Barnett Shale

Railroad Commission adopts stricter well construction rules

The Texas Railroad Commission today adopted new well construction rules that specify casing, cementing and other standards aimed at ensuring that hydraulic fracturing operations do not impact groundwater or injection wells. When cases of water contamination near oil and gas operations have been investigated,  the cause is typically found to be poor casing or cementing that allowed drilling fluids, oil or natural gas to escape and migrate nearby. The new rules drew support from observers as varied as the Texas Oil & Gas Association and the Sierra Club. They go into effect Jan. 1, 2014.

One measure mandates a minimum thickness of the cement sheath around casing, the steel pipe lining a well bore. Cement used to set surface casing in place must be at least 0.75-inch thick, and cement on subsequent casing must be at least a half-inch thick. Cyrus Reed of the Texas Chapter of the Sierra Club said his group would have preferred more cement on lower strings, but said it's still good to set a specific standard. "We're generally pleased with the new rules," Reed said. "It was a pretty good effort."

Deb Hastings, executive vice president of the Texas Oil & Gas Association, in a prepared statement said "the new rule enhances transparency, reflects advances in technology and is technologically feasible for operators to implement."

Besides the cementing standards, other measures require:

• pressure testing and monitoring on wells that are hydraulically fractured;
• verification of casing integrity;
• additional testing when a well taps a formation less than 1,000 feet below useable groundwater;
• use of air or water-based drilling fluid until surface casing is set and cemented;
• updated requirements for well control measures and blowout preventers;
• additional cementing when an injection or disposal well is within a quarter-mile

Officially, the rules are amendments to the Commission's Statewide Rule 13 (Casing, Cementing, Drilling, Well Control and Completion Requirements). They also implement legislation from the 2011 Legislature that transferred to the Railroad Commission responsibility for setting the required depth of surface casing. That job, aimed at protecting drinking water aquifers, was previously handled by the Texas Commission on Environmental Quality.

-- Jim Fuquay

FracFocus falls short, Harvard study says

FracFocus, a website that posts information on hydraulic fracturing materials used in new oil and gas wells around the nation, needs more federal oversight, a new study out of the Harvard Law School says. It faults the site, a project of state regulators and agencies, for inadequate disclosure and being difficult to search. Bloomberg News has a report here.

-- Jim Fuquay

Gas exports not favored by many consumers, UT poll finds

More American think the United States should keep natural gas production for domestic use rather than export it, according to the latest University of Texas Energy Poll. The online survey, conducted March 11-20, found that 39 percent favored keeping U.S. gas production, versus 28 percent that supported exports. The rest were neutral.

Interestingly, it's not much of a partisan issue: 36 percent of self-described Democrats and 38 percent of self-described Republicans oppose exports, and an even closer 30 percent of Democrafts and 29 percent of Republicans favor exports. Independents were most likely to oppose exports, by 44 percent. The  big split was by gender. A third of men favored exports, while only 22 percent of women did.

Partisan differences on hydraulic fracturing were more defined, even as support for the production technique declined overall, from 48 percent a year ago to 45 percent in the new poll. Forty-one percent opposing fracking. But while 71 percent of Republicans favor fracking and 20 percent oppose it, that flips with Democrats as 60 percent oppose fracking and just 22 percent support it.

The poll's results are here.

-- Jim Fuquay

 

FTS lost $29.8 million in 2012

FTS International, formerly Frac Tech, swung from a hefty profit in 2011 to a loss of $29.8 million as revenues slid 18 percent. The company said it kept its 34 fleets of hydraulic fracturing equipment busy all year, doing more fracturing stages even though the number of wells fractured declined slightly. But the revenue from each of those stages fell from $136,335 to $101,905, the lowest since 2009. The Fort Worth-based company replaced its CEO in November.

On Monday, The Wall Street Journal reported that Chesapeake Energy, FTS' biggest customer and owner of about 30 percent of the company, was no longer considering selling that stake. Citing unnamed sources, the newspaper said Chesapeake's stake, which it had estimated at about $2 billion earlier, was worth less than $1 billion under common evaluation methods using its most recent earnings before taxes, interest, depreciation and amortization.

-- Jim Fuquay

Pennsylvania contamination case to be unsealed

A Pennsylvania ruled the settlement of a water contamination case between drillers, including Fort Worth-based Range Resources, and two homeowners should be unsealed. According to a Bloomberg News report, "Chris and Stephanie Hallowich, told National Geographic magazine in 2010 that their water was polluted by the wells, pipelines, processing operations and truck traffic that came into the rural area where they had built their home. They also said they suffered burning eyes, sore throats and other symptoms when gas was released into the air."

