Welcome to Williston, Welcome to Prosperity

Perhaps only The New York Times could reduce the energy/economic miracle of North Dakota’s oil and natural gas bonanza to something akin to a toothache. Columnist Gail Collins ventures forth from the concrete canyons of Manhattan to discover the hubbub on the high plains and doesn’t avoid raising a skeptical eyebrow.

To her credit, Collins was able to confirm what lots of people already know: Oil and natural gas extracted from the Bakken Shale formation through hydraulic fracturing is practically evaporating unemployment in North Dakota , which has a jobless rate considerably lower than New York:

Collins writes:

"If you did come, however, you would feel really, really wanted. Radio ads urged me to embark on a new career as a bank teller, laborer, railroad conductor or cake decorator. The local Walmart has a big sign up, begging passers-by to consider starting their lives anew in retail sales. The Bakken Region Recruiter lists openings in truck driving, winch operating and canal maintenance work, along with ads for a floral designer, bartender, public defender, loan officer, addiction counselor and sports reporter. All in an area where the big city has a population of around 16,000."

In other words, if you want to work it’s almost guaranteed you can land a job. But there’s a “but.” Collins describes the Bakken boom as filled with traffic, dust, man camps, bursting schools, long lines (as though waiting 30 minutes for a Big Mac is too much to pay for May’s 2.7 percent state unemployment rate) – while suggesting the most ambitious eatery in town probably wouldn’t impress many folks on the Upper West Side.

It’s true that strong economic growth creates many demands, and, as North Dakotan Rob Port regularly notes on his Say Anything Blog, state and local officials and support businesses need to do a better job seizing the opportunities. But Collins loses us – and perhaps credibility – describing the fracking used to extract oil and natural gas as “environmentally suspect.”

Suspect? Not to EPA Administrator Lisa Jackson, talking April 27 to Fox News:

“In no case have we made a definitive determination that the fracking process has caused chemical contamination of groundwater.”

…basically repeating what she told Congress in May 2011:

“I’m not aware of any proven case where the fracking process itself has affected water.”

Collins may have turned in her piece before this came in, but on Wednesday the EPA removed suspicions surrounding hydraulic fracturing and well water in Dimock, Pa. – ground zero for those who claim fracking fouls drinking water. Regional Administrator Shawn M. Garvin:

“The sampling and an evaluation of the particular circumstances at each home did not indicate levels of contaminants that would give EPA reason to take further action. Throughout EPA's work in Dimock, the Agency has used the best available scientific data to provide clarity to Dimock residents and address their concerns about the safety of their drinking water.”

(Also see Kenneth P. Green’s blog post on the Dimock announcement over at AEI, here.)

Earthquakes and fracking? David J. Hayes, Interior Department deputy secretary, in April:

“We also find that there is no evidence to suggest that hydraulic fracturing itself is the cause of the increased rate of earthquakes.”

Bottom line: Collins may have environmental suspicions about shale energy and fracking, but a number of people paid to pay attention to such things don’t share them.

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Crude Production Rise: Credit Where Credit’s Due

Last week the Energy Information Administration (EIA) told us that U.S. crude oil production in the first quarter of the year topped 6 million barrels per day (bbl/d) for the first time in 14 years. EIA’s chart:

EIA’s analysis:

“Strong growth in U.S. crude oil production since the fourth quarter of 2011 is due mainly to higher output from North Dakota, Texas, and federal leases in the Gulf of Mexico. … After remaining steady between 5.5 million and 5.6 million bbl/d during each of the first three quarters of 2011, EIA estimates that U.S. average quarterly oil production grew to over 5.9 million bbl/d during the fourth quarter and then surpassed 6 million bbl/d during the first quarter of 2012.”

Certainly, great news like that will restart discussion of who deserves credit for such a production milestone – beyond, of course, the energy companies that are actually pulling the oil from the ground or the seafloor. Politico Pro [subscription required] reports White House spokesman Clark Stevens emailed in the administration’s claim for credit:

“Despite misleading rhetoric by some in Washington, President Obama has made expanding responsible oil and gas production here at home a clear priority and the facts speak for themselves. Since the president took office, domestic oil and gas production has increased each year, with oil production in the first quarter of 2012 higher than any time in 14 years and natural gas production at its highest level ever, and that is certainly thanks in part to steps taken by this administration.”

That’s one view. Others disagree. Politico quotes Tom Kloza, chief oil analyst at the Oil Price Information Service:

“In the end, the president and Congress can’t take credit for what price and technology have delivered. It would be akin to taking credit for the iPad. … Unless there is a price collapse, or a true scientific indictment of fracking, one can expect to see plentiful growth in light sweet crude coming from the Rockies, North Dakota, and even Ohio or West Virginia.”

And Richard Newell, the EIA’s head from 2009-2011:

“In a political year, different parties would like to take credit for positive news in the energy sector and I think here the credit largely goes to technology."

And also Amy Myers Jaffe, an energy fellow at Rice University, who notes that North Dakota and Texas shale production has occurred mainly on private land, while increases from the Gulf result from the actions of previous administrations:

“Production rises from Gulf of Mexico would have been in the hopper way before President Obama took office.”

Settling the argument isn’t as important as recognizing that with the right policies the oil and natural gas industry can further develop America’s energy wealth. With the right strategies and leadership, the United States could see 100 percent of its liquid fuel needs met from North American sources. And along with it: jobs and tax revenues for government.

Strategies, policies and action: It’s what separates election-year rhetoric from substantive progress toward a more secure energy future.

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Another Study ‘Showing’ No Contamination from Fracking

Where to begin in a review of Pro Publica’s article on new research into the migration of subterranean brine to shallow water above? The inflammatory, overreaching headline? The leap from Duke University’s study to conclusions suggesting to the public that hydraulic fracturing is polluting drinking water?

Let’s start there. On that point the article is self-rebutting. See the fourth paragraph:

"No drilling chemicals were detected in the (shallow) water, and there was no correlation between where the natural brine was detected and where drilling takes place."

Then, near the end of the article:

"Nevertheless, (Robert) Jackson, one of the study's authors, said he still considers it unlikely that frack fluids and injected man-made waste are migrating into drinking water supplies. If that were happening, those contaminants would be more likely to appear in his groundwater samples, he said. His group is continuing its research into how the natural brine might have travelled, and how long it took to rise to the surface. 'There is a real time uncertainty,' he said. 'We don't know if this happens over a couple of years, or over millennia.'"

As for the study itself, Jackson and his team say they found that naturally occurring brine migrates upward to shallower depths. They say the risk of the migration could be greater in areas that have undergone hydraulic fracturing. Yet, there’s this from the study’s introductory summary:

“The occurrences of saline water do not correlate with the location of shale-gas wells and are consistent with reported data before rapid shale-gas development in the region …”

Energy In Depth has solid analysis on the study, here. Highlights:

The study fails (as Jackson notes above) to establish whether the migration occurs over 10 years or 10 million years. Without that, it’s impossible to determine whether the phenomenon is cause for concern.If brine is traveling up from thousands of feet below the surface, why haven’t the pathways Duke’s researchers identify allowed natural gas in the Marcellus region to leak out and disappear over time?There’s no discussion of whether the Marcellus Shale – which is largely a dry region with “virtually no free water,” according to Penn State’s Terry Engelder – even contains enough brinewater to leak.

Engelder, a Marcellus expert who was asked by the researchers to review their work, notes a number of questions the study leaves unanswered, reducing its usefulness. He writes:

"My review is predicated on the objective of your paper which is stated as a search for '...specific areas of shale-gas development in northeastern Pennsylvania that are at increased risk for contamination of shallow drinking water resources with deeper formation brines...' (the last sentence of your abstract). The term, risk, suggests that your paper veers from a conventional geology paper and enters into the realm of science-based advocacy or if you like, science policy."

Engelder is on target there. Unfortunately, the academics, wittingly or unwittingly, produced a study that is easily morphed into a siren call by opponents of natural gas production. Pro Publica’s article is Exhibit A. Exhibit B is a Bloomberg News story under this headline: “Pennsylvania Fracking Can Put Water at Risk, Study Finds” – despite the fact the study found no evidence of such a risk.

Words like “can,” “may” and “might” camouflage the point that the study didn’t find a correlation between the location of shale-gas wells and occurrences of saline water. To suggest otherwise in a news article is disingenuous and counterproductive in the national discussion of energy from shale.

As Engelder notes, the study is a platform from which advocates can mislead. On this story, The Associated Press got it right, focusing its report on what the study showed: “Gas drilling in northeastern Pennsylvania did not contaminate nearby drinking water wells with salty water, which is a byproduct of the drilling.”

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Hailing the Chief’s Support for Natural Gas Development, Fracking

President Obama deserves credit for standing fast in his support for natural gas development through hydraulic fracturing – especially given the no-to-natural gas approach taken by some of his supporters in the environmental community, including the Sierra Club. Here’s the president on Monday in Cincinnati:

“… We’re moving in the right direction in terms of energy independence. Now, part of that is this boom in natural gas.  And this is something we should welcome, because not only are we blessed with incredible natural gas resources that are now accessible because of new technologies, but natural gas actually burns cleaner than some other fossil fuels, and is an ideal fuel -- energy source that we potentially can use for the next 100 years.  So I want to encourage natural gas production.  The key is to make sure that we do it safely and in a way that is environmentally sound.”

