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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.

To see more articles like this please visit Transfac.com

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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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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EV Energy Partners wants to sell off Utica assets in January

By Bob Downing

Texas-based EV Energy Partners is preparing to sell off its Utica shale assets in eastern Ohio in 2015, along with its interest in processing facilities.

There has been “enough drilling activity and consistent result to de-risk our assets and acreage,” said John Walker, the company’s executive chairman.

The value of the company’s Utica shale leases have grown significantly, he said in an earnings call with analysts and the media earlier this week.

The company intends to kick off a serious sale effort in January to sell off its joint venture acreage with Chesapeake Energy and Total SA in 10 Ohio counties, plus other leases held by the company, he said.

The company wants to sell about 120,000 acres within the 660,000-acre joint venture. That includes about 55,000 acres in Carroll County.

It also intends to seek a buyer for its 21 percent interest in Utica East Ohio that operates natural gas processing plants in Columbiana and Carroll counties and a liquids-separating plant in Harrison County.

Last month, EV Energy Partners sold its 9 percent interest in Ohio’s Cardinal Gas Services to two South Korean companies for $162 million.

EV Energy Partners, a publicly traded company that is part of privately held EnerVest Ltd., has said for some time that it intends to sell off Utica assets to monetize the holdings for its institutional investors. The company has been marketing about 335,000 acres in Ohio since 2013.

The EnerVest companies are one of Ohio’s largest oil and gas companies with 8,700 vertical wells in Ohio. They were the largest producer from traditional gas and oil wells in Ohio and generated 25 percent of Ohio’s natural gas prior to the Utica shale boom. They control about 900,000 acres in Ohio.

In other news, EV Energy Partners said production could begin in December on a much-watched Utica oil well in Tuscarawas County.

The company drilled the experimental well with eight other industry partners, Walker said.

“This is a test of what could be EnerVest and EVEP’s most valuable asset in the Utica,” he said.

Getting oil from the Utica shale has proven to be difficult for drillers, to date.

That well near Uhrichsville is being hydraulically fractured or fracked with liquid butane and mineral oil. That should be completed in two weeks.

“We’re excited but cautious as we are bringing new technology to bear in this process,” said company president and CEO Mark Houser. “We are in the middle of the completion operations and have completed five of the 20 (fracking) stages so far.”

A full review of the well will be offered in the next few months, he said.

The oil window covers all or parts of Portage, Stark, Trumbull, Tuscarawas, Holmes, Coshocton, Guernsey, Muskingum, Perry, Morgan, Athens, Vinton and Hocking counties.

EV Energy Partners is also getting about 80 barrels of oil per day plus natural gas from four Stark County horizontal wells that were drilled into the shallow Clinton sandstone. A fifth well is not yet in production.

Drilling each well costs about $2.6 million. Each well is projected to produce about 150,000 barrels of oil equivalents. The wells could generate 20 percent return on its investment at $80 per barrel for crude oil.

The company said the East Canton oil field where more than 4,000 wells have been drilled since 1947 has an estimated 1.5 billion barrels of oil and only 7 percent has been recovered.

The field in Stark, Carroll and Tuscarawas counties covers about 214,000 acres and EnerVest companies control half of it, the company said.

It says it has identified 70 potential drilling sites and that number could grow if the wells are successful, Houser said.

The company is “very pleased” with the initial Clinton results, he said.

To see more articles like this please visit Transfac.com

Article Source: Downing, B. (2014). EV Energy Partners wants to sell off Utica assets in January. Ohio.com. Retrieved from http://www.ohio.com/blogs/drilling/ohio-utica-shale-1.291290/ev-energy-partners-wants-to-sell-off-utica-assets-in-january-1.540174

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