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The two recent back-to-back earthquakes in Timpson, Texas had some viewers asking KSLA News 12 if the oil and natural gas activity in the area had anything to do with it.

Many people in Timpson don’t remember the last time earthquakes shook the ground in their area before last week, but there has been a history. There was a small quake in 1981, several within a few months in the mid 60′s, and even one dating back to the late 1800′s.

That history is why the Louisiana Oil and Gas Association says it doesn’t think the fracking has anything to do with the earthquakes.

“If earthquakes are caused by fracking, then were those earthquakes in the 1800′s preemptive earthquakes because they knew fracking was coming? It’s a silly comparison,” says Ragan Dickens with LOGA.

Just last month, the Interior Department Deputy Secretary, David Haynes was quoted saying,”there is no evidence to suggest that hydraulic fracturing itself is the cause of the increased rate of earthquakes.”

During the process of fracking, workers fill spaces in the ground with water and sand.

Ben McGee with the U.S. Geological Survey says while fracking may not cause the quakes, it can contribute.

“Of course you have to have a fault present to have movement along a fault, but water or fluid injected into the earth in the vicinity of faults of in faults increase the likelihood that those faults will move,” says McGee.

McGee says there may be another man made reason for the series of quakes in the 60s, too. “Probably back to when Toledo Bend and the Sam Rayburn Reservoir were being filled,” says McGee.

Mcgee says there’s a chance that East Texas could see more earthquakes in the near future,  but historically quakes in the ArkLaTex are lower magnitude so they don’t cause serious damage or injury.

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Analysts said that a crude-oil glut from increasing domestic production and imports from Canada helped drive U.S. oil prices below $100. They added that a change in the flow of a key U.S. oil pipeline that begins this week could help reduce retail gasoline prices.

The U.S. Energy Department says that crude oil inventories at a storage hub in Cushing, Okla., reached a record 45.1 million barrels on May 11, breaking the old record of 41.9 million barrels set in early April  2011.

The Energy Department also said that last year the supplies at Cushing peaked in April and “generally declined slowly for the rest of the year.” That’s not happening this year, the Energy Department said, as the amount of crude at Cushing has continued to build.

Analysts have frequently referred to the Cushing storage hub crude as “landlocked,” a misnomer that refers more to the fact that there have been few transport pipelines that could move that crude to the high concentration of U.S. oil refineries near the Gulf of Mexico, said Phil Flynn, an oil analyst for PFGBest Research in Chicago.

That situation may finally begin to change this week when the so-called Seaway pipeline that runs from the Houston area to Cushing has its flow reversed, Flynn said.

“We’ll have more crude down in the gulf area where it can be processed, and that should keep a downward pressure on U.S. gasoline prices,” Flynn said.

U.S. exports of refined products, such as diesel fuel, remain high, although they have dropped below the peak set in late February and early March.

So far today, U.S. crude oil prices have rebounded slightly, up 64 cents to $93.45 a barrel on the New York Mercantile Exchange. The closing price Wednesday of $92.81 a barrel  was the lowest since Nov. 2.

Brent oil, which is used to price most U.S. oil imports, was falling, down 32 cents to $109.43 on the ICE Futures Europe Exchange in London.

In the U.S., retail gasoline prices continued to creep lower. The national average for a gallon of regular gasoline fell 0.6 cents overnight to $3.722 a gallon. In California, gasoline prices were unchanged since last night at $4.366 a gallon.

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The Interior Department Thursday issued the final notice for an oil and gas lease sale to be held in New Orleans June 20 that will make available all unleased areas in the Central Gulf of Mexico for a total of more than 38 million acres offshore Louisiana, Mississippi and Alabama. The sale, which will take place at the Mercedes-Benz Superdome, could, according to estimates by Interior’s Bureau of Ocean Energy Management, lead to the production of more than one billion barrels of oil and more than 4 trillion cubic feet of natural gas.

“The Gulf of Mexico is the crown jewel of the U.S. Outer Continental Shelf, and home to a number of world-class producing basins — including many in deepwater areas that are becoming increasingly accessible with new technology,” said Bureau of Ocean Energy Management Director Tommy Beaudreau. “There have been a number of significant discoveries in the past two years alone, and this sale will continue making significant and promising areas available while encouraging diligent development and providing the taxpayer a fair return.”

“As part of the Obama administration’s all-of-the-above energy strategy, we continue to make millions of acres of federal waters and public lands available for safe and responsible domestic energy exploration and development,” said Secretary of the Interior Ken Salazar. “Holding this lease sale is one of the many administrative steps we are taking, at the president’s direction, to increase U.S. production, reduce dependence on foreign oil, and incentivize early production on leases that industry holds.”

