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Gas Prices Will Soon Drop Below $2 Per Gallon

By Brad Tuttle

Gas prices have been falling for months, and thanks to plummeting oil prices, they’re expected to keep on dropping through the end of the year—dipping below $2 per gallon in some parts of the country.

Wholesale prices for U.S. crude oil are down 38% compared with June, and analysts expect prices to keep dropping in the weeks ahead. The trickle-down effect is that American drivers will be receiving a holiday gift in the form of cheaper and cheaper gas.

How cheap? The national average may hit $2.50, and gas stations in states where pump prices are already low are all but guaranteed to dip into sub-$2 territory.

“We’ll see at least one station in the nation at $2 by Christmas,” Patrick DeHaan, an analyst with the gas price-tracking site GasBuddy told Bloomberg recently. “And that’s not really a prediction at all. That’s more like a certainty.”

“Drivers in southeastern states may see a select few stations selling gas at or below $2 in the coming weeks,” AAA spokesman Josh Carrasco said in a news release.

Drivers in all states can expect increasingly cheaper prices at the pump through the end of the year. And drivers in states where prices are already below average—including Alabama, Arkansas, Mississippi, Missouri, Oklahoma, South Carolina, Tennessee, and Texas—are most likely to see prices drop below the $2 mark.

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Article Source: Tuttle, B. (2014). Gas prices will soon drop below $2 per gallon. Time. Retrieved from http://time.com/money/3611655/cheap-gas-prices-2-per-gallon/?xid=twitter

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GasFrac’s president sees golden opportunity in waterless fracking in Ohio

By Tom Knox

Oil and gas companies want waterless fracking because it could work better than water fracking. Residents want waterless fracking because it saves millions of gallons of water and cuts down on transportation needed to truck used water away.

Add that to a failure of Ohio’s oil and gas companies to economically drill for oil in the northern and western part of the state’s Utica shale play, and Canadian company GasFrac Energy Services Inc. sees a golden opportunity, its president told me.

GasFrac has begun testing its first waterless fracking well in Tuscarawas County, as I reported last week.

“We think there’s a lot of work in Ohio and a lot of potential there,” said GasFrac president Jason Munro.

Munro couldn’t confirm that Houston-based EnerVest subsidiary EV Energy Partners LP (NASDAQ:EVEP) is the company working with the GasFrac on the test oil well, but its executives have made public comments alluding to the partnership. It’s one of the worst-keep secrets in the industry, one which EV executive chairman John Walker said could be its most valuable asset in the Utica.

GasFrac’s technique uses gelled propane instead of water in hydraulic fracturing. Munro said the technique could work in natural gas formations, but oil is the target. Drillers have had a hard time economically drilling for oil in Ohio; the process isn’t the same for extracting natural gas.

“The oil window in Utica appears to be water sensitive,” Munro said.

Fracking creates cracks in the shale formation to make it easier to bring oil out.

In the Utica oil window, shale captures and retains water when it’s used during fracking. It swells the formation, causing a blockage for the water and oil.

Propane is a gas and can come through those cracks easier, allowing the oil to flow more easily toward the surface.

“When you frack with water, you might get 8 (percent) to 40 percent of the water back,” Munro said. “With us, when fracking with hydrocarbon, you get 70 (percent) to 100 percent of the hydrocarbon back,” so it can be reused.

Concerns about water use will only grow. A Deloitte report on the topic found that Americans pay more for water than any other utility, and “shortages stemming from increased water competition and droughts” in many areas.

Researcher IHS Inc. found up to 10 percent of total capital expenditures can be attributable to a single shale well.

GasFrac has shaken up its management team – Munro joined the company this year – and is exploring selling or merging part or all of the Calgary, Alberta, company.

It lost $61 million (Canadian) in the first nine months of its latest fiscal year on sales of $31 million (Canadian).

The company has other businesses than waterless fracking, but a lot is riding on the test well. If the Ohio well is successful, “we’re talking different options than were presented before,” he said.

If it doesn’t do well?

“I certainly think the opportunity is a big one,” Munro said, but the company has a lot of options:“In my view, this won’t be our swan song if the well doesn’t work out.”

Editor’s note: Munro’s comment in an earlier version of this story confused some readers, so we paraphrased it for clarity.

Munro said the company is “cautiously optimistic” about the test well and is in talks with other area companies for potential partnerships. It should have some preliminary results on the well soon.

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Article Source: Knox, T. (2014). GasFrac’s president sees golden opportunity in waterless fracking in Ohio. Bizjournals.com. Retrieved from http://www.bizjournals.com/columbus/blog/2014/11/gasfrac-s-president-sees-golden-opportunity-in.html

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Oil, gas industry tries to keep talent in pipeline

By David Conti

Four years ago, Bryan Dickson and Matt Ockree were among the youngest engineers working on gas well pads in Western Pennsylvania’s Marcellus shale fields.

“I was out in the frack van with Bryan a lot of days and a lot of nights, learning from the people with more experience,” said Ockree, 27, a Lower Burrell native, recalling the training he received in trailers where engineers control the hydraulic fracturing of wells.

Ockree interned with Range Resources Corp., which hired him before he graduated from Penn State University’s petroleum engineering program. He now oversees the Fort Worth-based company’s internship program.

Dickson, 29, a Washington County native, was promoted to Northeast division engineering manager after less than five years at well completion company FTS International. He supervises the latest generation of engineers.

They’re part of what the expanding oil and gas industry calls the big shift change. Drilling veterans in their 50s and 60s, who cut their teeth on an oil boom that ended before these two engineers were born, are nearing retirement.

Many industries face the dilemma of replacing large groups of workers who are preparing to retire, especially in Western Pennsylvania where baby boomers outnumber 25- to 45-year-olds by about 130,000, according to the Allegheny Conference on Community Development.

