Chesapeake Energy Corp. is trimming the number of employees at its offices in North Texas as low natural gas prices have forced the company to curtail its operations in the gas-rich Barnett Shale.
Chesapeake currently has only two drilling rigs in the Barnett, so the company intends to cut loose about 70 employees at its offices in Fort Worth and Cleburne. That represents about 8 percent of its work force in North Texas.
“The colleagues we’re releasing are wonderful people, passionate about their work and true assets to our community,” Julie Wilson, Chesapeake’s vice president of urban planning, wrote in an email to employees. “I hope you’ll help us find new career opportunities for them.”
Chesapeake is eliminating positions in several departments that are most directly impacted by the company’s reduced drilling and leasing operations in the area. It had 44 active rigs in the Barnett as recently as 2008, but low gas prices have spurred the company to shift its focus to oil and liquids production.
Wilson said Chesapeake already has transferred employees to more prolific shale plays or its home base in Oklahoma City.
“Although in no way do I want to trivialize our local staff reductions, I feel compelled to note that our company remains in a strong growth mode. We continue to add staff at our headquarters in Oklahoma City and in many of our field offices as the company continues to drill approximately 1,650 new wells this year to develop our enormous reserves of domestic oil, natural gas, and liquids.”
Wilson also noted employees of pipeline subsidiary Chesapeake Midstream Partners will move into new offices once Chesapeake completes the sale of those assets to Global Infrastructure Partners later this year.
She said that does not mean the company will sell downtown Fort Worth’s Chesapeake Plaza, although it will remain open to offers.
Wilson said Chesapeake is more interested in leasing space in the building.
Chesapeake Energy Corp. has discovered a potentially lucrative new oil play, the company announced Friday.
Chesapeake has completed two horizontal wells in the Hogshooter formation, about 10,000 feet underground with laterals approaching 5,000 feet. Two more wells are under way in the formation, which is part of the Anadarko Basin in western Oklahoma and the Texas Panhandle.
One of the completed wells yielded more than 7,300 barrels of oil equivalent in its first eight days of stabilized production, spurring optimism from CEO Aubrey McClendon.
“We expect this new Hogshooter discovery to provide a significant boost to Chesapeake’s focus on harvesting its existing assets for growth and value creation rather than on pursuing new leasehold. In addition, this new Hogshooter development area should further enhance our growing liquids production, which we expect will have transformational effects on our company’s operational and financial performance in the years ahead.”
McClendon said the Thurman Horn well is one of the best onshore oil wells drilled in the lower 48 states in the past several decades, according to Chesapeake’s research.
“This discovery exemplifies the scale and quality of our world-class asset base and the skill and creativity of our technical teams. Their hard work and determination is continuing to create significant additional value for our shareholders and other stakeholders.”
Chesapeake owns approximately 30,000 net acres in the play, which are more than 90 percent held by production from its legacy deeper Granite Wash operations.
The company expects to drill at least 65 wells in the Hogshooter play over the next several years. Those wells will be part of Chesapeake’s already budgeted Anadarko Basin drilling program, so they will not require any increase to its capital expenditure budget.
Chesapeake had none of the 65 potential future Hogshooter wells classified as proved reserves in the company’s March 31 reserve report.
Texas-based FTS International announced Friday it has secured its first international joint venture.
FTS International and Summit Technologies Co. Ltd. will form a new company that will provide well completion products and services for oil and natural gas wells in Saudi Arabia and Oman.
FTS Arabia Ltd. will have a vertically integrated business model similar to its parent company.
It will manufacture and build high-pressure hydraulic pumps and mobile pressure pumping units using in hydraulic fracturing wells. The company also may provide raw materials such as proppants and other well completion additives.
“We are excited to make our first venture into the international marketplace for oil and gas services with such an esteemed partner,” FTS CEO Marc Rowland said. “Summit has operated in the KSA (Kingdom of Saudi Arabia) and the Gulf region for two decades, partnering with other companies to expand their businesses in the region. Summit’s knowledge and experience in the region, partnered with FTSI’s technical expertise and experience in the oilfield services business, our vertical integration, quality manufacturing operations, and extensive supply chain network, will make this a very successful venture for both entities.”
FTS International is a leading provider of well stimulation services for the oil and natural gas industry.
Chesapeake Energy Corp. owns a 30 percent stake in the Fort Worth-based company, but the company could sell its holdings in FTS International as it works to overcome a looming cash crunch.
A hydrologist hired by several environmental groups has confirmed a draft report by the U.S. Environmental Protection Agency that links water contamination in Wyoming to hydraulic fracturing, according to the Natural Resources Defend Council.
The EPA report is the result of an investigation that began in spring 2008 after residents of Pavillion, Wyo., complained about smells, tastes and adverse changes in their water quality.
Canada-based Encana Corp., which has been active in the Pavillion area, maintains the water wells in the area have not been adversely impacted by oil and natural gas development. The company noted the U.S. Geological Survey reported poor water quality in Pavillion as far back as the 1880s.
Wyoming officials also objected to the report, claiming EPA’s tests were inadequate, so new tests began last month.
The NRDC report indicates tests by independent hydrologist Tom Myers has confirmed the water contamination was caused by hydraulic fracturing, a process used to unlock oil and natural gas reserves from dense rock. Myers also concluded the EPA investigation was scientifically sound.
“These findings only serve to underscore why we need strong rules on the books that safeguard the American public from drinking water threats from fracking — including closing the Halliburton loophole in the Safe Drinking Water Act that allows the oil and gas industry to cut corners and put our water supplies at risk. We look forward to the final EPA report after continued investigation and peer review,” according to NRDC’s staff blog.