According to Interior, the 7,276 blocks that will be part of the sale are located from three to about 230 miles offshore, in water depths ranging from nine to more than 11,115 feet in the Central Gulf of Mexico, a region that BOEM estimates contains close to 31 billion barrels of oil and 134 trillion cubic feet of natural gas that are currently undiscovered and technically recoverable.

The Final Notice of Sale package issued by Interior describes all terms and conditions for Central Gulf Lease Sale 216-222. According to Interior, “these include a range of incentives that encourage prompt development and ensure a fair return to taxpayers, as described in a recent report by the Department of the Interior on the status of Oil and Gas Lease Utilization. These measures include escalating rental rates and tiered durational terms with relatively short base periods followed by additional time under the same lease if the operator drills a well during the initial period.”

BOEM has also increased the minimum bid in deepwater to $100 per acre, up from only $37.50. That change was based on the finding by Interior that, over the course of the last 15 years, deepwater leases that went for lesser amounts “experienced virtually no exploration and development drilling.”

The terms of the sale also, according to Interior, reflect lessons learned from the Deepwater Horizon disaster.

According to Interior, “these include stipulations to protect biologically sensitive resources, mitigate potential adverse effects on protected species, and avoid potential conflicts associated with oil and gas development in the region.”

For this sale, BOEM has also adopted a stipulation to notify bidders that the terms stated in a February 20, 2012 agreement between Mexico and the United States regarding the exploration and development of oil and natural gas reservoirs along the United States’ and Mexico’s maritime boundary may apply to some of the blocks offered in this sale, should the agreement enter into force.

The Final Notice of Sale information package is available at: http://www.boem.gov/sale-216-222/. Copies can also be requested from the Gulf of Mexico Region’s Public Information Office at 1201 Elmwood Park Boulevard, New Orleans, LA 70123, or at 800-200-GULF (4853).

The Final Notice of Sale and the Notice of Availability of a Record of Decision on a Final Supplemental Environmental Impact Statement for Lease Sale 216/222 are available today in the Federal Register at: http://www.archives.gov/federal-register/public-inspection/index.html.

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After a drumbeat of complaints from energy companies that the Obama administration is blocking domestic oil and gas production, the Interior department released a report claiming that U.S. oil and gas producers are sitting on millions of acres of idle government land leases.

Secretary of the Interior Ken Salazar says that if producers were sincere about wanting to increase energy production, they would activate millions of acres of public land already leased to them. What should they be doing on that land? Drilling.

In a statement issued Tuesday, Salazar says the administration wants companies “to develop the tens of millions of acres they’ve already leased but have left sitting idle.”

A report released by the Department of the Interior claims that of 36 million government acres leased offshore for oil and gas production, 72 percent sit idle. Onshore, in the lower 48 states, says the report, more than half of federally leased acreage sits idle, “neither producing nor under active exploration or development by companies who hold those leases.”

The American Petroleum Institute calls the administration’s claim “absurd” and “willfully misleading.”

In a statement, API CEO Jack Gerard says that just because a lease doesn’t fit the government’s definition of active doesn’t mean it’s idle. Where a lease truly is idle, the reason often is that the producer must hold off drilling while they wait years to get the necessary government permissions.

Erik Milito, API director of upstream and industry operations, says there’s another reason some leases aren’t being used: There’s only a 30 to 40 percent success rate to finding oil. A producer has to narrow down its leases to find the few ones good enough for drilling.

The fallacy behind Salazar’s assertion–which Milito characterizes as being, ‘We don’t have to open up any more public land to you, because you’re not using the leases you’ve already got’–is the belief “that you just put a pipe in the ground, and you’re ready to go–that there’s always oil there.”

Kathleen Sgamma, vice president of government and public affairs for the Western Energy Alliance, whose members produce, she says, 27 percent of the natural gas and 14 percent of the oil in the U.S., cites a more basic reason a lease may be idle: Its oil and gas may be uneconomic to extract.

As energy prices fluctuate, and as technology improves, she says, idle leases are brought into production. The most dramatic and most recent example is the 200,000-square-mile Baaken oil field underlying North Dakota and Montana. As recently as five years ago, she says, many leases here sat idle. Then technology and economics made production possible, and production boomed.

The DOI report, she says, “Actually is useful, since it shows that we’re becoming more efficient at operating on public lands. To have 44 percent of public lands in production is very high, compared to the 30 percent it’s been historically. There will always be maybe 30 percent of leases that don’t pan out. But of the rest, we estimate half are somewhere in the [drilling] process. If government is truly serious about increasing production, they would remove some of the red tape.”

