Summer 2013 Shale Gas News Bites
Looking Out for Shale Gas Labor Issues
The Houston Chronicle reports that the U.S. Department of Labor is closely watching how shale gas producers protect their laborers from workplace accidents and injuries. They suspect violations of the Fair Labor Standards Act on hours of work and overtime pay. The gas industry’s critiques say the companies hire day labor rather than full-time workers in order to avoid paying benefits such as overtime and health insurance. The U.S. Labor Department has a special Marcellus Shale regulatory initiative, now in its second year, designed to find unfair employment practices and prosecute them. “If you’re in the shale gas industry, especially in Pennsylvania and West Virginia, then the U.S. Department of Labor has you under a microscope right now,” said Rodney Bean of the law firm of Steptoe & Johnson.
Fly Me to the Gas and Let Me Play Among the Runways
Airports are located on large surfaces that may hide energy resources underneath their runways. That’s what happened at the Dallas-Fort Worth airport in Texas, which sits on top of the Barnett shale gas formation. The airport leased its gas rights to Chesapeake Energy in 2006 and has seen a windfall of some $300 million by the end of 2012. Now the airport in Pittsburgh, Pa., which sits on top of the rich Marcellus Shale formation, is looking at the same deal. Dutch energy consultant Ruud Weijermars writes, “Pittsburgh International and Allegheny County Airports want to reap a similar financial windfall from their shale resources and signed a deal with Consol Energy in February 2013. Key components of the agreement are a signing bonus of $50 million and royalties on future gas sales at 18% of gross gas sale revenues. The airport hopes to make $450 million on future royalty payments.”
Fracking Kills … Frackers?
UK opponents of fracking have taking to bombing … or at least, bomb threats. The Telegraph, a prominent British newspaper, reports that Francis Egan, CEO of Cuadrilla, a leading proponent of drilling for fossil energy in the U.K. and hydraulic fracturing to retrieve it, has been subject to multiple death threats. “This week,” he said, “I received an anonymous email saying that unless Cuadrilla ceased its activities in the UK, we would soon receive pipe bombs delivered by express mail to our premises. ‘Fracking kills,’ the message said, ‘and so do we.’” Cuadrilla has nonetheless begun exploratory drilling in West Sussex.
Has Shale Gas Put Nukes into a Death Spiral?
The natural gas boom and resulting lower prices for fuel have sucked nuclear power into a death spiral, says energy lawyer Margaret Hill at the firm of Blank Rome. She cites Chicago-based Exelon, the nation’s largest nuclear utility, as an example. Exelon says it isn’t closing any of its existing nuclear units, but isn’t planning any new plants in the face of low gas prices going far into the future, and has shelved some projects to upgrade its nukes, given the competition from gas. “The shale industry in the U.S. and what’s happening in terms of production and development…has taken the world by surprise,” said Hill. “I don’t think anybody foresaw what was going to happen. The economics and the environment are driving development and the use of shale oil and gas to provide power.”
Look Out, Marcellus, Here Comes Utica
First there was the Marcellus Shale formation in the Middle Atlantic states, possibly the largest natural gas field in the world. Now comes the Utica Shale, maybe even bigger. According to the Warren, Ohio, Tribune-Chronicle, Chesapeake Energy, a major player in the Marcellus and Utica formations, has reported major production in the Utica formation. “In the Utica shale,” said the newspaper, “Chesapeake’s average daily production of natural gas increased by 48 percent from the first three months of this year to the second quarter of the year. The average Utica well that started producing in the months from April to June yielded about 6.6 million cubic feet of natural gas per day. In the wet gas portion of the Marcellus shale, Chesapeake’s average daily production was about 208 million cubic feet per day, a 56 percent increase from the second quarter of 2012.”
Chesapeake Exits New York State Shale Plays
Shale gas pioneer and entrepreneur Chesapeake Energy, based in Oklahoma, is leaving New York and giving up a two-year fight to keep shale leases in the Empire State, Reuters news service reports. The state has become notoriously unfriendly to fracking. The account noted that the move “is a sign of energy firms’ growing frustration over operating in the Empire State, where most drilling is on hold, and also an indication of how Chesapeake is reining in spending after years of aggressive acreage buying left it with towering debt.”
—Kennedy Maize is MANAGING POWER’s executive editor.