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Traffic Deaths Are Cause For Concern In Oil Patch

September 16th, 2014 vaddison Posted in Uncategorized | Comments Off

When it comes to the oil and gas shale boom, Texas leads the pack in production. But a special report by the Houston Chronicle and Houston Public Media News 88.7 has put some alarming statistics in the spotlight, prompting a call for immediate attention.

While highway deaths have dropped steadily across the U.S. for the past six decades, the daily newspaper reports that motor vehicle crashes in Texas have climbed.

“There’s no way to tell from Texas traffic accident data just how many passenger cars or commercial vehicles that crashed can be linked directly to the state’s oil and gas boom,” reporter Lise Olsen wrote in the Sept. 14, 2014, article. “But records show that fatal accidents increased more in the groups of counties that make up the Permian Basin and in those affected by the Barnett and Eagle Ford shale plays, where busy roads regularly fill with tractor-trailers, tanker trucks and commercial vans hauling water, workers and suppliers to oil and natural gas well sites, as well in urban counties that serve as burgeoning hubs for the oilfield industry.”

The article goes on to state that motor vehicle fatalities jumped more than 50% from 2009 to 2013 in the West Texas counties associated with the Permian Basin. The increase reported was 11% for the Eagle Ford and Barnett Shale counties.

Regardless of the absence of a direct connection between the two, few can argue that there are not more vehicles, specifically trucks, on Texas roads where shale plays are located. The surge in truck-related traffic deaths in the oil patch is cause for concern, especially considering some of these deaths could have been prevented.

The stories shared are saddening.

In the news radio report, Guadalupe Quintanilla was described by his daughter as someone who loved his big rig and kept it in good condition. Quintanilla died in October 2010 when his truck collided with another truck as he traveled on a highway. Police said the other tractor-trailer driver, who worked for Turn Around Trucking (now out of business), blew a tire causing the accident. The truck was hauling flammable oil-based mud. According to the news reports, Turn Around’s safety record was terrible, with inspections having revealed not only blown-out tires on trucks in its fleet but also bad breaks.

Then, there is the story of Vilma Marenco, who died after a tractor-trailer carrying pipe ran a red light and hit her vehicle. She was so close to her home when the accident happened that her husband heard the screeching tires and crunch of metal from inside their home, the Houston Chronicle reported, which also stated that troopers discovered the 18-wheeler had a dozen defects.

These were only two of many stories.

It’s true, accidents happen. But all drivers should take responsibility. Don’t become be part of the problem and add to death tolls by being outright neglectful. Obey the laws of the road. Properly maintain vehicles. If you’re too tired to drive, pull over and take a break. Use common sense.

The news report revealed Texas Department of Public Safety troopers have already doubled the number of audits on trucking companies since 2009. Law enforcement agencies should continue doing whatever is in their power to keep illegally operated vehicles off the road. Likewise, oil and gas companies should do the same by choosing to do business with responsible trucking companies and responsible drivers. And for the trucking companies, regularly maintaining vehicles and providing driver training are essential. Make safety the priority.

The news report is part of a five-part series by the Houston Chronicle and Houston Public Media News 88.7. Read more in the series at HoustonChronicle.com/oiltraffic.

Contact the author, Velda Addison, at vaddison@hartenergy.com.

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Challenge Could Grow Future Scientists, Engineers

September 9th, 2014 vaddison Posted in Uncategorized | Comments Off

Ask any child “What do you want to be when you grow up?” and the responses vary widely—doctor, scientist, computer game designer, firefighter, nurse, musician, athlete, etc.

Few would say oilfield service worker, petroleum engineer or geologist—all of which are among the positions that are critical for the oil and gas industry. But results from a survey, which asked nearly 1,200 parents about their children’s job ambitions, show there is hope.

From a given list of jobs, a survey conducted by YouGov and commissioned by BAE Systems and the Royal Air Force revealed that scientist was the top career path, at 15%, that parents said their children were keen to pursue, according to an article published earlier this year by The Independent. The survey showed that most parents (67%) said their children found science lessons fun; however, the survey also revealed that about one-fourth of the moms and dads surveyed believe their children find science difficult.

