Monday, May 28, 2012

Military Veterans Valuable to Oil and Gas Firms

In my last post to this blog one week ago, I said that I would try to provide an update by the end of last week regarding what I learned at West Virginia's first geothermal energy conference on May 22, 2012 in Flatwoods, West Virginia.  I must report today, however, that such plans hit a few road bumps along the way.  Paraphrasing Robert Burns, the best laid plans of mice and men often go awry.  First, I was traveling most of last week for depositions.  Second, the three-day holiday weekend just plain made me lazy.  Third, I felt compelled to honor the military veterans who protect this great country of ours with a Memorial Day post about veterans in the oil and gas industry.  Accordingly, you will have to await my next post to learn more about the role that geothermal energy could play in solving America's energy puzzle, and instead wind down your Memorial Day reading about the opportunities that exist for our military veterans in the oil and gas industry.

Efforts of American corporations to target and hire military veterans  have steadily increased and gained national media attention over the last several years.  It seems that the oil and gas industry has not been immune to this trend.  According to the American Oil and Gas Reporter ("Reporter"), the leadership qualities, work ethic, and team goal-oriented focus exhibited by many veterans make them invaluable in many positions in the oil and gas fields.  An article appearing in the on-line version of the Reporter provides a nice road map for oil and gas firms to follow in developing a strategic plan to successfully target and hire the best and brightest veterans. 

There are also resources available for veterans who are actively seeking out employment in the oil and gas industry.  An organization called Veterans to Energy has launched a job search website dedicated exclusively to helping U.S. military veterans find careers in the oil and natural gas industry.  The site was developed by the American Petroleum Institute, a trade organization representing all aspects of the American oil and natural gas industry.  Veterans to Energy boasts an impressive list of participating companies, including such oil and gas industry "heavy hitters" as BP, Shell, Marathon, ExxonMobil, Chevron, and Conoco Phillips.  In addition to job listings, the site contains a page that allows veterans to match the skills they obtained during the course of their military service to possible careers in the oil and gas industry based upon their military occupation/classification. 

So the next time you see one of our military veterans, please thank them, buy them dinner, or, if you have such power, give them a well-paying job in the oil and gas industry!  Since I cannot do the latter, I will just use this space to express my appreciation for our men and women in uniform, especially my brother-in-law Robert Thompson, who is a proud veteran of the Second Iraq War.  Happy Memorial Day!

Monday, May 21, 2012

Could Geothermal Energy Provide Another Piece to Solve America's Energy Puzzle?

West Virginia’s first geothermal energy conference will be held tomorrow in Flatwoods, West Virginia.  The conference is sponsored by Marshall University’s Center for Business and Economic Research and Center for Environmental, Geotechnical and Applied Sciences, the West Virginia Division of Energy, and the West Virginia Geological and Economic Survey.  The aim of the conference is to explore the potential of geothermal energy as a sustainable source of energy, the geologic characteristics of geothermal energy, the economics of commercial electricity production from geothermal energy, the practical considerations of drilling for geothermal energy, and the engineering concepts involved in harnessing geothermal energy for commercial use. 

As the name implies, geothermal energy is energy stored within the earth.  The energy is generated primarily by radioactive decay at Earth’s core, which is then conducted to surrounding cooler rocks.  Some of the rocks melt, creating magma convection, which in turn heats rock and water in Earth’s crust.  This phenomenon is responsible for creating hot springs and geysers.  When harnessed, it can also be used to produce heat and energy for commercial use, including electrical power generation.    

Geothermal energy is currently being utilized in the United States for commercial power generation, but most of this activity is taking place near tectonic plate boundaries where hotter temperatures can be found closer to the earth’s surface.  Geothermal energy is also being utilized for residential heating with geothermal heat pumps that can utilize cooler temperatures closer to the surface to provide adequate residential heating.  One West Virginia company, Comfor Tech, which happens to be making a presentation at the geothermal energy conference, sells and installs geothermal heat pumps.

While it might be easier to produce geothermal energy near tectonic plate boundaries and from hot springs, energy can also be produced by drilling down into hot aquifers located deep within the Earth.  Like natural gas production, geothermal energy production can be enhanced by hydraulic fracturing.  The rock is fractured and then water is injected into the fractures to flow through the rock to be heated.  Of course, geothermal wells would have to be drilled to depths much greater than oil and gas wells.

A study commissioned a few years ago by Google’s non-profit arm and conducted by Southern Methodist University suggested West Virginia may be better suited than any other state in the eastern third of the country to exploit geothermal energy.  Researchers found that areas below Tucker, Randolph, Pocahontas, and Greenbrier counties are particularly suited for geothermal energy production due to elevated temperatures under the Earth’s surface.  The following map from the SMU study is reproduced to illustrate the temperatures of West Virginia’s subsurface at various depths. 

