Powering America: The Critical Need for Transmission Investment to Spur Growth

Economic investment has been a common theme in Washington, D.C., over the past few years as the country struggles to recover from the blow it took in the recent financial downturn. Politicians are pushing for expanded research and development, while physical capital investments have largely centered on base infrastructure such as bridges and outdated rail systems. But surprisingly little attention has been paid, at times, to the critical issue of electricity transmission and distribution.

The Department of Energy (DOE) reports that the U.S. electricity grid spans more than 300,000 miles of transmission lines connecting more than 1 terawatt-worth of generation capacity to hundreds of millions of homes and businesses. While the DOE suggests the system is still 99.97 percent reliable, outages still cost more than $150 billion a year and appear to be steadily impacting more and more people.

With electricity demand outpacing investments in transmission capacity by nearly 25 percent a year for the past three decades and peak demand expected to increase another 20 percent in the next 10 years, the problem only stands to worsen. It is time to stop taking our energy infrastructure for granted.

Energizing Employment

While our transmission and distribution systems serve to bring us the power we have come to rely on for almost every aspect of our daily lives, it is also a significant source of employment. Electrical grid workers are no small part of the U.S. economy. The Bureau of Labor Statistics (BLS) reports that occupations related to electric power generation, transmission and distribution accounted for over 300,000 jobs nationwide with a mean annual salary of over $65,000.

The Working Group for Investment in Reliable and Economic Electric Systems (WIRES) suggests that the country could see a major surge in employment with only a relatively modest investment in our electric infrastructure system. WIRES projects that barring regulatory and permitting issues, the transmission sector is likely to spend between $12-16 billion per year on upgraded transmission. This level of investment would lead directly to between 51,000 and 68,000 full-time jobs annually, with anywhere from 150,000 to 200,000 total full-time jobs produced a year as a result. The total economic return on these investments is estimated at around 250 percent.

In large part this is because transmission, unlike many sectors, is an eminently local industry. The group estimates domestic costs at roughly 82 percent of the total, with construction, design, permitting and most other facets entirely contained within the U.S.  Even materials, which account for 45 percent of total costs are still estimated at 61 percent domestic.

This kind of investment could prove particularly important for the struggling construction sector, which the BLS reports saw an unemployment rate of 14.2 percent in October 2011. The broad installation category saw a far lower rate of 7.2 percent, which still leaves 388,000 people in that sector out of work, though this also includes workers from multiple industries.

Vital to Green Energy

While traditional power sources face many of the strains imposed by an outdated grid, the current limitations of the U.S. transmission system pose an even greater problem for renewable power. Renewable energy sources like solar and wind power must contend with intermittency, generating electricity in inconsistent and often unpredictable patterns. With limited transmission capacity, these power sources can overload the grid at times of unusually high production.

Yet WIRES notes that current standards on how much power must come from renewable sources already require doubling the amount of renewable generation by the end of this decade. Under a stricter 20 percent national standard, this growth would be more than 350 percent by 2020 and 450 percent by 2025. Under the more modest current standards the U.S. would still need nearly $60 billion in transmission upgrades by 2025 just to accommodate growing renewables. At the stricter standard, that number would be more than $100 billion. Either way a significant investment in our energy infrastructure is going to be required to sustain reliability.

Facing the Issues

WIRES suggests that transmission companies are likely to spend billions each year on expanding and developing the grid in coming years, which might lead some believe the issue is well in hand. But these investments are only likely to come with the resolution of some serious issues in the development process. Because transmission lines cross numerous political boundaries and are often seen as unsightly, these projects can become major targets of protest, extending the approval process and dramatically raising costs. Many companies also have no realistic ways to recoup the costs of building further transmission lines, as the systems in place are designed at the state or lower levels with monolithic utilities in mind.

The Federal Energy Regulatory Commission attempted to address some of the prevailing concerns with the approval process over the summer, introducing Order No. 1,000 in June. The regulatory agency imposed new rules requiring a greater degree of regional collaboration on transmission development, though also required the costs of these projects be targeted specifically at those who directly benefit from them and that utilities consider non-transmission alternatives first. However, one crucial development for easing the approval process was ending the practice of granting local utilities the first right of refusal on transmission projects.

In addition to these more recent changes, the American Recovery and Reinvestment Act of 2009 set aside more than $1.9 billion for the distribution and reliability improvements to the grid, but many of the procedural concerns loom larger in the industry's eyes than the outright costs.

Nevertheless, a paper produced by the Federal Reserve Bank of San Francisco found the infrastructure investment of the ARRA resulted in substantial job gains in the years since, making addressing the lingering issues in the electrical distribution system an important point for encouraging economic and job growth in the country.

Drilling Down: What Can Geothermal Do for You?

The once overlooked geothermal industry is a fast rising energy sector poised to create thousands of jobs

Geothermal energy is far from new, but only recently has this renewable resource truly begun to garner a more comprehensive look into how it can serve as a viable commercial power source.

Geothermal energy is thermal energy naturally stored within the earth. When utilized to generate electricity, geothermal power is an effective, environmentally sound and sustainable resource.

Research, investments and project developments in the geothermal power industry are on the rise; more importantly, so are the jobs associated with this burgeoning energy sector.

Burgeoning Business

According to the International Geothermal Association, as of 2010 more than 10,000 megawatts (MW) of geothermal power is currently being utilized, a nearly 20 percent increase in active capacity since 2005. In 2010 the United States led the way in geothermal electricity production with more than 3,000 MW of installed capacity from 77 plants.

The Geothermal Energy Association (GEA) recently revealed the findings of new industry reports that show the geothermal industry will add thousands of jobs as dozens of new geothermal power plants come online or enter advanced stages of development. Furthermore, these reports highlighted that the geothermal industry is not just creating more jobs than most conventional energy per megawatt, but jobs that are permanent, full-time and often providing a higher wage.

Growth Potential

The GEA anticipates that 2011 will be a high point of geothermal activity in the US, yielding approximately 500 to 700 MW of power projects in the final construction phase. These projects will add approximately 3,000 construction jobs, primarily in Nevada and California.

Nevada is an excellent example of the rapid and significant potential impact the growth of geothermal can present to a regional economy. In July 2010, the GEA said the growth of the geothermal industry in Nevada alone could be worth as much as $22.5 billion over the next 30 years if current trends continue.

With 14 geothermal power plants in the later stages of development, after groundbreaking these projects would create an estimated 1,400 construction jobs in Nevada.

“This high volume of geothermal projects moving into final stages of development will likely generate a massive geothermal boom in Nevada,” said GEA Executive Director Karl Gawell. “Along with the millions of dollars in federal and private investment, come thousands of new jobs.”

