...CASE STUDY: FRACTURING THE ENERGY MARKET 1. Which industries gain and which industries lose from the availability of cheap natural gas produced from shale deposits? The industries that gain cheap natural gas produced from shale deposits are United States it is known for the largest deposit of shale gas. It is estimated to be nearly 500 trillion cubic feet of gas which is more than enough for America’s citizen to receive energy for 50 year or further. U.S. is the world’s largest economy that have a good prime market, political stability, military strength, foreign investment, international trade and many more. Plus it all started in 1932 when Joseph Schumpeter an American develop the innovation concept of fracking. France, Bulgaria and Poland have the largest shale reserves in European. France was banned fracking in 2001 due to environmental awareness and Bulgarian too banned in 2012 for the same reasons. Poland also has been banned from using fracking because they are protecting their quality water supplies and currently being managed by coal for power energy. Other than that, China also have a large shale gas reserve at about 1,275 trillion cubic feet. It have not yet been develop so China lose the availability of cheap natural gas. 2. Which countries gain and which countries lose from the availability of cheap natural gas? Based on the case study Germany has gradually shutter all its nuclear power plants and increase reliance on solar and wind energy because...
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...treated water rushed off of a natural gas fracking pad onto Truman and Bonnie Burnett’s land, killing a twenty foot swath of trees and filling their pond. The Burnett’s who live in Bradford County Pennsylvania have had to abandon their beautiful retirement home in the woods due to this terrible and tragic accident, which has contaminated their well and devastated their land (Walsh). Unfortunately the Burnett’s story is just one of many that have recently made headlines. All across the nation stories similar to the Burnett’s are becoming more common. The hydraulic fracturing frenzy that is sweeping the nation has caused many recent debates that have people wondering about the environmental impacts of this technology. But what is hydraulic fracturing? The process of hydraulic fracturing, also known as “fracking” begins by clearing an area so that workers can store equipment and materials for the fracking process. Next a hole, called a well, is drilled deep into the crust of the earth. Unlike conventional wells, which are mostly vertical shafts, fracking wells are drilled vertically then horizontally, which when complete can be over 11,000 feet deep and 11,000 feet long. The final step in the fracking process involves pumping millions of gallons of water, sand, and various chemicals into a well at extremely high pressure until the earth fractures. These fractures take place deep below the surface in dense shale deposits that can contain oil and natural gas. These fractures allow companies...
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...methane gas and toxic chemicals and contaminate groundwater. “Hydraulic fracturing is used after the drilled hole is completed. Put simply, hydraulic fracturing is the use of fluid and material to create or restore small fractures in a formation in order to stimulate production from new and existing oil and gas wells. This creates paths that increase the rate at which fluids can be produced from the reservoir formations, in some cases by many hundreds of percent.” (Pennsylvania Department of Environmental Protection, 2010) This process allows production in older oil and natural gas fields. Hydraulic fracturing has been used in the United States since the 1940’s. “The U.S. has vast reserves of natural gas that are commercially viable as a result of advances in horizontal drilling and hydraulic fracturing technologies enabling greater access to gas in shale formations. Responsible development of America's shale gas resources offers important economic, energy security, and environmental benefits.” (United States Environmental Protection Agency, 2013) Fractures in Onshore shale and Tight Rock formations are oil fracking. It can be natural or man-made through rock. The fluid includes water, sand, ceramic and often chemicals. “High-pressure Fracking is done from a wellbore drilled into reservoir rock formations to increase the rate and ultimate recovery of Shale Oil and Light Tight Oil. Most times a Shale Oil formation only needs to be Fracked once, where as a Natural Gas formation...
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...process used to obtain natural resources from underground geological formations. Although used in several different applications, including the extraction of oil and geothermal energy, hydraulic fracturing in natural gas production from shale formations has recently taken center stage. It is estimated that shale gas will comprise over 20% of the total U.S. gas supply by 2020 (Energy Information Administration, 2009). As hydraulic fracturing has expanded, the public, media, and Congress have expressed rising concerns about the practice. Allegations of natural gas entering private water supplies, well explosions, and polluted streams have sparked controversy about fracking. In response, Congress directed the Environmental Protection Agency (EPA) in fiscal year 2010 to study hydraulic fracturing and its potential impacts on drinking water. The goal of this study is to determine whether hydraulic fracturing endangers drinking water and, if so, how these risks can be mitigated. The results of the study, expected by the end of 2012, will help inform EPA‟s regulatory response to hydraulic fracturing. However, given the urgency of fracking concerns, some members of both the public and the government have called for EPA to regulate or halt hydraulic fracturing now. Thus, EPA must consider the policy options available to address these concerns. This report has multiple objectives: to provide background on hydraulic fracturing, to describe EPA‟s planned study, to discuss policy options...
