One particular region – the Mancos Shale – is buried deep in the Piceance Basin, but has already been the site for some tests wells. Another shale play, the Pierre Shale located in eastern Colorado, also holds potential but has yet to be tested.

“Certainly if the Mancos does prove out, it’s very widespread throughout all of western Colorado, and the Pierre Shale is widespread throughout eastern Colorado. If it’s as good as everybody is hyping right now, the potential is pretty exciting,” said Colorado State Geologist Vince Matthews in Daily Sentinel article.

The region is already well-known for its natural gas production, but adding shale gas to the mix could significantly increase the payoff in Colorado.

“We view it as potentially doubling the production from the gas wells,” said Hal Blacker, President of Dejour Energy Corp which holds some Piceance Basin leases.

If so, he added, it would result in the basin’s production being competitive with that of shale gas development areas elsewhere in the country, making it again one of the better places in the country to invest in drilling.

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Shale’s footprint is considerably smaller and more manageable than tradition oil drilling the blog explains:

“Horizontal drilling enables far wider subsurface activity but from one central location. There are already in the US plenty of lucky landowners who get the check for drilling under their backyard but don’t actually get to see anything in their backyard, or even anywhere in eyesight.”

Another way of reducing shale’s footprint is to develop water recycling systems or to use local water sources as opposed to imported water. Often mixed with chemicals to create what is called “fracking fluid,” water is a key part of shale extraction.

“Integrated water resource management helps you meet your objectives while minimizing the environmental effects,” said Dave Yoxtheimer, a hydrogeologist at Pennsylvania State University in the US. “A gallon saved is a penny earned.”

Of course, the footprint of each shale well is going to be different depending on location and terrain, but large sites can be reduced to smaller sites over time, says No Hot Air.

“We already have some reports of wells covering up to 5 square miles subsurface from five acres above ground. Even the five acres can reduce to a footprint the size of a shipping container three months after the first ground is broken,” the blog writes.

For some concerned citizens, the above ground footprint isn’t the problem, it’s the prospect of an underground footprint that is distressing. A Pennsylvania cemetery recently leased more than 1,000 acres of land to a drilling company who has a five-year option to drill. The company, however, said it would only need five acres to drill if they go forward, so “everyone and their grandmother can rest easy about the physical footprint of shale. Or in this case, everyone and their great-great grandmother.”

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Rex’s shares climbed 7.2% to $11 on the midafternoon disclosure.

The deal is the Japanese trading house’s second shale deal as a wide variety of international players are seeking exposure to the hot natural gas assets. A surge in output from the one-time unconventional drilling prospects have helped keep a lid on natural gas prices and inventories have surged the past several years.

Meanwhile, Rex gets to become debt free and have “substantial” cash on hand. The oil-and-gas company, which has most of its operations in the Illinois and Appalachian basins, returned to black ink in the most recent two quarters after posting a string of losses since commodity prices fell from record highs in 2008.

“We believe that this will enable us to continue to aggressively develop our assets, while maintaining one of the cleanest balance sheets in the industry,” said Rex President and Chief Executive Benjamin Hulburt. Meanwhile, the company announced Tuesday that its lenders have agreed to boost Rex’s credit line by 25% to $125 million while extending the maturity a year to September 2013. As of Tuesday, $65 million had been borrowed from it.

With the sale, Rex reduced its third-quarter guidance to average daily production by 5% while the year’s target was reduced by up to 20%.

Beyond paying the $88.4 million for the joint venture stake, Sumitomo will also cover 80% of Rex’s remaining Marcellus drilling and well-completion costs up to $52 million. The deal is set to close next month.

SOURCE:
The Wall Street Journal

There is a new source of energy which is really a primary focus of the State Department right now,” said David Goldwyn, U.S. State Department Coordinator for International Energy Affairs. “And that’s natural gas”.

In an interview with Voice of America, Goldwyn says natural gas from shale is an excellent source of energy for many nations “so they’re not dependent on one country or one pipeline.”

The State Department recently hosted the Global Shale Gas Initiative to discuss expanding the safe use of shale gas. Twenty nations as well as US federal, state and local regulators met in Washington, D.C to discuss the importance of shale gas development for the 21st century.

