Tag: natural gas
Natural Gas Supplies Down, Prices Up Ahead Of Winter

Natural Gas Supplies Down, Prices Up Ahead Of Winter

As colder winter weather approaches for a majority of the country, many regions will soon see climbing prices for natural gas. The global specialty gas market is forecast to surpass $14 billion by 2026, yet at the same time, it seems supplies for gas may be shrinking. With domestic natural gas supplies shrinking and prices soaring due to demand, politicians are struggling with how to resolve the issue. With some of the harshest winter weather just around the corner, the future of natural gas as a source of heat for many households in the nation is uncertain.

Prices Pushing Higher

As the supply of any product decreases, prices are nearly guaranteed to rise. This seems to be the case as well for natural gas supplies currently. The U.S. Energy Information Administration reported Thursday that domestic supplies of natural gas fell by 94 billion cubic feet for the week ending November 8. This slowly decreasing supply is leading, in turn, to rising prices going into the end of 2019. With current temperatures suggesting a cold winter, this could mean higher utility bills for the large percentage of the nation relying on natural gas for heating.

Demand For Pipelines

To meet the increasing demands for natural gas, largely for heating purposes during the winter months, many energy executives are pushing for the creation of new pipelines. On one hand, the increase in pipeline construction would mean more jobs being created – as of July 2017, the U.S. Bureau of Labor Statistics reported that there were 178,400 people working in the Oil and Gas Extraction industry in the United States.

However, this comes at a cost to both the environment and the areas where these pipelines are being constructed, leading to certain politicians limiting actions of these companies in the area. Governor Cuomo of New York has threatened to revoke National Grid’s license to operate its downstate gas business if it doesn’t have a plan by November 26. Continuing to operate after this date, if Cuomo follows through, could result in serious legal consequences for National Grid. Since 2007, a person charged with a 3rd or subsequent offense in their lifetime can be charged with a felony.

The Potential Costs

With natural gas becoming more expensive and supplies seeming to shrink, the potential human cost could become a problem. Natural gas is responsible for heat in many of America’s homes, and decreased supplies leading into winter could spell trouble for many families. Similarly, issues with pipeline construction could result in potentially toxic concentrations of certain gases; even with simple carbon dioxide, three to five percent may cause rapid breathing and headaches, 7 percent to 12 percent intensifies these symptoms and may cause unconsciousness. Higher levels can lead to suffocation.

While it remains unclear what exactly the future holds with regards to domestic natural gas supplies, it’s likely that increased prices will at least impact consumers for some time. Natural gas for home heat may increase in price slightly, if only temporarily until a solution is found. If natural gas prices continue to rise in the long-term, however, this winter will prove to be a very difficult one for some of the nation’s poorest households. A cold winter and climbing natural gas prices could be challenging for many families, but hopefully, an alternative solution will be found relatively shortly.

The Gas Field Next Door — And Its Dangers To Human Health

The Gas Field Next Door — And Its Dangers To Human Health

Reprinted with permission from DCReport

More Americans than previously estimated live within a city block of aged, underground natural gas storage wells, some more than a century old and most of them lacking modern designs to prevent major leaks, according to researchers from Harvard University.

Using satellite imaging, researchers estimate that 20,000 homes and about 53,000 people across six states live within 650 feet of natural gas wells.

Most of the homes are in suburban residential areas, researchers found. And many of the nearby wells lack the structural integrity to safely store highly pressurized natural gas.

High-pressure storage can create explosion hazards and, in a leak, the release of toxic compounds like benzene and formaldehyde.

“The question then becomes: is it acceptable that thousands of likely unsuspecting people should have to bear the risks of living on top of these aging, under-regulated systems that are doing a job they weren’t designed to do?” said Drew Michanowicz, lead author and research associate at the Center for Climate, Health and Global Environment at the Harvard T.H. Chan School of Public Health.

Michanowicz and his research team, whose study was funded in part by the nonprofit Environmental Defense Fund, wanted to understand how many people were at risk of exposure to harmful air pollutants or explosions because of their proximity to underground storage wells. They focused on six states with large numbers of aging wells. Their method allows residents in these states – Pennsylvania, Ohio, West Virginia, Michigan, New York and California – to see if their own homes are located near any of these wells.