Governmental Support

The GEA report “Green Jobs through Geothermal Energy” also found that the federal stimulus, tax incentives, and strong state renewable standards continue to fuel the growth in geothermal power and job creation. Every geothermal project that came online in 2009 took advantage of the tax reimbursement provisions of the stimulus bill, which helped maintain momentum for new projects and continue to create new jobs in America.

It is also important to recognize that the benefits of the stimulus to the geothermal industry have yet to be fully realized. Nearly 95 percent of the projects receiving American Recovery and Reinvestment Act (ARRA) funding are either less than 50 percent complete or have yet to break ground.

“Recovery Act funding is going to make a huge difference over the next year to push projects to completion and create more jobs. The majority of the ARRA investment will really start to pay dividends for the economy in 2011,” said Karl Gawell, GEA Executive Director. “It is critical that we continue to support these sound policies despite the rancor of several short-sighted initiatives which seek to strip away these tools to help grow our economy.”

Diversified Portfolio

The ARRA also appears to have attracted diverse groups into the geothermal sector. Almost half of the Geothermal Technologies Program awards from the stimulus went to non-industry entities such as colleges and universities; cities, counties, and other state and local institutions; tribal entities; and The Department of Energy’s National Labs.

This trend in diversity within the geothermal sector is only proving to bolster the emerging industry. As more geothermal jobs are being created, a number of educational providers across the country are establishing undergraduate, graduate and certification programs to meet demand.

“To keep creating jobs in the geothermal industry, we must keep getting talented individuals coming into the industry. The programs at these leading schools will develop the next generation of geothermal professionals,” Gawell said.

Geothermal energy has stepped beyond its once understated status into a promising sector with the potential to offer not only sustainable energy, but also sustainable jobs.

Finding the Green Workforce

While there may always be room for debate concerning clean energy initiatives and the long-term merits of a low carbon driven economy, what remains is the fact that the renewable industry is growing rapidly and it requires a substantial workforce.

As renewable energy continues to establish itself in the global market, an emerging concern is how to fill the industry’s need for skilled workers. According to a poll conducted by the Society for Human Resource Management, 40 percent of HR professionals say their organization is currently focused on creating green jobs or adding green duties to existing jobs. Further, a comprehensive report from the American Solar Energy Society forecasts that more than 17 percent of all anticipated U.S. employment could be generated from the renewable energy and energy efficiency industries over the next two decades. The need and opportunity for a green workforce is apparent, but are there enough skilled workers to meet demands?

The good news is there has been a tremendous cultivation of resources for training, funding and development in the renewable energy sector within the past five years. A good number of educational providers have expanded or modified their curriculums to include renewable education and training programs in response to the growing demand.

The U.S. government has also stepped up its efforts, paving the way in funding to support the creation of a competent green workforce through programs supported by the American Recovery and Reinvestment Act of 2009(ARRA). The U.S. Department of Labor’s Program of Competitive Grants for Worker Training and Placement in High Growth and Emerging Industry Sectors has been allotted $750 million through the ARRA to provide competitive grants for worker training and placement. Of that, $500 million is specifically for research, labor exchange and job training projects that will prepare workers for careers in the renewable energy and energy efficiency industries.

Companies in and outside of the renewable sector have also begun to invest in developing their own training courses in the hopes of attracting the workforce they are seeking and repurposing positions for renewables.

Now for the bad news; although there is an existing abundance of resources to support the establishment of a multi-level green workforce, there are far less available to bring these initiatives together or provide information to help establish realistic industry standards for recruitment. Which begs the question, is there truly a shortage of qualified workers or simply a shortage of renewable focused information, standards and hiring resources?

To move forward in creating the workforce needed for the renewable sector there must be a collaborative effort to establish a framework for industry knowledge, recruitment and training that will evolve into recognized standards as the industry matures. Establishing an understanding of just what quantifies a green job will lead to helping to define what is required to fill one. Developing resources to share information between industry insiders, education providers and recruiters will help balance expectation, shape training programs and, more importantly, highlight how existing skills can be re-tooled to benefit the emerging green industry.

One of the more attractive aspects of renewable energy is how balanced the industry is in providing career building paths across a vast array of skill sets. Low- to medium-skilled workers are needed for manufacturing, installation and maintenance; while highly skilled employees are needed for research, development and leading the commissioning of renewable services.

The issue does not appear to be a lack of workers to fill these roles but a lack of information and expectations on the part of those seeking workers. Until standards are established and enough time has elapsed to develop a seasoned body of workers within the industry, it’s simply not plausible for companies and recruiters to require advanced degrees in specific renewable niches or the equivalent amount of experience in service to it.

An available option is to take a more realistic inventory of the existing workforce with the purpose of grooming it for the green industry. Among those who are unemployed or underemployed there is the opportunity to utilize existing skills or higher-level disciplines that can be restructured to work within the renewable energy sector. Veteran solar engineers may not be numerous, but environmental engineers are certainly available.

Recent technical or college graduates are in a unique position to offer fresh perspectives, a clean learning slate and innovative thinking to an industry that is still forming itself. Those entering the workforce as unskilled laborers will not only benefit from highly subsidized training in a growing sector but can also provide the industry with the workforce needed to build its infrastructure through apprenticeships and vocational rehabilitation programs.

Meeting the demands of the renewable industry is not only attainable, but under many circumstances requires a very manageable investment on behalf of the industry. Finding the green workforce could be as simple as utilizing what is right in front of us.

The Necessary Good that is Nuclear Power

Just as the power industry appeared to be on the cusp of a nuclear renaissance, events in Japan forced governments, utilities and consumers to pause and re-examine the role of nuclear energy more thoroughly than ever. Nearly half a year after the natural disasters that triggered a series of meltdowns at the Fukushima Daiichi nuclear complex it’s more important than ever to refocus attention on the benefits of nuclear energy as a resource to meet global demands.

When looking at the future of nuclear power it is important to avoid doing so only through the lens of past accidents. While there are important lessons to be learned from such events these do not come close to representing the nuclear industry as a whole.

While most energy industry professionals already know this, the next critical step is to effectively share the full story of nuclear power with consumers and government officials. Failing to do so could mean the loss of one of the most innovative, clean and abundant energy resource available to the world.

The truth is, in its more than 50-year history there have been only three major reactor accidents concerning civil nuclear power - Three Mile Island, Chernobyl and Fukushima. These are the only major accidents to have occurred in over 14,500 cumulative reactor-years of commercial operation. There is not a single other power resource that has the same proven track record of reliability while also boasting the same exceptional level of safety.

