Chesapeake to start deducting some costs from royalty checks

 

 

Chesapeake to start deducting some costs from royalty checks

Posted Wednesday, Aug. 10, 2011

About 20,000 royalty owners who have Barnett Shale natural gas leases with Chesapeake Energy will likely see their royalty checks slashed by roughly 25 percent after the company deducts expenses associated with post-production, such as gas gathering, compression and transportation.

The actual percentage and dollar amount decreases in royalty checks will vary monthly based on natural gas prices, post-production costs and output from wells.

Affected royalty owners were notified of the new company policy in recent letters. The changes took effect with July royalty checks that were based on May production, according to Julie Wilson, Chesapeake vice president for urban development and the top executive in its Fort Worth regional office.

Barnett Shale | Dallas Business, Texas Business, Fort Worth Business, American Airlines, Barnett Shale, Radio Shack, Consumer News | Star-Telegram.com.

Texas’ Relentless Drought May End Up Costing Billions – TIME

Texas’ Relentless Drought May End Up Costing Billions – TIME.

Texas drought will harm wildlife habitat for years

CANADIAN, Texas – In a muddy pile of sand where a pond once flowed in the Texas Panhandle, dead fish, their flesh already decayed and feasted on by maggots, lie with their mouths open.

via Texas drought will harm wildlife habitat for years.