The oil and gas industry maintains hydraulic fracturing does not affect groundwater because of the way wells are constructed. Officials also have fought against federal regulation of the process, arguing state oversight is sufficient to protect the environment.
Energy in Depth, an industry-sponsored public outreach campaign, questioned Myers’ findings because of his ties to well known shale industry critic
Last week, President Barack Obama created a federal working group to coordinate efforts to regulate the oil and gas industry, including hydraulic fracturing.
Just a few days later, the U.S. Environmental Protection Agency released new rules to limit air pollution from fracking.
The agency said the move was forced by a court-ordered deadline.
Two environmental groups sued the EPA in 2009 for allegedly failing to review major source air toxics standards for the oil and natural gas industry.
A U.S. district judge in the District of Columbia issued a consent order in the case in February 2010, requiring the EPA to finalize new rules by April 17.
Increasing oil and natural gas production is spurring pickup sales, according to a report from USA TODAY and the Detroit Free Press.
“Every time we add a number of wells, we add a lease operator — and that requires a truck,” said Pat Gibson, vice president of Michigan-based West Bay Exploration.
General Motors, Ford, Chrysler and Toyota reported truck sales were up at least 10 percent in March or the first quarter, according to the report.
Don Johnson, GM’s vice president for U.S. sales, said a lot of the increase in heavy-duty truck sales can be attributed to the oil and gas industry.
Oklahoma is poised to become one of a growing number of states to require energy companies to disclose the chemicals used in hydraulic fracturing of oil and natural gas wells.
State regulators approved disclosure rules last month, but they still must be approved by the Legislature.
Texas began requiring chemical disclosure on Feb. 1, directing producers to FracFocus.org to log the details of their fracturing operations.
Nearly 6,000 Texas wells have been added to the registry created last year by the Ground Water Protection Council and Interstate Oil and Gas Compact Commission, but some state residents still are not satisfied, according to Houston Chronicle report.
“The regulation is fine, but it’s not going to do any good. No one will know how to interpret what things go into the frack job one way or another, whether it’s doing any harm or good,” said David Trotter, an oil and gas attorney who is a partner in a 4,500-acre Texas ranch.
The newspaper reports FracFocus shows that drillers employ chemicals such as hydrochloric acid and methanol to help free oil and gas deposits in the shale rock. Chemicals are a small part of the overall mix, which is mostly water and sand.
The online registry includes a section about chemicals are using in hydraulic fracturing.
U.S. Sen. Jim Inhofe on Wednesday introduced legislation to ensure states maintain the authority to regulate hydraulic fracturing.
The Oklahoma senator’s Fracturing Regulations are Effective in State Hands Act was cosponsored by fellow Republican Sens. Lisa Murkowski, David Vitter, Jeff Sessions, John Conryn, James Risch and John Hoeven. Rep. Louie Gohmert, R-Texas, will introduce companion legislation in the House.
Inhofe touted the bill in a news release Wednesday before taking the Senate floor.
“I am pleased to introduce this bill which will ensure that states have the sole authority to regulate hydraulic fracturing, so that the Obama Administration will not be able to impose federal regulations to stop the development of our vast natural resources.”
Inhofe said the administration wants to eliminate hydraulic fracturing, a technique credited with revolutionizing domestic oil and natural gas development, despite the president’s “disingenuous touting of the virtues of natural gas.”
“We know this because he currently has 10 different federal agencies in the process of crafting rules or studying the impacts of hydraulic fracturing, including an EPA that is apparently determined to find fault with the practice so that they can end it.”
The proposal was introduce nearly a year after Sen. Bob Casey, D-Pennsylvania, offered a bill that would regulate hydraulic fracturing under the Clean Water Act.
Casey’s bill has not moved out of committee.
Inhofe on Wednesday defended hydraulic fracturing, which involves pumping large amounts of pressurized water, sand and chemicals into tight rock formations to release oil and gas.
“The first use of hydraulic fracturing took place in my home state of Oklahoma in 1949, and in over 60 years there has not been one confirmed case of ground water contamination from fracked formations.”
Inhofe said his bill will stall President Obama’s “war on affordable energy.”
“It will ensure that under state regulations, Americans can take advantage of the many benefits – including hundreds of thousands of jobs and lower energy prices – that come with the development of our vast natural resources.”
The $10 billion facility, which could be weeks away from construction, would be the first natural gas export facility in the lower 48 states.
Opponents worry the export facility would lead to an increase of hydraulic fracturing in natural gas development, according to the CNN story.
The process is controversial in some circles because of concerns about its impact on the environment, although industry officials maintain hydraulic fracturing has never been conclusively linked to water contamination.
Exporting natural gas has become an attractive option for producers as prices have plummeted to the lowest levels in a decade. The commodity sells for up to five times as much in Europe and Asia, CNN noted.
The oil and natural gas industry doesn’t really like the word “fracking,” which has became a pejorative term embraced by its opponents, but it looks like it’s going to be sticking around a bit in journalism circles.
The Associated Press on Tuesday released a series of updates to the AP Stylebook, every journalist’s reference bible. It included an entry on hydraulic fracturing.
A technique used by the energy industry to extract oil and gas from rock by injecting high-pressure mixtures of water, sand or gravel and chemicals. The short form is fracking, a term considered pejorative by the industry.
Most industry officials don’t use the term fracking very often, unless it is to mention plans to fracture, or frack, a well.
Media use of the term has consistently included a “k” although some industry watchers have complained it doesn’t belong there. Industry officials seem to prefer to abbreviate fracturing to “frac.”