The Alliance says that when you add up the time required for prospecting, drilling, and waiting around for government approvals, 19 years can pass before a lessee actually sees oil. During part of that time, the government counts the lease inactive.

She says she knows the government can move energy projects ahead more aggressively when it wants to, because it has done exactly that with wind and solar projects. It’s only politics, she says, that accounts for the different treatment accorded oil and gas.

A spokesman for the Department of the Interior, asked to respond to the industry’s contention that DOI’s report is both misleading and absurd, says, “The report speaks for itself. The notion that we have somehow locked up federal lands clearly doesn’t square with the facts. Our goal is to continue expanding safe and responsible development, and we will continue to take steps to deliver on that priority.”

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A new study by the University at Buffalo concludes that state oversight and better industry practices have significantly reduced the risk of major environmental problems stemming from drilling high-volume natural gas wells in the Marcellus Shale region in Pennsylvania.

The report, which examined nearly 3,000 reported violations at almost 4,000 Pennsylvania natural gas wells between January 2008 and August 2011, found that nearly two-thirds of the violations were administrative in nature, and less than 2 in 5 were linked to environmental concerns.

The report, released Tuesday by UB’s new Shale Resources and Society Institute, also found that during 2008 there were slightly less than 3 environmental violations for every 5 wells drilled, or 58.2 percent. In the first eight months of 2011, there was a little more than 1 environmental violation for every 4 new wells drilled, or 26.5 percent — less than half the 2008 level.

“Regulatory oversight has been quite effective in Pennsylvania in ensuring the safe development of natural gas resources,” said Timothy J. Considine, a University of Wyoming economics professor and the lead author of the UB report.

“One of our surprising findings is that the regulatory oversight and environmental regulation has reduced the incidence of environmental events,” he said. “I can guess this is likely to continue because the regulatory structure has been refined and updated and modified.”

Considine’s previous research, often funded by the drilling industry, has highlighted the potential economic impact of natural gas drilling, using a controversial technique known as hydraulic fracturing, or “fracking,” that critics say poses a grave threat to water supplies and the environment.

The UB institute, so far, has been funded solely by the university, said John P. Martin, the institute’s director and one of the report’s authors. Considine said his involvement in the study was funded by the University of Wyoming.

Critics, however, noted that much of Considine’s funding on other research projects has come from the drilling industry. “He’s extremely cozy with the industry,” said Kevin Connor, co-director of the Public Accountability Institute, a local activist group that currently is studying the gas drilling issue. He has a history of working within the natural gas fracking industry.”

Opponents also have focused on the cumulative impact of environmental violations, and the study confirmed that the number of violations has increased as more wells have been drilled, even if the rate of incidents per well has improved.

“In just four years, this report shows that there have been major land spills, water contamination and other major problems in Pennsylvania,” said Wenonah Hauter, executive director of the advocacy group Food and Water Watch, based in Washington, D.C.

“We don’t know what will happen long-term,” she said. “Research published last month, for example, shows that fracking can enable contaminates to migrate thousands of feet underground, over a long period of time, potentially reaching drinking water aquifers.”

Considine, however, defended the study as a “dispassionate look at the facts.”

New York, which lies over vast amounts of natural gas trapped in a swath of the Marcellus Shale that stretches across much of the Southern Tier, has banned the drilling of horizontal natural gas wells that use fracking while the state Department of Environmental Conservation develops new regulations. Those rules, first released in preliminary form last year, still are under review.

Martin said New York’s proposed regulations would have helped avoid or mitigate the 25 major environmental events in Pennsylvania that were studied in the report. Most of the 845 environmental violations were minor in nature, such as a gallon of diesel fuel or antifreeze spilling on the ground, the report said.

“While prior research has anecdotally reviewed state regulations, now we have comprehensive data that demonstrates, without ambiguity, that state regulation coupled with improvements in industry practices results in a low risk of an environmental event occurring in shale development, and the risks continue to diminish year after year,” Considine said.

Those 25 major events included nine spills on land, eight spills that contaminated local water supplies, four incidents involving well blowouts and venting, and two each involving gas migration and major site restoration issues. All but six have been cleaned up, the authors said.

“The majority of the events were due to operator error, negligence or a failure to follow proper procedures while drilling,” the report said. “This suggests that the industry has room for improvement and the frequency of environmental events can be reduced.”

