Pacific Drilling Gains Total Nigeria Commitment

Pacific Drilling Gains Total Nigeria Commitment

Tuesday, May 03, 2011
Pacific Drilling S.A.

Pacific Drilling S.A. announced Monday that their latest generation drillship, the Pacific Scirocco, has received a Letter of Award from Total E&P Nigeria Limited, subject to completion of formalities with relevant government agencies in the near future, to perform exploration and development work in Nigeria. The minimum duration of the award is for a one-year initial term at a dayrate of $470,000 plus mobilization and client requested upgrades. The agreement further contemplates two one-year options at Totals discretion.

We are very pleased to announce a new core relationship with Total, a leading deepwater operator, consistent with our vision to work with the best in the industry, commented Pacific Drilling CEO Chris Beckett. This represents Pacific Drillings third commitment from a major oil company, including the two previously announced contracts for the Pacific Santa Ana and the Pacific Bora both contracted to Chevron in the Gulf of Mexico and Nigeria respectively.

Pacific Drillings fourth ultra-deepwater drillship, the Pacific Mistral, is under construction at Samsung Heavy Industries. The Mistral is on target for on time delivery in May 2011 and is the subject of advanced discussions with various clients. In March 2011 Pacific Drilling ordered two additional drillships from Samsung Heavy Industries, the Pacific Khamsin and the Pacific Sharav, scheduled for delivery in April and September 2013 respectively.

Pacific Drilling is a fast growing company that is dedicated to becoming the preferred ultra-deepwater drilling contractor. Pacific Drillings fleet of four of the newest ultra-deepwater drillships is expected to be in operation by the end of 2011, with two additional drillships on order at Samsung for delivery during 2013.

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Treaty Identifies Belize Drilling Locations

Treaty Identifies Belize Drilling Locations

Tuesday, May 03, 2011
Treaty Energy Corp.

Treaty Energy Corp. on Tuesday issued substantial information on the Company's progress in Belize.

Andrew V. Reid, Treaty Energy's CEO, indicated, "The first of several items issued today is that Treaty Energy Corporation has engaged a law firm in Belize City, Belize, for the purpose of forming a Belizean corporation to be named Treaty Belize Energy, Ltd. All of our business activities in Belize will be handled through this wholly owned subsidiary. As of May 2nd Treaty was told by our Belizean law firm that all filings were done and we are waiting on the 'Certificate of Incorporation' which we expect from the registry promptly."

Reid also explained that Treaty has selected five 'AREAS' as the first of innumerable well sites and has identified the first eight drilling locations that are to be drilled on the land portion of the Princess/Treaty Concession.

• AREA #1: Elevation – 108'
• AREA #2: This very encouraging location is right off Monkey River Road, and shows promise for many wells.This location was staked with one well location approximately 20' back from the seal on the oil side.  Due to lack of time on this formation further study will be done.  The one well is expected to be 1200' deep to the top of the formation.The Company has been informed by the geoscience team identifying these drilling locations that we can expect multiple wells on this formation at about 600' intervals.  

• AREA # 3:  This third formation is located near the end of Monkey River Road.  A well location has not been chosen on this location as of yet because it will require clearing certain areas to obtain access to specific drilling locations.j
• AREA # 4:  This fourth formation was along Southern Highway toward Punta Gorda.The first well staked is close to Southern Highway inside a guarded area that will be easy to drill.  The second well is located about 50' off a good dirt road.
• AREA #5: This fifth location is on Southern Highway in Medina Bank.

In conclusion, CEO Andrew Reid indicated, "We are now in the final process with regard to contracting a drilling company.  We are currently evaluating a highly qualified company out of Guatemala City, but other companies are also being considered, some of which are based in the United States.  It has been determined that an air drilling approach would be very successful in the areas that we will be exploring.  Since air drilling can be faster and would likely create less contamination and/or damage to the oil bearing formations, all factors are being considered prior to issuing the contract for the first well."

Treaty is engaged in the acquisition, development and production of oil and natural gas. Treaty acquires and develops oil and gas leases which have "proven but undeveloped reserves" at the time of acquisition. These properties are not strategic to large exploration-oriented oil and gas companies. This strategy allows Treaty to develop and produce oil and natural gas with tremendously decreased risk, cost and time involved in traditional exploration.

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GL Noble Denton Issues New BOP Guideline

GL Noble Denton Issues New BOP Guideline

Tuesday, May 03, 2011
GL Noble Denton

GL Noble Denton has published a new Guideline for the certification of blow-out preventers (BOPs). The Guideline clearly defines the process to be undertaken by independent third party certification bodies in certifying the integrity of the asset, which monitors and controls the flow of oil and gas wells.

The publication of the Guideline follows the first anniversary of the Macondo oil field incident in the Gulf of Mexico, during which the failure of the BOP from the Deepwater Horizon drilling rig contributed to lost lives and environmental damage. The event has highlighted the crucial need for operators to thoroughly inspect the reliability of this critical piece of safety equipment on a regular basis.

Since the Macondo incident, the oil and gas sector has placed increased emphasis on the inspection and testing of BOPs to ensure compliance with industry standards. The new Guideline published by GL Noble Denton provides rules and procedures for certifying BOPs throughout their lifecycle, from the design and manufacture phase through to annual inspection during operation.

The Guideline will be used by GL Noble Denton as the standard to which the company will inspect and certify BOPs as part of its certification services for sub-sea drilling assets for its clients, who include some of the oil and gas industry's best known exploration and production companies. It has been published using the combined expertise of the GL Group's experienced engineers in Houston, Aberdeen, Sandefjord and Hamburg.

The Guideline is divided into four distinct sections:

• The general certification process of a blow-out preventer, from the submission of a client's application for certification to the distribution of a certificate after design review and the regular review of the asset's integrity during operation.
• The procedures that should be undertaken on a BOP to demonstrate its integrity to a third party such as GL Noble Denton, including methods to identify potential failures and their consequences.
• The major design requirements of a BOP, based on internationally accepted codes and standards.
• The inspections and tests that should be undertaken throughout the lifecycle of a BOP, including factory acceptance tests, site integration tests, annual inspections and inspections after modification.

Paul Shrieve, GL Noble Denton's Senior Vice President for Technical Assurance, said: "The oil and gas industry has heavily scrutinised its approach to the safe operation of blow-out preventers over the past year. GL Noble Denton has been able to help respond to this by providing a standard for BOP certification that will help operators across the world to demonstrate their integrity and maintain the effective operation of this vital asset."