This is the reason why industries dependent on science should lead fun and educational experiences that encourage children in not only science, but also technology, engineering and math. That is what BP is doing with its recently launched Ultimate STEM Challenge in the U.K.

As part of the competition, open to 11- to 14-year-old students attending U.K. schools, children are asked to work in groups of two to four and put their STEM skills to work by helping the world explore, live and work in challenging environments. Students may pick from one of three challenges: keeping warm, keeping hydrated or keeping cool. Each team must create a short film or presentation that showcases their project.

“The challenges to students have been developed to ensure they reflect the challenges BP faces as a business, from operating at the bottom of the ocean to the heat of the desert,” BP said in a press release.

Students will get some assistance in that teachers will be given material to kick off the session. “Inspiration and support” will come via case studies that demonstrate how STEM is used to help BP overcome obstacles, social media linkups with BP scientists and local STEM ambassadors.

The challenge follows BP’s Ultimate Field Trip, which targeted university students.

“At BP, we know first-hand how important STEM subjects are to the future of the U.K.’s competitiveness in the global economy,” Ian Duffy, community development manager for BP in the U.K., said in the press release. “A key part of young people choosing STEM subjects is how strong a sense of self-identity and confidence they have in using those subjects.

“Many young people effectively make that decision in the very early years of secondary school, so positive early experiences can have a powerful effect. Together with our partners at the Science Museum and STEMNET, we have designed The Ultimate STEM Challenge in order to help young people see that they can be our engineers and scientists of the future, benefitting themselves, their families and their communities,” he continued.

BP’s efforts should be commended and duplicated by others in the industry. These childhood experiences are sure to factor into their future decisions.

Contact the author, Velda Addison, at vaddison@hartenergy.com.

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Understanding Each Generation Is A Workplace Must

September 2nd, 2014 vaddison Posted in Uncategorized | Comments Off

While everyone might not possess all of the characteristics typical of their generation, few could argue that they don’t share at least some of the traits of others born in the same time frame.

Such traits include similar beliefs, priorities, preferences, buying patterns, communication habits and workplace styles, according to author Jason Dorsey, the chief strategy officer for The Center for Generational Kinetics. An energetic Dorsey kicked off SAS’ Energy Analytics Summit in Houston last month, providing insight into typical behaviors of generations. The talk could not have come at a better time as the oil and gas industry, like many other industries, prepares to lose some baby boomers to retirement.

“Gen Y is the fastest-growing generation in this industry,” Dorsey said. “Everybody predicted for years that the boomers were just going to suddenly leave. As we all know that has not happened for a variety of reasons, … but boomers will continue to push back on time commitment.”

Dorsey, who has made appearances on 60 Minutes and The View among other TV shows, spoke on ways to solve generational challenges and understand differences. He pointed out that for the first time there are four generations in the workforce and five generations in the marketplace, each with a different view on work. And more often than not, this is creating or has already created collisions, disconnects and conflict in the workplace in areas such as communication, motivation, teamwork, engagement, professionalism and leadership.

“If companies do not bridge these generations and embrace their newest generation of frontline employees, their operating costs will go up, their effectiveness will decrease, and both morale and profits will suffer [although anonymous blog postings will go through the roof],” Dorsey wrote in his book titled Y-size Your Business: How Gen Y Employees Can Save You Money and Grow Your Business. “On the other hand, if companies can successfully navigate the dynamics of a multigenerational workforce, in particular Gen Y’s tidal wave-like entry, they can unlock tremendous workplace potential where other companies only unlock infighting.”

The generations and the approximate ages are: T, ages 69 and above; B, ages 50 to 68; X, ages 38 to 49; Y, ages 19 to 37; and I, age 18 and younger.