Range spokesman Matt Pitzarella said the company, which had opposed the unsealing, is fine with it now. In an e-mail, he told Bloomberg that unsealed documents "should provide the public with even greater clarity that shale gas is being developed safely and responsibly." The National Geographic story, posted online on Oct. 17, 2010, recounts the Hallowich family's  experience buying 10 acres in southwestern Pennsylvania in 2007, then finding themselves in the middle of natural gas development.  "From a nuisance perspective, I will tell you they have a legitimate concern," the online report quotes Pitzarella as saying of the Hallowich family of four. Range drilled a well "that produces gas beneath the Hallowich site," the report says, and the "company and others say the bulk of their operations—the well sites themselves—are short-term disruptions and that the land is restored, as the state of Pennsylvania requires, within nine months after drilling is complete." It says there are unresolved disputes over water quality from a well on the family's property, which was drilled after Range commenced its own drilling operations.

Bloomberg News has a report on the judge's ruling here.

-- Jim Fuquay

Duke Power CEO says fracking is transforming utilities, cutting CO2

James Rogers, the longtime chairman of North Carolina-based Duke Power, said environmentalists should make their peace with natural gas and hydraulic fracturing because of its contributions to dramatic cuts in carbon dioxide emissions from power generation. Rogers said the substitution of natural gas-fired generation for coal-fired power plants has lowered U.S. CO2 emissions to 1990 levels and to 1960's levels on a per-capita basis. "Natural gas is transforming our industry," Rogers told an audience at the IHS CeraWeek energy conference in Houston. Natural gas production can be done responsibly and its contribution to lower carbon and other emissions outweigh concerns about natural gas' possible impacts on water and air in areas where it is produced.

-- Jim Fuquay

Anti-fracking rally in Austin planned for Monday

A group holding an anti-fracking summit in Dallas this weekend also plans a rally in Austin on Monday. Organizers say they hope residents "from Texas and across the country" will meet at the state capitol "to end dangerous oil & gas extraction, to require water protections & accountability of industry and respect for local control." It's set for noon, March 4, at 11th Street and Congress Avenue. For more information, click here.

-- Jim Fuquay

The Economist launches online fracking debate

British business magazine The Economist on Tuesday launched an online debate on the costs and benefits of hydraulic fracturing. It includes a statement of position from a supporter -- Amy Myers Jaffe, executive director for energy and sustainability at the University of California at Davis -- and a critic -- Sierra Club executive director Michael Brune. There's a poll and  plenty of space for reader comments. It's sponsored by Statoil, the Norwegian energy company. A link to the site is here.

-- Jim Fuquay

Apache wants to fuel frac pumps with natural gas

Apache Corp. says it can cut its hydraulic fracturing fuel costs by 70 percent by using field gas instead of diesel to power the engines driving the big pumps, and it told oilfield service giants Halliburton and Schlumberger to figure out a way to do it. They did, Apache's Mike Bahorich told the Oil & Gas Journal.  "In 2012, the industry will have used more than 700 million gallons of diesel to pump sand and water during fracture stimulation. That’s $2.38 billion spent on diesel at a recent average of $3.40/gallon," the magazine said. The report says the three companies have tested a dual-fuel kit successfully several times. The story is here. Halliburton put out a news release on the project, and a link is here.

In December, we carried a report about using liquefied natural gas to fuel frac pumps on a job in the Eagle Ford Shale. That item can be found here.

-- Jim Fuquay

Shale critic Deborah Rogers named to advisory board

Fort Worth resident Deborah Rogers, who has been critical of natural gas drilling and the economics of shale gas production, has been named to a 21-member advisory committee to the Department of Interior. The group will "guide and oversee implementation of the United States Extractive Industries Transparency Initiative," which DOI describes on its website as "a voluntary, global effort designed to increase transparency, strengthen the accountability of natural resource revenue reporting and build public trust for the governance of these activities." DOI said President Barack Obama committed the U.S. to the international effort in 2011. Advisory committee members include representatives from environmental organizations, academia and industry.

Rogers, in a prepared release, called the committee's work "a tremendous opportunity to address financial issues with respect to natural resource extraction in this country." She was a 2008-2011 member of an advisory council to the Dallas Federal Reserve Bank, serves on the committee that advised the Texas Commission on Environmental Quality as it located air monitors in the Barnett Shale, and is a board member of Earthworks' Oil and Gas Accountability Project, according to the release. The release said she will appear in the upcoming documentary "Gasland 2"

In 2011 she founded Energy Policy Forum, "a consultancy and educational forum dedicated to policy and financial issues regarding shale gas and renewable energy." In an October blog post on her site, Rogers argued that shale gas is a money-loser driven by Wall Street. "There is no doubt that the investment banking community has been the driving force behind shale production since the economic downturn. Shale should have unravelled long before now. But Wall Street saw an opportunity to generate massive fees and so shale was taken to new heights... ." In 2009 she paid for air quality tests at her Westworth Village farm that showed elevated levels of several chemical compounds associated with natural gas production and flaring. The same year, which saw a sharp decline in the price of natural gas as supply surged, she concluded that shale gas wells "are depleting so quickly that the operators are in an expensive game of 'catch-up,' " according to an e-mail quoted in a New York Times report.