OIL AND GAS

EPA FRACKING STUDY DRAWS INDUSTRY, ENVIRONMENTAL SUPPORT

The recent news that the U.S.Environmental Protecton Agency will launch a 2-year study of the hydraulic fracturing process has both industry and its critics receptive - but for different reasons. The process of injecting massive amounts of water and a few chemicals and sand deep into well bores to free up shale gas is widespread and critical to its growth, says the industry.

It believes the study will confirm what they’ve been saying for years — that fracking poses no hazards to human health. While critics think it will show the process is contaminating drinking supplies and should be regulated by the feds.

Oil and gas proponents point out there has never been proof presented that frac’ing caused groundwater contamination, which environmental groups say is only because no one has been looking very hard.

The whole topic is taking on added importance since the recent introduction of legislation in Congress, known as the FRAC (Fracturing Responsibility and Awareness of Chemicals) Act, would give the EPA regulatory authority over the practice. In addition, the EPA was asked to take a second look at the effects of frac’ing on groundwater as part of a $32 billion appropriations bill passed late last year

“We are fine with that,” said Doug Hock, spokesman for EnCana Corporation, which has drilling interests in Garfield County. We still believe that this is something that is well regulated at the state level,” he added. “It doesn’t need another level of federal regulation.”

OIL  AND GAS PRODUCERS PUMP UP THE VOLUME -MODESTLY

WATER RIGHTS OWNERS IN LA PLATA COUNTY SUE STATE ON OIL AND GAS DEVELOPMENT

DENVER - Lawyers for senior water-rights owners are suing the state government in La Plata County and five towns, contending  the state engineer is failing to protect water-rights owners from gas and oil companies.

The energy companies remove water from the ground after they drill wells. In a previous case, the state Supreme Court ruled in favor of two Archuleta County families - the Vances and the Fitzgeralds - and required gas companies to get water permits for their coal-bed methane wells.

The state engineer adopted rules this year to exclude many gas wells from added regulation. In Southwest Colorado’s San Juan Basin, only wells close to the basin’s edge will need plans for replacing water they use. In most cases, the state engineer ruled that the gas wells are too deep to affect streams and springs that ranchers use.

But opponents, led by the Vances’ and Fitzgeralds’ lawyers, fought the rules. They said the state engineer relied too heavily on a map developed by the gas industry. They sued the state engineer early last week, seeking to overturn both the statewide rule and the map specific to the San Juan Basin.

“We wish they’d done it right, but they didn’t,” said Alan Curtis, a lawyer with the firm.

DELTA’S PLANS SALE OF PICEANCE BASIN ASSETS

Denver-based Delta Petroleum Company has seen its stock rise precipitously after news that it plans for the $400 million sale of a stake in its natural-gas assets in the Piceance Basin. The energy company said it has entered into a non-binding letter of intent with Opon International LLC of Denver to sell a 37.5 percent non-operated working interest in Delta’s Vega Area assets for $400 million.
Delta would continue to operate the Vega Area under a joint-venture agreement with Opon.

BLACK HILLS ENERGY PLANT WOULD USE LESS WATER

The power company says  its new proposed natural gas-fired power plant will use less water than traditional facilities and increase the reliability of electricity for Pueblo’s system. The Pueblo Board of Water Works last week approved a 40-year agreement (20 years with two 10-year extensions) to supply water to the new plant northwest of the Pueblo airport.

It will also fit in with governmental policies to reduce carbon emissions, said Mark Lux, vice president and general manager for power delivery with Black Hills. “Natural gas has half the carbon emissions as (than) coal,” Lux said. “It uses much less water.”

The water board will receive $5.6 million in revenues this year and more than $1 million per year after 2012 as part of the deal. The money will be used to improve the delivery system in proportion to the added demand of up to 2,530 acre-feet per year. Black Hills will construct new water mains and emergency pumping station as part of the deal.