Study: Fracking Priciest for Wells

- Study: Fracking Priciest for Wells

Wednesday, August 31, 2011
Pittsburgh Post-Gazette
by Erich Schwartzel

The hydraulic fracturing process that's brought the most controversy to the natural gas industry is also the most expensive aspect of operating a Marcellus Shale well, according to a University of Pittsburgh study released Tuesday.

The fracturing, or "fracking," process that splinters shale rock and lets gas escape costs an average of $2.5 million -- nearly one-third of the total $7.6 million that it costs a company to operate a single well.

Land acquisition and leasing accounted for $2.1 million of the total well costs, with the average signing bonus for land calculated as $2,700 per acre.

This examination of the economic impact of a single Marcellus well was deliberately more narrow than other academic takes on the industry, which have accounted for indirect or induced costs brought on by cottage industries associated with drilling. The conductors of the study called the direct cost of a well a "critical information gap" in gas research.

The study, conducted by Pitt's Institute for Entrepreneurial Excellence and the Katz Graduate School of Business, worked with Downtown-based EQT Corp. to study an operational drill site in Washington County.

Costs were found to dramatically drop after the 23- to 35-day drilling phase, with the reclamation (or "completion") phase and pipeline (or "gathering") phase costing less than one-tenth of the overall price of the well.

The $7.6 million in direct costs that were found for the EQT well is higher than the industry standard of $4 million to $5 million.

EQT sites are considered more expensive on average because the company is not vertical integrated, which means its vertical and horizontal drilling processes occur separately.

The full breakdown included:

• Acquisition and leasing: $2.1 million
• Permitting: $10,000
• Vertical drilling: $663,000
• Horizontal drilling: $1.2 million
• Fracturing: $2.5 million
• Completion: $200,000
• Production to gathering: $472,000

Copyright (c) 2011 the Pittsburgh Post-Gazette

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API Expands Fracking Remarks to U.S. Energy Dept.

- API Expands Fracking Remarks to U.S. Energy Dept.

Monday, August 22, 2011
Rigzone Staff
by Barbara Saunders

The federal government should not tell states how to regulate natural gas operations within their borders, the American Petroleum Institute (API) told a U.S. Department of Energy (DOE) panel in formal remarks on the panel's preliminary findings.

"While the industry and states are constantly striving to improve operations, it is important to recognize the strong foundation for shale gas operations that currently exists through robust state regulatory programs in most parts of the country," API said. "Rather than deferring on the proper role of state governments, we recommend the Subcommittee acknowledge the success that has been demonstrated through state-level programs. Regulation of oil and natural gas has been led by states since the inception of the industry and has demonstrated a high degree of capability and flexibility in adapting to changes such as those seen with unconventional gas development. States have created systems that effectively protected the environment, including ground water and drinking water sources."

Other remarks by the industry group included:

• "API supports a strong state regulatory framework for natural gas and the dedication of appropriate resources and staff to carry out the regulatory functions. The Subcommittee should defer to the states on the question of how to generate the necessary funding for regulatory programs, rather than making this determination for the states.
• "..[W]e are concerned that the Subcommittee did not engage in a gap analysis to determine whether, and to what extent, the items included in its recommendations have been or are being addressed by state and federal regulators, academia, industry or third parties. . . . A benefit-cost analysis is critical to balanced decisions related to the regulation of commercial activity.
• "API agrees that the protection of water resources is a top priority for all industry operations including hydraulic fracturing. However, water is a highly regulated commodity subject to the federal Clean Water Act as administered by the federal government and the states. A systems approach is already occurring in most local, state, and interstate jurisdictions due to the many requirements associated with water allocation and management processes. In addition, in most states, there already exists a reasonable manifest system for tracking wastes to their point of disposal. We see little additional value from requiring a manifest for the transportation of fresh water hauls since most water management agencies require reporting of these volumes already. This type of requirement should be reserved for those elements posing the greatest risks."

Among other things, API also protested the DOE panel's proposal to regulate air quality emissions from fracking operations separately. "Shale gas operations are already subject to a myriad of federal (Clean Air Act) and state air emissions regulations that have been in place for many years and continue to evolve," API said. "States must often obtain primacy by having programs as or more stringent than the federal requirements in meeting human health and environmental goals."

API supported the panel's recognition that shale gas provides important energy and economic contributions to the U.S.

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API Disappointed by DOE Fracking Committee Recommendations

- API Disappointed by DOE Fracking Committee Recommendations

Friday, August 12, 2011
API

API President and CEO Jack Gerard welcomed the shale gas subcommittee's acknowledgement of the economic and energy security benefits of natural gas development, but said the specific recommendations were disappointing and confusing.

"The committee's recommendations are deficient in large part because the committee failed to adequately acknowledge existing programs and rules. It called for new air emission standards when comprehensive EPA rules already are in place or are being revised. It recommended reduction in use of diesel engines, oblivious or dismissive of the practical and economic considerations that require their use. And it ignored consideration of the potential benefits and costs of new rules, an omission that could cause harm to consumers, jobs and the economy. The shortcomings may in part be due to the fact that none of its members are from the industry or have direct experience in natural gas drilling and hydraulic fracturing operations.

"The industry is committed to appropriate environmental protections and industry best practices, but is concerned that the subcommittee's recommendations could end up frustrating the many benefits that will come from further development of America's vast supply of natural gas, including the creation of hundreds of thousands of new jobs and increasing our nation's energy security. We urge the committee to revise its recommendations to better reflect the facts on hydraulic fracturing, the extensive regulations under which the industry operates, and the industry's new best practices."