In addition to helping the United States wean itself from its dependence on oil, the Obama administration believes that increased shale gas development will help reduce greenhouse gas emissions.

Other studies have also concluded that increased shale gas production in the United States and Canada could also help lower the price currently charged by Russia and Persian Gulf countries.

“This is not only a huge boon for energy security and economic development,” said Goldwyn, “but also, potentially for climate security if countries are able to move away from older coal plants and to natural gas instead.”

As Coordinator for International Energy Affairs at the State Department, David Goldwyn is at the center of U.S. energy security policy. His office supports initiatives that reduce U.S. dependence on foreign oil and also mitigate the impact of climate change.

Source: Natural Gas for Europe

Representatives from Armenia, Bulgaria, China, India, Indonesia, Jordan, Lithuania, Morrocco, Poland, Romania, South Africa, and Ukraine arrived in Williamsport, PA Tuesday to learn about shale gas development.

“Other countries want to develop their own shale gas deposits, but lack the experience needed to do it safe and efficiently,” David Goldwyn, coordinator for the State Department’s office on Internal Energy Affairs told the Sun Gazette. “The conference was held so we could teach them what they need to know.”

The delegates attended a luncheon hosted by Texas-based Chief Oil and Gas and then went on a bus tour of Chief gas operations in the eastern part of Lycoming County. The tour was moderated by company communications specialist Daria Fish, who attendees barraged with questions about shale gas development, including seismic testing, regulations, leases, landowner issues, pipelines and the financial viability of shale gas development, according to the paper.

“I think shale gas will be the future of energy in the world,” said Bahjat S. Aladwan, president of the Jordanian Geologists Association and Arab Geologists Union.

Aladwan said the technology needed to develop shale gas is new to his country, about half of which is over a shale deposit.

“I’m hoping we’ll be successful in producing that gas,” he told the Sun Gazette. “At the same time we are looking for support and help from the USA to develop the shale.”

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US officials believe that developing shale gas would provide fast-growing energy sectors in these countries with a cleaner alternative to coal, according to AFP.

Aside from being an untapped natural resource that experts say could dominate the gas market by 2030, shale gas could also lead to energy independence for some.

“The main reasons for doing it are national security and climate security,” David Goldwyn, the State Department’s coordinator on international energy affairs, said of the conference. “For China and India, it’s both climate security and economic security, because they have large demand for resources and the market is volatile.”

The US has been leading the shale gas boom, becoming one of the first countries to access the unconventional gas. Last year, the United States overtook Russia for the first time in decades as the world’s top gas producer.

Over the past few months, China has reached out to shale experts in the US to learn about shale development, and India’s biggest private oil and gas company, Reliance Industries, has invested nearly 3.5 billion dollars in joint ventures for fields in the United States.

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In addition to a recent black mark on oil production, advances in technology and $3-a-gallon gasoline have made deep-seated shale gas more accessible and desirable, experts told the paper, and could surpass oil as a leading energy supplier in Michigan – where the Antrim & Collingwood Shale Plays are located.

“Oil production in Michigan has been on a steady decline for several years,” said Hal Fitch, director of the Office of Geological Survey at the Michigan Department of Natural Resources, and also said shale gas could be a “bridge to” energy independence.”

Currently, Michigan produces around 150 billion cubic of natural gas per year.

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Fracking – and fracking fluid – has been a hot button issue not only in the Marcellus Shale play (where Range owns several shale wells), but also throughout the US.

Earlier this month, the New York state senate voted in favour of a temporary suspension through May 2011 on new drilling permits for the fracturing of shale rock deep under the ground. The fracturing process involves pumping underground, at high pressure, millions of gallons of water laced with chemicals and fine sands. The water breaks apart the rock and the fine sands prop it open so the gas can escape and be pumped out of the formation.

The chemicals are the cause of concern for many, but Range says their voluntary effort is aiming to change people’s opinion on the fracking fluid.

We’re hopeful that our voluntary effort will help to dispel misconceptions about the process and allow Range and others to deliver on the potential of this extraordinary resource base,” said John Pinkerton, Chairman and CEO of Range Resources, in a press release. “Our voluntary initiative represents the beginning of a series of announcements and efforts that Range is undertaking to allow people to better understand that natural gas is a valuable resource that can be pursued responsibly and for the benefit of the citizens in the regions where it’s developed and for the future of the United States.”