Often referred to as “the Gen Y Guy,” Dorsey focused mainly on Generation Y but also touched briefly on the other generations, which outnumbered the youngsters in the room.

Here are some insights he shared based on research from the center.

Technology: Generation Y is tech dependent, not tech savvy, and technology must be simple. They don’t necessarily know how technology works, but they can’t live without it, he said.

Communication: Gen Y communicates in this order—text, email (subject line determines importance) and social media, which Dorsey said has the highest impact but is the most underutilized in the oil and gas industry.

Why hire: Gen Y typically expects to make a difference, even on the first day; naturally challenges the status quo; drives innovation; and looks for something more than money. “Money alone will not attract and keep the best talent, and we have proven it time and time again,” he added.

Here is what he had to say about other generations.

Generation X: They are naturally skeptical and believe actions speak louder than words. Gen X dislikes workplace surprises (deadlines are important), never wants to be trapped and wants backup plans, making great managers. Dorsey called Gen X the most loyal generation but that loyalty is to individuals—not organizations.

Boomers: Baby boomers, he said, define work ethic in hours per week, and hours don’t count “unless they can see you.” This is especially true in the oil patch, he noted. Boomers believe in policies, procedures, steps and protocols.

Traditionalists: The traditionalists have strong military connections, grew up around the Great Depression and are OK with delayed gratification.

Dorsey also offered these tips for working with Gen Y:

• Provide specific examples of the performance expected. Gen Y especially lacks experience, so even showing a photo of business-casual dress to avoid someone showing up wearing a pair of khakis (business) and flip flops (casual) would be helpful. “The language of business means something different by generation and gender,” he said. Gen Y learns best from video, photos and bullet points;

• Provide ongoing feedback, not just the annual review. Such feedback can be quick and verbal; and

• The first day of work is the most important. So don’t start new hires on Monday, which usually is a high-stress work day, and have some business cards ready.

Dorsey seemed to have each generation pegged based on responses to questions posed to the audience. His insight should prove useful in the workplace as everyone adjusts to generational shifts in the workforce.

Contact the author, Velda Addison, at vaddison@hartenergy.com.

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SEC Investigations Serve As Reminder To Do Homework

August 19th, 2014 vaddison Posted in Uncategorized | Comments Off

Press releases from the U.S. Securities and Exchange Commission (SEC) don’t usually mean good news. More often than not, the SEC is alerting the public about charges it has filed against companies and individuals accused of wrongdoing.

Not even halfway through the month of August, the SEC has announced charges in connection to two investigations involving Houston-based oil and gas companies. The U.S. Commodity Futures Trading Commission also announced a court order concerning price rigging and a $13 million settlement reached with oil logistics firm Parnon Energy and London-based oil trader Arcadia Petroleum.

All should serve as a reminder for investors to complete their due diligence checklists and gather all of the information they can before making financial decisions.

The most recent SEC charges were brought against a Houston-based company called Chimera Energy and four individuals the SEC said were “behind an alleged pump-and-dump scheme that misled investors to believe the company was on the brink of developing revolutionary technology to enable environmentally friendly oil and gas production.”

Chances are you heard about the company’s claims to have found a technology that extracts shale oil without hydraulic fracturing. The SEC said the company issued about three dozen press releases within a two-month period about the technology.

“However, Chimera Energy did not actually license or even possess the technology it touted and had not achieved the claimed results in commercially developing it,” the SEC said in its press release. “While the stock was being pumped by the false claims, entities controlled by [Andrew I.] Farmer dumped more than 6 million shares on the public markets for illicit proceeds of more than $4.5 million.”

The feds also allege that the misleading press releases were approved by Charles E. Grob Jr. and Baldemar Rios, who operated the company at “the minimum level necessary to lend the company a veneer of legitimacy while concealing Farmer’s involvement altogether.” Carolyn Austin also was accused of dumping shares of the Chimera stock, boosting profits for Farmer. All four were charged with securities fraud, registration violations and reporting violations.

