Australia could be sitting on more than 1,000tn cubic feet of untapped shale gas, but effective environmental regulations and a fall in costs are needed before this resource can be fully exploited, according to a new report.

The report states that shale gas infrastructure costs in Australia will be double that of the US, where the industry is relatively mature, and will require a high price to make it profitable.

Around $500m will be spent by businesses over the next two years on shale gas exploration, the report predicts, with resources company Santos already working on an initial well in Queensland.

Shale gas extraction is similar to coal seam gas in that both processes gather methane for energy use. However, shale gas involves drilling at far greater depths than coal seam gas.

The report is sanguine on the environmental impact of coal seam gas, with some caveats.

“A large number of impacts are possible, but the likelihood of many of them occurring is low and where they do occur, other than in the case of some biodiversity impacts, there are generally remedial steps that can be taken,” it states.

“Nonetheless it is important that the shale gas industry takes full account of possible adverse impacts on the landscape, soils, flora and fauna, groundwater and surface water, the atmosphere and on human health in order to address people’s concerns.”

Prof Peter Cook, co-author of the report, told Guardian Australia that rigorous background work would need to be done on shale gas for it to avoid the controversy that has dogged the coal seam gas industry.

“You need a regulatory regime that is transparent,” he said. “One problem with coal seam gas is that people didn’t do the work needed before they started. You need to know what the impact is going to be, rather than rely on a high degree of speculation. That has caused angst around coal seam gas.

“Groundwater clearly needs to be safeguarded and used in careful way to ensure it doesn’t get contaminated. Fragmentation of landscapes through roads and drilling is another thing you need to be careful of.”

He added: “We won’t see a shale gas boom here as we have in North America. It will be more modest growth, but what might really push it along is the oil associated with the gas.

“Oil is what is driving the industry in North America. Gas is almost a byproduct. Things will move very quickly if they find oil amongst the shale gas here, because Australia doesn’t have much oil. But we just don’t know what’s down there yet.”

Substantial US tight oil resources could reshape global energy geopolitics, three experts suggested at a Bipartisan Policy Center conference on the subject. But the changes could be subtler and more gradual than some people think, they added.

“A better supplied world is a safer world, but it doesn’t mean there still aren’t above-ground and below-ground risks,” said Daniel Yergin, chairman of IHS CERA. “It could help us play a leadership position in the world that wouldn’t have been possible a decade ago, however.”

Carlos Pasqual, special envoy and coordinator for international energy affairs at the US Department of State, stated, “We have an incredible moment of opportunity that will be good for US business, the US economy, and the rest of the world. If we manage it with environmental responsibility, it will be historic.”

Luis Giusti, a senior advisor at the Center for Strategic & International Studies, said he does not expect the US to change its military commitments to defend overseas oil-producing countries because markets would become very volatile. He also agreed with Yergin’s statement that producing crude from tight shales and deepwater deposits will be more challenging than many believe.

US tight oil resource estimates have indisputably given the nation more clout in its foreign affairs, the trio agreed. More US production has let the federal government successfully encourage countries which buy Iranian crude to reduce their orders, Pasqual said.

“It’s important to sustain this policy,” Pasqual maintained, adding, “Countries understand the need to restrain Iran’s nuclear ambitions. They’re likelier to do something about it if they’re confident they can buy the oil elsewhere.”

Changing relationships

Europe’s natural gas relationship with Russia is changing because the European governments realize supplies are available elsewhere, according to Yergin. Russian Prime Minister Vladimir V. Putin and Chinese President Xi Jinping’s recent meeting in Moscow suggests the two countries’ future relationship will be based more on oil and gas than Marxism, he said.

Giusti said Saudi Arabia’s government has accrued enough cash to sustain lower crude prices, and is willing to spend what’s necessary to keep the kingdom stable. “They also would enjoy seeing Iran squirm under sanctions and Putin fail in his Arctic aspirations,” he added.

Pasqual said the US can’t retreat from its overseas commitments because oil and gas are global commodities that react to events, there’s not that much spare crude production capacity outside Saudi Arabia, and Asian and other countries outside the Organization for Economic Cooperation and Development now account for virtually all the growth in global oil demand. “If we can help Asia diversify its gas supplies, its positive influence on global markets will be important,” he indicated.

Yergin said the US should begin to export hydrocarbons, particularly gas, but added that it will be a net oil importer for some time. Pasqual said the US would be exporting LNG into a market where growth is limited. “But a large supply in those markets will help keep domestic prices at a reasonable level,” he added.

Increasing US gas production and using it instead of coal to generate electricity has put the country’s carbon emissions levels at a 16-year low, Pasqual said. Studies in China show that its greatest near-term reductions in carbon emissions would occur with a combination of more gas and increased efficiency, he noted. “In the short term, we’re trying to create a better market for gas so it can be a base fuel as more alternatives are introduced,” he said.

Friday’s jobs numbers from the Labor Department show that President Obama needs to approve the Keystone XL pipeline. Even with 175,000 jobs created in May, there are 2.4 million fewer jobs in America than at the start of the recession in December 2007.

Approval of the Keystone XL pipeline, to bring oil from Canada to our refineries near the Gulf of Mexico, would create jobs, both for constructing the pipeline and for refining the oil. But President Obama has delayed the pipeline’s approval, citing safety concerns.