Even government officials are commending Range’s submission of the forms.

“With many questions about the environmental impact of hydraulic fracturing in the Marcellus Shale still unanswered, I commend Range Resources for its decision to voluntarily disclose information about the contents of the fluids they are using in that process on a per well basis, and I strongly encourage other companies drilling in the Marcellus Shale to disclose the components of their fluids in that kind of detail as well,” said US Congressman Mike Doyle.

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The key to this “natural gas renaissance,” has been technology.

“These new reserves have been exploited by a large group of relatively unknown players, the independents,” he writes. “They approached these new reserves opportunistically, and leveraging new technologies such as horizontal drilling and hydraulic fracturing, they broke the mold. They approached reservoir development from a completely new perspective.”

Indeed independents may have led the way in the US shale boom, but now most of the major oil players are getting involved on a global scale. Companies such as Shell, Exxon Mobil, Reliance Industries, andChevron – just to name a few – have been acquiring stakes in shale plays around the world over the past year or two.

The movement towards shale gas hasn’t only changed the oil and gas industry, McDermott says, it has also allowed for a more renewable energy future.

“Natural gas is sure to comprise increasing percentages of the power generation mix, displacing dirtier coal, nuclear, and, of course, challenging high-cost renewables,” he says. “It is even conceivable that gas will emerge as a transportation fuel — not overnight, but it may play a large role in fueling fleets in the future.”

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The study predicts that domestic Chinese unconventional production will account for over a quarter of total gas supply by 2030. However, unconventional gas resources will take a significant time to develop. Therefore, meeting its gas demand will require China to import significant additional volumes of LNG and piped gas, particularly up to 2020.

“Development of indigenous unconventional gas is currently slow but we forecast significant volumes of coalbed methane, coal-based synthetic gas and shale gas to enter the market, reaching over 11 billion cubic feet per day by 2030. This will meet much of China’s incremental demand by this time. In total, unconventionals will account for over a quarter of total gas supply,” said Gavin Thompson, China gas study director for Wood Mackenzie.

Shale gas is the major growth story in China gas, he added. As China’s national oil companies increase their unconventional gas activity, they will look for partnership and technology in the initial phase of development, creating a window of opportunity for qualified foreign players. This is a near-term window of opportunity for international oil companies to gain access to China’s onshore acreage and to leverage skills honed in North America.

During the second quarter Encana Corporation announced it had signed a memorandum of understanding with China National Petroleum Corporation that outlines a framework for the two companies to negotiate a potential joint-venture investment in the development of certain lands in Encana’s natural gas plays in Horn River, Greater Sierra and Cutbank Ridge in northeast British Columbia.

While domestic Chinese conventional gas supply will continue to grow, Wood Mackenzie says it cannot keep pace with future demand in the current decade and China will need to secure significant additional volumes of imported gas in the form of both LNG and piped gas.

“China’s demand for LNG is driving Pacific LNG market growth. We now forecast China LNG demand in 2020 to be 46 million tons per annum, up from our previous forecast of 31 million tons per year. This will expand the opportunity for LNG suppliers seeking to secure markets, particularly those in Australasia. However, China’s LNG import growth will be mitigated by the emergence of indigenous unconventional gas. Consequently there will be a limited opportunity for some LNG suppliers to secure long term supply or risk seeing China disappear as a potential foundation buyer for their projects,” Thompson said.

China’s gas demand is forecast to rise from nine bcf per day in 2009 to 43 bcf a day in 2030, a compound annual growth rate of 7.5%, with strongest growth pre-2020. This strong demand growth, says Wood Mackenzie, will not purely be driven by gross domestic product (GDP).

“Demand is driven by a combination of factors, including policies to reduce the country’s growing reliance on oil imports. This is important as the gas demand story is about displacing oil products, not coal, in the industrial and residential sectors. Coal continues to dominate in power, although gas will increase its market share in wealthier coastal provinces as local government supports a cleaner fuel mix. As such, we think that industry will remain the largest gas consumer in China through to 2030,” Thompson said.

The study concludes that potential suppliers of gas to China need to rapidly engage with domestic buyers and secure contracts while the market is still available as longer term unconventional gas will constrain requirements for new LNG imports.