Tom Reynolds on the proposed gas drilling ban in Dryden on WHCU this morning

You can listen to Tom's interview with Dave Vieser on the public hearing at last night's Dryden Town Board meeting here.

Marcellus Shale natural gas production jumps, job opportunities skyrocket

July 20, 2011

By Phaedra Friend Troy

At its current rate of increase, the prolific Marcellus Shale of Pennsylvania could soon lead the United States in natural gas production while employing hundreds of thousands of people, according to a recent study by PennState.

On Wednesday, PennState released a study by the College of Earth and Mineral Sciences, entitled “The Pennsylvania Marcellus Natural Gas Industry: Status, Economic Impacts and Future Potential,” showing a strong support for the regional economy and a major boost to jobs in the area.

According to the study, drilling dramatically increased, with 1,405 wells spudded in Pennsylvania’s Marcellus Shale in 2010, almost double the number of wells drilled in 2009.

The third in a series, the study found that Marcellus Shale natural gas production in 2010 averaged 1.3 billion cubic feet equivalent a day, including dry gas and petroleum liquids. At the end of 2010, production rates reached near 2 billion cubic feet a day, a substantial increase in projected production due to improved well stimulation techniques to increase well productivity.

In 2010, the Marcellus Shale generated $11.2 billion in gross domestic product for the regional economy, up from $4.7 billion in 2009. Additionally, Marcellus Shale production supplied $1.1 billion in state and local tax revenues, nearly doubling the amount from the previous year.

The jobs market has also gained due to the Marcellus Shale, with nearly 140,000 jobs supported by the drilling and development of the natural resource in Pennsylvania – more than doubling year over year.

Based on a survey, producers in the Marcellus Shale plan to increase spending in drilling and development, supporting more jobs and the local and state economy while boosting domestic natural gas production.

Looking forward, the study forecasts nearly 157,000 jobs to be supported by the Marcellus Shale in 2011, more than 180,000 jobs in 2012, and more than 256,000 jobs in 2020.Additionally, the study foresees production reaching 17.5 billion cubic feet a day by 2020, with state and local taxes earned climbing to more than $2 billion.

The Marcellus Shale Coalition revealed that the study numbers combined with demand projections from the US Department of Energy, the Marcellus Shale could produce about a quarter of America’s natural gas by 2020.

“Large-scale development of the Marcellus is reshaping the economic landscape of Pennsylvania,” concluded Drs. Timothy J. Considine, Robert Watson, and Seth Blumsack, authors of the study. “Strategies and policies that encourage growth of the Marcellus gas industry will generate significant economic and environmental benefits for the Commonwealth of Pennsylvania, transforming Pennsylvania to a net natural gas exporter while creating hundreds of thousands of jobs and generating billions of dollars in additional output, income, and tax revenues.”

Source: pennenergy.com/index/petroleum/display/6230869753/articles/pennenergy/petroleum/exploration/2011/07/marcellus-shale_natural.html

 

The US Constitution v. the Town of Dryden

Read it for yourself, then decide. Has the Town Board of Dryden declared independence and is it now a sovereign power? The Constitution v. the Town of Dryden's proposed ban on energy development...

The Constitution of the United States, Article VI:

This Constitution and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.

Section 5 of Dryden's proposed ban on energy development:

(5) Invalidity of Permits. No permit issued by any local, state or federal agency, commission or board for a use which would violate the prohibitions of this section or of this Ordinance shall be deemed valid within the Town.

Speak Out

Dryden Safe Energy Coalition

Invites Dryden Residents
Particularly Land/Home Owners
To Attend and Speak Out

Public Hearing
Energy Development Ban
Dryden Town Hall, Wednesday
July 20, 2011, 7 P.M.

Don't Let $175,000,000+ of
Your Rights be Confiscated and
Land Titles be Forever Clouded
Through a Total Ban

Safe, Regulated Energy Development for Jobs

If you can't stand the heat...

...get out of the coloring book business, apparently.

The "friendly Fracosaurus" featured in a 24-page coloring book by Talisman Energy that explained the controversial process of extracting gas from rock formations will no longer be distributed by the company, a spokeswoman told FoxNews.com.

Natalie Cox, a spokeswoman for Talisman Energy USA Inc., said the coloring book, "Talisman Terry's Energy Adventure," was created in 2009 by staff at Talisman's headquarters in Calgary, Canada, as a giveaway for county fairs and other community events along the Pennsylvania-New York border. It's unclear exactly how many were produced and distributed, she said.