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Fracking, Testing Ops Commenced at Global Petroleum's Eagle Ford Well

- Fracking, Testing Ops Commenced at Global Petroleum's Eagle Ford Well

Wednesday, August 10, 2011
Global Petroleum Ltd.

Texon has advised that fracking and testing operations on the second Eagle Ford well in which Global has an interest (Tyler Ranch EFS #2H) began on August 8, 2011. The project involves 17 stages (compared with 15 in the first Eagle Ford well), with fracking expected to take about a week followed by testing.

Initial flow test results are expected to be available in two weeks.

The surface location of the well is close to the production facilities associated with the first Eagle Ford well so the well will be able to be immediately connected for production.

Global has a 7.939% working interest in approximately 1,651 acres beneath the Olmos formation including the Eagle Ford Shale. Global's interest in the Leighton prospect also includes a 15% working interest in approximately 873 acres from the surface down to the stratigraphic equivalent of the Olmos formation.

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'Fracking' Comment Period Firm

- 'Fracking' Comment Period Firm

Tuesday, August 02, 2011
Times Union, Albany, N.Y.
by Brian Nearing

The state Department of Environmental Conservation is unlikely to extend its 60-day comment period on proposed rules to control natural gas hydrofracking, Commissioner Joe Martens said Monday.

Speaking before the Times Union Editorial Board, Martens said anyone who wants to comment on the 1,100-page draft rules -- released last month -- are actually getting more than 60 days to react since the draft won't be finalized until later this summer, which will start the 60-day period.

"I am inclined to stick with the 60 days," said Martens.

In 2009, when DEC first unveiled proposed draft rules on hydrofracking, there were nearly 14,000 comments for the department to consider, prompting the department to come back with the revised draft rules.

Martens said the department will consider some changes before rules are made final, including whether to increase the financial security that well drillers must provide to pay for the cost of unforeseen environmental cleanups.

Currently, a well owner must post only $5,000, usually in the form of a bond. That amount has not changed in decades, and some opponents to hydrofracking said it is woefully inadequate to deal with spills or other potential pollution from wells.

Such possible changes to the draft regulations, as well as an examination of how DEC will handle enforcement of its rules, will be examined by a 12-member advisory group appointed by Gov. Andrew Cuomo.

Martens said the first meeting of that group is being scheduled for later this month.

He said the advisory group does not have a deadline for making its recommendation. That means the public comment period could end before possible changes offered by the advisory board would be made public.

Copyright (c) 2011, Times Union, Albany, N.Y.

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Nanotechnology Research Contributes to Fracking Proppant Development

- Nanotechnology Research Contributes to Fracking Proppant Development

Friday, July 29, 2011
Rigzone Staff
by Karen Boman

Nanotechnology research efforts at Houston-based Rice University have contributed to the development of a fracking proppant that will optimize production from unconventional oil and gas wells.

Technological advances in hydraulic fracturing have allowed producers to access shale gas. This process requires the use of proppants such as grains of sand, ceramic or other particulates, to prevent the fractures created in hydraulic fracturing from closing when the injection is stopped. However, current proppants used in hydraulic fracturing limit the depths at which wells can drilled, and the chemicals used have raised concerns about their impact on local water supplies and the environment. "Most proppants are either hard and heavy or soft and light," said Dr. Andrew Barron, Welch chair of chemistry and professor of materials science at Rice. "Present technology is defined by the hardness/weight relationship; we need to think outside the norm."

Nanotechnology research at Rice's Richard E. Smalley Institute for Nanoscale Science and Technology contributed to the development of OxBall and OxFrac, which are light, high strength ceramic proppants developed by Oxane Materials Inc., an energy-focused nanoproducts company. OxBall is now being used commercially, while OxFrac is in final scale up development, with sales scheduled to begin this year.

To date, OxBall has been utilized in the drilling of more than eight wells; the results of these wells have been very promising. The first batch of OxBall was manufactured at a 300,000 square foot plant in Van Buren, Arkansas, with an initial production of 20 million lbs/year; this production will be scaled up to 80 million lbs/year. OxBall is being utilized to enhance production flow from the deeper Haynesville and Eagle Ford plays; it is thought that OxFrac will be primarily used on the Barnett shale play.

The company was formed through a nanotechnology venture forum through the Rice Alliance for Technology and Entrepreneurship. The alliance, started in 1999, supports entrepreneurs and early-stage technology ventures in Houston and Texas through education, collaboration and research. The group has assisted in the launch of over 225 technology companies that have raised more than $500 million in funding.

The need to enhance gas production flow will be critical as the decline curve in shale wells is more dramatic than in conventional oil and gas wells, meaning that more shale wells are needed to maintain production from shale gas resources. Stronger proppants are needed to boost production and allow deeper wells to be drilled.

Environmental concerns over hydraulic fracturing, which has led to new legislation in Texas and other states requiring producers to disclose fracturing chemicals, has created the need for ceramic processing of proppants that is more benign.

Barron said the ideal proppant is mono-dispersed, which allows for enhanced flow and packing; light for enhanced transportation; and round-shaped to enhance flow. The material in proppants needs to have strength and depth will allowing proppants to get into the rock.

While fracking sand is cheap, the variance in the shape of the particles can prevent flowback from coming through evenly. Barron used the example of a bucket filled with ping pong balls, since the balls are all the same shape, the water flows evenly. "If the particles are different sizes, as often is the case with fracking sands, the dispersant slows. Developing proppant with particles consistently the same shape allows for better flow."

