Barnett Shale

It didn’t take long before Craig Dickman heard something interesting about natural gas in the transportation business here at the CeraWeek energy conference, which kicked off Monday. Dickman’s company, Breakthrough Fuel, helps companies set up fleets for natural gas and other alternative fuels. What got his attention was a description of the Chinese trucking market by Xizhou Zhou, director of China Energy for IHS, the sponsor of CeraWeek. Just four or five years ago, Zhou told his audience of energy executives from around the world, China had virtually zero heavy-duty trucks running on natural gas. Now, he said, there are perhaps as many as 70,000 big rigs running on natural gas, but liquefied natural gas, not the compressed natural gas more commonly used in the United States by operators like the city buses operated by The T, Fort Worth’s local transit operation.

LNG is so much cheaper in China than diesel, Zhou said, that truckers can recover the added cost of using the fuel in less than a year. The transition is aided by between 300 and 400 LNG fueling stations built to supply those trucks. “I think people here will be underestimating, not overestimating, gas in transportation,” Dickman said. Use in the long-haul market has been limited by the lack of a large engine those vehicles use, he said, but a 12-liter version from Cummins expected by August and being adopted by manufacturers should be a big boost. PACCAR, which produces Peterbilt and Kenworth brand trucks at its Denton plant, announced last year that it would use the engine.

For more, see Tuesday's Star-Telegram, and follow Jim Fuquay's continuing coverage of CeraWeek.

 

Average Barnett Shale well likely to have lower production than many producers expected, new study says

Productivity in the Barnett Shale varies widely across the big natural gas field, where an average horizontal well can be expected to produce about 1.44 billion cubic feet of gas over its life, according to preliminary results of a comprehensive study by the Bureau of Economic Geology at the University of Texas. Wells in the richest portions of the field can top that and be profitable even at relatively low prices, while those in the poorest areas likely can't make money even at record high gas prices. Some results of the study could be released publicly as early as this month or in March, said Scott Tinker, the bureau's director.

The bureau looked at more than 16,000 Barnett wells drilled through June 2011 to make its estimates. Tinker told the Star-Telegram that if no more wells were drilled in the North Texas field, they would ultimately produce between 22 and 23 trillion cubic feet. But he expects the field's total production to be considerably more than that. "You'll see at least three times that before the field is put to bed, and possibly more than that," he said. The 1.44 bcf figure, called the estimate ultimate recovery, or EUR, is considerably less than the 2 bcf to 3 bcf EUR that many producers have historically estimated. But representatives of the field's two largest producers, Devon Energy and Chesapeake Energy, told the newspaper they still expect their Barnett wells to live up to the companies' forecasts.

For a complete report, see today's Star-Telegram. A link is here.

-- Jim Fuquay

Another Barnett Shale monitor goes online at TCEQ

The latest air monitor in the Barnett Shale to start reporting its results on the website of the Texas Commission on Environmental Quality is in Rhome, in southern Wise County. It's the 11th active automated gas chromatograph (auto GC) monitor in North Texas. To see its exact locations and data, look for "Rhome Seven Hills Road" on the TCEQ's auto GC page.

The Star-Telegram on Sunday carried an extensive report on efforts by the TCEQ and Environmental Protection Agency to keep track of emissions in the Barnett Shale via a network of dozens of monitors. A link to the report is 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.

 

 

 

EPA releases hydraulic fracturing water study framework

The Environmental Protection Agency on Friday released a report describing how it will pursue its study of the impact of hydraulic fracturing on drinking water supplies. "The EPA has designed the scope of the research around five stages of the hydraulic fracturing water cycle," it said. The five areas being studied for their impact on ground and surface sources of drinking water are: large water withdrawals; spills of hydraulic fracturing fluids; injection wells and the fracturing process; spills of flowback and produced water; and inadequate treatment of wastewater. It will examine each issue using "existing data, scenario evaluations, laboratory studies, toxicity assessments and case studies." 

The agency began its research last year. It's expected to complete it in 2014. As of September, it said it had information on fracturing chemicals and practices on 24,925 wells fractured between September 2009 and October 2010. It will also take data from FracFocus, an intergovernmental disclosure site of fracturing fluids supported by energy companies. "Two rounds of sampling at five case study locations in Colorado, North Dakota, Pennsylvania and Texas have been completed," and water samples "have been collected from over 70 domestic water wells, 15 monitoring wells and 13 surface water sources," a summary of the progress report said.

-- Jim Fuquay

Two views on what's killing coal

The good folks at the Sierra Club issued a news release Thursday trumpeting the decline of coal in the past year and attributing it to "an unprecedented coalition including Sierra Club and more than a hundred local, regional and national organizations." There are some interesting numbers, but as far as what's driving the change, the Energy Information Administration at the U.S. DOE, and National Public Radio, and the San Francisco Chronicle, and The Wall Street Journal, and the Houston Chronicle, with a more nuanced version, offer a different interpretation. But their answers basically come down to two words: natural gas. Make that three words: cheap natural gas.

A link to the EIA's report is here. NPR's print version is here. The San Francisco Chronicle's story is here, and the Houston Chronicle's report is here. The Wall Street Journal's pay wall will likely catch nonsubscribers, but the link is here.

-- Jim Fuquay

IHS says 576,000 Texas jobs tied to shale

 Texas has 576,000 jobs tied to unconventional oil and gas development and its economic ripples, IHS Global Insight says in a report today. It approaches half the nearly 1.3 million jobs nationwide associated with unconventionals in 16 producing states, IHS said. It's the group's second study of the economic impact of shale development and the first do to a state-by-state count.

"No other state approaches Texas in the number of jobs tied to unconventional oil and gas or the economic revenue contributions from the activity. In addition to jobs directly related to oil and gas production, the state's professional, scientific and technical services; construction; and oil and gas extraction industries are among the largest source of direct and supply chain (indirect) jobs," the consultant's release on the study said.

It said unconventional energy activity "will also account for more than $101 billion in value added contributions to Texas gross state product (GSP) in 2012, a figure that will increase to $169 billion in 2020. The study estimates that unconventional oil and gas activity in Texas will generate more than $22 billion in federal, state and local revenues in 2012, or more than $790 billion cumulatively through 2035."

"The unconventional oil and gas revolution is having a bigger impact across the country, including in non-producing states, than is generally recognized," said Daniel Yergin, vice chairman of IHS and author of two highly-regarded histories of oil and gas development, mostly recently The Quest. 

The study said the top 10 producing states for unconventional oil and gas-related activity — Texas, North Dakota, California, Colorado, Oklahoma, Pennsylvania, Utah, Louisiana, Ohio, and Arkansas— "will contribute nearly 1.2 million jobs, almost $47 billion in government revenues, and approximately $178 billion in value added contributions to their state economies this year."

A link to the study is here.

-- Jim Fuquay