GL Noble Denton is a global independent provider of technical services and software to the oil and gas industry. The company works with some of the sector's best known corporations to provide a wide range of services across the lifecycle of their assets. GL Noble Denton's expertise spans upstream operations, such as on- and offshore exploration, production and delivery storage; midstream import, storage and processing; and downstream distribution. With over 3,500 employees and a presence more than 80 countries, GL Noble Denton plays a key role in helping to design and develop, operate and execute, and assure some of the industry's most innovative solutions.

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BP Alaska to Pay $25M for North Slope Spill

BP Alaska to Pay $25M for North Slope Spill

Tuesday, May 03, 2011
U.S. Environmental Protection Agency

The U.S. Environmental Protection Agency (EPA), the U.S. Department of Justice and the U.S. Department of Transportation's Pipeline and Hazardous Materials Safety Administration (PHMSA) on Tuesday announced that BP Exploration Alaska, Inc. will pay $25 million in civil penalties and implement a system-wide pipeline integrity management program for spilling more than 5,000 barrels of crude oil from the company's pipelines on the North Slope of Alaska. The penalty is the largest per-barrel penalty to date for an oil spill.

"Today's settlement with BP Alaska imposes a tough penalty and requires the company to take action to prevent future pipeline oil spills on the Alaska North Slope," said Cynthia Giles, assistant administrator for EPA's Office of Enforcement and Compliance Assurance. "The Clean Water Act gives the U.S. authority to assess higher penalties when oil spills are the result of gross negligence, and this case sends a message that we intend to use that authority and to insist that BP Alaska and other companies act responsibly to prevent pipeline oil spills."

"This penalty should serve as a wake-up call to all pipeline operators that they will be held accountable for the safety of their operations and their compliance with the Clean Water Act, the Clean Air Act and the pipeline safety laws," said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice. "Companies like BP Alaska must understand that they can no longer afford to ignore, neglect or postpone the proper monitoring and maintenance of their pipelines. This agreement will help prevent future environmental disasters and protect the fragile ecosystem of Alaska's North Slope."

"This penalty is a stern reminder to pipeline operators to follow orders issued by PHMSA or risk a federal civil lawsuit and steep fines," said PHMSA Administrator Cynthia L. Quarterman. "Also, it is a warning that operators must know, test and maintain their pipelines or risk harming people and the environment and having to spend, as in this instance, hundreds of millions of dollars replacing those pipelines."

In March 2006, BP Alaska spilled approximately 5,054 barrels of crude oil on the North Slope in Alaska. A second spill occurred in August 2006 with approximately 24 barrels of crude oil spilled. Investigators from EPA and PHMSA determined that the spills were a result of BP Alaska's failure to properly inspect and maintain the pipeline to prevent corrosion. PHMSA issued a Corrective Action Order to BP Alaska that addressed the pipeline's risks and ordered pipeline repair or replacement. When BP Alaska did not fully comply with the terms of the corrective action, PHMSA referred the case to the Department of Justice. Today's settlement also addresses Clean Air Act violations arising out of BP Alaska's improper asbestos removal along the pipeline in the aftermath of the spill.

Tuesday's settlement requires BP Alaska to develop a system-wide program to manage pipeline integrity for the company's 1,600 miles of pipeline on the North Slope based on PHMSA's integrity management program. The program will address corrosion and other threats to these oil pipelines and require regular inspections and adherence to a risk-based assessment system. The program will cost an estimated $60 million over three years and is in addition to the approximately $200 million BP Alaska has already spent replacing the lines that leaked on the North Slope.

Of the $25 million penalty, $20.05 million will be deposited in the Oil Spill Liability Trust Fund established under the Clean Water Act. The remainder, $4.95 million, will be paid to the U.S. Treasury. The funds paid to the Oil Spill Liability Trust Fund will be used to finance federal response activities and provide compensation for damages sustained from future discharges or threatened discharges of oil into water or adjoining shorelines. Oil spills are known to cause both immediate and long-term harm to human health and ecosystems, including the suffocation of wildlife and the contamination of nesting habitats.

In 2007, BP Alaska pled guilty to one misdemeanor violation of the Clean Water Act for the March 2006 spill and was sentenced to three years probation, ordered to pay a $20 million criminal penalty, including a $12 million fine, $4 million to the National Fish and Wildlife Foundation to support research and activities on the North Slope and $4 million in restitution to the state of Alaska.

The consent decree is subject to a 30-day public comment period and final court approval.

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Maryland AG Plans to Sue for Fracking Fluid Release in Northern Pa.

Maryland AG Plans to Sue for Fracking Fluid Release in Northern Pa.

Tuesday, May 03, 2011
The Baltimore Sun, Maryland
by Frank D. Roylance, The Baltimore Sun

Maryland's Attorney General has told a gas driller working in Pennsylvania that he plans to sue the company for violating federal anti-pollution laws after thousands of gallons of hydraulic fracturing fluid spilled into the Susquehanna River watershed last month.

In a "notice of intent to sue," Attorney General Douglas F. Gansler said there was an equipment failure April 19 at a gas well being drilled by Chesapeake Energy Corp. in Leroy Township, in north central Pennsylvania. The failure resulted in "loss of control of the well."

"Tens of thousands of gallons" of "fracking" fluid, used to fracture bedrock and release natural gas from the Marcellus Shale deep underground, leaked out and escaped the berm built to contain it, Gansler said. The fluid crossed neighboring farms, then flowed into Towanda Creek, a tributary of the Susquehanna River.

Gansler told the company the spill "may pose ... an imminent and substantial endangerment to the health of the population adjacent to the well site, recreational users of Towanda Creek and the Susquehanna River and to the environment. ..."

The fracking fluid contains hundreds of chemicals, some of them toxic, the attorney general argued, and the spill therefore constitutes a violation of the federal Resource Conservation and Recovery Act, and the Clean Water Act.

The Susquehanna provides 45 percent of the fresh water entering the Chesapeake Bay, and supplies drinking water to 6.2 million people. It is a backup source of water to Baltimore City in times of drought.

Brian Grove, senior director for corporate development at Chesapeake Energy Corp., said testing during the spill revealed "limited and very localized environmental impact, with no adverse affects [sic] on aquatic wildlife in Towanda Creek."

Testing in the Susquehanna a short distance downstream found "no effect whatsoever," he said. "We are confident there will be zero impact hundreds of miles away. The Susquehanna River and the Chesapeake Bay face many environmental threats; this event is not one of them."

Copyright (c) 2011, The Baltimore Sun. Distributed by McClatchy-Tribune Information Services.

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Magnum Hunter Acquires Williston 'Bolt On' Acreage

Magnum Hunter Acquires Williston 'Bolt On' Acreage

Tuesday, May 03, 2011
Magnum Hunter Resources Corp.

