Jack's Picks III

What follows is a discussion in which I will post/share industry related articles that I believe to be of general interest to some  who frequent this site.

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Permalink Reply by Jack Straw on October 23, 2012 at 4:11pm

Source: http://www.platts.com/RSSFeedDetailedNews/RSSFeed/NaturalGas/6712230

FEATURE: No gas rush seen even if New York fracking ban lifted

Washington (Platts)--22Oct2012/156 pm EDT/1756 GMT

If New York were to lift its fracking ban today, drillers would have little incentive to begin tapping Marcellus Shale gas beneath five Southern Tier counties anytime soon, according to industry officials and analysts.

"Very little would happen for a long, long time," said Rice University applied economics professor Bernard Weinstein.

He and others said New York's potential gas production would be stymied by a host of factors: low commodity prices, a lack of takeaway pipeline capacity, political pressure, and restrictive rules already written into the state's draft fracking rules.

The Southern Tier holds an estimated 20% of the roughly 300 to 500 Tcf of gas reserves in the Marcellus, which stretches from New York through Pennsylvania and into West Virginia.

While the latter two states have opened their doors to drillers eager to cash in on that wealth of gas, New York has had a years-long ban on fracking -- the drilling-completion process required to extract gas from shales -- while the state drafts regulations.

The process seems to have stalled, with Governor Andrew Cuomo tacking on a new review of the supplemental generic environmental impact statement by the state Department of Health. That review is expected to drag the rulemaking process into 2013 and will likely require the SGEIS to be reopened for another round of public comment.

Even without any further delay, however, drillers would be wary of launching operations in the Empire State, at least for a while, experts say.

Three years ago, Weinstein co-authored an economic impact study for Broome County predicting that over 10 years, drilling there would create 16,000 direct and indirect jobs with an economic impact of $15 billion. It used a price gas assumption of roughly $6/Mcf.

Last week, Weinstein said that scenario has been flipped on its head.

"Not if prices stay as low as they are," he said when asked if producers would jump at the chance to drill, adding that the industry also will have to fight political opposition in New York and a not-in-my-backyard mentality.

"I think the quick answer is 'no,'" Chris Faulkner, CEO of Breitling Oil & Gas, said in answer to the same question. "Dry gas is uneconomical below $4/Mcf. Dry gas will be dead until $5/Mcf and my analysts don't see that until 2016, 2017."

"There are other plays with more sex appeal," Faulkner added.

New York political consultant Jerry Kremer, chairman of lobbying firm Empire Strategies and a state legislator for 23 years, was more optimistic, saying the first movers in New York will likely be larger companies such as ExxonMobil that can think in terms of decades, not just their next quarterly report.

Even if ExxonMobil or Chesapeake Energy, currently the top leaseholder in New York, take a pass, Kremer said "the small guys will come" eventually because of the Southern Tier's proximity to the premium New York City market. "It's about getting on the ground here for the next five to eight years," he added.

"You will see some drilling in New York," Utilis Advisory Services principal and Oxford Princeton faculty member Alan Herbst said. Utilis provides consulting advice on unconventional North American gas and Oxford Princeton provides training for energy executives.

Herbst said the Southern Tier counties could see 300 to 400 wells within five years once the current fracking ban is lifted, with about 1 Bcf/d of production. "Some companies will take a slow approach," he added.

And the pace of initial development may be faster than Pennsylvania's if drilling is allowed, according to Herbst.

Forth Worth, Texas-based Range Resources drilled its first Marcellus horizontal well in Pennsylvania in 2004, and by 2008 there were only 161 producing Marcellus wells in the state, according to the Pennsylvania Department of Environmental Protection.

It was not until after that that the Marcellus in Pennsylvania exploded, with hundreds of wells drilled annually.

"Maybe it will happen faster a little faster in New York," Herbst said, noting that the rigs and service infrastructure are already present across the state line in Pennsylvania's Bradford and Susquehanna counties.