Pipelines have been used to transport natural gas and oil, including from Canada to the United States, for three-quarters of a century. Almost 500,000 miles of interstate pipelines crisscross America, carrying crude oil, petroleum products, and natural gas, and over 2 million miles of natural-gas distribution pipeline send natural gas to businesses and consumers.

This extensive infrastructure network is heavily regulated by the U.S. Department of Transportation, which monitors the very issues central to the Keystone controversy: safety and reliability.

A review of accident statistics provided by the Department of Transportation shows that, in addition to enjoying a substantial cost advantage, transporting these substances by pipeline results in fewer spillage incidents and personal injuries than transporting them by road or rail. Americans are more likely to get struck by lightning than to be killed in a pipeline accident. The full paper can be found here.

The question of how to transport oil and natural gas safely and reliably is broader than Keystone XL. Petroleum production in North America is now at nearly 18 million barrels a day, and could climb to 27 million barrels a day by 2020, attracting manufacturing from abroad and creating yet more jobs. Natural-gas production in Canada and the United States could rise by a third over the same period, climbing to 22 billion cubic feet per day.

U.S. oil and natural-gas production is outpacing the transportation capacity of our inadequate national pipeline infrastructure. The Keystone XL pipeline is only one of many pipelines that will need to be constructed in the years ahead. Much of America’s refining capacity is located in the Gulf states, but large and expanding reserves of petroleum are being discovered in the north-central part of America and in Canada. Bringing oil to refineries, and then to end users, requires pipelines.

If this oil and natural gas can easily travel to where it is needed, all America will be able to benefit from lower energy prices and thus from increased economic activity and employment. New environmental regulations are closing coal-fired power plants, increasing the demand for natural gas. Large fleets of buses and trucks are switching to natural gas, and General Motors and Chrysler are making dual-fuel pickup trucks.

Approximately 70 percent of crude oil and petroleum products are shipped by pipeline on a ton-mile basis. Tanker and barge traffic accounts for 23 percent of oil shipments. Trucking accounts for 4 percent of shipments, and rail for the remaining 3 percent. Essentially all natural gas, except liquefied gas, is shipped by pipeline to end users.

If personal injuries and environmental damage caused by accidents in the transportation of oil and natural gas were proportionate to the volume of shipments, one would expect the vast majority of incidents to occur on pipelines. But the opposite is true — the majority of incidents occur on road and rail, as shown by Transportation Department data, even though more road and rail incidents go unreported.

As the North American natural gas boom continues, state legislators across the country have targeted hydraulic fracturing for new regulations, proposing a range of 50 bills involving bans, moratoriums and increased disclosure requirements, according to a new Colorado State University study.

Much of the new legislation tries to address issues such as water use, air and water quality monitoring and fluids disclosure, as many non-industrial communities grapple with the impacts of hydraulic fracturing and the changes it brings.

For example, Illinois passed new rules in May requiring drillers to publicly disclose the chemicals they use, and on water testing.

And while hydraulic fracturing has existed for more than 50 years in parts of the country, such as Texas, the bulk of the new state rules are coming from the East Coast, where the shale boom has led to a new surge of oil and gas activity.

“Bans are clustered on the northern seaboard,” wrote Colorado State University’s Center on the New Energy Economy.

For example, New York State has introduced 10 new bills – the largest number of any state – as environmental concerns led New York legislators to extend the state’s moratorium on the practice until 2015.

Federal regulators have also begun to develop plans for increased natural gas regulation. The Obama administration introduced a new plan in May to tighten standards for drilling on public lands, including more rigorous chemical disclosure requirements.

The proposal would be the first major federal rule governing hydraulic fracturing but would apply only to U.S. land under the Interior Department’s control.

State lawmakers also have tried to address growing concerns about surface and mineral rights, introducing 50 bills in 2013 that made proposals regarding notification periods before drilling, post-drilling property restoration and setback or right-of-way property restrictions, the Center report said.

Concern over how natural gas drilling impacts local communities was another hot topic, with 30 new pieces of legislation introduced to address it. Issues such as permitting and zoning ordinances, requirements for safety monitoring devices and regulations on underground storage have been the focus on these proposed rules.

Additional bills have sought to provide revenue for local infrastructure and social program needs.

An additional 33 bills have targeted taxation issues, most of which address severance or production issues.

“States seek to strike a balance between attracting development and maintaining funding for a variety of programs,” the Center wrote.

A new report from Barclays Capital predicts a “Tectonic Shift” in demand for natural gas in the United States by 2020. While this report will no doubt be used by the prophets of “peak gas” theory as ammunition for the construction of new strawman fright scenarios, the reality is this is nothing but good news for the American public.

The new reality of extremely abundant and reasonably priced natural gas has already led to significant national benefits in the following areas:

• lower carbon emissions in the power generation sector;
• lower utility bills for consumers;
• the creation of hundreds of thousands of new, high-paying jobs;
• tens of billions of additional tax collections at the state, local and federal levels;
• billions of dollars in royalty payments to hundreds of thousands of mineral owners;
• massive new investments and new job creation by industries that use natural gas as a feedstock, such as plastics, fertilzer and chemicals;
• hundreds of billions in economic impact across the breadth and depth of the nation;

That’s all happened in just the last five years, and during a time in which the price for natural gas became quite depressed, and the number of rigs actively drilling for natural gas wells fell from about 1600 in 2008 to around 400 today. The reality is that many of these deep, high pressure wells that typify many of the prolific shale plays in the U.S. simply are not economic to drill at the $2 to $3 prices we’ve seen from 2010 through 2012. As a result, the great majority of natural gas wells that were drilled during that time frame were wells operators were obligated to drill in order to hold their leases by production.

