The Daily Digger

by Katie Brown, Energy in Depth The Wyoming Department of Environmental Quality (DEQ) has just released  the results  of its 30-month investigation into water contamination in Pavillion, Wyoming, and it has concluded that hydraulic fracturing is unlikely to have been the cause.  As the report  explains , “Evidence suggests that upward gas seepage (or gas charging of shallow sands) was happening naturally before gas well development. It is unlikely that hydraulic fracturing fluids have risen to shallower depths intercepted by water- supply wells .  Evidence does not indicate that hydraulic fracturing fluids have risen to shallow depths intersected by water-supply wells.  The likelihood that the hydraulic fracture well stimulation treatments (i.e. often less than 200 barrels) employed in the Pavillion Gas Field have led to fluids interacting with shallow groundwater (i.e. water-supply well depths) is negligible.” (emphasis added) As the  Caspe...

From The Deal: Chesapeake Energy Corp. has increased its offering to convert its senior unsecured notes into as much as $3 billion in new second-lien notes, but even though the exchange offer was oversubscribed, the oil and gas producer still isn’t seeing much participation from the holders of notes coming due in 2017 and 2018.  Oklahoma City-based Chesapeake announced on Wednesday, Dec. 16 that approximately $2.8 billion of its senior unsecured noteholders agreed to participate in the exchange by the early Dec. 15 deadline. The original swap was supposed to be unsecured debt for up to $1.5 billion in new second-lien notes.  “This exchange is a bit of a prisoners’ dilemma, because if the noteholders don’t participate, they will get primed by the new second-lien debt and be junior in the capital structure, and those that do swap are doing so at a discount, but moving up the priority chain in the event that the company has future problems,” said George Schultze, the CEO of...

From StateImpact Pennsylvania: Pennsylvania landowners who say they’ve been cheated out of royalty money by gas driller Chesapeake Energy are pleased with a lawsuit filed by Attorney General Katheleen Kane’s office , but still seek more legal protections.  Oklahoma-based Chesapeake has been accused of underpaying royalty money in Pennsylvania and in several other states. Earlier this month Kane’s office filed a lawsuit against the company, accusing it of deceptive marketing practices.  “The lawsuit was the best news,” says Jackie Root, head of the Pennsylvania chapter of the National Association of Royalty Owners. “We thought there might be more companies other than Chesapeake, but if [the lawsuit] is successful, then hopefully the other companies will snap into line as well.”  Although much of the focus has centered on Chesapeake, Root says she gets complaints about the royalty payment practices of other drillers as well. Her group has been pushing for new legisl...

by Jackie Stewart, Energy in Depth This past year has been amazing for the Utica Shale in Ohio, as production of oil and gas in the state has  more than doubled . At the end of 2014, EID  reported  that the counties to watch in 2015 included Monroe, Belmont, and Noble Counties — and we were right.  Production results  for the first three quarters of 2015 showed Utica Shale development trended south to these counties, and the best producing wells, particularly natural gas wells, have been located in these counties. But as we look ahead to 2016, one of these counties, Belmont, is where the real story of promise will lie. Why does Belmont County stand out amongst similar counties with high production? Well, it’s because Belmont County is by far the most diversified story in the Utica with a combination of surging production results ,  new permits to drill , proximity to roads, rail, and barges, and most importantly, a new  multi-billion dollar ethane...

View the latest weekly permitting update from the Ohio Department of Natural Resources below or download it by clicking here . Connect with us on Facebook and Twitter! Follow @EnergyNewsBlog

From Bloomberg: With the stroke of a pen, President Barack Obama on Friday ended 40 years of U.S. crude oil export limits by signing off on a repeal passed by Congress earlier in the day.  The restrictions lift immediately under a provision in the spending and tax package that the president signed into law. Congressional leaders earlier in the week reached an agreement to end the trade restrictions, established during U.S. oil shortages in the 1970s, as part of a grand bargain that includes tax breaks for renewable-energy companies and refiners.  “I don’t doubt you’ll see some exports next year,” ConocoPhillips Chief Executive Officer Ryan Lance said in a telephone interview after the Senate vote. “We’re pretty excited about it, but we’ve also got to get the infrastructure” in place. Repeal of the crude-export restrictions reverses four decades of a policy that has defined the nation’s relations with the rest of the world. Without the trade limits, the U.S. -- now the ...