If drillers did begin to produce shale gas in New York, they face an additional obstacle: getting the new supply to market.

"There is no pipeline capacity to take additional gas from New York," said Jennifer Robinson, an analyst with Platts unit Bentek Energy.

Even in Pennsylvania, pipeline companies are still working to catch up to the drilling boom and, as a result, hundreds of wells sit completed but not yet hooked up to the grid.

And then there are the political ramifications. "Can you really trust the state of New York?" is the question that former US Federal Energy Regulatory Commission member Marc Spitzer said operators will have to ask.

Spitzer, now a partner with law firm Steptoe & Johnson in Washington, said that unlike Pennsylvania, where rural districts have some weight in the state legislature, urban districts dominate Albany. "The votes are Manhattan and the five boroughs," as well as the suburbs, and "those folks don't like energy," he said.

"New York would be a tough environment," said Spitzer, a Republican, adding that he expects many producers to just take a pass on the state.

"There are too many variables to predict" what the first years of an "open for business" New York would look like, New York Independent Oil & Gas Association spokesman Jim Smith said. "It's going to be up to the operators."

Assuming the already published draft of the SGEIS becomes the rule in New York, Smith said, operators are going to face hurdles.

NYIOGA expects that the SGEIS setbacks and other rules would cost operators an additional $1 million/well, and "we're going to get lawsuits either way" from both landowners restricted in leasing and from environmental groups still looking to halt fracking.

"I would not characterize it as 'missing the boat,'" Smith said of New York's drawn-out process. "Natural gas consumption will continue to go up. We would still view [lifting the fracking ban] as progress."

--Bill Holland, bill_holland@platts.com
--Edited by Keiron Greenhalgh, keiron_greenhalgh@platts.com

Permalink Reply by David Perotto on October 24, 2012 at 1:13pm
Jack,
This story misses the picture. As Jim Willis at Marcellus Drilling News points out, Norse energy is waiting to develop it's existing leases. These are in the dry gas Marcellus strata in the Binghampton area. They will move quickly to stay afloat, NY has harmed this company in a severe way with it's moratorium. Te challenges from the enviro-Nazis will come, but that will be dispatched in due time. The O&G companies will be looking to the oil rich areas such as the rhinestreet formation in WNY, this will be the second wave. The third will be the Utica formation of the southern tier. I don't see companies staying away, the opportunity exists, despite our backward thinking politicians. As you would say "in my humble opinion"
Dave
Permalink Reply by Jack Straw on November 21, 2012 at 12:15pm

TransCanada pipes Pennsylvania gas to Ontario

Source: http://www.theglobeandmail.com/globe-investor/transcanada-pipes-pen...

NATHAN VANDERKLIPPE  CALGARY — The Globe and Mail

Published Friday, Nov. 02 2012, 7:14 PM EDT

The gas stoves in the Greater Toronto Area may not have flickered on Thursday. But their blue flames, fuelled for decades largely by products pulled from the ground in Western Canada, were suddenly very different.

For the first time, some of the gas flowing into the Golden Horseshoe came from Pennsylvania.

On Nov. 1, TransCanada Corp. began pumping gas from the U.S. Marcellus field across the Canadian border just north of Lewiston, N.Y. Although some U.S. gas has found its way into Ontario for many years – from Oklahoma, Michigan and elsewhere – Central and Eastern Canada have, since the 1950s, largely relied on Alberta energy.

The advent of Marcellus gas stands to fracture that lengthy history. Beginning last March, TransCanada spent $130-million to reverse and expand pipelines running from the Niagara Peninsula to Toronto. On Thursday, it began pumping nearly 400 million cubic feet per day of Pennsylvania product into the province. That is equivalent to 16 per cent of the average daily gas demand in Ontario.

“It’s the first time that this reservoir of gas has reached Canada,” said Karl Johannson, president of natural gas pipelines for TransCanada.