As we’ve pointed out before, this means that there is an enormous amount of excess drilling capacity in the system all over the country, given that lease obligation wells represent a small fraction of the potential wells that are ultimately available to be drilled.

As the price has risen in recent months back to the $4 to $4.30 range, we’ve already begun to see leasing activity in dry gas areas like the Haynesville Shale and the Eastern third of the Eagle Ford Shale begin to pick up, and will no doubt begin to see increased natural gas rig counts if the price holds in that range, where so many more projects are in fact economic to drill.

To the handful of petrochemical scientists, engineers and industry executives who have spent a lifetime trying to unlock America’s domestic energy potential, the country’s current shale-oil and -gas boom is the result of a half-century of technological trial and error. But to the rest of the world, it has seemed like an overnight miracle. In less than a decade, the United States has gone from importing $30 billion worth of natural gas to the cusp of becoming an energy exporter.

Thanks to improvements in hydraulic fracturing and horizontal drilling, wells can be dug into rock formations that are nearly 100 m thick and tap reserves that are nearly two kilometres wide. That has the potential to unleash enough oil and gas to power America for nearly a century—a feat unthinkable just a few years ago.

The golden age of gas, as it has been dubbed, is already reshaping the economies of newly energy-rich states from California to North Dakota. It is helping to rebuild America’s industrial landscape and holds profound implications for global politics. “North America has set off a supply shock that is sending ripples throughout the world,” declared Maria van der Hoeven, executive director of the International Energy Agency (IEA), which, in May, issued a prediction that America’s oil and gas boom “will be as transformative to the market over the next five years as was the rise of Chinese demand over the last 15.”

If soaring demand from Asia and political instability in the Middle East has defined the last few decades of oil politics, the agency predicts that America’s shale-gas and -oil revolution will define the future. The transformation is happening faster than anyone would have predicted. After decades spent tracking the global price of crude, North American natural-gas prices have recently become unglued from the rest of the world, plunging from $13 per thousand cubic feet in 2008 to below $2 last year. (They’re now closer to $4.)

The glut of cheap gas has helped drive the U.S. economic recovery by slashing the price of natural-gas by-products—valuable petrochemicals such as ethylene, propane and butane—that are used to manufacture everything from shampoo, to window panes, to fertilizer. That has unexpectedly brightened the prospects of American manufacturers and farmers, who analysts estimate now have the lowest cost of raw materials in the world outside of Qatar. Less expensive materials could slash costs to manufacturers by as much as $12 billion a year by 2025 and create a million new manufacturing jobs, according to an analysis byPricewaterhouseCoopers.

Heartened by a brief mention of liquefied natural gas exports by President Barack Obama, the new head of the US trade group for shale gas producers said Thursday he thought Obama should hasten a permitting process that has issued only two permits thus far.

"The great news, here in America, is that by 2020 we'll be a net exporter of natural gas," Obama said Wednesday evening at a fundraising speech in Chicago. "We will over the next couple of decades have the capacity to be energy independent for the first time, incredible change."

"Obama's behind this," America's Natural Gas Alliance CEO Marty Durbin told roughly 100 lobbyists and trade industry representatives Thursday at the American Gas Association's monthly Natural Gas Roundtable in Washington.

"We'd like to see a little faster pace on the permitting side," Durbin admitted.

Texas continues to lead the nation in drilling activity, and by a bunch.

The state has 840 rigs drilling for oil or gas – about 47.7 percent of all U.S. rigs and 26.3 percent of all rigs worldwide, according to the latest Baker Hughes Rig Count.

Most of the Texas rigs are working in the Permian Basin (402), the Eagle Ford Shale in South Texas (232), the Granite Wash in the Panhandle (41), the Barnett Shale in North Texas (32) and the Haynesville Shale in East Texas (17).

If you missed MicroSeismic's own Founder and CEO, Peter Duncan, on CNBC's Squawk Box this morning, you can check out the recording on CNBC's website now. 

Peter spoke about microseismic technology and how it's helping to revolutionize the industry. Let's hear it for technology and for MicroSeismic! 

Don't forget to tune in to CNBC's Squawk Box, this Thursday, May 30th as MicroSeismic's own Founder and CEO, Peter Duncan speaks live on the popular program. The segment will air at 5:30 a.m. EST.

Texas, the second largest state in the Union, rich in oil and renewable resources alike stands as an internationally recognized energy capital. Already a leader in oil drilling activity, Texas now has at least ten shale plays of production potential that could very well reshape the future of the industry in the US.

Although only a few of those plays are being tapped, Texas oil production reached a 25-year record high of 2.139 million barrels a day last November. According to a study conducted by the University of Texas-San Antonio, the Eagle Ford shale production gave a $25 billion economic boost to the area in 2011. It also supported some 48,000 jobs in the oil and gas market alone.