The application of nanotechnology within the oil and gas industry is part of the institute's mission to solve humanity's most pressing problems through the application of nanotechnology. During 2002 and 2003, Professor Richard E. Smalley developed a list of the Top Ten Problems Facing Humanity over the Next 50 Years. Five of these problems have been identified as Grand Challenges, including energy, water, environment, disease and education. The faculty researchers of the Smalley Institute use a variety of nanotechnology approaches to significantly impact these Grand Challenges.

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'Fracking' Has EPA Seal of Approval

- 'Fracking' Has EPA Seal of Approval

Thursday, July 14, 2011
Mclatchy-Tribune News Service.
by Andrew P. Morriss

Natural gas is clean and cheap compared to other forms of energy. Over the last few years, U.S. and world natural gas reserves have soared - U.S. reserves are up by over a third - as we've discovered how to apply the technique known as fracking to unleash gas trapped in deep underground shale formations.

Fracking involves pumping a mixture of water, sand and chemicals under pressure into underground formations, releasing the gas trapped there. Some of the material pumped in returns to the surface; some remains underground where it props open the fractures created in the formation.

The technique has been in use in the United States since the 1940s and it has been used around the world for decades in both oil and gas production. What is new is its effectiveness as methods are refined and the extent of the areas where it can be used cost effectively.

This has revolutionized America's energy picture. Shale gas made up just 1 percent of our gas supply in 2000; today it represents 25 percent.

In the early 2000s, plans were under way to build liquefied natural gas terminals to import natural gas from the Middle East. Today we are retrofitting our ports to allow us to export it. Natural gas prices have fallen to a quarter of their 2000 price, in large part as a result of this dramatic increase in supply.

As we discover new shale formations with recoverable gas, we face some difficult technical and legal issues. The liquid residue can pose risks to ground water and pumping pressurized liquid into the ground can affect neighbors' properties.

However, thus far fracking's dangers are mostly theoretical. Earlier this year EPA Administrator Lisa Jackson - certainly no friend to the hydrocarbon energy industry - told Congress that there had been "no proven cases where the fracking process itself has affected water."

"We have in place a national regulatory system to protect ground water and well developed principles of property law that protect neighbors," she testified. "We don't need more rules, just consistent application of those we have already."

Indeed, all forms of energy production involve side effects. Consider these examples:

• Wind and solar energy production require extensive use of rare earth minerals. Almost all of these minerals are imported from China where their production often triggers environmental disasters. The British Daily Mail's investigation into rare earth production for renewable energy earlier this year quoted Greenpeace China as saying "There's not one step of the rare earth mining process that is not disastrous for the environment."
• Ethanol poses serious threats to water in the Midwest, both from its water-intensive production draining aquifers faster than they recharge and from groundwater pollution from increased fertilizer use in growing corn.
• Nuclear plants require disposal of long term radioactive wastes. Coal plants emit both conventional pollutants and greenhouse gases, while mining risks lives and the environment.

Unless we are willing to drastically reduce our energy use - and so diminish our access to energy-intensive goods like pharmaceuticals and computers - we cannot reject every advance in energy production.

And unlike renewable energy firms such as General Electric and Archers Daniels Midland, the natural gas industry doesn't have its hand out asking for subsidies. Making sure we do not shut down development of our natural gas reserves with ill-considered regulatory measures is critical to our energy future.

(C) 2011 Mclatchy-Tribune News Service.. All Rights Reserved

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DEC Chief Defends Plan For Fracking

- DEC Chief Defends Plan For Fracking

Wednesday, July 13, 2011
The Buffalo News, N.Y.
by David Robinson

State Environmental Conservation Commissioner Joseph Martens says he doesn't see a double standard in new natural gas drilling recommendations that would bar a controversial practice in parts of the state and not others.

His department's recommendations for regulating the natural gas drilling technique known as hydraulic fracturing would bar the practice in the Syracuse and New York City watersheds, but would open about 85 percent of the gas-rich Marcellus Shale region to drillers.

Martin, in a meeting Tuesday with reporters and editors of The Buffalo News, said the New York City and Syracuse watersheds were singled out as deserving special protection because they are the only supplies of unfiltered drinking water in the state.

A surge in natural gas drilling, along with the increased truck traffic that comes with it, potentially could jeopardize the ability to tap those watersheds as drinking water supplies that do not require filtering.

If that happened, the municipalities that rely on those watersheds for drinking water could be forced to build costly water treatment plants that, in the case of New York City, could carry a tab as high as $9 billion, Martens said.

Martens said the Department of Environmental Conservation's recommendations protect water supplies elsewhere in the state by barring drilling within 500 feet of the boundary of primary aquifers or private wells. Drilling also would be prohibited within 2,000 feet of a public drinking water supply.

"Our regulations are stricter than any other state," Martens said.

"We have very ambitious setbacks from all water supplies," he said. "I would say we've taken a cautionary and prudent approach."

But State Sen. Daniel Carlucci, DClarkstown, questioned why what's good for a large swath of upstate New

York is not allowed in the two watershed areas.

"It does, however, raise a troubling paradox," Carlucci wrote this week in a letter to the DEC. "If the threat of potential pollution is too great to subject the New York City and Syracuse watersheds to, why would it then be acceptable to subject water sources in the rest of the state to the same potential contamination?"

The recommendations also would ban high-volume hydraulic fracturing on state-owned land, including parks, forests and wildlife-management areas, and in flood plains.