The president is spot on – and as a response to a negative question about natural gas, his remarks were all the more remarkable. Because of abundant, affordable gas, made accessible through fracking, the global energy balance could be shifting. The president continued:

“Now, you always hear these arguments that somehow there’s this huge contradiction between the environment and economic development, or the environment and energy production.  And the fact of the matter is that there are a lot of folks right now that are engaging in hydraulic fracking who are doing it safely.”

This also is true. The oil and natural gas industry has focused on making hydraulic fracturing safer and more efficient through a set of standards that guide operators, and it has worked with states to develop regulatory regimes tailored for their specific conditions. The president went on:

“The problem is, is that we haven’t established clear guidelines for how to do it safely, and informed the public so that neighbors know what’s going on, and your family, you can make sure that any industry that’s operating in your area, that they’re being responsible.”

Well, OK. The president is mistaken or misinformed on that point. Industry has been clear and detailed in developing the standards mentioned above. It also has supported FracFocus.org to create transparency about fracking itself – a website community members can use to learn where wells are being drilled in their area, as well as the chemicals being used in the fracking fluids themselves. The industry takes community engagement and support seriously and is committed to getting shale development right.

Back to the president:

“What we’ve said is, look, we are going to work with industry to establish best practices.  We are going to invest in the basic research and science required to make sure this is done safely and in a way that protects the public health.  And for responsible companies, they should be able to operate, make a profit, and we can all benefit and put people back to work."

Best practices, we’re on it, Mr. President. Industry also is supportive of new technologies to improve operations, including those to reduce or even eliminate water use during the fracking process. Shale energy is creating jobs, thousands of them, and boosting the economy.

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Hot Dogs, BBQs…and Fracking

Kudos to Fuel Fix.com for cooking up a link between hot dogs and fracking in time for the Fourth of July – making the point that chemicals used in hydraulic fracturing are all around our daily lives, in some of the things we eat and other products that make our lives better.

Take the hot dog. Fuel Fix points out that the staple at cookouts, ballparks and fireworks displays often contains something called sodium erythorbate for fast curing and retention of the hot dog’s distinctive pink color. In fracking, it helps prevent precipitation of metal oxides, improving the process.

Going to a barbecue? Many BBQ sauces contain guar gum, derived from (you guessed it) the guar bean. In hydraulic fracturing, guar gum thickens the water in the fracking fluid, better suspending the sand that keeps tiny cracks in rocks open so oil or natural gas can be recovered.

It’s true: Not all of the stuff that goes into fracking fluid can be ingested by humans, yet these substances are found in things people use all the time. Check out Fuel Fix’s neat slideshow for a different way of looking at a drilling process that’s revolutionizing this country’s energy production.

Final point: The typical fracturing fluid is made up of 99.5 percent water and sand. Just half of 1 percent is chemical ingredients. See FracFocus.org for more information on fluid composition and other aspects of the hydraulic fracturing process, as well as the Energy From Shale website – and Happy Independence Day!

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Caution Warranted as E15 Launches in Kansas

From Kansas we hear that a gas station owner in Lawrence has become the first in the country to offer E15 fuel – gasoline with 15 percent ethanol instead of the 10 percent blend that’s standard around the U.S. According to the New York Times, Scott Zaremba may expand E15 to more of his eight stations.

Before motorists in the Lawrence area rush down to fill up, they might take the time to check their vehicle warranties. Even though the EPA has approved E15 for cars and light trucks from model year 2001 forward, a Coordinating Research Council study showed that the fuel can cause engine damage. Automobile manufacturers have said vehicle warranties will not cover damage from E15. Bob Greco, API downstream group director:

“We need to press the pause button on EPA’s rush to allow higher amounts of ethanol in our gasoline. The new fuel could lead to engine damage in more than 5 million vehicles on the road today and could void the manufacturer’s warranty.”

Greco said E15 also could damage engines in boats, recreational vehicles and lawn equipment. Consumers should follow the fueling recommendations in their owner’s manuals and carefully read all gasoline pump labels before refueling, he said.

Potential problems with E15 – which is being advanced as a way to help meet volume requirements set out by the Renewable Fuels Standard – were discussed at a hearing on Capitol Hill this week. API President and CEO Jack Gerard criticized EPA’s rush to push E15 into the marketplace:

“EPA should not have proceeded with E15, especially before a thorough evaluation was conducted to assess the full range of short- and long-term impacts of increasing the amount of ethanol in gasoline on the environment, on engine and vehicle performance, and on consumer safety.”

Greco said consumer protection is paramount:

“Our first priority should be protecting consumers and the investments they’ve made in their automobiles. EPA has an obligation to base this decision on science and not on a political agenda.”

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Made in America: For a Sustainable Energy Future

Access, common-sense regulation and a governmental approach that encourages energy investments: Each one is integral to an American-made, more secure energy future. Getting there will require continued improvements in efficiency and investments in renewable energy – two areas where the oil and natural gas industry has been a leader. This is the fourth recommendation in API’s recent report to the two political parties’ platform committees.

Today, the U.S. uses about half as much energy for every dollar of GDP as it did in 1980, according to the Energy Information Administration:

Efficiency helps energy companies manage costs, which in turn makes them more competitive and allows them to bring more affordable energy products to consumers.  Efficiency also helps reduce greenhouse gas emissions.

Industry is committed to technologies that help the environment, investing $71 billion in developments that reduce greenhouse gas emissions between 2000 and 2010 – far more than the federal government ($43 billion) and nearly as much as the rest of domestic private industry combined ($74 billion).

This is what energy companies do. They produce the oil and natural gas that run our economy now and which will continue to fuel it in the future. They work on efficiencies that will make our energy go further. They look to the future for additional resource options that will be necessary to complete the energy picture.

The question is whether governmental policies will or hinder these efforts. Some think the path to our energy future should be selected by Washington, using the tax code to preordain winners and losers. They think an industry sector that contributed nearly a half-trillion dollars to the economy in 2010, which already sends $86 million a day to the U.S. Treasury, should be taxed more.

The wrongheadedness of this path was detailed in a Wood Mackenzie study last fall, which compared the likely results of pro-energy development policies with policies leading to higher energy taxes:

With a pro-development approach, America’s oil and natural gas companies can add jobs, increase energy supply and generate more tax revenue for government. Higher taxes on our industry will likely lose jobs, decrease tax revenue and result in less energy production.

The United States has tremendous energy resources to support and grow our economy and meet the challenges of the future. With the right vision and leadership we can stride into the future confidently – as befits an energy-rich nation.

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Bakken Shale: Supplying Energy, Supporting Communities

Check out a couple of new videos from North Dakota in which Hess employees and others talk about how energy development in the Bakken Shale formation is changing lives and growing the state’s economy.

Part 1:

Part 2:

The narrative isn’t complicated. As Hess’ Steven Fretland notes in the first video, the Bakken is believed to hold between 8 billion and 40 billion barrels of oil reserves. Companies developing the energy resources need workers, and workers need places to live and services to support their lives. Fretland, who was raised in North Dakota, says Bakken energy is reversing historic trends:

“Younger kids, after they left, you know, you hated to see them go but then they come back and they decide … it’s where they’re going to have their home and raise a family and hopefully retire with the industry.”

In the second video, Hess’ Steve McNally says hydraulic fracturing that has revolutionized energy development is responsible for North Dakota’s jobs boom:

“The impact on the North Dakota area and the U.S. in the short term is numerous jobs. There’s a tremendous amount of employment opportunities here. For anyone who wants to work, you can get a job.”

The point, underscored in this new industry spot, is that fracking has made an old frontier state like North Dakota a new energy frontier. Previously unreachable shale resources are now available in abundance through responsible development. Learn more at Energy From Shale.org.

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Energy Quest and ‘Britain’s Atlantis’

A couple of fascinating reports detail discoveries at the bottom of the North Sea that some scientists say indicate the existence of “Doggerland,” an area that connected modern-day Great Britain to continental Europe until about 7,000 years ago.

CBS News reports that fossilized evidence of mammoths and other large game, harpoons, flint tools and suspected burial mounds mark settlements of hunters and gatherers who lived on dry land all around the British Isles – in areas connecting England to France and the Low Countries, as well as the area between Scotland and Denmark. London’s Daily Mail calls it “Britain’s Atlantis.”

Interesting stuff, you say, but what the heck does it have to do with energy?

It turns out divers with oil companies that are operating in the North Sea found remains of the submerged world, the Daily Mail reports, and scientists have used industry geophysical modeling data to help piece together what the area looked like when it was dry ground. Research team leader Richard Bates, a geophysicist at the University of St. Andrews:

“Through a lot of new data from oil and gas companies, we’re able to give form to the landscape - and make sense of the mammoths found out there, and the reindeer. We’re able to understand the types of people who were there.”