“Farmer and his accomplices secretly rigged the market for Chimera Energy stock and illegally profited by exaggerating the company’s capabilities and technology,” David Woodcock, director of the SEC’s Fort Worth regional office, said in the Aug. 15 news release. “They seized on fracking as a topic of public discourse and aggressively touted an entirely fictitious business to attract unwitting investors.”

Interesting side note: Courthouse News Service pointed out that “chimera,” according to the Merriam-Webster dictionary, means “something that exists only in the imagination and is not possible in reality.”

On Aug. 4, the SEC announced charges against Houston American Energy Corp. and John F. Terwilliger. Accusations are that the company and Terwilliger “fraudulently claimed that a Colombian exploration concession, in which Houston American only owned a fractional interest, held between 1 billion and 4 billion barrels of oil reserves and that the reserves were worth more than $100 per share to Houston American’s investors. The estimates lacked any reasonable basis and were falsely attributed to the concession’s operator, whose actual estimates were much lower.”

The oil and gas industry is inherently subject to risks. But doing research and asking questions can help in protecting investments and minimizing those risks.

Contact the author, Velda Addison, at vaddison@hartenergy.com.

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Mexico’s Actions Show It Means Business

August 12th, 2014 vaddison Posted in Uncategorized | Comments Off

Mexican legislators are on a mission to do all that is in their power to turn around lagging production and stimulate the country’s economy by opening its oil and gas sector, among others, to private investors.

About eight months after they agreed to break the monopoly that state-owned Pemex has held since 1938, legislators have accomplished a feat in passing energy laws. Another milestone was reached this week when Mexico’s President Enrique Pena Nieto, who has pushed the reform as part of a sweeping overhaul of key segments of the government, enacted the legislation.

The country should be applauded for not only its initiatives, but its swiftness. The pace at which legislators and other officials involved in the process have worked has been quick, even despite the presence of disagreement on certain issues. Their counterparts across the border in the U.S., to the northeast in the nation’s capital, could learn a few lessons.

The Mexican government is pushing forward, and it is moving ahead of schedule.

Bloomberg reported that the government plans to announce which fields Pemex will keep for production as part of round zero. Instead of announcing the fields on Sept. 17, the news is scheduled to be announced Aug. 13, according to Pena Nieto.

“The energy reform opens a great opportunity for Mexico, and we need to seize it with complete and fast implementation,” Pena Nieto said. “I’ve told different areas of the government to accelerate all of the measures necessary to put this reform into action for the good of Mexico.”

The energy ministry will decide which fields Pemex gets to keep. The company has shallow-water E&P capabilities but lacks the technical know-how to tap deepwater and unconventional resources.

Pemex has requested 31% of the country’s prospective resources, which accounts for 34.5 Bbbl.

During a March 28 conference call about round zero, Gustavo Hernández, who was acting E&P director for Pemex at the time, said, “There are still lots of opportunities for other players to come to explore and to convert these prospective resources—both conventional and unconventional—accounting for 78 billion barrels to be discovered.”

Mexico is believed to have 156.6 Bboe of hydrocarbon resources, of which 112.8 Bboe are considered prospective resources.

The energy ministry will decide, with technical input from the National Hydrocarbon Commission, which fields Pemex gets to keep.

In order to get what it requested, “Pemex has to demonstrate that it has the technical, financial and operational capacities needed to explore and produce hydrocarbons in a sufficient and competitive manner,” Maria de Lourdes Melgar, undersecretary of hydrocarbons for the Ministry of Energy, said during the same call.

“It’s like a coin which has two sides,” Melgar added. “On one hand, we need to strengthen Pemex, providing the necessary resources to ensure current levels of production in an efficient manner, and that includes reserves. This is the first step toward converting Pemex into a productive state enterprise. On the other hand, from the prospective of the state, we need to multiply investments in E&P, increasing the number of players and creating a new oil industry, which will allow us to increase production and reserves.”