“It’s probably more acute in the energy industry,” said conference CEO Dennis Yablonsky.

Twenty years of bust in the drilling business before the shale revolution gave Generation X little reason to pursue petroleum engineering degrees or jobs, leaving a gap between the dwindling number of boomers and a big batch of twentysomethings with high-tech knowledge, industry leaders say.

“We’ve been working pretty hard over the past … five years, to get past the baby boomer experience level and to fill that gap before it arrives,” said Nigel Hearne, president of Chevron Appalachia.

San Ramon, Calif.-based Chevron, Pennsylvania’s 10th-biggest gas producer, announced last month that it would spend $20 million on programs to teach school children and train college students in Appalachia to eventually fill the industry’s high-demand jobs.

A third of the 115,000 oil and gas extraction workers nationwide are between 25 and 34, pulling the median age to 38.6, according to the Bureau of Labor Statistics. That’s younger than any agricultural, mining, construction or manufacturing sector.

“There’s a pretty big gap in age between the senior management who are, like, 55 to 60, and us. A huge gap,” said Dickson, whose company has nearly 700 employees in Pennsylvania.

Bridging the gap

John Applegath remembers when a generation of World War II veterans ceded control of the industry to baby boomers. He recognized the latest shift a few years ago.

“We’re better prepared to handle it than in the past,” said Applegath, a 38-year veteran of the industry who leads Range Resources’ southern Marcellus division. “We’re embracing it. We’re doing a lot to get these younger folks up to speed.”

At its Cecil office, Range Resources, the state’s most prolific shale driller, holds meetings geared toward addressing generational differences between workers. More than half of the company’s 1,000 employees are younger than 45.

The older generation is more company-minded and expects to put in time before getting a say in big decisions, but “younger people, as soon as they feel comfortable, they’re looking for when (they) get a seat at the table,” Applegath said.

“I’m glad to see that kind of aggressiveness,” he said. “I like to say, ‘I’d rather use the rein than the spurs.’ ”

Companies are wise to embrace the new generation, said Josh Hickman, founder of Young Professionals in Energy Pittsburgh, whose monthly networking events are called Crew Changes.

“When you want to take that retirement, who’s going to watch over your pensions, your stock?” said Hickman, whose Canonsburg-based Hickman Geological Consulting contracts with energy companies and landowners.

Younger workers want to know they have room for advancement, he said. They need exposure, though, to experienced mentors and some old-fashioned networking skills, which his group helps facilitate.

The growth of the drilling industry allows for some instant gratification for new hires, young workers said.

“It was boots-on-the-ground right away. You’re right in the business fast,” said Carrie Schimizzi, 27, of Latrobe, a land agent for Range Resources, who joined the company once she graduated from the University of Pittsburgh with a law degree and discovered the “dismal” job market for lawyers.

Amanda Lyle, 24, of Shaler is five years younger than Dickson, her boss at FTS, but she is training new engineers after less than two years on the job.

“My friends in chemicals and plastic industries aren’t moving that fast; they don’t have that potential,” she said.

Interns and mentors

To feed the pipeline of young workers needed to replace retirees, companies are focusing on internship programs and other partnerships with Pennsylvania schools, including Penn State, where the petroleum engineering program is graduating nearly 200 students per class.

“I was always told that I would have to leave Pittsburgh to find a really good job, but now I am here at Range and I could not ask for a more amazing job coming right out of college,” said operations engineer Wade Lipscomb, 22, a Stanton Heights native who interned with Range Resources while attending Penn State.

Range Resources brings in 12 interns a year and has hired nearly three-quarters of them, said spokesman Mark Windle.

Houston-based Cabot Oil & Gas Corp., Pennsylvania’s second-largest shale gas producer, this year gave $2.5 million to Lackawanna College to endow the petroleum and natural gas program that the Susquehanna County school established five years ago. Cabot has not started to experience the generational shift, but it expects to.

The endowment “ensures there’s a quality college nearby to supply those workers we will need,” said Cabot spokesman George Stark.

Once hired, young workers get intense field work — new Range Resources engineers live on drilling rigs for 12 days at a time — and lots of time with experienced supervisors. At FTS, all engineers spend three to four months with mentors.

“We want them to know they have the backing of the full resources of the company,” FTS spokeswoman Pam Percival said.

That kind of attention could mean the difference for companies trying to attract or keep a generation of workers noted for wanting to know what’s in it for them, Hickman said.

“Some companies have the capacity to make changes and make those adjustments,” he said. “Others might realize it, but they’re unwilling or unable to make the cultural shift.”

To see more articles like this please visit Transfac.com
Article Source: Conti, D. (2014). Oil, gas industry tries to keep talent in pipeline. Triblive.com. Retrieved from http://triblive.com/business/headlines/6996455-74/industry-engineers-gas#axzz3J4O59Buw

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Ohio Anti-Fracking Activists Want to Delay First Responders from Receiving Important Information

By Jackie Stewart

Back in October of 2013, Energy In Depth reported on how anti-fracking activists in Ohio were trying to slow down first responders with added bureaucracy, based on dubious assumptions about regulatory exemptions. In that report, we discussed how disastrous it could be if first responders were sent back to the stone ages by being forced to add layers of bureaucracy by having to leaf through paper records to gain access to important information required under the Emergency Planning Community Right to Know Act of 1986 (EPCRA).

Since our report, there has been a lot of activity going on regarding this matter, as it is clear that this antiquated system of paper reporting is a nightmare. This past weekend, the Columbus Dispatch wrote a story regarding this subject matter entitled “Bill alters reporting of fracking chemicals in Ohio.”