Kate Sinding of the Natural Resources Defense Council noted that the DEC recommendations "inexplicably" would allow individual landowners to waive the 500-foot buffer around private drinking water wells. "They should not put landowners in a position of balancing potential economic gain against risking their health and safety," she said.

Drilling advocates contend the prolific horizontal wells could provide a major economic boost to upstate New York, creating thousands of jobs and helping to hold down natural gas prices by bolstering supplies.

More than 3,000 horizontal wells have been drilled and hydraulically fractured in the Marcellus Shale area of Pennsylvania, but none in New York because of a moratorium imposed by the state while the DEC developed new rules.

Horizontal wells go straight down for about a mile, then gradually turn at almost a 90- degree angle and continue for a half mile to nearly a mile horizontally, through the Marcellus Shale.

Drillers then inject millions of gallons of water, chemically treated to kill bacteria and prevent scale buildup up on pipes, into the well at high pressure to produce tiny cracks in the rock to free the gas. They also use small explosive charges.

The technique allows drillers to tap into much larger supplies of gas from a single drill site, which can have as many as six wells extending out in different directions. A single well can cost more than $4 million, but successful wells can produce gas at very high rates.

Opponents contend that the process, which uses millions of gallons of water mixed with chemicals and sand, could contaminate drinking water supplies and cause other environmental damage through increased truck traffic and the construction of roads and pipelines through rural areas.

Any drilling boom, however, probably would miss most of Western New York, with the likely exception of the easternmost portion of Allegany County. Unlike the layer across much of Central New York, geologists said the Marcellus Shale throughout most of the western part of the state is too thin and shallow to hold vast quantities of natural gas. Instead, most of the drilling is expected to focus on the portions of the Southern Tier from Steuben County eastward to Delaware County.

Copyright (c) 2011, The Buffalo News, N.Y.

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NY Official: Highly Unlikely to Issue Fracking Permits in 2011

- NY Official: Highly Unlikely to Issue Fracking Permits in 2011

Friday, July 01, 2011
Dow Jones Newswires
NEW YORK
by Matt Day & Angel Gonzalez

New York State environmental authorities have determined that hydraulic fracturing can be safe, but the first permits to apply the controversial drilling technique won't likely be issued this year, the state's top environmental official said Friday.

Joe Martens, commissioner for the state's Department of Environmental Conservation, said that with strict regulation, "we believe high-volume fracturing can be done safely in New York."

Hydraulic fracturing, also known as fracking, involves injecting high volumes of water mixed with chemicals into tight rock formations, in order to crack them and release the oil and gas trapped within.

Martens was presenting a study of the environmental impact for high-volume fracturing commissioned by the state government that recommends that fracking be allowed on private lands, but not near public aquifers nor the New York City and Syracuse watersheds.

DEC, however, won't issue permits until the report, unveiled Friday, goes through its comment period and is finalized. "It's impossible to predict" when first permits will be issued," Martens said. "It is highly unlikely that it would be this year." DEC will issue regulations codifying the recommendations of the report once the review process is over, Martens said.

New York state's embrace of fracking comes amid national controversy over the issue. Proponents say the technique, perfected in the last decade by independent U.S. oil companies, is an economic boon for state coffers and local populations, and has unleashed an unprecedented supply of natural gas. Opponents say fracking can pollute aquifers and surface waters, constituting a serious danger to public health, allegations the oil industry denies.

New York, which straddles the giant Marcellus Shale natural gas field, has huge gas potential, but fierce opposition to the practice and the uncertainty caused by the controversy has kept it off limits to oil producers. Opposition hasn't been limited to New York. The New Jersey legislature voted on Wednesday to ban fracking in its state, though it isn't a key drilling area. Even in places traditionally comfortable with the tradeoffs associated with energy production, such as Texas, oversight has increased. The U.S. Environmental Protection Agency is currently doing its own study, primarily on the potential effects of fracking on drinking water and groundwater.

Catskills Citizens For Safe Energy, an advocacy organization that opposes fracking, said in a statement on its website that "no one" can say with certainty that chemicals injected into the ground "won't present a threat to our drinking supplies in the years and decades to come." The state's recommendations will protect some drinking water supplies, but not others, the organization said.

With the recommendations issued by DEC, more than 80% of the Marcellus Shale resources present in the state will be within the reach of energy companies, Martens said.

Martens said after a close examination of contamination incidents in neighboring Pennsylvania, which also sits atop the Marcellus Shale, New York environmental authorities "have been able to isolate what the problems were."

New York state officials will require that oil companies put a long piece of pipe--known as "intermediate casing"--separating the drill pipe from the surrounding rock formation in order to keep shallow natural gas found during the drilling process from migrating into nearby aquifers or drinking wells. Authorities will also seek to ensure that wells are properly cemented, as poor cementing jobs were implicated in a number of cases where "people ended up with gas in their wells," Martens said.

The state will also require rigorous equipment tests and better storm-water controls, and will seek to have its staff conduct diligent oversight, Martens said.

Martens acknowledged, however, that the state has "limited staff right now" to enforce the strict regime it envisions. That could create a backlog in permitting. "We will only review those applications that we have the staff capacity to handle," he said.

Copyright (c) 2011 Dow Jones & Company, Inc.

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Fracking Foes Resort to Rest Area Prank Signs

- Fracking Foes Resort to Rest Area Prank Signs

Wednesday, June 29, 2011
Pittsburgh Post-Gazette
by Don Hopey

The professionally printed sign bearing the banner message "SAFE TO DRINK" and affixed to a drinking fountain in the Pennsylvania Turnpike's Midway Service Plaza looked official at first glance, even if it seemed to state the obvious.

