It’s been quite the busy two weeks here, and posts to this blog have suffered accordingly. Just so that people are aware, and also so that people know this blog is not being ignored, we’d like to make a short but important announcement. Nuttall Legal now has the ability to process all major forms of credit cards. Ask about paying by credit card when you call or email.
Frack Water Found in Water Wells! But it’s not as Bad as it Sounds.
A Penn State study from a few years ago has found its way into the news. Marcellus Drilling News has posted an article here. If you have trouble viewing the article through that link, do a Google search for “Penn State Finds Chemical Migration in 3 PA Water Wells from 2010”. MDN links to a bunch of the articles that have been published about the study.
The gist of the articles you will find at most news sources right now is that frack water is bad, and was found in three water wells, so fracking must be bad.
The reality is that the researchers thought the frack water had come from a bad casing job in the vertical portion of the well (the part that is not fracked) or from a frack water containment pit on the surface that was shown to be leaking. It is splitting hairs to say that fracking is not the cause as it was a fracked well that was the cause, but the reality is that the actual fracking was not the cause. If one reads far enough into most of the articles at most of the news sites one will find that they all point to something other than the actual fracking being the cause.
I can guarantee that fracked wells communicate with other wells in the area, pushing gas through naturally-occurring weaknesses in the formations between them, and probably pushing some frack fluid through, too. It’s quite possible that fracked wells communicate with water wells and the surface. There is not solid evidence yet that that’s the case.
Evidence of communication with the surface and with water wells has probably been covered up by oil and gas companies. Affected landowners have most likely been given excellent settlements with confidentiality agreements attached. If I were an oil and gas attorney working for one of the development companies, that’s what I would try to do. One of these days a surface owner is not going to take the settlement, a case will go to court, and then we’ll all have the evidence at our fingertips. Until then, it’s all just “he said, she said” and hearsay. If anyone out there has hard evidence to the contrary, please give this office a call.
Ford F-150, Natural Gas Edition
The last generation of Ford F-150s offered a natural gas version of the six-cylinder engine. The demand was higher for that engine than Ford anticipated, so they’re now offering a 5.0-liter V8 natural gas option. Awesome!
You can check out a few more details over at Autoblog. Ford’s website doesn’t make it easy to find information on the natural gas options, but I imagine if someone walked into a dealership and requested one that the salesmen would be happy to help.
The obvious drawback is refueling. If there are no CNG stations in your area, this truck will be ridiculously impractical. If you’re not going to be deterred, however, you could get a Phill home refilling station. Be forewarned that refilling at home can have detrimental effects on your warranty. Read it carefully before deciding.
Fracking Didn’t Pollute the Monongahela River Basin
A report from the USGS shows that the quality of water in the Monongahela River Basin has not been effected by fracking. Well, not much. The groundwater quality is almost exactly the same, and surface water quality has been changed somewhat. The surface water changes, though, are probably attributable to clean up of old coal mines.
UPS is Adding 60 LNG Trucks to its Fleet
This is the kind of news we like to see! UPS is adding more Liquid Natural Gas fueled trucks to its existing fleet. The new trucks will be based in Harrisburg, PA, taking advantage of inexpensive natural gas from the Marcellus and Utica shales.
One of the main drivers behind low prices for bonuses and royalties in West Virginia right now is the fact that there just isn’t enough demand for the product. Wells are being shut in because there isn’t enough pipeline capacity to handle all the production. Local use of natural gas would help drive those prices up. Let’s see more natural gas vehicles!
It’s Time for the U.S. to Export Oil
Oil producers in the United States are not allowed to export oil. It was a policy started back in the 70s with the energy crisis. I imagine that it accomplished its stated purpose at the time, it probably protected the American public from high gas prices. We didn’t have enough oil for our own needs, so shipping it abroad didn’t make much sense. Now we have plenty, or pretty close to it, and we’re looking at being able to bring a whole lot more to the surface. Exporting oil shouldn’t hurt gas prices, and according to this article over at the Council on Foreign Relations, it might even help gas prices. That statement didn’t make a whole lot of sense to me either at first, but the article makes a pretty good case. Regardless, we need to be able to ship our oil abroad.
The Latest on Oil Price Predictions
Oil prices have dropped for a couple of days because the Saudis said they would keep pumping oil to keep up with demand. Basically, if somebody wants to buy their oil, they’re going to sell it. I’m personally surprised that anybody is surprised at this. I’ll be surprised when the Saudis start to cut back on production. Why the market thinks that the Saudis want high oil prices right now is beyond me. They haven’t yet accomplished any of their (suspected) goals, except for keeping market share. U. S. shale drillers are not yet going out of business in large numbers, and Venezuela, Russia, and Iran have not been hurt enough to make any serious changes. Until those goals are accomplished, Saudi Arabia is going to keep pumping oil so that they keep their current customers.
On the other hand, experts are predicting that rig counts will bottom out in May. I think this is too soon to start bringing rigs back, as supply needs to drop and prices need to climb before more rigs become economically sound. Supply isn’t going to drop enough to justify bringing rigs back online because producers will be able to bring previously drilled non-producing wells online.
Atlantic Coast Pipeline Clears One Hurdle
The U. S. Forest Service has approved a survey through the Monongahela National Forest for the Atlantic Coast Pipeline. The survey will take a year, and is just one in a large number of steps that the Pipeline will need to take before getting approval.
Antero’s Plans for 2015
This article over at Natural Gas Intel includes a lot of useful information about Antero Resources’ plans for the upcoming year. In short, they plan to scale back production for a while before ramping back up at the end of the year. They’ll be running 11 rigs and seven completion crews. They’re going to be holding back completion of 50 wells, waiting for prices to come back up.
This jives well with the sense that we’ve been getting about oil and gas prices and production from fracked wells, and the amount of oil and gas that is currently in storage. Sometime this summer we’ll probably see a drop off in production from already producing wells. That drop off in production will be offset by bringing wells that have already been drilled but not completed into production. As the number of drilled but non-producing wells starts to decline companies will begin to see the need to start drilling more. This need will come from completed or soon-to-be completed pipelines and energy plants. We don’t really see that need arising as early as the end of this year, but Antero probably has better research and data available to it than we do, so we’ll trust them. Look for drilling to pick back up at the end of this year.
EDIT: As of July of 2015 we began to see an uptick in the number of people calling the office with questions about leases. Surprisingly, they haven’t been from Antero. We’ve begun hearing from Mountaineer Keystone and EQT. It seems that in preparation for drilling in 2016, and after having reviewed the first half numbers, some companies have begun taking leases again.
Pipelines are the Chokepoint
There’s an interesting article over at Environment & Energy Publishing that puts forth the premise that a lack of pipeline infrastructure is what’s really slowing down the growth of shale fracking. I think they’re right. Of course, once pipelines are in place, consumption will need to increase, but consumption will increase if the pipelines can be put in place. There’s too much demand for cheap, clean energy, and natural gas offers the best balance of clean and cheap right now.