About 80 percent of the wells in U.S. gas storage fields were completed in the 1970s or earlier. Built for oil production, they later were modified to store natural gas, according to a federal government report released in 2016.

But repurposing the old has created new safety concerns, the researchers say.

Wells Lack Modern Safety Features

Many older wells, for instance, have only one pipe for injections and withdrawals and lack a secondary blow-out prevention system needed for gas storage wells, which are subject to high-pressure injections, said the federal report by a Department of Energy task force.

Such high-pressure storage can create explosion hazards and, in a leak, the release of toxic compounds like benzene and formaldehyde, according to the Harvard research.

Failures can be catastrophic. In 2015, one of 115 wells in the Aliso Canyon storage field in suburban Los Angeles ruptured, sending nearly 100,000 metric tons of methane into the air and over nearby neighborhoods. Methane is a potent greenhouse gas and, at high levels, can react with other compounds to form a toxic mix that can cause respiratory problems and headaches.

More than 8,000 nearby residents were forced to relocate, leaving their homes for months. Schools in the area were closed and children were sent to classrooms far from their neighborhood.

The ruptured well, originally constructed in the 1950s, had only one pipe and lacked safety valves. The scale of the leak is considered unprecedented.

The American Gas Association, which represents more than 200 local energy companies, did not comment specifically on the safety of older wells. But the association stated that the natural gas industry already goes above and beyond state and federal regulations and has collaborated with outside companies to design, operate and “ensure the integrity of underground storage for natural gas.”

The Aliso Canyon incident led Michanowicz and his team to examine the safety of gas storage fields. They estimate that two-thirds of the nation’s storage wells lack needed safety features.

Old Wells Concentrated in Four States

A majority of those repurposed wells are in Ohio, Pennsylvania, New York and West Virginia, states where the Harvard researchers found that regulations on setback requirements between homes and underground storage fields are seldom enforced.

Long-term exposure to natural gas operations also has been associated with many illnesses. A University of Colorado study released last month found there may be a connection between mothers living near more intense oil and gas development and having children with congenital heart defects.

The massive leak from the Aliso Canyon storage field in northern Los Angeles continued for more than three months. During that time, Los Angeles County health authorities logged more than 700 reports from residents of health problems ranging from headaches and nosebleeds to other illnesses.

The federal task force created in response to the Aliso Canyon accident recommended taking older wells offline and further studying the cost and effectiveness of updating them with safety valves.

During his research, Michanowicz and his team found that while the industry is starting to provide information on wells that are plugged, leaking, repaired or tested for durability, little data exists on which old wells remain active.“There is currently no effective means to ensure compliance with safety standards,” according to Michanowicz’s study.

In California, regulations finalized in 2018 called for natural gas operators to prove that older wells are safe by modifying them with both primary and secondary barriers, according to the state’s Division of Oil, Gas, and Geothermal Resources.

“Operators have to submit a work plan for bringing existing wells into compliance with the new standards,” said agency spokesman Don Drysdale. “The work plan must provide for all wells to be in compliance within seven years with minimum annual benchmarks.”

Environmentalists Want Swifter Action

That’s not soon enough, say environmental activists. “California’s underground gas storage wells are old and not properly maintained or monitored, making them ticking time bombs that endanger nearby residents,” said Maya Golden-Krasner, deputy director of the Center for Biological Diversity’s Climate Law Institute.

Meanwhile, setback rules between homes and storage fields are seldom enforced nationwide.

In Ohio, more than 12,000 homes and over 30,000 residents are within 650 feet of an underground well. Michigan requires a 300-foot setback, one of the most stringent laws on the books, but there were more violations of the rule there than in all six states that Harvard researchers examined. In Pennsylvania, setbacks can be as far as 500 feet.

But all an operator has to do is get written consent from a homeowner and “they can put the wells where they want,” Michanowicz said.

“A lot of these homeowners don’t know what they are signing.”

Conventional Oil And Gas Producers Band Together To Survive

Conventional Oil And Gas Producers Band Together To Survive

By Anya Litvak, Pittsburgh Post-Gazette (TNS)

PITTSBURGH — Stan Berdell says his company, BLX Inc., is like a barrel of water.