Magnum Hunter Resources Corp. announced Tuesday that the Company's recently acquired wholly owned subsidiary, NuLoch Resources Inc, along with certain of NuLoch's existing joint venture partners, have acquired 16,800 gross acres (5,000 net acres) in a "Bolt On" acquisition located in Burke County, North Dakota.

The acquired acreage is in close proximity to a producing Sanish well, the Gustafson #29-32, where NuLoch owns an 18.6% working interest. As previously announced by NuLoch, the Gustafson #29-32 had a peak 24 hour initial production rate of 937 Boe per day from the Sanish formation.

Management Comments

Glenn Dawson, President of NuLoch, commented, "Leveraging the success of the Gustafson #29-32 well into a now much expanded acreage position in Burke County, North Dakota where we own a larger working interest (up to 30%) is an extremely positive strategic move for our Company. NuLoch has now increased the Company's net acreage position by 75% in this region alone; including one mostly contiguous block of 11,700 net acres to NuLoch's working interest ownership position. We are currently in the process of permitting production spacing units for purposes of drilling wells with two mile horizontal laterals. Today, NuLoch has drilled two wells in Burke County, North Dakota and has an additional six wells planned for the remainder of fiscal year 2011. This type of 'Bolt On' acreage acquisition adjacent to our recent success allows us to continue to maximize our presence in this region of the Williston Basin."

Magnum Hunter Resources Corp. is an independent oil and gas company engaged in the acquisition, development and production of oil and natural gas, primarily in the states of West Virginia, North Dakota, and Texas. The Company is presently active in three of the most prolific shale resource plays in the United States, namely the Marcellus Shale, Eagle Ford Shale and Williston Basin/Bakken Shale.

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Bristow Renews of Long-Term Norway Contract

Bristow Renews of Long-Term Norway Contract

Tuesday, May 03, 2011
Bristow Group Inc.

Bristow Group Inc. a leading provider of helicopter services to the offshore energy industry, announced Tuesday that it has been awarded a renewal contract for work in Norway valued in excess of $167 million in revenue.

William E. Chiles, President and Chief Executive Officer, said, "Our recent success in renewing this long-term contract with a key customer reinforces our long-term commitment to the Norwegian market. It also demonstrates that customers value our differentiated service capabilities provided by our unique Target Zero programs with specific delivery focus on zero accidents, zero downtime, and zero complaints."

The existing five-year contract was extended after a bid competition for another five-year term, which commences in early 2013, with the option to extend it for an additional three periods of one year each. Bristow will provide two dedicated Sikorsky S-92 large helicopters operating from our Sola base in Stavanger, Norway beginning in March 2013.

Bristow Group Inc. is the leading provider of helicopter services to the worldwide offshore energy industry based on the number of aircraft operated and one of two helicopter service providers to the offshore energy industry with global operations. The Company has major transportation operations in the North Sea, Nigeria and the U.S. Gulf of Mexico, and in most of the other major offshore oil and gas producing regions of the world, including Alaska, Australia, Brazil, Mexico, Russia and Trinidad.

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Chrysler Posts First Quarterly Profit In Nearly 5 Years

Chrysler Posts First Quarterly Profit In Nearly 5 Years



May 3, 2011

Chrysler Group reported its first quarterly profit since the second quarter of 2006 on Monday, posting earnings of $116 million in the first quarter of 2011, compared to a loss of $197 million in the year ago period.

Revenue surged 35% year-over-year to $13.1 billion, as both sales volume and pricing improved. The company sold 18% more vehicles globally in the quarter.

Chrysler is still a privately held company; the U.S. government owns 9%, Italian car company Fiat owns 30%, and the United Auto Workers trust fund ownsthe majority.

The company plans to offer shares to the public late in 2011 or early in 2012, with Fiat expecting to own a 51% share by then, as part of a structured plan for Chrysler to pay back government loans and get back on its feet.

Chrysler announced plans last week to repay $5.8 billion in loans to the U.S. Treasury Department and another $1.7 billion to the Canadian government, which also pitched in to help the company as part of the 2009 bailout.

Sergio Marchionne, Chief Executive Officer, Chrysler Group LLC said, "Chrysler Group's improved sales and financial performance in the first quarter show that our rejuvenated product lineup is gaining momentum in the marketplace and resonating with customers. These results are a testament to the hard work and dedication of our employees, suppliers and dealers, all of whom are helping Chrysler create a new corporate culture built on the quality of our products and processes, and simple, sound management principles."

Marchionne added that the company is on pace to hit its worldwide sales target of 2 million vehicles for 2011, including 1.4 million in the U.S., despite

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Twitter seeks to buy TweetDeck

Twitter seeks to buy TweetDeck



May 3, 2011

A multi-million dollar offer is on the table in the social networking arena. Twitter has made an offer to acquire TweetDeck for close to $50M. Tweet Deck is a popular third-party software application used for Internet social networking services.
According to a Reuters report, the cash and stock deal could close in less than ten days and would represent one of five-year-old Twitter's largest acquisitions to date. The deal would give Twitter an application that has won praise among sophisticated users for its slick interface and enhanced capabilities, while closing out a potential threat to Twitter's fast-growing service. TweetDeck had been in talks with Pasenda Web company UberMedia in a deal that was valued at less than what Twitter offered. UberMedia which is owned by entrepreneur Bill Gross, has been amassing a collection of Twitter applications which some commentators have speculated could ultimately be used to create a rival social network to Twitter. The exclusivity terms of UberMedia's offer for TweetDeck expired in mid-April, allowing TweetDeck to respond to the Twitter offer. The deal comes a little over a month after Twitter co-founder Jack Dorsey returned to the company as executive chairman to oversee product development.

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OTC 'Feels Normal Again'

OTC 'Feels Normal Again'

Tuesday, May 03, 2011
Houston Chronicle
by Brett Clanton

Phillip Bordelon may have summed it up best Monday morning in describing the mood of this year's Offshore Technology Conference.

"What it feels like? It feels normal again," said the salesman for Wild Well Control, a Houston firm that provides firefighting and well control equipment to the offshore industry.

He was referring to the contrast with last year's event, when BP's Macondo well was still gushing thousands of barrels of oil into the Gulf of Mexico each day, and anxiety was at a fever pitch in the offshore oil and gas industry.

On Monday, as one of the world's largest gatherings for the industry began at Reliant Park, barely a year after the deadly Macondo accident, a number of exhibitors expressed a similar feeling.

