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Big Oil and Gas industry writing down billions in U.S. shale gas assets

Robert Magyar, The Examiner
On Friday shale gas driller Encana Corporation, the largest natural gas company of Canada announced it had written down more than $1.7 billion in shale gas assets on its books, the majority from its U.S. shale gas operations as it posted its ominous 2nd quarter operating results. Encana Chief Executive Officer Randy Eresman went on record saying to expect his company to have to take additional shale gas asset write downs in the near future. Such asset impairment write downs directly affect the industry’s operating credit lines as reduced value assets on their books results in financial lenders lending the companies less cash going forward.

Encana Corporation is also the focus of a U.S. Department of Justice price collusion investigation regarding the allegation it has conspired with Chesapeake Energy to fix prices for shale gas land lease agreements with state of Michigan landowners. The investigation is ongoing.

Other shale gas development companies also wrote down major assets as continued shale gas industry aggressive claims meet the realities of the tough economics the industry never fully anticipated…
(29 July 2012)

EPA finds remaining water safe in famous fracking town

Timothy Gardner, Reuters
The U.S. Environmental Protection Agency is discontinuing water deliveries to four homes in a rural Pennsylvania town that attracted national attention after residents complained that natural gas drilling polluted wells.

Further testing showed no reason for further action, the EPA said on Wednesday.

The EPA had been delivering water since January to four homes in Dimock, Pennsylvania where the agency did a second round of water sampling after residents and local regulators submitted data that suggested water at the homes could be contaminated.

“The sampling and an evaluation of the particular circumstances at each home did not indicate levels of contaminants that would give EPA reason to take further action,” said EPA Regional Administrator Shawn Garvin.

The EPA said its water sampling was complete and that it would work with residents on disconnecting water supplies provided by the agency…
(25 July 2012)

Shale gas drilling depths argue against Pennsylvania’s Marcellus

Robert Magyar, The Examiner
On Monday Baker Hughes Inc. issued its U.S. weekly rig count report showing an ongoing decline in natural gas rig counts which have now declined to a total of 518 rigs, a substantial drop from a year ago, when the total was 889. Pennsylvania recorded no new rigs and held steady for the week at 78 however this is down significantly from last year’s same time period of 116 rigs. Many think its caused by a glut of natural gas produced by the industry’s unconventional shale gas wells. Unnoticed has been the deeper than average shale gas drilling depths found in Pennsylvania compared to Ohio and New York State which may be limiting development based on geology more than regulations or enviromental opposition.

Published Penn State geology maps show it can take on average twice the distance to drill into the Marcellus shale gas formation in Pennsylvania than it does in neighboring New York State or Ohio where shale formations are much closer to the surface. As drilling depths play a key role in the industry regarding total extraction costs, such geology may be playing a significant but unrecognized factor driving the recent downturn in shale gas drilling in the Pennsylvania Marcellus…
(24 July 2012)

The Real Story Behind the Fracking Debate

Peter H. Gleick, Huffington Post
By now, if you have any interest in water, energy, international security and politics, climate change, environmental impacts on small communities, or any number of other issues of the day, you have seen, heard, or read something about “fracking” — the shorthand name for the process of hydraulic fracturing.

Are you confused by the debate over fracking?

I’m not surprised. The public debate is complex, angry, boisterous, a mix of science intertwined with politics, and complicated by a lack of information (or even intentional disinformation) on all sides. And like many other complex problems, the reality is often somewhere in between the extreme points of view that are highlighted in the media, which seems less and less able to appreciate, report, and acknowledge nuance and subtlety around complex scientific issues…

The Pacific Institute has just released a new study on the issues associated with fracking, especially risks to the nation’s water resources. Authored by Heather Cooley and Kristina Donnelly, this assessment was based on extensive interviews with a diverse group of stakeholders, including the industry itself, representatives from state and federal agencies, academia, environmental groups, and community-based organizations from across the United States. When honest and open discussions occur, there is surprising agreement among them about the range of concerns and issues associated with hydraulic fracturing. The top six key concerns were:

  1. Spills or leaks of contaminated water or fracking fluids into the surrounding environment.
  2. Storing, transporting, treating, and appropriately treating or disposing of wastewater
  3. Water requirements for fracking competing with other water needs in water-scarce regions.
  4. Truck traffic and impacts on air quality in rural communities.
  5. Lack of comprehensive and credible data and information to clearly assess the risks and develop sound policies to minimize those risks.
  6. The failure to clarify terms and definitions about the hydraulic fracturing process.

(30 July 2012)
Link to study
Peter Gleick is President of the Pacific Institute, and was responsible for the recent distribution of documents from the Heartland Institute.