Mexico has shown that it is willing and ready to do business. Now, it is up to private investors to join in the action. Some companies already are getting involved. Pemex recently awarded unrelated contracts to CGG and GE Oil & Gas. CGG won a $200 million contract for ocean-bottom cable (OBC) 3-D/4C seismic work, while GE Oil & Gas was awarded a contract to provide vital surface equipment to Pemex for use at its offshore project in the Ayatsil heavy oil field in the Campeche Sound in the Gulf of Mexico.

Contact the author, Velda Addison, at vaddison@hartenergy.com.

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Marcellus Production Soars To New High

August 6th, 2014 vaddison Posted in Uncategorized | Comments Off

Gas production in the Marcellus region has eclipsed previous rates, hitting a new record high that exceeded 450 MMcm/d (15 Bcf/d) in July.

The news about the large U.S. shale gas basin, which accounts for nearly 40% of the nation’s shale gas production, was released Tuesday by the U.S. Energy Information Administration (EIA). The EIA reported that gas production from the Marcellus region has skyrocketed from 60 MMcm/d (2 Bcf/d) in 2010.

The production increase was attributed to improved drilling productivity, which includes the better precision and efficiency that comes with horizontal drilling and hydraulic fracturing. The EIA predicts that these techniques will help push up production even further by the end of the month.

“With 100 rigs in operation and with each rig supporting more than 6 million cubic feet per day [170 Mcm/d] in new-well production each month, new Marcellus region wells coming online in August are expected to deliver over 600 [MMcf/d] [18 MMcm/d] of additional production,” the EIA said in its report. “This production from new wells is more than enough to offset the anticipated drop in production that results from existing well decline rates, increasing the production rate by 247 MMcf/d [7.4 MMcm/d].”

The year appears to be shaping up as a good one for oil and gas companies’ operations in the region, including Chesapeake Appalachia and Cabot Oil &Gas among others. Cabot called its Marcellus Shale properties the “cornerstone asset of its portfolio” that has driven record production and reserve growth.

For second-quarter 2014, Cabot reported production averaged 37.7 MMcm/d (1,258 MMcf/d), marking a 41% jump over the same time last year.

“Our operations in the Marcellus continue to meet expectations across our acreage position,” Cabot CEO Dan O. Dinges said in a July 24 news release about the company’s second-quarter results. “We recently placed on production three pads that encompass the northern- and eastern-most reaches of our acreage with great success.”

Chesapeake is scheduled to release its second-quarter results Aug. 6.

But higher output has brought some growing pains. The EIA pointed out that production has outpaced pipeline capacity in the region, prompting the need for pipeline expansion projects.

“As pipeline capacity is increased, markets in the Northeast gain greater access to Marcellus region gas, which can result in stabilized or decreased prices,” the EIA said. “Natural gas prices in the Northeast, such as the Dominion South trading point in southwestern Pennsylvania, have increasingly been below the Henry Hub price, in part because of increased access to Marcellus gas.”

Contact the author, Velda Addison, at vaddison@hartenergy.com.

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Arctic’s ‘Targeted Leasing’ Approach Could Work Elsewhere

July 29th, 2014 vaddison Posted in Uncategorized | Comments Off

Oil and gas industry officials seeking drilling access to more offshore areas have a chance to let their voices be heard by U.S. regulatory authorities.

Using the targeted leasing approach unveiled in 2012, the U.S. Bureau of Ocean Energy Management (BOEM) wants to find out which specific areas in the Beaufort Sea planning area have the most promising hydrocarbon potential. BOEM already has its own idea, but seeks industry’s input. The federal agency is also seeking knowledge about environmentally sensitive habitats as well as other native activities of importance in the area as part of its recently announced 45-day call for information and nominations.

“There is significant oil and gas potential in the Beaufort Sea, but this part of the Arctic Ocean is also a unique and sensitive environment that is critically important to the subsistence needs of Alaska Native communities on the North Slope,” BOEM Acting Director Walter Cruickshank said in a press release about the call for information. “Any consideration of future leasing must be done in a way that identifies not only the areas that have resource potential, but also those areas that must be protected for wildlife and traditional uses.”