Meeting Demand

As of this posting there are 440 commercial nuclear power reactors operating across 30 countries. Collectively these reactors supply approximately 14 percent of the world’s electric generation, according to the World Nuclear Association (WNA).

In addition to commercial nuclear power plants, the WNA outlines there are about 250 research reactors operating in 56 countries, with more under construction. These have many uses including research and the production of medical and industrial isotopes, as well as training.

Nuclear power plants also need significantly less fuel than those generating power through the use of fossil fuels. One ton of uranium can produce more than 40 million kilowatt-hours of electricity, which is equivalent to burning 16,000 tons of coal or 80,000 barrels of oil.

Uranium is also abundant and can even be recycled, making nuclear energy an integral part of ensuring the future of sustainable global energy.

Nuclear power is the only proven resource that can provide utility scale electric generation cleanly, reliably and economically in a time when the supply of energy is continually under pressure, the cost of fossil fuels are increasing, resources are tenuous, and the limitations of renewables are still numerous.

Environmental Advantages

Another important benefit of nuclear power is its low environmental impact. Extensive regulations and stricter standards concerning greenhouse gas emission are being implemented globally, and the fact is nuclear power is the only proven, grid-ready resource for clean, utility-scale power generation currently available.

Even when considering the entire life-cycle of a nuclear power plant, which includes mining for resources, operation and decommission, nuclear power remains extremely competitive.

According to an International Energy Agency analysis, nuclear power’s life-cycle emissions range from 2 to 59 gram-equivalents of carbon dioxide per kilowatt-hour (CO2 per kWh). That puts nuclear power on par with renewable energy resources such as hydropower (2 to 48 grams of CO2 per kWh) and lower than wind (7 to 124 grams of CO2 per kWh) and solar photovoltaic (13 to 731 grams of CO2 per kWh).

Within the US, nuclear power plants also support a broad range of environmental programs, including land and water preservation, wetlands recovery as well as wildlife protection and recycling. This level of environmental stewardship has not only added to the preservation of the environmental integrity of their locations but also in certain situations even served to improve them.

Economic Benefits

Nuclear power also presents tremendous economic benefits. The jobs, taxes, and direct and secondary spending associated with nuclear power plants serve to bolster the economies where they are located and contribute on a broader scale in providing low-cost high volumes of electricity.

The Nuclear Energy Institute (NEI) estimates that private investment in new nuclear power plants has created 14,000 to 15,000 clean energy jobs over the last few years in the US alone. Operation of a nuclear power plant not only generates 400 to 700 permanent jobs, but they are jobs that pay as much as 36 percent more than average salaries in the area they are located

The NEI also outlines that construction of a new nuclear power plant will provide a substantial boost to suppliers of commodities like concrete, steel and manufacturers of hundreds of components. That translates to the creation of 1,400 to 1,800 jobs during construction, with peak employment as high as 2,400 jobs.

Further, studies show that nuclear power is also the lowest-cost producer of baseload electricity. The NEI highlights that costs for the production of nuclear power have remained steady for more than 10 years, averaging 2.14 cents per kilowatt-hour in 2010. This includes the costs of operating and maintaining the plant, purchasing fuel, and paying for the management of used fuel.

Nuclear is Here to Stay

When considering the advantages of nuclear power in meeting increasing energy demands, environmental standards and economic sustainability, there is little room for dismissing the importance of its continued role in the global energy mix.

When also factoring in the massive potential of emerging nuclear technologies such as small modular nuclear reactors, thorium-fueled reactors, and advanced fuel recycling and reprocessing, it becomes clear that to phase out this incredible resource would prove to be a severe global misstep.

Nuclear power is here to stay mainly because it has to. Global energy demand is increasing at a rate that can only be met with the inclusion of nuclear power. Even understanding that, the goal of those in the energy industry should be to ensure that nuclear power also remains a part of our energy future because it is properly understood and supported. Doing so will mean the difference between being dependant on the nations that aggressively embrace and develop nuclear power or being among those that have secured for themselves a reliable, safe, economic and cleanly abundant nuclear foundation.

Are renewables worth it?

It ain’t easy being green. That once gently sung lament of a childhood icon has taken on a whole new meaning for me. Sifting through hundreds of pages of power related content a week for PennEnergy.com; it’s not difficult to recognize that renewable energy is a hot topic. What is rarely publicly addressed is just how expensive and difficult renewables are to currently utilize.

The administrative and public push for lean, green energy is growing stronger every day, but the viability of renewables as a reliable and economically sound resource has not kept up. Don’t get me wrong; I’m sold on implementing renewables. I truly believe they are an invaluable part of revitalizing industry and responsible power production/consumption- when and if they can be executed properly.

Quick, what is the first image that comes to mind when you hear the words renewable energy?

I would wager the picture you most likely summoned is of a towering wind turbine in a vast open area beset by a gorgeously hued expanse of sky. Pretty, right? Pretty expensive, noisy, and erratic many would argue.

It seems most of us are buying more into an image than a real renewable plan. Renewable energy can be fantastic, but as things stand they are still quite cost prohibitive and difficult to implement effectively. I want to see renewables grow. In fact, I’m certain doing so will bolster manufacturing sectors, offer new opportunities to displaced workers and strengthen our economy. Not to mention all of the obvious environmental benefits. Promising stuff, but as of today the cost to produce and distribute power from those sources still woefully outweighs the returns. Those are not just opinions either, they’re facts. Math is quirky that way in its total disregards for people’s opinions.

While renewable power sources have been steadily improving, problems remain with consistency and cost versus output; yet billions of dollars continue to be funneled into large-scale projects utilizing these under developed resources. Seems a little horse before cart in my humble opinion.

As things stand most hydrocarbons still beat out renewable energy resources by at least four to one in cost, implementation and output. So why the rush to implement such massive renewable projects that cannot reasonably offer sound financial or production returns? Especially when these large, fast tracked projects may end up costing us more as significant improvements to existing technologies are made. Even the best of us fall victim to a bit of pomp and circumstance at times.

So is the vigorous pursuit of green energy really worth it? Yes and here is why I think so-

Renewables seem to have reached the awkward teenage stage of their development; full of potential and requiring incredible investments of time and resources with seemingly little initial return. If we stick with it though, make the right choices and focus on developing its strengths we will in fact find ourselves one day looking at a mature well-rounded set of clean resources that will have a tremendous amount to offer the world.