Before 2011, shale production was practically nonexistent. Once it took off in 2011, it nearly tripled by 2012.

The latest UTSA study revealed something even more spectacular: the 2012 economic impact from Eagle Ford was $61 billion—the biggest oil and gas development in the world last year.

According to an article in Forbes, “there are several studies that point to the Eagle Ford Shale eclipsing the East Texas Field as the biggest oil field ever discovered in the lower 48 states.”

That also accounted for a whopping 116,000 jobs in once sparsely populated parts of the state.

While the US Geological Survey (USGS) estimates that the Eagle Ford recoverable reserves is around 10 billion barrels of oil (two and a half times North Dakota's Bakken shale), complete development of the field is set to take the patience of decades.

But Eagle Ford represents just one of Texas' numerous shale play in a state where more than half of the country's (20 percent of the world's) drill rigs are turning. Initial estimates of Texas' Cline Shale play point to recoverable reserves of 30 billion barrels of oil.

Devon Energy Corp, an independent oil and natural gas exploration and production company, has stepped up as one of Cline's early-in players. Under a partnership with Sumitomo Corporation, which has invested $1.4 billion in Devon's activities in that play, Devon's 2013 plans to drill in the area are aggressive (up to 140 wells).

As many as 46,000 permanent jobs in the chemical industry will be created if all of the chemical and plastics projects that have been announced to take advantage of plentiful and low-cost supplies of natural gas are built, according to a study released Monday by the American Chemistry Council.

By 2020, the report found the projects could lead to another 264,000 jobs in supplier industries and 226,000 additional jobs in communities where workers live and spend money, generating $200 billion in additional payroll.

“The United States has become a magnet for chemical industry investment, a testament to the favorable environment created by America’s shale gas, as well as a vote of confidence in a bright natural gas outlook for decades to come,” Cal Dooley, president and CEO of the council said in a statement.

The report examined 97 announced chemical and plastics projects, totaling $71.7 billion in potential investment in the United States.

The report said about 1.2 million additional temporary jobs will be created during the capital investment phase between 2010 and 2020.

Natural gas: Feds give Texas project license to broadly export LNG

Dooley said about half of the announced investments are from firms based outside the United States.

Many of the planned expansions are in Texas, including a $4 billion expansion in Freeport by Dow Chemical. That includes restarting an ethylene cracker, building a new ethylene cracker and other projects.

But Dow isn’t the only company growing in Texas.

Exxon Mobil Chemical has announced plans for an ethylene cracker and two polyethylene plants in Baytown, while Eastman Chemical has said it will build an ethylene cracker and a propylene unit in Longview. Other companies expanding or building new chemical plants include Chevron Phillips Chemical, LyondellBasell and Mitsui & Co.

The U.S. Department of Energy needs to ensure that remaining requests for licenses for liquefied natural gas exports get approved, the API said.

The U.S. Energy Department gave its consent last week for the Freeport liquefied natural gas terminal on Quintana Island, Texas. The facility could export up to 1.4 billion cubic feet of LNG per day for 20 years once it gets cleared by the Federal Energy Regulatory Commission.

Freeport LNG becomes the second facility to get preliminary consent to export LNG to countries that don't have a free trade agreement with the United States. The government in 2011 approved Cheniere Energy's terminal in Louisiana in May 2011.

Upstream director for the American Petroleum Institute Erik Milito said the government has several LNG projects that it could approve for natural gas exports.

"(The Energy Department) has had the remaining applications on its desk for months and should ensure that these applications are approved without any further delay so that the U.S can achieve its full energy and economic potential," he said in a statement.

There are at least 60 international projects under consideration, API said. The organization didn't say how many FTA and non-FTA projects are up for regulatory review in the United States.

New technologies used to tap into shale formations are creating a natural gas boom in the United States. Environmental groups worry that LNG exports would lead to more hydraulic fracturing, a drilling practice that's seen as a threat to groundwater.

There's nothing standing in the way of new drilling plans for shale gas resources in the country, British Energy Minister Michael Fallon said.

The British government last year lifted a ban on hydraulic fracturing, or fracking, of shale natural gas resources in light of new risk controls. Fracking operations were suspended after Cuadrilla Resources in 2011 reported minor tremors associated with natural gas operations in the country.

Fallon addressed the first meeting of a multiparty group on unconventional oil and gas before the House of Commons. The group includes representatives from industry, consumer groups and non-governmental organizations.

He said the government since December has created the right mechanisms to move forward with shale gas development.

"We announced fracking could resume with robust regulation last December and there is nothing now stopping licensees from bringing on new drilling plans," he said.

Apart from temblors, shale development is controversial because chemicals used in the process are environmental threats.

Fallon said shale would ensure energy security and offer a source of economic stimulus, provided it's done so with care.

He said more than 300 licenses are already in the hands of explorers. A new round for license applications is expected next year.

In case you were wondering whether there was really an oil Renaissance happening in Texas, the state has 838 drilling rigs – about 47 percent of all U.S. rigs and 26 percent of drilling rigs worldwide.

The Texas rigs are mostly operating in five fields across the state, according to the latest Baker Hughes Rig Count.

