Following up on yesterday’s Senate EPW hearing on energy policy and the states, where North Dakota Gov. John Hoeven called for a comprehensive national energy strategy (see post), the good people at Energy in Depth pass on an exchange the governor had with Sen. Jim Inhofe (R-OK):

Key Excerpts From Yesterday’s U.S. Senate Environment and Public Works Hearing
Dialogue starts at 101:50.
Click HERE to view.

U.S. Sen. Jim Inhofe (R-OK):  “Governor Hoeven, the thing I was going to bring up is there’s a lot of discussion, when you talk about your offset capabilities there, and what you’re doing, that’s great. We’re doing somewhat the same thing, although most of ours is marginal production. But there is a, I’d suggest to you, the use of hydraulic fracturing is necessary in your state to be able to explore, to retrieve all these oil capabilities.”

Gov. John Hoeven (R-ND):  “It’s absolutely vital. You know, you mention some of these new formations. They are not, uh, the oil isn’t connected. You’ve got to go underground. And you’re talking two miles underground. And make a fracture in order to get the oil to flow. That’s vitally important.”

U.S. Sen. Jim Inhofe (R-OK):  “I wanted to get that into the record, because there are some efforts to do away with hydraulic fracturing, and it would be devastating.”

Just so. Energy in Depth has been a strong voice defending hydrofracturing technology, in which pressurized water is pumped in subterranean strata to make the oil or natural gas accessible via drilling. Without hydrofrac, development of the Bakken Formation oil as well as our vast natural gas resources in Texas (Barnett Shale) and Pennsylvania/New York/Ohio (Marcellus Shale) would be prohibitively expensive.

The activist group, ProPublica, has been leading a bizarre campaign against the widely accepted technology, and by offering its agenda-driven reporting for free has been successful in getting newspapers to publish the articles. Apparently if it’s gratis, editing is optional.

This is a telling observation from an Energy in Depth rebuttal, which explains why we refer to ProPublica as an activist outlet, not a journalistic venture, “Separating Fiction from Invention in ProPublica’s Latest Anti-HF Attack Piece“:

Earlier this week, ProPublica author Abrahm Lustgarten released the latest installment in his series of advocacy pieces attacking the commonly used energy technology known as hydraulic fracturing. Instead of simply running on the ProPublica blog and website, however, the article was co-published with Politico and appeared in the paper’s news section (a letter to the editor from Energy In Depth policy director Lee Fuller will appear in the paper this Tuesday).

It wasn’t the first time that a mainstream news outlet provided ProPublica with a platform for this kind of product – although, for papers such as the Pittsburgh Post-Gazette, the determination has been made that ProPublica articles, when run, are more appropriately filed on its “opinion/perspectives” page than as part of its straight-news reporting.

Prior to its release, Energy In Depth spoke at length with Mr. Lustgarten about the direction of the (presumably already written) piece and the myriad mistakes he was making in issuing a blanket indictment of recent government and third-party reports finding that EPA regulation of hydraulic fracturing would cost Americans jobs, revenues and future security.  

Regrettably, none of those explanations made it into his final piece.

 And regrettably, ProPublica appears to be a model for future journalistic ventures.

As previously noted, this blogger once worked for Gov. John Hoeven. But it’s been eight years now.

From the testimony of Lynn Helms, director of the Department of Mineral Resources of the Industrial Commission, North Dakota, at Thursday’s hearing by a House Natural Resources and Environment Committee subcommittee hearingo natural gas and hydro fracturing. Helms was also representing the states of the Interstate Oil and Gas Compact Commission.

As the head regulator of oil and natural gas development in the State of North Dakota and an officer of the IOGCC representing all oil and natural gas producing state regulators, I can assure you that we have no higher priority than the protection of our states’ water resources – let me repeat no higher priority. Much of our entire regulatory framework, from drilling to completion, production, and finally plugging and abandonment, is centered around measures to prevent any contamination of the water resource. As a component of the completion of a well, hydraulic fracturing operations are thus thoroughly regulated and supervised by the states.

A major component of production operations is the proper storage and disposal of all production wastes, including hydraulic fracturing flow back water. These operations are carefully monitored, audited, and regulated in our state programs.

As I noted in my testimony above, hydraulic fracturing is a critical component of developing the Bakken formation, indeed every shale play throughout the U.S. and Canada. Without hydraulic fracturing, under regulation of the states, this resource could not be produced.

As Helms notes, the Bakken Formation can yield 4-7 billion barrels of oil and 4-7 trillion cubic feet of natural gas — using current technology, which now includes hydrofrac.

That’s energy security at work.

