Shale Revolution

Tuscaloosa Marine Shale Closing in on Commercialization 

After several years of testing and seeking profitable production solutions, prospects for companies invested heavily in Mississippi’s and Louisiana’s Tuscaloosa Marine Shale seem promising. The summary provided in this article gives a brief overview of the current outlook.

Drilling results disclosed last week by Goodrich Petroleum expand the list of prolific and successfully executed wells in the TMS.
Goodrich’s comments regarding the play’s consistent matrix productivity are particularly encouraging.
The TMS is steps away from becoming a proven commercial play.
Progress on the execution front continues to be gradual and not without “bumps in the road.”.
However, execution consistency and drilling economics should improve substantially once development phase is reached.

 

Related: The Pike County Economic Development District is planning a jobs fair in at least five locations in anticipation of the oilfield jobs stemming from the Tuscaloosa Marine Shale explorations.
Organizers want to hold the first event in November at the Martin Luther King Center in McComb. Other tentative locations are in Liberty, Centreville, Woodville and at Southwest Mississippi Community College.

Did You Know? 

According to the consulting and forecasting firm IHS Global Insight, shale development has supported more than 2 million American jobs and generated $75 billion in federal and state tax revenues. By 2020, IHS estimates, total jobs linked to shale will grow to 3.3 million, with a total impact on U.S. gross domestic product of nearly half a trillion dollars.

 

TMS Fervor Grows in Southwest MS

A private equity firm’s pledge to invest up to $400 million in Halcón Resources’ deep drilling in Mississippi and Louisiana could lead to a doubling of Halcón’s 2015 operations in the region. Read more about the big TMS investment at the Mississippi Business Journal.

Oil Boom is in the Making in Southwest Mississippi

The Sun Herald reports on the emerging Tuscaloose Marine Shale in southwest Mississippi. Mississippi Energy Institute President Patrick Sullivan comments that it’s a potential energy boom for the state that calls for cautious optimism. Read more at the Sun Herald. 

Shale Production Hoping to Spur Economic Growth in Southwest MS

Mississippi has multiple opportunities for energy-based economic development in the near-, mid- and long-term time horizons. A near-term opportunity is the shale oil and gas energy exploration going on in southwest Mississippi, which you can read about at the Clarion Ledger.

U.S. Carbon Emissions at Lowest Level in Over Two Decades

The Energy Information Agency recently issued a report stating that the U.S. energy sector’s carbon dioxide emissions fell last year to their lowest level since 1994. During that same 28-year period, real U.S. gross domestic product rose 56 percent.

carbon emissions

When it comes to deciding who deserves credit for such an accomplishment, many point to the U.S. oil and natural gas industry.

“They invest more in zero- and low-emissions technologies than the federal government and nearly as much as all other industries combined,” said Howard Feldman, American Petroleum Institute’s director of regulatory and scientific affairs. “Innovations in hydraulic fracturing and horizontal drilling have helped make the U.S. the biggest developer of natural gas in the world, and these technologies are a great example of how we can grow the economy, create jobs and clean the air.”

EIA also stated that after 1990, only the recession year of 2009 saw a larger percentage emissions decrease than 2012. But unlike those recession-stricken years, last year saw GDP rise by 2.8 percent — while energy consumption fell 2.4 percent — and the EIA says this can be credited to a 5.1 percent decline in energy use per dollar of GDP.

Over the longer term, the amount of carbon dioxide emitted for each unit of GDP has been on a downward trend since records began in 1949, but the 6.5 percent drop in 2012 was the largest reported drop. Only two other years — 1952 and 1981 — had declines greater than 5 percent, according to the EIA.

When adjusted for economic growth and inflation, the United States has cut its energy needs by more than 50 percent since 1973, and the trend shows no signs of slowing.

Mississippi Materials Corp. Fleet Embraces Natural Gas

Photo Credit: Greg Jenson, The Clarion Ledger

Photo Credit: Greg Jenson, The Clarion Ledger


Mississippi Materials Corp. is set to add 12 mixing trucks that will operate on compressed natural gas (CNG) to its fleet this month.

The company’s investment in the CNG powered trucks and construction of an on-site fueling station signifies a milestone not only for the company but for the industry as a whole as both commercial and individual use of CNG for transportation has seen little activity in Mississippi.

Because of the substantial infrastructure costs for refueling stations, fleet businesses have hesitated to move away from diesel or gasoline and to CNG. At today’s prices, CNG costs less than diesel on a comparative basis. With known natural gas reserves of supply at historic highs, heavy vehicle fleets may pay for the conversion to hedge against diesel costs. In order for CNG to be more widely used, more refueling infrastructure will be required. As with MMC, expect any fuel conversions to be within companies operating heavy vehicle fleets based out of a common location, as with concrete or waste collection trucks. With lighter vehicles running more intermittently, the economics of conversion or new vehicle premiums are less attractive.

Typically, states seeing more activity in CNG in transportation have offered financial incentives, such as rebates or tax credits, for associated costs.

UPDATE:

The Waste Management fleet of Jackson has also announced plans to utilize CNG vehicles for their daily routes in Jackson. That makes two Jackson companies supporters of CNG.

