W.Va. Official Signs Emergency Marcellus Rule

- W.Va. Official Signs Emergency Marcellus Rule

Tuesday, August 30, 2011
Knight Ridder/Tribune Business News
by Mannix Porterfield, The Register-Herald, Beckley, W.Va.

While legislators toil on something permanent and vastly more comprehensive, Secretary of State Natalie Tennant signed an emergency rule Monday regulating Marcellus shale natural gas.

Two specific meetings are planned during Sept. 12-14 interims by a select panel formed by the Joint Committee on Government and Finance, and a co-chairman says he expects to see the final amendments put to a vote.

Legislation bogged down in the final night of the regular session March 13, but acting Gov. Earl Ray Tomblin recently produced an emergency rule that Tennant said didn't reach her office until about a week ago.

"I am disappointed this matter took so long to resolve," the secretary said after signing the rule.

"This is a huge development opportunity that would diversify West Virginia's economy that has to be done promptly and responsibly."

If the Legislature fails to provide a permanent rule within 15 months, the emergency rules will expire under state law.

Tennant had 42 days to approve or deny the filing by the Department of Environmental Protection and said she signed it in the belief there should be no further delay for the industry. The DEP is scheduled to file a permanent rule Sept. 8, allowing a 30-day public comment period. All comments are to be posted on the secretary of state's Web site.

"I recognize there will be differing opinions about this rule, but I remind all those concerned that I can legally only approve the filing of the emergency rule or leave the process regulated in its current manner," she said.

Marcellus shale was put on the back burner this month in back-to-back special sessions, giving the Legislature an opportunity to smooth out legal obstacles in a controversial House of Delegates redistricting plan.

A co-chairman of the select panel, Sen. Doug Facemire, D-Braxton, expects at least 13 amendments to be debated when members convene Sept. 12 and again two days later during next month's interims session.

"I'm confident we can probably finish this up in our September interims and have it ready to go back to our respective bodies and see if we can sell it to them," Facemire said in a recent interview.

Facemire said the panel is focusing on three major goals in seeking a workable piece of legislation -- protecting the environment, safeguarding the rights of surface owners, and giving the fledgling industry room in which to operate.

(c)2011 The Register-Herald (Beckley, W.Va.). Distributed by MCT Information Services.

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BP, Reliance Make India Alliance Official

- BP, Reliance Make India Alliance Official

Tuesday, August 30, 2011
Reliance Industries Limited

Reliance Industries Limited (RIL) and BP on Tuesday announced the completion of BP's acquisition of a 30-percent stake in 21 oil and gas production sharing contracts (PSCs) that Reliance operates in India, including the producing KG D6 block.

This significant step will commence the planned alliance which will operate across the gas value chain in India, from exploration and production to distribution and marketing. The completion of the deal delivers one of the largest ever foreign direct investments into India.

The two companies will also form a 50:50 joint venture for the sourcing and marketing of gas in India which will also accelerate the creation of infrastructure for receiving, transporting and marketing natural gas.

Mukesh Ambani, Chairman and Managing Director, Reliance Industries, said, "The alliance with BP will boost our efforts to realize the true potential of India's hydrocarbon reserves. The globally renowned expertise of BP and the in-depth domestic experience of Reliance make for a formidable alliance which will deliver unparalleled value for the country in its pursuit of energy security."

"This is the beginning of what we expect to be a long and successful working partnership with Reliance, building on the strengths of each company," said Bob Dudley, BP group chief executive. "This major investment is directly aligned with our strategy of creating long-term value by forming alliances with strong national partners, gaining material positions in significant hydrocarbon basins and increasing our exposure to growing energy markets."

BP will pay RIL an aggregate consideration of US$7.2 billion subject to completion adjustments for the interests to be acquired in the 21 production sharing contracts. Further performance payments of up to US$1.8 billion could be paid based on exploration success that results in development of commercial discoveries.

The 21 oil and gas blocks cover approximately [220,000] square kilometers and lie in water depths ranging from 400 to over 3,000 meters. They include the KG D6 block that currently produces about [1.7] billion cubic feet of gas per day (bcf/d), over 40 percent of India's total gas production. RIL will remain operator of the PSCs and BP will bring its global deepwater, sub-surface and gas expertise to enhance exploration and development of the blocks.