But something didn't look quite right to Tonya Markiewicz, who stopped in for a drink June 8 while on a trip to Philadelphia and New York City, and it had nothing to do with the stream of cold water arching from the fountain.

The message of the sign, which bore what purported to be a Pennsylvania Department of Environmental Protection logo in the upper left hand corner and has since been discovered in several other turnpike service plazas, was coyly equivocal. It read: "This water is most likely safe. If you have any concerns about contamination due to hydraulic fracturing, expose water to flame."

That procedure -- unsafe at best and potentially fatal at worst if the water contained ignitable concentrations of methane -- was depicted in a graphic that shows a hand holding a lit match under a water faucet.

That raised a big red flag for Ms. Markiewicz.

"I didn't want to try to drink the water after seeing that sign," said Ms. Markiewicz, a Braddock resident, who took a photograph of it. "After reading closely it occurred to me it was posted as part of an activist project, but it was so well done. It gets right at you when you're about to consume the water."

At the bottom of the sign, posted by an as yet unknown activist prankster, was a list of symptoms from drinking contaminated water, including "headaches, nausea, vomiting, dizziness, hair loss, itchy skin and kidney failure," and a DEP phone number to call for more information.

Kevin Sunday, a DEP spokesman, confirmed that the not-so-subtly subversive sign was not posted by the department. He noted that its appearance at the Midway Service Plaza near Harrisburg roughly coincided with the June 7 rally in Harrisburg by hundreds of people protesting Marcellus Shale gas well drilling and development.

"That's not from DEP," Mr. Sunday said last week, noting that the "E" in the DEP logo on the sign was different from the DEP's real logo.

Bill Capone, a Pennsylvania Turnpike Commission spokesman, said last week that after inquiries by the Pittsburgh Post-Gazette, the bogus DEP signs were found on water fountains in "most of the service plazas west of Harrisburg." He said they were probably up on the drinking fountains for almost two weeks and viewed by hundreds of turnpike travelers and service plaza attendants who didn't raise questions about its message, which he termed, "odd, curious and somewhat alarming."

"We found them in Somerset and New Stanton and others, and we are having them removed," he said.

He said not only do the signs appear official but the contact number for more information is a working DEP phone line that belonged to Katy Gresh, the department's spokeswoman in its Southwest District office in Pittsburgh before her promotion to head the DEP's Harrisburg media office in March.

The signs' water contamination test, using a lighted flame, is a reference to problems caused by faulty well casing and drilling operations at Marcellus Shale gas wells in Dimock, Susquehanna County, that allowed high concentrations of methane gas from shallower formations to contaminate well water at several homes.

Also, a homeowner in Colorado was able to ignite his tap water, a dramatically explosive scene shown in the 2010 Oscar-nominated documentary film "Gasland" by Josh Fox, who, coincidentally, spoke at the anti-drilling rally.

Myron Arnowitt, state director for Clean Water Action, one of the environmental organizations that helped organize the rally, said last week that he hadn't seen the prank signs and doesn't endorse them, but thought them "an amusing way to raise some public awareness."

"Of course it's not a good idea to give the public misleading information on water quality and we would want any signs to be clearly factual," he said. "And as far as I know, any of the activists I've been in touch with, no one is taking credit for it."

Copyright (c) 2011, Pittsburgh Post-Gazette

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Southern Bay Preps for Fracking Ops at Fayette Well

- Southern Bay Preps for Fracking Ops at Fayette Well

Friday, June 10, 2011
ureka Energy Ltd.

Eureka provided an update on drilling at the Blackjack Springs Unit 1H, the first well at its Pan de Azucar Eagle Ford Shale project in Fayette County, on-shore Texas USA. As per the latest Operator reports, the well has successfully reached a Total Depth of 16,680 ft, and has been subsequently cased and cemented in preparation for fracking operations.

Mr. Ian McCubbing, Chairman of Eureka stated that, "We are very pleased to have reached this key milestone with the well, and look forward to the fracking operations being undertaken which will provide us with important productivity information in the Pan de Azucar acreage. This is a significant step in the Company's appraisal and development strategy for what is its first exploration activity outside of the Sugarloaf AMI."

The well which was drilled by the Operator, Southern Bay Operating, LLC, a wholly-owned subsidiary of GeoResources Inc., achieved a horizontal section of approximately 6320 ft., and was drilled through the main target zone of the Eagle Ford Shale in accordance with the drilling plan.

The fracture stimulation operations are expected to be undertaken within the next few weeks, immediately after the Operator has completed fracture stimulation operations on its two Flatonia wells located less than 10km south west of Eureka's Pan de Azucar area.

The Blackjack Springs Drilling Unit is a 916 acre pooled unit to which Eureka has contributed 86 acres for its 9.4% working interest. The unit is immediately adjacent to the remaining 675 acres (EKA WI 100%) that make up the balance of the Pan de Azucar project.

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Energy Bills Put 'Fracking' On Different Tracks

- Energy Bills Put 'Fracking' On Different Tracks

Tuesday, May 31, 2011
The News & Observer, Raleigh, N.C.
by John Murawski & Rob Christensen

Two energy-related bills making their way through the legislature underscore the excitement and the anxiety that energy exploration engenders in this state.

Their official titles notwithstanding, one bill might well be called the Go Slow bill and the other the Hurry Up bill.

