Please take a moment to personally welcome LOGA’s newest members to our growing association and thank them for supporting Louisiana’s oil & gas industry:

Matcor, Inc – Helen Morgan
Allegro Development - Samantha Johnston
Aquatech - Chuck Kozora & Devesh Mittal
Arthur J. Gallagher Risk Management Services – Bill Farnan & Bumpy Triche
Boots & Coots – Jennifer Tweeton, Galen Hebert, Bill Markus, Scott O’Neal & Danny Watson
CenterPoint Energy Field Services – Orland “Bud” Plyant & Martina Sittler
Crowe Horwath - Jeff Mills
EnergyNet.com, Inc - John Mandich & Chris Atherton
Gulf Coast Industrial & Supply – Roderick K. Broussard & Gail F. Broussard
Royal Video & Communications - Russell Lanclos & Marwin Emert
Shamrock Management – Keli Bonvillain
Tanner Services – Michael Tanner & Brian J. Tanner
Vital Oil Well Services - Michael Meredith & Morgan Ryan
Texas Classic Productions – Eli Logan
Driver Pipeline - Michael Norris
FocalPoint Business Coaching of LA – Karen Johnson
Pinnacle Companies – Rebecca Larson
The Lemoine Companies – Michael Alost
Amoss Trading Services – Jonathan Red
Blake International Rigs - Michael Blake, Jr
Blue Fin Services – Bryan Lipari
Bourque Sales & Service – Scott Bourque
Edge Engineering & Science - Andy Goldberg
First Response Environmental Group – Damon Ploger & Pauli Overdorff
Force Well Services - Jeff Hebert
G4SGS Gulf Coast – Mark Hunter
GulfStar Group – Heather Mattingly
LATX Operations – Jonathan St. Amant
Longhorn Intermodal Supply Company - Allan Jay Goldstein
Magnum Producing, LP – Avinash Ahuja
Marriott International - Jamie Trahant
Midsouth Bank – Shiloh Kidder
Omni Industrial Solutions – Markelle Palombo
Petrocap/Falcon Fund - Thomas Neville & David Hopson
Razor Consulting Group – Chris M. Streib
Samson Exploration – Stephen Trujillo
Shaw Oil Field Services – Bryan Vollimer
ViZon Solutions – Daniel O’Neil

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Encana Corp (ECA.TO) is launching a formal search for a partner to help develop a number of properties in the United States and Canada with potential for lucrative oil and liquids-rich natural gas, as the company struggles with chronically depressed prices for dry gas, its chief executive said on Thursday.

Encana — Canada’s largest natural gas producer and one of the biggest in North America — is looking for a single partner for a package of assets that could include positions in the Collingwood shale, the Tuscaloosa Marine shale, the Mississippi Lime and the Eaglebine shale in the United States, CEO Randy Eresman told Reuters at a conference in Singapore.

All have natural gas liquids or oil potential and are in the early stages of exploration and development.

“One of the things we have been trying to do is to get more liquids, particularly oil, in our portfolio,” Eresman said. “But because of the high initial cost on that, we think it might be best to reduce our risk so to accelerate that point of commercialization by bringing in another party.”

Eresman compared the possible partnership with Devon Energy Corp’s (DVN.N) recent deal with China’s Sinopec (0386.HK), in which the U.S. energy company gave up a third of its interest in five developing fields for $2.2 billion.

He said the process could launch “in the next weeks to a month.”

The company’s position in Canada’s Duvernay shale, an early stage gas liquids prospect in Alberta, may also be part of the offering, he said.

“We are not really sure if there is an appetite in the financial marketplace for cross-border deals, or (if) there would be separate kinds of transactions … but in either case we are open to discussions on both of them,” Eresman said.

Based on the terms of the Devon-Sinopec deal, Encana could extract around $2 billion for its offering, according to FirstEnergy Capital Corp analyst Michael Dunn, who has run the numbers on such a possibility.

Using similar calculations, in the range of $5,100 per acre, Canaccord Genuity analyst Phil Skolnick pegged the value of such a deal in the same range as Oklahoma City-based Devon’s.