"Last year, when all of that was going on, nobody had smiles on their faces," said Mike Mikulenka, director of marketing services for drilling and production systems with Cameron International, maker of the much-scrutinized blowout preventer on the Macondo well. "This year, everybody's a little more optimistic."

That optimism stems not only from the fact that the crisis has passed, but that drilling activity is resuming in the deep-water Gulf of Mexico and $100 oil prices are providing a tailwind for new global exploration.

But it's been a cautious return to normal. The industry still complains that regulators are not approving new offshore drilling permits fast enough in the deep-water Gulf. Uncertainty remains about new offshore regulations yet to come. And some companies have been slow to resume spending after the recession.

"People are still scared of the economy," said Tim Lewis, a salesman for Gefco, an Enid, Okla. company that on Monday had one of its giant portable land drilling rigs on display outside Reliant Center. Even so, he said, the mood is "tremendously better" than it's been in recent years.

In its 43rd year, the four-day Offshore Technology Conference is expected to draw more than 72,000 engineers, executives, technical specialists and other offshore professionals.

On Monday morning, the crowds appeared thin at first, perhaps because attendees were still digesting the news that U.S. forces had killed Osama bin Laden. But by midday, the park was bustling, with thousands from every part of the world, chattering in different languages and wearing everything from cowboy hats to dashikis.

"It's a good thing when you have this many people show up for OTC," Texas Land Commissioner Jerry Patterson said in an afternoon panel discussion. "It's like the days of yesteryear."

In 1982, at the peak of an oil boom, the event drew more than 100,000 people. Last year, with interest high in Macondo issues, attendance reached 72,900, its second-highest ever.

Event organizers on Monday declined to estimate turnout. But attendance so far is beating the event's first day for the previous two years, said Stephen Graham, associate managing director of OTC.

Dean Madell, a division president of Houston's Wellhead Distributors International, agreed that the crowds looked fairly strong from the booth he manned in Reliant Arena.

And, without a doubt, the mood is lighter, a year removed from Macondo.

"That cloud," he said, "is long gone."

Copyright (c) 2011, Houston Chronicle. Distributed by McClatchy-Tribune Information Services.

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Range Calls EPA Conclusions 'Sheer Guesswork'

Range Calls EPA Conclusions 'Sheer Guesswork'

Tuesday, May 03, 2011
Fort Worth Star-Telegram, Texas
by Jack Z. Smith

Range Resources, fighting claims by the U.S. Environmental Protection Agency that it "caused or contributed" to the contamination of two Parker County, Texas, water wells, says in court filings that the EPA's conclusions are "sheer guesswork" based on "threadbare-thin" reasoning.

In filings with the U.S. 5th Circuit Court of Appeals in New Orleans, Range also argues that the EPA's Dec. 7 emergency order against the Fort Worth-based natural gas producer requires the company to engage in fact-finding efforts that the agency itself should have undertaken.

The EPA pinpointed two Range natural gas wells, drilled more than a mile deep into the Barnett Shale, as the likely sources of methane contamination in the residential water wells in far south Parker County that are approximately 200 to 220 feet deep. Methane is the chief component of natural gas.

Range said "there is 5,500 feet of the earth's strata separating the bottom of the private water wells from the subsurface horizontal sections" of its gas wells, and that the EPA order "does not even set forth a theory how gas could migrate from Range's wells to the aquifer."

Range says the EPA's order imposed costly and excessive requirements far beyond the scope required to ensure protection of the drinking-water supplies of the two contaminated wells, which served nine people.

The EPA declined to provide specific responses to Star-Telegram questions about Range's criticisms of the agency's investigation. The EPA said Friday that it "stands by the order" and "seeks to ensure that the contamination found in the drinking water wells ... is properly addressed." The EPA said it would soon file briefs responding to Range.

Among Range's contentions, the company said the order directed it "to engage in long-term and costly remedial action, including conducting an extensive study of a 20-county aquifer [the Trinity Aquifer], identifying gas flow pathways anywhere within that aquifer regardless of the source and preparing a plan to eliminate those flows and remediate any area of the aquifer that has been impacted from gas from any source."

David Poole, senior vice president and general counsel for Range, estimated that the company already has spent $1.5 million to $1.75 million defending itself against the EPA order.

Range says the EPA ignored advice from an agency chemist, Doug Beak, to do more analytical work before concluding that Range's gas wells caused the contamination. Range obtained a Nov. 28 e-mail that Beak sent to Chris Lister, an EPA environmental engineer involved in the contamination investigation.

Beak said in the e-mail that data the EPA obtained from testing natural gas from a Range well and the gas in one of the contaminated water wells showed strong similarities, but that "this is not conclusive evidence."

The U.S. Justice Department filed a complaint in a Dallas federal court Jan. 20, saying that Range failed to comply with the EPA's order. Range appealed to the 5th Circuit, seeking the order's dismissal.

The EPA continues to oppose Range's request to take sworn depositions of Lister and another EPA official, Jerry Saunders, who were involved in the contamination investigation.

While the EPA says Range "caused or contributed" to the contamination, Range repeatedly has noted that John Blevins, the EPA official who signed the order, later retreated somewhat, saying in a Jan. 25 sworn deposition that Range "may" have caused or contributed to it.

The Texas Railroad Commission found March 29 that the Range gas wells did not contaminate the water wells. The commission agreed with staff examiners and Range consultants that the gas in the water wells likely came from the shallow Strawn geological formation, which is only a few hundred feet deep and into which some gas wells were drilled in the early 1980s.

The EPA did not participate in that inquiry.

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W.Va. IOGA: Reasonable Regs Possible without Special Session

W.Va. IOGA: Reasonable Regs Possible without Special Session

Tuesday, May 03, 2011
Knight Ridder/Tribune Business News
by David Beard, The Dominion Post, Morgantown, W.Va.

The Independent Oil and Gas Association of West Virginia (IOGA) wants to see reasonable and responsible regulation for the Marcellus gas industry, but doesn't see a need for a special legislative session to enact it.

In order to gain some industry perspective on the recent Marcellus drilling boom, The Dominion Post sat down with IOGA representatives in April.

They included President Mike McCown, who is vice president-Northeast of Gastar Exploration (not the same person as state Budget Director Mike McKown); Executive Director Charlie Burd; and a trio of public relations staffers for Chesapeake Energy, the single biggest player in the north-central West Virginia Marcellus operations.

IOGA has more than 600 members, McCown said. While members operate in 53 of the state's 55 counties, the organization had kept a relatively low profile until Marcellus hit the spotlight.

"Here recently the world's changed," he said. "We've been compelled to be more proactive" with communicating with the public.