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Gas Damage Recovery Fund Proposal Premature, Official Says

- Gas Damage Recovery Fund Proposal Premature, Official Says

Thursday, August 11, 2011
Rigzone Staff
by Karen Boman

A bill proposed by New York Comptroller Thomas P. DiNapoli to establish an energy industry-supported fund to cover damages caused by natural gas production seems premature since the Department of Environmental Conservation (DEC) has not completed work on the state's new permit requirements, said Brad Gill, executive director of the Independent Oil & Gas Association of New York.

"The proposal does not take into account existing permit requirements, which address bonding for site reclamation, and it does not acknowledge existing environmental, criminal and civil law, which holds businesses accountable on many levels," Gill said, noting that the state's new permit requirements would likely be the strictest in the nation.

"The industry's outstanding record of environmental protection in New York should give the public the assurance that we operate with the best interests of the environment in mind," said Gill. "There is simply no basis for such a fund at this time."

DiNapoli on Aug. 9 proposed Comptroller's Program Bill #20 to remediate contamination related to gas production; the proposed legislation would apply to current drilling operations as well as to proposed high-volume hydraulic fracturing.

"Preventing accidents and contamination should always be our first priority," said DiNapoli. "If an accident does occur, the State needs to be ready with a rapid response and a reliable mechanism to hold polluters responsible. New Yorkers should not have to bear the burden from contaminations that damage their air, water and property. Whatever final decisions are made regarding high-volume hydraulic fracturing, this program and new fund will provide the necessary resources to respond to any accidents."

DiNapoli's program is modeled after the New York State Environmental Protection and Spill Compensation Fund (Oil Spill Fund), which draws on the expertise and collaborative efforts of the DEC, the Office of the Attorney General and the Office of the State Comptroller.

Under the program, strict liability would be imposed on owners or operators of drilling sites that cause contamination. The DEC would be empowered to order immediate clean-up by owner or operator or take over sites for immediate clean-up, or would impose a surcharge on drilling permits to create the Natural Gas Damage Recovery Fund similar to structure to the existing Oil Spill Fund.

Oil and gas companies also would be required to post surety bonds to cover any shortfall between fund resources and remediation costs. Additionally, the program would create for the first time an online registry of all gas drilling related incidents in New York State.

The Natural Gas Damage Recovery Fund would pay for any remediation of contamination undertaken by DEC where a responsible party could not be identified, responsible parties refused or responsible parties were unable to pay for needed remediation, according to a statement from the comptroller's office.

The Office of the Attorney General would determine who is legally responsible for the contamination and, if necessary, commence civil damage-recovery litigation against responsible parties. Any recovered funds would be returned to the Natural Gas Damage Recovery Fund to cover cleanup of future contaminations.

DEC on July 1 released its revised recommendations on high-volume hydraulic fracturing, including the prohibition of high-volume fracturing in New York City and the Syracuse watersheds, including a buffer zone. DEC also is recommending the prohibition of drilling within primary aquifers and within 500 feet of their boundaries. Additionally, surface drilling also would be prohibited on state-owned land including parks, forest areas and wildlife management areas.

Previous recommendations had permitted drilling in the New York and Syracuse watersheds, as well as in primary aquifers and forest areas. DEC said the new recommendations would protect the state's environmentally sensitive areas while realizing the economic development and energy benefits of the state's gas resources, and that approximately 85 percent of the state's Marcellus shale resources would be accessible to gas extraction under these recommendations.

DEC plans to hold a 60-day public comment period on the recommendations beginning this month.

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Oil Cos Could Adopt BP's New Safety Standards - US Official

- Oil Cos Could Adopt BP's New Safety Standards - US Official

Friday, July 15, 2011
Dow Jones Newswires
WASHINGTON
by Tennille Tracy

The nation's top offshore drilling regulator welcomed a plan by BP Friday to voluntarily beef up safety standards and said ExxonMobil, Shell and other major oil companies are equipped to follow suit.

