Fort Worth Council Wants Best Practices for Gas Drilling

- Fort Worth Council Wants Best Practices for Gas Drilling

Wednesday, August 17, 2011
by Bill Hanna
Fort Worth Star-Telegram, Texas

The City Council signaled its desire Tuesday to require best practices for the oil and gas industry to increase oversight of drilling in the city.

Possible best practices include vapor recovery units, increased inspections of well pads and more research on formaldehyde and acrolein emissions.

"I think we definitely want to adopt best practices," Mayor Betsy Price said. "And we definitely want to send the message to [the Texas Commission on Environmental Quality] that we want those inspections done and to maintain that oversight."

That was echoed by Councilman Jungus Jordan."We've had enough study; it's time to take some action," Jordan said, referring to the city's $1 million natural gas air-quality study.

At a three-hour gas drilling workshop, members also discussed the city gas drilling ordinance and possible amendments regarding setbacks, well sites and multiple-well sites.

Price said many issues remain "murky" and need further study by the city staff and council.

But council members appear to be moving toward lifting the city five-year moratorium on saltwater injection wells. They extended it by 90 days at the end of July just as it was about to expire.

Currently, wastewater from hydraulic fracturing must be trucked to sites outside the city, a process that officials say increases truck traffic and wear and tear on roads.

The council has been leery of allowing saltwater injection wells because of concerns that the waste could contaminate groundwater.

But a presentation from the Texas Railroad Commission eased members' concerns about allowing wastewater from large gas drilling sites to be injected into the ground. The state said it normally requires the chemical-laced wastewater to be injected into the Ellenberger formation, which is deeper than the Barnett Shale.

After the presentation, Councilman Sal Espino suggested allowing only large-volume injection wells so as to guarantee that the wastewater would be placed in the Ellenberger Shale.

Price said the discussion shows that the council is leaning toward lifting the moratorium when it expires in October, but she said it is unclear whether it will be lifted just for pilot sites in the Brentwood Stair area and the Alliance Corridor.

The city's only saltwater disposal site is the Brentwood well, and Hillwood Development would like to add one in the Alliance Corridor to reduce truck traffic and stress on roads.

"That's something that didn't get discussed and needs to be talked about," Price said.

Copyright (c) 2011, Fort Worth Star-Telegram, Texas

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Iran Discovers Another Gas Field Worth $133B

- Iran Discovers Another Gas Field Worth $133B

Monday, August 08, 2011
TEHRAN
Dow Jones Newswires

Hydrocarbon-rich Iran has discovered another gas field with reserves of 495 billion cubic meters, valued at $133 billion, the oil ministry's SHANA news service quoted an oil official as saying Monday.

"The new gas field has in spot reserves of about 495 billion cubic meters (17.5 trillion cubic feet) valued at $133 billion and is located east of Assalouyeh," National Iranian Oil Company (NIOC) managing director Ahmad Qalebani said.

Assalouyeh, in the southern province of Bushehr, is the base for developing Iran's offshore South Pars field which Tehran shares with Qatar.

It holds an estimated 14 trillion cubic meters of gas (500 trillion cubic feet) or about eight percent of the world's total.

The Islamic republic, which has divided South Pars into 28 phases, has proven gas reserves of 33 trillion cubic meters second largest in the world after Russia.

Iran consumes almost all of the 600 million cubic meters per day of gas it produces, but hopes to double production and export 250 million cubic meters a day to its neighbors and Europe from 2015 by developing the giant South Pars field.

Tehran also announced Monday an increase of 17 million cubic meters in phase 10 of South Pars, SHANA reported.

"Gas production in phase 10 of South Pars has increased by 17 million cubic meters," said Moussa Souri, director of Pars Oil and Gas.

But the South Pars development has been delayed amid a lack of investment in a country faced with severe gas needs of its own and because of difficulties in procuring the required technology.

Iran's vital energy sector is one of the key areas targeted by world powers in sanctions imposed against Tehran for pursuing its controversial nuclear program.

Most Western and European energy firms have withdrawn or put on hold their investments in the country's energy sector.

Iran is the second largest producer within Organization of Petroleum Exporting Countries at 3.7 million barrels per day, and has oil reserves of around 155 billion barrels.

