Replies to This Discussion

Permalink Reply by Jack Straw on September 5, 2012 at 1:35pm

Source: http://eidmarcellus.org/blog/sgeis-methane/2129/

 

SGEIS Spills the Beans on Naturally Occurring Methane in NY Water

2011 July 5  tags: Draft SEIS, Duke Study, Methane in NY wells, NY State

by JD Krohn

 

Over the next few days we will be skimming through the updated Supplemental Generic Environmental Impact Statement (SGEIS), available here, which was recently released by the New York Department of Environmental Conservation. For today, our focus will be on methane in private wells and groundwater throughout New York’s history as relayed by the SGEIS. For a post like this, its best to let the SGEIS speak for itself:

The presence of naturally occurring methane in ground seeps and water wells is well documented throughout New York State.
NYSDEC SGEIS Pg. 4-38

The existence of naturally occurring methane seeps in New York has been known since the mid 1600s.
NYSDEC SGEIS Pg. 4-38

In his 1966 report on the Jamestown Aquifer, Crain explained that natural gas could occur in any water well in the area which ends in bedrock or in unconsolidated deposits overlain by fine-grained confining.
NYSDEC SGEIS Pg. 4-38

Gas that occurs naturally in shallow bedrock and unconsolidated sediments has been known to seep to the surface and/or contaminate water supplies including water wells. Often landowners are not aware of the presence of methane in their well.
NYDEC SGEIS Pg. 4-39

In 1987 the Times Union reported that contaminants, including methane, were found in well water in the Orchard Park subdivision near New Scotland, Albany County. Engineers from the Department reported the methane as “natural occurrences found in shale bedrock deposits beneath the development.
NYDEC SGEIS Pg. 4-39

These quotes help to paint the background of New Yorkers’ history with methane finding its way to their wells, which has roots long before modern gas drilling techniques were even invented let alone employed in New York state. Of all these quotes, this is the most compelling and succinct.

The highest methane concentration from all samples analyzed was 22.4 mg/L from a well in Schoharie County; the average detected value was 0.79 mg/L.59 These groundwater results confirm that methane migration to shallow aquifers is a natural phenomenon and can be expected to occur in active and non-active natural gas drilling areas.
NYDEC SGEIS Pg. 4-41

It is also important to note that the SGEIS also declares that natural gas production is often not the cause of private well impairment.

Methane contamination of groundwater is often mistakenly attributed to or blamed on natural gas well drilling and hydraulic fracturing. There are a number of other, more common, reasons that well water can display sudden changes in quality and quantity. Seasonal variations in recharge,stress on the aquifer from usage demand, and mechanical failures are some factors that could lead to degradation of well water.
NYDEC SGEIS Pg. 4-40

The SGEIS also provides examples where water well impairment has been unfairly laid at the feet of natural gas producers.

Recently, as part of two separate complaint investigations in the towns of Elmira and Collins,New York, the Department documented that methane gas existed in the shallow aquifers at the two sites long before and prior to the exploration and development for natural gas. Both investigations provided clear evidence that methane contamination was present in the area’s water wells prior to the commencement of natural gas drilling operations.
NYDEC SGEIS Pg. 4-40

Also, the SGEIS takes another look at the data produced by the often misquoted and mischaracterized Duke study which EID-Northeast Marcellus covered previously here. What did the SGEIS say about the Duke study?

In April 2011 researchers from Duke University (Duke) released a report on the occurrence of methane contamination of drinking water associated with Marcellus and Utica Shale gas development. As part of their study, the authors analyzed groundwater from nine drinking water wells in the Genesee Group in Otsego County, New York for the presence of methane. Of the nine wells, Duke classified one well as being in an active gas extraction area (i.e. a gas well is within 1 km of the water well), and the remaining eight in a non-active gas extraction area. The analysis showed minimal amounts of methane in this sample group, with concentrations significantly below the minimum methane action level (10 mg/L) to maintain the safety of structures and the public. The water well located in the active gas extraction area had 5 to 10 times lessmethane than the wells located in the inactive areas.
NYDEC SGEIS Pg. 4-41

We thought you may like to have this information before our friends on the other side begin screaming that wells are already being tainted by hydraulical fracturing in New York even before that fracturing begins. We plan on continuing to comb through the SGEIS to help you understand what it says and what it does not. Given the size of the document we will continue providing these updates over the next few days and weeks so stay tuned for additional updates.

 

 

Permalink Reply by Jack Straw on September 6, 2012 at 1:24pm

Source: http://seekingalpha.com/article/851911-natural-gas-storage-fears-no...

 

Natural Gas Storage Fears Not Supported By Data

September 6, 2012  |  about: UNG, includes: CHK, CXPO, DVN, ECA, GDP, MHR, NFX

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More...)

