Japan Disaster To Boost Shift To NatGas?

There are different 'degrees of disaster'. And while the Fukushima nuclear debacle may not be another Chernoble, it most certainly has reasonable people re-examining the wisdom of building more nuclear reactors. Whether you're 'for' or 'against' nuclear power, and whether you believe we can do it safely or not, there's still the question of, "Does it even make financial sense?"

Factoring in the initial costs of building a reactor, the inevitable cost overruns and add-ons, the costs of waging legal battles vs. the anti-nuke crowd, and the security & waste management involved, you wind up with numbers that are mind boggling. And now, after the Japanese incident, who knows what an insurance policy for a nuclear reactor will cost ... that is, if you can even get one.

At a time when nuclear power was seemingly getting a new lease on life, we have once again been reminded that we're no match for the awesome power of Mother Nature, be it earthquake, tsunami, or runaway nuclear reaction. Factor in human error and incompetence and it gets really dicey. Think it can't happen here? A while ago, it was discovered that one of our own nuclear reactors in California (earthquakes?) ran for 18 months with the facility unaware that the power had been shut off to the backup cooling system.

With the Middle East in turmoil, ever-more-costly oil supplies dwindling, nuclear shortcomings highlighted, and renewable energy sources decades away from reality, what are we left with? A huge supply of cheap natural gas right under our feet. And all we have to do is harvest it. What are we (our leaders) waiting for?

Range To Sell More Assets - Will Focus On Marcellus

Range Resources, the first company to seriously explore the Marcellus Shale, announced that it is going to be selling even more of it's assets to focus on it's investment in the Marcellus. Just this past February, Range agreed to sell off it's Texas holdings for $900 million. Range CEO John Pinkerton was quoted as saying, "We're a relatively small company and we've found probably the largest gas field in the US. We're going to need all the capital we can find."

Pinkerton said that Range can be profitable selling natural gas at $4 per thousand cu. ft. and will sell off it's lower-end assets as needed to fund it's Marcellus development plans. Range plans to spend $1.4 billion this year, $1.4 billion in 2012, and even more in 2013. I guess we know which state isn't going to benefit from those huge investments.

Chevron Ready To Gear Up

It's been reported that Chevron will drill up to 70 wells in the Marcellus this year. Chevron got into the game when it purchased Atlas Energy in November of 2010. They reportedly paid $9,000 per acre for the huge tracts of land involved. Atlas probably paid landowners anywhere from $100 to $1000 per acre. Someone made a lot of money on this deal.

Marcellus Drillers Saving / Recycling Water

Oil & Gas companies that perform hydraulic fracturing in the Marcellus Shale are typically recycling about two thirds of the water they use. These are the results of a study by Penn State hydrogeologist David Yoxtheimer. "The industry is striving to reuse as much flowback water as possible", Yoxtheimer said.

Many who are opposed to Marcellus development site extreme water demand as a problem. However, statistics clearly show that other industries comsume much more water.

Marcellus Dillers Getting A Bonus

Range Resources, one of the first oil and gas companies to drill into the Marcellus, has just increased the estimate of their 'Unproven Reserves'. What that means is, they now think that they can get a lot more gas out of the ground than they previously thought. Why do they think that?

First of all, their Marcellus Shale gas wells in PA are producing way better than they had hoped. Secondly, there is more gas in the Upper Devonian Shale (just above the Marcellus) and in the Utica Shale (below the Marcellus). As they learn more about the potential of these other shale formations, it's highly probable that the reserve numbers will increase even more.

The bottom line is, the land and mineral rights above the Marcellus Shale is becoming more and more valuable.

Another Marcellus Joint Venture

Triana Energy and Marathon Oil will be joining forces in Pennsylvania and West Virginia in a venture to produce natural gas from the Marcellus Shale. They reportedly have access to 82,000 acres in northern West Virginia and Fayette County, PA. They plan to drill 4 wells this year, but it's estimated that the total acreage could support up to 350 horizontal wells.

PA 'Clears The Air'

One of the many 'trumped up' charges from the Anti-Natural Gas Crowd is that the air pollution (caused by the drilling operations) will cause health problems. To find out for sure, the Pennsylvania DEP conducted a four week study of the air quality around Marcellus Shale drilling operations. The study focused on Volatile Organic Compounds (VOCs) as well as other potential pollutants that are associated with natural gas well operations. They found no threat to human health in any of their testing.

Oil Majors Moving Into Natural Gas

ExxonMobil has released it's annual energy forecast and predicts that natural gas will overtake coal as the second-most consumed fuel in the world by the year 2030. Due to (1) future oil shortages and (2) the environmentally unfriendly nature of coal, many of the largest, most successful, oil majors appear to agree with ExxonMobil and are positioning themselves to profit from the expected increased demand for natural gas.

Everywhere But New York

As the demand for 'fracking' continues to grow, oilfield services companies like Baker Hughes, Haliburton, and Schlumberger are struggling to keep up with the demand. Baker Hughes reportedly earned $335 million in the 4th quarter of 2010, a sharp rise compared to the $85 million they earned for the same period in 2009. This heightened demand for fracking is not just in the U.S. either. It's spreading internationally as more and more countries all over the world hope that their own shale formations will offer them the promise of a home-grown energy supply.

West Virginia's Marcellus Boom

Pennsylvania's not the only state that's benefitting from the Marcellus Shale. According to a study by West Virginia University's 'Bureau of Business and Economic Research', drilling operations helped pump $2.3 billion into West Viginia's economy in 2009. The report generated by the group also states that Marcellus activity helped generate 7,600 jobs, $298 million in worker pay benefits, and $14.5 million in tax revenues.

Hello? ...... Mr. Cuomo? .......