There’s much work to be done, Bates says: 

"We haven't found an 'x marks the spot' or 'Joe created this', but we have found many artifacts and submerged features that are very difficult to explain by natural causes, such as mounds surrounded by ditches and fossilized tree stumps on the seafloor. There is actually very little evidence left because much of it has eroded underwater; it's like trying to find just part of a needle within a haystack. What we have found, though, is a remarkable amount of evidence, and we are now able to pinpoint the best places to find preserved signs of life."

We’ll let you know if they turn up any signs of pre-historic oil and natural gas exploration.

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EPA’s Unjustified Particulate Matter Proposal

Three good reasons EPA should shelve a proposal to tighten its air pollution standard governing particulate matter:

Science doesn’t justify it.Current control programs are working.A more stringent standard could harm jobs and economic growth.

EPA is scheduled to hold public hearings on its PM 2.5 standard today in Philadelphia and Sacramento – part of a commenting period that runs into August. The proposal, which is to be finalized by the end of the year, would tighten the standard from 15 micrograms per cubic meter to 12 or 13 micrograms.

API’s Howard Feldman, director of regulatory and scientific affairs, discussed the proposal during a conference call with reporters:

“Changing the standard should be supported by clear scientific analysis. The science in this case cannot demonstrate a proven ‘cause and effect’ between levels below the current standard and health consequences. In part, this is because in EPA’s analysis it failed to adequately address confounding factors. EPA also assumed rather than demonstrated a linear relationship between pollution and health effects, concluding that harm to health must occur even at very low levels.”

Feldman, who was to deliver testimony in Philadelphia, said a tighter standard could result in higher costs for providing and using energy, meaning fewer businesses would be created, fewer would expand and fewer workers would be hired. Feldman:

“Existing control programs are working. According to EPA, between 2000 and 2010, concentrations of PM 2.5 in the air fell by 27 percent. As a result, more than three-fourths of Americans today live in areas where air quality meets today’s standards.”

Dr. Julie Goodman of Gradient, an expert in toxicology, epidemiology and in assessing health risks from chemicals in products and the environment, also joined the call. Goodman said EPA has not produced “coherent evidence” that a new PM standard is necessary:

“There’s no evidence that lowering (the standard) 2 to 3 micrograms will have any effect on health. In other words, there’ll be no (real) health benefits from lowering the standard.”

Goodman’s remarks for the Philadelphia hearing can be read here.

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Lights, Cameras…Fracking!

Great time Thursday night at the grand, lovely Warner Theater in Washington, D.C., for API’s “Big Screen Energy” event, featuring film trailers from pro-energy documentaries on hydraulic fracturing including “Truthland,” “Empire State Divide” and “Frack Nation.” After the trailers, representatives of the films talked about their projects and answered questions from the audience. Some important points that emerged:

#1: Shale Energy = Economic opportunity

For lots of people in the Marcellus Shale portions of Pennsylvania, energy from fracking is helping them alter the courses of their lives. And it could help even more if New York state approves hydraulic fracturing on some scale. “Empire State Divide’s” Karen Moreau said New York agriculture needs working capital to survive. Energy development from that state’s portion of the Marcellus could supply that, keep farms operating and allow them to be handed off to the next generation, said Moreau, who since making her film was named executive director of the New York State Petroleum Council.

#2: Countering Frack Fiction

“Truthland,” featuring Pennsylvania science teacher and mom Shelly Depue, spends much of its 34 minutes dispelling misinformation about hydraulic fracturing and natural gas development. The film is a step toward centering the national fracking debate on science and fact instead of fear and misrepresentation. “Frack Nation’s” Phelim McAleer said some opponents aren’t interested in responsible development; they want to block natural gas altogether.

#3: The Right to Prosper

Moreau said the divide in New York over fracking is actually a property rights test – whether individuals may develop resources on their land. She said some opponents of natural gas development in New York’s southern tier, the counties in the Marcellus along the Pennsylvania border, aren’t residents of those areas. Still, they are trying to control or block development. The contest is still playing out, as state officials weigh how much development, if any, to allow.

Again, the evening provided an interesting perspective on an important public policy issue. At the center of it is a truth, noted by McAleer: the ability of energy to lift lives, to lift standards of living. McAleer said the lack of affordable, reliable energy usually characterizes areas that are impoverished and unhealthy – places where people have little chance to lift themselves. Energy changes that, he said.

In energy from shale, the United States has an historic opportunity to be more prosperous – with abundant fuel for the lifestyles of its citizens and the power to revitalize critical industries like manufacturing and chemicals. The U.S. also can make its future more secure, less dependent on imports. Industry’s role is to develop these resources safely and responsibly. It is doing this while striving to continually improve technologies and performance.

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Oil and Natural Gas Companies: Betting On America

Who’s doubling down on America? Companies in the U.S. oil and natural gas industry, which owned five of the top 11 spots on the Progressive Policy Institute’s list of the top 25 nonfinancial U.S.-based companies, ranked by their 2011 capital spending inside this country:

Kudos to PPI for compiling this interesting list. ExxonMobil ranked No. 3 with $11.7 billion in U.S. capital expenditures and was joined on the list by No. 6 Occidental Petroleum ($6.2 billion), No. 7 ConocoPhillips ($5.6 billion), No. 9 Chevron ($4.8 billion) and No. 11 Hess ($4.4 billion).

It’s more than a novelty or a talking point. The $136.2 billion in capital spending by these companies was a direct input into the U.S. economy. PPI:

"Domestic business investment generates growth, raises productivity, increases wages and creates jobs for Americans. It can span the gamut from new office buildings to improved production lines to faster communications equipment to deeper natural gas wells."

Indeed. America’s oil and natural gas companies support 9.2 million jobs and contributed $476 billion to the economy in 2010. PPI calls the top 25 companies “Investment Heroes” for plowing dollars into growth and job creation. PPI’s overarching point is that more capital investment is needed to get the economy rolling again. The key is unlocking those private dollars.

Though it has invested a lot already, the oil and natural gas industry is willing to do much more. With greater access to U.S. natural resources, onshore and offshore, the industry could create 1.4 million jobs and generate $800 billion in revenue for governments. This will require policy changes – including a commonsense regulatory structure and a positive, proactive approach to developing America’s energy assets. As PPI notes:

"Multiple layers of regulation, even if well-intentioned, have the impact of discouraging capital investment and innovation."

Former Shell president John Hofmeister talked about that very point at an energy forum this week hosted by the New America Foundation. Hofmeister said government must decide whether it will be an “enabler of prosperity” or a “disabler of markets”:

“I think if I’m heading an American oil company looking at use of capital in America, I would be very careful, I would be selective. And I think that’s what we’re seeing.”

The good news is that despite the current investment climate, America’s oil and natural gas companies are investing in America – and can be an engine that drives the entire economy.

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Friends of Fracking and Natural Gas

Perhaps as important as the president of the United States acknowledging the importance of natural gas and hydraulic fracturing to America’s energy present (and future) is a sense that such support is pretty far and wide. Here’s a quick roundup of some notable friends of natural gas – affordable, abundant and creating jobs all across the country – with a nod to Energy In Depth’s Steve Everley for help in corralling the links.

U.S. Sen. Sherrod Brown, D-Ohio:

“Shale development means economic development, and that’s exciting news for Ohio. It means tens of thousands of good-paying jobs across our state, all while helping to lower power costs for Ohio consumers. … We know that Ohio is home to countless innovative companies and a world-class workforce—now we need to ensure that energy companies arriving in the state are utilizing all that Ohio has to offer.”

Deputy Energy Secretary Daniel Poneman:

“The natural gas boom in the United States offers a tremendous opportunity to strengthen American energy security by drastically reducing our dependence on imported oil, while at the same time creating new U.S. jobs and industries. This is precisely why President Barack Obama is committed to safely and responsibly harnessing American oil and gas resources, and to developing the technologies that will unlock new domestic energy sources.”

U.S. Rep. Mike Ross, D-Ark.:

“I’m a firm believer in natural gas. It already supplies almost one-fourth of all energy in the U.S. and we’re discovering more natural gas reserves every day thanks to newer, safer drilling techniques and technologies. Better yet, more than 98 percent of natural gas comes from right here in North America. … With the Fayetteville Shale in the northern part of (Arkansas) and the Haynesville Shale in the southern part, we have an abundant supply of clean, affordable energy to offer the world.”

Natural gas and fracking have support from strong environmentalists including …

U.S. Sen. Ron Wyden, D-Ore.:

“This is what I tell environmental folks: Natural gas is really important to a lot of renewables, solar and wind, ensuring that option is out there. … Natural gas is the cleanest of the fossil fuels, so you start with that as your basic proposition.”

U.S. Rep. Edward Markey, D-Mass.:

“I think environmentalists should want natural gas on the table as an option. When coal is also going to be considered for new electrical generation or an extension of the life of an existing coal-fired power plant, I think it would be wise for us to not take natural gas off the table.”

Gov. John Hickenlooper, D-Colo.:

“Like any industrial process, fracking has some risks but, really, if done properly, certainly out in the West, there is literally no risk — certainly much less than many industrial processes. … I love open space and wilderness, but we all drive cars, right? And we all need energy. We recognize that, along with education, energy is the other necessary component to lifting people out of poverty.”

