Friday, August 30, 2013

An obstacle to natural gas exports

With hydraulic fracturing widespread in the U.S., the country has found an abundance of energy supply. Currently, the effects of fracking to the economy have been felt, with the government recently reporting an improved trade balance for June, which has been attributed to lower oil imports. There are projections of zero energy imports in the longer term.

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Meanwhile, key players in the energy industry have also been planning to increase the country’s exports of natural gas as they try to optimize economic benefits by taking advantage of the abundance in energy supply. By exporting more natural gas, the U.S. could pull up its standing in the global economy.

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However, supporters of increased exportation of natural gas may find an obstacle in Andrew N. Liveris, Dow Chemical’s chief executive, who has launched a campaign against more exportation. Mr. Liveris sees this as a threat to the recovery of the nation’s manufacturing industry, which has gained a lot of ground due to the lower costs of energy.

Mr. Liveris is calling for an energy policy from the government that balances the interests of oil and gas companies and those of domestic industries, themselves big energy consumers. Unrestricted exports, he said, could bring a shortage of domestic gas supplies and bring back higher energy prices.

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Dr. Ali Ghalambor has authored several books on hydraulic fracturing and oil and gas production. Find more links to news articles about the energy industry on this Twitter page.

Tuesday, August 27, 2013

The fracking debate in the UK

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The use of hydraulic fracturing to extract shale gas remains a tricky prospect to mainstream. While this is a groundbreaking (literally) manner of harvesting oil or natural gas, it is also decried as an environmental threat by concerned groups.

In the U.K., there are recent reports of this clash. Protesters are rising up against an exploratory oil drilling project at Balcombe. The worries of activists are the same: water contamination and seismic tremors, which fracking could trigger. Apart from these, environmental groups are also against the industrialization of Britain’s countryside and how the influx of industrialists and their equipment and facilities will adversely affect the communities there.

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Meanwhile, British Prime Minister David Cameron has voiced his support for the technology, trumpeting potential economic benefits such as lower energy bills and the generation of more jobs. Other proponents of fracking in the U.K. look to the U.S., which demonstrated that exploiting natural gas reserves can reduce fossil fuel emissions.

Exploratory drilling for gas and oil around Britain has been on-going since 2011, but hasn’t commercially produced shale gas on-shore. Observers doubt there will be major developments within the decade. The opposition is stronger in the U.K. and there are still many details to be worked out by British lawmakers and private corporations. Without a solid agenda for how it will extract and export natural gas, the U.K. may end up missing out on the economic benefits that it has set out to attain.

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Dr. Ali Ghalambor has co-authored several books on hydraulic fracturing and well productivity. Learn more about hydraulic fracturing and how it has affected the global oil and gas market by following this Twitter page.

Tuesday, August 20, 2013

The 'Peak Oil' theory: Effectively rebutted?

'Peak Oil' is the theory that fossil fuel demand will reach a summit at some point in the future. As is the wont of supply and demand forces, peak demand will necessarily bring about supply shortage and steep prices. The proponents of this theory believe that worldwide peak of oil production will be reached. In the US, analysts predict the situation will arise sooner, if not for the mitigating effects of shale and natural gas production.

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David Blackmon, writer of this Forbes article thinks otherwise. He points out that as fracking activities increase with the discovery of more oil shale reservoirs in the United States, the ‘Peak Oil’ theory no longer holds. He explains that the ‘Peak Oil’ theory came into widespread acceptance in the oil and gas environment, but is now on the brink of extinction when the global market shifted interest in massive oil shale reservoirs. The rise of hydraulic fracturing has largely defused the near-apocalyptic scenario put forward by Peak Oil theorists.

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The article further notes that ‘Peak Oil’ advocates have largely disregarded the role that technology plays in discovering untapped oil resources, accessing known but previously unexploitable resources, and extracting oil through secondary and tertiary recovery techniques. He also attacks the obstinacy of “Peak Oil” advocates in their belief in the fixity of oil and gas resources.

British Petroleum’s chief executive Bob Dudley could not have agreed more with this write-up when he said that the warnings that the world is headed for ‘Peak Oil’ are becoming increasingly unreasonable.

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Learn more about hydraulic fracturing and the energy sector by following this Twitter page for Dr. Ali Ghalambor. Dr. Ghalambor has been contributing to the education of students and professionals worldwide about the efficient production of natural gas.

Economic misconceptions about the energy sector, as reported by media

"The US shale gas phenomenon has transformed global energy markets," said David L. Goldwyn, US State Department coordinator for International Energy Affairs at a 2010 Global Shale Gas Initiative Conference in Washington, DC.

