study released Tuesday concludes.

The findings were released by David Dismukes of the LSU Center for Energy Studies in the report, “The Impact of Legacy Lawsuits on Conventional Oil and Gas Drilling in Louisiana.”

It’s an update of a 2005 study conducted for the Louisiana Department of Natural Resources and the Department of Economic Development that found a “preliminary correlation” between legacy lawsuits and conventional oil and gas drilling in South Louisiana, Dismukes said Monday at the Louisiana Oil and Gas Association annual meeting in Lake Charles

The 2012 study quantifies the impact and cost of the legacy lawsuits, he said.

Dismukes said that legacy lawsuits cost Louisiana 1,200 new oil and gas wells over the past eight years, a loss of $6.8 billion in drilling investments and 30,000 jobs.

The financial impact goes even deeper, he said. With state government chopping its budget because of declining revenues, fewer wells equates to less revenues coming into state coffers, Dismukes said.

Don Carmouche, whose Baton Rouge law firm Talbot

Carmouche and Marcello settled 40 to 50 legacy lawsuits in recent years, said the LSU study released Tuesday is flawed because much of it was done before Act 312 of the 2006 regular session of the Louisiana Legislature.

That legislation was sponsored by the oil companies and supported by then-Gov. Kathleen Blanco, Carmouche said. But oil and gas companies aren’t happy with it.

They failed in attempts last year to amend Act 312 and are gearing up for to push for amendments in the 2012 regular session.

“We’re not against the oil companies,” he said. “We just expect them to bear responsibility for what they did.”

Spokesmen for two Louisiana oil and gas industry associations spoke out Tuesday in support of the Dismukes report.

“The conclusions drawn in the study are particularly disturbing and dismaying to those who are interested in or dependent upon the future vitality of Louisiana’s oil and gas industry,” Chris John, president of the Louisiana Mid-Continent Oil and Gas Association, said in a news release.

Don Briggs, president of LOGA, said the report “clearly lays out the facts that legacy lawsuits are merely court-sanctioned extortion where there is no need for remediation in most cases.”

Companies are being sued for drilling on property decades ago with little or no proof that any environmental damage occurred, he said.

original article

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Natural gas is a game changer for the U.S. economy according to PIMCO’s Mark Kiesel (via Josh Brown). The report says:

“The energy sector is growing more quickly than the overall economy in numerous areas around the globe due to supportive long-term demand fundamentals from the emerging markets and emerging global supply sources. In the U.S., the use of new drilling technologies for onshore natural gas and oil production is a potential “game changer” for U.S. energy security and an improved economy.”

But how exactly is natural gas a game changer?

First, it’s lowering costs. Onshore shale natural gas production has surged in areas like Marcellus, Haynesville, Fayetteville and Barnett formations. Natural gas output has increased to 22.7 trillion cubic feet (tcf) in October 2011, from 20.2 tcf in December 2007.  This has helped push down nat gas prices, and is expected to lower heating costs in the future.

Moreover, this will also make the U.S. less energy reliant. Nat gas imports have fallen to 1.7 tcf today, from 4 tcf in 2008. U.S. nat gas prices are also cheaper relative to international prices.

Second, U.S. annual upstream (exploration, recovery and production) and infrastructure capital expenditure on shale gas is projected to grow to $48.7 billion in 2015, from $33.3 billion in 2010,.

This is expected to increase “direct, indirect and induced” employment in shale gas to 869,684 employees in 2015, from 601,348 employees in 2010. Moreover, employment and private sector business investment in industries like fertilizer, chemicals, manufacturing, etc., is expected to increase. Kiesel says investment by chemical companies in the Gulf Coast is recovering and manufacturing plants are returning to the Midwest to take advantage of low natural gas prices.

The upshot seems to be that the U.S. could overtake Russia to become the world’s biggest energy producer in the next 10 years if it continues to boost natural gas and oil production. For now though, oil represents a greater portion of the U.S. economy’s energy demand, than gas.

original article

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A liquefied natural gas fueling station formally opened Friday by EnCana Natural Gas Inc. at the Relay Station holds the distinction of many “firsts.” It’s the first:

LNG station open in Louisiana.

Public LNG station in the U.S.

Location for Heckmann Water Resources to use LNG trucks.

And when the Relay Station in a couple of months opens its compressed natural gas pumps, the facility will be the first in the state to offer four fueling options: LNG, compressed natural gas, or CNG, gasoline and diesel.

So it was no surprise that 100 or so industry representatives, public officials and residents filled a tent on the blustery afternoon to mark the historic occasion. Recognitions and speeches were followed by the traditional ribbon-cutting.

But guests also had the chance to view LNG in action. Tractor-trailers fueled at the LNG pumps as quick as the gasoline pumps, albeit with a little heavier dispenser.

LNG differs from CNG in that it’s more dense and suitable for heavier vehicles such as Heckmann’s fleet of water transport trucks, ships, barges or mining equipment.

Natural gas-powered cars and trucks fueled with CNG or LNG operate similarly to gasoline- or diesel-powered vehicles and generally have a longer operating life because of the cleaner combustion.

Converting freight trucks and commercial vehicles also has an immediate effect on saving fuel costs and reducing carbon emissions.

Converting one 18-wheeler from diesel to LNG is equivalent to removing the emissions of about 325 cars from the road. Estimated savings range from 20 percent to 40 percent cheaper than gasoline or diesel.

EnCana forged ahead with the LNG station after cementing a partnership with Heckmann Water Resources, which provides water management services to EnCana and other Haynesville Shale operators, to use the pumps in its vast Haynesville Shale operations. The pumps are now available for public use.

David Hill, EnCana’s vice president of natural gas operations, believes if more would embrace the alternate fuel choices, which burn cleaner than gasoline or diesel, it would give America the competitive advantage as the fuel future clouds with so much foreign unrest.

original article