A House bill focusing on natural gas, HB 242, directs the state to spend $100,000 to study the effect of exploring natural gas trapped in prehistoric shale formations underground, centered in Lee County.

This bill, sponsored by Reps. Mike Stone, a Republican from Sanford, and Mitch Gillespie, a Republican from Marion, takes a cautious tone with regard to the controversial horizontal drilling and hydraulic fracturing (or "fracking") technologies used to gain access to the natural gas. The practices are not legal in this state and would require approval by the General Assembly.

The bill was introduced March 7. On Thursday, it was approved by the Finance Committee and sent to the Appropriations Committee. If it is approved by the House, it would set the stage for a 2013 bill that would regulate the industry.

There's no such waiting with the Senate's fracking bill. The title of the bill says it all: Energy Jobs Act. Sponsored by Rep. Bob Rucho, a Republican from Matthews, SB709 encourages offshore oil and gas exploration, inland shale gas exploration and domestic energy production in general to achieve energy independence. It also would allow fracking to start much sooner in the state.

The bill would also create an Energy Jobs Council "to protect the economy of the State, promote job creation and expand business and industry opportunities."

The council would also come up with emergency plans to deal with energy shortages in this state.

The legislation was introduced April 19 and by May 10 had passed the Senate, but has not had a vote in the House.

Burr likes agency mergers

Republican Sen. Richard Burr has introduced a bill to merge the departments of Labor and Commerce into a new Department of Commerce and the Workforce.

Burr said the move would save money and end duplication and would help the country's economic policies by ensuring a consistent approach.

"The amount of money wasted annually on duplicative programs within the federal government is staggering," Burr said in a statement.

"In his State of the Union address this year," Burr said, "the president proposed merging and consolidating federal agencies and this bill advances that proposal. This common-sense approach reduces duplication by combing offices with similar functions within these two agencies and would streamline our approach to comprehensive policy."

Labor was part of the Department of Commerce until President William Howard Taft made it a separate Cabinet agency in 1913. President Lyndon Johnson considered combining the two in the 1960s.

This month, Burr introduced a bill that would combine the Department of Energy and the Environmental Protection Agency.

Copyright (c) 2011, The News & Observer, Raleigh, N.C.

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Texas Researchers to Study Fracking of Shale Gas

Texas Researchers to Study Fracking of Shale Gas

Tuesday, May 10, 2011
Fort Worth Star-Telegram, Texas
by Jack Z. Smith

University of Texas at Austin researchers will conduct "a comprehensive review of the science, policy and environmental issues surrounding hydraulic fracturing of shale gas," the school's Energy Institute announced Monday.

North Texas' Barnett Shale will be included in the study, which will examine the controversial process that pumps huge volumes of water and sand, plus much smaller amounts of chemicals, under extremely high pressure to create fractures in rock and release trapped oil and natural gas.

The project "will for the first time combine an independent assessment of alleged groundwater contamination and seismic events" ascribed to hydraulic fracturing, or "fracking," of shale formations "with a detailed analysis of the scope and effectiveness of laws and regulations" related to the process, the announcement said.

The project is expected "to get started straight away," Gary Rasp, communications director for the Energy Institute, told the Star-Telegram. Preliminary findings are expected by the end of October and a final report by the end of this year, he said.

The Environmental Protection Agency is conducting its own fracking study but doesn't expect to have initial findings before the end of 2012. The EPA study is also expected to include portions of the Barnett Shale.

The Energy Institute is providing the approximately $300,000 for its study, Rasp said.

"What we're trying to do is separate fact from fiction," Dr. Raymond L. Orbach, director of the Energy Institute, said in a statement. "Unlocking huge reserves of natural gas could be vital to our nation's energy security. If proven to be safe and environmentally benign, fracking could unleash a bountiful supply of domestic energy for generations, if not centuries, to come."

The research team "will investigate specific claims of groundwater contamination, seismic events, fugitive air emissions and other concerns" associated with fracking in the Barnett, Marcellus and Haynesville shales, the announcement said.

The Barnett Shale underlies more than 20 North Texas counties, including Tarrant and Johnson, the leading natural gas-producing counties in Texas. The Marcellus is in the Appalachian region of the eastern U.S, most notably in Pennsylvania and West Virginia, and the Haynesville is in northwest Louisiana and East Texas.

Copyright (c) 2011, Fort Worth Star-Telegram, Texas. Distributed by McClatchy-Tribune Information Services.

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DOE Forms Fracking Safety Panel

DOE Forms Fracking Safety Panel

Friday, May 06, 2011
U.S. Department of Energy

U.S. Energy Secretary Steven Chu on Thursday announced a group of environmental, industry and state regulatory experts who will make recommendations to improve the safety and environmental performance of natural gas hydraulic fracturing from shale formations. President Obama directed Secretary Chu to convene this group as part of the President's "Blueprint for a Secure Energy Future" plan to reduce America's oil dependence, save consumers money, and make the U.S. the leader in clean energy industries.

"America's vast natural gas resources can generate many new jobs and provide significant environmental benefits, but we need to ensure we harness these resources safely," said Chu. "I am looking forward to hearing from this diverse, respected group of experts on best practices for safe and responsible natural gas production."

A group of highly respected experts with experience in industry, environmental groups and state regulatory agencies will form a subcommittee of the Secretary of Energy's Advisory Board to conduct the review, and will work to identify, within 90 days of beginning their work, any immediate steps that can be taken to improve the safety and environmental performance of hydraulic fracturing. They will also develop, within six months of beginning their work, consensus recommended advice to the agencies on practices for shale extraction to ensure the protection of public health and the environment.