McCown touted some oil and gas industry stats. The industry employs 35,000 people at an average annual wage of $60,000. In 2010, it made capital investments of $771 million, paid $71 million in severance taxes and $106 million in property taxes. As many as 7,000 new jobs may emerge from the Marcellus industry.

"The growth that we've got planned is significant going forward," he said. "We're a significant player. We're proud to be here. We're stewards of the environment. We take safety very seriously. We're a good corporate citizen."

"What are the energy alternatives?" he asked, adding that many are not viable on a wide scale -- such as solar and wind.

"We drill wells. We drill wells in West Virginia. We drill wells in this county. We drill them correctly. We continue to improve. We're proud to represent the oil and gas industry."

The discussion covered a variety of topics, from roads to legislation regulatory details. Here's a look at IOGA's views and comments. Members noted that discussion of new regulation and fees should apply only to horizontal wells, not conventional vertical wells.

Legislative goals

McCown: "We would support reasonable additional regulation" limited to horizontal Marcellus operations. Given the current low price of gas -- $4.20 per mcf (thousand cubic feet) -- there are virtually no conventional wells being drilled.

"Conventional players don't need and can't afford additional regulation. ... Marcellus wells are more complex, it's a different animal."

IOGA is agreeable to a significant permit fee increase, site safety plan requirements and design criteria for impoundments. "So many of the things they [legislators and others developing the failed Marcellus bill] advocated, we agreed to. But the bill got more things bolted on and became unmanageable."

Asked if IOGA would prefer a special session or acting Gov. Earl Ray Tomblin's proposal to let the Department of Environmental Protect draft emergency rules, McCown said, "There is no need for special session."

Road wear and maintenance

McCown: Although no other industry is singled out for rulemaking policies, IOGA met with Division of Highways representatives during the summer. "We agreed to it."

IOGA supports identifying the prior condition of the road, paying a bond, and restoring the road to its original condition.

"That's something that shows that we're willing to do what needs to be done." They know large trucks damage small roads not intended for the traffic. Some roads began as cowpaths -- with no base. They were graveled, then tarred and chipped, then coated with asphalt, with no sturdy base. "Any kind of heavy equipment is going to cause damage."

Chesapeake: The company knows the conditions of the roads in Wetzel County, and has heard the residents' complaints. "We have repaired those" while drilling operations are going on. "We didn't just let them go."

Chesapeake has done maintenance for the DOH in agreement with the DOH. "I think the DOH has been satisfied, but I don't think the residents have always been satisfied." Chesapeake hired a roadway engineer and has had drilling crews out repairing roads.

"Some of those roads are traditionally horrible during the spring. But yes, clearly our traffic doesn't help."

Brock Ridge Road, connecting W.Va. 7 from New Martinsville with Wetzel County Route 89 and the Victory Field gas pads, is an example of a problem road. It had no base, and attempts to build one didn't work. Once asphalt, it's now dirt. "It's frustrating that money was spent and the road didn't hold."

Inspectors

McCown: "Inspectors have the right to inspect any time they want. The numbers don't concern me. They don't concern my company as an operator."

While legislators have complained that there are 12 working inspectors for 59,000 gas wells, IOGA looks at it differently. Wells primarily need inspection during construction, drilling and reclamation. There are only 37 active wells being drilled now. With 12 inspectors, "that's not too bad a ratio compared to when they were drilling thousands a year."

Once a gas well is drilled and it's just sitting out there, annual inspection is adequate. "We police our own business."

Surface owner notification

McCown: "Some limited additional notice period would be acceptable. We are receptive to extending the notice period for work on site."

The problem: If there's too much notice, surface owners could take advantage of rules regarding distance from watercourses and buildings, and build a structure or dig a pond or a well to ward off drilling. "The rub comes in when the mineral owner is not the surface owner."

Water use

The Dominion Post asked about suggestions raised by legislators that unscrupulous subcontractors may dump frack water in streams.

McCown: "We dispose of our water properly."

Burd: "As expensive as it is to move water in and out, you recycle every drop you can. ... I just challenge the validity of those accusations." IOGA supported a water management plan in bills introduced, but not passed, in 2010 and 2011.

Chesapeake: Recovered frack water is trucked to the next drilling site.

McCown: After repeated uses, when there's no more use for it, it's taken to a certified disposal well where it's injected deep underground -- thousands of feet below any aquifer. "I take offense to that [suggestion]. It's without any substance."

Chesapeake: An average well uses about 5 million gallons for drilling and fracking. New York City uses that in about seven minutes; a 1,000 megawatt coal-fired power plant in 12 hours; a golf course in 25 days.

Marcellus fracking is "the most efficient use of water for energy creation compared to coal, nuclear, biofuels" and the amount of BTUs a gallon generates.

McCown: "Granted the footprint of one of our pads is larger. ... The footprint is tiny in comparison to the reserves that we generate from today's technology. Technology enables us to buy energy resources at home instead of importing Mideast oil."

Regulations to disclose frack fluids

Chesapeake: On new wells, the company uses a closedloop drilling system that reuses frack water without introducing it into water supplies. This technology-driven industry makes shifts before regulators can. "Those things occur and are happening just because of wanting to be good stewards, to be a good neighbor, and make good decisions.

Material safety data sheets are available at drilling sites and at the state DEP website.

McCown: "The allegation that there's some mysterious concoction of chemicals is bull."

Permit fees

McCown: "If I go to get my driver's license renewed and it goes from $65 to $1,000, I'm going to get kind of excited. So going from $650 to $10,000 caused us to be excited."

Fee hikes should take into account multiple wells on the same pad, allowing for much inspection work to be done at one time.

"Half that is what we as an association were looking at and would support," with corresponding fee reductions for multiple wells on the same pad.

Workers -- in state and out

McCown: "I'm an out-ofstate worker. I came here 35 years ago from out of state, and I stayed here and raised a family here."

With the state's population dropping, "I like the fact people are coming in here." They may come in and stay, or they may go back home -- but they spent money while they were here.

Chesapeake: While the supervisors still come from out of state, the entire rig crew for its Nomac Drilling subsidiary is all local -- from the West Virginia-Ohio-Pennsylvania corner area.

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Williams Says It Has No Utica Drilling Plans

Williams Says It Has No Utica Drilling Plans

Tuesday, May 03, 2011
Knight Ridder/Tribune Business News
by Elizabeth Skrapits, The Citizens' Voice, Wilkes-Barre, Pa.

Beneath the deep-lying Marcellus Shale lies the even deeper Utica Shale, a rock formation that geologists say also has the potential to be rich in natural gas.

However, nobody is tapping into it in Northeastern Pennsylvania just yet, and the Utica remains largely unexplored in the rest of the state.

