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- September 8, 2011 Fayetteville Shale News
Chevron And BP Reveal Big New Deepwater Finds In The Gulf Of Mexico
Forbes - 23 hours ago
... having this year bought out Chesapeake Energy's Fayetteville Shale position for $5 billion and in the midst of acquiring Petrohawk for $15 billion. ...
Chesapeake CEO slams anti-drilling 'extremists'
Arkansas Online (subscription) - 20 hours ago
Chesapeake was a major player in the Fayetteville Shale drilling. It said in February that it would sell its assets in the Fayetteville Shale to BHP ...
CHK - PINK:UNGS
Report blasts gas-industry regulation
Arkansas Online (subscription) - Paul Quinn - 3 hours ago
A report released Tuesday by a private group that advocates strict regulation of the natural gas industry in Arkansas' Fayetteville Shale said ...
America's Top 10 Gas Drillers
Huffington Post - Nicholas Kusnetz - 19 hours ago
The company has operations in Arkansas, Texas, Oklahoma and Pennsylvania, with most of its production coming from the Fayetteville Shale formation ...
US Gas Supply 'Steady as She Grows,' Says Energy Analyst
NGI's Shale Daily (subscription) - 11 hours ago
The poster child for this phenomenon is the Barnett Shale. ... almost twice as much gas in the first year than the average Barnett or Fayetteville wells. ... PINK:UNGS - RJF
Report blasts gas-industry regulationArkansas Online (subscription) - Paul Quinn - 3 hours ago A report released Tuesday by a private group that advocates strict regulation of the natural gas industry in Arkansas' Fayetteville Shale said ... |
America's Top 10 Gas DrillersHuffington Post - Nicholas Kusnetz - 19 hours ago The company has operations in Arkansas, Texas, Oklahoma and Pennsylvania, with most of its production coming from the Fayetteville Shale formation ... |
US Gas Supply 'Steady as She Grows,' Says Energy AnalystNGI's Shale Daily (subscription) - 11 hours ago The poster child for this phenomenon is the Barnett Shale. ... almost twice as much gas in the first year than the average Barnett or Fayetteville wells. ... PINK:UNGS - RJF |
Senator Requests Review of Fracturing Rules and Regulations
Posted: Aug 12, 2011 4:38 PM PDTUpdated: Aug 22, 2011 12:23 PM PDT
Conway - Sen. Jason Rapert (R), Chair of the Fayetteville Shale Caucus of Legislators, has called for an independent review of Arkansas Oil & Gas Commission Rules and Regulations by STRONGER.
The name, STRONGER, is an acronym for State Review of Oil and Natural Gas Environmental Regulations. STRONGER was formed in 1999 to reinvigorate and carry forward the state review process begun cooperatively in 1988 by the U.S. Environmental Protection Agency (EPA) and the Interstate Oil and Gas Compact Commission (IOGCC).
"After spending the past several months researching the Fayetteville Shale Play development in Arkansas, listening to constituents, hearing testimony from environmental, regulatory and industry experts and conferencing with leaders from other states developing natural gas, I believe it is time for a review of AOGC rules and regulations governing Hydraulic Fracturing in the natural gas industry in Arkansas. STRONGER has the history and integrity to bring together regulators, environmental leaders, industry leaders and the public in general. It is important that we cultivate public trust and I believe having a review of our regulations in Arkansas is appropriate at this time," stated Rapert.
STRONGER is a non-profit, multi-stakeholder organization whose purpose is to assist states in documenting the environmental regulations associated with the exploration, development and production of crude oil and natural gas. Sen. Rapert said, "I have consulted with experts in this arena and believe that STRONGER will have the support of all stakeholders in Arkansas. It is fair and balanced."
Sen. Rapert sent a letter to Larry Bengal, Director of the Arkansas Oil and Gas Commission this afternoon, asking to present his request to AOGC at their August 23rd meeting, and also informed ADEQ and Governor Mike Beebe's office of his request.
