Sharon Kelly's blog

Will LNG Exports Save the Shale Gas Drilling Industry's Profitability? Not So Fast

Last year, a wave of bankruptcies swept the oil and gas drilling industry as oil prices collapsed, leading to layoffs, lost revenues for communities, and turning former boomtown-era mancamps into ghost towns in places like North Dakota's Bakken shale.

Even before oil prices plunged, the price of shale gas was already under siege from a domestic supply glut caused by the shale drilling frenzy. All told, prices dropped from its all-time high of over $15/mcf when the shale boom began in 2005 to $1.57/mcf — the lowest levels since 1998 — in March.

For shale exploration and production companies, however, the conventional wisdom has held for years that there is a light at the end of the tunnel — gas exports.

Unlike oil, natural gas is difficult to transport across oceans. To ship gas by tanker, it needs to be cooled to below -256 degrees Fahrenheit, an expensive and technologically challenging process, requiring the construction of multi-billion dollar Liquefied Natural Gas (LNG) import and export terminals.

Former Massey CEO Don Blankenship Sentenced to One Year in Prison For Conspiracy to Evade Mining Safety Rules

Disgraced coal baron Don Blankenship received the maximum possible sentence today for his misdemeanor conspiracy conviction, in a criminal case spurred by the Upper Big Branch disaster that killed 29 coal miners in West Virginia in 2009.

Mr. Blankenship was acquitted in December of three felony charges over his direct personal responsibility for those deaths. But he was convicted on conspiracy to violate federal mining safety standards. Today, a federal judge handed down a sentence of one year in prison, plus a year of probation and a fine of $250,000 for Mr. Blankenship's crimes.

Had he been convicted of all charges, Mr. Blankenship would have faced a maximum of over thirty years.

For over a quarter century, Mr. Blankenship ruled with an iron fist as the notoriously aggressive former head of Massey Energy, one of the nation's largest coal mining companies.

Dimock Water Contamination Verdict Prompts Calls for Federal Action on Fracking

Last week, in a historic verdict, a Pennsylvania jury awarded $4.24 million to two families in Dimock, PA who sued a shale gas driller, Cabot Oil and Gas Corp., over negligent drilling that contaminated their drinking water supplies.

Dimock has for years been one the nation's highest-profile cases where shale gas drilling and fracking was suspected to have contaminated water, a claim the oil and gas industry strenuously denied. Controversy over the water quality swirled as state and federal regulators repeatedly flip-flopped over who was responsible for the water contamination — and whether the water might even be safe to drink.

For years, Cabot Oil and Gas has maintained that the problems with the water were simply cosmetic or aesthetic, and that even if the water was not good, their operations in the area had nothing to do with it.

The federal jury's verdict last Thursday represents a legal conclusion that the water was in fact contaminated because of the negligence of the drilling company — no small matter for those who spent years living in a deeply fractured community where emotions over the shale rush have run high and pitted neighbor against neighbor.

The verdict also has broader ramifications for the national debate over shale drilling and water contamination.

BREAKING: $4.2 Million Jury Verdict Against Cabot Oil & Gas in Dimock, PA Water Contamination Lawsuit

A Pennsylvania jury handed down a $4.24 million verdict in a lawsuit centering on water contamination from negligent shale gas drilling in Dimock, PA, a tiny town that made international headlines for its flammable and toxic drinking water.

Following Sudden Death of Indicted Former Chesapeake Energy CEO, Justice Department Investigation into Collusion Continues

Last Tuesday, the Justice Department announced criminal charges against former Chesapeake Energy CEO Aubrey McClendon, stemming from an alleged lease bid-rigging conspiracy between McClendon and another unidentified oil and gas company. The felony count against McClendon carried up to a decade in prison and $1 million in fines.

Shortly after 9 AM the next day, McClendon crashed his SUV at over 50 mph into a concrete highway overpass and died instantly of blunt force trauma. Police are continuing to investigate McClendon's cause of death, awaiting toxicology results and other data, and have not ruled out the possibility that the car wreck may have been a suicide.

“He pretty much drove straight into the wall,” Oklahoma City Police Department Capt. Paco Balderrama told a local NBC affiliate. “There was plenty of opportunity for him to correct and get back on the roadway and that didn’t occur.”

The dramatic exit of one of the most flamboyant wildcatters in the shale rush stunned many observers — and his abrupt death may serve to pull attention away from the underlying crimes that McClendon was so recently accused of committing. The acts McClendon, age 56, stood accused of occurred at the height of the shale land rush and were committed in his role as then-CEO of Chesapeake Energy, the nation's second largest natural gas producer.

Before McClendon died, Forbes writer Chris Helman noticed something very interesting in the former CEO's response to his indictment: McClendon didn't deny the acts underlying the charges, he simply argued that others in oil and gas industry also engaged in the same conduct.

Proposed Marcellus Gas Pipeline Sparks Protest At Prized Maple Farm

Plans to build a major Marcellus shale gas pipeline were briefly paused this month by a protest launched by a collection of community and environmental activists who gathered on the Holleran-Zeffer property in New Milford, PA.

Pipeline company Williams Partners, LLC plans to start clearing trees on the property as early as this week to make way for a proposed 124-mile pipeline stretching across the Pennsylvania-New York border.

Tree felling for Williams' Constitution pipeline project began in Pennsylvania on February 5, before New York state had finished its regulatory approval process. Environmentalists fear that the company hopes to present New York state with a fait accompli on the Pennsylvania side, which would put pressure on New York regulators to approve the expansion on its side of the border.

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