The article alleges that the way companies report hydraulic fracturing chemicals would be changed under new provision of recently passed HB 490. First and foremost, EPCRA is not specific to just the oil and gas industry. Second, the way in which the information is being captured via the online system is the same system that first responders in Ohio have been using since 2001. The environmental activists wanted to see that system changed to a paper system, and they were sorely disappointed to learn that, under U.S. EPA guidelines, the states were given flexibility to capture that information the way they see fit. So what we are seeing here is not only a misrepresentation of facts, but a good old fashioned case of sour grapes by the anti-fracking community. As a point of fact, Ohio is leading the way not only by complying with federal statute, but getting ahead of the curve with HB 490, which includes guidelines that provide more transparency and timely access to information through a web based system.  But don’t take my word for it; take a look at the history of this issue and the facts to debunk the misleading claims found in the above article.

As a reminder, Congress passed EPCRA as a means of supporting local emergency planners and responders with information concerning potential chemical hazards present in their communities. It’s important to note that the individual states were given the flexibility to implement EPCRA in a manner that would best suit them. This issue of jurisdiction — if the states have the authority verses the federal government, and the issue of how information is captured — through an outdated paper system or via a website, is really the heart of the most recent discussion.  Ohio activists would like you to believe that the state does not have the jurisdiction regarding the implementation of the Emergency Planning Community Right to Know Act, prolonging an ongoing effort to have the federal government completely regulate every aspect of hydraulic fracturing.

However, the facts simply do not support their attempts to mislead the public. For example, on July 13, 2010  the EPA published guidelines, which outlined various reporting options available to them. One of those options included the state’s choice to use the State Emergency Response Commission (SERC) or Local Emergency Planning Committees (LEPC) and the local fire departments’ joint access to information outlined in federal statute under EPCRA. In short, federal law says that Ohio can use SERC so long as it meets EPCRA requirements. How that information is obtained, paper reporting or through a website, is a moot point. As a reminder, what Ohio did back in 2001 through House Bill 94, revolutionized the filing requirements and streamlined the process by utilizing a website. This was cutting edge at the time, and still is to this day.

Recently the Ohio statehouse decided to dive into this issue again, beefing up this existing web based system and further ensuring that our first responders are given the information they need. This is yet another example of Ohio continuing to lead in regulatory reforms as the development of oil and natural gas continues. HB 490, 1509.231 which was recently passed, includes information on this matter. In it, we see specific language which states that the information submitted through the online database will:

Ensure that the information submitted for the database will be made immediately available to the emergency response commission, the local emergency planning committee of the emergency planning district in which a facility is located, and the fire department having jurisdiction over a facility; (3) Ensure that the information submitted for the database includes the information required to be reported under section 3750.08 of the Revised Code and rules adopted under section 3750.02 of the Revised Code. (C) As used in this section, “emergency planning district,” “facility,” and “fire department” have the same meanings as in section 3750.01 of the Revised Code.

It is very clear that in Ohio, the metrics by which we adhere to federal statute are more efficient and effective with regard to chemical disclosure and access to information in emergency situations. The anti-development groups either have not read the EPA guidelines, or simply want to mislead the public about clear statutory obligations and provisions. The Ohio Department of Natural Resources continues to do its part by not only maintaining records and a system that has worked for first responders for the past 13 years, but through HB 490 we see the agency trying to improve upon the database by continuing to provide information quickly to emergency personnel to protect the health and safety of our communities.

The website is real time and accessible, which is exactly why the Ohio Fire Chiefs Association wrote a letter supporting the online system. If the health and safety were of first priority for these activists groups, they would not be opposing the passage of HB 490, but instead encouraging these proactive measures by ODNR to move forward through the statehouse process.

To see more articles like this please visit Transfac.com

Article Source: Stewart, J. (2014). Ohio anti-fracking activists want to delay first responders from receiving important information. Energyindepth.com. Retrieved from http://energyindepth.org/ohio/ohio-anti-fracking-activists-want-to-delay-first-responders-from-receiving-important-information/

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Shale academy ready to graduate oil and gas workers

By Greta Mittereder

SALINEVILLE, Ohio (WKBN) – The Utica Shale Academy, located inside Southern Local Schools, held a special demonstration Tuesday for students and board members.

Austin Sadler, 17, is the only senior in the academy. He hasn’t wasted any time obtaining three certifications needed to get a job in the oil and gas industry after graduation.

Sadler said he has learned how to case a well, install pipe and tubing and understands how gas and oil is extracted from the ground. The first certification he received was for safety, called the Rig Pass.

“It allows me to be safely on any rig. I can be on a rig and know what I am doing and what not to do,” Sadler said.

Utica Shale Academy Director Eric Sampson said there are three certifications the students can receive. The Rig Pass, which is for safety; Drilling Instructors Training (DIT); and Well Controlled Certification.

“All of these are IDAC certified courses with the International Association of Drilling Contractors,” Sampson said.

The students have been working through modules and learning about the industry. Some of the work is done online and guest speakers are brought in to relay first-hand experiences from the field. Other work is supplemented with hands-on course material from the Ohio Oil and Gas Education Energy Program.

An advisory board will be set up to give the academy more insight into the oil and gas industry and prepare for changes in the job market.

“The advisory board is here to say here is what we have produced thus far. But as the job market evolves and different skills are needed, we want to make sure that our curriculum still matches the jobs that are available to the students,” said Chuck Kokiko, Jefferson County Educational Service Center.

Brian Logue, a representative for Express Energy, conducted a demonstration for the boards of Jefferson County EDs, which sponsors the academy, and the Southern Local Schools.

“He has set up rig tours for us. This is the third time he has come in to do a presentation to our students,” Sampson said.

Kokiko said the industry is still in the drilling stage and that will level off as gas companies reach production levels, but he says the ancillary and support jobs will be in the area indefinitely.