The reason natural gas has traded below $3 for much of the spring and summer has been to encourage utility companies to switch their power generation from coal to natural gas in hopes of preventing natural gas storage from reaching storage capacity in the Fall of 2012. The warmest winter in the last 100 years caused natural gas to exit the withdrawl season with a huge storage glut compared to last year and the five year average. The low prices have done their trick and according to the EIA Weekly Natural Gas Report for the week ended August 31, 2012, natural gas storage has dropped to 329 Bcf above the five year average. The question for the market is how much further does natural gas storage need to fall compared to the five year average to avoid having to shut-in production because there is no room to store it? An earlier article - Natural Gas Storage Will Not Reach Storage Design Capacity in 2012 - predicted natural gas production would not need to be shut-in because it would run out of storage room. It discussed factors such as storage design capacity, the drop in the rig count, and the impact of coal to gas switching.

The market has been too focused on the total lower U.S. 48 state storage average rather than the maximum storage reached in the last five years. And the market has not focused on the three separate producing and storage regions of the lower 48 states. The EIA releases a link to data for the minimum and maximum storage levels reached over the last five years for each of the three regions in its weekly report. An examination of the total maximum storage level of 3,353 Bcf reached in one of the last 5 years shows that the current storage level of 3,402 Bcf is only 49 Bcf above the combined maximum storage level. But each region has its own storage capacity and examining the maximum storage reached in each region, albeit in different years, gives a clearer picture of how close natural gas production is to having to be shut-in due to storage constraints. Specifically, the current storage in the East Region was reported to be 1,793 Bcf, which is 7 Bcf below the 1,800 Bcf proven maximum storage for August 31 for the East Region. It is highly unlikely the East Region will run out of storage capacity this Fall. Current storage in the West Region is 492 Bcf, which is 16 Bcf above the maximum proven storage of 476 Bcf. Due to lower hydroelectric power generation this year, and the outage of the San Onfre Nuclear Power Plant in Southern California, the West Region is also unlikely to have to shut-in production because of a lack of storage capacity. That leaves the Producing Region as the one to watch.

The Producing Region consists of New Mexico, Kansas, Oklahoma, Texas, Louisiana, Arkansas, Mississippi, and Alabama. The latest EIA weekly report shows storage has reached 1,117 Bcf as of August 31, 2012. That is 174 Bcf above the five year average for the Producing Region of 943 Bcf. But the maximum proven storage is 1,092 Bcf which means the Producing Region is only 26 Bcf above maximum proven storage. The Producing Region had a draw of 7 Bcf in the latest report because of shut-in production from Hurricane Isaac. The EIA has reported a similar amount of production in the Producing Region has been shut-in this week from Hurricane Isaac. Additionally, it was hotter in the Producing Region this week than last week. That means the Producing Region will likely show another draw in storage in next week's report. The maximum storage reached for the Producing Region for the week ending September 7 is 1,104 Bcf. This will put the Producing Region close to being within the maximum proven storage range. The drop in the rig count has finally led to a decline net natural gas supply versus the previous year. Net natural gas supply dropped by an average of over 3 Bcf per day in August versus August of 2011. That trend should accelerate in September and October. Even if coal-to-gas switching were to end right now, it is unlikely the Producing Region would run out of storage capacity causing natural gas production to have to be shut-in. Many market participants still believe natural gas maximum storage levels will be reached this Fall because we are running 329 Bcf above the five year average. In reality we are under proven maximum storage in the East Region, we are only 16 Bcf above proven maximum storage in the West Region, and we are only 26 Bcf above maximum proven storage capacity in the Producing Region.

This means natural gas prices will be rising sooner than anticipated to end coal-to-gas switching. Natural gas will need to rise above $4 to end all coal-to-gas switching in the Appalachian part of the country. Investors can take advantage of the coming rise in natural gas prices by buying the United States Natural Gas Fund (UNG), which is an ETF designed to mirror movement in the current futures price of natural gas. Additionally, many primary natural gas producers are trading much lower than their highs. An upward tick in natural gas prices would have a big impact on the bottom lines of companies like Chesapeake Energy (CHK), Devon Energy (DVN), Encana (ECA), Magnum Hunter Petroleum (MHR), Newfield Exploration (NFX), Crimson Exploration (CXPO), and Goodrich Petroleum (GDP).

Permalink Reply by Jack Straw on September 16, 2012 at 4:38am

Source: http://www.slate.com/articles/health_and_science/project_syndicate/...

 

A Fracking Good Story

Carbon dioxide emissions in the U.S. are at their lowest level in 20 years. It’s not because of wind or solar power.

By Bjørn Lomborg|Posted Saturday, Sept. 15, 2012, at 6:30 AM ET

 

Weather conditions around the world this summer have provided ample fodder for the global warming debate. Droughts and heat waves are a harbinger of our future, carbon cuts are needed now more than ever, and yet meaningful policies have not been enacted.