Top potential buyers for Encana’s interests are state oil companies from Asia as well as European majors such as Royal Dutch Shell (RDSa.L), France’s Total SA (TOTF.PA) and Norway’s Statoil (STL.OL), all of which have joined shale alliances, Skolnick said.

“Devon had said that there was a huge amount of interest when they went through their own process. It’s probably not going to be a very difficult thing for Encana to find a partner,” he said.

Asian-based oil companies have been major players in a frenzied rush to develop shale-gas plays in North America as domestic companies look to accelerate development of the expensive operations while cutting the pressure on their own balance sheets.

NO STRANGER TO JOINT VENTURES

Encana, whose shares have been pressured by natural gas prices that are close to decade lows due to a continent-wide oversupply of the fuel, was behind many of its competitors in shifting its focus toward gas liquids, which are priced like oil rather than natural gas.

It has a target to lift such output to 80,000 barrels a day by 2015 from around 25,000 today.

With current low prices for dry gas, the company expects to have an average of 250 million cubic feet a day of unprofitable dry gas off-line this year.

Encana shares were down 45 Canadian cents, or 2 percent, at C$19.70 on the Toronto Stock Exchange on Thursday.

Encana is no stranger to joint ventures on its holdings.

The most recent was last month, when it agreed to sell a 40 percent share of its massive Cutbank Ridge gas field in British Columbia to Japan’s Mitsubishi Corp (8058.T) in a C$2.9 billion deal that brought both upfront money and an agreement from the buyer to fund much of the development.

That deal replaced a more extensive C$5.4 billion ($5.4 billion) transaction with PetroChina (601857.SS), which collapsed in June 2010 when the two sides could not agree on the final terms.

Overall, Encana is looking to sell $3 billion worth of assets this year. ($1=$0.999 Canadian)

original article

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Much of what the United States might have achieved through a visionary energy policy—lower prices, lower carbon emissions, less reliance on dirty coal and foreign oil—is coming to pass as a result of abundant natural gas from hydraulic fracturing, said the recently retired CEO of one of America’s largest energy companies.

“We are backing ourselves into rationality, but it’s only because of this incredible national blessing of cheap natural gas,” said John Rowe, who retired 17 days ago as chairman and CEO of Exelon Corporation.

On Thursday Rowe told about 50 people at the University of Chicago’s Harris School of Public Policy that natural gas is the only rational fuel for new energy plants and that it can replace archaic coal plants for relatively little expense.

“No one in their right mind in the market would build anything other than a gas-fired power plant right now,” he said.

“Right now we think we can get huge quantities of gas through the fracking process and produce it at something like $4 per 1,000 BTU,” Rowe said, compared to $8 to $10 for nuclear power or wind or $15 to $20 for solar.

Hydraulic fracturing wells extract gas by injecting water and chemicals into shale formations deep underground, shattering the shale to release trapped gas.

Fracking, as it is commonly known, has been blamed for poisoning nearby wells. Fracking fluids are believed to contain benzene, ethylbenzene, formaldehyde, methanol, naphthalene, polycyclic aromatic hydrocarbons, toluene, xylene, boric acid, hydrochloric acid, isopropanol, and diesel fuel.

The formula used at each well may be guarded as a trade secret.

Rowe asked analysts at Exelon to predict the impact on prices of more regulation of hydraulic fracturing. Analysts estimated environmental regulations could add $1 to the price, he said, “but not $2 and not enough to change any of your fuel choices for a very long time.”

Gas prices could also rise if the United States begins to aggressively export its supply—a prospect made likely by higher gas prices overseas. But even an abundance of new export terminals could not deplete domestic supply enough to rival the price of other energy sources, he said.

“If prices stay in this $2 to $4 range, I’ve got to believe people will find places to build LNG (liquid natural gas) export terminals, but I doubt it will be anywhere large enough to affect the national versus overseas price discrepancies.”

