Cheniere – The First U.S. Company To Export Natural Gas (LNG)

Cheniere (NYSE: LNG) is the first company in America to be given a license to export liquefied natural gas by FERC.   The world became interested in researching Cheniere in 2011 when this authorization was given.  Just a few years prior, in 2005, the US was building LNG import facilities as natural gas shortages seemed imminent. Natural gas prices continued to climb from 2005 to 2008 as the world did not recognize the fundamental energy shift sweeping across the planet during the great recession of 2008.  From 2008 to 2011, the US & world energy market paradigm was changing fundamentally.  With new technological abilities related to hydraulic fracturing and horizontal drilling, natural gas drillers had unlocked the potential of the Eagle Ford and the Mighty Marcellus.  Many operators didn’t recognize the fundamental changes taking place in natural gas markets.

Cheniere, however, adapted to world markets differently between 2005 and 2011 as they reacted faster than anyone else when they saw the future of natural gas, not the present.  Before modern era hydraulic fracturing into the Eagle Ford and Marcellus shales had reached the ears and psyche of America, Cheniere adapted their LNG strategy to be a natural gas exporter.  In 2011, Cheniere had the approval they needed and long-term sales agreements locked up with some of the world’s largest energy customers. And now in 2015, Cheniere’s first liquefaction train for export is about to go online.  How did Cheniere come to be the first company licensed to export LNG internationally? Let’s begin our recap of Cheniere’s story in the year 2011.

Cheniere Sabine Pass LNG
Cheniere LNG Facility in Sabine Pass, Cameron Parish, Louisiana. This facility is being built by Bechtel, the 4th largest privately owned company in the US.  Bechtel is a construction company based in San Francisco, California.  Click to enlarge.

In 2011, the board of directors of Cheniere was different than it is today. Two of the board members of Cheniere in 2011 had some inside connections that may have helped with Continue reading Cheniere – The First U.S. Company To Export Natural Gas (LNG)

Michigan Oil & Gas Monthly – July 2015

The big news this month is the expiration of permits 60746-60750 & permits 60765-60767 for the State Excelsior extension pads just north of M-72 in Kalkaska Michigan. Calgary based EnCana Corporation originally received these permits in 2013 but they transferred to Houston, Texas based Marathon Oil Corporation when Marathon acquired EnCana’s Michigan assets in 2014.  Each of these 8 HVHF permits that expired were estimated to require 23,100,000 gallons of water per completion.   All told, that’s approximately 185,000,000 gallons of Michigan freshwater that will not be consumed because these wells will never be drilled.

The expiration of these 8 permits is significant because it’s more conclusive evidence that HVHF in Michigan’s Collingwood formation is not economical for operators between $3/mcf & $4/mcf selling prices. Even if natural gas prices were to return to their 2008 level of $7.97/mcf, the highest price in US history, Collingwood wells would not be profitable wells by a long shot. The energy produced from the 7 wells that did make it to production from the Collingwood formation have demonstrated themselves to be an uneconomical use of Michigan’s freshwater resources for energy production. But, the uneconomical use of Michigan freshwater has Continue reading Michigan Oil & Gas Monthly – July 2015

Michigan Oil & Gas Monthly – June 2015

It was another slow month for Michigan oil & gas activity like it has been every month since the initial hype of High Volume Hydraulic Fracturing (HVHF) came to our state in 2010.  Five years ago we were sold a bill of goods about how HVHF was going to revolutionize hydrocarbon production in our state.  The last 5 years, however, have been the slowest in Michigan’s oil & gas exploration history.

Some people think there’s a drilling frenzy coming in Michigan and dream of their Jed Clampett style payday.  Some think there’s a drilling frenzy coming and fear the impending doom of a fracing industry growing across our state like a virus.  Both of those seemingly opposite schools of thought have more in common than you think, they’re both based in fantasy.   As far as permitting goes, this year is on pace to be the slowest year in Michigan’s 88 year history of keeping track of permit numbers.

1931 was the slowest year on record in Michigan permitting history at 111 permits for the year.   So far this year, we have 54 permits through six months of activity.  If we extrapolate (54 * 2) we would have 108 permits for the year which would be the lowest on record.  And, considering that many wells this year are two-for-one (i.e. two permits are issued for a single well with a horizontal leg) we have even less permits than the 54 reported through June 26, 2015.

Land owners hold steadfast to the unlikely possibility their land will get leased, drilled, and produced. They've fallen for the Jed Clampett fantasy.
Land owners hold steadfast to the unlikely possibility their land will get leased, drilled, and produce millions in royalties. They’ve fallen for the Jed Clampett fantasy.