It’s a dramatic shift. The pipeline carrying the Marcellus gas once carried Canadian product south into the United States. In recent years, that export flow largely dried up. Now, the same pipe is being used to import foreign energy – produced using controversial hydraulic fracturing techniques – and displacing Canadian supplies.

 “Marcellus gas coming into Ontario does have an impact on the exports from the Western Canadian Sedimentary Basin,” Mr. Johannson said. “What that total impact will be, it’s hard to tell.”

That’s because this is likely the beginning of a process that stands to substantially weaken cross-Canada energy ties. Last year, TransCanada sought support for more Marcellus imports. It was not successful in garnering much interest then, but the Marcellus is one of the most prolific gas plays in North America today, and TransCanada intends to try again early next year.

The company estimates it could carry an extra billion cubic feet a day across the border near Niagara. At the same time, another proposed pipeline called Nexus, backed by Enbridge Inc., DTE Energy and Spectra Energy Corp., is working to carry another billion cubic feet a day into Ontario near Sarnia. Those two projects stand to meet the entire average Ontario demand with U.S. gas – although the coldest winter days would still require energy from other sources.

The first Marcellus shipments are “a sign of the opportunity for both U.S. production and the Canadian markets that can be further benefited when we can get some new infrastructure in there,” Spectra spokeswoman Andrea Grover said.

The use of Pennsylvania gas holds several benefits for Ontario. It is cheaper to bring in: It costs about $1.50 to carry a Gigajoule of Marcellus gas into Ontario, and about $2.10 for the same quantity of Alberta gas.

But for Ontario buyers, it holds another advantage: The addition of a new gas seller provides a more competitive market for big distributors such as Enbridge Inc., as well as an important alternative supply.

“It’s access to a basin that’s growing by leaps and bounds,” said Malini Giridhar, senior director of gas supply for Enbridge Gas Distribution in Toronto. “We definitely want to be connected to emerging basins.”

Those emerging basins are rewriting the energy geography of North America in ways not anticipated just a few years ago. The changes are hurting Western Canada, but even TransCanada will feel the pain because it runs many of the cross-Canada pipelines that have long carried Alberta gas east.

Still, Mr. Johannson said the company is better to carry that gas, rather than watch someone else move it. “It may displace some long-haul volumes, but it’s better than not having any volumes on the system at all.”

Permalink Reply by Jack Straw on November 21, 2012 at 12:42pm

Department of Energy – Energy Information Agency  

Interesting Charts that incorporate figures for last week that were released today by the DOE-EIA.

http://www.investorvillage.com/uploads/13230/files/PetroleumStorage...

Page 5 shows current situation with regards to Distillates (Diesel + Heating  Oil).                                         

Page 6 shows current (deteriorating) situation with regards to Heating Oil inventory contained in storage. If you depend upon Heating Oil, it may be wise to keep your tank topped up.

If you go to this site, you will see the Natural Gas Charts that incorporate figures for last week that were released today by the DOE-EIA.

http://www.investorvillage.com/uploads/13230/files/USNaturalGasStor...

You may note that draws from Storage commenced two to three weeks earlier than is typically the case.     The potential is for withdrawal from storage to continue until April. Good news for royalty holders in PA, OH, WV.

Permalink Reply by Jack Straw on November 29, 2012 at 3:26pm
                                               
 Source:  http://www.robertbryce.com/articles/474-backlash-against-big-wind-c...                     
                           

Backlash against Big Wind Continues

November 27, 2012 National Review Online

Last month, 60 residents of New York’s Herkimer County filed a lawsuit in Albany that provides yet another example of the growing backlash against the wind-energy sector. It also exposes the double standard that exists in both the mainstream media and among environmental groups when it comes to “green” energy.

The main defendant in the lawsuit is the Spanish electric utility Iberdrola, which is the second-largest wind-energy operator in the U.S. The Herkimer County residents — all of whom live within a mile or so of the $200 million Hardscrabble Wind Power Project — are suing Iberdrola and a group of other companies because of the noise and disruption caused by the wind project.