The Permian Basin in West Texas has 397 rigs, the Eagle Ford in South Texas has 234, the Granite Wash in the Panhandle has 44, the Barnett Shale in North Texas has 31 and the Haynesville Shale in East Texas has 19.

Eagle Ford: Chesapeake thinks it has 342 million barrels

Our neighbors continue to see an enormous amount of oil and gas activity as well. Oklahoma has 190 drilling rigs, Louisiana has 106, New Mexico has 77 and Arkansas has 15 rigs, according to Baker Hughes.

A domestic natural gas boom already has lowered U.S. energy prices while stoking fears of environmental disaster. Now U.S. producers are poised to ship vast quantities of gas overseas as energy companies seek permits for proposed export projects that could set off a renewed frenzy of fracking.

Expanded drilling is unlocking enormous reserves of crude oil and natural gas, offering the potential of moving the country closer to its decades-long quest for energy independence. Yet as the industry looks to profit from foreign markets, there is the specter of higher prices at home and increased manufacturing costs for products from plastics to fertilizers.

Companies such as Exxon Mobil and Sempra Energy are seeking federal permits for more than 20 export projects that could handle as much as 29 billion cubic feet of natural gas a day.

If approved, the resulting export boom could lead to further increases in hydraulic fracturing, a drilling technique also known as fracking. It has allowed companies to gain access to huge stores of natural gas underneath states from Colorado to New York, but raised widespread concerns about alleged groundwater contamination and even earthquakes.

The drilling boom has helped boost U.S. natural gas production by one-third since 2005, with production reaching an all-time high of 25.3 trillion cubic feet last year, according to the U.S. Energy Information Administration.

In recent months, however, production has begun to level off as the glut of natural gas keeps U.S. prices down. In response, producers have begun pushing to export the fuel to Europe and Asia, where prices are far higher.

Approval of all the projects currently under review by the Energy Department could result in the export of more than 40 percent of current U.S. production of liquefied natural gas, or LNG, which is gas that's been converted to liquid form to make it easier to store or transport.

The prospect of a major expansion of U.S. gas exports has tantalized business groups and lawmakers from both parties, and they're urging the Obama administration to move faster to approve the projects as a way to create thousands of jobs and spur economic growth. Increased exports also would help offset the nation's enormous trade deficit.

But consumer groups and some manufacturers that use natural gas oppose expanded exports, saying they could drive up domestic prices and make manufacturing more expensive. Many environmental groups also oppose LNG exports because of fears that increased drilling could lead to environmental damage

"Exporting natural gas will have serious implications for public health, the environment and climate change," said Michael Brune, executive director of the Sierra Club. "Building these terminals means lots of new fracking, and more fracking means more risks for Americans."

Bill Cooper, president of the Center for Liquefied Natural Gas, an industry group, called natural gas a safe, clean-burning alternative to coal and oil.

"LNG exports are a huge opportunity for the United States economy, our workers and our geopolitical relationships" with countries such as Japan that are seeking to import natural gas, Cooper said. "LNG exports will create jobs, increase government revenue and benefit consumers."

The administration has not said whether it will approve the projects. The issue is among the main challenges for Ernest Moniz, President Barack Obama's nominee to be energy secretary.

Federal law requires the Energy Department to determine that projects are in the public interest before granting export permits to countries that do not have free-trade agreements with the U.S.

Moniz, a physics professor and former top officials at the department in the Clinton administration, is widely seen as sympathetic to the natural gas industry. At a Senate hearing last month, he called the "stunning increase" in natural gas production a "revolution" that has led to reduced emissions of carbon dioxide and other gases that cause global warming.

A recent study commissioned by the department concluded that exporting natural gas would benefit the U.S. economy even if it leads to higher domestic prices for the fuel, as is likely.

Michigan-based Dow Chemical Co. and other manufacturers have criticized that study, saying it relied on 2-year-old data that doesn't account for increased demand for natural gas by manufacturers, trucking fleets and power plants.

Dow, which uses natural gas to power its plants and make products from plastics to pharmaceuticals, has argued against unfettered exports and said that could lead to price spikes that could harm the U.S. economy.

But John Felmy, chief economist for the American Petroleum Institute, the largest lobbying group for the oil and gas industry, said restricting trade to control prices "is bad for the economy" and could result in lower domestic investment and production, hampering jobs and economic growth.

"We cannot and should not build around a wall around United States," Felmy said.

Whether to approve natural gas exports is "a huge question that's facing the federal government right now," said Sarah Ladislaw, an energy analyst at the Center for Strategic and International Studies. Expanded exports not only could raise natural gas prices, but also could hinder development of renewable forms of energy such as wind and solar power that do more to combat climate change, Ladislaw said.

"How do you put yourself on a pathway to reduced (carbon) emissions over the longer term while not killing this golden goose which is providing low-cost energy to the United States right now?" Ladislaw asked.

Natural gas results in fewer carbon emissions than other fossil fuels such as coal or oil, but still leaves a significant carbon footprint. Environmental groups also worry that more fracking could harm drinking water supplies or cause other problems.

Kevin Book, an analyst for ClearView Energy Partners, a research and consulting firm, predicted that the administration will approve some new exports, but nowhere near the 20 projects that are pending before the Energy Department.

"Everything we see from the administration suggests they embrace the idea of a small first-allocation" of LNG export permits, Book said. "They are looking for some subset to test the market."