Corps worries that fracking gas wells might hurt dams

Corps worries that fracking gas wells might hurt dams

By RANDY LEE LOFTIS
Environmental Writer
Published 31 July 2011 10:50 PM
The U.S. Army Corps of Engineers<http://topics.dallasnews.com/topic/Army_Corps_of_Engineers> is concerned that hydraulic fracturing of natural-gas wells near its dams – such as the one at Joe Pool Lake in southwestern Dallas County – could threaten dam safety.
In most of Texas and several other states, the corps has declared a 3,000-foot buffer around its dams and water-control structures within which it will not allow new wells, drilling pads or pipelines.
The corps also has a national team studying potential risks to dam safety from minerals extraction.
“We want to feel confident that our projects are safe,” said Anita Branch, regional technical specialist in geotechnical engineering for the corps’ Fort Worth<http://topics.dallasnews.com/topic/Fort_Worth%2C_Texas> office. “That’s always our No. 1 priority.”
Hydraulic fracturing, or fracking, in which drillers inject millions of gallons of water at extreme pressures to fracture rock and release gas, tops the corps’ list of worries.
The corps wants to know whether increased geological pressures from fracking could cause differential movement, or shifts along natural faults, weakening dam foundations.
“That could precipitate a fairly quick failure if it was not detected in time,” Branch said.
Two less worrisome possibilities are also under review. One is whether extracting large volumes of gas beneath or near a dam might make rock and soil subside.
Another is whether huge amounts of liquid waste from drilling, pumped into disposal wells, can trigger earthquakes.
Questions about dam safety could add another potential complication to shale gas, which has become a major source of natural gas nationwide.
The combination of fracturing and horizontal drilling – running pipe a mile or more from the wellhead to reach the gas – has made possible tens of thousands of new wells, including in North Texas’ Barnett Shale<http://topics.dallasnews.com/topic/Barnett_Shale> region.
At least in the case of dam safety, the corps’ questions suggest there might be little or no research supporting blanket assurances that the practice poses no public risk.
It also shows that the government has been slow to study the potential threat.
New wells have been drilled or permitted within the 3,000-foot zone around Joe Pool Lake’s dam, for example, but only recently has the corps responded to complaints that wells might harm dams.
Federal jurisdiction is limited by the corps’ incomplete ownership of surface title and mineral rights beneath its own reservoirs – decisions made decades ago to save money.
For that reason and others, including the nearly complete lack of scientific research to prove or disprove a risk, any national policy on wells near dams seems far off.
Caution advised
The Texas Railroad Commission<http://topics.dallasnews.com/topic/Texas_Railroad_Commission>, the state’s oil and gas regulator, said the corps had not contacted it about dam safety concerns or told it about a 3,000-foot buffer around corps dams.
Spokeswoman Ramona Nye said in an email the agency was not aware of cases in which oil or gas wells harmed dams.
Texas has no general rule keeping wells a certain distance from dams but would consider a scientifically and factually valid request to do so from the corps, Nye said.
In 2009, the Railroad Commission set a no-drilling buffer zone around an underground gas-storage depot in Jack County, she said.
The American Petroleum Institute<http://topics.dallasnews.com/topic/American_Petroleum_Institute>, the largest U.S. oil and gas trade group and a strong supporter of fracking in natural-gas production, did not respond to a request for comment on the corps’ inquiries.
The organization says on its website that “a comprehensive set of federal, state<http://topics.dallasnews.com/topic/Arkansas_State_University>, and local laws addresses every aspect of exploration and production operations. These include well design, location, spacing, operation, water and waste management and disposal, air emissions, wildlife protection, surface impacts and health and safety.”
A check of institute publications on fracking did not turn up discussions of dam safety.
Two dam safety experts said they believe the corps is asking valid questions.
Bruce Tschantz, professor emeritus of civil and environmental engineering at the University of Tennessee<http://topics.dallasnews.com/topic/The_University_of_Tennessee>, said the lack of scientific research or published studies on fracking’s potential effects on dams justified special care.
Tschantz is also a former White House<http://topics.dallasnews.com/topic/White_House> adviser and the first chief of dam safety at the Federal Emergency Management Agency<http://topics.dallasnews.com/topic/Federal_Emergency_Management_Agency>.
“Until the science involving any short- and long-term relationship between hydraulic fracturing and foundation destabilization, dam safety and reservoir stability is better understood,” he said in an email, “it is my general opinion as a hydraulic engineer that we should approach hydrofracturing in the vicinity of these structures very cautiously.
“This wisdom is especially important for hydrofracturing around high-hazard classes of dams.” A high-hazard dam is one with great potential for loss of life and property in case of a failure. It does not mean that a dam failure is likely.
Stephen Wright<http://topics.dallasnews.com/topic/Stephen_Wright>, professor of civil, architectural and environmental engineering at the University of Texas<http://topics.dallasnews.com/topic/University_of_Texas>, noted that problems with clay shales have led to at least two dam failures in Texas, although neither resulted in deaths. He said the corps was right to err on the side of safety.
“It seems reasonable that the corps is researching this issue,” Wright said, adding that the search for answers could be long and complex.
“I am pleased that the corps takes the position of placing public safety of paramount importance. I hope everyone would be as conscientious.”
Marc McCord of Dallas, an opponent of fracking, also welcomed the corps’ interest in possible threats to its dams.
However, after talking with corps officials for months about natural-gas wells near Joe Pool Lake’s dam, he said he’s seen little movement toward action by either federal or Texas agencies.
“We have multiple agencies failing to enforce the law and each blaming it on another so that nothing is done to protect the general public from commercial enterprises that seek to profit at citizen expense,” McCord said.
Most of the public dispute over the expansion of natural-gas drilling has been over fracking’s possible water-quality impacts.
The Texas Railroad Commission and the gas industry say there is no documented case of fracking polluting drinking water. Environmentalists dispute that.
In December, the Environmental Protection Agency<http://topics.dallasnews.com/topic/Environmental_Protection_Agency> accused Range Production of polluting drinking-water wells in Parker County. Range denies that its wells are to blame. The company is contesting an EPA order before the U.S. Fifth Circuit Court of Appeals in New Orleans<http://topics.dallasnews.com/topic/New_Orleans%2C_LA>.
Increased pressures
The corps’ concern with gas wells isn’t over water quality.
“Ours is specifically associated with the safety and integrity of our projects,” said the corps’ Branch. “It’s a different way of looking at it than most folks have done in the past.”
Fracking usually takes place thousands of feet underground, so deep that many experts say it can have little or no effect near the surface.
But corps experts have envisioned a scenario in which naturally occurring faults might transfer the high-pressure force of fracking upward toward a dam’s foundation.
“They’re basically changing the stress state of the existing geology,” Branch said. “You’ve got the geology as it exists today, and they’re going in and changing that by increasing the pressures that are in that.
“And those increased pressures are associated with those high pressures used as part of the hydrofracturing process.”
The weight of a reservoir’s water also applies great pressure to the earth, but in a uniform load rather than the concentrated force of fracking, Branch said.
“The fracture pressures they’re using are in the neighborhood of 8,000 pounds per square inch, and that’s a much more significant load than you get from the weight of the pool,” she said.
Potential damage to a dam from differential movement of the earth shifting along a fault would probably be gradual, allowing repairs as it happens, Branch said. But it could be quick, posing immediate risks, she added.
“We know that based on experiences elsewhere, these are concerns that have been noted,” Branch said. “That’s why we want to make sure that we fully understand the mechanisms that are developed so we can develop appropriate policy to address those.”Finding those answers will be complicated because every dam has different local geology. The variations may be great enough to prevent the adoption of a national buffer zone to cover all federal dams.
The 3,000-foot buffer that Brig. Gen. Thomas Kula, commander of the corps’ Southwestern Division, ordered March 17 is not impermeable. It does not prevent wells on land where the corps did not obtain ownership or mineral rights when it built a dam and reservoir.
No current law or rule lets the corps ban all drilling on land it does not control through ownership or mineral rights, Kula noted in his order.
Kula ordered corps offices in his division to examine oil and gas projects within 3,000 feet of a corps dam or water-control structure. Regardless of ownership, if the agency determines that a well would endanger dam safety, it can take legal action.
Kula’s order covers corps operations in all or parts of Texas, Oklahoma, Louisiana<http://topics.dallasnews.com/topic/Louisiana>, Arkansas, Kansas and Missouri.
McCord, the Dallas environmentalist who has pressed the corps to take a tougher stance on wells near its dams, said corps officials told him some companies had complied voluntarily with the 3,000-foot buffer zone, but others had not.
“This leads me to wonder why no governmental agency is doing its job in regulating the oil and gas industry by forcing compliance with legal restrictions on their operations,” he said.