Instead of throwing money at an ideal we should be investing in creating and implementing truly functional energy resources. Research and development are vital. A lot more should be going toward finding out how to get the most out of renewable resources before we dot every open expanse with expansive biomass factories, wind farms and solar panels.

In the meantime there are still jobs to be had, smaller scale opportunities offering sounder returns and the sort of contentment that comes with the knowledge that the good being developed is for the long term and not simply an industry trend to garner funding.

We also need to get a grip on the real role renewables will play in our energy future. I don’t know who keeps pushing the idea that green energy is the white knight that has been charged with slaying the hydrocarbon dragon, but its time to put the fairy tales aside and get back to reality.

As already mentioned Renewables at this stage of the game simply cannot offer what hydrocarbons can. Worse yet the rumors of it being able too have been wildly exaggerated. Energy independence and sustainability is a complicated issue that will require sophisticated and balanced solutions. Most experts actually point toward a strategic energy mix and the development of hybrid technologies as the road to success, not the blind championing of any set of resources over another.

Renewables can be developed into reliable energy providers and hydrocarbons can in fact be utilized responsibly with enough innovation, investment and patient dedication.

See, its cake. Now all we have to do is solve that pesky power infrastructure and distribution issue…

US East Coast joins the LNG liquefaction, export race

Dominion (NYSE:D) has filed an application with the Department of Energy to make its Cover Point LNG import and gasification terminal in Maryland bi-directional, allowing the facility to liquefy shale gas production and export it globally.

Dominion Cove Point LNG

Dominion hopes to build liquefaction units at the existing facility, with a processing capacity of 1 billion cubic feet of LNG a day or 7.82 million metric tons a year.

"Dominion Cove Point has connections to several interstate pipelines and is well-positioned to provide export customers access to abundant and diverse domestic gas supply," said Thomas Farrell II, chairman, president and CEO of Dominion. "The facility is particularly well-situated to export gas production from the prolific Marcellus Shale and promising Utica Shale formations."

The Cove Point LNG facility is well positioned, in comparison to the proposed Gulf Coast LNG projects, to receive natural gas production from the Marcellus Shale in Pennsylvania and emerging Utica Shale in Ohio. Additionally, Dominion can use existing pipeline to move the natural gas.

Increasing production from vast shale resources has created a natural gas glut in the United States, and various downstream companies are looking to create an international market for US natural gas by turning it into LNG and exporting it by tanker.

Canada also has a number of LNG projects ongoing to export its shale resources.

...............................................

Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.

North American shale may soon find an international market via LNG

Until Liquefied Natural Gas (LNG) technology was developed, natural gas production was regional because the hydrocarbon had to be transported via pipeline. While European and Asian markets realize a growing demand for natural gas, the North American natural gas market has been glutted by ever-increasing production from various emerging shale plays.

In fact, increasing production in the Marcellus Shale, Barnett Shale, Haynesville Shale, Horn River Shale, Fayetteville Shale and others has forced some producers to pull back on drilling campaigns and even shut-in production. By not producing all of the unconventional natural gas in these formations, producers can limit production and affect the supply-demand curve.

While natural gas prices have substantially dropped since their highs in 2008, prices have remained somewhat steady above the $4 mark on the Henry Hub for some time now.

In an effort to connect this production with eager markets abroad, nine LNG import facilities on the US Gulf Coast have submitted applications with authorities to convert or add LNG liquefaction and export capabilities.


Sabine Pass LNG

Most recently, British producer BG Group has formed a joint venture with Southern Union and applied for federal approval to convert its Lake Charles, Louisiana LNG import facility into an LNG liquefaction and export facility.

At its Sabine Pass LNG project, Cheniere Energy (NYSE:LNG) is working to add liquefaction and export capabilities to its facility, as well, lining up LNG buyers in Asia and Europe, as well as South America.

Furthermore, Freeport LNG located near Houston, Texas, has received permits to re-export LNG shipments that are currently being held in storage due to lack of demand.

Additionally, Apache Corp. (NYSE:APA), EOG Resources (NYSE:EOG) and Encana Corporation (TSX:ECA) (NYSE: ECA) are working to build a pipeline to connect Horn River Shale natural gas in Canada to a proposed Kitimat LNG export facility on the Western Canadian coast.

As companies work out the commerciality to transform North America into an LNG supplier, producers in the US and Canada are eagerly awaiting the development of a new market for their natural gas production.

...................................

Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.

East Africa emerging as new hydrocarbon province

West Africa has long held the spotlight as a major oil province, but other areas of the continent are proving just as exciting. Beyond Tullow's success in Uganda, the waters offshore East Africa are attracting attention from various international players.

With successes in Mozambique and potential growing in Tanzania, Kenya and Madagascar, East Africa is emerging as a new hydrocarbon province.

Mozambique

US independent Anadarko Petroleum (NYSE:APC) has seen numerous successes in its Offshore Area 1 in the Rovuma Basin of Mozambique. With successes at Windjammer, Lagosta and Camarao, the natural gas reservoir is now believed to contain some 10 trillion cubic feet of natural gas.

Anadarko has already contracted a consortium between Technip and KBR to conduct the pre-FEED on the development of an LNG liquefaction and export facility in Mozambique.

Tanzania

Despite the recent negative press generated by a Somali pirate attack on a drillship there, Tanzania is also gaining spotlight with Brazilian major Petrobras (NYSE:PBR) and super-major Shell (NYSE:RDS-A) (NYSE:RDS-B) joining forces on two blocks in the deepwaters there.

Drilling is ongoing on the Zeta-1 exploration well on Block 5, and seismic is being acquired to identify future prospects.

BG Group and Ophir Energy have drilled numerous successful wells on Block 1 offshore Tanzania, with Pweza-1, Chewa-1 and Chaza-1 all hitting natural gas.

Kenya

Other countries in East Africa have majors clamoring for acreage, as well. Offshore Kenya, French major Total (NYSE:TOT) has gained interest in five oil and gas blocks in the Lamu Basin.

“This transaction is part of a bold exploration strategy that consists in acquiring large stakes in high-potential frontier plays,” said Marc Blaizot, Total’s senior vice president, Exploration. “Recent discoveries in offshore Mozambique and Tanzania offer a very promising outlook for these Kenyan permits.”

BG Group, Cove Energy and Dominion are also active in Kenya.

Madagascar

Although political issues have clouded some prospects lately in the island nation of Madagascar, certainly the successes in East Africa have upped the ante for this country.

With interest in five onshore blocks, Madagascar Oil (AIM: MOIL) has been diligently trying to develop the Tsimiroro heavy oil field on onshore Block 3104 there, but offshore exploration has not yet started.