In New York, the Marcellus Shale stretches for more than 20,500 square miles beneath 23 southern counties. The most gas is likely to come from areas where the shale is thickest and deepest underground, primarily in areas along the Pennsylvania border, especially in Broome and Tioga counties and parts of Chenango and Chemung counties.

Considine’s previous research has estimated that allowing natural gas drilling in New York’s portion of the Marcellus Shale could generate $173 million in spending next year, which then would jump to $1.9 billion in 2016 and $2.2 billion in 2021. He estimated that Marcellus drilling could support more than 15,000 jobs by 2016.

The authors said New York regulators have “the luxury of learning from the experience in Pennsylvania.”

Some of the “strict procedures” included in New York’s draft rules may help avoid or lessen the impact of incidents, the report said.

“New York’s current regulations would prevent or mitigate each of the identified major environmental events that occurred in Pennsylvania,” Martin said. “It’s important that states continue to learn from the regulatory experience — both strengths and weaknesses — of others.”

According to the report, “Many others, however, might provide little extra protection, while creating restrictions that ultimately stifle industry and investment.”

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Truck manufacturers say falling natural gas prices, clean-truck mandates are prompting the switch

Motor carriers are adopting natural gas as one of the fuels of choice for their fleets because it makes financial sense, truck manufacturers told the Alternative Clean Transportation Expo in Long Beach.

“These are exciting times for natural gas,” said Andy Douglas, national sales manager at Kenworth Truck Co., “and Long Beach is where it all started,” he said.

The clean-truck programs launched by the neighboring ports of Los Angeles and Long Beach in 2008 encouraged the use of heavy-duty trucks powered by compressed natural gas and liquefied natural gas. Modern trucks powered by CNG and LNG produce a significant reduction in pollution compared to older vehicles that run on diesel fuel.

The clean-truck plans mandated the rapid replacement of old trucks with 2007 model year or newer trucks powered either by clean diesel or natural gas. The ports earlier this year reported that truck pollution in Los Angeles-Long Beach harbor has been slashed by about 90 percent from the 2005 baseline year.

Although natural-gas powered trucks represent a small percentage of the total national truck fleet because the trucks are more costly and the nation lacks an extensive natural gas fueling infrastructure, a convergence of factors indicates the use of natural gas will accelerate.

The main reason why natural gas is becoming popular is the declining price of gas compared to diesel. Development of shale deposits in the U.S. has produced a glut of natural gas, sending the price down to about half of the price of diesel.

“The fuel price differential keeps getting better,” said Brian Daniels, product manager, powertrain, at Daimler Trucks North America.

Furthermore, natural gas suppliers are expanding the fueling infrastructure along major highways. What started as a fueling infrastructure serving the ports of Los Angeles and Long Beach is becoming a national network that will serve many busy truck corridors. Within two years, the natural gas infrastructure in many corridors will resemble what Southern California looks today, Douglas said.

Heavy-duty trucks powered by natural gas retain most of the same truck parts found in diesel-powered vehicles. The big difference, Douglas said, is in the fuel tanks, which tend to be larger and heavier.

Large retailers and third-party logistics providers are urging motor carriers to incorporate more natural gas trucks into their fleets. Retailers are then able to use the carbon emissions reductions in their corporate responsibility marketing efforts.

Truck manufacturers say falling natural gas prices, clean-truck mandates are prompting the switch

Douglas said that in the future possibly 10 percent of annual heavy-duty truck sales will be natural gas-powered vehicles.

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The federal government is giving some of its beleaguered oil and gas regulators a raise as it tries to strengthen its four Louisiana field offices and compete with the private sector to recruit 200 more people to review and approve offshore drilling proposals, permits and spill-response plans. Empowered by a congressional spending bill passed in December, the Interior Department’s Bureau of Safety and Environmental Enforcement granted 25 percent raises over the base salaries of 102 petroleum engineers, geophysicists and geologists stationed in its New Orleans, Houma, Lafayette and Lake Charles offices.

The new rates took effect April 22 and have been touted by the bureau’s director, James Watson, as a key tool for recruiting and retaining employees in competition with private industry.

The employees actually are getting an 11 percent raise over their current salaries because they already had a cost-of-living adjustment equal to a 14 percent over their base pay. For example, a typical senior petroleum engineer or geoscientist making $95,459 before the raise would now make $104,524. Survey data collected by the Society of Petroleum Engineers show that the average private-sector geoscientist made $152,475 in 2011 and the average drilling engineer earned $175,363.

The Bureau of Safety and Environmental Enforcement has hired 28 new engineers since it was reorganized from the old Minerals Management Service following the BP oil spill in April 2010. Five of them were recruited and hired this year after the raise was approved by Congress, the bureau said.