U.S. officials also must consider competition from countries such as Canada and Australia, where new LNG export terminals also are being proposed. The facilities cost billions of dollars and take years to complete.

Only one U.S. license has been granted so far, to Houston-based Cheniere Energy Inc. for an export terminal in Louisiana's Cameron Parish. Proposals to build plants from Maryland to Texas and Oregon are pending from energy giants such as Exxon Mobil and Conoco Phillips, as well as Virginia-based Dominion Resources Inc. and Canadian-based Veresen Inc.

The Energy Department has promised to decide on a case-by-case basis, but must finish wading through nearly 200,000 comments filed on a study last year that concluded more exports would translate to net economic benefits for the U.S.

Sen. Ron Wyden, D-Ore., chairman of the Senate Energy and Natural Resources Committee, said officials should seek a "sweet spot" for LNG exports - allowing enough to spur drilling and increase gas supplies, but not enough to create export-driven price hikes.

Under the right approach, energy companies can "make enough money to continue producing, U.S. manufacturers have an affordable, stable supply of natural gas, and the environment is not only protected, but actually benefits from greater use of natural gas and lower CO2 emissions," Wyden said.

Allowing hydrofracking to proceed in New York would be an economic boom that would bring $8 billion of income to Upstate New Yorkers, a new study concludes.

If New York lifts its moratorium on hydrofracking, The Manhattan Institute says, income of residents in the 28 counties that lie above the gas-rich Marcellus Shale could rise by 15 percent.

The report says Pennsylvania counties in which hydrofracking has occurred have grown faster than those without it. Nearly 5,000 wells have been hydrofractured In Pennsylvania since 2002, the report says.

"By our count, there are immediate and concrete benefits in hydrofracturing wells: more money in the pockets of the people, more tax revenue for the state," said the report, authored by institute senior fellow Diana Furchtgott-Roth. "These data deserve close attention and consideration as New York state confronts its decision."

Hydrofracking is not allowed in New York while the state Department of Environmental Conservation studied the issue. The study, begun four years ago, still awaits a report from the state Department of Health.

Among the Manhattan Institute's findings:

-- Pennsylvania counties with hydrofractured gas wells had more economic growth that counties without wells. The more wells a county had, the better its economy.

• Between 2007 and 2011, per-capita income rose by 19 percent in Pennsylvania counties with more than 200 wells, by 14 percent in counties with 20 to 200 wells, and by 12 percent in counties with fewer than
20 wells.

-- By contrast, in counties without hydrofrackiing, income rose by only 8 percent.

-- Counties with more than 200 wells added jobs at a 7 percent annual rate; in counties with no or few wells, the number of jobs fell by 3 percent.

This shale revolution has turned around the industry. Today it contributes to one-third of the US gas supplies. By 2030, it might provide half.

US oil and natural gas production is increasing at its fastest rate in five decades. The Bakken formation, one of the country’s largest shale gas reservoirs, produced 0.1m barrels per day in 2007. In 2012, it produced over 1mbpd. This rapid growth is set to continue over the next decade too. But there is another, less discussed part of this story too.

Fracking involves blasting millions of gallons of water, combined with chemicals and proppants, such as sand, underground at high pressure to release trapped oil and natural gas.

The high level of water consumption in the entire process, is now a real concern.

Hydraulic fracking has already run into a potential problem there because of the long-term drought that has afflicted the Lone Star State in recent years. The problem is exacerbated because the unique geology of the Eagle Ford formation, where Texas gets much of its shale oil and gas, requires more water to frack open the product.

Water is an issue. Many say the next round of global wars could be to secure scarce water resources. A senior Canadian diplomat, once told this correspondent; ‘look, we are a water rich country. And we know it fully well; the day there is a scarcity of water next door, we would find a pistol pointed at our head, to ensure a regular supply.’

Shale gas is a black hole for water, argue Asit Biswas Julian Kirchherr in a paper, carried by Huffngton Post.

A typical horizontal shale well requires 5m gallons of water to complete, according to Chesapeake Energy, which has fracked more shale wells in Ohio than any other company.

Exploiting the resource requires and pollutes massive amounts. And because of this water footprint, France in 2011 banned hydraulic fracturing. Environmentalists also note that water used in fracking cannot be treated and reintroduced to the water supply where it eventually will cycle through to become rain.

Lea Harper, founder of the Southeast Ohio Alliance to Save Our Water, an anti-fracking organisation, said , “We cannot make more water. We can find renewable sources of energy.”

Other countries are also joining in the shale bandwagon, making the water issue acute. China is reported to have huge, un-tap huge resource.

Saudi Arabia, the world’s biggest oil exporter, is planning to drill about seven test wells for shale gas this year.

“We know where the areas are,” Minister Al-Naimi said at a conference in Hong Kong, referring to the shale deposits.

“We have rough estimates of over 600 trillion cubic feet of unconventional and shale gas so the potential is very huge and we plan to exploit it.”

However, Aramco is conceding that finding the necessary amount of water will be difficult, Amin Nasser, senior vice president of upstream at Aramco said at a conference in Manama.

Faced with this challenge, oil and gas companies have been attempting to overcome the problem by recycling fracking fluid.