Fracking’s air quality impacts debated

Fracking’s air quality impacts debated.

T. Boone Terrorism: Droughts Pit Natural Gas Industry Against Texans | The Energy Collective

T. Boone Terrorism: Droughts Pit Natural Gas Industry Against Texans | The Energy Collective.

U.S. takes action to protect public health in TX Jan 18, 2011

Environmental Protection Agency Region 6 South Central – Top Stories.

U.S. takes action to protect public health and enforce EPA imminent and substantial endangerments order in southern Parker County

The United States Department of Justice filed a complaint today against Range Production Company and Range Resources Corporation (“Range”) in federal district court, seeking enforcement of a Dec. 7, 2010, emergency order issued by the Environmental Protection Agency against the companies. In the order, the EPA determined that Range had caused or contributed to the contamination of a drinking water aquifer in Parker County, Texas. The complaint asks the Dallas court to direct the companies to comply with portions of the order and to pay a civil penalty of up to $16,500 per day of violation.

EPA issued the order following an investigation into complaints from residents about methane contamination in their private drinking water wells. According to allegations in the complaint filed today, testing confirmed the presence of methane gas and the presence of other contaminants, including benzene, a known human carcinogen, in the well water

Residents noticed problems with their private drinking water wells soon after Range completed drilling and well stimulation operations on two natural gas wells located near the residents’ drinking water wells. During the course of conducting its investigation and while consulting with various state authorities, EPA determined that the risk of explosion warranted the issuance of an emergency order.

While Range offered to provide two affected residences alternative drinking water and installed explosivity meters in their homes after issuance of the emergency order, it has failed to comply with other requirements to conduct surveys of private and public water wells in the vicinity, to submit plans for field testing, and to submit plans to study how the methane and other contaminants may have migrated from the production wells, in addition to plans to remediate affected portions of the aquifer.

Complaint against Range Production Company (10 pp, 27 KB, About PDF)
Exhibit A to the complaint (12 pp, 2.87 MB, About PDF)