Australia's ROC Oil recently divested its interest in the Juan de Nova Maritime Profond Block, which is offshore Juan de Nova, a tiny island possessed by France sandwiched between Madagascar and Mozambique.

Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.

Oil shale discovery in South Australia proves significant

By Phaedra Friend Troy

Junior explorer Linc Energy has discovered oil shale in the Arckaringa Basin of South Australia. The Arck 1 well was drilled into the Stuart Range formation, transecting an oil shale reservoir that measures between 406 feet and 124 feet deep and spans some 284,000 acres.

This is a major discovery, and will likely prove extremely profitable for Linc and South Australia.

Initial estimates as to the size of the discovery position the shale to hold more than 200 billion tonnes of unconventional oil.

"This is the first time shale oil has been specifically targeted in South Australia's Arckaringa Basin, which has historically been the focus of coal exploration," said Minister for Mineral Resources Development Tom Koutsantonis. "The discovery at Linc's Arck 1 stratigraphic well in PEL 122 reinforces the prospectivity for shale oil and the Arckaringa Basin."

Shale drilling and development was just made possible in the last decade with the combination of horizontal drilling and hydraulic fracturing. Shale development began in the natural gas shale formations of the Marcellus, Barnett, Haynesville and others in the US.

Operators have now perfected the drilling and development of liquids-rich shale formations, shifting interest to oil and condensate. Rigs are actively drilling the Bakken Shale of North Dakota and Eagle Ford Shale of South Texas, as well as the emerging Niobrara, Utica, Woodford, Wolfcamp and Monterrey Shales.

Other nations are trying to create shale booms of their own, with China, India, Poland and Argentina actively pursuing shale developments.

Nonetheless, this is the first announced shale oil discovery outside of the US, and the positive affect it will have on the economy in South Australia will be major – just look at the jobs forecast in North Dakota and South Texas. (Most hotels and real estate are full, and small towns are booming with oilfield workers and engineers.)

This shale discovery, alongside Western Australia's mega LNG projects and Queensland's innovative coal-seam-gas-to-LNG (CSG-to-LNG) projects may very well catapult the nation to a new high. Certainly, Australia is worth a second look for investments both in the energy industry and all the markets that would support the swelling workforce there.

.............................................................................

Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.

Trucking Industry to Oil & Gas: 'Find more domestic supply'

Most oil and gas professionals are watching oil prices. We're aware of fundamentals and what's driving the current price, whether that’s supply and demand, or economic factors or an edgy market.

Oil prices are important because they determine the success of any given project. As investment decisions and development (and even re-development) projects are undertaken, there is a certain price point that makes any upstream project commercial. Everything over that is just icing on the cake.

Beyond the oil field, the price at the pump can affect demand, as well. American families drive less when gasoline reaches about $4 a gallon, but some consumers cannot afford to simply drive less.

The North American trucking industry is dependent on the oil and gas industry, from upstream to midstream to downstream and marketing. I got a chance to chat with Charles Wilson, the editor of Bulk Transporter, a trade publication that covers the tank truck and storage terminal operations in the US and Canada, about his take on the relationship between our industries.

The implications of increased domestic production are very present in the trucking industry. More oil and gas will help keep prices down, and that will help to keep the North American trucker profitable.

"The number one top question for the trucking industry is: What will diesel cost in coming years?" Wilson revealed.

He explained that trucking fleets are not as concerned with availability, but that the cost of fuel is paramount.

"North America is pretty much awash in diesel," Wilson said. "Fleets are reluctant to consider a switch to different fuels that are not comparable to diesel. Biodiesel is seen as transparent. Natural gas can be used in a diesel engine with relatively minimal modification. It all comes down to cost of the fuel."

While the trucking industry will be required to comply with new EPA regulations starting in 2014 that will call for a reduction in fuel consumption by up to 20 percent, the new trucks will cost more, which simply adds to the industry’s focus on fuel prices moving forward.

"How can the oil and gas industry help?" Wilson said. "Find more domestic supply that will help hold down prices and ensure adequate supply."

With an abundance of natural gas from prolific shale gas developments across North America, natural gas may prove to be the answer -- or at least one of them.

Various projects are under way to build natural gas and LNG fueling stations, and South American petrochemical company Sasol (NYSE:SSL) has just announced that it is looking to build a gas-to-liquids (GTL) plant in Louisiana based on its proprietary technology.

"Natural gas and GTL both hold considerable promise for trucking," Wilson said. "These fuels would make it much easier to meet the GHG reductions. LNG and CNG also are attractive because they offer the potential for much lower fuel costs, which would boost ROI for truck fleets."

While natural gas fleets require a costly upgrade to trucks, the GTL fuel can be distributed using existing infrastructure and used in existing engines.

"We see considerable interest in natural gas among tank truck fleets," Wilson said. "They like the fact that natural gas costs at least the price of diesel on a per-gallon basis, and they see natural gas as a potential cargo, since it will be distributed outside the existing pipeline infrastructure in many parts of the country. LNG probably holds the biggest potential as a cargo for the future."

The oil and gas industry is diligently working to increase domestic production and improve distribution (think Keystone XL pipeline). From the deepwaters of the Gulf of Mexico to Canada's oil sands, from oil shale developments to the potential offshore the East Coast, oil and gas abounds in North America. Now the question is: Will we be able to tap it?

...........................................................

Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.

Downstream solutions offer new opportunities for upstream developments

Natural gas has typically been a domestic product. Due to its gaseous state, natural gas is usually transported by pipeline, which limits the reach of the production in comparison to crude or other liquids.

Billion-dollar pipelines have been built to transport natural gas resources in the Caspian, Middle East and Russia to hungry markets nearby.

Liquefied Natural Gas

Enter: liquefied natural gas. LNG opened up myriad markets for stranded production or glutted natural gas markets. For decades, countries like Malaysia and Qatar have been transporting natural gas to under-served markets.

Up until very recently, the US was an LNG importer.

By combining horizontal drilling and hydraulic fracturing, prolific shale gas formations across North America have dramatically ramped up production in the US. Not only do US markets not require LNG imports, the country now has too much natural gas, causing the price to drop and some production to be shut-in.

Nonetheless, markets in South America, Europe and Asia are still hungry for natural gas, and many operations worldwide are increasing LNG production to fill that growing need.

A number of companies in the US and Canada are also jumping for downstream solutions to upstream production overloads. Various companies are attempting to reverse LNG import facilities and pipelines to allow Gulf Coast operations to liquefy and export LNG, and there are projects on Canada's west coast to build new LNG liquefaction and export facilities to deliver Horn River Shale production to eager Asian markets.