Exelon’s nuclear-based value has been “hammered times two” by cheap natural gas, Rowe said, and gas prices are so low that “gas companies don’t like it either.”

Wind and nuclear power won’t be able to compete with gas for at least 5 to 10 years, Rowe said, and coal is a “bad technology” even if it is “cleaned.” With coal, said Rowe, “You’re constantly rebuilding a really archaic system.”

Cheap natural gas can more readily replace coal, and in fact, utilities have recently announced or accelerated the closure of several aging coal plants. Replacing old coal plants with new gas ones is “not a free scenario,” Rowe said. “But it’s not a very expensive one.”

“This is a blessing for society, but it’s a whole new challenge for the energy industry.”

original article

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Senior Senate Republicans are floating legislation that would slam the brakes on Obama administration efforts to expand regulation of the controversial oil-and-gas drilling method called “hydraulic fracturing” on federal lands.

Sen. James Inhofe (Okla.), the ranking Republican on the Environment and Public Works Committee, is the lead sponsor, and the seven other backers include Sen. Lisa Murkowski (Alaska), the top GOP member on the Energy and Natural Resources Committee.

The bill is unlikely to advance but will provide Republicans another rallying point for allegations that President Obama’s Interior Department and Environmental Protection Agency have an overzealous agenda that will stymie development.

The bill introduced Wednesday requires that only states may regulate hydraulic fracturing — or “fracking” —– on federal lands within their borders.

“States better understand their unique geologies and interests,” Inhofe said when introducing the measure.

Fracking involves high-pressure injections of water, chemicals and sand into rock formations to open up seams that enable trapped gas to flow.

The bill arrives ahead of a planned Interior Department proposal that would require disclosure of chemical ingredients used in fracking on public lands, and also create new requirements regarding well integrity and wastewater management.

President Obama touted the upcoming rules in his Jan. 24 State of the Union speech in which he strongly endorsed expanded natural gas development.

“My administration will take every possible action to safely develop this energy. Experts believe this will support more than 600,000 jobs by the end of the decade,” Obama said. “And I’m requiring all companies that drill for gas on public lands to disclose the chemicals they use, because America will develop this resource without putting the health and safety of our citizens at risk.”

Separately, EPA is working on new air-emissions rules for oil-and-gas drilling, including wells developed through fracking.

EPA is also conducting a major study of how fracking might affect drinking water.

A 2005 energy law largely exempts fracking from Safe Drinking Water Act regulation, but environmentalists and some Democrats are seeking to overturn the provision.

Fracking is enabling a natural gas production boom — much of it on state and private lands — in many regions but is bringing fears of water pollution alongside it.

Energy industry officials, Republicans and conservative Democrats say the method is safe and well-regulated at the state level.

The new bill states:

”A State shall have the sole authority to promulgate or enforce any regulation, guidance, or permit requirement regarding the underground injection of fluids or propping agents pursuant to the hydraulic fracturing process, or any component of that process, relating to oil, gas, or geothermal production activities on or under any land within the boundaries of the State.”

original article

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Natural gas, whose price is at record lows thanks to a shale drilling boom, is gaining traction as an alternative energy in the United States, with automakers jumping on the bandwagon.

The use of natural gas instead of oil-based gasoline to drive the country’s cars and trucks “is definitely starting to take off,” said Mark Hanson, an analyst at investment research firm Morningstar.

“The economics seem to work,” he said, noting it was “just a question of what pace” the necessary infrastructure will take to develop.

Gas is in focus as a potential engine fuel because “it is tremendously good fuel,” said David Cole, the chairman emeritus of the Center for Automotive Research.

Unlike gasoline, whose rising prices are causing pain at the pump for consumers, natural gas is cheap in the United States as supplies bulge from production in the country’s vast shale gas formations.

In addition, natural gas burns while emitting less carbon dioxide than gasoline.

Thus, it is considered a “green” fuel even though in its raw state, the methane it emits is more destructive to the Earth’s ozone layer than CO2, and the artificial fracturing of gas shales, known as “fracking,” has drawn fire from environmentalists.