Speaking at a congressional hearing, the director of the Bureau of Ocean Energy Management, Regulation and Enforcement said BP knows it has to prove it can operate safely following last year's Deepwater Horizon oil spill in the Gulf of Mexico.

"BP has clearly been through a lot," said bureau Director Michael Bromwich. The company is going to have to "win back not only regulators' confidence, but the public's confidence as well."

BP disclosed Friday it was adopting drilling standards that go beyond existing federal requirements. Specifically, BP said it will require drillers to use more robust equipment, mandating subsea blowout preventers to be equipped with at least two blind shear rams.

BP also said it will use third parties to verify maintenance procedures and oversee testing, and enhance certain measures for responding to an oil spill.

Bromwich said he suspected that Exxon Mobil, Shell and other major oil operators could adopt similar measures, adding that the standards were technologically and economically viable for large companies.

Bromwich also said the measures that BP was undertaking could be folded into a set of new drilling regulations on which his agency is working. He said those new rules would be "broad" and "far-reaching," but he acknowledged the oil and natural-gas industry is wary of the agency adopting new requirements too often and too quickly.

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

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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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N. Dakota Official: Floods Have Idled 5 Rigs, Shut Down 45 Wells

- N. Dakota Official: Floods Have Idled 5 Rigs, Shut Down 45 Wells

Tuesday, June 28, 2011
Dow Jones Newswires
HOUSTON
by Angel Gonzalez

Bad weather, flooding and road restrictions are disrupting oil production in North Dakota, shutting down the transportation by rail of 50,000 barrels a day of crude, a state official said.

"No one was prepared to deal with floods that are breaking records set 130 years ago," said Lynn D. Helms, director of the North Dakota Industrial Commission's Department of Mineral Resources said in an e-mail sent late Monday. Helms said the temporary shutdown of the rail transportation will last until it can be re-routed west, but didn't give an estimate as to when that might occur.

The weather has forced the shut in of 45 wells and idled five drilling rigs and is delaying the arrival of service crews to 500 wells waiting to be fractured, Helms said.

North Dakota sits atop the Bakken Shale, one of the richest deposits of oil in the U.S.--but one that requires intensive fracturing activity to yield crude. Last year, it produced an average of about 307,000 barrels of oil per day.

Michael Marino, an analyst with the investment bank Stephens, said moving drilling supplies in and crude out of the oil patch is the main problem in the Bakken.

"Overall the biggest impact has been on the (exploration and production companies)trying to get oil out of the region because service companies have been able to work around issues to some extent," he said.

Bad weather and flooding have affected not only energy production, but also the agricultural sector and have severely damaged several cities, including Minot, in the western part of the state, where many residents had to evacuate.

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

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Aussie Official to Unions: Don't Be Greedy in Wage Demands

Aussie Official to Unions: Don't Be Greedy in Wage Demands

Monday, April 11, 2011
Asia Pulse Pte. Ltd.

Australian Resources Minister Martin Ferguson says workers' unions should not be greedy in their wage demands for workers at oil and gas plants.

A reported 30 percent jump over two-and-a-half years in the cost of hiring an offshore welder, for example, was not a sustainable rate, Mr. Ferguson said.

That kind of wage rise had already placed pressure on the offshore building industry and unions should heed some advice, he said.

"Don't kill the golden goose," Mr. Ferguson told ABC Radio on Monday.

"We are talking about a sector of industry that is now exceptionally well paid and we've got to see a stronger commitment - and I've raised this with industry - to apprenticeship training."

Mr. Ferguson was the president of the peak national union body, the Australian Council of Trade Unions, between 1990 and 1996.

He said both sides had to accept a dampening in the spiraling cost of wages and accept "a bit of give and take".

Mr. Ferguson said take-home pay wasn't the only factor to be considered.

"There are far more important issues such as training young Australians in creating long-term career opportunities through decent apprenticeships," he said.

"The wage increases that have occurred in offshore construction are unsustainable.

"Industry knows it, the commonwealth government knows it and some sections of the union movement know it."