“It’s got a leak in it and it’s dripping every day. If we don’t do something, it’s going to be empty one day.”

Conventional oil and gas producers are experts at pessimistic metaphors. They’ve been edged off their perch by large companies tapping the Marcellus and Utica shales. Some tried drilling shale wells themselves but couldn’t compete. The price of natural gas dropped and it became uneconomical to drill shallow wells, too. They sold some shale rights to big operators. They started side businesses. They had layoffs.

Now, “We’re swinging for the fences to see what happens,” Berdell said.

For the past six months, he’s been herding a group of independent operators — Berdell puts an emphasis on “independent” to imply the challenge involved — to form Vintage Land Holdings, the latest survival strategy.

The idea is to aggregate the deep oil and gas rights of a dozen conventional operators and market them to a private equity fund.

The 40,000-acre package will be an all-or-nothing proposition which Berdell hopes will fetch between $200 million to $300 million. But the trick is convincing independent companies to give up control over what might be their last promising asset for a five-year term.

It’s not something Berdell takes lightly. His company’s future is on the line with this deal, too. In January, he hired Paul Kimmell, a landman who used to broker shale deals for major players, to help with Vintage.

“I hope this works,” Kimmell said. “This is our final fight. We’re all trying to survive.”

HARD TIMES IN THE INDUSTRY

The theme of this year’s pig roast and industry conference put on by the Pennsylvania Independent Oil & Gas Association in late July was: “Hard times — unique solutions.”

In one session, titled “Strategies a small business can use to survive a market downturn,” an attorney from Leech Tishman gave out a tip sheet for how to prepare for bankruptcy.

“It’s a good time to open up a Dairy Queen,” said Lou D’Amico, executive director of PIOGA.

It’s a running joke — running time five years now — he has with Jim Kriebel, president of Kriebel Cos.

Natural gas spot prices peaked in 2005 above $14 per million British thermal units. In June 2008 they spiked again to more than $12.

Then the recession collided with shale development, creating a supply glut. It’s difficult to make many Marcellus Shale gushers work at gas prices below $3, where they currently are, let alone conventional wells that hiccup by comparison.

STRENGTH IN NUMBERS

Aggregation deals aren’t new. Landowner groups often pool their acreage for a better negotiating position with oil and gas firms.

In 2012, Snyder Brothers, the oil and gas arm of Snyder Associated Cos., organized more than a dozen shallow well operators into a block that was marketed to shale firms. BLX was in the bunch, as was Turm Oil.

It was supposed to be an all-or-nothing proposition, said Turm Oil director Dickson “Deke” Forbes.

Instead, PennEnergy Resources, a startup founded by former Atlas Energy CEO Rich Weber and Atlas alum Greg Muse and backed by private equity group EnCap Investments LP, cherry-picked properties. Only about 10 percent of Turm Oil’s offering was sold, leaving the company with 7,000 acres.

BLX was left holding 5,000 acres.

Berdell says banding together once again is the best option. “No one’s knocking on our doors,” he said.

In 2009, he said, he got weekly offers for several thousand dollars an acre. He didn’t sell “because I’m … an independent operator,” he said, once again using the term euphemistically.

Now, he keeps thinking back to that time when a guy from one of the majors told him, “‘You’re all for sale. You just don’t know it yet.'”

VOLATILITY IS AN OPPORTUNITY

He’s met with three private equity groups so far and says all have expressed an interest in Vintage.

When it comes to energy, private equity investors view volatility as an opportunity, said Rob McCeney, a partner at PricewaterhouseCooper’s U.S. energy & infrastructure deals division.

“There’s a tremendous amount of capital committed to energy funds today that investors are trying to put to work,” he said. “Many of these investors are comfortable investing in the cycles and looking at the opportunity sets that may not be highly returning today but may be highly returning in the future.”

Ryan Devlin, a director with EnCap who brokered the PennEnergy investment, said his firm is anticipating some good pickings from companies forced to sell assets or reorganize in the continuing low commodity environment.

EnCap can wait for those opportunities to ripen. “It’s a cyclical business, we all know it,” he said.

Devlin would love to hear from Vintage. “Give him my number,” he said. “Seriously, do.”

