Tag Archives: Horn River News

Polish auditors slam government for slow pace of shale gas development

Its always interesting to read the progress other countries are making with shale gas development. In the case of Poland, their national auditing agency criticized the Polish government for the slow pace at which they are developing out the industry. Poland is in a unique situation whereby it great shale gas potential and currently depends on Russia for about 70% of its natural gas needs. In addition, Poland is building a LNG facility on their northeast coast to import natural gas for domestic consumption and potential transport to Ukraine – another Russian natural gas dependent.

Article: Polish auditors slam government for slow pace of shale gas development

 

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The geographic proliferation of shale gas and tight oil is inevitable

This article in the Globe & Mail is worth a quick read. Though the proliferation of technologies for shale gas and tight oil will spread around the world, it take more then just technology to make the process of extracting these resources work. Mainly, water. For example, China may have more shale gas then that found in all of the USA, but its in the dry arid eastern regions where water is scarce. But with time, this too is changing with the evolution of new technologies that recover and recycle 99% of the fluids used in the fracking process. Time will tell but history has shown that opportunities are created by providing solutions to problems.

The geographic proliferation of shale gas and tight oil is inevitable

Globe & Mail (Source) This question keeps getting repeated: “Will shale gas and tight oil technologies proliferate beyond North America?”

Of course they will. There is no precedent for game-changing innovations in any business to respect territorial boundaries. So some remaining questions are, under what conditions will shale gas and tight oil be developed in other countries, how long will it take, and where first?

With respect to necessary conditions, it seems Texas has the right stuff. At a major conference in Dallas last week, a few thousand exuberant U.S. oil and gas executives were gushing over recent production growth from unconventional resources. North Dakota’s Bakken seems like yesterday’s news as attention now shines on the productive oil potential of the legendary Texas Permian Basin.

The stock, U.S. oil man’s answer to what drives such domestic exploration frenzy is the American principle of landowners’ mineral rights – if you own the land on the surface you also have title to the oil and gas beneath your feet. This alignment of financial interests between private landowners and oil companies lubricates the wheels of capitalism like nowhere else. Ergo, the converse argument goes, we are unlikely to see meaningful shale gas or tight oil development in other parts of the world, where no such subsurface benefits accrue to the landowner. But there are flaws in this line of thinking.

Read more.

Canada’s Natural gas production is under threat if it can’t find new markets

This past Tuesday, Shell Canada declared an official launch to a liquefied natural gas (“LNG”) terminal project in Kitimat, B.C. The multi-billion-dollar plant would load and esimtated 1.2 billion cubic feet per day onto LNG tankers. The project partnership, gives shell a 40 per cent interest, and 20 per cent each to Korea Gas Corp., Mitsubishi Corp., and PetroChina Co. Ltd.

With the increased production in the US and the US becoming an exporter of natural gas, it is critical for Canada to find an alternative market for Canadian natuarl gas. The only way to do this is through export via a LNG export facility.

One potential problem is that Kitimat LNG is primarily owned by American companies where other interests and politics could come into play and its corporate backers (Apache Corp. EOG Reources etc) have delayed an investment decision that was expected for early this year. An Asian backed LNG project may have a better chance of success given the huge and growing demand for natural gas in Asia. Having your customers finance the facility and participate in the ownership has a different set of motivating factors to influence the investment decision.

The take-away here is that Canada is at a critical juncture in saving their natural gas industry, and growing it by tapping into the global LNG distribution network. Certainly a point highlighed by Shell Canada president Lorraine Mitchelmore who referred to not openting up Asian markets “We are at risk. You have to find a market for this product.”

Hopefully, Kitimat LNG, and Shell’s project are not too late. Shell is leading their partnership project and intends to start front-end engineering and design on the terminal in 2013. A final investment decision could come in 2015, with construction complete by the end of the decade.

Related articles:

Globe & Mail: Shell urges quick action to secure LNG markets for Kitimat terminal

Globe & Mail: PetroChina takes stake in Shell gas field in B.C.

AltaGas to buy Semco Energy for $1.14 billion

CALGARY – (Source) AltaGas Ltd said Wednesday it has agreed to buy privately held Continental Energy Systems LLC’s Semco Energy Inc unit for $1.14 billion, adding natural-gas distribution and storage assets in Michigan and Alaska to its Canadian distribution and gas-processing businesses.

AltaGas said in a release that the purchase comes as it aims to expand into the northern United States, and will boost its earnings and cash flow by more than 10 percent.

In the deal, the company will acquire a Michigan gas-distribution business with 286,000 customers as well as a regulated storage facility with 4.9 billion cubic feet of capacity and a half share in 12.8 bcf unregulated storage facility.