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...Pipeline Routes For Delivery Of US North Slope Natural Gas to Lower-48 Markets [pic] Economics 494 March 2, 2005 By: Etienne Snyman Pipeline Routes for Delivery of US North Slope Natural Gas to Lower-48 Markets Table of Contents 1.0 Introduction 1.1 Over-the-Top Route 1.2 Alaska Highway Route 2.0 Part 1 2.1.0 Economic Impacts of the Alaska Highway and “Over-The-Top” Routes on Various Stakeholders 2.1.1 Natural Gas Producers in Alaska 2.1.2 Natural Gas Producers in the Beaufort Sea-Mackenzie Delta 2.1.3 Mackenzie Valley Corridor Producers 2.1.4 Producers in the Western Canadian Sedimentary Basin 2.1.5 Producers in the Supply Regions of the Lower 48 US States 2.1.6 The Global Liquefied Natural Gas Sector 2.1.7: Natural Gas End-use Consumers 2.1.8: Pipeline Operating Companies 2.1.9: American Taxpayer Perspective of the Alaska Highway Route 2.1.10: Canadian Taxpayer Perspective of the Alaska Highway Route 2.1.11: American Taxpayer Perspective of the “Over-the-Top” Route 2.1.12: Canadian Taxpayer Perspective of the “Over-the-Top” Route 2.1.13: Aboriginal Interests 2.2.0: Potential Environmental Impacts of the Alaska Highway and the “Over-The-Top” Routes 2.2.1: Overview 2.2.2: Environmental Impacts According To The Yukon Conservation Society 2.2.3: Environmental Impacts...
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...environment and furthermore, concerned for the Earths sustainability. Although this is the case for most, Multinational Enterprises (MNEs) often target developing countries that are rich in resources and therefore take them for all they’ve got. One such example is fracking the earth, in order to extract natural gases that could potentially benefit corporations and contribute to their bottom line dramatically. Although this has it’s positives, the implications of fracking could have incredibly serious repercussions, particularly the preservation of the earth and it’s current resources. “Fracking” is the process in which one would drill thousands of meters below the earth’s surface and inject fluid that is then pumped into the shale at an incredibly high pressure, which then shatters the rocks in order to release shale gas. This particular natural gas is trapped within sedimentary shale rock formations and is found richly in many areas of the world. Fracking breaks most of the regulations in the sustainable environments handbook, and as you can imagine, this causes a massive up brawl in the societies that are pro-environment and sustainability. Although this point of view is prominent and relevant, the opposing side has an equally compelling argument. Global thoughts on the idea of fracking Globally, the topic is thought to be both “one of the best things to happen to onshore gas exploration for a century” (Nick Grealy, director of No Hot Air energy consultancy) as well...
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... |Weakness | |One of the world's strongest brand names. |Cost of environmental hazards. | |Diverse and huge operations. |Legal issues. | |PETRONAS has grown to be an integrated international oil and gas |Employment scam. | |company with business interests in 50 countries. |Rising investment requirement. | |Sponsored education to Malaysian students. (PESP, PSIP) | | |Opportunity |Threats | |Increasing fuel/oil prices. |Government regulations. | |Increasing natural gas market. |High Competition. | |More oil well discoveries. |Long-term falls in domestic oil production. | |Expand export market. |Competition in regional LNG supply. | ...
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...of Engineering Science and Technology Vol. 2(4), 2010, 610-617 Gas Flaring activities of major oil companies in Nigeria: An economic investigation. Dr. Stella Madueme Department of Economics University of Nigeria, Nsukka Enugu State, Nigeria Abstract This paper reveals the general trends in gas flaring in seven major oil companies in Nigeria from 2000 to 2008. It reveals which company’s flaring activities constitutes the greatest hazard. Data was collected through archival sources. Gas flaring activities was highest between 2000 to2002 but presently only about a quarter of all gas produced is flared. TEXACO and PAN OCEAN has been flaring more than 95% of its gas from 2000 to 2008. SHELL was discovered to maintain the best record in terms of the fact that its flaring activities has been decreasing consistently over the years. Some of the recommendations are planned targeted policies towards gas flaring reduction, increased government taxation on gas flaring and governmental reward packages to companies with lowest flaring activities are also necessitated. Keywords: Oil company. Gas. Flaring, economic, environmental, hazard Introduction and literature review Gas flaring has been recognised as an economic waste and a great environmental hazard. Various researchers have written extensively on various issues in the gas sector. Blasing, Hand and Kimberly (2007) worked on monthly carbon emissions from natural gas flaring and cement manufacture in the United States.[1] They discovered...