The state Department of Environmental Protection issued Williams Production Appalachia LLC a permit on Feb. 4 to drill deeper for its exploratory well on Route 487 in Sugarloaf Township, Columbia County, past the Benton Foundry.

The permit sparked rumors Williams planned to drill into the Utica Shale, but company spokeswoman Helen Humphreys says they're not true.

"I know that we are not going into the Utica Shale at all," she said.

The plan is to drill down past the Marcellus Shale to tap into the Onondaga limestone formation beneath, then go back up into the Marcellus, Humphreys said. The well has been drilled and the next step will be to hydraulically fracture it, but she said she didn't have a date for when it will be done.

A map issued by DEP on April 5 shows that, like the Marcellus, the Utica Shale runs completely through Northeastern Pennsylvania including Luzerne, Lackawanna, Wyoming and Columbia counties.

Although DEP keeps track of Marcellus Shale drilling permits, the Utica is still pretty much off the radar for the state agency.

"We don't have anything really identifying the formation in our system right now," said Dave English of the DEP Bureau of Oil & Gas Management. "Basically all we're tracking at this point in time is the Marcellus."

There have been permits issued for the Utica Shale -- although not many, and none in Northeastern Pennsylvania -- and there are several other shale formations being tested, English said.

Range Resources, the first company to drill a Marcellus Shale well in Pennsylvania, in 2004, is a pioneer in the state's portion of the Utica Shale as well.

Last year, the company drilled a productive well in Beaver County. Range Resources President and Chief Operating Officer Jeffrey Ventura reported in an April 27 conference call the company is planning a second horizontal well in the Utica Shale later this year.

Copyright (c) 2011, The Citizens' Voice, Wilkes-Barre, Pa. Distributed by McClatchy-Tribune Information Services.

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Pa. Revenue Agency: Q1 Tax Payments Already Beat 2010 Totals

Pa. Revenue Agency: Q1 Tax Payments Already Beat 2010 Totals

Tuesday, May 03, 2011
Pennsylvania Department of Revenue

At the direction of Governor Tom Corbett, the Department of Revenue on Monday released an analysis showing that companies engaged in and related to natural gas drilling activities in Pennsylvania have paid more than $1.1 billion in state taxes since 2006.

Those taxes came on top of the billions of dollars of infrastructure investments, royalty payments and permit fees paid by the industry.

The Revenue Department's analysis, which breaks out tax payments from oil and gas companies and their affiliates through April 2011, indicates that 857 of these companies have already paid $238.4 million in capital stock/foreign franchise tax, corporate net income tax, sales/use tax and employer withholding to the state in 2011.

These figures from the first quarter of this year already exceed by nearly $20 million the total tax payments made in all of 2010.

The department's analysis also identified $214.2 million in personal income taxes paid since 2006 attributable to Marcellus Shale lease payments to individuals, royalty income and sales of assets.

A comprehensive analysis of personal income tax paid on Marcellus Shale business profits is not feasible because the department cannot conclusively determine what profits from Marcellus Shale partnerships, S corporations and LLCs were passed through to individuals as opposed to C corporations, which are taxed at 3.07 percent and 9.99 percent, respectively.

However, the department can determine that these oil and gas companies, and their affiliates, include 1,096 pass-through businesses. These businesses reported $675.4 million in 2008 income.

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KBR Wins Offshore Denmark EPC Contract

KBR Wins Offshore Denmark EPC Contract

Tuesday, May 03, 2011
KBR

KBR announced Monday that it has been named as subcontractor by Dragados Offshore, S.A. (Dragados) for the detailed engineering work on the South Arne Phase 3 Project, an expansion of the existing South Arne field located offshore in the Danish sector of the North Sea.

The EPC award to Dragados includes two wellhead platform topsides with weights of 1,600 tons and 1,350 tons respectively, the two jackets supporting these platforms with a weight of 2,600 tons each, as well as detailed engineering, additional support for procurement assistance and construction site support.

KBR is the subcontractor for the detailed engineering and procurement assistance, and will provide additional engineering assistance throughout the construction and installation phases. The detailed engineering work will be performed by KBR from its Leatherhead offices, under the supervision of Dragados Offshore. Completion will be achieved upon sailaway of the different elements and is targeted for April and May 2012. This term includes a seven-week period for onshore commissioning of the platforms within the Dragados Puerto Real yard.

"Working with Dragados provides a strategic opportunity for KBR to expand our technical services beyond engineering and through to project completion," said Dennis Calton, President, KBR Oil & Gas. "KBR delivered the original South Arne Project in 1999, and this award by Dragados S.A. provides KBR an opportunity to apply our engineering expertise and value to this project development."

KBR is a global engineering, construction and services company supporting the energy, hydrocarbon, government services, minerals, civil infrastructure, power, industrial, and commercial markets.

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BP Awards Technip 10-year Spar Deal

BP Awards Technip 10-year Spar Deal

Tuesday, May 03, 2011
Technip

Technip has been awarded a 10-year master agreement by BP Exploration and Production, Inc.

The agreement covers the design, procurement and construction of hulls and mooring systems for Spar platforms to be located in the Gulf of Mexico, as well as the design of top tension risers for dry tree units. This award follows a design competition and confirms Technip's leadership in Spar technology, secured over time through the construction of 14 of the 17 existing Spars worldwide.

Technip's operating center in Houston, Texas, will execute the agreement. It stipulates that the Spars will be fabricated at the Group's yard in Pori, Finland, where 12 of Technip's 14 Spars have already been manufactured.

Within the framework of this agreement, pre-front-end engineering design activity for the Mad Dog Phase II Spar has already begun. The front-end engineering design for this project is scheduled to commence in the second semester of 2011.

A Spar is a cylindrical, partially submerged offshore drilling and production platform that is particularly well-adapted to deepwater.

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Patterson-UTI Reports April Drilling Activity

Patterson-UTI Reports April Drilling Activity

Tuesday, May 03, 2011
Patterson-UTI Energy, Inc.

Patterson-UTI Energy, Inc. on Tuesday reported that for the month of April 2011, the Company had an average of 201 drilling rigs operating, including 197 rigs in the United States and 4 rigs in Canada.

Average drilling rigs operating reported in the Company's monthly announcements represent the average number of the Company's drilling rigs that were operating under a drilling contract. The Company cautioned that numerous factors in addition to average drilling rigs operating can impact the Company's operating results and that a particular trend in the number of drilling rigs operating may or may not indicate a trend in or be indicative of the Company's financial performance. The Company intends to continue providing monthly updates on drilling rigs operating shortly after the end of each month.