The process will play a role in BOEM’s decision on which areas could be included in a potential oil and gas lease sale offshore Alaska. Industry is asked to rank its interest in certain areas on a five-level scale ranging from “critical interest” to “no interest.” BOEM said if a nomination is outside the area BOEM believes has high hydrocarbon potential, the company must provide detailed information, such as geologic, geophysical and economic data—about the desired area.

This doesn’t mean all areas with high interest will be shoo-ins for possible sales. Just as with previous targeted lease approaches, detailed environmental reviews and consultations under the National Environmental Policy Act and other laws will be part of the process.

The approach differs from area-wide leasing, which applies to lease sales in the Gulf of Mexico (GoM), in that:
 Industry provides information to back its nominations for areas proposed for leasing;
 The government also wants to know which areas should not be considered for leasing;
 The call for information and nominations happens prior to, instead of concurrent with, the notice of intent to prepare an environmental impact statement, which enables BOEM to “create a more geographically distinct proposal for analysis in the environmental impact statement.”

“BOEM hopes to lessen controversial issues and demonstrate its commitment to targeted leasing strategy early in the process,” the agency said on its website. “The process will allow local communities and other stakeholders to focus attention on a more compact proposed lease sale area, allowing them to concentrate their limited resources toward developing more detailed and relevant comments.”

This sounds like a logical approach to conducting lease sales, especially in environmentally-sensitive areas. But it also could take out some of the guesswork and perhaps save time and manpower if the same, or similar, approach was used for areas that are new to oil and gas drilling. This could apply both offshore and onshore.

Sure, that would mean another regulatory element; however, it could reduce issues that could surface later—whether it’s the presence of endangered birds or reptiles, or some other issue or circumstance unforeseen by the oil and gas industry, regulators or both. Maybe the timing is off, or there simply isn’t enough evidence to justify spending more money chasing oil and natural gas believed to be in place.

Perhaps, the targeted approach could have come in handy with Eastern Sale 225 in the GoM. That sale, which took place in March, didn’t get any bids for new leases.

In addition to Lease Sale 242, scheduled for 2017 in the Beaufort Sea program area, BOEM plans to institute targeted leasing for Lease Sale 237 in the Chukchi Sea program area. The Chukchi lease sale is scheduled in 2016.

Contact the author, Velda Addison, at vaddison@hartenergy.com.

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Carbon Capture, EOR Projects Make Coal ‘Cleaner’

July 22nd, 2014 vaddison Posted in Uncategorized | Comments Off

As one of the top contributors to energy-related CO2 emissions, coal has been both a reliable power source and a target for reduced consumption as countries across the globe work to combat air pollution.

But huge steps are being made toward cleaning its dirty image. The term “clean coal” remains an oxymoron, for the most part; however, carbon capture-EOR projects—like the one being built by NRG Energy and JX Nippon Oil & Gas Exploration’s Petra Nova Holdings—could go a long way in making the term a reality by preventing most of the power plant CO2 from entering the atmosphere, instead delivering it via pipeline to oil fields for EOR projects.

“Using proven technology, the [Petra Nova] project will be a commercial-scale carbon capture system that captures 90% of the carbon dioxide [CO2] in the processed flue gas from an existing unit at the WA Parish power plant in Fort Bend County, southwest of Houston,” according to a Business Wire news release. Construction on the project has started, and when complete, “the project is expected to be the world’s largest post-combustion carbon capture facility on an existing coal plant.”

The captured CO2, anticipated to be about 1.6 million tons annually, will be compressed and delivered via a 132-km (82-mile) pipeline to the West Ranch oil field, which is co-owned by Petro Nova (NRG, 50% interest; and JX Nippon, 50% interest) and Hilcorp Energy.

“EOR is expected to boost oil production at the field from around 500 [bbl/d] to approximately 15,000 [bbl/d],” the release said. “The West Ranch oil field is currently estimated to hold approximately 60 [MMbbl] of oil recoverable from EOR operations.”