Membership of the group includes:

• John Deutch, Institute Professor at MIT (Chair)
  John Deutch served as Director of Energy Research, Acting Assistant Secretary for Energy Technology and Under Secretary of Energy for the U.S. Department of Energy in the Carter Administration and Undersecretary of Acquisition & Technology, Deputy Secretary of Defense and Director of Central Intelligence during the first Clinton Administration. Deutch also currently serves on the Board of Directors of Raytheon and Cheniere Energy and is a past director of Citigroup, Cummins Engine Company and Schlumberger. A chemist who has published more than 140 technical papers in physical chemistry, he has been a member of the MIT faculty since 1970, and has served as Chairman of the Department of Chemistry, Dean of Science and Provost.
• Stephen Holditch, Head of the Department of Petroleum Engineering, Texas A&M University
  Stephen Holditch serves as Head of Texas A&M's Harold Vance Department of Petroleum Engineering and serves on the Boards of Directors of Triangle Petroleum Corporation and Matador Resources Corporation Texas. In 1977, Dr. Holditch founded S.A. Holditch & Associates, a petroleum technology consulting firm which provided analysis of low permeability gas reservoirs and designed hydraulic fracture treatments. He served as president of the company until it was bought by Schlumberger in 1997. Holditch has worked for Schlumberger, Shell Oil Company and Pan American Petroleum Corporation.
• Fred Krupp, President, Environmental Defense Fund
  Fred Krupp has overseen the growth of EDF into a recognized worldwide leader in the environmental movement. Krupp is widely acknowledged as the foremost champion of harnessing market forces for environmental ends. He also helped launch a corporate coalition, the U.S. Climate Action Partnership, whose Fortune 500 members - Alcoa, GE, DuPont and dozens more - have called for strict limits on global warming pollution. Krupp is coauthor, with Miriam Horn, of New York Times Best Seller, Earth: The Sequel. Educated at Yale and the University of Michigan Law School, Krupp was among 16 people named as America's Best Leaders by U.S. News and World Report in 2007.
• Kathleen McGinty, Former Secretary of the Pennsylvania Department of Environmental Protection
  Kathleen McGinty is a respected environmental leader, having served as President Clinton's Chair of the White House Council on Environmental Quality and Legislative Assistant and Environment Advisor to then-Senator Al Gore. More recently, she served as Secretary of the Pennsylvania Department of Environmental Protection and as Chair of the Pennsylvania Energy Development Authority. McGinty is Senior Vice President of Weston Solutions, Inc. and a Director at NRG Energy.
• Susan Tierney, Managing Principal, Analysis Group
  Susan Tierney is chairman of the Board of the Energy Foundation, and serves on the Boards of Directors of the World Resources Institute and the Clean Air Task Force. Until recently, she was a co-chair of the National Commission on Energy Policy. Currently, she chairs the National Petroleum Council Policy Subgroup's study of North American natural gas and oil resources. Dr. Tierney served as Assistant Secretary for Policy at the U.S. Department Energy during the Clinton Administration. In Massachusetts, she served as Secretary of Environmental Affairs, Chair of the Board of the Massachusetts Water Resources Agency, Commissioner of the Massachusetts Department of Public Utilities and executive director of the Massachusetts Energy Facilities Siting Council.
• Daniel Yergin, Chairman, IHS Cambridge Energy Research Associates
  Daniel Yergin is the co-founder and chairman of IHS Cambridge Energy Research Associates. He is a member of the Board of the United States Energy Association and a member of the U.S. National Petroleum Council. He has chaired the U.S. Department of Energy's Task Force on Strategic Energy Research and Development. Yergin is also CNBC's Global Energy Expert and the author of the Pulitzer Prize-winning book, The Prize: The Epic Quest for Oil, Money and Power.
• Mark Zoback, Professor of Geophysics, Stanford University
  Mark Zoback is the Benjamin M. Page Professor of Geophysics at Stanford University. He was co-principal investigator of the San Andreas Fault Observatory at Depth project (SAFOD) and has been serving on a National Academy of Engineering committee investigating the Deepwater Horizon accident. He was the chairman and co-founder of GeoMechanics International and serves as a senior adviser to Baker Hughes, Inc. Prior to joining Stanford University, he served as chief of the Tectonophysics Branch of the U.S. Geological Survey Earthquake Hazards Reduction Program.

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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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South African Govt Places Moratorium on Fracking

South African Govt Places Moratorium on Fracking

Friday, April 22, 2011
Deutsche Presse-Agentur (dpa)

South Africa's government placed a moratorium on licences for fracking, a technique used to extract gas in the Karoo Basin region, pending further research.

Hydraulic fracturing, also known as fracking, sees a pressurised mixture of water, sand and chemicals pushed down drill holes, to explore for and then extract shale gas.

Shell is among several major energy companies keen on exploring the Karoo, a semi-arid region in the west of the country, using fracking.

Green groups worry about the effects of the technique, which could worsen air and water quality.

A government statement, announcing the moratorium, said the mineral resources department along with the trade and industry and science and technology departments, would lead research into the technique.

"Cabinet has made it very clear that (a) clean environment together with all the ecological aspects will not be compromised," government spokesman Jimmy Manyi was quoted by the SAPA news agency as saying.