Patterson-UTI Energy, Inc. subsidiaries provide onshore contract drilling and pressure pumping services to exploration and production companies in North America. Patterson-UTI Drilling Company LLC has approximately 360 marketable land-based drilling rigs that operate primarily in the oil and natural gas producing regions of Texas, New Mexico, Oklahoma, Arkansas, Louisiana, Mississippi, Colorado, Utah, Wyoming, Montana, North Dakota, Pennsylvania, West Virginia, Ohio and western Canada. Universal Pressure Pumping, Inc. and Universal Well Services, Inc. provide well services primarily in Texas and the Appalachian region.

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Sonangol Okays Cobalt's Offshore Angola Plans

Sonangol Okays Cobalt's Offshore Angola Plans

Tuesday, May 03, 2011
Cobalt International Energy, Inc.

Cobalt International Energy, Inc. on Tuesday announced that Sonangol has approved the drilling plans for the Cobalt-operated Cameia-1 and Bicuar-1 pre-salt exploratory wells on Block 21 offshore Angola.

Given the proximity of the well locations, Cobalt plans to drill the surface hole of Bicuar-1, move the rig to Cameia-1 to drill and evaluate the prospect, then return to Bicuar-1 to drill the well to total depth. Cobalt anticipates drilling operations offshore Angola to commence in the second quarter, in-line with previously disclosed guidance.

Also during the second quarter, Cobalt anticipates the signing and formal award of its 40% working interest and operatorship in Block 20 offshore Angola.

Cobalt is an independent oil exploration and production company focusing on the deepwater U.S. Gulf of Mexico and offshore Angola and Gabon. Cobalt was formed in 2005 and is headquartered in Houston, Texas.

Enterprise to Extend Eagle Ford Pipeline System

Enterprise to Extend Eagle Ford Pipeline System

Tuesday, May 03, 2011
Enterprise Products Partners L.P.

Enterprise Products Partners L.P. on Tuesday announced plans to build an 80-mile extension of its 350,000 barrel per day (BPD) Eagle Ford Shale crude oil pipeline, that would allow the partnership to serve growing production areas in the southwestern portion of the play.

The Phase II project would originate in Wilson County, Texas at the terminus of the partnership's previously announced 140-mile Phase I segment, and extend to a site near Gardendale, Texas in La Salle County, where a new central delivery point (CDP) is planned for construction that will feature 500,000 barrels of storage. Phase I is on schedule to begin service by the second quarter of 2012, with Phase II set to commence operations in the first quarter of 2013. When completed, the approximately 220-mile crude oil pipeline system will provide Eagle Ford Shale producers with access to the Texas Gulf Coast refining complex through Enterprise's integrated midstream network.

The Phase II extension, which is being designed with a capacity of 200,000 BPD, is anchored by a 10-year agreement with Chesapeake Energy Marketing, Inc. ("Chesapeake"), a subsidiary of Chesapeake Energy Corp., that Enterprise also announced today. As part of the long-term contract, Chesapeake has committed to 100,000 BPD of firm crude oil transportation capacity.

"We are very pleased to expand our relationship with Chesapeake in the Eagle Ford Shale by adding crude oil transportation to the various natural gas services Enterprise is already providing under long-term contracts," said A.J. "Jim" Teague, executive vice president and chief operating officer of Enterprise's general partner. "Including the Chesapeake agreement, we now have producer commitments for nearly all of the available capacity on Enterprise's Eagle Ford crude oil pipeline, with 320,000 BPD under 10-year contracts."

With more than 2.5 million acres under lease and potentially 15,000 wells to be drilled over the production life of the Phase II service area—based on the partnership's own research and information from producers—development activity in this region of the Eagle Ford Shale is expected to remain brisk for the foreseeable future. Estimates provided by producers also suggest that up to 3 billion barrels of crude oil are recoverable in the southwestern region of the play.

The Phase II project would address the lack of pipeline infrastructure in the southwestern crude oil production region of the Eagle Ford Shale and provide shippers with access to Enterprise's Sealy, Texas delivery point. The Sealy facility interconnects with the partnership's Rancho Pipeline and feeds into Enterprise's new ECHO crude oil storage terminal being constructed at a location along the Houston Ship Channel in southeast Harris County, Texas. The pipeline options available to shippers via the terminal would provide access to more than two million BPD of refining capacity in the Houston area.

Teague further stated, "Typical of the strategy that has positioned Enterprise as a key provider of midstream services in the Eagle Ford Shale, this latest agreement leverages our existing integrated network of assets to create a cost-effective and timely solution that will allow Chesapeake to maximize the value of their production by providing access to the largest refining market in the world."

Approximately 165 rigs are presently working in the Eagle Ford Shale, which have drilled more than 1,200 wells. Current production from the play is approximately 100,000 BPD of crude oil and condensate.

Enterprise Products Partners L.P. is the largest publicly traded partnership and a leading North American provider of midstream energy services to producers and consumers of natural gas, NGLs, crude oil, refined products and petrochemicals. EPD's assets include approximately: 50,200 miles of onshore and offshore pipelines; 192 million barrels of storage capacity for NGLs, refined products and crude oil; and 27 billion cubic feet of natural gas storage capacity. Services include: natural gas transportation, gathering, processing and storage; NGL fractionation, transportation, storage, and import and export terminaling; crude oil and refined products storage, transportation and terminaling; offshore production platform; petrochemical transportation and storage; and a marine transportation business that operates primarily on the United States inland and Intracoastal Waterway systems and in the Gulf of Mexico.

Grid Estimates 41M Bbls Oil in Place

Grid Estimates 41M Bbls Oil in Place

Tuesday, May 03, 2011
Grid Petroleum Corp.

Grid Petroleum Corp. announced Tuesday the completion of the acquisition of Joaquin Basin Resources Inc. The Company has determined the primary asset of the company, the 4,000 acre Kreyenhagen Trend leases, contain the same target zones of production as the neighboring Kreyenhagen Ranch.

These target zones consist of the heavy oil in the upper Temblor and the Unconventional Shales, of the Kreyenhagen and the Monterey that continue to trend North and South from the Kreyenhagen Ranch Field.

Initial estimates indicate that there exists 82,000,000 BOOIP (Eighty Two Million Barrels Oil In Place). The Company currently holds a 50% Working Interest in the 4,000 acres providing an estimated 41,000,000 BOOIP to the Company's Interest.

Using a P10 valuation of the Oil in Place reserve calculation and assuming a recovery rate of 10% indicating the volume of recoverable oil at an estimated 4,100,000 Barrels of Oil.