RMP went on record with this post in November 2014 talking about how primary oil & gas reservoirs in Michigan had been conventionally depleted over the past 88 years.  We have Continue reading Michigan Oil & Gas Monthly – June 2015

Michigan Oil & Gas Monthly – May 2015

In the May edition of the Michigan Oil & Gas Monthly (MOGM) we see something relatively new in the Michigan Basin: hydraulic fracturing with carbon dioxide (CO2).   The nomenclature itself sounds funny because CO2 is not water and therefore the word hydraulic seems out of place.   RMP has recently acquired the Record of Well Completion for the State Sherman & Forshee & Cooper 1-33A well in Sherman Township Michigan in Osceola county.   The well was fracture stimulated with 51 tons of liquid CO2 and 10,500# of ceramic proppant in December of 2014.   The initial flowback production from the Prarie Du Chien formation was 120 BOPD and 1.5 MMCFD of natural gas.   In our February MOGM edition we were watching a company called GasFrac who is fracing using hydrocarbons.  Fracing using CO2 is similar in that both methods are waterless. Click here to open a new tab in your browser to see the State Sherman & Forshee & Cooper 1-33A well on our interactive map.

The State Sherman & Forshee & Cooper 1-33A well is south of Cadillac and just north of Rose Lake. Follow this URL to see the well on our interactive map: http://www.respectmyplanet.org/public_html/site/pru_number/?pru=17795
The State Sherman & Forshee & Cooper 1-33A well is south of Cadillac and just north of Rose Lake. Copy & paste this URL into your browser to see the well on our interactive map: http://www.respectmyplanet.org/public_html/site/pru_number/?pru=17795

If you’ve been paying attention to the clues over the past couple years, it is not surprising to hear of a Michigan well being fracture stimulated using CO2.   In 2012 we heard our first clue about CO2 when Governor Rick Snyder said “I am asking the Legislature to enact a law that will grant carbon dioxide pipelines the same legal standing as other Continue reading Michigan Oil & Gas Monthly – May 2015

2014 Top Oil, Gas, & NGL Producing Units in the Michigan Basin

Understanding Michigan hydrocarbon production data is important for anyone interested in understanding the economics of energy production.  Join us as we continue our journey to compile oil & gas production information that helps everyone understand more about energy, economics, and the protection of our public natural resources.   There’s a ton of information out there.   But how should we break it down in a way that tells us what’s really going on?  With everything happening across our communities, at the state level, at the federal level, and even internationally, where do you focus your effort?   What really matters?

Well, one thing that matters to everybody is money.  When you get all the fluff out of the way, you realize it’s been about money the whole time.   Dolla dolla bills y’all.   Money is a common denominator regardless currency, boundary, nationality, company, or even  country.  Furthermore, it doesn’t matter if you’re talking oil, natgas, coal, wind, or solar either;  energy’s common denominator is cost per unit.   Money is the great leveler.  But understanding money can get complicated.  It gets especially complicated to understand money when you consider the long term environmental impact costs of energy production.  For example, you could have high initial investment costs that have much better long term returns with respect to environmental impacts vs low initial costs that have large long term negative consequences on the environment.

Merit Energy's website can be found here: https://www.meritenergy.com/
Merit Energy’s website can be found here: https://www.meritenergy.com/

Just looking at the oil produced or gas produced won’t tell you the whole story about energy economics either.   It will, however, teach us just a little bit more about the big picture; it’s like another brick in the wall. To understand the money as it relates to oil & gas, we need to understand fundamentals like Continue reading 2014 Top Oil, Gas, & NGL Producing Units in the Michigan Basin

Michigan Oil & Gas Monthly – April 2015

2014 Hydrocarbon production results for Michigan have all been updated into the Michigan database.   Merit Energy’s Norwich Unit located just west of Higgins Lake was the #1 oil producer in 2014 at 119,187 barrels.   This unit, made up of 288 wells, is referred to as a water flooding unit which means it is in secondary recovery.  The per well production for this unit is actually very low at just over 1.1 BOPD.   Take a minute to click here to view our interactive map of the 288 wells that make up this PRU (a static image of our interactive map is shown below).  Zoom in on our Google map a little and you’ll see black oil markers mixed in with blue water injection markers.   Water, which is heavier than oil, is injected in the oil reservoir through wells at the blue colored markers which pushes oil up to the surface at wells located at the black colored markers where there are pumpjacks.