Despite no complaints from the public -- only from "the media," Cox said -- the company decided to stop using the publication within the past month...

But if you want to see the self-censored book that raised all the ruckus, click on the friendly fracosaurus:

 

More on the economic impact of shale gas drilling

In a study done by a consortium of northeastern PA colleges in 2008, "The Impact of Marcellus Shale in Northeastern Pennsylvania with an Emphasis on Charities, Crime, and Poverty,"  there is this on pg. 7:

The example below uses Barnett Shale [in TX] production rates as a baseline for estimates:

 

  • If you own 100 acres of gas-producing land, and

  • You receive a royalty of 15%, and

  • Natural gas is priced at $10 per Mcfe

  • The daily production rate is 2 Mmcf (million cubic feet) per day (an estimate), then

______________________________________________________________

  • Total royalty would be approximately $1,095,000 in the first year.
     

It is very difficult to predict a well’s output at any point in time – especially so early in the Marcellus Shale play. This is only one possible scenario. It is also important to note that output declines quickly at first, but such decline slows towards the well’s half life. A well’s production typically lasts 20 – 30 years. The figure above does not include the lease value or sign-on bonuses.

Read the rest of the study.

Gas drilling data

  • It is sometimes claimed that energy companies won't disclose what is in fracking fluids.  The law requires posting this information in PA, TX, and WY.  Fluids are posted on the web.  See www.chk.com/Media/MarcellusMediaKits/Marcellus_Hydraulic_Fracturing_Fact_Sheet.pdf
  • It is sometimes claimed that fracking water will pollute our aquifers.  "The productive area of the Marcellus Shale is found at depths ranging from 4,000 to 8,500 feet underground, and the average depth of a Chesapeake natural gas well in the Marcellus Shale is more than 5,300 feet ... groundwater aquifers and producing natural gas formations are separated by thousands of feet of protective rock barriers."  Source: www.chk.com/Media/MarcellusMediaKits/Marcellus_Hydraulic_Fracturing_Fact_Sheet.pdf
  • Chesapeake Energy states that "In 2008, Chesapeake paid almost $2.0 billion in royalties to approximately 130,000 individuals, families and other entities across the U.S."  This means that each of these people received an average of slightly more than $150,000 each.  Source:  www.askchesapeake.com/marcellus-shale/Pages/default.aspx

Energy in America: Oil Shale – Boom or Bust?

By John Roberts

Published July 13, 2011 | FoxNews.com

 

    With all the talk that global oil production has reached its peak, and will only slowly decline from here, you may be surprised to learn that there is a vast untapped reserve that could possibly yield 1.4 trillion barrels of oil, enough to supply the daily oil needs of the United States for 191 years.

 

    And where is this incredible reserve --The Middle East, Russia or Brazil? None of the above. It’s right here in the U.S. Specifically, in the great open spaces of Colorado’s Piceance Basin and the Uintah Basin in Utah.

 

    So why isn't the U.S. tapping this liquid gold and ending the country's reliance on foreign sources of oil, regional instability and governments unfriendly to America? Well, as with many things, there’s a catch. It isn’t exactly oil. Well, not yet. Which brings us to a little history.

 

    In the Cretaceous Period, roughly 100 million years ago, the vast Western Interior Sea covered much of western Colorado and eastern Utah. In the same way oil deposits were created elsewhere in the world, lots and lots of animals, fish, plankton, etc. died and settled on the sea bottom. Eventually, they turned to organic-rich shale rock. And the remnants of that organic material remain in the rock today, as a compound called kerogen – the building blocks of oil.

 

    “I like to call it ‘teenage’ oil,'” says Glen Vawter, the director of the National Oil Shale Association. “If it had been buried for maybe a few more million years, it would have been petroleum.”

 

    And therein lies the challenge. How to speed up nature and turn the kerogen into oil. The best way to do it is to heat the rock – to as much as 900 degrees Fahrenheit – which drives off the hydrocarbons as a gas. Condense the gas, and it becomes oil. Refine the oil and it becomes diesel, jet fuel, even gasoline.

 

    It sounds simple enough, right? Well, let’s take another look at history.

 

    The government and oil industry have known about “oil shale” for more than 100 years. In fact, vast tracts of land were set aside in the early 20th century as the Naval Petroleum Reserve. It was to be the source of fuel for the U.S. Navy during wartime. Like gold prospectors, hundreds of oil shale entrepreneurs staked claims through Colorado’s Piceance Basin, where the oil shale came up out of the ground as the Rocky Mountains were formed. They set up furnaces to convert the shale to oil and the word went out about a new western oil boom.