Gas-To-Liquids

On the other hand, new technologies may help North American markets to better use existing domestic production, rather than export excess natural gas.

This week, South African petrochemical firm Sasol (NYSE:SSL) announced that the company is planning to build a gas-to-liquids (GTL) plant on Louisiana's Gulf Coast. Sasol is presently sturying the feasibility of the downstream project, which would convert natural gas to transportation fuels.

Using a proprietary Sasol technology successfully deployed in other GTL facilities, the Louisiana GTL plant would create GTL transportation fuel that is cleaner-burning than conventional diesel and does not require modifications to be used in existing vehicles and fuel delivery infrastructure.

The GTL solution would offer a new market for area shale production and could possibly offset some crude oil imports.


Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.

Oil and gas industry fights negative PR

Did you read that actress Daryl Hannah got arrested in front of the White House, protesting the Keystone XL pipeline?

Ugh.

Although a few years have passed since Hannah was thought of as an American Sweetheart, she still holds that spot for many a mermaid lover. Lately she's been kicking up some negative dust around the Keystone XL pipeline.

Proposed by TransCanada (NYSE:TRP) (TSX:TRP) in 2008, the Keystone XL pipeline will transport up to 830,000 barrels of oil a day from Canada to markets in the US, all the way to the Texas Gulf Coast. The $7 billion pipeline project is expected to create some 20,000 American jobs, as well as offer the US much-needed energy security.

Nonetheless, people like Daryl Hannah oppose the pipeline because the source of the energy independence is Canada's oil sands.

Asia, on the other hand, does not have the same aversion to Canada's black gold, and has commercially supported Enbridge's (NYSE:ENB) (TSX:ENB) proposed $5.5 billion Northern Gateway Pipelines, which are also slated to export Canada's oil -- but this time to Asia.

Poor shale also can't seem to get a fair shake. A documentary comes out, and everyone believes it. Now, with drilling and development reaching new highs, shale gas and oil are expected to become the life-saver for growing demand in the country.

Again, negative PR comes in to ruin the day. Instead of news agencies heralding the new technologies that are allowing operators to produce ever-increasing amounts of unconventional natural gas, condensate and oil, they continue to focus on a misrepresentation of the truth.

I even saw that CSI did an episode on hydraulic fracturing. Really?


Where's the Hollywood endorsement for oil and gas? Who's going to step up and support the thousands upon thousands of Americans who earn their livelihoods from the upstream, downstream and midstream segments?

No, oil and gas is not necessarily pretty. It takes hard work, dedication, sweat and risk to develop our nation's natural resources. We've been doing it successfully for more than a century.

Thinking about it: Maybe the industry doesn't need a movie star to publicly support oil and gas -- we've got hard-working Americans, quietly toiling to ensure that US families can afford gasoline, electricity and heat.

Thank you.

............................................
Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.

Successful bomb detection on Oklahoma pipeline supports effective safety measures - expert

Last week, an improvised explosive device was discovered attached to an Oklahoma natural gas pipeline. The FBI and local authorities worked quickly to remove and safely diffuse the bomb, as well as arrest a suspect in the incident.

While much of the country was satisfied knowing that the suspect was apprehended, the oil and gas industry and midstream sector in particular remain vigilant in keeping energy infrastructure safe in the US -- and this attempted bombing is an example of that.

PennEnergy.com was able to get some insight from former CIA officer Fred Enochs, now a partner in Washington, DC-based TD International, a strategic advisory firm. Working in Houston, Enochs specializes in domestic and international energy, finance and commodity trading with a focus on government policy issues and project due diligence.

Enochs contends that the US has ample safety measures in place to ensure security for its pipelines and energy infrastructure.

"Following 9/11, energy infrastructure, including midstream assets, underwent a very thorough review and assessment process which encompassed extensive safety and security risk reviews," Enochs said. "These reviews determined the appropriate measures and response procedures based upon the overall threat, vulnerabilities and consequences."

Because of the amount of pipelines -- thousands of miles -- physically paroling the systems would prove impossible, but high-tech solutions have provided the next best thing. A combination of electronic and control room monitoring, redundancy and response measures help to keep pipelines across the US safe.

"For instance, a typical pipeline is supervised 24 hours a day by control room technicians using systems such as SCADA and checked regularly by field staff," Enochs said. "Of course their main focus is keeping the pipeline in operating order, but security measures are also built into this protocol."

"The risk assessment process also allows operators to focus their security and safety efforts, using tools like surveillance systems and actual manual checks, on the most critical areas of the pipelines thus ensuring the best use of resources," he added.

Enochs contends that our pipelines do not require any increased safety measures such as those enacted, somewhat successfully, in other regions of the world, because of the stable infrastructure in the US today.

Areas in South America, the Middle East and West Africa have a different risk profile than the US, because of increased poverty and greater threat of terrorism, as well as military strife, Enochs stated.

"For instance, in Columbia the FARC was a guerrilla terrorist group which tried in the past to harm the government by damaging pipelines in order to disrupt the nation's energy supply; while in the Nigeria Delta today you have various groups competing for political and economic power using pipelines and the country's energy infrastructure as a weapon in their arsenal," Enochs said.

The US has appropriate security measures and responses in place according to its risk assessment, he explained.

"It's about protecting the areas that have the most overall risk, which is a function of determining the threat probability, the consequence of a successful attack and your vulnerability to that attack," Enochs said. "The risk assessment methodology that has been applied allows these operators to make the best use of the resources that are available and ensures that the most critical areas are properly protected."

While suspenseful, the Oklahoma pipeline attempted bombing proves his midstream safety assessment. The bomb was quickly discovered, removed and diffused, and the man suspected of planting the device has been arrested.

Rest assured: They're on it.


Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.

Oil prices have fallen, but will they stay low?

Oil prices fell dramatically this week from the mid-$90s to $75 a barrel on worries that the global economy is headed for a double-dip recession.

With some positive jobs numbers, West Texas crude prices rose above $84 a barrel on the New York Mercantile Exchange Thursday. Brent crude in London has seen a similar drop and slight recovery, trading at more than $106 a barrel.

While the price of oil increased, investors are wary demand may drop if the economy is headed for a downfall. Stock markets also fell drastically, leaving many worried about the future.

While multiple economic data combine to affect the price of oil, including jobs, home sales, purchasing, imports and inventories, the most-recent drop was pinned on the reduction in the United States' credit rating.

While OPEC has dropped demand looking forward, which casts out any suspicion that the oil cartel might up production, many analysts see the current drop in oil prices as temporary – and $100 oil a long-lasting reality.