We also commend the testimony of Mike John, Vice President of Corporate Development and Government Relations, Eastern Division, Chesapeake Energy Corporation:

The topic of this hearing is very exciting because shale gas no longer just has “potential.” It is real, and it is a game-changer not only for America’s natural gas industry but also potentially for our nation, our economy and our environment! In fact, North American natural gas supply is so plentiful it has been described recently by some experts as a virtual “ocean of natural gas. As such, this shale gas revolution has made greater energy independence, enhanced national security and a significantly cleaner environment, attainable goals today. The real issue is no longer whether there is adequate supply, but rather whether there is adequate demand for this clean-burning, domestically produced fuel to continue the development of these enormous resources bases.

The House Energy and Natural Resources Committee, Subcommittee on Energy and Mineral Resources, holds a hearing Thursday, “Unconventional Fuels, Part I: Shale Gas Potential.” Shale gas is natural gas, and there’s nothing unconventional about that energy source.

Relatively new, however, is the effective and remarkable expansion of U.S. domestic natural gas resources made possible through technological advances, in this case hydraulic fracturing, or hydro-frac, the process of pumping pressurized liquids into gas-bearing shale deposits to fracture the stratum and release the gas.

Some environmental groups and other activist outfits like Propublica have targeted hydraulic fractioning, claiming it harms the environment. You’ll hear some of that criticism from witnesses tomorrow.

Fortunately, there are several witnesses who can bring real-world experience to the discussion, including Mike John, a vice president with Chesapeake Energy Corp., a global leader in natural gas development. John represents the company’s eastern region, which is where a lot of action is under way with the Marcellus Shale.

Also testifying is Lynn Helms, director of the Oil and Gas Division, North Dakota Industrial Commission. Helms has been a key state regulator and smart observer as hydrofrac has been used to develop the Bakken Formation, an oil-bearing shale formation in North Dakota, Montana and Saskatchewan. The technological advances represented by hydrofrac and horizontal drilling have helped make billions more barrels of oil available for drilling  — creating a much-welcomed energy boom in the prairies. (Lynn testified last year before a Senate Budget Committee hearing on the Bakken Formation.)

The American Petroleum Institute has developed many resources on hydraulic fracturing at its API website here, including a Q&A.

Our view is that if anyone claims to want “energy independence” or “energy security” and then attacks the new technologies that make more domestic natural gas and oil available, they’re just not very serious.

Haven’t had a post about the Bakken Formation in a while, that vast and already proven layer of sweet crude in the Upper Midwest and Prairie Provinces, accessible via horizontal drilling and hydrofrac technology. And there are interesting things going on with clean coal out there, too.

From Bismarck Tribune, “Oil leases still vigorous in Mountrail, McKenzie“:

While far off the all-time highs, bids for oil and gas acres in North Dakota brought top dollar at the quarterly Bureau of Land Management auction Tuesday.

A Kansas company bid $3.5 million for a 10-year lease on 1,358 acres in Mountrail County, making the highest total bid of the sale, said BLM spokesman Greg Albright.

From the Oil and Gas Journal, “Final EIA figures show US oil reserves grew 2% in 2007“:

WASHINGTON, DC, Jan. 28 — Proved US oil reserves rose by 345 million bbl, or 2%, during 2007 to 21.32 billion bbl from 20.97 billion bbl at the beginning of the year, reported the US Energy Information Administration on Jan. 28.

The increase was a contrast to the rapid decrease in domestic crude reserves that began in 1970 but which have moderated in the past decade, EIA said as it released final yearend numbers for 2007. The federal energy research and statistical service will begin gathering 2008 numbers in February when it distributes proved reserves data survey forms to more than 1,400 US well operators…[snip]

EIA said Alaska, Texas, and North Dakota accounted for a majority of the year’s new reserves with a combined 605 million bbl of net additions. Eight other states showed relatively small increases while 13 states and the Gulf of Mexico reported declines, it said.

As for coal, “5 coal-fired power plants studying carbon capture“:

Five coal-fired power plants in the U.S. and Canada, including one in central North Dakota, are studying the feasibility of retrofits to capture and store carbon dioxide, a nonprofit industry research group says.

Electric Power Research Institute said studies are being done at Great River Energy’s Coal Creek Station near Underwood, and at plants in Illinois, Utah, Ohio and Nova Scotia. The group said the research could help guide development of future power plants and how they deal with carbon dioxide emissions blamed for global warming.

Which makes this Economist story all the more timely, “North Dakota is one of many states waiting for an energy policy from Washington.”

P.S. Crambe!