That last point is so important. Energy development is the difference between modern and primitive civilization – facilitating greater freedom, mobility and opportunity for better, healthier lives.

Candidly, the choice offered by some opponents of natural gas and hydraulic fracturing isn’t between more responsible development and less; it’s between responsible development and NO development. It’s an extreme choice. As energy blogger Steve Maley posted a few weeks ago, “If you’re not a fan of natural gas you’re a fan of mud huts.”

The right choice is to safely and responsibly develop a resource that can play a major role in securing America’s energy future.

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EPA’s Costly, Unnecessary Soot Proposal

EPA continues to act tone deaf to the real-world needs of U.S. businesses and regular Americans. Its particle standards proposal issued this week is a good example of the kind of investment-squelching overregulation that ultimately could hurt the country’s energy future.

With the country’s air continuing to improve under the existing fine-particle soot standard, EPA proposed tightening it. The rule is scheduled to be finalized in December. Howard Feldman, API’s directory of regulatory and scientific affairs, says the rule’s benefits aren’t worth its costs:

“Air quality will continue to improve dramatically under the current government standards, but EPA’s proposal could substantially increase costs to states, municipalities, businesses and ultimately consumers without justified benefits. We are concerned that it could come at a significant economic cost and lost investments and limit our ability to produce the energy our nation needs.”

Between 2000 and 2010 concentrations of fine-particle soot fell by 27 percent, according to EPA. Feldman says three-fourths of Americans today live in areas where air quality meets today’s standards, and that the trend will continue – which suggests the new standard is unnecessary.

Feldman also says EPA based its proposal on “faulty scientific analysis,” that important data have been ignored and some of its purported findings are actually misinterpretations. How tightly the standards are set is a policy judgment. Because there is no bright line to guide the standard setting, the impacts of the standards matter. Feldman:

“A more stringent rule will discourage economic investment in counties that fail to meet new federal standards.  It’s in our interest to have both clean air and a vibrant domestic economy. However, the new standards would put many regions out of attainment, and companies considering a place to build a plant or refinery could perceive non-attainment as non-investment.”

Again, in the context of an economy trying to regain its footing, EPA is tossing out banana peels – with potential costs on a number of fronts that ultimately will hit real people. This economic anti-stimulus also is an unnecessary energy impediment.

It illustrates why, if we’re serious about a secure energy future, a common-sense regulatory structure is needed. By that we mean a regulatory process that’s open to all and based on sound science and legitimate cost-benefit analysis. By that standard EPA’s proposal falls well short.

View the original article here

Gulf Lease Sale Emphasizes Need for Expanded Opportunities

Some details from Wednesday’s federal lease sale in the central Gulf of Mexico (news coverage here and here):

Size – The Bureau of Ocean Energy Management (BOEM) sale attracted high bonus bids of $1.7 billion for the area off the coasts of Louisiana, Mississippi and Alabama – ranging as far as 230 miles into the Gulf. Bids – Fifty-six companies submitted 593 bids on 454 tracts, with the sum of all bids totaling more than $2.6 billion. That’s a big sale, though not the biggest ever. According to BOEM the biggest value lease sale was $3.68 billion in the central Gulf in March 2008. The last sale in the central Gulf in March 2010 totaled $949 million. Record – The highest bid on a single tract was $157.1 million, submitted by Statoil in the Mississippi Canyon, Block 718 – about three times higher than the previous top bid of $52.5 million submitted in 2010.

Now, some perspective.  As API’s Erik Milito said Tuesday, the simple fact that the federal government held a lease sale in the central Gulf is important. It had been more than two years since drilling blocks had been put up for bid. That BOEM opened more than 38 million acres after a two-years-plus hiatus was a positive step.

Interior Secretary Ken Salazar heralded the sale as evidence of the administration’s “all-of-the-above” energy strategy:

“When it comes to domestic production, the president has made clear he is committed to expanding oil and natural gas production safely and responsibly, and today's sale is just the latest example of his administration delivering on that commitment. … The Gulf is back. There is great robustness in oil and gas activity currently under way in the Gulf, as well as interest in additional exploration.”

Well, it’s probably more accurate to say the Gulf is getting back. Unfortunately, just returning to 2010 levels of activity (rig counts, etc.) concedes that two years of production were negatively affected by the administration’s policies – the 2010 deepwater drilling moratorium and the slow pace of permitting when the ban was lifted. Given that context, sure, industry was enthusiastic about Wednesday’s sale. National Ocean Industries Association President Randall Luthi:

“A sale of this size signals a strong industry commitment to the Gulf of Mexico and to our nation’s energy future and to more domestic jobs.”

More context: The areas opened for bidding this week have been considered before, which is what Milito emphasized on Tuesday. The central Gulf was not a new area for development. So, instead of restricting opportunity to these areas, the government should be expanding it to new ones. As Luthi suggests, industry is willing and able to do more. Just imagine the robustness of the bidding if the lease areas were in the Eastern Gulf or off the Pacific and Atlantic coasts – areas with undiscovered, technically recoverable reserves estimated at 1.40 billion, 10.37 billion and 3.82 billion barrels, respectively (see map).

Milito from Tuesday:

“Exploration is what leads to production. And it is important to understand that it is critical to maintain a robust leasing program to allow companies to explore new prospects and replace the production that is coming from existing wells. Maintaining the status quo won’t work.”

Opening up more U.S. resources for development (onshore as well) is the real path to expanding domestic oil and natural gas production – which is fundamental to a true, all-of-the-above energy approach. It’s critical to an American-made energy strategy that will create jobs, expand the economy and help us be more energy secure in the future.

View the original article here

EPA’s Unjustified Particulate Matter Proposal

Three good reasons EPA should shelve a proposal to tighten its air pollution standard governing particulate matter:

Science doesn’t justify it.Current control programs are working.A more stringent standard could harm jobs and economic growth.

EPA is scheduled to hold public hearings on its PM 2.5 standard today in Philadelphia and Sacramento – part of a commenting period that runs into August. The proposal, which is to be finalized by the end of the year, would tighten the standard from 15 micrograms per cubic meter to 12 or 13 micrograms.

API’s Howard Feldman, director of regulatory and scientific affairs, discussed the proposal during a conference call with reporters:

“Changing the standard should be supported by clear scientific analysis. The science in this case cannot demonstrate a proven ‘cause and effect’ between levels below the current standard and health consequences. In part, this is because in EPA’s analysis it failed to adequately address confounding factors. EPA also assumed rather than demonstrated a linear relationship between pollution and health effects, concluding that harm to health must occur even at very low levels.”

Feldman, who was to deliver testimony in Philadelphia, said a tighter standard could result in higher costs for providing and using energy, meaning fewer businesses would be created, fewer would expand and fewer workers would be hired. Feldman:

“Existing control programs are working. According to EPA, between 2000 and 2010, concentrations of PM 2.5 in the air fell by 27 percent. As a result, more than three-fourths of Americans today live in areas where air quality meets today’s standards.”

Dr. Julie Goodman of Gradient, an expert in toxicology, epidemiology and in assessing health risks from chemicals in products and the environment, also joined the call. Goodman said EPA has not produced “coherent evidence” that a new PM standard is necessary:

“There’s no evidence that lowering (the standard) 2 to 3 micrograms will have any effect on health. In other words, there’ll be no (real) health benefits from lowering the standard.”

Goodman’s remarks for the Philadelphia hearing can be read here.

View the original article here

Well-Paying Jobs…Like Ours!

We like talking about our industry’s job-creating ability – how, with the right policies America’s oil and natural gas companies could create a million new jobs before the end of the decade.

Some industry opponents dismiss the assertion by deriding the number of wage positions supported by oil and gas activity. We don’t. Every job means a paycheck for an American who’s glad to have it, especially in this economy.

But guess what? Our industry supports well-paying jobs, too. Payscale.com’s list of high lifetime-earnings jobs is topped by two from oil and natural gas – petroleum engineer and landman/senior landman.

Payscale.com says the typical earnings total for a petroleum engineer over a 45-year career is nearly $6.3 million. The average starting pay is more than $84,000, and at 20+ years the typical salary is $151,000. No. 2 on the list, a landman will earn $5.38 million over a 45-year career, Payscale notes. Starting pay averages $53,600, growing to $138,000 at 20+ years. Payscale lead analyst Katie Bardaro:

“This list is dominated by left-brained jobs that require analytical thinking. We are a tech-heavy, analytics-heavy society, so jobs that focus on those skills pay well.”

Especially jobs in fields that have a future – like oil and natural gas. Our industry literally fuels America’s economy now and will do so in the future according to government estimates. It’s an industry that’s going to be around.

So what other positions made Payscale’s Top 10? Glad you asked:

Software/senior software engineer ($4.36 million over 45 years)Electrical/senior electrical engineer ($4.17 million)Mechanical/senior mechanical engineer ($3.9 million)Software/senior software developer ($3.83 million)Financial analyst/senior financial analyst ($3.44 million)Communications coordinator/manager ($3.32 million)Marketing coordinator/manager ($3.31 million)Certified public accountant ($3.2 million)

Guess what again? You can find virtually all of these positions in the oil and natural gas industry – from the people who’re pioneering “intelligent field” technologies to manage modern, global exploration and development to the folks who develop marketing campaigns – you know, like this one.