Oil Demand to Increase Worldwide

The fact of the matter is that demand and consumption in the United States is going to become less of a price driver – or at least not the biggest factor to be considered.

The US has held the spot as the world's largest oil consumer for some time, but the growing and industrializing massive populations of China and India will soon take the spotlight for demand.

Additionally, demand continues to rise despite spikes in oil prices in countries where oil subsidies exist, including many Latin American, Middle Eastern and Asian countries. Meaning, consumers that pull back on demand when prices at the pump escalate are outnumbered by those who do not see an increase.

As markets continue to absorb these fundamental changes, the market will see less volatility based on US consumption changes due to the price at the pump, summer driving season or even risk from hurricanes.

Emerging Oil Resources for a Growing Demand in the US

Nonetheless, the appetite for oil in the US continues to grow, and emerging reserves in new regions could soon prove major sources of future energy in the nation. Namely, the development of shale oil resources in the US is growing drastically in the Eagle Ford and Bakken Shale, and new liquids-rich shale plays are being aggressively sought.

Additionally, the development of Canada's vast oil sands resources could prove a major source of future oil for years to come. Currently, the US government is working to approve the development of a major pipeline that could increase imports of oil sands into the US.

Finally, the burgeoning oil resources offshore Brazil will likely supplement the demand in the US. Multiple basins in the pre- and post-salt reservoirs offshore Brazil are proving high productivity; and Petrobras (NYSE:PBR) and others are leading the way in developing these resources.


Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.

Devon Energy pioneers shale drilling and production

US independent Devon Energy Corp. (NYSE:DVN) has earned the distinction as the first company to combine horizontal drilling and hydraulic fracturing to produce hydrocarbons trapped in shale plays.

Prior to the 2001, this had never been done, and oil and gas in shale rock was considered uneconomic.
Announced in 2001 and completed in 2002, Devon bought junior oil and gas company Mitchell Energy. Mitchell held acreage in the Barnett Shale, and had been drilling vertical wells and hydraulically fracturing them to produce natural gas from the formation.

The Barnett Shale is located just above the Ellenberger aquifer, which if penetrated will ruin the well. In the Central Texas counties of Denton, Wise and Tarrant, the Barnett Shale is insulated from the aquifer by the Viola limestone.

After several unsuccessful tries in areas not protected by the limestone, Mitchell was drilling wells in the areas that posed no threat of water infiltrating the shale because of the Viola; but Devon had much more acreage -- about 300,000 acres beyond the limestone. That meant that the majority of Devon's acreage could not be produced with vertical wells.

"We realized that if we could drill horizontally across the non-core area of the Barnett, than we could use the bottom half of the formation as the barrier, protecting us from the Ellenberger aquifer," revealed Devon spokesperson Chip Minty.

That realization is what drove Devon to experiment with the combination of horizontal drilling and hydraulic fracturing in shale plays. While both practices were well-established technologies, no companies had ever used them together in shale.

While the first two wells drilling and completed this way were disappointing, the third was encouraging.

"What we found was these horizontal wells would produce three times more gas as a vertical one, and they only cost twice as much," Minty said.

What Devon started tinkering with in 2002 has become an industry-wide practice for developing shale, unconventional and tight gas formations in North America. Now many companies are starting to use horizontal drilling and hydraulic fracturing in other parts of the world, including China, Poland and Argentina.

"This company has a history of innovation and perseverance," Minty continued. "Devon pioneered production of natural gas from deep coal seams in northwestern New Mexico in the late 1980s and early '90s."

At its operations in the Fruitland coal formation in the San Juan Basin of New Mexico, Devon was one of the first companies in the US to economically produce natural gas from coal.

Applying its expertise to various shale plays across North America, Devon currently employs 72 rigs in North America. Devon is active in the Barnett Shale of Central Texas, Cana Woodford Shale in Western Oklahoma, Arkoma Woodford Shale in Southeastern Oklahoma, Haynesville Shale in East Texas, the Permian Basin in West Texas and Southeast New Mexico, Horn River Shale in British Columbia Canada, Utica Shale in Ohio and Michigan, and Tuscaloosa Shale in Louisiana. The company is also pursuing exploration and production drilling in oil sands and unconventional plays in Alberta.


Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.

North Dakota oil production skyrockets on Bakken Shale drilling and development

Currently the fourth-largest oil producer in the United States, North Dakota is only surpassed by Texas, Alaska and California – nonetheless, mounting oil production from North Dakota's prolific Bakken Shale may soon change that.

The US Energy Information Administration recently focused on the recent upward trend oil production from North Dakota in its report entitled, "Rising North Dakota Oil Production: Recent Trends and Future Prospects."

Since 2005, oil production in North Dakota has tripled to an average of 307,000 barrels of oil a day in 2010 – a number that is likely to jump again in 2011. In January 2011, oil production in the state reached an average of 341,000 barrels of oil a day, and in February, North Dakota's oil production averaged 360,000 barrels of oil a day, showing a definite trend upward.

By using horizontal drilling and hydraulic fracturing in the Bakken Shale formation, operators in North Dakota have increased Bakken oil production from less than 3,000 barrels of oil a day in 2005 to more than 230,000 barrels of oil a day in 2010.

Drilling in the state has certainly increased, as well. According to the most-recent report from Baker Hughes, North Dakota currently has 158 rotary drilling rigs active in the state – all of which are drilling for oil. At the same time in 2005, there were only 22 rigs drilling.

Additionally, the rate of production growth in North Dakota far out-paces any other state in the Union. Over the last five years, oil production growth has increased some 40 percent in North Dakota, in comparison to less than a 4 percent increase in Texas and dwindling oil production rates in California and Alaska.

The EIA expects oil production from North Dakota to continue climbing, as elevated oil prices support further development of the Bakken Shale and underlying Sanish Three Forks formation.

Furthermore, the 2008 USGS assessment of the Bakken formation estimated some 3 to 4.3 billion barrels of recoverable oil, a significant increase from previous estimates. (The USGS plans to start a new assessment of the Bakken in October 2011.)

Recently, the North Dakota Department of Mineral Resources projected that production from the Bakken formation could possibly double, jumping to as high as 700,000 barrels of oil a day in the next four to seven years.

Increased oil production in the state is prompting investment in pipelines and infrastructure to transport the crude to eager US markets. In addition to a number of pipeline expansion and construction projects, some companies are resorting to railroads to deliver oil production from the state.

A mega-solution, TransCanada is hoping to start its Keystone XL Pipeline in 2013, but the construction project, which will span two countries and myriad states, is still undergoing the approval process with the US government (although the House voted to expedite the Obama Administration’s decision on the pipeline just this week).

