Midwest Sees a Sand Rush

Fracking Spurs Demand for the Stuff, Sparking a Mining Boom—and Vexing Some

By MARK PETERS and ISABEL ORDÓÑEZ Updated May 13, 2012, 7:56 p.m. ET

WINONA, Minn.—Scouts armed with geological maps and elevations from Google Earth are knocking on doors in the upper Midwest in search of what seems too common to mine: sand.

The sedimentary material is in high demand among U.S. oil and natural-gas producers, setting off a sand rush in Wisconsin, Minnesota and other Midwestern states. While adding jobs, the mining boom is prompting pushback from some local residents, who are surprised by the frenzy and leery of its impact on their communities.

Sand mined in the Midwest is used in places such as North Dakota and Pennsylvania to tap oil and gas reserves. The U.S. producers' demand for sand reached 28.7 million tons in 2011, up from six million tons in 2007, according to independent laboratory PropTester Inc. and consultancy Kelrik LLC.

The surging demand is making sand the Midwest slice of a national energy boom. Oil and gas producers in recent years have greatly boosted the use of horizontal drilling and hydraulic fracturing to tap reserves once out of reach. Sand, injected deep underground to prop open fractures in shale formations and allow oil and gas to flow out, is important in "fracking."

Wisconsin and Minnesota have abundant supplies of the type of sand that oil and gas producers need. Geological conditions were right hundreds of millions of years ago to form sand hard enough to withstand the pressure thousands of feet underground, while also having round grains that leave space so the oil and gas can escape. Fracking sand can fetch around $50 a ton, depending on quality.

To read the entire article go to: http://online.wsj.com/article/SB10001424052702303877604577383923263429292.html?mod=WSJ_Energy_leftHeadlines

Deadliest Danger Isn’t at the Rig but on the Road

By IAN URBINA May 14, 2012

After working 17 hours straight at a natural gas well in Ohio, Timothy Roth and three other crew members climbed into their company truck around 10 o’clock one night last July and began their four-hour drive back to their drilling service company’s shop in West Virginia.

When they were just 10 minutes from home, the driver fell asleep at the wheel. The truck veered off the highway and slammed into a sign that sheared off part of the vehicle’s side, killing Mr. Roth.

About two months before the fatal crash, Mr. Roth nearly died in a similar accident when another co-worker with the same company fell asleep at the wheel after a long shift and ran the company’s truck into a pole. In 2009, Mr. Roth’s employer was penalized in New York, Pennsylvania and Utah for violations like “requiring or permitting” its oil field truckers to drive after working for 14 hours, the legal limit.

Over the past decade, more than 300 oil and gas workers like Mr. Roth were killed in highway crashes, the largest cause of fatalities in the industry. Many of these deaths were due in part to oil field exemptions from highway safety rules that allow truckers to work longer hours than drivers in most other industries, according to safety and health experts.

To read the entire article go to: http://www.nytimes.com/2012/05/15/us/for-oil-workers-deadliest-danger-is-driving.html

For Natural Gas, End to Wishful Thinking

By SPENCER JAKAB May 13, 2012, 9:15 p.m. ET

Viewed from space, parts of North America probably resemble a pincushion these days.

Rarely have there been as many drilling rigs poking holes in the ground to pump out hydrocarbons. But the furious activity doesn't have to be all bad for prices in the glutted natural-gas market.

To read the entire article go to: http://online.wsj.com/article/SB10001424052702304543904577398501626586314.html?mod=WSJ_Energy_leftHeadlines

Icahn Expected to Disclose Stake in Chesapeake

By RYAN DEZEMBER And DANIEL GILBERT May 13, 2012, 7:53 p.m. ET

Chesapeake Energy Corp. is expecting activist investor Carl Icahn to disclose soon that he has taken a significant stake in the embattled natural-gas company, according to people familiar with the matter.

Such a move by Mr. Icahn could ratchet up pressure on Chesapeake, which faces a cash crunch and corporate-governance controversies that have pushed its stock to the lowest level since 2009; he has said previously that investors want the company to reduce its leverage. But he is also known to buy stocks he thinks have become bargains, and shares often rise as other investors mimic him. A spokeswoman for Mr. Icahn declined to comment on Sunday.

Any boost to the stock could cheer investors, whose shares lost $1 billion of value in less than an hour on Friday as Chesapeake revealed that it might have to delay planned asset sales to stay in compliance with the terms of its line of credit. The company's market capitalization sank to $9.8 billion, the first time it has fallen below $10 billion since the financial crisis in 2008.

To read the entire article go to: http://online.wsj.com/article/SB10001424052702303505504577402553480182824.html?mod=WSJ_Energy_leftHeadlines

Chesapeake Energy’s Chief, Under Investor Pressure, Seeks to Win Over Skeptics

By CLIFFORD KRAUSS May 14, 2012

HOUSTON — Chesapeake Energy sought to calm investors on Monday by disclosing details of a new $3 billion unsecured bridge loan aimed at buying time for the financially beleaguered company to bargain for the best terms in selling valuable oil fields in West Texas and other assets.

Plummeting natural gas prices have put Chesapeake, the nation’s second-largest gas producer after Exxon Mobil, in a squeeze in recent months, upending a business model that led the company to pile up debt, with long-term liabilities of $13 billion as of March 31, to finance a frenzy of land acquisition and drilling across the country.