It said it will also operate Alaska’s gas distributor with 132,000 residential customers and 11 bcf of gas storage currently under construction.

To help pay for the purchase, AltaGas will issue 12.1 million subscription receipts for C$29 each to raise gross proceeds of C$350 million ($350 million).

If demand warrants, the issue’s underwriters, a group led by BMO Capital Markets, RBC Capital Markets and TD Securities, have the option to buy a further 1.8 million receipts, boosting gross proceeds to C$403 million.

The proceeds will be held in escrow until regulators approve the acquisition.

AltaGas shares were halted on the Toronto Stock Exchange prior to the announcement. They were last up 10 Canadian cents at C$30.38.

Calgary Herald: AltaGas to buy Semco Energy for $1.14 billion

Natural gas prices back near 10-year lows as production booms, supplies at record levels

NEW YORK — (Source) The price of natural gas dropped back near a 10-year low Wednesday after Exxon Mobil and other energy companies declined to cut production.

Exxon, America’s biggest natural gas producer, has led a push by major industry players into U.S. gas drilling over the past few years that has boosted production to the highest levels ever. Supplies in storage are well above average, and some experts estimate the nation has enough natural gas to meet its needs for a century.

Investors hoped that Exxon would follow smaller competitors like Chesapeake Energy and shut down some natural gas rigs. But when it released its quarterly and annual earnings results Tuesday, Exxon said it will not slow natural gas production.

“We remain bullish on the future of natural gas as an energy source,” Exxon investor relations chief David Rosenthal said.

The company has started to shift its focus to developing more oil in the U.S., but “we have not curtailed any gas production,” Rosenthal said.

On Wednesday the price of natural gas fell 10 cents, or 4 percent, to $2.40 per 1,000 cubic feet in New York. That follows an 8 percent drop on Tuesday. Natural hit a 10-year low on Jan. 19 at $2.32 per 1,000 cubic feet. The price rose briefly, after Chesapeake and other companies said they would cut natural gas production. It slid back as investors lost faith that the reductions would significantly impact supplies and mild winter weather persisted, keeping demand weak.

Washington Post: Natural gas prices back near 10-year lows as production booms, supplies at record levels

T. Boone Pickens Statement on President Obama’s State of the Union Address

“In his remarks in the State of the Union address, President Barack Obama again called for a national focus on developing a long-term energy plan for America. I agree we should use every available American resource. I applaud President Obama for highlighting natural gas and for calling on Congress to better promote its use.

“The expanded use of natural gas in America – in power generation and transportation – has enormous bipartisan support in the Congress and in the states. It is time to move from vague generalities to specifics on how we make this transition happen. I am confident that President Obama, as well as all the candidates for President, will lay out detailed plans on how they intend to achieve it.

“We cannot solve the OPEC dependency crisis without a focus on transportation. It is two-thirds of all oil use. Oil is not a major player in the production of electricity so creating more energy from natural gas, hydro, wind, solar or nuclear will not have a major impact on our dependence on OPEC for our oil. Finding a substitute for oil as a major transportation fuel will.

“We have massive amounts of natural gas reserves in the United States and we should immediately move to better utilize it. As a White House report on rebuilding our economy states, natural gas is the cleanest of the fossil fuels.

“America does not have a natural gas production problem – we are awash in natural gas. What we have is a demand problem and unless we bring both sides of the equation in balance, we will see this cleaner, cheaper, abundant, domestic resource exported in greater and greater quantities.

“I hope the President and the Congress will call on American ingenuity and creativity to utilize all of our domestic resources. America is blessed with having the cheapest energy in the world right now. It is that cheap energy – including coal, oil and natural gas – that will not only fuel our factories, cars, and trucks, but will fuel the resurgence of manufacturing in America, while creating solid, well-paying, and permanent jobs.”

Source: The Pickens’ Plan

Obama Pushes Natural-Gas Fracking to Create 600,000 U.S. Jobs

“We have a supply of natural gas that can last America nearly 100 years, and my administration will take every possible action to safely develop this energy,” President Barack Obama stated in tonight’s State of the Union address.

For years, the Horn River News has been supporting the the opportunity that North America’s shale gas reserves represent to provide a domestically produced, lower carbon energy source to the United States’ and Canada’s energy needs.

President Obama’s support for the shale gas industry was a little short on reality. The solution for addressing the concerns of fracking is not in having the drillers disclose the ingredients of their fracturing fluids but in passing law and enforcing the use of non-toxic fluids, and double lining the drill holes that pass through the water table.