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"Because we have discovered and we have the technology to develop efficiently large quantities of gas from shale, global prices of liquefied natural gas have decreased,” Mr. Goldwyn added.

This statement confirms that the shale gas boom has been around as early as several years back and has been a major economy booster for the country.

Meanwhile, David Blackmon tries to halt media excitement over hydraulic fracturing’s economic promises in his Forbes commentary. With the shale gas boom well in place, the United States’ economic prospects tied in with its energy activities, particularly hydraulic fracturing, of late, are largely sensationalized by the media as a long-awaited salvation. Such assertions ignore the benefits put to work by the existing shale gas boom.

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Mr. Blackmon also critically questions the chronology of US energy independence as the media tells it. While the media still sees energy independence as a future, Mr. Blackmon asserts that it has already happened, citing his years participating in natural gas supply and demand studies. In general, Mr. Blackmon paints an energy sector different from media presentations, an image disparity that does not accurately inform the public of the state of the country’s energy sector, and the economic phenomena that succeed its developments.

Even oil and gas professionals like Dr. Ali Ghalambor and Dr. Kermitt W. Walrond would agree that the international media’s portrayal of the oil and gas industry and its economic effects do not reveal precise situations in the sector.

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For more updates and industry news about shale natural gas and other related topics, visit this Facebook page.

Thursday, August 8, 2013

Hydraulic fracturing: Turning unproductive shales into large natural gas fields

State Impact, a reporting project of NPR, defines hydraulic fracturing as a process of extracting natural gas and oil by drilling into the earth’s underground. Natural gas is mostly trapped in coal beds and shale formations, and hydraulic fracturing is used to stimulate these wells and penetrate rock formations. The drilling process utilizes advanced equipment to fracture or crack the ground and the underlying earth layers to ease the flow of natural gas and oil and tease them out.

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This article from Geoscience News and Information illustrates how the combined work of hydraulic fracturing and horizontal drilling has transformed unproductive shales into some of the largest gas fields worldwide. Previously unproductive rock units that are now potent gas and oil fields are the Bakken Formation, The Marcellus Shale, and Barnett Shale. These rock units have been stimulated and turned into viable gas fields through hydraulic fracturing.

simplified diagram of hydraulic fracturing in the Marcellus Shale
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The combination of hydraulic fracturing and horizontal drilling can yield significant results, and it usually targets previously thought unprofitable rock formations. The technology has been around since 1940, and has gone through controversies such as its possible hazards to groundwater that people convert to drinking water.

In the past, natural gas used to be flared off in oil fields for its little use. But now, with hydraulic fracturing, it has become a substantial international commodity.

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Get more information about hydraulic fracturing and other related topics through the ‘Frac Packing Handbook’ by Ali Ghalambor, Ali Syed Ali, and W. David Norman. For more information about the industry, access this Facebook page.

Tuesday, August 6, 2013

EPA conducts a study on the potential impacts of hydraulic fracturing on drinking water

Natural gas has a vital role in the world’s pursuit of clean energy. The United States is home to several reserves of commercially viable natural gas exploited through horizontal drilling and hydraulic fracturing technologies, which allow access to gas in shale formations. This accessibility allows for a vast number of uses for natural gas varying from domestic benefits, power generation, transportation, fertilization, to manufacturing.

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The United States Environmental Protection Agency (EPA) hopes to frame the current clamor for natural gas in terms of boosting the economy, laying out energy security, and keeping it friendly towards the environment and public health. In doing so, it works with stakeholders to make sure that gas extraction proceeds according to environmental standards and laws. Among such efforts is the agency’s ongoing study to explore the plausible impacts of hydraulic fracturing on water resources. The research scope focuses on the full cycle of water use in hydraulic fracturing and the impact to drinking water safety of each step of the process.

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The study’s progress report was released in December 2012. While this progress report summarizes the details of the study, it does not present conclusions yet on the impacts of hydraulic fracturing on drinking water safety. Congress awaits the definitive results of the study in 2014.

EPA has worked with stakeholders and industry leaders so that the study would be based on contemporary hydraulic fracturing practices and trends.

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The ‘Natural Gas Engineering Handbook’ authored by Ali Ghalambor and Boyun Guo, illustrates more concepts about natural gas production. For more information about the subject, follow this Twitter page.

Friday, August 2, 2013


Africa can reap a windfall from its resources, but they have yet to fully realize it. Caroline Kende-Robb discusses the subject in this article

Africa's natural resources have fueled economic growth, but most Africans have not benefited, says Caroline Kende-Robb.
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(CNN) -- A decade after Angola emerged from devastating civil war, the sea front road that winds around the bay of its capital, Luanda, is now dotted with multi-million dollar condominiums, exclusive clubs, and boutique stores catering for the country's elite.

