Independent Water Testing Before Fracking

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Something I always tell surface owners to do is get their water tested.  I’ve never considered getting the air tested, as I’ve never thought that would be a long term problem.  After all, once drilling is done any air pollution will go away with the rig.  Air pollution from the well or pipelines shouldn’t be a problem, and if it is, it will have a pretty obvious source, such as a hissing crack in a pipe.  Apparently, though, air pollution is a concern.

Two Columbia University scientists are doing testing at 15 homes near fracking sites Pennsylvania.  They’re taking samples of both water and air.  They are gathering data to “provide an objective viewpoint to drive a more rational discussion.”  I’ll be very interested to see what their results are.

UPS Adds CNG Filling Stations

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UPS, the shipping company, is building fifteen new compressed natural gas filling stations.   They already have eight in operation, so this will bring their total CNG filling stations to 23, if I do my math correctly.  UPS has been using CNG since 1989, and uses a number of other alternative fuels in its fleet.  They have an alternative fuels factsheet over at their website if you’d like to check into a few more details.

One of the new CNG filling stations will be located in Charleston, WV.  This is great for us!  Not that the filling station itself will bring a lot of new jobs or anything.  We need more CNG filling stations and more CNG vehicles.  The vehicles are one of the things that will drive up demand for natural gas.  More demand equals higher prices.  Higher prices equal more royalties paid and more development.

Mountain Valley Pipeline Litigation is Getting Started

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People are lawyering up over the Mountain Valley Pipeline.  A while back, the MVP sent out letters to property owners saying that if the property owners didn’t allow the MVP surveyors onto their property, MVP would sue.  A few people took initiative and filed a suit asking that the MVP not be allowed onto their property.  Now MVP has filed suit asking to be allowed onto their property, and that of 100 other people who have refused access.  It’s an interesting question, whether the MVP can force people to allow surveyors under the eminent domain laws.  Certainly, Federal eminent domain won’t apply because the MVP hasn’t been approved by FERC yet.  State eminent domain laws might, but the surface owners’ argument is interesting.  West Virginia eminent domain allows eminent domain to be exercised for the public good, and since the pipeline is just passing through, there won’t be any good done to the West Virginia public.  If you’re interested in more details, the article over at the Register Herald is worth a quick read.

Oil Prices Start to Go Back Up

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Perhaps this is a bit premature, but it looks like oil prices are going to start going up again.  Based off a combination of Cushing, OK storage levels not increasing much and the Saudis saying they were going to charge more for the oil they will send to Asia, oil futures have gone up.

Looking at it, the storage levels at Cushing actually went up, just less than they have recently.  And the Saudis only bumped their price up a dollar.  So it’s pretty tenuous.  It seems that investors are looking for a reason for oil to go up in price, and this is a reason, be it what it may.  I’m not convinced that this increase will stick.  I expect prices to start consistently going up this summer or fall.

Burning Storage Tanks in Wetzel County

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Unfortunately for Gastar, some of it’s tanks in Wetzel County caught fire early last Wednesday morning.  The cause is under investigation.  No injuries or damage have been reported so far.  It appears that even the pad wasn’t damaged.

Oil and gas production has been great for West Virginia, but it’s impossible to ignore the dangers that come along with it.  I’m all for development.  Just make sure that you educate yourself before you sign, and keep your eyes wide open after you sign.

Compressed Natural Gas in a Box

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West Virginia should really encourage development of technologies such as CNG in a Box.  It uses gas that would otherwise be wasted as flared gas to fuel vehicles that burn natural gas.  It’s quite obviously not an actual product yet, but man, it should be.

Let’s look at who wins with this.  1)  Consumers, since natural gas costs less than gasoline.  2) West Virginians, since we produce a huge amount of natural gas.  3) Car manufacturers, since they get to sell a new technology.  4) Environmentalists and producers, since gas that’s otherwise flared to the air gets put to use.  5) Environmentalists again, since clean-burning natural gas is used in place of dirtier gasoline.

The only losers are oil producers, but most of them are in the business of producing gas too, so maybe we can’t really list them as losers.  It’s probably a wash for them.