There are several forms of natural gas used to power vehicles. Compressed natural gas (CNG) is pressurized gas stored in a similar way to a vehicle’s gasoline tank.

Liquefied natural gas (LNG) is produced by chilling natural gas to about minus 260 degrees Fahrenheit (minus 162 degrees Celsius). It can be used as engine fuel for heavy ground or maritime vehicles.

In Europe, the fuel of choice for automobiles is liquefied petroleum gas, typically a mixture of butane and propane made from refined crude oil or natural gas.

Across the Atlantic, the three big U.S. automakers are pumping out vehicles based on alternative fuels.

Ford Motor Company, the nation’s second-biggest automaker, has the largest array of alternative-energy vehicles: eight powered by natural gas.

original article

The smallest U.S. car maker, Fiat-controlled Chrysler, in early March unveiled a pick-up truck than can use liquefied natural gas, which will go on sale in June.

Sergio Marchionne, the chief executive of Fiat and Chrysler, views natural gas as having greater potential than electricity to power vehicles.

General Motors, the U.S. giant at the top of the global auto industry, produces two vans that use compressed natural gas, the Chevy Express and the GMC Savana, and will begin production by the end of the year on two pick-up trucks running on CNG.

GM already has sold 1,200 of the vans to U.S. telecommunications titan AT&T.

The Detroit, Michigan auto maker is working on a number of different alternative fuels and particularly on electric vehicles.

But a GM spokesman, Dan Flores, said: “We think compressed natural gas offers a lot of potential. The technology is promising.”

It is particularly appealing to businesses, especially service providers such as telecoms, package deliverers like UPS, or to local governments, which operate trash removal or emergency vehicle fleets.

CNG vehicles operate at relatively short distances from a refueling hub. The economies of scale for a large business or public body can potentially justify the cost of an investment in the specialized refueling equipment.

For individual consumers, the refueling infrastructure is limited. And compressed or liquefied gas is expensive and requires substantial storage capacity, restricting the vehicles’ range.

Morningstar’s Hanson said that currently there are only about 400 CNG stations in the US.

In Europe, natural gas also is sparking interest amid rising gasoline prices, but so far it remains only a small portion of the market.

In France, for example, it represents less than one percent of the vehicle fuel consumed and only 200,000 vehicles are outfitted for liquefied petroleum gas, of the 31 million privately owned.

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The answer to whether Louisiana’s Tuscaloosa Marine Shale oil formation will see a rapid increase in activity could come Wednesday during Devon Energy’s analyst day, said Doug Leggate, senior U.S. energy analyst with Bank of America Merrill Lynch.

Devon Energy is expected to reveal if it has figured out how to economically produce in the shale formation, Leggate told those who attended Merrill Lynch’s oil and gas industry update Wednesday at Juban’s Restaurant. If so, drilling activity can be expected to accelerate.

“Watch this one very closely,” Leggate said, “because they’re the ones who are going to tell us if this play is working or not.”

In February, Devon officials said the company planned to drill 10 wells in the shale by the end of 2012. Devon has leased more than 265,000 acres in the formation, which straddle’s Louisiana’s midsection.

So far, Devon officials have described the Tuscaloosa Marine Shale as still in the exploratory stages, although the company is optimistic about the formation.

Leggate said Devon bought Mitchell Energy and Development Co., the company that originally figured out how to produce in shale formations.

Devon likes to quietly establish a lease position and then experiment with its production techniques, Leggate said. The process typically takes a couple of years.

Devon along with Encana Corp. hold more than 550,000 acres in the formation, which contains an estimated 7 billion barrels of oil.

Encana has announced plans to drill eight wells during the first half of the year.

Leggate told those in attendance that energy stocks remain an opportunity although the potential for volatile energy prices concern some investors.

He also said that refinery stocks offer investors an opportunity.

The United States has become a net exporter of refined products, such as gasoline, Leggate said. When domestic gasoline consumption dropped, refiners turned to the export market.