Also facing processing and transport constraints, North Dakota's natural gas production has grown as associated production to the oil.

Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.

New Lucius development shows gaining strength of the US Gulf

This week, US independent Anadarko Petroleum (NYSE:APC), super-major ExxonMobil (NYSE:XOM) and other project partners signed a unitization for the Lucius oil and gas field in the ultra-deepwaters of the US Gulf of Mexico.

Discovered in 2009, the Lucius oil and gas field spans Keathley Canyon Blocks 874, 875, 918 and 919, which had different project partners and differing operators, requiring a new break-down to move forward.

Following the unitization, Anadarko will serve as the operator of the Lucius field with 35 percent interest. Lucius partners include ExxonMobil with 15 percent, Plains Exploration and Production Company (NYSE:PXP) with 23.3 percent, Apache (NYSE:APA) with 11.7 percent, Petrobras (NYSE:PBR) with 9.6 percent and Eni (NYSE:E) with 5.4 percent interest.

The unitization moves the project one step closer to a project sanction on the development of the field, which is now expected for later this year -- a major vote of confidence for oil and gas operations in the US Gulf.

Development plans for Lucius call for a truss spar capable of processing more than 80,000 barrels of oil and 450 million cubic feet of natural gas a day.

Additionally, the Lucius project partners have signed an agreement with the partners on the Hadrian South field, to process the natural gas of the nearby field through the Lucius production facility -- making Lucius a production hub in the ultra-deepwaters of the Keathley Canyon.

Following the Deepwater Horizon accident and Macondo oil spill, and the subsequent permitting delays for drilling and development as regulators reorganized operations and requirements, the Lucius field development is the third major project to be announced for the US Gulf of Mexico.

Chevron's (NYSE:CVX) $7.5 billion Jack-St. Malo and $4 billion Big Foot developments have gotten the ball rolling on contract awards for oilfield service companies in the Gulf of Mexico. Additionally, deepwater drilling permits have been issued, and offshore men and women are getting back to work.

With the Lucius project sanctioning imminent, major projects are picking back up in the Gulf, showing operators are eager to continue working in the waters offshore the US.

.......................................

Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.

International shale race takes off

While shale gas production in the US reached 4.87 trillion cubic feet in 2010, shale drilling and production is slow-going in other countries.

Nonetheless, the EIA recently released a report covering 48 shale gas basins in 32 countries, asserting that shale gas is a global phenomenon with 6,662 trillion cubic feet of unconventional resources worldwide.

With the news this week that Chevron has hired oilfield services firm Halliburton for drilling services on its Polska shale project in Poland, the international shale race heated up a bit.

International countries around the world are eager to tap into shale reserves, using techniques and technologies, namely horizontal drilling and multi-stage fracturing, perfected in the unconventional formations of the US and Canada.

Both India and China are making strides to begin drilling shale. National oil company CNPC joined forces with super-major Shell to develop a well manufacturing company to focus on shale gas and CBM drilling and development. Additionally, India is drilling its first shale gas wells, as well as awarding shale gas blocks for development.

In South America, shale drilling in Argentina is also picking up through efforts in the Neuquen Basin.

While France has recently banned the use of hydraulic fracturing for oil and gas resources in the country, Toreador Resources, an active shale explorer in France, stresses that it can develop its Paris Basin resources without the technology.

The Ukraine claims to hold the world's largest shale reserves, with the Ministry of Environment and Natural Resources in the country calling for international investors to study its shale gas deposits.

The drilling and development of shale resources across the globe may prove the perfect solution to growing demand for energy outpacing current production levels.


................................................

Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.

Alaska bids to increase oil production

Oil and gas are abundant in Alaska. Despite the harsh weather, the most northern state of the US is home to somewhat easily produced hydrocarbons, as well as a strong network of pipelines to connect that production to US markets.

Nonetheless, production in Alaska has been waning. Just this year, the LNG liquefaction and export terminal located on Alaska's Kenai Peninsula closed after 40 years of production -- and delays in obtaining drilling permits turn off operators. (After dropping its plans for drilling this year, Shell is working to drill in the Beaufort and Chukchi Seas offshore Alaska in 2012.)

To top it off, North Dakota's Bakken Shale is ramping up production at record rates, with more and more rigs drilling and infrastructure projects being awarded left and right. In fact, recent data revealed that oil production in North Dakota may well outpace Alaska by 2017.

This is despite the fact that a recent study found that Alaska's Outer Continental Shelf could produce 10 billion barrels of oil and 15 trillion cubic feet of gas.


Working for Change

To change the tide, Alaska's officials have been on the offensive, trying to boost oil and gas production in the state through oil-friendly initiatives and supportive legislation.

Drawing the line in 2010, the State of Alaska filed a lawsuit against the Secretary of the Interior to overturn the federal moratorium on offshore drilling in Alaska's Outer Continental Shelf.

Recently, Alaska Senator Lisa Murkowski introduced legislation to improve permitting offshore Alaska, recognizing that the "endless regulatory loop" is costing the state jobs and production.

"We have companies that have spent more than five years and billions of dollars attempting to conduct offshore exploration and production in Alaska, but have been unable to secure the necessary permits from EPA," Murkowski said. "It's clear that this process is not just overly costly and time-consuming, but simply does not work."

In April 2011, Alaska Governor Sean Parnell called on President Barack Obama to support the state's goal to increase the flow of oil through the Trans Alaska Pipeline System (TAPS) to 1 million barrels per day in the next 10 years.

Last week, Gov. Parnell and Natural Resources Commissioner Dan Sullivan revealed that Alaska plans to sell nearly 15 million acres of state-owned land and waters in October. The acreage up for grabs includes 2 million acres in the Beaufort Sea, 5.1 million acres on the North Slope and 7.6 million acres in the North Slope foothills -- and could hold up to 6 billion barrels of oil and 45 trillion cubic feet of natural gas.

"Releasing 30 million barrels of oil from the Strategic Petroleum Reserve is bad policy," Gov. Parnell said. "This decision only provides the nation with 30 days of additional oil supply. It will have no long term impact. The real Strategic Petroleum Reserve is Alaska, which has the potential to provide more than 30 billion barrels of oil over three decades. Developing Alaska's vast hydrocarbon resources will supply the nation with billions of barrels of domestic crude. It will provide tens of thousands of high paying jobs and it will generate hundreds of billions of dollars in revenue for the federal government. The right policy call for the nation is to develop Alaska's resources."

................................................................

Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.