Controversial 'Horizontal Fracking' Remains Legal in Idaho

Controversial 'Horizontal Fracking' Remains Legal in Idaho

Wednesday, April 20, 2011
Knight Ridder/Tribune Business News
by Rocky Barker, The Idaho Statesman, Boise

Though the only natural gas drilling company active in Idaho today has no plans to employ a method blamed around the country for polluting drinking water, industry officials say other companies could one day.

That was enough to keep Gov. Butch Otter and the other state elected officials who make up the Idaho Oil and Gas Conservation Commission from banning the practice Tuesday.

Bridge Resources, the Canadian-based exploratory company that has discovered natural gas in Payette County, said it only will use a "mini-fracking" procedure to stimulate flows of some of its wells.

But David Hawk, representing Snake River Oil and Gas, a subsidiary of Weiser-Brown, another exploration company, pointed to the Chainman Shale formation in Nevada, which has already gained interest from oil and gas explorers and may extend into Idaho.

"People are looking at southern Idaho," Hawk said. "I'd hate to forestall anything."

The commission approved temporary rules Tuesday that allow Bridge Resources to become the first natural gas driller in the state.

Idaho Conservation League Program Director Justin Hayes offered several amendments he said would protect groundwater. One would prohibit horizontal fracking, where fluids are pumped into shale formations at high pressure to allow natural gas to permeate through for recovery.

"Let's just keep those doors closed," Hayes said.

Bridge would inject only vertically, at high pressure, a mixture of gel and sand into the sandstone formation where the company has found gas to clean out the reservoir near the well bore. This process props open fractures and entices gas to flow more freely.

Hayes wanted drillers to ensure their liquids were not carcinogenic and were not a threat to children. Kim Parsons, Bridge Resources' explorations manager, said the rules as written and the company's own practices will ensure its very limited fracking poses no threat to groundwater.

An impermeable shale formation lies between the drill head area, where the fracking will take place thousands of feet below the surface, and the groundwater closer to the surface.

Parsons said other industries on the surface -- such as agriculture -- use far more dangerous compounds that have far more opportunities to leach into the groundwater.

"We invite the rest of industry to come up to our level of groundwater protection," Parsons said.

The commission, made up of Gov. Butch Otter, Secretary of State Ben Ysursa, Attorney General Lawrence Wasden, state schools chief Tom Luna and State Controller Donna Jones, voted unanimously for the temporary fracking rules. Over the summer, the Idaho Department of Lands will hold a series of meetings to develop permanent rules.

Bridge Resources and its partner, Paramax Resources Ltd., both of Canada, have drilled 11 wells in Payette County. Three of the 11 wells can produce at economic levels naturally. Four require stimulation through fracking, officials said. The other four were dry.

Bridge officials said they could go into production before the end of 2011. That could mean money for schools from state land royalties and for other programs from state severance taxes.

'Fracking' Deemed Eco-Safe at Hearing

'Fracking' Deemed Eco-Safe at Hearing

Thursday, April 14, 2011
Tulsa World, Okla.
by Jim Myers

Oklahoma Corporation Commissioner Jeff Cloud told key U.S. senators that his agency's record on protecting water from pollution makes it clear that states, not the federal government, should regulate hydraulic fracturing.

The decades-old practice has helped spark a natural-gas boom in parts of the country, along with growing controversy.

"During more than half a century of hydraulic fracturing experience, there has not been a single documented instance of contamination to groundwater or drinking water as a result of hydraulic fracturing," Cloud told the Senate Environment and Public Works Committee.

That record, he said, covers more than 100,000 wells in Oklahoma.

Cloud's testimony triggered praise from an unlikely source, Sen. Ben Cardin, D-Md., who not only led the hearing into natural-gas drilling and public health but who also represents a state that has imposed a moratorium on "fracking operations."

Cardin was critical of both the industry, which he accused of failing to meet even minimally acceptable performance levels for protecting human health, and regulatory agencies that in his view also have failed to do what is necessary to protect drinking water supplies.

What especially impressed Cardin was Cloud's explanation that Oklahoma requires the fluids used in fracking to be either recycled or injected into wells.

Cloud repeatedly offered assurances that those fluids never get into the state's water.

Cardin urged other states to follow Oklahoma's lead.

"I think we need to learn from best practices, and we have seen some of that catch on from other states," he said, also citing the record in Colorado.

In some areas, the fluids reportedly are taken to municipal wastewater treatment plants.

Sen. Jim Inhofe of Oklahoma, the committee's top Republican and a key player on environmental issues in Congress, also welcomed Cloud's testimony about the state's "long and successful history of regulating hydraulic fracturing."

"Oklahoma has long been a leader in natural gas production, and hydraulic fracturing plays a key role in providing affordable domestic energy," Inhofe said.

Tuesday's hearing came as natural gas is generating more attention, both negative and positive, as an alternative to oil as a transportation fuel. Rising oil prices and an abundance of domestic natural gas have sparked the interest of politicians, but environmental concerns accompanying the gas boom have prompted states like Maryland and New York to step back from increased drilling activity.

Sen. Robert Casey, D-Pa., is sponsoring legislation to repeal the so-called loophole for the industry and require the disclosure of chemicals used in fracking.

Casey admitted that for decades his state did not take the correct approach to regulating coal mining. Today, he said, "we have to get it right on natural gas."

According to Cardin, who cited a number of violations, and statements from others at the hearing, Pennsylvania is still struggling when it comes to regulation.

The U.S. Environmental Protection Agency also did not escape critical questions, especially concerning its take on the use of diesel fuel in fracking and whether firms that use diesel fuel must apply for a permit.