Most of the work of reviewing offshore drilling permits in the Gulf of Mexico is handled by the bureau’s engineers, and they’ve come under heavy fire in the past two years. First, the attention was on the role they played in approving permits and plans for the ill-fated Deepwater Horizon rig. They approved stock spill-response plans, failed to check tests for a piece of safety equipment and took just a few minutes to approve 11th-hour changes in BP’s well design and drilling operations. President Barack Obama said the regulatory agency had a “cozy relationship” with the oil industry and ordered its overhaul.

But when that reform came in the form of three new agencies and new leadership, the scientists and engineers were demonized again by Louisiana politicians who blamed them for slow-walking permits for an industry trying to get back to work. The conflict reached a head in September when U.S. Rep. Jeff Landry, R-New Iberia, tried to meet with a bureau official in charge of permits and was turned away from the New Orleans office, then said the agency was akin to the Gestapo, Nazi Germany’s secret police.

With morale at an all-time low, even the government’s most outspoken critics say more competitive pay is justified. But some question why the raises are also going to the engineers who approved plans and permits for the Deepwater Horizon.

“It’s reasonable they should get a raise and it’s reasonable that the congressional delegation should back off, but it’s also reasonable to have some accountability for the people who are at least partially responsible for the worst environmental disaster in the history of the United States,” said Anne Rolfes, director of the Louisiana Bucket Brigade.

The bureau declined to comment on whether any regulators were disciplined as a result of the Deepwater Horizon investigation, although none of the various accident investigations found their decisions had been a direct cause of the rig explosion and oil spill.

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Energy intensive industries in Europe and Asia are becoming increasingly envious of the huge competitive advantage their U.S. rivals have gained from a boom in natural gas production.

The gap between U.S. and international gas prices has expanded to all time highs, giving American industries a competitive advantage that could be worth as much as $1 billion a day.

Plans are underway to export gas from the U.S., which could narrow this gap, but they will be several years coming and likely to be limited by political pressure to preserve the low energy price advantage for American industry.

The boom in production of natural gas trapped in shale rock, which has been unlocked by new technology, has driven U.S. gas prices to 10-year lows. This has proved a huge blessing for big industrial users of natural gas.

Petrochemical companies have seen their growth prospects transformed. A report from the U.S. National Association of Manufacturers said cheap supplies of natural gas could help its members reduce their expenses by as much as $11.6 billion a year through to 2025, helping them create a million new jobs.

Users of electricity have also gained, as cheap natural gas has displaced coal at many power plants. Households using natural gas to heat their homes, or gas-fired power to light them, have seen their bills fall and disposable income rise.

Other parts of the world have seen no such benefit. In fact, the gap between U.S. gas prices and those in Europe and developed Asian economies has never been higher, said Barclays in a note to clients.

“If North American natural gas prices matched those in Japan, it would equate to an uplift of $1 billion a day,” Barclays said. The gap with Europe is smaller, but still worth around $700 million a day.

So there is plenty to be jealous of in Europe, which is already lagging U.S. economic growth. Business leaders are starting to sit up and take notice.

“The fact that energy is cheap in the U.S., and probably will be for a long time, is changing the game,” Jean-Pierre Clamadieu, Chief Executive of Franco-Belgian chemicals giant told the Financial Times last week. “Electricity’s getting more and more expensive in Europe, and some of the decisions that have been announced regarding nuclear energy production will certainly move the price in the wrong direction.”

There is little Europe can do to overcome this disadvantage in the short term.

There are plans in the U.S. to build facilities that would liquefy natural gas by cooling it and shipping it overseas, potentially narrowing the gap between U.S. and international prices. However, the first LNG export terminals will only begin to operate between 2015 and 2017.

Even then, the scope for exports from the U.S. may be limited. “The U.S. Department of Energy is in the unenviable position of balancing the desire of the oil and gas industry to export spare gas…with the demands of consumers to limit the effect on U.S. gas prices,” said Barlcays.

Senior executives from oil companies Total SA and Royal Dutch Shell PLC, both of whom have shale gas operations in the U.S., said last week that they believe the government will limit LNG exports in order to maintain the domestic pricing advantage.

All that remains is the hope that Europe could one day mirror the U.S. boom in shale gas production. Potentially significant shale gas resources have been discovered in the U.K. Several companies, including Chevron Corp. and Shell are looking at prospects in Poland and Ukraine.

But, most analysts believe that a boom of the sheer speed and scale of that seen in the U.S. is unlikely.

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