There tends to be a quick drop-off in significance in the North Dakota AP’s annual list of the state’s 10 major news stories. But there’s no doubt developments involving the Bakken Formation were not just the No. 1 story in North Dakota, but big news nationally and internationally, as well.

1. Oil: North Dakota moves into 5th place among the states in oil production as prices soar, but the year ends in uncertainty after the prices plummet. In a long awaited study, the government estimates up to 4.3 billion barrels of oil can be recovered from the Bakken shale formation in North Dakota and Montana, using current technology.

The Bakken Formation is a shale structure accessible through horizontal drilling and hydrofracking, technology made possible through the profits of oil companies.

AP reported on the effects of the price drop on the Bakken Formation earlier this month, “Oil prices temper boom in ND oil patch“:

Drilling in North Dakota’s oil patch is expected to be slashed by at least a third next year, industry officials say, citing slipping crude prices and a slumping U.S. economy.

But no hint of an ’80s-type bust, observers say.

And Harold Hamm of Continental Resources is upbeat about his company’s prospects, in part because of its investment in the Bakken Formation. (From The Enid, OK, News.)

That’s a connection worth considering: Energy production helps boost the economy, government tax revenues and employment in states like North Dakota, where the Bakken Formation and good ag prices have spread the wealth.

From The New York Times, “ A Placid North Dakota Asks, Recession? What Recession?”

While dozens of states, including neighboring ones, have desperately begun raising fees, firing workers, shuttering tourist attractions and even abolishing holiday displays to overcome gaping deficits, lawmakers this week in Bismarck, the capital, were contemplating what to do with a $1.2 billion budget surplus.

And as some states’ unemployment rates stretched perilously close to the double digits in the fall, North Dakota’s was 3.4 percent, among the lowest in the country.

And…

North Dakota’s cheery circumstance — which economic analysts are quick to warn is showing clear signs that it, too, may be in jeopardy — can be explained by an odd collection of factors: a recent surge in oil production that catapulted the state to fifth-largest producer in the nation; a mostly strong year for farmers (agriculture is the state’s biggest business); and a conservative, steady, never-fancy culture that has nurtured fewer sudden booms of wealth like those seen elsewhere (“Our banks don’t do those goofy loans,” Mr. Theel said) and also fewer tumultuous slumps.

The increased oil production comes in great part from development of the Bakken Shale, a formation that has been accessed profitably through hydrofracturing and horizontal drilling.

Falling oil prices will obviously have an impact on the energy production, and farm commodity prices are also slumping. Manufacturing has also suffered its hits. Still, we bet there are a lot of states that would love to have North Dakota’s problems.

In related developments….

• We see that new Energy and Commerce Chairman Henry Waxman is opposed to hydrofracturing, and the anti-business investigative journalistic outfit ProPublica is pushing a campaign against hydrofrac. The new puritanism is progressivism: The haunting fear that someone, somewhere, may be making money.

• The New York Times story on North Dakota was reported by Monica Davey, who always does a nice and accurate job on North Dakota stories. Sunday’s paper also carried a Davey story, “Drone to Patrol Part of Border With Canada“:

FARGO, N.D. — Federal Customs and Border Protection authorities are preparing to launch unmanned aircraft patrols from this state, the first time such monitoring will occur along the nation’s northern border.

A Predator B aircraft, delivered to Grand Forks on Saturday, will make runs along the northern edge of North Dakota using sensors that can provide video and detect heat and changes to landscape, Customs and Border Protection officials said.

Quite interesting, in terms of all-politics-is-local observations. From Alan Greenblatt at Governing:

Few legislative chambers changed hands yesterday. Those that did reflected the increasingly regional nature of the major parties’ strength.

“This wasn’t a big, overwhelming night for Democrats,” says Tim Storey, of the National Conference of State Legislatures. “They definitely got their wins, but they didn’t command legislative elections like they did two years ago.”

Democrats won the biggest prize of the night, taking control of the New York Senate for the first time since 1966 — and gaining control of the entire New York State government for the first time since the Depression. They now hold at least 32 seats in the 62-seat chamber.

But Republicans pulled off the biggest surprise of the cycle, taking the Tennessee House for the first time since 1971. They also broke a tie in the Tennessee Senate, winning a solid majority that gives them total control of the legislature for the first time since Reconstruction.

Republicans also broke a tie in the Oklahoma Senate, taking control of that chamber for the first time ever.

Finally, congratulations to your correspondent’s former boss, Governor John Hoeven of North Dakota, the first governor in the state to win election to a third, four-year term. Seventy-four percent!  Hoeven has emphasized jobs-creation in North Dakota, where economic growth and the expansion of manufacturing has been driven by the energy sector — coal, some ethanol, and oil, lots of oil. 