Technology and processes developed by Mitsubishi Heavy Industries and Kansai Electric Power Co. are making the project, which was also a recipient of a U.S. Department of Energy’s (DOE) Clean Coal Power Initiative Program grant, possible. The release stated that the process will use the KM-CDR Process and proprietary KS-1 high-performance solvent for CO2 absorption and desorption.

The project is one of several that illustrate how technology is making coal cleaner.

Another project is already making an impact.

Air Products and Chemicals Inc. has captured more than 1 million metric tons of CO2 at its facility in Port Arthur, Texas, according to the DOE. The company is using a technology called vacuum swing adsorption, enabling it to capture more than 90% of the CO2 from onsite steam methane reformers (SMR).

“Vacuum swing adsorption works by feeding the SMR product gas—a synthesis gas consisting predominantly of hydrogen and CO2 —into ‘adsorber vessels’ where the CO2 adheres to a solid sorbent while the remainder of the stream, primarily hydrogen, passes through the vessels,” according to an article posted June 27 on the DOE’s website. The hydrogen is purified for use in an adjacent refinery, while the CO2 is removed from the solid sorbent through a number of pressure adjustments inside the vessels.

Like the Petra Nova project, this one also pipes gas to an oil field for EOR—the West Hastings Field in southeast Texas. The DOE said the field could produce between 60 MMbbl and 90 MMbbl more of oil with the CO2 injection.

“This process is a promising approach that, if retrofitted to every steam methane reforming facility in the U.S., could reduce our CO2 emissions by about 56 million metric tons a year,” the DOE said.

Now, that would be a huge transformation indeed.

So far, the DOE said its projects have already captured and stored nearly 7.5 million metric tons of CO2 emissions. That, according to the agency, is the equivalent of removing more than 1.5 million vehicles from roads for a year.

Contact the author, Velda Addison, at vaddison@hartenergy.com.

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‘Good Neighbor’ Standards Are Worth Following

July 15th, 2014 vaddison Posted in Uncategorized | Comments Off

When oil and gas operations move into communities where they have not been present, it is crucial that relationships involve clear two-way communication, transparency and quick response to ease and eliminate concerns.

This should actually happen in all places where the oil and gas industry operates, regardless of how long oil and gas companies’ operations have been present.

Time has shown that any skimping in this regard can lead to misinformation being distributed, tarnished images, developmental hurdles or possibly squashed projects. This is why the initiative undertaken by the American Petroleum Institute (API) to create what it calls “good neighbor” standards for oil and natural gas developers can prove to be an effective tool in improving industry’s relationship with the public.

API’s guidelines, released last week, are geared toward areas where there are horizontal drilling and hydraulic fracturing operations. The guidelines offer ways for companies to help local residents prepare for what is to come during exploration, minimize interruptions in the community and manage resources, according to the news release announcing the standards.

“From entry through exploration and operation to eventual exiting, fostering broad stakeholder involvement through every phase of project development has become good industry practice. Operators should explain their activities, in a reasonable time frame, to community stakeholders and then identify, understand, listen and respond to legitimate issues and concerns,” the guidelines said. “Identifying and engaging the right stakeholders at the right time in an appropriate way allows for two-way communication to occur. Involving stakeholders in managing the potential impact on their community helps establish trust and build mutually beneficial relationships. While a balanced resolution between industry and stakeholders is ideal, some issues can present unique challenges.”