Granted, a number of these careers can be found on other paths. Yet the list illustrates the breadth of our industry, its need for workers in the future and the promising career-long opportunities that this industry provides.

View the original article here

Energy’s Game-Changing Face

A Wall Street Journal report [subscription required] quotes energy analysts who say America will cut its Middle East oil imports in half by the end of the decade and could become oil-independent by 2035, thanks to North American production. 

To those who see the unique chance for the United States to increase domestic oil and natural gas production and fundamentally change this country’s energy equation, we say welcome to the fold. The Journal’s sources are saying things similar to what others have said, including Wood Mackenzie’s analysis last fall, Citi’s 2020 Energy Outlook released this spring and this week’s study by Harvard’s Kennedy School. Of course, along with the energy, there’s job creation and tax revenue generated for government treasuries. All good.

Look at the analyses and there’s a common thread: hydraulic fracturing. It’s the game-changer for the United States, unlocking oil and natural gas resources from shale and other tight rock formations. It is responsible for the rewriting of U.S. natural gas reserve estimates, and its use in oil development is expanding in North Dakota, Texas and other states.

USA Today highlights the fracking boom in a big article, here.  There’s a neat infographic with the story, detailing some hydraulic fracturing basics. The piece’s main thrust is the fantastic economic and energy opportunities afforded by fracking, as well as some of the challenges:

“Even as the price of natural gas dropped to around $2 for a thousand cubic feet this warm winter — half last year's price — states caught up in the boom have enjoyed an employment windfall when jobs nationally have been hard to come by. Since 2009, Pennsylvania has 38,900 natural resources jobs, up 72%; North Dakota has 21,900 jobs, a 172% surge, according to Federal Reserve data. These numbers don't include jobs added to service the fracking industry — everything from selling workers donuts to making steel pipes used in the process.”

That’s what dynamic growth, driven by energy derived from hydraulic fracturing, looks like. The article goes on:

“For many others, the good times are rolling. Welders employed in the natural gas industry average $28.48 an hour, 6 bucks more an hour than other industries pay, according to the Bureau of Labor Statistics. ‘We're still hiring,’ says David Schultz, a plant manager for Forum Energy Technologies' metal fabrication plant in Clearfield, Pa. … About half the fracking well tanks that are manufactured or fixed at the plant are bound for Ohio and the Utica shale, Schultz says.”

No question, there are challenges, as the article notes. Traffic, noise, stretched public services, scarce hotel space, long lines at restaurants. People are concerned the boom will go bust, although industry leaders repeatedly stress the long-term nature of their shale investment. Ohio State University agricultural extension agent Mike Hogan:

“The number of trucks on the roads is incredible. But the money is more than welcome here.”

That seems to be the dominant attitude in other shale states. Energy development is bringing dramatic growth that occasionally tests local infrastructures. But it’s also lifting local, regional and state economies – taking up what Citi’s Daniel Ahn, one of the authors of its energy outlook, describes as slack in our economy. “This couldn’t happen at a better time,” Ahn says.

View the original article here

A European Perspective on the U.S. Shale Energy Revolution

The intersection of a recent anti-natural gas fundraiser at the trendy Brooklyn Winery – featuring fabulous culinary delights prepared by a group of talented chefs – and the natural gas that made the evening possible was, well, simply mouth-watering.

New York Daily News columnist Bill Hammond writes that the “Taste of the Marcellus” event last week was hosted by a group called Chefs for the Marcellus, to showcase the kinds of foods they say could be jeopardized if New York Gov. Andrew Cuomo OKs hydraulic fracturing in that state’s portion of the Marcellus Shale. Hammond:

"Guests were treated to eggplant-stuffed okra, smoked lamb belly with fermented tofu and whipped ricotta jewel on toast — along with wines from the Finger Lakes and beers from Cooperstown’s Ommegang brewery. Th... more »

Jill is a district manager for Total Safety, a company that provides service solutions for various aspects of the oil and natural gas industry, as well as power-generation and industrial markets. For her, the industry is about future job security: “It’s really an industry that’s not going away.”

Her video:

Visit American Energy Works.org for more videos and information about the people who’re at work for America’s energy future.

A new USA Today/Gallup poll finds two of the top three issues that Americans care about the most in this election year are … jobs and reducing the federal budget deficit. Check and check. America’s oil and natural gas industry can help with both. Respondents were asked to weigh the importance of a number of issues (see chart), and 92 percent said creating good jobs is “extremely/very important.” On cutting the federal deficit the figure was 86 percent. Jobs and revenue to the government – we can help.

With the right policies in place – increasing access to American natural resources, the right approach to energy regulation, encouraging energy investments and more – our industry could create 1.4 million jobs by 2030. Here’s how the Wood Mackenzie energy consulting firm charts the pot... more »

Energy-driven economic growth is more than theory in places like Mount Vernon, Ohio, and Chandlersville, about 60 miles to the southeast. Shale energy is building growth in both places – in different ways.

In Mount Vernon, Ariel Corporation is experiencing demand for the reciprocating gas compressors it manufactures, which are used to extract, process, transport, store and distribute natural gas from shale. In Chandlersville, Steve Addis and his wife own and operate Annie’s Restaurant, which is seeing an influx of workers who’re drilling new shale gas wells in the area. Both show how the oil and natural gas industry supports jobs beyond direct industry jobs.

More in this video:

Visit American Energy Works.org for more videos and information about the people who’re at work for Am... more »

ConocoPhillips’ Bob Morton is chief materials scientist at the company’s technology center in Bartlesville, Okla. The chemical that allowed development of low-sulfur gasoline and diesel – without sacrificing octane and without increasing the cost of the fuel – was developed there, he says.

Coming up with environmentally friendly consumer products is Morton’s mission:

“What I really love about my job is sometimes I’m given the opportunity to see something that nobody has seen before. And when those moments happen truly, those are the things that I think are the most wonderful parts of doing the job.”

Check out Bob’s story:

Visit American Energy Works.org for more videos and information about the people who’re at work for America’s energy future.

... more »

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American Energy Works: Tanker Safety Officer

Janet DeCastro of Polar Tankers wanted a life at sea, so she entered the U.S. Merchant Marine Academy. One of the requirements for cadets was to go to sea for a year on a commercial vessel, and DeCastro’s assignment was aboard an oil tanker.

The experience has become a 24-year professional career – and is one of 9.2 million jobs supported by the oil and natural gas industry. In the video below, DeCastro talks about the ships on which she serves, and the role she plays ensuring safe delivery of oil and protection of the environment:

Visit American Energy Works.org for more videos and more stories from the people of the oil and natural gas industry, who are at work for America.

View the original article here

Hailing the Chief’s Support for Natural Gas Development, Fracking

President Obama deserves credit for standing fast in his support for natural gas development through hydraulic fracturing – especially given the no-to-natural gas approach taken by some of his supporters in the environmental community, including the Sierra Club. Here’s the president on Monday in Cincinnati:

“… We’re moving in the right direction in terms of energy independence. Now, part of that is this boom in natural gas.  And this is something we should welcome, because not only are we blessed with incredible natural gas resources that are now accessible because of new technologies, but natural gas actually burns cleaner than some other fossil fuels, and is an ideal fuel -- energy source that we potentially can use for the next 100 years.  So I want to encourage natural gas production.  The key is to make sure that we do it safely and in a way that is environmentally sound.”

The president is spot on – and as a response to a negative question about natural gas, his remarks were all the more remarkable. Because of abundant, affordable gas, made accessible through fracking, the global energy balance could be shifting. The president continued:

“Now, you always hear these arguments that somehow there’s this huge contradiction between the environment and economic development, or the environment and energy production.  And the fact of the matter is that there are a lot of folks right now that are engaging in hydraulic fracking who are doing it safely.”

This also is true. The oil and natural gas industry has focused on making hydraulic fracturing safer and more efficient through a set of standards that guide operators, and it has worked with states to develop regulatory regimes tailored for their specific conditions. The president went on:

“The problem is, is that we haven’t established clear guidelines for how to do it safely, and informed the public so that neighbors know what’s going on, and your family, you can make sure that any industry that’s operating in your area, that they’re being responsible.”

Well, OK. The president is mistaken or misinformed on that point. Industry has been clear and detailed in developing the standards mentioned above. It also has supported FracFocus.org to create transparency about fracking itself – a website community members can use to learn where wells are being drilled in their area, as well as the chemicals being used in the fracking fluids themselves. The industry takes community engagement and support seriously and is committed to getting shale development right.

Back to the president:

“What we’ve said is, look, we are going to work with industry to establish best practices.  We are going to invest in the basic research and science required to make sure this is done safely and in a way that protects the public health.  And for responsible companies, they should be able to operate, make a profit, and we can all benefit and put people back to work."