From the Norwalk Reflector: What if your land was being taken for pipeline construction without your permission?  For some in Huron County, that is exactly what they are facing as Spectra Energy plans to construct 36-inch pipes in its NEXUS Gas Transmission project.  The project will transport natural gas to markets throughout the United States and Canada.  This prospect had many landowners concerned about where that left their land as construction threatens to tear up farm land and uproot trees. For others, the pipes carrying flammable gases have been planned within 70 feet of their homes.  Law firm Goldman & Braunstein, LLP held a meeting Thursday at the Bellevue Public Library to discuss options available to the landowners to ensure they get a “fair and proper” compensation, and to ensure the pipes are “put in properly.” You can read more by clicking right here. Connect with us on Facebook and Twitter! Follow @EnergyNewsBlog

From SNL: U.S. oil and natural gas producers have significantly less of their production hedged for 2016 than they did in 2015, and that lack of price protection could bring more financial distress, particularly for less-than-investment-grade companies, according to a report by Standard & Poor's Ratings Services.  "Hedges represent 8% (1.619 MMboe/d) of total expected oil and gas production in 2016, a marked decline from the 15% hedged last year," S&P said Dec. 15. "The trend continues for speculative-grade companies, which have just 29% (1.437 MMboe/d) of total oil and gas production hedged next year compared with 45% in 2015."  Among independent producers in the Utica and Marcellus shales, the group is deceptively well-hedged compared to the national peer group, an SNL Energy analysis found.  "Deceptively" because while the majority of these producers, such as Antero Resources Corp., have more than half of their production hedged at p...

View the latest weekly permitting report from the Ohio Department of Natural Resources below or click here to download it . Connect with us on Facebook and Twitter! Follow @EnergyNewsBlog

A press release from Magnum Hunter Resources: Magnum Hunter Resources Corporation Files Voluntary Chapter 11 Petitions to Facilitate Balance Sheet Restructuring With the Overwhelming United Support of Funded Debt Holders Company Maintaining All Existing Operations During Restructuring Process IRVING, TX--(Marketwired - Dec 15, 2015) -  Magnum Hunter Resources Corporation ( OTC PINK :  MHRC ) and certain of its wholly-owned subsidiaries (collectively, the "Company" or "Magnum Hunter") today announced that they have filed voluntary petitions for relief under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware to facilitate the restructuring of their consolidated balance sheet through a prearranged restructuring plan. The Company also announced its entry into a restructuring support agreement with lenders that hold, in the aggregate, approximately 75% in principal amount of the Company's funded ...

A press release from Dartmouth College: The production of hazardous wastewater in hydraulic fracturing is assumed to be partly due to chemicals introduced into injected freshwater when it mixes with highly saline brine naturally present in the rock. But a Dartmouth study investigating the toxic metal barium in fracking wastewater finds that chemical reactions between injected freshwater and the fractured shale itself could play a major role.  The findings , which are published in the journal Applied Geochemistry, show that transformation of freshwater used for fracking to a highly saline liquid with abundant toxic metals is a natural consequence of water-rock reactions occurring at depth during or following fracking. Fracking wastewater poses a hazard to drinking water supplies if improperly disposed. A PDF is available on request.  The researchers examined samples from three drill cores from the Marcellus Shale in Pennsylvania and New York to determine the possible wate...

From NGI: Halliburton Co. and Baker Hughes Inc. said Tuesday they now are uncertain that their merger will be completed because a timing agreement with the antitrust division of the Department of Justice (DOJ) is going to expire before reaching a settlement.  The $34.6 billion merger announced in late 2014 would combine the No. 2 (Halliburton) and No. 3 (Baker) global oilfield service operators (see Daily GPI, Nov. 17, 2014 ). Halliburton is the No. 1 hydraulic fracturing provider in North America also. Since announcing their tie-up, the companies have agreed to sell assets to ensure they would pass antitrust muster. However, DOJ "has informed the companies that it does not believe that the remedies offered to date are sufficient" to address its concerns.  The companies said they are continuing discussions with federal officials and remain focused on completing the transaction "as early as possible in 2016, but there is no guarantee that an agreement with the DOJ o...

Click here to download the report. Connect with us on Facebook and Twitter! Follow @EnergyNewsBlog

From Shale Play: Cera now serves on the state's 2020 Tax Policy Study Commission. According to commission data, Ohio collected about $20 million worth of oil and natural gas severance revenue in fiscal year 2015, up nearly four times from the $5.2 million it received the previous year.  The 2020 commission will examine increasing the severance tax as part of an overall examination of Ohio's tax code. The commission is expected to make recommendations or propose legislation before the end of 2016.  "I don't know if we'll be able to get anything through," Cera said. "I'll just keep advocating for it."  Another matter of concern for Cera is the potential contruction of the $5.7 billion PTT Global Chemical ethane cracker in Dilles Bottom. He said this will create an even larger burden on local roads and infrastructure, as well as law enforcement resources.  "We really need more money to improve our roads and bridges. If they build the ...