To see more articles like this please visit Transfac.com

Article Source: Mittereder, G. (2014). Shale academy ready to graduate oil and gas workers. wkbn.com. Retrieved from http://wkbn.com/2014/11/18/shale-academy-ready-to-graduate-oil-and-gas-workers/

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Energy Saves the Day

By Pete Sapp

In Washington, nothing plays better than a good narrative. And for opponents of traditional energy, no yarn has gotten more mileage than “Big Oil versus middle-class America.” It’s reached emblematic, near-parable status among some politicians – that oil and natural gas producers (the modern-day Goliath) overshadow and intimidate hapless consumers who cry out for a David (naturally, those same politicians) to save them. The trouble is, in this case, the narrative is no parable, and it certainly has nothing to do with the Bible; instead, it is just another self-serving myth.

In reality, the United States’ energy revolution over the past decade is a success story of everyday, hard-working Americans. As the country has shifted into the position of a global energy leader almost solely on the shoulders of remarkable shale development, every layer of the economy has emerged the winner – especially small- and medium-size businesses.

This month, the Small Business and Entrepreneurship Council released a report titled the “Benefits of Natural Gas Production and Exports for U.S. Small Businesses: Nationally and Key States.” The findings indicate that while much of the economy was reeling from the turbulent downturn following 2008, increased natural gas production has been bolstering growth, especially among small businesses.

Between 2005 and 2012, the U.S. economy lost, on a net basis, more than 378,000 jobs across all sectors. During the same time, energy production and the industries that directly support it created more than 293,000 positions. And that doesn’t include the ripple effect that reached even further – the jobs created in other segments of the economy because of increased demand for goods and services in non-energy industries. Also, lower energy overhead can free up resources that businesses can use for hiring.

Those gains were very often realized among America’s small and midsize businesses, for which elected officials constantly express great concern. It’s not often recognized, but smaller enterprises comprise much of the country’s energy structure. From 2005 to 2011, more than 95 percent of the companies in the five vital energy industries examined in the report – drilling, extraction, construction and infrastructure, operational support and equipment manufacturing – employed 500 or fewer workers.

To break it down even further over the same period, consider that the number of operational support businesses, the men and women contracted to oversee production in the field, increased by more than 30 percent, including 29 percent growth among firms with fewer than 20 workers. Similarly, the number of very small energy construction companies saw a jump of more than 12 percent, while “micro” equipment and machinery manufacturers experienced nearly 15 percent growth.

Such important growth is far from over, and in fact, Washington has the opportunity to ratchet it up even further. Today, the United States is the leading producer of natural gas, surpassing Saudi Arabia and Russia. Last year domestic production topped 25 trillion cubic feet, a 35 percent increase over 2005, and the U.S. Energy Information Administration anticipates an additional 56 percent increase by 2040.

As a result of this abundance, energy prices have fallen significantly, providing a boon to manufacturers, homeowners and consumers in the form of lower heating and electrical costs. That competitive advantage has given a leg up to U.S. companies. Earlier this year the Federal Reserve found affordable natural gas prices have boosted manufacturing by 3 percent and job creation by 2 percent since 2006. Likewise, the International Monetary Fund estimates cheaper energy prices led to a 6 percent increase in manufacturing exports. By comparison, the International Energy Agency predicts Europe, where prices remain high, will lose a full third of its share of energy-intensive exports within the next 20 years.

Yet for all that natural gas development is doing here at home, there are opportunities for the United States to capitalize on our position even more by exporting some our resources to energy-hungry allies overseas. The U.S. Energy Information Administration found that under all scenarios – whether we export a little or a lot – “the U.S. was projected to gain net economic benefits from allowing LNG [liquefied natural gas, the shippable form] exports.” And with U.S. prices running between a quarter and a third of those in Asia and Europe, it is in our country’s best interest to open our abundant resources to the global market.

Expediting the approval process of LNG export applications will introduce greater demand and thereby additional production, meaning more jobs, more investment, more state and local revenues from greater business activity and more economic development. And just as importantly, analysis shows we can do so without negatively disturbing prices here at home. In fact, market economics naturally put a cap on upward price mobility so U.S. businesses reliant on natural gas won’t see their bills soar.

Across the United States, individuals of all walks of life have benefited from America’s natural gas renaissance whether they recognize it or not. We have the potential to do even more and sustain that growth well into the future through natural gas exports. Now, that’s a story Washington should be telling.

To see more articles like this please visit Transfac.com

Article Source: Sapp, P (2014). Energy Saves the Day. US News. Retrieved from http://www.usnews.com/opinion/economic-intelligence/2014/11/24/us-natural-gas-renaissance-is-a-boon-for-the-economy-jobs

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Rail Shipments Of Oil And Petroleum Continue To Rise

According to the Energy Information Administration, U.S. rail traffic, including carloadings of all commodity types, has increased 4.5 percent through October 2014 compared to the same period in 2013. Crude oil and petroleum products had the second-biggest increase in carloadings through the first 10 months of this year, with these shipments occurring in parts of the country where there is also strong demand to move coal and grain by rail. In response to shipper concerns over the slow movement of crude oil, coal, grain, ethanol, and propane, federal regulators are closely tracking service among the major U.S. freight railroad companies.

Rail carloadings of oil and petroleum products totaled 672,118 tank cars during January-October 2014, 13.4 percent higher than the same period last year, according to the Association of American Railroads (AAR). Rising U.S. crude oil production, particularly in North Dakota’s Bakken Shale formation, where pipeline takeaway capacity is limited in moving the state’s growing oil volumes to market, is one of the main reasons for this increase in rail shipments of petroleum and petroleum products.