Rapert states, "As the chair of the Fayetteville Shale Caucus of Legislators and the current senator for District 18 wherein 80% of the Fayetteville Shale Play lies, I want Arkansas to have proper standards in place to protect our environment and groundwater resources, while developing our natural gas resources in the most responsible and efficient manner. While I am confident that AOGC and ADEQ have been doing a good job in managing the development of the Fayetteville Shale Play and that most industry producers are being responsible corporate citizens, I want the communities within my district and the state of Arkansas to be confident that we have proper environmental protections in force and that Arkansas rules and regulations are fair to all concerned. The development of natural gas has been the savior of many communities in my district and is critical to the future of Arkansas."
Senator Rapert met briefly and has consulted with Mike Paque, who is Executive Director of The Ground Water Protection Council (GWPC), and serves on the board of STRONGER. Mr. Paque said, "The Ground Water Protection Council has long been a supporter of the STRONGER process and more recently the reviews of state oil and gas regulatory programs as they relate to hydraulic fracturing. The recent STRONGER multi-stakeholder hydraulic fracturing reviews of Ohio, Pennsylvania, Oklahoma, Louisiana, and Colorado have shown that state programs are well run and have helped the concerned public understand the programs better. At the same time, where there were regulatory practices or procedures that could be updated or modified to improve environmental protection or public understanding, those recommendations were made to the state agencies."
"I have taken time to really investigate the STRONGER process and I have found that leaders in the regulatory agencies are supportive of the review process," Rapert stated.
One of those leaders is Lori Wrotenbery, Director of Oil and Gas Conservation Division for the state of Oklahoma. Recently when testifying before the Congressional Natural Gas Caucus on June 01, 2011, Wrotenbery said, "The STRONGER stakeholder teams take the time to review the material provided by the state, listen to a presentation by the state on its rules and procedures, and discuss with the state how the state addresses the key program elements laid out in the STRONGER guidelines. The review team then prepares a report that discusses the state program and makes findings and recommendations based on the STRONGER guidelines. The review teams strive for balance in their reports. They attempt to highlight the program strengths and accomplishments, as well as identifying areas for improvement."
"I want Arkansas to develop a CNG economy. We should be using Arkansas energy to power Arkansas. Having public trust is crucial for our state to prosper from natural gas while simultaneously protecting our environment in the Natural State. Undergoing a review from STRONGER, will make us stronger," said Rapert.
We are maintaining our long-term Neutral recommendation forSouthwestern Energy Company (SWN - Analyst Report) following its impressive second quarter 2011 results. However, a tempered outlook due to the weak natural gas scenario in the U.S. keeps us on
the sidelines.
Southwestern reported better-than-expected earnings backed by improved production growth, primarily at its Fayetteville shale operations. During the reported quarter, oil and gas production experienced a 25% year-over-year jump encouraged by striking Fayetteville Shale operations wherein production surged 28% to 107.4 Bcfe from the year-earlier period. In fact, volumes from Fayetteville shale formed more than 87% of the total oil and gas production.
The company’s industry-leading holdings in Northern Arkansas’ Fayetteville Shale play make it one of the highest quality natural gas discoveries in North America in the recent years. This year, Southwestern expects approximately 425–435 billion cubic feet (Bcf) of the total hydrocarbon volume to come from the Fayetteville Shale.
Notably, the company also remains upbeat on a prospective unconventional horizontal oil play and expects to drill and complete two test wells by this year end. Southwestern has collective 460,000 net acres in the Lower Smackover Brown Dense play in southern Arkansas and northern Louisiana. It expects to receive a permit during the third quarter to spud its first test well, drill a second well by the end of 2011 and add up to 10 wells in 2012 to test the concept.
Hence, Houston, Texas-based Southwestern’s industry leading presence in the Fayetteville shale and its emerging position in the Marcellus Shale provide ample opportunities for newer natural gas discoveries. For 2011, the company plans to invest a total of $2.0 billion, mainly for faster drilling activities at its Fayetteville shale play. Again, its healthy financial position (with a debt-to-capitalization ratio of 27% in the last quarter) along with operational effectiveness provide comparative advantages.
However, the company’s results are vulnerable to the negative near-term outlook for natural gas, which accounts for most of its reserve and production base. Moreover, an oversupplied U.S. natural gas market and lower demand provide little space for Southwestern to flourish.