Even if the Vintage deal succeeds, BLX — which Berdell founded in 1989 — still needs to figure out what it will look like in the future. It won’t be drilling wells, he said. The focus will shift — and this has already begun to happen — to the service side, helping other companies drill and manage their wells.

In May, Berdell co-founded a wireline company, which operates cables that bring tools in and out of wellbores. He also invested in an Albuquerque mobile water treatment firm and is hoping to sell units in the Marcellus.

He joked about taking a page from Snyder Associated Cos, which has a successful business selling mushroom spawn internationally.

“I’m thinking about getting into pork belly,” he said.

When it was suggested he might be too late with the idea, that pork belly is more of a 1980s sensation, Kimmell replied: “So is gas.”

(c)2015 Pittsburgh Post-Gazette. Distributed by Tribune Content Agency, LLC.

Stan Berdell owns an oil and gas company that’s been struggling for years to keep up with, first, booming shale, and now, the collapse in commodity prices. He is forming a new company, Vintage Land Holdings, and is going after private equity money. (Nate Guidry/Pittsburgh Post-Gazette/TNS)

Scientists Look For What’s Causing Texas Earthquakes

Scientists Look For What’s Causing Texas Earthquakes

By Anna Kuchment, Randy Lee Loftis, James Osborne, and Avi Selk, The Dallas Morning News (TNS)

DALLAS –– Swarms of small quakes rippled up from unknown faults beneath the soil. They rustled Cleburne, Azle and Irving. Fifteen recent earthquakes around the old Texas Stadium in Irving site included the strongest yet in Dallas County, and their waves shook downtown office towers.

But after six years and more than 130 quakes, scientists are just beginning to map the fissures beneath Texas,. figure out why they woke up and predict what they might do next.

No one knows for sure whether the quakes are signs of a geological realignment, the aftermath of gas drilling or something else entirely.

What lies under Irving? That may be the biggest mystery facing the team of scientists investigating the latest earthquake swarm to hit North Texas.

“There are no known faults near the earthquake site,” said Beatrice Magnani, one of nine Southern Methodist University researchers studying the quakes.

That means about three dozen quakes that have rocked Irving since April are coming from a previously undiscovered fissure, deep underground.

“In this area of the world, researchers don’t know a lot about these faults, because the faults don’t come to the surface,” said Heather DeShon, a seismologist with the university.

Science can tell us only so much. Geological earthquake records are spotty before 1970, though they show no evidence of anything like the current spate in North Texas history.

And it may be impossible to predict how long the current rash of quakes will last. The Azle area got 27 quakes over three months. Cleburne was hit by two clusters, in 2009 and 2012.

But without knowing the size of the fault under Irving, scientists have no way to tell whether it might one day produce a devastating quake — something thousands of times more powerful than the 3.6-magnitude earthquake that struck last week. (Scientists say the majority of earthquake swarms do not culminate in large, damaging events.)

To that end, the SMU team is trying to pinpoint each new quake and use the earthquakes’ locations to map the Irving fault’s size and depth.

The team is also trying to figure out which of several nearby fault systems Irving’s fissure belongs to. To the west, a system of small, deep faults has been linked to previous quakes in Azle, Cleburne and Dallas/Fort Worth International Airport. In the east, the large Balcones and Ouachita fault systems wind south to the Gulf of Mexico and beyond.

The U.S. Geological Survey, which monitors and locates earthquakes across the world, places most of Irving’s quakes near the former Texas Stadium site. With sparse equipment near the quakes, the agency’s estimates can be off by miles. So last week, the SMU team added nearly two dozen seismometers — quake detectors — in and around Irving.

The team has also asked the Texas Railroad Commission and energy companies to help them gather information.

“Since the oil and gas industry are actively drilling into those rocks, they tend to know more than we do about subsurface fault structure,” DeShon said.

But the team has another purpose in investigating nearby gas wells and wastewater wells: to see whether underground pressure changes related to those wells are significant enough to cause quakes.

Almost as soon as earthquakes began rattling North Texas, fingers pointed at the hydraulic fracturing, or fracking, boom that has overtaken the state this past decade.