Rail shipments of coal were up a relatively small 0.3 percent during the same period, but coal is still by far the largest commodity volume moved by rail, with 4.9 million carloadings. Power plant operators are seeking more coal deliveries by rail to rebuild their coal stockpiles, which were drawn down during last winter’s colder-than-normal weather. Rail also moves U.S. coal to various points for export. At the national level, coal exports were down nearly 16 percent during the first half of this year, but coal exports from the Seattle Customs District (mostly sourced from Wyoming’s Powder River Basin) were up 2.4 percent during the first half of 2014.

Increased movement of grain represents the biggest commodity increase in rail traffic so far this year, up about 15 percent to 878,824 carloadings, according to AAR. The U.S. Department of Agriculture (USDA) forecasts a record harvest of corn and soybean crops this year. Harvesting of these crops is well underway in the major growing areas in the northern Great Plains states, according to USDA’s crop progress reports.

On October 22, the U.S. Department of Transportation’s Surface Transportation Board (STB) began requiring major freight rail carriers to file weekly updates on their service performance in delivering goods and commodities. These filings will lead to a better understanding of commodity movements by rail and the potential issues associated with increased demand from multiple types of commodities.

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Article Source: Author Unknown. (2014). Rail Shipments Of Oil And Petroleum Continue To Rise. Chem.info. Retrieved from http://www.chem.info/news/2014/11/rail-shipments-oil-and-petroleum-continue-rise

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Shell Execs Update Public on Its Cracker Plant Project

By Dan O’Brien

MIDLAND, Pa. – In about 30 days, Shell Chemicals should announce that it’s ready to begin remediation work on more than 540 acres in order to prepare the land for its proposed multibillion-dollar ethane cracker plant here.

“That’s part of the permitting process in Pennsylvania,” said Randy Armstrong, Shell’s senior environmental adviser. “You’re required to give a notice to the public that the process is starting. I think we’ll be ready within the next 30 days.”

Last week, Shell Chemicals, a division of energy giant Royal Dutch Shell, exercised its option to purchase the former Horsehead industrial property along the Ohio River in Monaca, Pa., its preferred site for the plant.

The build site encompasses 546 acres just off Interstate 376 along the Ohio River.

It’s estimated that Shell could invest between $2 billion and $4 billion to construct the plant, create 400 permanent jobs and more than 6,000 temporary jobs during the construction phase.

Still, Shell has not made a final decision as to whether it will move forward with the project, Armstrong cautioned, and there is no timetable for making such a decision.

“It is a process that we go through,” he said. “We passed a key milestone last week, and that property purchase was required to get one of the permits from the U.S. Army Corps of Engineers and the state,” he clarified. “That doesn’t mean we’re coming.”

Many other variables need to fall in place including design, permits, overall development plans, remediation plans and construction plans, and negotiations with the state and local communities, Armstrong said.

“One of the key things I’m working on is getting the environmental permits,” he said. “We’re continuing down that process of doing everything you would need to do to be ready to build this facility.”

Armstrong and other Shell representatives participated in a panel discussion Thursday morning at the Lincoln Performing Arts Center in Midland, where about 200 residents gathered to hear specialists address questions related to the environmental impact of the plant. Another informational meeting took place last night.

The company wants to collect input from the community and in turn provide them information about the proposed “cracker” plant. If built, the processing facility would manufacture polyethylene pellets from ethane gas pumped from the Utica and Marcellus shale plays in eastern Ohio and western Pennsylvania.

These polyethylene pellets — the largest mass-produced plastic in the world — provide the basic ingredients for countless products ranging from plastic bags to automotive components. “We want to be a part of that market,” Armstrong said.

Todd Wittemore, the lead on Shell’s process-design and operations team, said work has started at the site, and several buildings have been torn down in order to prepare it for remediation. “The site is almost clear now, and we’re at the phase where we can actually start building the site as opposed to deconstructing the site,” he said.

Most of the public discussion centered on the plant’s impact on water and wildlife in the area. Once operating at full capacity, Wittemore said the ethane cracker would use about 20 million gallons of water a day from the Ohio River. This water would be recycled through the system to produce steam, which would generate heat to the entire process.

Armstrong said water treatment, monitoring and testing would be ongoing throughout the construction process, while a plan on how to cap over and remediate the brownfield site would need to be prepared.

Other modifications such as storm water management through the use of culverts, retention ponds, and sewage control with nearby municipalities would also be put in place.

Wildlife such as osprey that have nested atop of high-voltage transmission towers would be protected, and a plan developed to consider accommodating eagles that have returned to the area, Armstrong noted.

The Monaca location proved logical, he said, since it included 146 acres of flat land, which is valuable in this hilly region of Pennsylvania.

For many of those attending the public meeting, Shell’s project is reminiscent of other large-scale projects developed in western Pennsylvania and northeastern Ohio since energy companies started prospecting oil and gas from the Utica and Marcellus shale plays.

Joseph Pertaconi, a project engineer from Bristolville who was part of the team that constructed Vallourec Star’s $1 billion plant in Youngstown, said a Shell cracker would be and exciting jolt for the entire region.

“Shell’s presence here is going to have a major impact — not just to the local area in Beaver County — but also throughout West Virginia and southeast Ohio,” he said.” It’s exciting to be a part of this.”

Pertaconi said the process that Shell is moving through reminds him of the same process that Vallourec pursued when it constructed the new Youngstown mill.

“It was a seven-year process before we put a shovel into the ground, and I think that’s where we are right now — the due diligence, the demolition, the permit process,” he noted. “This is a great opportunity.”

Moreover, support businesses and industries are likely to follow should Shell construct the plant, added Beaver County Commissioner Dennis Nichols.