But, beyond this well-trodden battlefield, something amazing has happened: Carbon-dioxide emissions in the United States have dropped to their lowest level in 20 years. Estimating on the basis of data from the US Energy Information Agency from the first five months of 2012, this year’s expected CO2 emissions have declined by more than 800 million tons, or 14 percent from their peak in 2007.

The cause is an unprecedented switch to natural gas, which emits 45 percent less carbon per energy unit. The U.S. used to generate about half its electricity from coal, and roughly 20 percent from gas. Over the past five years, those numbers have changed, first slowly and now dramatically: In April of this year, coal’s share in power generation plummeted to just 32 percent, on par with gas.

America’s rapid switch to natural gas is the result of three decades of technological innovation, particularly the development of hydraulic fracturing, or “fracking,” which has opened up large new resources of previously inaccessible shale gas. Despite some legitimate concerns about safety, it is hard to overstate the overwhelming benefits.

For starters, fracking has caused gas prices to drop dramatically. Adjusted for inflation, natural gas has not been this cheap for the past 35 years, with the price this year three to five times lower than it was in the mid-2000s. And, while a flagging economy may explain a small portion of the drop in U.S. carbon emissions, the EIA emphasizes that the major explanation is natural gas.

The reduction is even more impressive when one considers that 57 million additional energy consumers were added to the U.S. population over the past two decades. Indeed, U.S. carbon emissions have dropped about 20 percent per capita, and are now at their lowest level since Dwight D. Eisenhower left the White House in 1961.

David Victor, an energy expert at UC-San Diego, estimates that the shift from coal to natural gas has reduced U.S. emissions by 400 to 500 megatons CO₂ per year. To put that number in perspective, it is about twice the total effect of the Kyoto Protocol on carbon emissions in the rest of the world, including the European Union.

It is tempting to believe that renewable energy sources are responsible for emissions reductions, but the numbers clearly say otherwise. Accounting for a reduction of 50 Mt of CO₂ per year, America’s 30,000 wind turbines reduce emissions by just one-10^th the amount that natural gas does. Biofuels reduce emissions by only 10 megatons, and solar panels by a paltry three megatons.

This flies in the face of conventional thinking, which continues to claim that mandating carbon reductions—through cap-and-trade or a carbon tax—is the only way to combat climate change.

But, based on Europe’s experience, such policies are precisely the wrong way to address global warming. Since 1990, the EU has heavily subsidized solar and wind energy at a cost of more than $20 billion annually. Yet its per capita CO₂ emissions have fallen by less than half of the reduction achieved in the U.S.—even in percentage terms, the U.S. is now doing better.

Because of broad European skepticism about fracking, there is no gas miracle in the EU, while the abundance of heavily subsidized renewables has caused overachievement of the CO₂ target. Along with the closure of German nuclear power stations, this has led, ironically, to a resurgence of coal.

Well-meaning U.S. politicians have likewise shown how not to tackle global warming with subsidies and tax breaks. The relatively small reduction in emissions achieved through wind power costs more than $3.3 billion annually, and far smaller reductions from ethanol (biofuels) and solar panels cost at least $8.5 and $3 billion annually.

Estimates suggest that using carbon taxes to achieve a further 330-megaton CO₂ reduction in the EU would cost $250 billion per year. Meanwhile, the fracking bonanza in the U.S. not only delivers a much greater reduction for free, but also creates long-term social benefits through lower energy costs.

The amazing truth is that fracking has succeeded where Kyoto and carbon taxes have failed. As shown in a study by the Breakthrough Institute, fracking was built on substantial government investment in technological innovation for three decades.

Climate economists repeatedly have pointed out that such energy innovation is the most effective climate solution, because it is the surest way to drive the price of future green energy sources below that of fossil fuels. By contrast, subsidizing current, ineffective solar power or ethanol mostly wastes money while benefiting special interests.

Fracking is not a panacea, but it really is by far this decade’s best green-energy option.

 

Permalink Reply by Bluflame on September 16, 2012 at 5:24am

AMEN. If subsidies to wind and solar ceased, the businesses would quickly expire. We'd be better off greatly reducing the subsidies and transferring the incentives to E&P drilling. A matter of adapting to new realities.

BluFlame

Permalink Reply by Jack Straw on September 16, 2012 at 6:24am

RE: "the American taxpayer paid out subsidies to alternative energy companies to the tune of almost $15 billion dollars."

Sometimes I think that subsidies do more harm to an industry than good.

The "crutch" of subsidies allows an industry/technology to limp along in spite of existing inefficiencies or weaknesses.

In the absence of subsidies, success would be dependent upon facing up to problems/inefficiencies and solving them.