Companies like GasFrac Energy Services Ltd. of Calgary – a company often referred to here – is leading the charge using non-toxic fracturing fluids and recovering nearly all the fluid. Double lining can be easily done (oil tankers use to be single hulled until oil spills forced the use of double hulled ships only). Technology can be employed to make the shale gas industry safer. And we should always look to employing the best technologies available to continually improve safety.

Obama Pushes Natural-Gas Fracking to Create 600,000 U.S. Jobs

Jan. 25 (Bloomberg) — President Barack Obama pushed drilling for gas in shale rock and support for cleaner energy sources to boost the economy in his final State of the Union address before facing U.S. voters in November.

Hydraulic fracturing, the process of injecting water, sand and chemicals underground to free gas trapped in rock, could create more than 600,000 jobs by the end of the decade, Obama said yesterday. The process, called fracking, is among a list of energy policies Obama said would fuel economic growth.

Full Article

The EPA’s Fracking Scare

The fracking controversy and debate continues. A recent article in The Wall Street Journal titled The EPA’s Fracking Scare summarizes some points and makes some important observations. The one they fail to mention is that the fracking technology has dramatically improved to address many of the concerns raised. As stated in the article: “By all means take threats to drinking water seriously. But we also need to be sure that regulators aren’t spreading needless fears so they can enhance their own power while pursuing an ideological agenda.”

The EPA’s Fracking Scare

Breaking down the facts in that Wyoming drinking water study.

(Source: The Wall Street Journal) The shale gas boom has been a rare bright spot in the U.S. economy, so much of the country let out a shudder two weeks ago when the Environmental Protection Agency issued a “draft” report that the drilling process of hydraulic fracturing may have contaminated ground water in Pavillion, Wyoming. The good news is that the study is neither definitive nor applicable to the rest of the country.

“When considered together with other lines of evidence, the data indicates likely impact to ground water that can be explained by hydraulic fracking,” said the EPA report, referring to the drilling process that blasts water and chemicals into shale rock to release oil and natural gas. The news caused elation among environmentalists and many in the media who want to shut down fracking.

More than one-third of all natural gas drilling now uses fracking, and that percentage is rising. If the EPA Wyoming study holds up under scrutiny, an industry that employs tens of thousands could be in peril.

But does it stand up? This is the first major study to have detected linkage between fracking and ground-water pollution, and the EPA draft hasn’t been peer reviewed by independent scientific analysts. Critics are already picking apart the study, which Wyoming Governor Matt Mead called “scientifically questionable.”

Full Story: The EPA’s Fracking Scare

Shale Gas in Europe: Revolution or Evolution?

For a couple years now, HRN has predicted that the same technology break throughs that resulted in the shale gas boom in the US, and Canada will have a profound impact on the geopolotics of Europe, and other parts of the world as it unlocks trillions of of cubic feet of natural gas from the shale in several part of the world.

In a report released today (Dec. 5th, 2011), by Ernst & Young titled “Shale gas in Europe: revolution or evolution” indicates that while shale gas has had a transformative impact on the outlook for the US energy market, the impact on the European market may be more evolutionary in nature.

John Avaldsnes, Ernst & Young’s EMEIA Oil & Gas Sector Leader is quoted as stating;

“While exploration is underway in several countries such as Austria, Germany, Hungary, Ireland, Poland, Sweden and the UK, no shale gas play has yet been brought into production in Europe, and only a fraction of this resource base is likely to ever prove commercial and be produced. In addition, over half of all estimated European shale gas reserves, which accounts for almost 10% of the global total, are concentrated in just two countries, Poland and France.

“There are some difficult challenges that the industry needs to address. There appears to be no consensus across Europe on shale gas development and government attitudes vary, in some cases markedly. Public opinion on the issue is similarly divided, adding to pressure on governments to take action to either support or restrict shale gas development with most countries adopting a ‘wait and see’ attitude.”

A copy of the report is available here;
“Shale Gas in Europe: revolution or evolution”

Shale Gas Reserves Could Reignite U.S. Economy

This story in Bloomberg is worth a read. The economic potential of shale gas to have a bigger economic impact is there. For the most part of its history, the Horn River News has focused on the potential of shale gas to reduce carbon emissions, and decrease US dependency on suppliers that are in conflict with with US interests.

Given the flat US economy we are seeing increasing interest opportunity in the shale gas industry as a positive contributor to the US economy. Here in British Columbia, Canada, hundreds of millions of dollars were invested into shale gas infrastructure, gas pipelines, roads, etc. All creating valuable jobs for BC.

Read: Shale Gas Reserves Could Reignite U.S. Economy

UPDATE: Business Week: Could the Shale Gas Industry Reignite the U.S. Economy?