Natural gas will continue to displace coal for power generation, and represents the best opportunity for the natural gas industry to boost domestic demand, Exxon Mobil CEO Rex Tillerson said Wednesday.Speaking after the company’s annual shareholders meeting in Dallas, Tillerson predicted that “as additional electricity capacity has to be built out, there’s going to be a substantial increase in natural gas-fired power generation,” both when replacing older coal-fired power plants and when used as a complement to wind power’s fluctuating output.
Tillerson addressed the demand issue in relation to the Irving-based company’s acquisition of Fort Worth-based XTO Energy two years ago. While Exxon expected natural gas prices to weaken from their levels at the time of the purchase, the weak economy has further depressed prices by stalling demand growth, he said.During the shareholder’s meeting, Tillerson also repeated Exxon’s interest in exporting natural gas from North America, where a supply glut has produced the lowest prices in a decade. He said the company continues to study the prospects of a Gulf Coast terminal and a western Canada terminal to ship liquefied natural gas to overseas markets, where the fuel draws a considerably higher price than in North America.
In other actions at the annual meeting, shareholders rejected two environmental proposals, one calling for further disclosure of risks involved with hydraulic fracturing and another for setting goals for reduction in greenhouse gas emissions.
Here's a different angle to the continuing controversy of groundwater contamination related to oil and gas drilling. Rather than tying pollution to hydraulic fracturing or poorly constructed wells, three families in Washington County, southwest of Pittsburgh, on Friday sued Fort Worth-based Range Resources alleging that hazardous chemicals leaked from a wastewater pit at a company operation near their properties and contaminated their water. The suit also claims Range withheld complete test results from the landowners. Range spokesman Matt Pitzarella told the Pittsburgh Post-Gazette the company "has repeatedly proven that our operations have had no adverse impacts in this instance." According to the newspaper, in 2010 the Pennsylvania Department of Environmental Protection cited Range for "failing to control/dispose of production fluids properly," and a month later Range drained the pit, replaced the pit liner and excavated contaminated soil. Range has not been fined for that violation."
A separate report in the Pittsburgh Tribune-Review says the state DEP "fined Range $18,025 in April for brine and drilling fluid leaks at nearby properties in 2010 and 2011. They came from a pipeline that connects to the impoundment referenced in the lawsuit. Other claims of spills and leaks in the lawsuit could not immediately be verified." That report also says DEP officials declined to comment on the lawsuit, "saying they need time to review the allegations in the 182-page suit. At least two of the families previously tangled with the department about its investigations into their allegations and decisions not to fault Range. State officials said they fully investigated."
That report is here. A copy of the suit is here. And the industry site Energy In Depth had this 2011 post that touched on elements of the case. (Scroll down to the subhead "Wrong on Amwell Township.")
The city of Dallas continues to work on its drilling ordinance, although there is relatively little activity in that city given the Barnett Shale's less-favorable quality east of Tarrant County. One issue involves how close to flood-control levees to allow drilling. The U.S. Army Corps of Engineers bans drilling closer than 3,000 feet to levees on land it controls, the Dallas Morning News says, but proposed rules for the city set no such limits. The story is here.
Weatherford state judge Trey Loftin's campaign mailers make reference to the impact his decisions in a water contamination case have had on the U.S. Environmental Protection Agency, and judicial ethics experts question whether that's appropriate when parts of the case are still before Loftin. One Houston law professor says he thinks the State Commission on Judicial Conduct should investigate. The story, which stems from Fort Worth-based Range Resources' dispute with the EPA and two Parker County landowners, is here.
It had to happen. Now even the Oklahoma City Thunder NBA franchise has been dragged into the continuing controversies at Chesapeake Energy over CEO Aubrey McClendon's various personal interests. Seems the team has about $8 million so far this year in Thunder-related spending, including tickets and sponsorships, about twice what it spent last year. Bloomberg News has the story here.
The Federal Reserve Bank of Dallas takes a look at South Texas' Eagle Ford Shale in its latest issue of Southwest Economy. Economists at the Fed say the 23-county area has added more than 15,000 jobs since Jan. 1, 2010, and also has seen wages rise. The study is here.
Fort Worth-based Quicksilver Resources said Wednesday its bankers reaffirmed the natural gas producer's global borrowing base on the company's combined credit agreements at $1.1 billion. The company had $679 million available under that facility as of March 31, based on its oil and gas reserves as of Dec. 31. JPMorgan Chase Bank leads the group of 20 lenders.
Although the announcement came after the close of regular trading, Quicksilver's shares (ticker: KWK) were up nearly 3 percent Wednesday. However, it had given back much of that gain in after-hours trading. Quicksilver had about $2 billion in long-term debt as of March 31 and earlier this month warned that 2012 production would be short of its previous estimates, although similar to 2011 output.