The trouble here is the old chicken/egg idea.  We need more natural gas cars to use the infrastructure, but we need more infrastructure for the natural gas cars.  Which do you build first?

The obvious answer is fleet vehicles, since companies and governments can eat the short-term costs and wait for the long-term savings.  But this technology looks like it would make it possible for gas stations to fire one of these things up at their normal site.  It might make it possible to build up the infrastructure first.

Forced Pooling is Bad. Here’s why.

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Pat McGeehan is a member of West Virginia’s House of Delegates.  He was also an opponent of HB 2688, the Forced Pooling bill.  It’s very likely that the bill is going to be coming back up this fall, and in preparation Mr. McGeehan has written an excellent editorial on why the Forced Pooling bill is a bad idea.  I’m not going to summarize it.  It’s worth reading the whole thing.

T. Boone Pickens on Oil Supply and Prices

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T. Boone Pickens in an interview with the Wall Street Journal said that we’ll see our stock of oil drop because rigs have been idled.  That will begin to be reflected in the price of oil in June 2015, and he expects oil prices to be up to about $70/bbl by the end of 2015.  I certainly am not privy to the information he has, but I am happy to say that the information I have run across would lead me to completely agree with him, and that I previously come to the same conclusion.

The takeaway for West Virginia mineral owners is this.  If you’re on the fence about signing a lease, and think you could wait until the end of this year or the beginning of next to sign, I think it would be a good idea to wait.

Southwestern, Chesapeake, and the Northern Panhandle of West Virginia

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Southwestern bought a ton of West Virginia acreage from Chesapeake.  It was land that CHK was just sitting on.  SWN is really ramping up their drilling program on it.  This is excellent news for West Virginia mineral owners in the northern panhandle and Monongalia County.  It seems like CHK bought up most of the good minerals in those parts of West Virginia back before 2009.  I say that because there just hasn’t been that much development in those parts, and I know that CHK bought up a ton of land up there because I was working as a landman for them at the time.  I’d been wondering when development was going to start up in the northern panhandle, and why it hadn’t been more developed already.  It’s prime gas real estate.  There’s a ton of development in Ohio and Pennsylvania, just across the borders.  I couldn’t think of a good reason for the northern panhandle to not be developed, other than that CHK just didn’t want to.  My gut told me it was prime, but nothing was happening.  Now it seems that my gut was right, as SWN is getting after it up there.

Yemen, Saudia Arabia, Rebellions, and Air Strikes

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This is the kind of thing that adds so much unpredictability to the oil and gas market.  Yemen is an oil producing country, although it doesn’t produce a lot.  It also happens to be next door to the second largest oil producing country, Saudi Arabia.  Russia is number one, in case you were wondering, and the U.S. is a close third, with the likelihood of being or becoming number one very quickly.  But that’s beside the point.

Yemen has seen a lot of turmoil lately.  President imprisoned, president escaping, president declaring new capital city, rebels taking over, suicide bombings, all kinds of crazy stuff.  I feel for them.  I’d hate to be living in that kind of a political situation.

Today, Saudi Arabian jets carried out air strikes in Yemen.  Oil prices jumped a couple dollars as a result.  Why?  It doesn’t seem to me that it should.  Stockpiles of oil are very high, and it doesn’t appear that any oil fields or pipelines were targeted.  At least, there’s nothing in the news to indicate that they were.  There are shipping lanes that run right next to Yemen, but they are not being disrupted at the moment, either.

So it seems to me that oil prices jumped because of unpredictability.  Yemen is becoming less stable, and Iran and Saudi Arabia are involved, so of course oil is suddenly more valuable.  That’s the way the market works.  It’s weird, but it’s true.

Edit: I’d like to point out that the very next day oil prices dropped almost the same amount that they had jumped.  Everybody had a minute to look at the situation and realize it wasn’t all that bad after all.  I’d also like to point out that somebody in Saudi Arabia knew that the strikes were going to happen and that oil prices were going to jump because of it.  Somebody probably made a good chunk of change in the stock market.