“The economic impact can’t be overstated,” he said. A study conducted by the Pennsylvania Economy League found that total job creation as a result of the plant could number 18,000 positions across the tri-state area.

These jobs would be tied to service businesses such as hotels and restaurants, related companies in the petrochemical markets, manufacturers, and suppliers, Nichols said.

“The numbers I’ve heard is it could have a $4.5 billion a year input into the local economy.”

To see more articles like this please visit Transfac.com

Article Source: O’Brien, D. (2014). Shell execs update public on its cracker plant project. Business Journal Daily. Retrieved from http://businessjournaldaily.com/drilling-down/shell-execs-update-public-its-cracker-plant-project-2014-11-14

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U.S. Drillers Shift Oil Rigs to Tap Most Reliable Fields

By Lynn Doan

U.S. oil drillers put rigs back to work this week, lifting the number in operation from a three-month low in a push to home in on their most profitable fields after crude prices sank to the lowest since 2010.

Rigs targeting oil jumped by 10 to 1,578 after sliding to the lowest level since August last week, Baker Hughes Inc. (BHI) said on its website today. Those drilling for natural gas declined by six, the Houston-based field services company’s website. While oil rigs fell in Texas’s Eagle Ford formation and the Cana Woodford of Oklahoma, they picked up in the Utica in the eastern U.S. and the Permian Basin of Texas and New Mexico.

“The Permian is a tried and tested formula,” Matthew Jurecky, head of oil and gas research for the London-based research company GlobalData Ltd., said by telephone from New York. “The stuff that’d be more at risk is in the periphery, the immature plays. In the Permian, you’ve still got tons of acreage that you can drill for days and make money at $30 oil.”

The oil-rig count has fallen from a peak of 1,609 on Oct. 10 as companies slow drilling in response to a 26 percent slide in crude prices over the past four months. Hess Corp. (HES), one of the largest operators in North Dakota’s prolific Bakken shale formation, said this week that it plans to idle three rigs next year. The slump threatens to curb a production boom in U.S. shale fields that has helped bring gasoline prices at the pump below $3 a gallon for the first time since 2010 and shrink the nation’s dependence on imports.

Down 30

Declines aren’t “going to be consistent every week,” James Williams, president of energy consulting company WTRG Economics, said today by telephone from London, Arkansas. “We’re still down 30 rigs. I still think we’re going to be near 1,500 by the end of the year.”

U.S. benchmark West Texas Intermediate crude for December delivery rose $1.61 to settle at $75.82 a barrel on the New York Mercantile Exchange. Prices are down 19 percent in the past year and capped the longest run of weekly declines in almost three decades.

This week Hess joined the growing pool of drillers, including Apache Corp. (APA) and Continental Resources Inc. (CLR), who’ve said they plan to run fewer rigs in some oil plays. The New York-based company will cut its count to 14 next year “in direct response to the lower oil prices,” Geurt Schoonman, vice present of the New York-based company’s Bakken division, told investors in a conference call Nov. 10.

Domestic Output

Domestic oil output climbed 92,000 barrels a day in the week ended Nov. 7 to 9.06 million, Energy Information Administration data show. While rigs have dropped, their productivity has surged to record levels across all major oil fields, the agency said in a report Nov. 10. New crude output per rig will rise to a record 543 barrels a day in the Bakken in December and to 550 in the Eagle Ford, the report shows.

Rigs in North Dakota may fall below 180, down from 191 last month, as oil and gas operators stop renewing contracts on their least-efficient equipment, Lynn Helms, director of the state’s Mineral Resources Department, said in a conference call today.

Murphy Oil Corp. (MUR), an El Dorado, Arkansas-based oil and gas producer, said in a presentation today that the Eagle Ford is the most expensive of its major oil plays. Supply costs totaled $43.40 a barrel in the South Texas field in September, compared with $29.48 in Canadian offshore operations, the report shows.

U.S. gas stockpiles increased 40 billion cubic feet last week to 3.611 trillion, according to the EIA. Supplies were 6.2 percent below the five-year average and 5.7 percent under year-earlier inventories.

Natural gas for December delivery gained 4.3 cents to $4.02 per million British thermal units on the Nymex, up 12 percent in the past year.

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Article Source: Doan, L. (2014). U.S. drillers shift oil rigs to tap most reliable fields. Bloomberg. Retrieved from http://www.bloomberg.com/news/2014-11-14/u-s-drillers-shift-oil-rigs-to-tap-most-reliable-fields.html

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GARTMAN: We’re Witnessing The End Of The Oil Era

Dennis Gartman has a new forecast for oil: a lot lower.

In an appearance on CNBC’s Fast Money on Monday, Gartman, publisher of the Gartman Newsletter, said that crude oil prices will fall demonstrably from current levels.

Earlier on Monday, it had been reported that Gartman saw crude oil going to $10 a barrel, but he backed a bit off that claim in his appearance on Monday, saying that maybe next time he ought to be a bit more circumspect when he talks to CNBC’s producers.

But the central spirit of Gartman’s not quite $10 call was still intact, with Gartman saying simply that the era of oil is over. At one point, Gartman went so far as to compare crude oil to whale oil, which became obsolete following the advent of crude in the early 20th century.  

In discussing the “end of oil,” Gartman referenced news from Lockheed Martin earlier this month that the aerospace giant has made a technological breakthrough in developing a power source based on nuclear fusion. And while Business Insider’s Jessica Orwig reported that some in the scientific community are skeptical of this breakthrough, Gartman sees the potential in this breakthrough as being something of a death knell for oil. 

Gartman also referenced other factors weighing on oil prices, namely a supply glut and a market that is contango.

A market is said to be in contango when the futures contract for a commodity is more than what the expected price will be in the future.