As Energy Demands Grow, Water Becomes Even More Valuable

Because of technology and not policy, the U.S. is experiencing an energy renaissance with the potential to make the long-fabled energy independence a reality. While all is well and good in the abundance of energy resources, one resource that is continuously a growing source of concern and tension is water.

Water will soon become a heavily valued asset as populations and industrial demands continue to increase. Most energy production requires substantial amounts of fresh water, and although energy efficiency and water conservation practices have improved significantly, the economy will demand more energy for growth and this demand will require more access to water resources.

Water quantity challenges, especially in the western U.S., as well as in parts of the Southeast, is a problem that is growing with population and industrial demands. Consequently, water availability is becoming a major consideration for energy projects in certain regions.

Mississippi is blessed with abundant water resources, but Mississippi leaders and developers should understand both Mississippi’s water-related challenges and advantages for industrial recruitment. Water should be another selling point for industrial growth. Expect to hear more and more about water quantity concerns in other places in the near future.

In the meantime, read more about the energy-water nexus at Energy Insider, where they discuss how vital water resources are in shale formation areas here.

A Tale of Two States: One Energy Rich, the Other Decision Poor

In case you missed the Wall Street Journal’s recent editorial (5/4) comparing oil booming Texas to over-regulated California, we wanted to be sure to highlight this important story because it’s a not-so-micro microcosm of the energy opportunity facing our country.

California, once one of the top three energy producing states in the nation, has lost its top spot to North Dakota, who now joins energy titans Alaska and Texas.

The column points out how impactful an expanding energy industry can be to a state’s economy when it welcomes energy development.  Restricted by politics and policy, California is unable to take advantage of its offshore reserves and the Monteray Shale, both believed to be abundant resources. Meanwhile, Texas is capitalizing on its private leases within the Eagle Ford shale and doubling its oil production.

Stats show that more than 400,000 Texans work in the oil and natural gas industry – nearly 10 times as many as in California. The average salary is $100,000 in an industry that generates $80 billion a year in economic activity. The Journal goes on to say:

In short, Texas loves being an oil-producing state while California is embarrassed by it. And it’s no accident that Texas has been leading the nation in job creation since the recession ended. The energy boom is creating thousands of jobs related to drilling but also in downstream industries such as transportation, high-technology, construction and manufacturing. The Texas jobless rate is 6.4% while California’s is still the third highest at 9.4%.

In short, the editorial presents an excellent case study of the two states’ economies and poses the question of whether the nation will embrace America’s oil and natural gas wealth with comprehensive pro-development policies.

Fuel diversity is the key

The New York Times recently published an article about New England’s over-reliance on natural gas for electric power generation and, consequently, the precipitous price spike after a surge in demand.

What does this event in New England teach us? It teaches us diversity is critical to both reliability and stability of supply and cost in electric power generation. This microcosm shows the fallacy in allowing short term market conditions to over-influence decisions best made in long term perspective. This New England event also shows us the critical importance of infrastructure and delivery in energy. Along with adequate production and fuel supply, robust infrastructure and regular upgrades are the key components to what the public expects – electricity and energy available on the spot at a fair price.

The shale gas revolution has dynamically changed the economic picture in the U.S., especially in manufacturing. If not for the explosion in energy production over the past 5 years, who knows where our the U.S. economy would be? But all of these gains do not mean we should make ourselves over-reliant on natural gas. A diverse energy portfolio is the right answer.

Well over half of Mississippi’s electricity is generated using natural gas. Coal and nuclear account for the remainder of electricity generated in Mississippi, so while Mississippi does have some balance, the state as a whole is already heavily leveraged on natural gas (see graph below.)

Figure 5, graph 1

“It is certainly true that a region like New England that relies on a single fuel source like natural gas for the bulk of its power does leave itself open for more disruptions than a region with a more diverse fuel mix,” said Jay Apt, executive director of the Electricity Industry Center at Carnegie Mellon University in Pittsburgh. “It’s not a knock against natural gas; it’s a knock against a single fuel source.”

With Mississippi Power’s Kemper plant one of the latest targets of the anti-build-anything-in-America coalition, it is important for us, ratepayers, in Mississippi to take heed of Mr. Apt’s words. These opponents saying we should be adding natural gas generation are missing the fundamental point about the importance of a diverse fuel portfolio in electric power generation. It cannot be stressed enough that diversity in fuel options is critical to stability and reliability coupled with the infrastructure capacity to meet demand. We must understand that electric power generation investments have very long lifespans of 40 years or more, so making decisions on today’s fuel costs make no sense. That’s why diversity will always be the best policy.

As discussed in the Times’ article, when New England experienced an early cold snap over Thanksgiving, there was an overreliance on gas- an overreliance that could not be met because of shortage of pipeline capacity. The demand was outpacing the delivery capacity of gas infrastructure. Thankfully, Indian Point, a twin-unit nuclear plant on the Hudson River, was able to contribute 1,400 megawatts.

New England’s near crisis is an excellent case study for not only Mississippi, but the nation. When an area relies heavily on one energy source (one that is delivered only as needed and requires an abundant infrastructure of pipelines) that area is susceptible to a volatile price market and shortage of energy.

Goodrich Petroleum Announces Tuscaloosa Marine Shale Well Report

Goodrich Petroleum Corporation announced the completion of its Crosby 12H-1 (50% WI) well in Wilkinson County, Mississippi. Read more details about the well here.