Best practices, we’re on it, Mr. President. Industry also is supportive of new technologies to improve operations, including those to reduce or even eliminate water use during the fracking process. Shale energy is creating jobs, thousands of them, and boosting the economy.

View the original article here

Video: Refiner Plays Its Role in ND Energy Bonanza

The sights and sounds of energy-driven growth are all over this video, in which Ron Day of Tesoro Corporation talks about how the company’s Bismarck-Mandan oil refinery has grown along with development of North Dakota’s Bakken shale play:

For the benefit of the energy-jobs deniers out there, let’s underscore Day’s description of the multiplier effect associated with a growing energy sector, which is being seen across North Dakota, Pennsylvania, Texas and other energy states:

“We’re hustle and bustle. We’re growing. It’s a great opportunity for North Dakota: from restaurants to car parts stories, to repair shops – they’re definitely being impacted in a positive way (by energy development).”

Even better? America is energy rich, which means the North Dakota “miracle” can be repeated elsewhere – with the right policies and leadership.

View the original article here

Innovation: Making Energy Production Cleaner, More Efficient

When we wrote last week about technologies to mitigate water demands during hydraulic fracturing, we knew we’d find more examples of energy innovation for the simple fact that there’s a lot of innovating going on. Here’s a little bit about two other advances in the area of fracking waste water, as well as another company’s initiative to make the development of Canada’s oil sands cleaner and greener.

Halliburton says it has a suite of solutions to reduce the demand for fresh water in hydraulic fracturing operations, called H2-Forward. You can read more about it, here. Basically, it’s a process that allows drillers to reuse fracturing fluid. Halliburton:

"The service includes new technologies such as CleanWave service that is used to process fracturing flowback and produced water, resulting in a clean brine fully suitable for well site operations including drilling, fracturing and completion fluids. … The system, which can treat 20 bbl/minute, uses an electrical process that destabilizes and coagulates suspended colloidal matter in water. Easy scalability enables quickly treating large volumes of water in reserve and flowback pits and, depending on the operation, treating flowback and produced water in real-time during a fracturing operation. The CleanWave system removes up to 99% of total suspended solids, heavy metals, hydrocarbon and bacteria."

Meanwhile, Pennsylvania-based Epiphany Solar Water Systems’ main product is a system that uses solar power to clean fracking waste water. Consol Energy, which is active in the Marcellus Shale area, recently announced it is investing $500,000 in Epiphany and will run a test site for the purification system beginning next month.

Here’s Ephiphany’s description of its technology:

"Dirty water passes into the distillation unit and instantly vaporizes due to the intense heat focused on the distillation unit. During the vaporization process, any dissolved solids … separate, and living organisms (bacteria) are killed due the intense heat. The water vapor (now void or any impurities) continues to pass through the distillation unit. As the steam reaches colder stages it begins to condense back down into distilled water. From the output of the distillation unit then comes freshly distillated water, safe for consumption."

Calgary-based N-Solv Corporation is promoting a technology it says will reduce the amount of energy needed to produce bitumen from oil sands, while reducing greenhouse gas emissions 85 percent without using any water. A $60 million field test in Alberta is scheduled for next April. It uses warm solvents such as propane or butane to melt the bitumen deposits, which the company says is more efficient than using in-situ steam technology. You can read more about it on the company’s website, here.

View the original article here

Video: Refiner Plays Its Role in ND Energy Bonanza

The sights and sounds of energy-driven growth are all over this video, in which Ron Day of Tesoro Corporation talks about how the company’s Bismarck-Mandan oil refinery has grown along with development of North Dakota’s Bakken shale play:

For the benefit of the energy-jobs deniers out there, let’s underscore Day’s description of the multiplier effect associated with a growing energy sector, which is being seen across North Dakota, Pennsylvania, Texas and other energy states:

“We’re hustle and bustle. We’re growing. It’s a great opportunity for North Dakota: from restaurants to car parts stories, to repair shops – they’re definitely being impacted in a positive way (by energy development).”

Even better? America is energy rich, which means the North Dakota “miracle” can be repeated elsewhere – with the right policies and leadership.

View the original article here

Bakken Shale: Supplying Energy, Supporting Communities

Check out a couple of new videos from North Dakota in which Hess employees and others talk about how energy development in the Bakken Shale formation is changing lives and growing the state’s economy.

Part 1:

Part 2:

The narrative isn’t complicated. As Hess’ Steven Fretland notes in the first video, the Bakken is believed to hold between 8 billion and 40 billion barrels of oil reserves. Companies developing the energy resources need workers, and workers need places to live and services to support their lives. Fretland, who was raised in North Dakota, says Bakken energy is reversing historic trends:

“Younger kids, after they left, you know, you hated to see them go but then they come back and they decide … it’s where they’re going to have their home and raise a family and hopefully retire with the industry.”

In the second video, Hess’ Steve McNally says hydraulic fracturing that has revolutionized energy development is responsible for North Dakota’s jobs boom:

“The impact on the North Dakota area and the U.S. in the short term is numerous jobs. There’s a tremendous amount of employment opportunities here. For anyone who wants to work, you can get a job.”

The point, underscored in this new industry spot, is that fracking has made an old frontier state like North Dakota a new energy frontier. Previously unreachable shale resources are now available in abundance through responsible development. Learn more at Energy From Shale.org.

View the original article here

Innovation: Chevron’s ‘i-field’ Links Performance, Savings

USNews.com has a good read on Chevron’s digital investments, which the company says will save up to a billion dollars a year in operating costs in 2016. The linchpin is Chevron’s digital oil field, the “i-field,” which is short for “intelligent field.” USNews explains:

“Chevron's i-field harnesses advanced technology and communications to improve performance at 40 strategic assets throughout the world, including some of its biggest and most productive oil and gas fields. The company is rolling out six to eight mission-control centers focused on separate business areas, ranging from machinery to drilling to wells and reservoirs, that monitor those assets in real-time and rely on sophisticated computer algorithms for early detection of problems. From Chevron's perspective, the i-field is now essential to its global operations, which span six continents.”

Chevron isn’t the only company doing these things (USNews notes that Shell and ConocoPhillips have their own versions), but it is recognized as one of the oil and natural gas industry’s leaders. Basically, to overcome the global and labor-intensive characteristics of oil and gas development, Chevron has digitized a number of its operations. USNews:

“Chevron has deployed thousands of tiny sensors, only millimeters or centimeters in size, that monitor field operations and transmit data, both wired and wirelessly, back to central locations. The sensors instantaneously track pressure, temperature, and other readouts and aid with the mapping of underground fuel deposits, allowing the company to maximize production. Chevron also employs analytics to evaluate data streams in real-time from oil wells, drill rigs, ships, and elsewhere.”

The company has two mission-control facilities in Houston that oversee drilling and machinery support and two others in Lagos, Nigeria, and Covington, La., that monitor deepwater drilling. USNews:

“High above Houston in an office tower, a tech-savvy team at Chevron's machinery support hub monitors thousands of pieces of equipment, in real-time, across every continent except Antarctica. Using software to analyze data transmitted by sensors, it conducts ‘predictive intelligence’ to pinpoint when equipment, such as rotating devices called compressors, needs maintenance ‘so we can change out parts before they break down,’ [Chevron Energy Technology President Paul] Siegele says.”

USNews includes some examples where the technology came into play. The machinery support center sensed that a compressor in one of Chevron’s Asian business units was experiencing valve failure. On-site inspection confirmed the problem and the valve got fixed. Another time, equipment at Chevron’s Sanha oil and natural gas field off the coast of Angola was showing an irregularity, which the team in Houston detected. A repair was made, and the company saved millions of dollars in potential damage and lost production.

Again, Chevron figures it already is saving in the millions of dollars and says that will become billions when the “i-field” and a general operational overhaul are fully implemented in four years. Efficiencies and savings, of course, mean innovating companies, like Chevron, can invest more in energy exploration and development, which is a good thing.

View the original article here

Philadelphia Story: Energy From Shale and Jobs

Energy produced from shale deposits by hydraulic fracturing continues to create jobs far from the drill site.  The latest example: Improved economics have allowed for a deal to keep a Philadelphia refinery open, which means 850 workers will keep their jobs – and the facility’s new majority partner says hundreds more could be added if plans to expand production come to pass. Philly.com had the story last week.

Those refinery employees – and the local/regional economy that is supported by the installation, as many as 10,000 indirect jobs by one estimate – can thank the Carlyle Group, and they can also thank the Marcellus Shale. Philly.com:

"Carlyle officials say they are 'reimagining' the business to exploit new, cheaper domestic sources of crude oil to replace expensive imported petroleum, a major reason the refinery was uncompetitive. …  Carlyle, which will have a majority interest in the venture and operate the refinery, also plans to increase dramatically the use of low-priced natural gas from Pennsylvania's booming Marcellus Shale region to reduce refining costs and emissions. 'We believe the changing nature of the energy paradigm in the U.S., coupled with a redefined operating model, can truly benefit this refinery,' Carlyle managing director Rodney S. Cohen said."