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...u06d2 Case Analysis: Gas or Grouse In preparation for this discussion: * Read "Gas or Grouse" on pages 254-257 in the course textbook. * View "To Drill or Not to Drill" (6:13), segment five on the ABC News Videos for Business Ethics CD-ROM. After you have read the case and viewed the video segment: * Discuss the actions of Questar and the outcome of the resulting litigation from an ethical perspective, bearing in mind the heavy dependence of the United States on oil, and the effect of the current oil shortage on the country's economy. The energy company Questar, is known for supplying a natural gas that burns cleaner than others because of the molecular structure it possess. This supply of natural gas allows the United States to be less contingent on foreign companies for energy supplies and provides royalties for the state of Wyoming. Questar drills and operates in close proximity to wildlife habitats that rely on the mesa, sagebrush and high elevation for survival. The Bureau of Land Management has specific limitations based on the habitat surrounding the drilling sites that Questar must follow to protect the wildlife. Studies were conducted that indicated that the restrictions were not sufficient enough to address the decline in the sage grouse; although Questar have followed the guidelines set forth by the Bureau of Land Management. The sage grouse are being considered for the endangered species list as it is believed to have a population of only 250...
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...Week 3 Course Project 1. State the primary legal issues raised by hydraulic fracturing: “The rapid increase and geographically expanding use of fracturing, along with a growing number of citizen complaints and state investigations of well water contamination attributed to this practice, has led to calls for greater state and/or federal environmental regulation and oversight of this activity. Historically, the Environmental Protection Agency (EPA) had not regulated the underground injection of fluids for hydraulic fracturing of oil or gas production wells. In 1997, the U.S. Court of Appeals for the 11th Circuit ruled that fracturing for coalbed methane (CBM) production in Alabama constituted underground injection and must be regulated under the Safe Drinking Water Act (SDWA). This ruling led EPA to study the risk that hydraulic fracturing for CBM production might pose to drinking water sources. In 2004, EPA reported that the risk was small, except where diesel was used, and that national regulation was not needed. However, to address regulatory uncertainty the ruling created, the Energy Policy Act of 2005 (EPAct 2005) revised the SDWA term “underground injection” to explicitly exclude the injection of fluids and propping agents (except diesel fuel) used for hydraulic fracturing purposes. Consequently, EPA currently lacks authority under the SDWA to regulate hydraulic fracturing, except where diesel fuel is used. (In May, EPA issued draft permitting guidance for use of diesel...
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..._________________ CANDIDATE NUMBER: 130168 Term Paper COURSE NAME: Philosophies of Social Sciences COURSE NUMBER: TØL 4003 December 6th 2013 EXAM PAPER DUE DATE: EXAM: Term paper AIDS ALLOWED: Any Comparison of how the analytical and system perspective look at reality, using a case as example: replacing the propane gas system used for the furnaces in Frito Lay to use Natural Gas Introduction Frito Lay (FLD) is a cooking company that makes fry chips, which form part of the Pepsi corporation cluster. Pepsi is one company that is totally committed to be on the track towards sustainability, considering area of protections as water treatment, Greenhouse gases (GHG) emission, sustainable agriculture, water recycling, social responsibility and others with the intention of increasing revenues while reducing the environmental impact that it causes. And FLD as part of this group has been thinking of the opportunity to implement some sustainable features within the company that are to strive for the same objectives. One of the strategies that they considered is about replacing the propane gas that they are using as the combustible with natural gas1, which in some way is more ecofriendly to use, due to the lower level of CO2 emissions that the burning produce. However, to be able to take the decision if the replacement should be done or not, there are many factors to consider, like, how viable would be this change for the company? which is what this paper...