Texas Tribune reported that a new technology, dubbed “waterless fracking,” could address the problem of water use in fracking operations.

A Canadian company called GasFrac is using a combination of gelled propane and butane to conduct fracking, without the use of water.

The technology is new and may cost more than conventional hydraulic fracking. And in addition to propane, some companies are also experimenting with carbon dioxide and nitrogen.

The fracking industry is still in its infancy. In order to deliver the revolution, that it has promised and in fact unleashed too, it will have to overcome many obstacles.

The water issue is just the one – that needs immediate attention – all around the globe.

MicroSeismic, Inc.  is pleased to offer three full days of technical presentations in their booth, #427, at this year's GeoCon 2013, May 6-10th. 

GeoConvention 2013: Integration will pave the way for economic, environmental and energy recovery in Western Canada. Over 100 exhibiting companies and 4,000 conference attendees will convene at the Calgary TELUS Convention Centre May 6 – 10, 2013 to view new technologies, explore new business opportunities and learn from industry experts. The 2013 Convention is the ultimate opportunity to gain insight into your profession, share experiences with others and gain knowledge from industry experts.

For the ful presentation schedule, please visit the MicroSeismic, Inc. Events page on their website. 

China's shale natural gas development is facing hurdles, experts say.

The U.S. Energy Department's Energy Information Administration reports China may hold nearly twice as much as the estimated 862 trillion cubic feet of shale natural gas in the United States, where the resource has transformed the energy sector.

China aims to produce 6.5 billion cubic meters of shale gas a year by the end of 2015 and the National Energy Administration estimates annual output to reach 100 bcm by 2020.

But so far, there has been no Chinese shale production. Research firm IHS CERA says about 60 shale exploration wells have been drilled over the past two years in the country. That's about the number of wells drilled in North Dakota every 10 days, The Washington Post reports.

"China is a newcomer to the shale gas industry," David Xu, an analyst at KPMG International, was quoted as saying by The Washington Times. "Over time, it could become one of the world's largest producers" if it learns the technology and resolves numerous obstacles to development.

Compared to more accessible areas where shale is located in the United States, in China's mountainous Sichuan Basin "the formations seem to be more faulted and folded," Briana Mordick, an Oil and Gas Science Fellow at the Natural Resources Defense Council and formerly a geologist at Anadarko Petroleum told Bloomberg.

Those characteristics, Mordick says, make it more difficult and less economic to drill long horizontal well bores associated with shale.

Most of China's shale-gas reserves also lie in remote areas where there isn't enough water for hydraulic fracturing, or fracking, the water-intensive technique used to unlock gas trapped in the rock.

Meanwhile, Chinese companies are looking to tap into U.S. expertise in shale developments for domestic development. For example, Sinopec in 2011 paid $2.2 billion for access to five shale plays in a deal with U.S. company Devon Energy Corp.

Although China has held two shale gas auctions since 2011, no foreign-funded joint ventures were awarded in either round.

But in March China approved a shale gas exploration deal between China National Petroleum Corp. and Shell.

The deal, covering 4,000 square kilometers of the Fushun shale gas block in Sichuan province is considered an important step in accelerating China's shale gas exploration activities and enhancing its drilling techniques, said Che Changbo, the deputy director of the Oil and Gas Research Center under the Ministry of Land and Resources, when announcing its approval.

More such cooperation deals "will be released gradually," Che told China Daily.

Zhou Xizhou, who heads IHS CERA's China Energy practice, says Chinese shale won't be an important domestic energy source until into the 2020s. But Martin Stauble, who heads Royal Dutch Shell's exploration and production in China, told Bloomberg that commercial development "is likely to be in a three- to five-year time frame."

Processing constraints might have curtailed Chesapeake Energy Corp's natural gas production in the Utica shale of eastern Ohio, but that's likely to change by the second half of this year, says its acting CEO.

"We've reduced cycle times there and our efficiencies are improving," Steve C. Dixon said Wednesday during a conference call to discuss his company's first-quarter earnings. "With the pace we're on, we'll meet those objectives and significantly grow production in the last half of this year."

Chesapeake posted net income of $15 million for the quarter ended March 31, or two cents per diluted share, compared with a loss of $71 million the same period a year ago.

The energy giant reported it has budgeted 63% of its capital expenditures on well completions in the Eagle Ford and Greater Anadarko Basin shale plays this year, 11% to the Utica.

As of March 31, Chesapeake reported it's drilled 249 wells in the Utica. However, just 66 are in production while another 86 await pipeline connections.

"Processing is really the holdup," Dixon said Wednesday. Two major processing plants are under development that will tie into Chesapeake wells. Dominion’s Natrium plant in West Virginia is expected to be in operation this month and the first phase of M3 Midstream's Kensington plant in Columbiana County is scheduled to come online by June and the second phase by the end of the year.

Both processors are important to Utica production because they are needed to separate dry gas, such as methane, from natural-gas liquids such as ethane, butane and propane.

Jeff Fisher, Chesapeake executive vice president for production, reported the company's Utica wells remain on track to hit the goal of producing 330 million cubic feet equivalent per day, but overall production has remained flat since Chesapeake last provided an update April 1.

During the first quarter, net production from Chesapeake's wells averaged 66 million cubic feet of natural gas equivalent per day.