Using a conservative value for oil at $100.00 per barrel and a cost of production at a very conservative $45.00 per barrel of oil providing for a valuation of the Company's Interest of the Kreyenhagen trend lease at $225,000,000.00 as determined by the company's geologists.

Grid Petroleum Corp. is a development stage company focused on the acquisition and development of low cost high reward oil and gas prospects with infield drilling for proven potential reserves in the United States and Canada.

The company anticipates the initiation of a development plan with its joint venture partners for the purpose of establishing suitable drill sites for the Kreyenhagen Trend leases in the near future. Upon completion the company will have established a time line for the development of its significant Oil and Gas assets.

Subsea 7 Designs, Builds Commercial AIV

Subsea 7 Designs, Builds Commercial AIV

Tuesday, May 03, 2011
Subsea 7

Subsea 7, a global leader in seabed-to-surface engineering, construction and services, on Tuesday announced that it has completed the design and build of the first commercial AIV, a technology which has the potential to revolutionize Life-of-Field projects.

Subsea 7 has an ambitious plan to develop a series of Autonomous Inspection Vehicles (AIV), initially capable of general visual inspection, through to fully capable work-class sized intervention vehicles. A combined project team comprising hardware developers and operational personnel from Subsea 7 and Seebyte, a Scottish based software developer for the autonomous robotics market, has been working together to deliver the first vehicle.

The design and build of the vehicle is complete and successful progress through in-water trialling and commissioning phase is underway. Following completion of extensive in-water testing and capability development, the first commercial AIV is expected to be available in late 2011.

Through the development process, many technical challenges have been overcome, the shape of the vehicle has changed from the original design concept due to the significant work done using the latest Computational Fluid Dynamics Modelling to optimize the vehicle's shape with regard to stability and maneuverability, while conserving the onboard power resources.

The vehicle is fully autonomous and can operate for a 24-hour period on a single charge of its lithium-ion batteries, which are housed in pressure vessels within the hull. These batteries have been specifically designed for the vehicle and provide a more cost-effective solution to pressure tolerant batteries, with a lower capital cost and much improved cycle lives. /p>

The sensor package has been developed to cover the requirements of general visual inspection; it comprises the latest sonar technology coupled with high quality video cameras and low power LED lighting.

A significant software integration and development project has been running in parallel with the hardware development and this too has used the most advanced techniques to manage, debug and control the development.

Neil Milne, Subsea 7's Vice President - Life-of-Field Services, commented: "We are delighted with the success of the commercialization program to date for what represents a significant technological advance in the area of subsea remote inspection and intervention. With the arrival of the AIV, subsea structures such as manifolds, wellheads and risers will be able to be inspected by this tetherless technology, significantly increasing flexibility and efficiencies throughout the life-of-field cycle. Following completion of extensive trials and further development over the coming months, we look forward to bringing the first commercial AIV into operations towards the end of 2011."

Cobalt Posts Smaller Loss for Q1

Cobalt Posts Smaller Loss for Q1

Tuesday, May 03, 2011
Cobalt International Energy, Inc.

Cobalt International Energy, Inc. on Tuesday announced a net loss of $16.1 million, or $0.05 per basic and diluted share for the first quarter of 2011, compared to a net loss of $29.7 million, or $0.09 per basic and diluted share, for the first quarter of 2010.

Cash expenditures (excluding changes in working capital) for the quarter ended March 31, 2011 were approximately $11 million compared to guidance of $20 25 million. For the full year 2011, expected cash expenditures (excluding changes in working capital) including the cash expenditures associated with Block 20 offshore Angola are $325 to 400 million. The range depends principally on when Cobalt recommences Gulf of Mexico drilling activities in the second half of 2011, and the testing and appraisal expenditures associated with any discoveries offshore Angola.

Cash, cash equivalents and investments at the end of the first quarter were approximately $843 million. This excludes approximately $349 million designated for future operations held in escrow and collateralizing letters of credit, as well as approximately $196 million in the TOTAL drilling fund for the Gulf of Mexico. In addition to these balances, Cobalt closed a common stock offering on April 15, 2011, which resulted in total gross proceeds to Cobalt before underwriting discounts and offering expenses of $499.1 million. Cobalt has no short or long-term debt. Including the proceeds from the offering, Cobalt holds cash, cash equivalents and investments of over $1.67 billion which Cobalt expects will be sufficient to fund its planned exploration and appraisal program, including expenditures relating to Block 20 offshore Angola, through the end of 2013.
Cobalt is an independent oil exploration and production company focusing on the deepwater U.S. Gulf of Mexico and offshore Angola and Gabon. Cobalt was formed in 2005 and is headquartered in Houston, Texas.

Enserveco Expands Niobara Presence

Enserveco Expands Niobara Presence

Tuesday, May 03, 2011
ENSERVCO

ENSERVCO Corp., a provider of well-site services to the domestic onshore oil and gas industry, on Tuesoday announced it is expanding its presence in the active Niobrara Shale region of the Central United States, and has executed a lease on a new operations facility in Cheyenne, Wyo.

The Cheyenne site is being established to address growing demand in the northern portion of the Niobrara, where several current customers are accelerating horizontal drilling programs and making significant investments in new leases, infrastructure and personnel.

"This expansion parallels the geographic growth of our customers," said Mike Herman, chairman and CEO. "Between our facilities in Greeley, Colo. and our new Cheyenne site, we have established a major presence in what is becoming one of the nation's most active onshore exploration and production regions."

The Cheyenne facility will initially serve more than a dozen customers, including Chesapeake, Anadarko, Whiting and Exxon Mobil. The 5,400 sq. ft. facility, which is expected to be operational by Aug. 1, will sit on roughly four acres, and will stage a fleet of service vehicles that will include hot oiling, frac heating, acidizing and water hauling trucks, as well as well-site construction equipment.

Herman said, "Our growing workload in this region is significantly extending our busy season, as fluid heating needs in the northern Niobrara typically cover 10 months of the year. This is more than double the length of our heating season in the Marcellus Shale."

Through its two operating subsidiaries, Heat Waves Hot Oil Service and Dillco Fluid Service, ENSERVCO has emerged as one of the energy service industry's leading providers of hot oiling, acidizing, frac heating and fluid management services. The Company owns and operates a fleet of more than 200 specialized trucks, trailers, frac tanks and related well-site equipment. ENSERVCO operates in Colorado, Kansas, New Mexico, Oklahoma, Pennsylvania, Texas, Utah and Wyoming. ENSERVCO became a public company in July 2010 when it merged with Aspen Exploration Corporation, which is now doing business under the trade name ENSERVCO Corp.