 

    But the boom went bust when no one could produce significant quantities of oil economically, not when there was still plenty elsewhere that just bubbled up from the ground. So prospectors and companies pulled out and the nascent oil shale industry went dormant.

 

    In the 1970s, as the price of oil soared in the wake of the Arab oil embargo, oil shale again looked like a shining beacon of energy independence. Exxon invested hundreds of millions of dollars in mines and plants to produce commercial quantities of crude. It hired thousands of locals to work in the industry. Boom times were back.

 

    But in 1982, the price of oil plunged. And in what is still known as Black Sunday, Exxon pulled out – literally overnight – putting 2,000 people out of work. The boom had again gone bust.

 

    “Oil shale is the fools’ gold of the petroleum industry,” says Randy Udall, an energy expert and son of politician Mo Udall. “We’ve been trying to do this for 100 years and everyone who has tried to produce oil shale has lost their shirt and broken their pick.”

 

    Udall is one of many people who believe oil shale will never pay off. “Oil shale is kind of a mirage on the highway,” he says. “As you approach it, it recedes further and further away from you. I compare it to pulling the sword from the stone.”

 

    If oil shale is Excalibur, there are still plenty of people trying to become the industry's King Arthur. In Utah, EnShale has developed new technology to more efficiently extract oil from the shale by heating it on the surface. Crushed rock goes in one end – light crude comes out the other. The company has plans on the table for a commercial facility it claims could produce 15,000 barrels a day. Eesti Energia of Estonia (where oil shale is fueling power plants) is moving into Utah to develop its version of surface conversion -- “retorting.” And Red Leaf Resources is experimenting with new surface technology that converts shale to oil with minimal environmental impact.

 

    Big companies like Shell, Exxon, Chevron and American Shale Oil are taking a different tack. They are trying to convert the oil 'in situ' – where it is – underground. They’re spending tens of millions of dollars on research to heat the rock 1,000 feet deep and release the oil so it can be pumped to the surface with a conventional well. The technology is incredibly complex. Shell has even been experimenting with a 'freeze wall’ – basically a vertical ice rink – that keeps ground water out of the oil producing area – and vice versa.

 

    The companies say they have ‘proof of concept’ that in situ oil shale conversion is possible. Now the trick is to make it commercially viable.

 

    And that’s where they run headlong into environmental concerns. A Rand Corporation study found that producing oil shale will take an enormous amount of water. And in Colorado and Utah, there is barely enough to go around as it is. The study also found that converting 100,000 barrels of oil from shale underground every day would take enough power to light a million homes, and that upping production to 1 million barrels a day would require the construction of 10 new 1200mw power plants.

 

    Environmental groups argue that given the failed promise of oil shale so far, it’s just not worth it to try again.

 

    But with oil hovering between $90 and $100 per barrel, gas near $4 per gallon and the Obama administration taking the drastic step of releasing 30 million barrels of oil from the Strategic Petroleum Reserve to shore up a wobbling economic recovery, oil shale proponents argue that we can’t afford not to develop this resource. They claim the revenues could run into the trillions of dollars and thousands of jobs would be created.

 

    The battle over oil shale has now landed in the halls of Congress. The Bush Administration had come out with a plan to develop oil shale leases on federal land, which includes much of the Piceance Basin. But after it was sued by environmental groups, the Obama White House put those plans on hold and has ordered a review. That prompted Wyoming Senator John Barrasso (R-WY) to recently introduce a bill that would put it back on the fast track. The American Energy And Western Jobs Act is now before the Senate committee on Energy and Natural Resources.

 

    Glen Vawter has spent 40 years chasing the promise of oil shale. Can it be done this time? “I hope it can,” he says. “And you know, I believe it might be, because we have this new technology.”

 

    The old joke around western Colorado goes like this: Oil shale is the fuel of the future…..and always will be.

 

    Now consider this: Estonia is developing oil shale. So is Brazil. China, too. The U.S. has far more than any of those countries. 

Tags: 

The economics of gas drilling

By Tom Reynolds

Getting the straight, untwisted facts concerning any aspect of fracking is very difficult.  However, the anti-fracking element seems particularly adept at emotional (rather than factual) presentations that are half-truths.  Since my background is finance, I was particularly interested in Jannette Barth’s study on the economic impact of gas drilling in the Marcellus Shale.  Both in her study and at anti-fracking meetings Barth states, “Studies used to support the claim that drilling will bring economic benefits to New York are either biased, dated, (or) seriously flawed.”