One can perhaps argue for assistance for "new" technologies - but wind and solar have been around for many decades - yet these industries are still dependent upon  taxpayer provided subsidies.

The time to critically look at what the taxpayer is receiving for their largess has long passed.

 

All IMHO,

                    JS

 

Permalink Reply by Bluflame on September 16, 2012 at 5:19am

Hi Jack,

   Great article, but I would argue that it is only partially factually correct. The author attributes the increase in low cost natural gas availability to "fracking". That is only part of the story. The real technological breakthrough is horizontal drilling COMBINED with  a creative new application for hydraulic fracturing. Fracking itself has been with us for many years. 

   A more correct statement would be "Horizontal well drilling combined with a clever application of hydraulic fracturing (Fracking) has allowed the oil & gas industry to unlock vast quantities of natural gas, oil and natural gas liquids located in shale formations and previously inaccessible to E&P companies. These expansive shale formations are present in several US locations in addition to other parts of the world."

  I know this is a technicality, but I've seen several other articles also attributing the surge of NG availability to fracking only.

BluFlame

Permalink Reply by Jack Straw on September 16, 2012 at 5:33am

Yes, it is the confluence of a number of technologies that have allowed for the economic exploitation of a previously unavailable resource. Too much emphasis is made on the contribution of the one element, when it takes the interrelationships of a number of improved technologies to achieve success.

multi-stage fracing (not your Grandad's frac job).

horizontal drilling to great distances while staying within a relatively narrow vertical corridor - courtesy of geo-steering.

micro-seismics allowing real time appreciation of the effectiveness of an ongoing frac.

MWD (measurement while drilling) logging tools.

high resolution 3-D seismic data, with exhaustive post-stack computer processing allowing for attribute enhancement.

A number of technological advances met in a manner that made what is happening today possible.

Who knows what the next ten years will bring - who knows what further advances might accomplish. 

A new prosperity provided by the Clean, Green, Fracing Machine (with a lot of help from its friends).

 

All IMHO,

                JS

Permalink Reply by Jim Litwinowicz on September 16, 2012 at 6:23am

The more I read, the more I realize how little I know. Down-hole radiological readings, well casing design, lots of other technologies involved.

I suspect that a major area of research will be in getting a better extraction rate out of fractured shales. Lots of articles state that the companies expect to retrieve any where from 2% to 5% of all the oil and gas in the shales.  That is a very small percentage but yet it brings huge volumes of gas and oil along with massive profits.  Imagine if they could get that rate to 10% or 20%.

I know they already have some methods to increase production already like high temp, high pressure steam injection and chemical stimulation and are researching more but if someone can come up with a way to double the rate of extraction they will be able to but several Caribbean islands.

Permalink Reply by Jack Straw on September 16, 2012 at 6:43am

The industry history has been one in which constant incremental improvements have taken place; punctuated by major breakthroughs.

The best place to explore for Oil & Gas is where you already have Oil & Gas.

Enhanced recovery techniques are often the cheapest way to increase production/profits.

Sadly, the Shales do not yield to the same sort of enhanced recovery techniques that have been successfully applied to conventional reservoirs.

The factors that made it necessary to develop new technology/techniques to exploit the Shales make it difficult (or impossible) to successfully apply existing enhanced recovery techniques.

Enhanced recovery techniques tailored to the Shales will doubtless be the subject of industry research; first they pluck the low hanging fruit, then eventually they haul out the ladder.

 

All IMHO,

                 JS

 

 

Permalink Reply by Bluflame on September 16, 2012 at 8:27am

Jim & Jack,

  This is a great discussion. Jim, I'm with you....the more I read I realize how little I know! Increasing the yield from these shale resources has to be the next stage of progress. The implication a just a small incremental improvement is profound.

  One would think that merely fine-tuning and optimizing the interfaces of all the recently-developed technology noted in these posts could potentially provide that small incremental increase.

  We're still in the first inning of the shale plays as has been noted elsewhere.

BluFlame

Permalink Reply by Jack Straw on September 20, 2012 at 3:27pm

U.S. Natural Gas Storage Charts

Charts updated after today's data release of last week's storage data from U.S. Department of Energy.

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

These charts are each worth more than 1000 words.

 

All IMHO,

                  JS

Permalink Reply by Bluflame on September 21, 2012 at 2:19am

Thanks  Jack,

   All the charts point toward stabilization in storage quantity going into the winter. The only disconcerting chart is #4, which shows a projected increase in storage over the next several months. However, the projection is based on an average of the last five years. We know that the scenario has changed drastically this year with a switch by virtually all drillers to liquids. Since this is a government-produced document, they chose not to ruffle any feathers which likely would have resulted from a legitimate projection. Since I'm not concerned with ruffling feathers, I boldly project a continuation of the declining storage trend!

BluFlame

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