So basically, if I pay $80 for a futures contract for a barrel of oil I want to get next year, but if expectations are that the spot price of a barrel of oil will be $60 in a year, the futures contract — again, assuming the spot price doesn’t move — will have to fall.

This is all a bit oversimplified. 

But Gartman’s central point is that things look absolutely terrible for crude oil, and while Gartman was reticent to commit to his $10 a barrel call, he added that “it doesn’t really matter” where oil prices go exactly, except that they are definitely going lower.

Gartman’s comments come after what was an ugly morning for oil, which fell below $80 a barrel for the first time since June 2012.

The tumble in oil came after analysts at Goldman Sachs cut their price target on WTI crude oil to $70 by the second quarter of next year.

In his note, Goldman Sachs analyst Jeff Currie wrote:

“We are lowering our oil price forecast to reflect the required slowdown in US production growth: our WTI crude oil forecast is $75/bbl for 1Q15 and 2H15 (from $90/bbl previously). Given our unchanged WTI-Brent spread forecast of $10/bbl, our Brent forecast is now $85/bbl ($100/bbl previously)… Our 2016 and long-term forecasts are now $80/bbl WTI, $90/bbl Brent. Uncertainty around the required price to slow down US shale production growth is a key risk to our price forecast.”

After Monday’s early sell off, oil futures were trading just below $81 a barrel near 5:30 p.m. ET.

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Article Source: Gartman, D. (2014). GARTMAN: We’re witnessing the end of the oil era. Business Insider. Retrieved from http://www.businessinsider.com/dennis-gartman-sees-oil-collapsing-2014-10

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Shale Boom Shines Light on Natural-Gas Liquids

By Nicole Friedman

An unsung byproduct of oil and natural-gas production is getting more attention from hedge funds and investors as they seek new ways to bet on the U.S. shale boom.

Natural-gas liquids, which include ethane, propane, butane, isobutane and natural gasoline, are separated out from crude oil and natural gas. They are known as the fuels in propane grills and butane lighters and as feedstocks to make plastics and chemicals. Until recently, they attracted little investor consideration.

But that has begun to change amid a swift increase in both supply and demand. U.S. production of NGLs topped 3 million barrels a day this year. Production volume has grown 60% in the past decade to become on par with the amount of oil produced in Texas or Iraq. Petrochemical manufacturers world-wide are expanding to take advantage of the new supply.

Investors can act as middlemen between producers and consumers of NGLs, particularly as banks are backing away from commodities trading. They also are more easily able to make bets on prices as trading volumes grow. Many investors are using NGLs as a way to bet on the North American energy boom while sidestepping the pipeline bottlenecks and export restrictions that have held down most U.S. energy prices.

It helps that unlike oil and natural gas, NGLs can easily be exported overseas, where prices are higher. Connections to the global market make it less likely NGLs will meet the same fate as natural gas, which saw prices crash when production swamped U.S. demand. NGLs fetch an average of $9.94 a million British thermal units, more than double the price of natural gas.

“Anyone you can think of in the energy space is there,” said Greg Bower, a broker at Blue Ocean Brokerage. “There’s new people in it all the time.”

Still, the drop in oil and natural-gas prices over the past few months has taken its toll, with the price of propane futures recently hitting a 14-month low on the New York Mercantile Exchange. Even so, that market has more than tripled in size since the start of May to a record $2.8 billion.

At least two new hedge funds are focused on trading NGLs, people familiar with the matter say. KC Alpha Fund I launched in January with $850,000 and a plan to focus on trading NGLs, along with other energy products, according to people familiar with the fund.

Norman MacDonald, portfolio manager at Invesco Ltd. , owns shares in oil-and-gas producers that generate a large amount of NGLs, including Range Resources Corp.

“I don’t think the market really truly appreciates just what [NGLs] can do” for oil-and-gas producers, added Mr. MacDonald, who manages the $1.4 billion Invesco Energy Fund.

NGL trading is still sparser and less transparent than in the vast markets for crude oil or natural gas. However, growing volumes are making it easier to get in and out of positions in the market, building NGLs’ appeal to large investors. Futures trading volumes in these markets rose 18% in the first six months of 2014 compared with the same period last year, according to Intercontinental Exchange Inc.

“You’re seeing global macro hedge funds step in,” said Sid Perkins, managing partner at Houston brokerage Ion Energy Group, which is owned by OTC Global Holdings. “They’ve been watching it for the last few years, and were waiting until the market got to a point where it was liquid enough for them to come in and trade.”

Another problem for traders is that NGL markets are typically not that volatile, so there are fewer opportunities to profit from price moves. Propane, the largest NGL market, saw prices spike in February as high demand from farmers, home-heating and overseas buyers all stretched supplies during a frigid winter. But stockpiles rebuilt rapidly this summer, reducing expectations for a similar squeeze this year.

The lack of transparency in the market is keeping OppenheimerFunds Inc. from trading NGLs, said George Zivic, portfolio manager for the $420 million Oppenheimer Commodity Strategy Total Return Fund.

“Unless you’re privy to what [producers and manufacturers] are doing on a month-to-month basis, you can really get squeezed,” Mr. Zivic said.

Others see potential for prices to rise, potentially drawing in more investors. Enterprise Products Partners LP plans to build a terminal by the third quarter of 2016 to export up to 240,000 barrels a day of ethane from the Gulf Coast. When Enterprise opened a propane export facility in 2013, trading volume expanded as traders prepared for greater access to overseas markets, said Michael Angell, markets editor for the Oil Price Information Service, which tracks spot NGL prices.

“I’m actually beginning to move some of my businesses more into the NGL side because of the demand,” said Steve Reese, chief executive of Reese Energy Consulting and Reese Energy Training in Edmond, Okla., who said he is planning to start a propane business. “The trading activity has definitely increased.”