Thirteen wells were placed into commission, Chesapeake reported, with an average peak daily rate of 1,200 barrels of oil equivalent.

"We now expect the next-step change in our Utica production will occur closer to mid-year," Fisher said, once the Natrium plant is operational.

Chesapeake highlighted the performance of three wells in the Utica play. The Coe 34-12-4 1H well in Carroll County achieved a peak rate of 1,980 barrels of oil equivalent per day that included 235 barrels of oil, 470 barrels of natural gas liquids (NGLs) and 7.6 million cubic feet of gas per day.

The Scott 24-12-5 6H well, also in Carroll County, achieved a peak rate of 1,530 barrels of oil equivalent per day, consisting of 285 barrels of oil, 350 barrels of NGLs, and 5.4 million cubic feet of natural gas.

In Harrison County, Chesapeake's Henderson South well achieved a peak rate of 1,625 barrels of oil equivalent per day, which included 755 barrels of oil, 240 barrels of NGLs, and 3.8 million cubic feet of natural gas liquids.

Fisher emphasized the Coe unit exemplifies the cost efficiencies that come with drilling multiple wells from a single pad.

"We drilled six wells from a common pad," he said. The first well cost $8.5 million, including infrastructure, while the five others at the site averaged just $5.9 million to complete, or a reduction of 30% in cost.

Dixon said the company has made strides in reducing its debt and is focusing on improving shareholder value.

"Chesapeake is off to a strong start in 2013," Dixon told analysts. "We are capitalizing on drilling efficiencies wherever possible and leveraging our investments in roads, well pads, gathering lines, and compression and processing facilities."

Register now for MicroSeismic, Inc's FREE May webcast, Next Generation Downhole Microseimic Monitoring with EventPick Technology. 

Oil production in the Eagle Ford Shale was up 74 percent in February compared with the year before.

Bloomberg News is reporting that the nine fields that make up the majority of the Eagle Ford yielded 471,258 barrels of crude a day in February.

That’s an all-time high, based on preliminary data released by the Texas Railroad Commission.
Gas production is dipping as drillers continue hunting oil instead of gas.

Production of condensates, or natural gas liquids, was 89,217 barrels a day in February, down from 117,789 a year earlier, according to the Bloomberg story.

Production of natural gas was 1.79 billion cubic feet a day, down from 1.87 billion the year before.

Plains Marketing LP’s posted price for Eagle Ford light oil yesterday was $84.50 a barrel, compared with $88.38 for West Texas Intermediate and $107.66 for Brent.

About eight-in-ten Americans (83%) identify ultraviolet as the type of radiation that sunscreen protects against. Nearly as many (77%) know that the main concern about the overuse of antibiotics is that it can lead to antibiotic-resistant bacteria.

However, only about half (51%) of the public knows that “fracking” is a process that extracts natural gas, not coal, diamonds or silicon from the earth.

Similarly, knowledge of basic scientific concepts differs greatly across questions. While most Americans (78%) know that the basic function of red blood cells is to carry oxygen to all parts of the body, just 20% could identify nitrogen as the gas that makes up most of the atmosphere.

The quiz is part of a nationwide survey, conducted March 7-10 among 1,006 adults, which also probed opinions and perceptions about science and math in education. The survey was conducted with Smithsonian magazine for an edition focusing on STEM (science, technology, engineering and mathematics) education (see “How Much Do Americans Know about Science?”).

The public underestimates how well American high school students perform on standardized science tests compared with students in other developed nations. A plurality (44%) believes that 15-year-olds in other developed nations outrank U.S. students in knowledge of science; according to an international student assessment, U.S. 15-year-olds are in the middle ranks of developed nations in science knowledge.

Nearly half of Americans (46%) say that the main reason that many young people do not pursue degrees in math and science is mostly because they think these subjects are too hard; just 22% say it is mostly because young people think math and science are not useful for their careers while 20% say it is because they think these subjects are too boring. Women (54%) are more likely than men (37%) to say that the main reason young people do not pursue math and science degrees is because they think these subjects are too difficult.

The survey asked an open-ended question about what one subject K-12 schools should emphasize more these days; 30% of respondents say math; 19% say English, grammar or writing, while 11% say science; and 10% say history, social studies or government. Overall, 45% mention some aspect of science, technology, engineering or mathematics.

The webcast will be help April 23, 2013 at 10:00 AM CST and is entitled Coupled Fluid Flow and Geomechanical Modeling of Unconventional Hydraulic Stimulation: Processing Affecting Recovery. 

Read the full presentation description below and register on the MicroSeismic, Inc. website today! 

During hydraulic stimulation in unconventional oil and gas, newly forming and preexisting fractures interact to generate complex fracture networks. We developed a computational model, CFRAC, that couples fluid flow and the stresses induced by fracture deformation in large, complex discrete fracture networks.

Modeling these processes with discrete fracture networks is useful because the stresses induced by fracture propagation and deformation are especially heterogeneous and depend on the relative locations and orientations of neighboring fractures. The model also has the capability to describe friction evolution on fractures, allowing it to directly describe the processes giving rise to microseismicity. In this talk, applications to practical problems will be given.

Different mechanisms that encourage or inhibit development of productive fracture networks will be summarized. The relationship between microseismicity and deformation will also be discussed.