The lawsuit comes at a touchy time for the wind industry, which is desperately trying to convince Congress to extend the industry’s production tax credit that expires at the end of this year. The subsidy gives wind-energy companies 2.2 cents for every kilowatt-hour of electricity that they produce.

Wind-energy proponents claim that an elimination of this tax credit could result in the loss of 37,000 jobs, but they have not been able to silence the dozens upon dozens of groups that have sprung up to fight expansion of the wind sector. And few places in the U.S. have seen a bigger backlash than New York State. About two dozen New York towns have passed rules banning or restricting wind-energy development, and many rural residents have expressed ongoing concerns about turbine noise.

The noise issue is front and center in the Hardscrabble lawsuit. Neighbors of the project have been complaining about noise from the turbines since last year. Two noise studies done on the Hardscrabble facility found that the turbines sometimes exceed their permitted limit of 50 decibels. In response to the complaints, Iberdrola Renewables — which owns the Hardscrabble project — installed noise-reduction equipment on a handful of the turbines.

In the lawsuit, the residents claim that the noise produced by the turbines on the 74-megawatt facility causes headaches and disturbs their sleep. Some of the residents say they have abandoned their homes because of the noise. Others are claiming that the project has hurt their property values. The key paragraph in the suit says that the defendants “failed to adequately assess the effect that the wind turbines would have on neighboring properties including, but not limited to, noise creation, significant loss of use and enjoyment of property . . . diminished property values, destruction of scenic countryside, various forms of trespass and nuisance to neighboring properties, and health concerns, among other effects.”

For years, the wind industry and its many supporters on the “green” left have been trying to dismiss the turbine-noise issue — and the nearby residents who are complaining about the problem. In late 2009, the American Wind Energy Association and the Canadian Wind Energy Association published a paper that attempted to quiet critics of the noise problem; they stated in the paper that “there is no evidence that the audible or sub-audible sounds emitted by wind turbines have any direct adverse physiological effects.” The paper also suggested that the symptoms critics were attributing to wind-turbine noise were psychosomatic and declared flatly that the vibrations from the turbines were “too weak to be detected by, or to affect, humans.”

The Herkimer County lawsuit — Abele et al. v. Iberdrola et al. — will bring the noise issue into the legal arena where it can be properly adjudicated. But it’s not yet clear what the plaintiffs might get if they win, because the lawsuit doesn’t name a specific dollar amount in damages. Jeff DeFrancisco, one of the lawyers representing the plaintiffs, said that New York State doesn’t allow plaintiffs to put a dollar value on the damages. Further, DeFrancisco said the plantiffs cannot seek injunctive relief because the turbines are already in place. “All we can do is seek compensation,” he says.

DeFrancisco said the litigation was necessary because the residents living near the turbines had no other options. The plaintiffs, he says, “can’t live peacefully” in their homes. “These are people who never had a problem before.” Some of them, he says, “would like to move but can’t because they can’t sell their homes.”

In addition to illustrating the backlash against the wind industry, the Herkimer County lawsuit provides yet another example of the double standard that exists in media coverage of “green” energy. Rural newspapers in New York and a few anti-wind websites have covered the lawsuit, but it has not been mentioned in mainstream media outlets such as the New York Times.

It’s easy to imagine what the coverage in the Times might look like if a lawsuit similar to the one in Herkimer County was filed against a company that was drilling for oil or natural gas. Last year, the Times ran a number of stories under a banner called “drilling down” — some of them were published on the front page — spotlighting hydraulic fracturing and the possibility of water contamination due to drilling.

The issues involved in oil and gas drilling and wind-turbine development are similar. They all entail new industrial activity in rural areas. All bring friction — truck traffic, noise, and other disruptions — to regions that are not accustomed to energy development. But the Times has never published a story on the backlash against the wind industry, even though New York is home to much of the backlash.