Then, she produces a study that is “biased, dated, and seriously flawed.”

  • Barth compares gas’s economic impact in NY’s top 10 gas-producing counties to neighboring NON-gas-producing counties. She unequivocally concludes that ‘gas counties’ are not doing better economically than neighboring counties. But gas jobs and payroll in “gas counties” make up less than 4/10s of 1% (.004) of the counties’ jobs & payroll.  Her conclusion can certainly be described as seriously flawed, based on the insignificant difference in gas-related jobs and payroll between the counties.  

  • Barth dismisses gas drilling’s economic multiplier of 1.4, i.e., every $1 of payroll has a $1.40 impact on the local economy.   She concludes that, “On economic impact alone, gas drilling should not necessarily be encouraged…it would appear to make more sense to encourage an alternative industry that would provide a greater economic impact…such as tourism.”  But Barth never actually gives an economic multiplier for tourism.  The highest I found was 1.67.

  • Barth ignores the fact that there has to be at least two parts to a multiplication operation, one being the base—in this case, the average salary to be multiplied.  Since Barth’s paper was published, the Ithaca Journal has published articles on two studies comparing average salaries.  Hospitality (tourism) has average salaries of about $20,000 while all industries other than agriculture were over $40,000.  To just equal the impact of gas, tourism would need an economic multiplier of 2.8!

  • On rural environments, Barth states, “Unfortunately, it is difficult to assign precise monetary values to aesthetic benefits.”  Of course, it is difficult to value “aesthetics,” primarily because someone else usually owns it!  But the anti-gassers don’t want someone else’s property rights to interfere with their aesthetics.

Throughout, Barth uses possibilities in a way that can best be described as “it’s a fact that it’s a possibility.”  A few examples:

  • Barth states, “It is possible that local land owners who get rich from natural gas will move to Florida or other points south, taking their new found wealth with them.” She ignores the fact that it’s also possible they might not move!  And even if half moved, the half that stayed would be pumping NEW MONEY into the local and state economies.
  • Barth also states that due to negative economic issues, “It is quite possible that…existing homeowners may be driven out.” That they might also stay, due to positive economic issues, is never mentioned.
  • “To some extent, gas drilling and other industries (tourism, sport fishing and hunting) may be mutually exclusive.”  Or maybe not?
  • “Far fewer retirees will choose to settle and second home owners would certainly be vastly reduced in numbers.”  Based on what study of occurrences that have not yet occurred? 

Towards the end of her paper, Barth quotes a study done by Headwater Economics, which compared western U.S. counties that focused on fossil fuel extraction as an economic development strategy to counties that did not focus on such industries.  Barth summarizes one of Headwater’s conclusions as, “While energy-focused counties race forward and then falter, non-energy peer counties continue to grow steadily.”

But other Headwater studies, not quoted by Barth, give a much more complete description of their research. For example, “Energy producing states outperformed their peers  fiscally at the start of the recession, but ultimately the decline in fossil fuel prices and reduced revenue exposed (them) to the impacts of the recession.”  Headwater also said, “Predominantly rural areas with high levels of drilling and limited economic diversity may be the most overwhelmed by the buildup phase of the energy boom, but also are the places that ultimately may see the greatest long term fiscal gain from energy development.”  Further, Headwater states, “The tax revenue from fossil fuel extraction is the longest lasting legacy of fossil fuel development…it continues to accrue.”  On green energy, Headwater praises, “Colorado made energy revenue funding available for regional clean energy initiatives…the funding helped launch an effort that has grown businesses and jobs and has funded clean energy infrastructure.”

Lastly, one of the four studies that Barth trashes is one done at Penn State.  Of it she says, “An intelligent lawmaker should not take this study seriously.”  After having read her study, I would suggest that anyone with at least a room temperature IQ should not take her paper seriously.

 

Extracting natural gas from shale is safe and economically sensible

From the Boston Globe, July 11, 2011:

ENLIGHTENED MOMENTS in politics are few and far between. Populism has a lot to do with it; playing to fear, anger, and other emotions is a safe move politically, and what the media love most. That’s why New York Governor Andrew Cuomo’s decision to lift a ban on hydraulic fracturing - also known as “fracking’’ - should be celebrated as a victory for rational thought.

Read it all. http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2011/0...

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