The export market will not disappear even if an economic turnaround increases domestic demand, Leggate said.

Meanwhile, some U.S. refineries have closed because companies could not recover the cost to meet environmental regulations.

The remaining refineries already were seeing much higher margins on their products, Leggate said.

Removing additional capacity from the market with summer, when the demand for gasoline is highest, could mean refineries could enjoy even higher margins.

original article

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Anti-energy crusaders are in a celebratory mood this week as the EPA effectively banned the construction of coal-fired power plants, and thus completed the federal government’s trifecta beat-down on affordable energy.

First, new obstacles to energy production resulted in oil production on federal lands dropping 11% in Fiscal Year 2011 vs. 2010. Second, President Obama announced earlier this year that his administration was blocking construction of the Keystone XL pipeline that would deliver large quantities of valuable oil from neighboring Canada. Third, the EPA announced this week its severe global warming restrictions on power plants.

For all the talk of an “all of the above” federal energy policy, this administration is imposing “none of the above,” unless we choose to celebrate our imminent burning of dung for fuel, like they do in the utopian economic powerhouse of Bangladesh.

Coal is our nation’s leading source of electricity for a reason; it is less expensive than all other sources except large-scale hydropower, which environmental activists had already taken off the table. By definition you cannot ban the least expensive power sources without creating a jump in electricity prices. If you have been a fan of our rapidly rising gasoline prices, you are going to love what is about to happen to our electricity prices, too.

There is at least one theoretical scenario whereby banning the construction of coal-fired power plants will only cause a modest rise in electricity prices. That scenario would occur if natural gas filled most of the void for future power plant construction and government refrained from punishing natural gas production. However, the same environmental extremists who successfully pushed for the end of new coal-fired power plants are just as adamant about shutting down natural gas production.

The EPA is already targeting natural gas production from lucrative shale formations, and is likely to soon impose unprecedented restrictions that will raise costs and throttle natural gas production. Tripling down on “none of the above” appears poised to become quadrupling down on “none of the above.”

Oh, and I forgot to mention this administration’s pulling the plug on the Yucca Mountain repository for spent nuclear fuel. Make that quintupling down on “none of the above.”

Those who claim humans are causing a global warming crisis argue that expensive energy is necessary to stop the growth in our global warming emissions. The facts, however, tell a different story.

U.S. carbon dioxide emissions have fallen since the beginning of the century, and the U.S. Energy Information Administration does not anticipate any appreciable rise in emissions for at least the next several decades. True, global emissions have risen by approximately one-third this century, but the United States has had no part in that global increase.

The reason why global carbon dioxide emissions continue to rise is nations such as China and India continue to ramp up their industrialization. China, for example, emits more carbon dioxide than the entire Western Hemisphere and is increasing its carbon dioxide emissions by an average of 10 percent per year. Even if the United States theoretically eliminated all of its emissions today, such action would be rendered moot in less than a decade merely by the corresponding increase from China.

What we are left with, even if we assume for the sake of argument that humans are causing a global warming crisis, is tremendous self-induced economic pain for absolutely no real-world environmental impact.

All of the Above is now None of the Above. Welcome to the return of “That 70s Energy Policy.”

original article

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I recently wrote about the gas drilling lease issue through the lens of a personal anecdote.

The topic is increasingly in the spotlight as the land grab for gas leases — by drilling companies seeking to tap shale deposits via high-volume, hydraulic fracturing combined with horizontal drilling (fracking) — continues through New York State and the nation. The New York Times recently shed light on yet another important aspect of gas drilling leases, that U.S. Department of Agriculture rural housing loans are being routinely granted on properties with oil and gas leases using a so-called “categorical exclusion” from the National Environmental Policy Act (NEPA), although such exclusions are only supposed to apply to properties without environmental risks.

Most people would agree that fracking comes with an assortment of environmental risks given that it’s a heavy industrial activity; in this case an activity that introduces hazardous substances into people’s backyards. What’s less clear is the regulatory and legal landscape. If you have trouble wrapping your brain around this issue, then you’re not alone. Fracking is a complex subject with an endless number of sub-themes and gas leases might just be one of the more complicated aspects of this knotty topic.