The Texas Railroad Commission’s newly appointed seismologist, Craig Pearson, quickly dismissed any connection to oil and gas drilling. But the SMU team isn’t so sure.

“Obviously, we’re in the Fort Worth basin. We have to look into production activities and also wastewater injection activities,” DeShon said.

For decades, research has linked earthquake activity to underground injection wells, used by oil and gas companies to dispose of the large volumes of brackish water that are a byproduct of oil and gas drilling.

An injection well can reach more than 10,000 feet deep, pumping tens of millions of gallons of untreated water a year into underground rock formations and sometimes the faults that cause earthquakes.

That rush of liquid can stress the faults, setting off a chain reaction that can make buildings shake.

Since 2008, the SMU team has linked the Cleburne and airport quakes to injection-well activity.

But with Irving’s quakes, there’s some skepticism about whether injection wells are to blame.

Two injection wells lie under the airport, up to ten miles from the center of the latest quakes. While one study in Oklahoma found that injection wells could cause quakes as far as 21 miles away, most studies link earthquakes to injection wells no more than six miles away.

“You can never say never, but it doesn’t seem like a smoking gun,” said Cliff Frohlich, a University of Texas at Austin seismologist and one of the foremost experts on Texas earthquakes.

But that is not the only line of inquiry directed at the oil and gas industry.

Recent research has linked earthquakes to fracking itself — a process where water and chemicals are pumped underground at high pressure to create small fissures in rock that release oil and gas.

Scientists at Miami University in Ohio published a paper tying natural gas wells there to a quake in a previously unknown underground fault that registered magnitude 3.0.

In North Texas, the closest wells are about two miles northwest of the epicenter of the Irving earthquakes. They are operated by Fort Worth-based Trinity East Energy.

There are nine more within about seven miles of the quakes, according to data from the Texas Railroad Commission.

According to Trinity East President Steve Fort, the two closest wells were last fracked about five years ago.

That would make them an unlikely cause, said Steve Horton, a seismologist at the University of Memphis.

But with many questions and little in the way of explanation, scientists are digging through those and other drilling records and studying fault maps looking for a connection.

They expect solving the riddle to take months — and they’re only just getting started.

“It’s like cancer,” Frohlich said. “You can never really prove someone got lung cancer because they smoked. All you can do is look at the statistics and say you’re more likely to get cancer if you smoke.”

“In 1902, there was a big earthquake in Austin,” he said. “You know that wasn’t fracking. But if it happened at D/FW airport tomorrow, you’d wonder if it was.”

Besides drilling activity and natural shifts in the bedrock, at least one other theory intrigues some researchers: Could the long Texas drought have sucked enough water from the ground to destabilize the fault?

A gallon of water weighs a bit over eight pounds — whether it’s in a jug or in the ground.

Multiply that by thousands of square miles, years of scorching heat, and millions of thirsty residents. A drought can reduce the force of gravity over a fault zone — potentially causing the Earth’s crust to bounce up and trigger earthquakes.

In theory, anyway. And local data appear to pour cold water on that theory.

Much of the state has been in a drought for years, yet only a few places have had earthquakes.

What’s more, drought or no drought, groundwater pumping in urban North Texas is minuscule — seemingly not nearly enough to tip the balance toward earthquakes.

The water that comes out of public taps in Dallas-Fort Worth is from reservoirs and rivers, which aren’t believed to affect earthquakes.

Local monitoring of groundwater levels is spotty. A state database showed no readings from Irving wells for years. Another well about seven miles southeast of Irving has seen a general decrease in water levels since 2006, but nothing dramatic.

And studies show that people would need to use at least three times as much water from the aquifers below Irving before depletion would become a threat, let alone cause a gravity-induced earthquake.

One final clue: Two NASA satellites called GRACE circle the Earth, taking gravity readings. They show intense groundwater reduction in parts of North Texas in the last few years.

But the deficit is not uniform across the region.

“We have not seen anything in the GRACE records that would relate to the quakes reported in the Dallas-Fort Worth area,” Byron D. Tapley, director of the Center for Space Research at the University of Texas and the satellite’s chief investigator, said in an email.

Until scientists can explain the quakes, the people living with them can only guess.
––––
(Dallas Morning News staff writer Daniel Lathrop contributed to this report.)