Geothermal energy has several attributes that could make it a critical piece to solving America’s energy puzzle by providing a sustainable energy source that is more environmentally friendly than fossil fuels.  While the production of geothermal energy does release greenhouse gases that are trapped within the earth, such emissions are said to be much lower than those emitted when burning fossil fuels.  Geothermal energy is also considered a sustainable energy source that could supply the world’s energy needs for thousands of years.   

Geothermal energy also carries with it several potential drawbacks that could reduce its viability as a source of commercial energy.  Chief among those drawbacks is cost.  Geothermal energy would cost more to produce than fossil fuels, principally because of the large capital investment required to build a geothermal power plant.  Some believe that geothermal energy may only be viable if subsidized by the government. 

Geothermal energy production would also not be without legal and environmental concerns.  First, there will no doubt be an issue regarding ownership of the right to extract the geothermal energy stored deep below the Earth’s surface.  Does the owner of the surface rights own the geothermal energy rights due to the fact that such rights have not been carved out of his deed?  Is there an argument that the owner of other subsurface rights owns them?  If so, then are such rights owned by the owner of the oil and gas rights or the owner of the coal or other mineral rights?  Similar ownership issues were faced in the not-so-distant past when coal-bed methane was first produced in West Virginia.  The property ownership issues arising from geothermal energy production would likely be worked out in the courts. 

Because drilling for geothermal energy in West Virginia would likely utilize similar technologies to drilling for natural gas, including hydraulic fracturing, it would likely also face similar environmental criticisms and legal challenges.  Geothermal energy production could release noxious gases and chemicals.  It could also potentially produce seismic activity similar to earthquakes.  Water usage for hydraulic fracturing would likely be raised as a concern.  Many of the same issues concerning damage to local transportation and other infrastructure currently existing with oil and gas production would also exist with geothermal energy production.  Additionally, subsidence has been experienced in conjunction with geothermal energy production in other countries.  Although these risks seem to be considered manageable, these issues will no doubt spawn an abundance of litigation and legal wrangling in today’s litigious society. 

I will be attending tomorrow’s conference and hope to provide an update post by week’s end. 

Monday, May 14, 2012

West Virginia May Get a Cracker Plant After All

As everyone who has a television, a radio, or a newspaper subscription likely knows, West Virginia was recently disappointed by Shell's decision to locate its multi-billion dollar cracker plant not in West Virginia, but just across the border in Pennsylvania.  The dreams of many State officials and workers of a revitalization of the State's chemical manufacturing industry were crushed by Shell's announcement that it would not locate its facility here. While it is still recovering from the sting of being left at the altar by Shell, West Virginia may land a cracker after all, and it may locate right here in the Kanawha Valley.

The Charleston Gazette has reported that Aither Chemicals, a South Charleston, West Virginia company, has plans to build a $300 million ethane cracker on a site currently owned by Bayer CropScience in Institute, West Virginia.  The cracker plant is expected to employ 200 people and gross $500 million in annual sales.  The Gazette reports that the cracker would be built in stages.  Full production would not commence until 2014.  It would utilize a new, proprietary cracking process instead of traditional steam cracking.  This should make environmentalists happy, as it is expected to use 80% less energy and produce 60% less carbon dioxide.  The company was recently informed that it is a finalist in the Shale Gas Innovation Contest that seeks to honor new, innovative, and emerging technologies in the natural gas industry. 

The Gazette has reported that Aither actually prepared a press release announcing the investment and distributed it to State officials in March, but didn't go ahead with the announcement due to a need to work out some details with its partners.  One of those partners is rumored to be Mark West Energy Partners, a growing company engaged in gathering, transporting, storing, fractionation, and marketing of Natural Gas Liquids (NGLs), among other activities.  Mark West would supply the ethane to be used in the cracker. 

This author can't help but to wonder whether one of the "partners" with whom details must be worked out is the State of West Virginia.  The West Virginia legislature recently passed a bill to give rather lucrative tax incentives to any company that would commit at least a $2 billion investment in a cracker plant in West Virginia.  That bill obviously targeted Shell.  Although Aither's investment will fall far short of the $2 billion dollar investment required by the cracker investment bill, Aither will ask for a similar tax deal from the State.  The view from here is that, if such negotiations are taking place, the State should compromise where it can in order to secure this large investment in "green chemistry" that would potentially employ hundreds of West Virginians and place West Virginia at the forefront of innovation in the natural gas industry.