Recommendations, designed to fit the different stages of a typical oil and gas project’s life cycle, include activities such as:

 Entry. Selecting professional standards for landmen and ethical code of conduct protocols; identifying and engaging stakeholders on communication strategies; conveying key company messages on safety, environment and health practices; building a timeline for when to release information to the public; and developing information packets to distribute at community engagements;

 Exploration. Determining the best media and technology vehicles for community access to the company; assessing opportunities for workforce development with key community stakeholders; offering and providing access to a community feedback mechanism; and engaging in dialogue to address issues, challenges and opportunities;

 Development. Providing project updates by engaging emergency services and first responders; informing the community on potential economic impacts; seeking collaborations with local universities; and managing and promoting best practices;

 Operations/production. Addressing community concerns; developing and implementing an ongoing strategy to engage local government officials; and maintaining open communication; and

 Exit. Decreasing surface footprint; conducting community meetings during decommissioning; and soliciting key community leaders and other stakeholders for input on exit strategy.

These were just a few of several recommendations, or considerations, given for each phase.

“America’s energy revolution is creating millions of jobs and reenergizing communities from coast to coast,” API Director of Standards David Miller said in the release. “The energy revolution is now occurring in areas of the country where oil and natural gas exploration doesn’t have the same history as Texas or Oklahoma. API’s community engagement guidelines will serve as a gold standard for good neighbor policies that address community concerns, enhance the long-term benefits of local development, and ensure a two-way conversation regarding mutual goals for community growth.”

The guidelines are available for free via the API’s website. Hopefully, they will be put to use with good results for all.

Contact the author, Velda Addison, at vaddison@hartenergy.com.

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Production, Sales From Federal Land Need Improvement

July 8th, 2014 vaddison Posted in Uncategorized | Comments Off

Unconventional shale plays across the U.S. continue to bask in the spotlight, pushing the nation’s oil and gas production levels to new highs.

Unfortunately, production and sales from federal and Indian lands are contributing little to the big picture.

In a continuing trend, sales of fossil fuels from production on federal and Indian lands fell by 7% in 2013 compared to the previous fiscal year, according to a report released recently by the U.S. Energy Information Administration (EIA). The amount dropped from 17,230 trillion Btu in fiscal year 2012 to 15,942 trillion Btu in fiscal year 2013.

The drop came despite what could be called a dismal increase of only 1% in sales of crude oil from federal lands. The EIA reported that sales of crude oil increased to 606 MMbbl last fiscal year, led by production from the federal Gulf of Mexico and Wyoming. Combined, these two areas accounted for 73% of all fossil fuels produced on federal and Indian lands in fiscal year 2013. The areas were followed by New Mexico, Colorado and Utah.

However, the lackluster gain was wiped away when declining coal, natural gas and natural gas plant liquids (NGPL) were added to the mix. Here is how sales fared for fiscal year 2013 compared to the previous fiscal year, according to the EIA’s report.

• Natural gas: dropped 10% to 109 Bcm (3,843 Bcf), with offshore and onshore sales decreasing at 13% and 8%, respectively. Production dropped two percentage points to 16%;

• NGPL: dropped 13% to 103 MMbbl, following a downward trend that emerged after the fiscal year 2010 peak. Onshore production volumes plummeted 21%, while offshore volumes were “virtually unchanged;” and

• Coal sales: dropped by 9% to 401 million short tons. Contributing most to the decline was Wyoming production.

In all, “sales of fossil fuels from federal and Indian lands accounted for about 26% of total fossil fuel sales volumes in the United States in 2013,” the EIA said in the report. “Since FY 2003, sales of fossil fuels produced on federal and Indian lands have fallen 21%, driven by declines in natural gas production and coal production. From FY 2003 to FY 2013, total U.S. fossil fuel production increased by 14%, with a 34% increase in production from nonfederal, non-Indian lands offsetting the decline from federal and Indian lands.”

More than 90% by some estimates of the domestic oil and gas production growth in the U.S. is happening on private or state lands, according to a blog post on the White House’s website. In the post, many of the industry’s strides were touted as was the president’s “all-of-the-above” energy strategy and a shorter processing time for onshore drilling permits (down from an average of 228 days in 2012 to an average of 194 days in 2013).

But it’s time for the feds to contribute a bit more to turn some of these declining federal production and sales stats into positives.

Contact the author, Velda Addison, at vaddison@hartenergy.com.

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