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Article Source; Friedman, N. (2014). Shale Boom Shines Light on Natural-Gas Liquids. The Wallstreet Journal. Retrieved from http://online.wsj.com/articles/shale-boom-shines-light-on-natural-gas-liquids-1414613891

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Mineral rights, royalties flowing to Western Pa. charities

By Katelyn Ferral

Some universities and charities don’t need a gas well in their backyards to be enriched by the Marcellus shale frenzy.

Contributions of mineral rights and royalty checks are flowing in from landowners who are sitting on fortunes because of the gas boom.

Penn State University said it has received five to 10 gifts of royalty income or bonuses from gas drilling. West Virginia University has received about 24 donations of oil and mineral rights. And the University of Pittsburgh is weighing its first such donation.

Charitable donations of complex assets, such as collectibles, real estate, royalties and mineral rights, are not uncommon. When these assets appreciate significantly, their owners may consider donating them, not just to share the wealth and be altruistic but for tax advantages.

Researchers who track philanthropy say there are no statistics that measure gifts of mineral rights and royalties, but Michael Hoffman, a charitable planning consultant with Fidelity Charitable based in Pittsburgh, said there is growing interest from potential donors.

“Definitely, there’s a lot of discussion. We see a definite increase of inquiries in that area,” Hoffman said.

Penn State said it received its first such donation in 2008, which tracks the boom in the state’s gas drilling industry. Although the university’s mineral rights and royalties donations have dwindled since 2012, when gas prices bottomed out, the class of charitable gifts under which they fall (noncash complex assets) has been growing.

The number of people reporting noncash donations to the Internal Revenue Service increased 21 percent from 2006 to 2011, the most recent year available. At Fidelity Charitable, one of the biggest operators of donor-advised charitable funds, noncash complex assets accounted for 17 percent of the gifts it handled in 2013, up from 3 percent in 2009, spokeswoman Kim Judecki said.

Universities in Texas and Oklahoma, situated amid drilling for decades, have benefited from mineral and oil rights donations for years. Now, gas drilling in Appalachia is bringing this potential windfall to Pennsylvania schools.

“This is an opportunity for Pennsylvania colleges to have kind of an unusual revenue stream,” said Betsy Suppes, a geologist based in Johnstown, who has consulted nonprofits and universities on mineral rights gifts since 2002.

Receiving mineral rights as a donation can be more burden than benefit for some nonprofits because they require a lengthy and costly vetting process before they can be accepted. But institutions and groups say they are expecting such gifts to increase with growing gas production in the Marcellus and Utica shales.

“We anticipate if the price of gas goes back up, there will be more drilling and also more gifts,” said Mike Dagenhart, assistant vice president in the Office of Gift Planning at Penn State.

Penn State is trying to make the process easy for potential donors. The university has staff that is dedicated to vetting such gifts and advising people who want to donate. It is petitioning the IRS to streamline forms to make it easier for donors to assign a percentage of their royalty interest to a charity or university, Dagenhart said.

Penn State officials are working with Tom Hoffman, an Erie attorney who advises clients on royalty and land rights gifts, to coordinate with charities and gas companies on mineral rights donations.

Hoffman advises clients on how to donate mineral rights and royalties so they’re taxed at the lowest rate. Donating can help lower the overall value on an estate that’s taxed when it is inherited. He is spearheading an initiative to ask landowners with gas money to consider donating a percentage to charities and universities.

“We’re trying to help charities create the thought that if you have shale energy you should leave a legacy so that when all the energy is out of the ground there’s a legacy for future generations,” Hoffman said.

The University of Pittsburgh has not received a mineral rights gift yet, but one such gift is currently being vetted with a donor, said Albert Novak, vice chancellor for Institutional Advancement.

“We’re a long way from getting that done, there’s just so much due diligence around a gift,” he said.

Due diligence includes such things as verifying mineral rights leases, reviewing land records and performing environmental assessments.

But how to receive and benefit from such gifts are new to institutions in Pennsylvania — and donors, too, Novak said.

“I suspect as more and more citizens, especially in the Marcellus shale area, come to benefit from these types of earnings that that’s going to factor in other philanthropic plans too,” Novak said.

Many universities and nonprofits say they don’t have the staff or money to thoroughly investigate the land rights and want to avoid any potential controversy associated with the shale drilling industry.

“Oftentimes, we want to sell that as soon as possible,” said Dan Clare, director of communications at Disabled American Veterans (DAV), a national charity that helps veterans receive their benefits and has an office in Pittsburgh. The group has received mineral rights in the past but no longer holds any and is not seeking them.

Both the Washington County Community Foundation and Community Foundation of Greene County, based in counties that have seen an influx of gas drilling, say they’ve received or are promised gifts from wills either from mineral rights or royalties.

“The big change is people making charitable contribution to us, and we know that their revenue has been increased because of the industry,” said Betsie Trew, president of the Washington County Community Foundation.

Both groups say they are seeing the most donations coming from people who have lived in the counties for years, not from big gas companies.

Officials from the universities, nonprofits and foundations said donors nearly always want to remain anonymous.

At the Community Foundation of Greene County, Executive Director Bettie Stammerjohn has her staff looking into how the group should approach mineral land rights should they be donated. The group has received royalty payments, and some donors have promised their gas money once it’s paid out, she said.

“We’re starting to see a little bit more of that in Greene County,” Stammerjohn said. “We saw some initially and that kind of dried up, and I think that was from the initial signing bonuses. It took a while for some of the wealth to come into play.”

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Article Source: Ferral, K. (2014). Mineral rights, royalties flowing to Western Pa. charities. Triblive.com. Retrieved from http://triblive.com/business/headlines/7003166-74/rights-mineral-gas#axzz3I0zVPWXw

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