From Bloomberg: As oil crashed through $35 a barrel in New York, some producers were already living with the reality of much lower prices.  A mix of Mexican crudes is already valued at less than $28, an 11-year low, according to data compiled by Bloomberg. Iraq is offering its heaviest variety of oil to buyers in Asia for about $25. In western Canada, some producers are selling for less than $22 a barrel. “More than one-third of the global oil production is not economical at these prices,” Ehsan Ul-Haq, senior consultant at KBC Advanced Technologies Plc, said by e-mail. “Canadian oil producers could have difficulty in covering their operational costs.”  Oil has slumped to levels last seen in the global financial crisis in 2009 amid a global supply glut. While the prices of benchmarks West Texas Intermediate and Brent hover in the $30s, they represent a category of crude -- light and low in sulfur -- that is more highly valued because it’s easier to refine. Some pro...

From NGI: After years of protracted lawsuits, the Ohio Supreme Court heard oral arguments on Tuesday in a case that could release hundreds of landowners from undeveloped oil and natural gas lease agreements and cast doubt on similarly worded leases that have been used for decades in the state.  Legacy driller Beck Energy Corp. has been fighting two groups of landowners over leases signed to explore for oil and gas in southern and eastern Ohio. The parties, including Beck's partner, XTO Energy Inc., have claimed the dispute has prevented millions in bonus payments, royalties and profits.  The high court would decide if the leases signed with Beck are void because they include language to allow the company to perpetually control mineral rights without drilling. If the landowners are successful, a certified class of 700 of them could end their leases and negotiate new ones.  In September 2011, five landowners filed a lawsuit in Monroe County Common Pleas Court agains...

by Randy Hildreth, Energy in Depth CELDF founder Thomas Linzey appears on Days of Revolt to urge his supporters to fill up jails The leader of a  national activist organization  behind ban-fracking campaigns in Colorado, Ohio and elsewhere is calling on activists to “ratchet up” civil disobedience and begin “filling up jails.” The comments are from Thomas Linzey, founder of the Community Environmental Legal Defense Fund (CELDF) in an interview he did with Chris Hedges’  Days of Revolt .  From the interview : HEDGES: “Well, you have talked about it as a kind of military operation. Explain what it would look like.” LINZEY: “Well, I think it means thinking about civil disobedience differently than we’ve thought about it before. So it’s not just to make a moral or ethical statement; it’s actually aimed at stopping the project itself. And that means, I think, successive days. It means rotating people through. It means bringing people in from other places....

From The New York Times: The Environmental Protection Agency engaged in “covert propaganda” and violated federal law when it blitzed social media to urge the public to back an Obama administration rule intended to better protect the nation’s streams and surface waters, congressional auditors have concluded.  The ruling by the Government Accountability Office , which opened its investigation after a report on the agency’s practices in The New York Times, drew a bright line for federal agencies experimenting with social media about the perils of going too far to push a cause. Federal laws prohibit agencies from engaging in lobbying and propaganda.  “I can guarantee you that general counsels across the federal government are reading this report,” said Michael Eric Hertz, a professor at the Benjamin N. Cardozo School of Law in New York who has written on social media and the government.  An E.P.A. official on Tuesday disputed the finding. “We use social media tools...

From CNN Money: The U.S. ban on exporting oil may not live to see its 40th birthday.  There's growing momentum to kill the restriction and a deal could be reached before the end of the year as part of a broader spending and tax bill that's making its way through Congress .  Proponents argue the restriction is terribly outdated. It was signed into law on December 22, 1975 when the OPEC oil embargo created a shortage that slammed the American economy with skyrocketing prices.  No scarcity of oil  Today, the world has too much oil -- thanks largely to the American shale oil boom. That's why crude oil prices have crashed below $35 a barrel and a gallon of gasoline is on the verge of falling below $2 per gallon.   In other words, there is no longer an oil scarcity that justifies keeping it at home. In fact there's too much of it. Click here to continue reading the article. Meanwhile, from Bloomberg: Oil prices won’t be affected by U.S. crude exports...