Southwestern also faces a dearth of a geographical diversity in its asset portfolio, with most of its activities concentrating on Fayetteville Shale, Arkoma and East Texas fields. Thus, the company's earnings and cash flow stream are sensitive to regional pricing or upheavals.
Competition from its peers, such as Chesapeake Energy Corporation (CHK - Analyst Report), also remains a threat.
As of now, we don't see any obvious catalyst in Southwestern’s business to significantly push the stock price higher. Consequently, we see the company’s shares performing in line with the broader market. Our long-term Neutral recommendation is supported by a Zacks #3 Rank (short-term Hold rating).
UNDATED (KTHV) -- A proposed change to thestate's severance tax -- one of the natural gas producers say it could cost jobs and tax dollars.
Arkansas has two different areas where natural gas is drilled in the Haynesville shale in the southern part of the state and the Fayetteville shale in the north.
Gas companies say those landscapes could drastically change if that measure passes. Energy companies say if that happens the natural gas companies drilling these landscapes could disappear.
The Natural Gas Severance Tax Act of 2012 proposes the severance tax on natural gas extracted from within the State of Arkansas to 7 percent of the market of the gas at the time it is extracted from the ground.
It also eliminates various severance tax rates from 1.25 percent to 5 percent, replacing them with the 7 percent rate.
"It's strictly to generate revenue and it will generate revenues to correct the problem they are creating," Nelson said.
"An increase in the severance tax particularly a substantial increase that we've heard about would certainly make producers and operators look at other places," Kelly Robbins from the Arkansas Independent Producers & Royalty Owners say this could mean a loss of jobs and money for the state.
"It's important that our policy and decision makers as well as the public understand that there is a fierce competion for drilling assets for dollars to be used to produce this very valuable resource," Robbins added.
Nelson says this increase will just raise Arkansas to the same level of Nieghboring states' severance tax rate.
"7-percent on $5 gas is only 35 cents. Their complaining as though it's a tremendous expense when in fact it's one of the least expenses they have," Nelson said.
"Doesn't seem fair, doesn't seem equitable, doesn't make common sense if you ask me," Robbins said. "When you have a commodity that it's prices are depressing to go out and do a significant increase in taxing that commodity."
FAYETTEVILLE SHALE PLAYERS LOOK BEYOND ARKANSAS BORDERS
Submitted by The City Wire staff on Mon, 08/01/2011
Editor’s note: Roby Brock, with our content partner Talk Business, wrote this report. He can be reached at roby@talkbusiness.net
Current and former Fayetteville Shale leaders Southwestern Energy and BHP Billiton (Chesapeake Energy) sent signals through the energy industry late this week that both are ready to expand their drilling programs well beyond the Arkansas shale reservoir.
In announcing impressive second quarter results, Chesapeake and Southwestern touted new exploration programs that could boost profits for both U.S.-based drillers for years to come.
Chesapeake highlighted energy stock performance in stock market trading Friday (July 29) after the Oklahoma City based driller announced a new “major discovery” in Ohio. Company officials boasted that the discovery was superior to the Eagle Ford Shale – the huge gas-liquids shale play in South and West Texas with an estimated 4 billion barrels in recoverable reserves.
“Chesapeake believes that its industry-leading 1.25 million net leasehold acres in the Utica Shale play could be worth $15 - $20 billion in increased value to the company,” Chesapeake said in its second-quarter earnings report. “As a result of its analysis, the company believes the Utica Shale will be characterized by a western oil phase, a central wet gas phase and an eastern dry gas phase and is likely most analogous, but economically superior to, the Eagle Ford Shale in South Texas.”
The news of the projected multi-billion oil and natural gas discovery sent the company’s stock up more than 3% in mid-day trading on Friday. The share price eventually settled at $34.35, up 92 cents over Thursday’s close. In April, Chesapeake exited the Fayetteville Shale with the sale of 2.4 trillion cubic feet of proven reserves to Australia-based BHP Billiton Petroleum for $4.75 billion in cash.