Friday, May 4, 2012

Tom Myers' Study on Potential Drinking Water Contamination from Hydraulic Fracturing Should be Viewed with a Skeptical Eye

A May 2, 2012 article in the Charleston Gazette reported that a study commissioned by two environmental groups, and authored by Reno Nevada researcher Tom Myers, concluded that chemicals injected into the ground during the hydraulic fracturing of natural gas wells could migrate into aquifers used as sources of drinking water after 10 years or less.  Scientists and oil and gas industry officials have previously argued that the thick and impermeable nature of the shale formations being fractured, as well as the various layers of rock above the shale, would prevent the migration of these chemicals into aquifers located thousands of feet above.  But the study referenced in the Gazette article apparently suggests that hydraulic fracturing could exacerbate exiting cracks and allow vertical migration of the fracturing fluids into the aquifers.  The study and its conclusions are based upon computer modeling. 

Not surprisingly, proponents of hydraulic fracturing have challenged the methodology of Mr. Myers’ research and the results it produced.  Reportedly, several scientists have called Myers’ approach unsophisticated.  They have also asserted that the study relies on several assumptions that do not accurately reflect what is known about the geology of the Marcellus Shale formation.  Terry Engelder, a purported pro-fracturing geologist from Penn State University, was quoted in the Gazette article wondering aloud whether Mr. Myers really understands anything about what the shale formation looks like. He is critical of Mr. Myers’ use of modeling rather than observations and asserts that hydraulic fracturing wouldn’t be needed to free natural gas from the Marcellus Shale if the migration of fracturing fluids through the shale and other rock formations were as easy as suggested by Mr. Myers. 

I have not had the opportunity read Mr. Myers’ study beyond the information discussed in the Gazette article.  I am also not trained as a geologist, hydrologist, engineer, or the like.  Therefore, I am unable to offer any type of technical critique of the methodology or results of Mr. Myers’ study based upon my own personal knowledge.  I can, however, offer some cautionary thoughts based upon my experience as a practicing litigator.  In most instances where the resolution of some particular issue will have a substantial impact upon the pecuniary, political, personal, or emotional interests of particular groups, those groups and their supporters will typically take rather extreme positions on the issue that are supportive of their interests.  Those positions may often have, or at least appear to have, some validity.  But the actual, hardcore truth typically lies somewhere in the middle.  Accordingly, before forming any conclusions about the dangers of drinking water contamination posed by hydraulic fracturing based solely upon the Myers study, one should take a moment to consider its source. 

The study was bought and paid for by the Park Foundation and the Catskill Mountain Keepers, both environmental organizations that have openly opposed drilling in New York’s portion of the Marcellus Shale (;
Additionally, Mr. Myers’ “Statement of Qualifications” in his curriculum vitae (“CV”) proudly touts that he is experienced “as a watchdog of government agencies and different industries.”  His listed client base includes mostly environmental and conservation groups like Natural Resource Defense Council, Great Basin Resource Watch, Greater Yellowstone Coalition, Great Basin Water Network, Defenders of Wildlife, Centers for Biological Diversity, McCloud Watershed Council, and Catskill Mountain Keepers.  His CV also reveals that he consults for law firms, which no doubt means that that he earns a substantial amount of money based upon his ability to testify/advocate as an “expert witness” in environmental lawsuits.  It often enhances an expert witness’ ability to get work if he or she routinely and sometimes blindly takes the position of one side of a particular issue or the other.  As West Virginia Supreme Court Justice Menis Ketchum recently pointed out in a multi-million dollar soil contamination case: “Retained expert witnesses are like eggs. You can buy them by the dozen - they are just more expensive.”

Finally, Ken Ward Jr. authored the Gazette article, which was conclusorily and sensationally entitled Drilling Chemicals Could Move Quickly to Aquifers, Study Says.  Mr. Ward is notorious for writing “exposé” type pieces that are highly critical of companies in the energy, natural resources, and extractive industries.  One of his projects is a blog entitled “Coal Tattoo” that is extremely critical of the coal industry.

Once again, it is not the intent of this blog post to take a definitive position on the technical accuracy or credibility of Mr. Myers’ study.  Likewise, it is not the intent of this post to take a position on whether or not hydraulic fracturing poses risks to the environment or the public.  Rather, the intent of this blog post is to point out that one should consider the source of the Myers study and the potential ulterior motives of its author, funders, and promoters before affording it too much weight.  As I wrote above, the truth can often be found somewhere in the middle of the positions taken by groups who have a pecuniary, personal, political, or emotional interest in a contentious issue.  It wouldn’t be surprising to this author if this is the case in regard to many issues surrounding hydraulic fracturing.