The Philadelphia story illustrates what some have been talking about when they laud the game-changing nature of energy from shale. It’s creating jobs (and saving them), reducing costs to manufacturers and helping them create jobs, reinvigorating the chemicals industry and more. It’s abundant and affordable energy that’s also helping out consumers.

We’ve seen the shale energy stimulus rippling through states like North Dakota, Texas and Pennsylvania. Ohio is gearing up for its own economic wave from shale. As for the Philadelphia refinery, studies, analyses and projections about shale energy are to become reality – real jobs, held by real people, saved.

Because of energy from shale.

View the original article here

Philadelphia Story: Energy From Shale and Jobs

Energy produced from shale deposits by hydraulic fracturing continues to create jobs far from the drill site.  The latest example: Improved economics have allowed for a deal to keep a Philadelphia refinery open, which means 850 workers will keep their jobs – and the facility’s new majority partner says hundreds more could be added if plans to expand production come to pass. Philly.com had the story last week.

Those refinery employees – and the local/regional economy that is supported by the installation, as many as 10,000 indirect jobs by one estimate – can thank the Carlyle Group, and they can also thank the Marcellus Shale. Philly.com:

"Carlyle officials say they are 'reimagining' the business to exploit new, cheaper domestic sources of crude oil to replace expensive imported petroleum, a major reason the refinery was uncompetitive. …  Carlyle, which will have a majority interest in the venture and operate the refinery, also plans to increase dramatically the use of low-priced natural gas from Pennsylvania's booming Marcellus Shale region to reduce refining costs and emissions. 'We believe the changing nature of the energy paradigm in the U.S., coupled with a redefined operating model, can truly benefit this refinery,' Carlyle managing director Rodney S. Cohen said."

The Philadelphia story illustrates what some have been talking about when they laud the game-changing nature of energy from shale. It’s creating jobs (and saving them), reducing costs to manufacturers and helping them create jobs, reinvigorating the chemicals industry and more. It’s abundant and affordable energy that’s also helping out consumers.

We’ve seen the shale energy stimulus rippling through states like North Dakota, Texas and Pennsylvania. Ohio is gearing up for its own economic wave from shale. As for the Philadelphia refinery, studies, analyses and projections about shale energy are to become reality – real jobs, held by real people, saved.

Because of energy from shale.

View the original article here

The Administration’s Flawed Five-Year Offshore Plan

Words matter. But actions matter more, and the Interior Department’s final five-year offshore oil and natural gas leasing plan shows that while the administration trumpets an all-of-the-above energy approach, it falls short of providing the bold leadership needed to fully deploy our country’s ample resources.

You can read Interior’s statement on the plan here. Basically, Secretary Ken Salazar says the strategy includes areas with the “highest-known resource potential.” Sounds good, but it took industry exploration for those areas to gain that designation. Only through exploration can we learn the resource potential of other areas. Loudly, misguidedly, the administration is saying “no” to that.

Its plan omits areas off both coasts and in the Eastern Gulf of Mexico that are believed to be rich in energy – but which will remain unexplored. There’s little incentive to spend millions of dollars to research and gather data in these areas because they are off-limits to exploratory drilling. API’s Erik Milito, director of upstream and industry operations:

“We must move past policies that undermine the mission of supplying Americans with the energy they need. While vitally important, the Western and Central Gulf of Mexico areas included in this proposed offshore program are not ‘new’ areas. … Today’s proposal will not allow us to realize the full benefits from safe and responsible development of America’s oil and natural gas resources, continuing a pattern of delay and unnecessary restraint.”

Milito said Interior’s plan, announced with the Bureau of Ocean Energy Management, actually pushes back a scheduled 2015 lease sale for the Beaufort Sea off Alaska – where leasing already has occurred. It makes more areas off limits than it makes available. Milito:

“A sensible long-term strategy would embrace and promote expanded oil and natural gas exploration and development to create new jobs and secure critical energy supplies for future generations. … Exploring and developing new areas that offer oil and natural gas gives the United States the golden opportunity to create an additional one million new jobs and billions in new revenue to our government in just seven years. We cannot reach these goals by constricting exploration and obstructing the safe and responsible development of American energy resources.”

While oil production has increased in private and state lands, this administration has consistently deterred activity on federal lands, where oil production has actually decreased. Instead of forward-looking energy leadership that would create jobs, generate tax revenue for governments and make America’s future more secure, the administration offers posturing and talk. Instead of acting to promote greater domestic oil and natural gas production it is restricting opportunity and building in delay – neither of which will prepare the United States for its energy future.

View the original article here

Graphically Speaking: Fracking and Injection Wells

Last week’s National Research Council report on hydraulic fracturing and earthquakes pretty much ends up where a number of scientists are on the correlation between fracking and quakes: that energy development from shale formations poses a low risk for tremors of significance. The report said more attention should be given to injection wells, which are used for waste disposal by a number of industrial enterprises, not just the oil and natural gas industry. AP science writer Seth Borenstein’s take on the report is here.

API, America’s Natural Gas Alliance and the American Exploration & Production Council have produced a couple of informational tools on hydraulic fracturing and seismic activity and underground injection control (UIC) wells that are especially timely with release of the council’s report. 

Highlights from the fracking document:

Hydraulic fracturing is done with a mixture of more than 99.5 percent water and sand. The other one-half of 1 percent is chemical – including anti-bacterials and lubricants. See the FracFocus.org site for more on fracking fluids.Fracturing that occurs thousands of feet below the surface (and below groundwater aquifers) is carefully mapped with sophisticated equipment to optimize recovery of the oil and/or natural gas and to monitor the well itself. In other words, microseismic activity associated with fracking is thoroughly understood.

One study of several thousand shale fracture treatments across North America showed the largest micro-quake measured about 0.8 or about 2,000 times less energy than a magnitude 3.0 earthquake. The chart below shows that most of the micro-quakes in this study were 10,000 to 1 million times smaller than a 3.0 earthquake, which is roughly equivalent to the passing of a nearby truck:

Highlights from the UIC document:

The U.S. has about 151,000 Class II UIC wells used by the oil and natural gas industry, of which only a handful are being studied for possible links to earthquakes. These wells are a subset of more than 800,000 injection wells nationwide used to dispose of a variety of industrial wastes and for development of various minerals and geothermal energy sources. Here’s a map that shows the state-by-state well distribution:

Injection wells are regulated by EPA under the Safe Drinking Water Act. In many cases EPA has delegated authority for the UIC program to the states, with 39 states having primary authority over 95 percent of all UIC Class II wells.Literature published in the past five years shows that less than 40 incidents of seismic activity felt on the surface were associated with Class II injection wells.

Injection wells pump fluids into deep rock formations (see graphic). It’s unusual, but in some cases a quake can occur when a number of geological and operational factors come together – especially the presence of hard, dense and brittle crystalline “basement rock.”  These quakes are almost always small, below the level that would be felt on the surface.

For more information, check out the Energy From Shale website.

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Energy: It’s About Jobs

The latest jobs report, showing the creation of just 80,000 new jobs in June, is refocusing the political debate on the economy. How meager is 80,000 jobs? Well, according to UPI that’s “not even enough to keep up with growth in the working-age population,” which last month grew by 191,000. Meanwhile, a Rasmussen survey reports that only 31 percent of likely voters say the president is doing a good or excellent job handling economic issues.

Short analysis: It’s about jobs. Good news: It doesn’t have to be hard.

Energy-related job booms in North Dakota, Pennsylvania, Texas and other states are showing what’s possible – in terms of jobs, tax-revenue generation and associated economic growth – when energy development leads the way. The Institute for Energy Research’s Robert Bradley Jr., in an article for Oilprice.com:

"In North Dakota, where drillers are producing crude oil from the Bakken Shale, workers are finding jobs offering wages that are significantly higher than the national average. Truck drivers are being paid $80,000 a year to start. Some workers on oil rigs are being paid six figures. And yet many jobs are going begging. According to the mayor of Williston, 'A lot of jobs get filled every day, but it’s like for every job you fill, another job and a half opens up.' In April, North Dakota had a jobless rate of 3.0 percent, the lowest in the country."

Additional detail:

In Pennsylvania, Bradley writes, state analysis projects jobs for drill operators will grow nearly 85 percent this year (compared to sub-3 percent growth otherwise in the state).Expansion is occurring in Texas’ Eagle Ford shale play, Louisiana’s Haynesville Shale, Arkansas’ Fayetteville Shale and other energy-rich rock formations, “increasing domestic energy supplies, making energy more affordable, and spawning subsidiary investments in the private sector creating additional jobs.”A steel plant in Ohio is adding 200 jobs to produce more drill pipe.A planned ethane plant in Texas is expected to create 400 jobs.

Bradley:

"These jobs are being created by companies, not the federal government. And they are based on 'made in the USA' technologies that have the potential to greatly increase nation’s energy security and alter the world’s balance of power. As U.S. oil and natural gas supplies increase, some experts believe American energy independence is on the horizon."

On his blog, John R. Hanger connects energy production and employment:

"Jobs are a major product of that commerce and energy production. The 5 biggest energy producing states all have unemployment rates below the national average, but the same cannot be said about the 5 states producing the least energy." 