Although it’s easy to get riled about the newspaper of record, it’s mainstream environmental groups that display the most pernicious double standard. Sierra Club, Greenpeace, and other groups were founded on the notion of environmental protection. The Sierra Club’s mission statement declares that it wants to “educate and enlist humanity to protect and restore the quality of the natural and human environment.”

If that’s true, why isn’t the Sierra Club campaigning for the rights of the residents in Herkimer County? Don’t rural landowners have the right to a high-quality natural and human environment that is free from industrial intrusions, like, say, 470-foot-high wind turbines that are built within a few thousand feet of their homes?

The hard reality is that for groups such as the Sierra Club and their fellow travelers, the issue of climate change — and their near-religious belief that wind turbines are an effective method of cutting carbon dioxide emissions — trumps nearly every other concern. If rural residents in Herkimer County and elsewhere are getting steamrolled by wind-energy developers, well, then, that’s just too bad.

It will take months for the Herkimer County lawsuit to wend its way through the courts. But the lawsuit shows, once again, that the anti-wind backlash is growing. And that blowback will only get worse — with or without the help of the self-proclaimed “environmentalists.”

                       
                                                                   
Permalink Reply by Dan on November 30, 2012 at 9:20am

A big reason for current push for NG dual cycle powerplants is the new NG powerplants can ramp up and down quick, and can be push button started in 30 minutes or less, can be shut down till needed.  All a perfect fit to make the ill-logical windmills unreliable power production usable instead of just adding possibly unused power on top of the coal plants that have to burn wether power is needed at that time or not. 

Permalink Reply by Jack Straw on December 1, 2012 at 11:37am

EIA: September U.S. Natural Gas Use +9.4% Vs Year-Earlier

12/01/2012

NEW YORK--Total U.S. natural gas demand rose 9.4% in September from a year earlier, to 1.79 trillion cubic feet, the Energy Information Adminstration said Friday.

That's the highest ever in September, according to EIA data beginning in 2001. September marked the sixth straight month of year-on-year rises in gas demand. Since April, the year-on-year gains have averaged 9.2%. Those gains followed a 5.4% year-on-year drop in March, which capped an unusally warm winter.

Natural-gas use by the electric power sector rose 17.9% in September from a year earlier, to a total of 806.8 billion cubic feet. That was also the highest September gas demand from power generators in 12 years of EIA data.

Gas demand jumped as record-high inventories kept prices cheap relative to coal, its main competitor for utilities who can easily switch their fuel source. Benchmark U.S. natural gas futures prices in September averaged more than 24% below year-earlier levels.

Monthly gas use by power companies last declined on a year-to-year basis in September 2011. In the 12 months since then, demand has posted an average year-on-year rise of 22%, EIA data show.

 

Permalink Reply by Jack Straw on December 6, 2012 at 9:59am

Just released DOE - EIA Natural Gas Weekly Update:

http://www.eia.gov/naturalgas/weekly/?src=email

A nice short view of the current situation.

Permalink Reply by Jack Straw on December 9, 2012 at 4:53am

NY gas driller Norse Energy files for Chapter 11

Source: http://online.wsj.com/article/AP92eff451438b4a179790b89683a81196.html

Associated Press

ALBANY, N.Y. — A debt-laden natural gas drilling company that had counted on tapping the riches of New York's part of the Marcellus Shale filed for Chapter 11 bankruptcy protection Friday while the state's 4-year-old moratorium on hydrofracking remains in place.

Norse Energy Corp., based in Oslo, Norway, that its U.S. subsidiary had filed a voluntary petition for Chapter 11 reorganization.

Norse has 130,000 acres under lease for gas drilling in New York state. But the state Department of Environmental Conservation has had a moratorium on drilling permits since it launched an environmental impact review in 2008.

The DEC is developing new regulations for fracking, or high-volume hydraulic fracturing, a controversial technology used to free gas from shale.

"It isn't just regulatory delays. We had debts incurred outside of New York that we're paying back," said Dennis Holbrook, Norse's Buffalo-based chief legal officer. "But clearly the regulatory delays in New York have had a negative impact on this company."