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

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Chesapeake CEO: Utica Shale Acres Worth $15B-$20B

- Chesapeake CEO: Utica Shale Acres Worth $15B-$20B

Monday, August 01, 2011
Dow Jones Newswires
HOUSTON
by Ryan Dezember

Chesapeake Chief Executive Aubrey McClendon said Friday that the company believes its acreage above the Utica Shale formation in eastern Ohio, 1.25 million acres the company has quietly pieced together over the last year and a half, is worth $15 billion to $20 billion.

"That's a big number to share but we believe we understand the hydrocarbon potential under our acreage and we also know a fair amount about how to create and extract value from a play such as this," McClendon told investors during a conference call to discuss the company's second-quarter earnings. "The Utica should emerge as a key driver in the future growth of U.S. energy supplies, especially in natural gas liquids."

Oklahoma City-based Chesapeake reported earnings of $510 million, or 68 cents a share, compared with a prior-year profit of $255 million, or 37 cents a share. Excluding mark-to-market and other impacts, adjusted earnings rose to 76 cents from 75 cents. Revenue jumped 65% to $3.32 billion on higher production and rising oil and gas prices.

Analysts surveyed by Thomson Reuters expected a per-share profit of 72 cents on revenue of $2.77 billion.

In order to contend with rising oilfield service costs and ramp up drilling in Ohio, Chesapeake said it will boost spending by $1 billion over the next two years to between $6 billion and $6.5 billion annually.

McClendon said Chesapeake, which is drilling into the Utica with five rigs, plans to add three more rigs by the end of the year and eventually have as many as 40 drilling in eastern Ohio by the end of 2014.

Chesapeake has spent between $1.5 billion and $2 billion on leasing property in eastern Ohio and continues to add parcels, McClendon said. The acreage will exceed the $15 billion to $20 billion range once more of it is developed into producing oil fields, but that is its value now as Chesapeake shops it to potential joint venture partners.

Chesapeake plans to sell a stake in the property during the fourth quarter.

The Utica, a deeply buried rock formation, lies below parts of eight states, from Tennessee to New York, as well as parts of Canada. Oil companies, however, have concentrated their leasing and exploration efforts in eastern Ohio, which they believe will yield more valuable oil and natural gas liquids.

While McClendon decline to detail the results from the 15 Utica wells it's drilled so far, he said the activity that will come there should lift an Ohio work force that has suffered for years as manufacturers flee the Rust Belt. Abundant water, needed to hydraulically fracture shale formations, easy transport by rail, highway and river, and a large base of industrial workers make the Utica more attractive and potentially more profitable than many other recent shale discoveries, McClendon said.

"We think that our activity can help rejuvenate this area and we're quite pleased with the size of the work force and the quality of the work force," he said. "This is pretty much the most ideal place in America for a new play."


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

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Pemex to Lease 8 Platforms in Deal Worth $1.2B

- Pemex to Lease 8 Platforms in Deal Worth $1.2B

Tuesday, June 21, 2011
Dow Jones Newswires
MEXICO CITY
by Laurence Iliff

Pemex said it expects to issue soon an international tender to lease eight offshore oil platforms, along with other work in the southern Gulf of Mexico, in a deal worth more than $1.2 billion.

Pemex said the rigs will be used for the drilling, termination, maintenance and repair of wells as part of its program to maintain crude-oil output at its two biggest oil complexes in the Gulf: the mature Cantarell fields and nearby Ku-Maloob-Zaap, or KMZ.

A Pemex Exploration and Production committee has approved the tender, which now moves to the board of directors. If authorized, Pemex said, the tender would be published in the official government gazette and posted on its website in July, with some contracts to begin by the end of the year and early next year.

Five of the platforms are destined for KMZ, Pemex's No. 1 production site, which averaged about 845,000 barrels a day during the first five months of the year, according to Pemex preliminary figures.

Two of the platforms are to be used at Cantarell, a supergiant field that began declining in 2004. Cantarell averaged about 465,000 barrels a day in the January-to-May period of this year. Pemex's total crude-oil output averaged about 2.570 million barrels a day over the same five months.

The platform leasing program will be staggered and end in 2016, Pemex said.

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

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