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...are using more energy-intensive methods to get to conventional fossil fuels, and turning to harder-to-extract fuels such as shale gas. But do these sources give us a good return on the energy we invest? A new article investigates how assessing this return could help us make decisions about our energy future. The feature in Scientific American compiles a range of sources to look at which energy sources provide the most energy compared the the amount of energy it takes to extract them - called their energy return on investment (EROI). We take a look at the returns different fuels offer - and examine some other considerations to take into account when choosing how to meet energy demand. Energy return on investment Professor Charles Hall, an ecologist at the SUNY College of Environmental Science and Forestry, developed the concept of EROI to give a common measure for comparing very different fuels. Finding out fuels' EROI means working out how much energy it takes to make the materials usable - like finding oil, drilling the well, pumping it out and refining it - and how much energy you get afterwards. It's a simple equation - you divide the energy output by the energy input. A high EROI means you get a lot of energy out for very little energy expended. This infographic puts hydroelectricity, wind and coal as the best performers, while natural gas, solar and nuclear deliver a much lower return on this measure: Source: Scientific American The reason hydroelectric and...
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...Earnings Management Study Oil & Gas Industry Abstract This study mainly focused on the earnings management in oil and gas industry and we used Jones model to detect discretionary accruals in the subject companies. Specifically, we examined three oil and gas sample companies that have been required to restate their financial reports due to the oil reserve overestimation. After running the regression and comparing statistics with other oil and gas companies, we found that the sample companies do revise oil reserves to manipulate the DDA expenses, thus achieving their goals of earnings management. Some recommended auditing guidance to detect such manipulation were given at the end. Introduction/Assumption Earnings management, in accounting, is the act of intentionally influencing the process of financial reporting to obtain some private gain. Earnings management involves the manipulation of company earnings towards a pre-determined target. This target can be motivated by a preference for more stable earnings, in which case management is said to be carrying out income smoothing. Management may also overstate the income for personal interests. Other possible motivations for earnings management include the need to maintain the levels of certain accounting ratios due to debt covenants, boost earnings to beat analyst targets, or intentionally understate the earnings to get rid of the...
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...estimates of oil and gas in the lower 48 states. This sustained supply and production has been a result of technological advancement, particularly improved techniques in hydraulic fracturing, has kept prices for natural gas extremely low while crude oil prices have fluctuated and changed over time. One reason for this is the different nature of exportation in the two hydrocarbons. As will be discussed below, the transportation and exporting of natural gas is much different than for crude oil. Natural gas must undergo a liquefaction process in order to travel by specialized cargo ship, the alternative to a pipeline, which adds substantial costs to the activity. There are currently no operational natural gas export terminals in the lower 48 states, but a few are under construction. The large sunk costs will be a large part of our consideration of the exportation of natural gas. The U.S. has traditionally been a net importer of gas, and considering the high upfront costs of building export terminals, the sale of American gas has been isolated almost exclusively to the domestic market. The only exception to this has been to export natural gas only where existing pipelines can carry it, which has limited foreign export to North America. Despite this historical trend, calls for the US to begin exporting natural gas have been growing louder as the potential to seek higher priced natural gas markets become more attractive. This paper will explore liquid natural gas (LNG) export terminals...
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...and analysis. Case Study 1 ExxonMobil Corp. Acquisition of XTO Energy, Inc. Case Study 1 ExxonMobil Corp. Acquisition of XTO Energy, Inc. EXECUTIVE SUMMARY The purpose of this document is to outline elements of the acquisition process in the energy industry by detailing ExxonMobil Corp.’s (referred to as ExxonMobil) acquisition of XTO Energy, Inc (referred to as XTO). This transaction was announced in December 2009 and finalized in June 2010. The subsequent information will contain an introduction that focuses on the economic atmosphere of the energy industry at this time and details surrounding the agreement including motivations for the deal and terms of the deal. Next, calculations used in the valuation process will be introduced with results presented. Finally, a discussion of findings will conclude, supplying answers to the following questions: (1) What should the acquisition price for XTO shares have been? (2) Which comparable firm is the best comparison firm for XTO Energy? (3) Why did ExxonMobil want to acquire XTO? (4) Based on the analysis, did ExxonMobil overpay for XTO or get a Bargain? (5) What additional information could help with this analysis? INTRODUCTION Economic Considerations and Pertinent Features of the Energy Industry The timing of this acquisition corresponds with an economic downturn in the energy industry. This downturn is represented in Figure 1 which depicts the performance of the Dow Jones U.S. Oil & Gas Index (DJUSEN)...
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