Elisabeth Radow, an attorney-at-law with a keen interest in environmental impacts on human health and the subject of hydraulic fracturing (and who wrote in depth about gas leases and mortgages in the Nov/Dec 2011 cover story for the New York State Bar Association Journal magazine), helps to explain the significance of the Times story:

The New York Times reported on Monday that environmental specialists at the US Department of Agriculture have recognized USDA mortgage loans made to property owners with oil and gas leases may violate the National Environmental Policy Act (NEPA) if an extensive review is not performed. NEPA is a federal statute enacted in 1969 which requires that all federal agencies’ funding or permitting decisions be made with full consideration of the impact to the environment. According to the Times report, USDA mortgages have been routinely granted on properties with gas leases without NEPA review by using a so-called “categorical exclusion” which is supposed to pertain to properties without environmental risks. The Times also reported that recognition in USDA of the need for a higher level of review was anticipated to result in a notice issued in April by USDA Secretary Tom Vilsack clarifying existing rules. However, on the heels of the Times article, Secretary Vilsack stated he will issue an Administrative Notice reaffirming that rural loans are “categorically excluded” under NEPA.

High volume hydraulic fracturing combined with horizontal drilling introduces heavy industrial activity and hazardous substances into property owners’ backyards across America where families raise their children and farmers raise cattle and grow crops. In the words of the gas industry (as disclosed in the SEC mandated Form 10-K), this is inherently risky activity, including well blow-outs, explosions, pipe failures, fires, uncontrollable flows of natural gas, oil, brine or well fluids and other environmental hazards and risks which can result in property damage, personal injury and loss of life.

You might be wondering, what does this risk mean for the taxpayer? Radow explains:

Taxpayers subsidize the low interest-rate USDA rural development loans. In addition, these loans are routinely sold into the $6.7 trillion secondary mortgage market; 90% or more of all home mortgages are. To protect the federal government, the lending bank, the mortgage-backed securities investor and the taxpayer, it is critical that people underwriting federally backed loans grasp the multi-step (oil or) natural gas extraction process and assess the risks associated with each step so they can determine if the mortgage collateral (i.e., the land, the house and the water supply) will retain its integrity and value throughout the 30 year loan. Otherwise, USDA (and the other NEPA governed federal agencies involved in mortgage loans) risk litigation.

A close look at the USDA underwriting guidelines reveals that use of a categorical exclusion will not exempt a property from requirements of other environmental laws, regulations or Executive orders. Each property is supposed to be individually reviewed and can lose its categorical exclusion status where “extraordinary circumstances” or “cumulative impacts” are involved; both criteria have relevance here.

Radow predicts we have not heard the end of this debate since the Obama administration appears to be supportive of natural gas extraction, considers America’s food supply a matter of national security and is resolute about preventing another mortgage crisis. “To illustrate the conundrum created by these three competing priorities,” Radow suggests that we need “a transparent map of all of America’s farms and family homes with mortgages, superimposed on a second map of the nation’s oil and gas shale plays. That visual would say it all; clearly illustrating just what’s at stake.” But here’s where it gets really interesting, according to Radow:

USDA underwriting guidelines prohibit a loan on a residential property which produces income or has the potential to produce income, as is the case with a residential property with a gas lease. So, while NEPA’s relevance to all federal agencies involved in mortgage loans should be recognized and acted upon-to protect and preserve our food supply, property value and public health-for purposes of USDA residential mortgages, it may be moot.

Many thanks to Elisabeth Radow for her expert aid in unraveling this complex issue. As I wrote last week, in most cases, gas drilling companies shift to landowners the risk of negative environmental and health impacts associated with the fracking technique. With this new information, it would seem that an over-burdened government agency (one that is supposed to be ensuring the safety of our food supply) and taxpayers are shouldering the load. I encourage you to continue following this unfolding issue and distribute this information to as many people as possible.

original article