Most of Luanda's population, however, live in the nearby slums, where health facilities are non-existent and children must work, not study, to survive. Africa's natural resource wealth has certainly fueled a decade of rapid growth, but most Africans have still not seen the benefits. More urgently, rapid population growth combined with deepening inequality could one day prove explosive.

It does not have to be this way, of course. Botswana successfully used its diamond wealth to develop quickly, growing from one of Africa's poorest countries at independence in 1966 to become a democratic, stable, and upper middle-income country. But countries such as Ghana and Liberia have also made impressive strides towards better natural resource management in recent years.

With surging global demand keeping export prices high and new exploration revealing larger reserves than were previously known, Africa stands to reap a windfall from its natural resources.

The challenge is to translate this wealth into meaningful benefit for African citizens.

This year's Africa Progress Report, "Equity in Extractives: Stewarding Africa's natural resources for all," recommends policies so that more Africans can benefit from the minerals under their soil and coastal waters. Among our recommendations for African policy makers, the international community, and the private sector, five major themes emerge.

First, from revenue flows to company ownership, transparency is critical because it reduces the opportunity for corruption. International initiatives, such as the Extractive Industries Transparency Initiative (EITI), have brought serious progress, and African governments such as Guinea, Liberia, and Ghana are increasingly publishing contract details online.

But there is still plenty of work to be done. The international community must do more to tackle the issues of money laundering and anonymous shell companies, which facilitate corruption by hiding the true recipients of corrupt payments. This is a global challenge which requires multilateral solutions.

Our report analyzed five recent deals, for example, which cost the Democratic Republic of the Congo an estimated US$1.36 billion through the systematic undervaluation and sale of nationally owned mineral assets to unknown buyers. These losses were equal to more than double the combined 2012 budget for health and education in a country that has some of the world's worst malnutrition, its sixth highest child mortality rate, and over seven million children out of school.

These issues may have been on this year's G8 political agenda, but G8 leaders did little to legislate against anonymous company ownership in their jurisdictions. The world will be watching Australia's G20 leadership next year for meaningful progress on this issue.

Second, African countries must secure a fairer share of natural resource revenues for their citizens. Africa has too often received an unfair return on its mineral resources. At the beginning of this century, for example, half a million Zambians in the mining sector were paying a higher tax rate than the multinational companies they were working for.

Inevitably, some African governments have been at a natural disadvantage when negotiating with companies whose experience stretches over many decades and different continents too.

But fairer deals can be good for multinationals. Companies prefer a stable business environment and fairer deals tend to last much longer. Third, African governments must spend their natural resource revenue more effectively on poverty reduction.

Between 2000 and 2011, for example, Equatorial Guinea grew an average 17 percent per year, making it the fastest growing economy in the world and propelling it into the league of high-income countries. But three quarters of its population still live in poverty and its child mortality rates are among the highest in the world.

By using resource flows to eliminate malnutrition, African policymakers could eliminate the greatest barrier to Africa's social and economic progress, which blights the lives of 40 percent of Africa's children.

Fourth, the international community must tackle tax avoidance and evasion, especially relevant for Africa's oil, gas, and mineral sectors.

The international community must tackle tax avoidance and evasion, especially relevant for Africa's oil, gas, and mineral sectors.  --- Caroline Kende-Robb, APP Executive Director

As we said in our report, Africa still loses more money each year through tax avoidance than it receives in either international aid or foreign direct investment. But the examples of Amazon, Google, and Starbucks show G8 policy agenda aligns with an African agenda too. Throughout the world, governments and citizens will all benefit from tackling tax evasion and avoidance.

Fifth, African policy makers must grasp this opportunity to create more jobs. Oil, gas, and mining don't create large amounts of jobs per se, but job creation is a critical issue for Africa, which has one of the world's fastest growing populations. Governments must require extractive companies to procure more goods and services locally. But policy makers can also use extractive industries as a base for diversifying their economies.

We are upbeat about Africa's prospects. Not only do we see democracy taking root across the continent and much stronger economic governance, we also see more commitment from multinationals to contribute to society.

Ultimately, it is in all our interests that Africa succeeds. We all benefit from an Africa that is prosperous, fair, and stable.

One of the prominent names in the oil and gas industry, Dr. Ali Ghalambor has held important positions at some of the nation’s finest universities and organizations. Visit this Facebook page for more updates.