Meanwhile, Fayetteville Shale leader Southwestern said that the company’s “New Ventures” group is studying drilling prospects beyond its huge leasehold position in central and northern Arkansas. In the second quarter, Southwestern spent $682 million to operate 149 working wells, upkeep 18 drilling rigs and produce 1.8 billion cubic feet of natural gas per day in the Arkansas shale play.
However, Southwestern said it spent $80 million in new ventures in the second quarter, including the recent development of the Smackover Brown Dense formation, an unconventional oil reservoir found in southern Arkansas and northern Louisiana.
“This region of Arkansas and Louisiana has produced oil and gas from the Upper since the 1920s. The Brown Dense formation is the source rock for these Upper Smackover fields,” said Southwestern CEO Steve Mueller. “It has the critical properties necessary to be a successful play and compares favorably to other productive oil plays in the United States. However, it has never been exploited with horizontal drilling technology until now.”
Current and former Fayetteville Shale leaders Southwestern Energy and BHP Billiton (Chesapeake Energy) sent signals through the energy industry late this week that both are ready to expand their drilling programs well beyond the Arkansas shale reservoir.
In announcing impressive second quarter results, Chesapeake and Southwestern touted new exploration programs that could boost profits for both U.S.-based drillers for years to come.
Chesapeake highlighted energy stock performance in stock market trading Friday (July 29) after the Oklahoma City based driller announced a new “major discovery” in Ohio. Company officials boasted that the discovery was superior to the Eagle Ford Shale – the huge gas-liquids shale play in South and West Texas with an estimated 4 billion barrels in recoverable reserves.
“Chesapeake believes that its industry-leading 1.25 million net leasehold acres in the Utica Shale play could be worth $15 - $20 billion in increased value to the company,” Chesapeake said in its second-quarter earnings report. “As a result of its analysis, the company believes the Utica Shale will be characterized by a western oil phase, a central wet gas phase and an eastern dry gas phase and is likely most analogous, but economically superior to, the Eagle Ford Shale in South Texas.”
The news of the projected multi-billion oil and natural gas discovery sent the company’s stock up more than 3% in mid-day trading on Friday. The share price eventually settled at $34.35, up 92 cents over Thursday’s close. In April, Chesapeake exited the Fayetteville Shale with the sale of 2.4 trillion cubic feet of proven reserves to Australia-based BHP Billiton Petroleum for $4.75 billion in cash.
Meanwhile, Fayetteville Shale leader Southwestern said that the company’s “New Ventures” group is studying drilling prospects beyond its huge leasehold position in central and northern Arkansas. In the second quarter, Southwestern spent $682 million to operate 149 working wells, upkeep 18 drilling rigs and produce 1.8 billion cubic feet of natural gas per day in the Arkansas shale play.
However, Southwestern said it spent $80 million in new ventures in the second quarter, including the recent development of the Smackover Brown Dense formation, an unconventional oil reservoir found in southern Arkansas and northern Louisiana.
“This region of Arkansas and Louisiana has produced oil and gas from the Upper since the 1920s. The Brown Dense formation is the source rock for these Upper Smackover fields,” said Southwestern CEO Steve Mueller. “It has the critical properties necessary to be a successful play and compares favorably to other productive oil plays in the United States. However, it has never been exploited with horizontal drilling technology until now.”
Mueller said the company hopes to receive a permit from the Arkansas Oil and Gas Commission to spud the company’s first test well at 8,900 feet in Columbia County late in the third quarter. If successful, the brown limestone rock development also could spur land leasing in Southern Arkansas and northern Louisiana, where Southwestern owns 835,000 undeveloped net acres.
A second well is planned to spud later this year with a total vertical depth of nearly 10,700 feet and a 6,000-foot horizontal lateral in Claiborne Parish, La. Ten additional wells are planned for testing in 2012.
“If our testing yields positive results, we expect that our activity in the play could increase significantly over the next several years,” Mueller said.
Besides the Smackover Brown development, Southwestern’s New Ventures group also is in the second phase of testing for oil and natural gas at an undeveloped site in New Brunswick, Canada. Southwestern holds 2.5 million acres in that play.
http://www.thecitywire.com/index.php?q=node/17027 (for additional information)
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