Merit Energy's Norwich Unit, made up of 288 wells, was the #1 oil producing unit in Michigan in 2014.  Check out the interactive map @ http://www.respectmyplanet.org/public_html/site/pru_number/?pru=20020
Merit Energy’s Norwich Unit, made up of the 288 wells in the picture above, was the #1 oil producing unit in Michigan in 2014. Check out the interactive map @ http://www.respectmyplanet.org/public_html/site/pru_number/?pru=20020

Even though this PRU is the #1 oil producing unit in Michigan for 2014, on a per well basis, it wouldn’t even Continue reading Michigan Oil & Gas Monthly – April 2015

Michigan Oil & Gas Monthly – March 2015

Welcome to Volume 3 of the Michigan Oil & Gas Monthly for March 2015.   In the featured image above is a March 2015 photo of the Dettore Et al 1-9 well in Lyon Township, Michigan.  This Oakland County well is at the crossroads of Grand River, Milford Road, and Pontiac Trail in downtown New Hudson.  The well is just south of the only runway at the Oakland Southwest Airport which was formerly called the New Hudson Airport.   Surveillance cameras and No Trespassing signs surround this well pad that runs right along side the Huron Valley Trail.  The flare stack burns 24/7 and most likely attracts kids like a porch light attracts moths as it looks to be heavily damaged by mischievous behavior over the last 20 years.

The Dettore Et al 1-9 well was completed May 29, 1985 into the Niagaran Gray formation.  It has reported production of 423k barrels of oil over 17 years and 1 month.  Although it looks active, as evidenced by the flare stack burning 24/7, the well does not have reported production since December of 2011.  Although there is a oil & water separator and a waste water tank on the well site that can be seen from the Huron Valley trail, the well has not reported any waste water production in its 17 year exisistence.   This well was listed on the 1993 SAP list for contaminated soil.

Continue reading Michigan Oil & Gas Monthly – March 2015

Analysis of Michigan Department of Environmental Quality High Volume Hydraulically Fractured Well Completions and Applications

Please read this paper to learn more about High Volume Hydraulic Fracturing in Michigan.  This document is hosted by Friends of the Au Gres-Rifle Watershed.

ANALYSIS OF MICHIGAN DEPARTMENT OF ENVIRONMENTAL QUALITY HIGH VOLUME HYDRAULICALLY FRACTURED WELL COMPLETIONS AND APPLICATIONS

Responsibly Migrating Away from Crude Oil

Crude oil and internal combustion engines are a part of our lives.   Crude oil refines into the primary energy that gets our vehicles around today.   It’s what powers our cars and trucks on freeways across America every day.   Crude oil is responsible for many jobs and products across our country and around the world.   RMP takes those jobs, especially the jobs in America, very seriously. We feel a great responsibility to make sure it is well understood that we care  about jobs provided by the oil & gas industry to Americans and people around the world.  RMP advocates, however, for an immediate and responsible migration away from crude oil as a fuel source.  By ramping up the displacement of internal combustion engines with fuel cell electric vehicles (FCEVs), like the Toyota Mirai pictured above, America’s economy and national security will improve.  Mirai is the Japanese word for future.

Continue reading Responsibly Migrating Away from Crude Oil

Michigan Oil & Gas Monthly – February 2015

Welcome to Volume 2 of the Michigan Oil & Gas Monthly.   In the featured image above, a GasFrac Energy Services truck rolls westbound down I-96 in Novi Michigan on February 6, 2015.  GasFrac uses a proprietary waterless fracing process to fracture rock with a mixture of liquid petroleum gases.   The main ingredient in their frac fluid is gelled propane (C3H8).

We have seen a poor success rate recently in the A1 Carbonate in Michigan for operators targeting the A1.  Many recent A1 attempts in Michigan have made the HVHF list calling for millions of gallons of water for completion in the application.   Operators have changed their completion techniques on the fly and have moved away from such high volumes of water and hydraulic fracturing altogether; but still have had no success.   One theory is that the water is damaging the formation and it therefore will not produce.  Since gelled propane is a hydrocarbon (C3H8), it is soluble in the A1 formation fluids unlike water an perhaps may not Continue reading Michigan Oil & Gas Monthly – February 2015

RMP is 501(c)3 non-profit organization registered in Michigan. We are committed to protecting fresh water resources by advocating for: sustainable energy production, hydrogen fuel cell vehicles, remediating environmental pollution & rethinking waste management.