Norse has been selling off assets, primarily oil and gas leases and some production properties, to pay debts and meet operating expenses. "But over time, the valuations have consistently declined for those assets because of a general perception that New York is not open for business," Holbrook said.

The Chapter 11 filing may "likely constitute an event of default" on a $21 million bond, the company said in a statement.

Norse has been operating in central New York since 1996 and has drilled hundreds of vertical gas wells in sandstone formations. It had applied for dozens of permits to drill in the Marcellus Shale, a gas-rich region underlying southern New York, Pennsylvania, Ohio and West Virginia. While Pennsylvania has seen soaring shale gas production over the past five years, New York has had a moratorium on permits while DEC studies environmental, health and safety concerns related to shale gas development.

Norse's fortunes have been sinking rapidly over the past couple of years. It has reduced its New York workforce from about 60 to six people and sold off some of its leasehold and pipeline right-of-way in an attempt to reduce costs and raise cash. In May, Norse announced it was moving its headquarters from Buffalo to Houston, where it had offices. Holbrook and a handful of others remain in Buffalo.

In November, the company said it had $1.5 million in cash, enough to fund its obligations only into December. Then, a New York court ordered Norse to place $7.6 million in an escrow account in a ruling in an ongoing dispute with Buffalo-based Bradford Drilling Associates.

Holbrook said the company ultimately would like to reorganize and attract a qualified industry partner to develop its lease acreage in the Southern Tier, assuming Gov. Andrew Cuomo decides to allow shale gas drilling. A decision may come by the end of February, when new regulations are due to be completed.

"I may be in the minority but I do believe there's light at the end of the tunnel," Holbrook said. "I believe New York is going to allow permitting to move forward."

Permalink Reply by Jack Straw on December 13, 2012 at 2:39pm
Permalink Reply by Jack Straw on December 19, 2012 at 3:57am

Source: http://uk.reuters.com/article/2012/12/19/statoil-shale-idUKL5E8NJ4T...

UPDATE 1-Statoil adds to U.S. shale acreage for $590 mln

Wed Dec 19, 2012 11:00am GMT

* Buys 70,000 acres in Marcellus formation (my comment: this works out to almost $8500/acre)

 * Current production from new area at 5,000 boe per day

* Aims for 200,000 boe per day from Marcellus by 2020

OSLO, Dec 19 (Reuters) - Norwegian energy firm Statoil bought the rights to about 70,000 acres of shale-producing area in the United States on Wednesday as part of a plan to increase its North American production by five times by 2020.

Statoil paid a total consideration of $590 million for the liquid-rich shale area in the Marcellus formation in Ohio and West Virginia, it said in a statement.

Statoil entered the Marcellus in 2008 through a partnership with Chesapeake Energy and has been steadily increasing its acreage through acquisitions.

"A majority of the net acres in this transaction are located in the liquid-rich part of the Marcellus," Statoil said in a statement. "The market for these products is substantially better paying than the current market for dry gas in the U.S."

The new area has a risked resource base estimated at 300 million to 500 million barrels of oil equivalent (boe), and its current equity production is around 5,000 boe per day.

Statoil earlier said that it aimed to increase its production from Marcellus to at least 50,000 boe per day in 2012 and at least 200,000 boe per day after 2020.

That is part of its wider plan to increase North American production to 500,000 boe per day by 2020 from less than 100,000 in 2011, with around 300,000 of that coming from onshore operations, primarily shale formations.

The firm also has share acreage in the Eagle Ford, Bakken and Three Forks formations.

Permalink Reply by Jack Straw on December 23, 2012 at 11:19am

Carlyle Group, Sunoco and politicians’ joint venture to rescue Philadelphia refinery

This is a relatively long article.

That portion that is of most interest to we denizens of the Marcellus and Utica in towards the end of this five page article.

http://www.washingtonpost.com/business/economy/carlyle-group-sunoco... 

JS

 

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