Meanwhile, Canada, which a few years ago staked its economic revitalization on energy, is looking for U.S. workers to fill anticipated job slots in Alberta. The Edmonton Economic Development Corporation expects a shortage of 114,000 workers in the coming months and has set up the aptly named opportunityawaits.com website to promote job openings. One U.S. veterans group is reaching out to former military personnel and active-duty soldiers who soon will transition to civilian life, encouraging them to consider oil sands and Keystone XL pipeline jobs in Canada. Fox News has a story, here. Again, the point is to recognize the dynamic economic power of the energy stimulus.

No question, U.S. jobs figures for June suggest a still-struggling economy. The administration says it’s not to blame, that there are limits to what a president can do to change the national economic trajectory. Indeed, a president has limited options – so perhaps the first move is to not stand in the way of growth.

Energy is a proven job creator, a shining sector in the weak economy. But the administration is making energy expansion harder, not easier. It is delaying construction of the Keystone XL pipeline, and it is restricting offshore energy development. Its permitting policies in the Gulf of Mexico have suppressed production there, costing jobs and economic opportunity throughout the region. It is sending confusing messages on hydraulic fracturing, the shale technology that is unlocking America’s ample energy potential.

America’s oil and natural gas companies are creating good jobs and can create even more. With the right policies this industry can add 1 million new jobs before the end of the decade. Here’s a blueprint for an American-made energy policy.  It’s energy, it’s jobs and it’s within our reach.

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Crude Production Rise: Credit Where Credit’s Due

Last week the Energy Information Administration (EIA) told us that U.S. crude oil production in the first quarter of the year topped 6 million barrels per day (bbl/d) for the first time in 14 years. EIA’s chart:

EIA’s analysis:

“Strong growth in U.S. crude oil production since the fourth quarter of 2011 is due mainly to higher output from North Dakota, Texas, and federal leases in the Gulf of Mexico. … After remaining steady between 5.5 million and 5.6 million bbl/d during each of the first three quarters of 2011, EIA estimates that U.S. average quarterly oil production grew to over 5.9 million bbl/d during the fourth quarter and then surpassed 6 million bbl/d during the first quarter of 2012.”

Certainly, great news like that will restart discussion of who deserves credit for such a production milestone – beyond, of course, the energy companies that are actually pulling the oil from the ground or the seafloor. Politico Pro [subscription required] reports White House spokesman Clark Stevens emailed in the administration’s claim for credit:

“Despite misleading rhetoric by some in Washington, President Obama has made expanding responsible oil and gas production here at home a clear priority and the facts speak for themselves. Since the president took office, domestic oil and gas production has increased each year, with oil production in the first quarter of 2012 higher than any time in 14 years and natural gas production at its highest level ever, and that is certainly thanks in part to steps taken by this administration.”

That’s one view. Others disagree. Politico quotes Tom Kloza, chief oil analyst at the Oil Price Information Service:

“In the end, the president and Congress can’t take credit for what price and technology have delivered. It would be akin to taking credit for the iPad. … Unless there is a price collapse, or a true scientific indictment of fracking, one can expect to see plentiful growth in light sweet crude coming from the Rockies, North Dakota, and even Ohio or West Virginia.”

And Richard Newell, the EIA’s head from 2009-2011:

“In a political year, different parties would like to take credit for positive news in the energy sector and I think here the credit largely goes to technology."

And also Amy Myers Jaffe, an energy fellow at Rice University, who notes that North Dakota and Texas shale production has occurred mainly on private land, while increases from the Gulf result from the actions of previous administrations:

“Production rises from Gulf of Mexico would have been in the hopper way before President Obama took office.”

Settling the argument isn’t as important as recognizing that with the right policies the oil and natural gas industry can further develop America’s energy wealth. With the right strategies and leadership, the United States could see 100 percent of its liquid fuel needs met from North American sources. And along with it: jobs and tax revenues for government.

Strategies, policies and action: It’s what separates election-year rhetoric from substantive progress toward a more secure energy future.

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Enter Innovation: Improving the Fracking Process

One of the factors involved in pulling energy from shale through hydraulic fracturing is how much water is needed – typically 2 to 4 million gallons per well. Though that’s not as much water as it sounds (electrical generation for the Susquehanna River Basin requires nearly 150 million gallons per day), it’s a public concern. More on water usage at the FracFocus website.

Water also is an industry concern. It isn’t free, and once the well has been stimulated with fracking, there’s waste water that has to be disposed of or recycled. Enter innovation. A number of companies are tackling the issue.

Schlumberger’s HiWAY flow-channel technology claims to use less water, with greater effectiveness:

“HiWAY technology fundamentally changes the way proppant fractures generate conductivity. The first technique of its kind, HiWAY fracturing creates open pathways inside the fracture, enabling hydrocarbons to flow through the stable channels rather than the proppant. This optimizes connectivity between the reservoir and the wellbore—resulting in infinite fracture conductivity.”

Other companies are marketing waterless alternatives, using other agents to apply pressure to the shale – producing microscopic fractures and introducing sand or other proppants to keep the cracks open so the oil or natural gas can drain from the shale and be collected.

Baker-Hughes has developed VaporFrac, combining a high-pressure nitrogen and/or carbon dioxide gas stream and an ultra-lightweight proppant slurry:

“This method safely creates a flow stream that is more than 90% gas, significantly reducing post-frac cleanup. The high energy of the gas phase makes for easy flowback. There’s a quicker tie into pipelines.”

GASFRAC Energy Services’ liquefied petroleum gas (LPG) gel is primarily propane, which the company says has a number of advantages in fracking:

“Since our gel regains permeability with the hydrocarbons we stimulate, we have the ability to recover 100% of the fracturing fluids within days of stimulation. This creates economic and environmental benefits reducing clean-up, waste disposal and post-job truck traffic, while creating higher initial production levels.”

No doubt, other companies, other energy innovators, are at work on this question. The point here is to show the kind of invention that’s being sparked by necessity surrounding water and fracking. Businesses are taking on this issue and others associated with energy development with the goal of making processes better, safer, more efficient and more environmentally friendly. When we hear about their stories, we’ll pass them along.

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Gulf Lease Sale Emphasizes Need for Expanded Opportunities

Some details from Wednesday’s federal lease sale in the central Gulf of Mexico (news coverage here and here):

Size – The Bureau of Ocean Energy Management (BOEM) sale attracted high bonus bids of $1.7 billion for the area off the coasts of Louisiana, Mississippi and Alabama – ranging as far as 230 miles into the Gulf. Bids – Fifty-six companies submitted 593 bids on 454 tracts, with the sum of all bids totaling more than $2.6 billion. That’s a big sale, though not the biggest ever. According to BOEM the biggest value lease sale was $3.68 billion in the central Gulf in March 2008. The last sale in the central Gulf in March 2010 totaled $949 million. Record – The highest bid on a single tract was $157.1 million, submitted by Statoil in the Mississippi Canyon, Block 718 – about three times higher than the previous top bid of $52.5 million submitted in 2010.

Now, some perspective.  As API’s Erik Milito said Tuesday, the simple fact that the federal government held a lease sale in the central Gulf is important. It had been more than two years since drilling blocks had been put up for bid. That BOEM opened more than 38 million acres after a two-years-plus hiatus was a positive step.

Interior Secretary Ken Salazar heralded the sale as evidence of the administration’s “all-of-the-above” energy strategy:

“When it comes to domestic production, the president has made clear he is committed to expanding oil and natural gas production safely and responsibly, and today's sale is just the latest example of his administration delivering on that commitment. … The Gulf is back. There is great robustness in oil and gas activity currently under way in the Gulf, as well as interest in additional exploration.”

Well, it’s probably more accurate to say the Gulf is getting back. Unfortunately, just returning to 2010 levels of activity (rig counts, etc.) concedes that two years of production were negatively affected by the administration’s policies – the 2010 deepwater drilling moratorium and the slow pace of permitting when the ban was lifted. Given that context, sure, industry was enthusiastic about Wednesday’s sale. National Ocean Industries Association President Randall Luthi:

“A sale of this size signals a strong industry commitment to the Gulf of Mexico and to our nation’s energy future and to more domestic jobs.”

More context: The areas opened for bidding this week have been considered before, which is what Milito emphasized on Tuesday. The central Gulf was not a new area for development. So, instead of restricting opportunity to these areas, the government should be expanding it to new ones. As Luthi suggests, industry is willing and able to do more. Just imagine the robustness of the bidding if the lease areas were in the Eastern Gulf or off the Pacific and Atlantic coasts – areas with undiscovered, technically recoverable reserves estimated at 1.40 billion, 10.37 billion and 3.82 billion barrels, respectively (see map).

Milito from Tuesday:

“Exploration is what leads to production. And it is important to understand that it is critical to maintain a robust leasing program to allow companies to explore new prospects and replace the production that is coming from existing wells. Maintaining the status quo won’t work.”

Opening up more U.S. resources for development (onshore as well) is the real path to expanding domestic oil and natural gas production – which is fundamental to a true, all-of-the-above energy approach. It’s critical to an American-made energy strategy that will create jobs, expand the economy and help us be more energy secure in the future.

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