USA TODAY returns to North Dakota, land of the Bakken Formation, plumbing the depths of social tension produced by a sudden flow of wealth into a laconic, taciturn, restrained people, i.e., Americans of Norwegian descent. From “Oil boom creates millionaires and animosity in North Dakota“:

Now, after decades of watching their children flee the prairie for brighter futures elsewhere, North Dakotans in the state’s sparsely settled west find themselves sitting atop the largest contiguous oil deposit in the lower 48 states. There are an estimated 4.3 billion barrels of recoverable oil in a deposit under parts of the Dakotas, Montana and Canada — about half what the USA uses in a year.

“It’s bigger than Texas,” says Herb Geving, 75, of Parshall, a former landfill owner who has two oil wells on his land.

“It’s unexpected, a blessing,” says Larry Lystad, 57, of Stanley. He is among the descendants of Scandinavian and German homesteaders now looking to reap as much as $1 million a year per well from oil leases and royalties.

“These people have been farming rocks for generations,” he says. “It’s like winning the lottery.”

Well, not quite. There’s quite of bit investment involved. Good thing oil companies make profits.

So it’s an international story now, and more than just Canadian coverage. The U.K. Telegraph reports on the Bakken Formation, using the town of Killdeer, North Dakota for illustration:

Mr Kupper, 55, and his wife Dawn, 46, long lived hand-to-mouth raising livestock on land first settled early last century by his grandfather, an ethnic German immigrant from Russia. But the dark days of debt and juggling bills are a thing of the past for the Kuppers. For like hundreds – and soon thousands – of other families in this remote and sparsely-populated region, America’s newest Black Gold Rush is making them millionaires.

Thanks to oil, America’s least-visited state is one of just three with a budget in the black – a surplus of $1 billion for its 635,000 residents.

And with its three bars, two motels, car dealership, pharmacy and post office, Killdeer is an implausible boom town.

Actually, it’s quite a plausible boom town. Back during the last oil boom of the 1980s, western North Dakota towns like Dickinson, Watford City and Williston flourished, grew, grew too fast, and then crashed when oil prices tanked.  Some 40,000 to 50,000 people left the state. An extended drought didn’t help.

We hear this time there’s more appreciation of the commodity cycles, for energy AND agricultural commodities — at least among the public. State government’s spending like a roustabout on a weekend, so that’s a lesson yet to be learned there.

Meanwhile, Agence France Presse last month takes note of the Bakken, reporting: “Entre derricks et éoliennes, l’Amérique balance” — “Between derricks and turbines, America in balance:” “In the face of expensive gasoline and “dependence on foreign oil — an obsession in the United States — two great projects are dividing America: The massive relaunching of oil expolation or betting it big on wind and solar power.”

Looks like shale is where the action is these days, at least when it comes to oil and natural gas development. We’ve previously mentioned development of the Barnett Shale formation in Texas, the Bakken in North Dakota and the Marcellus formation in Pennsylvania and New York, and now add to the list the Haynesville Formation.

From Dow-Jones, an article that focuses on Chesapeake Energy‘s activities:

Chesapeake has been a particularly active acquirer of land in the Haynesville play. Like other shale reservoirs, Haynesville requires more costly and technologically advanced drilling techniques to extract gas embedded deep in rock formations, but high natural gas prices have made such endeavors profitable.

 

According to the most optimistic estimates, Haynesville could produce up to 245 trillion cubic feet equivalent of natural gas, enough to supply the entire U.S. for a decade.

High energy prices and new technological developments in horizontal drilling and hydrofracturing have made these kind of developments profitable. To be sure, there are obstacles to overcome. From the Shreveport Times.

BATON ROUGE — Producing natural gas from the Haynesville Shale is not as simple as drilling a hole in the ground,  says Don Briggs, head of the Louisiana Oil and Gas Association.

Unlike most places, the gas is not trapped in reservoirs. It’s in small vertical fissures in the horizontal bands of shale that have to be fractured by intense water pressure pumped 12,000 feet underground.

When the gas is in a pool big enough to remove, “we do not have today the infrastructure in north Louisiana to take that gas out” because of an insufficient pipeline system to handle it, Briggs told the Baton Rouge Press Club on Monday. Roads in the largely rural area also are a problem.

“Water is a big concern right now,” he said, because aquifers in northwest Louisiana are insufficient to supply the millions of gallons of water needed for the fracturing process. “They may have to transport water long distances.

The Times also has a location map on the drilling, very interesting.

In addition to the technical problems, there will also be the political challenges, that is, opposition from constituencies who do not acknowledge the energy needs of a modern, prosperous, free society.