The company’s stock, which has lost about half its value over the last year, went into a tailspin late Friday, dropping 14 percent after Chesapeake warned in a Securities and Exchange Commission filing that it might have to delay the selling of $14 billion in assets to comply with the terms of a critical line of credit. The company, which is based in Oklahoma City, also gave the impression of disarray when it said it would delay releasing its quarterly earnings report, but then filed it anyway just minutes later.

But on Monday, Chesapeake’s chief executive, Aubrey K. McClendon, tried to reassure investors by saying the company was merely postponing the $1 billion sale of future production from its South Texas Eagle Ford oil field along with the spinoff of a drilling subsidiary. He further reiterated that he was fully confident that the company could raise roughly $10 billion from asset sales in Texas, Oklahoma and Kansas this year.

To read the entire article go to: http://www.nytimes.com/pages/business/energy-environment/index.html?src=busfn

Ohio’s shale development is a ‘game changer,’ says American Petroleum Institute’s Jack Gerard

Published: Saturday, May 12, 2012, 6:00 AM     Updated: Saturday, May 12, 2012, 9:24 AM

By John Funk, The Plain Dealer

Ohio is poised for an energy boom -- if it adopts public policies to encourage development rather than over-regulate shale gas and oil drilling, the nation's top oil industry spokesman said Friday.

"Ohio has immense opportunities to create thousands of jobs thanks to the Utica and Marcellus shale," Jack Gerard, president and chief executive officer of the American Petroleum Institute, told an audience Friday at the City Club of Cleveland.

"Responsible energy production has already generated more than $22 billion for the Buckeye state. It is the industry's use of new technology like horizontal drilling and hydraulic fracturing that has given fresh life to energy development in Ohio."

To read the entire article go to: http://www.cleveland.com/business/index.ssf/2012/05/ohios_shale_development_is_a_g.html

Ohio horizontal well permits increase sharply in 2012: Sunday’s Numbers

Published: Sunday, May 13, 2012, 8:00 AM     Updated: Sunday, May 13, 2012, 8:56 AM

By Rich Exner, The Plain Dealer

113: Horizontal well permits issued by the state of Ohio for drilling in Marcellus and Utica shale during the first four months of this year.

6: Permits during the first four months of 2011.

116: Permits for all of 2012.

30: Permits in April, second-highest behind only the 37 issued in March.

72: Permits for Carroll County, located between Canton and Steubenville, most in Ohio.

32: Permits for Columbiana County, located between Youngstown and Steubenville, second most.

To read the entire article go to: http://blog.cleveland.com/datacentral/print.html?entry=/2012/05/ohio_horizontal_well_permits_i.html

Obscure-but-awesome energy law getting shivved by natural gas lobby

By David Roberts

Original source: http://grist.org/politics/obscure-but-awesome-energy-law-getting-shivved-by-natural-gas-lobby/

Wouldn’t it be cool if we passed a rule mandating that all new federal buildings had to be carbon-neutral by 2030? The feds buy and build a lot of real estate. An effort to wring fossil-fuel energy out of those buildings — by increasing their efficiency and supplying them with renewables — would seriously bolster domestic markets for efficiency and distributed energy. Beyond that, it would serve as a proving ground and an example for the communities where those buildings are located. It would be galvanizing.

“But,” you’re protesting, “we would never do something so radical. Germany might. Denmark, maybe. Not us.”

Hark! I say to you. Hark to this sh*t: We do have such a rule! It was passed by Congress and signed by President George W. Bush! It’s on the books, the law of the land. Specifically, it is Section 433 of the Energy Independence and Security Act of 2007. It says that new federal buildings, or major renovations ($2.5 million or more) of federal buildings, must reduce their consumption of fossil-fuel energy (relative to a similar building in 2003) 55 percent by 2010, 80 percent by 2020, and 100 percent by 2030. (It hasn’t been funded yet, so that 2010 target is, er, no longer operational.)

It’s an audacious goal, basically Architecture 2030′s “2030 Challenge” put into law.

“Holy crap,” you’re saying, “if we have a law that awesome, surely come powerful constituency must be trying to screw it up!”

Right you are. On April 12, representatives from the American Gas Association (AGA) and the Federal Performance Contracting Coalition (FPCC) met at the White House with administration officials from DOE, CEQ, and OMB. At that meeting they offered this issue brief [PDF], which called on Congress to “substantially modify or eliminate EISA section 433.” You can bet that issue brief hit all the relevant congressional offices as well.

Cuba embargo could threaten oil-drilling safety, expert says

By Erika Bolstad | McClatchy Newspapers

last updated: May 11, 2012 07:44:29 AM

WASHINGTON -- ]

The 50-year-old U.S. embargo of Cuba is getting in the way of safety when it comes to deepwater drilling in Cuban waters, an expert on the communist country’s offshore drilling activity said Thursday.

Lee Hunt, the former president of the International Association of Drilling Contractors, warned that Cold War-era economic sanctions threaten not only Florida’s economy and environment but that of Cuba, too, in the event of a major disaster on the scale of 2010’s Deepwater Horizon oil spill. The worst-case scenario is "state-sponsored chaos at a disaster site," Hunt said during an event sponsored by the Center for International Policy, a Washington think tank that advocates for a foreign policy based on human rights.

The U.S. Coast Guard has extensive response plans, as does the state of Florida. But Hunt said he would give prevention efforts an "F" grade. He likened the work to stocking body bags for a plane crash – but not training pilots to fly safely or to maintain aircraft properly.

"We’re getting ready for what will inevitably happen if we don’t take the right proactive steps," Hunt said.

To read the entire article go to: http://www.mcclatchydc.com/2012/05/10/148433/cuba-embargo-could-threaten-oil.html