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ANR Pipeline: Introducing TransCanada’s Keystone XL for Fracking

2:14 pm in Uncategorized by Steve Horn

Cross-Posted from DeSmogBlog   

When most environmentalists and folks who follow pipeline markets think of TransCanada, they think of the proposed northern half of its Keystone XL tar sands pipeline.

Flying beneath the public radar, though, is another TransCanada-proposed pipeline with a similar function as Keystone XL. But rather than for carrying tar sands bitumen to the Gulf Coast, this pipeline would bring to market shale gas obtained via hydraulic fracturing (“fracking”).

Meet TransCanada’s ANR Pipeline System.

Although not actually a new pipeline system, TransCanada wants ANR retooled to serve domestic and export markets for gas fracked from the Marcellus Shale basin and the Utica Shale basin via its Southeast Main Line.

“The [current Southeast Main Line] moves gas from south Louisiana (including offshore) to Michigan where it has a strong market presence,” explains a March 27 article appearing in industry publication RBN EnergyBecause of the immense amount of shale gas being produced in the Marcellus and Utica, TransCanada seeks a flow reversal in the Southeast Main Line of itsANR Pipeline System. 

TransCanada spokeswoman Gretchen Krueger told DeSmogBlog that ANR’s flow reversal is a “more efficient use of the system based on market demand.”

TransCanada has already drawn significant interest from customers in the open seasons and negotiations held to date, so much so it expects to begin the flow reversal in 2015.

“ANR Pipeline system has secured almost 2.0 billion cubic feet a day (Bcf/d) of firm natural gas transportation commitments on its Southeast Main Line (SEML) at maximum rates for an average term of 23 years,” reads a March 31 TransCanada press release. ”ANR secured contracts on available capacity on the [South East Mainline] to move Utica and Marcellus shale gas to points north and south on the system.”

Like Keystone XL, an Export Pipeline

Like Keystone XL, ANR’s flow reversal will serve — among other things — the global export market.

“This project will…allow more natural gas to move south to the Gulf Coast, where markets are experiencing a resurgence of natural gas demand for industrial use, as well as significant new demand related to natural gas exports from recently approved liquefaction terminals,” TransCanada CEO Russ Girling said in his company’s March 31 press release.

ANR will continue to be an attractive transportation option due to its strategic foot print, interconnections, on-system storage and access to high demand markets.

With the debate over liquefied natural gas (LNG) exports heating up in the U.S.,ANR has arrived on scene right in the knick of time for the oil and gas industry.

Other Keystone XL: Cove Point or Sabine Pass?

Some recent media coverage of the prospective Dominion Cove Point LNG export facility located in Lusby, Maryland has drawn comparisons to the Keystone XLdebate because both involve key pipeline systems, with accompanying plans to export product globally and the Obama Administration has final say over approval (or disapproval) of the pipeline.

Yet, while Cove Point awaits final approval from the U.S. Federal Energy Regulatory Commission (FERC), Cheniere’s Sabine Pass LNG export facility wasapproved by FERC in April 2012 and opens for business in late 2015.

Enter TransCanada into the mix with ANR and it’s the perfect storm: a KeystoneXL pipeline for fracking run by the same company that owns Keystone XL.

Creole Trail: ANR’s Connection to Sabine Pass

ANR feeds into the same Gulf Coast export and refinery markets Keystone XL is set to feed into (and the same ones its already-existing southern half, the Gulf Coast Pipeline Project feeds into).

Port Arthur, Texas — the end point for Keystone XL — is a mere 20 minute drive away from Sabine Pass, Louisiana.

That’s where Cheniere’s Creole Trail Pipeline comes into play, a 94-mile pipeline completed in 2008. Cheniere proposed an expansion project in September 2013 to FERC for Creole Trail, which FERC is still currently reviewing.

If granted the permit by FERC, the expansion would allow Creole Trail to connect to TransCanada’s ANR pipeline at the Mamou Compressor Station located in Evangeline Parish, Louisiana. 

Mamou Compressor Station already received an expedited air permit in October 2013 from the Louisiana Department of Environmental Quality (DEQ).

Exports Gone Wild, Climate Disruption Gone Wild

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Former Chesapeake Energy CEO Aubrey McClendon Buys Fracking Wells In Ohio’s Utica Shale

9:41 am in Uncategorized by Steve Horn

Cross-Posted from DeSmogBlog

Former Chesapeake Energy CEO and Founder Aubrey McClendon is back in the hydraulic fracturing (“fracking”) game in Ohio’s Utica Shale in a big way, receiving a permit to frack five wells from the Ohio Department of Natural Resources on November 26.

“The Ohio Department of Natural Resources awarded McClendon’s new company, American Energy Utica LLC, five horizontal well permits Nov. 26 that allows oil and gas exploration on the Jones property in Nottingham Township, Harrison County,” a December 6 article appearing in The Business Journal explained. “In October, American Energy Utica announced it has raised $1.7 billion in capital to secure new leases in the Utica shale play.”

McClendon is the former CEO of fracking giant Chesapeake Energy and now the owner of American Energy Partners, whose office is located less than a mile away from Chesapeake’s corporate headquarters.

The $1.7 billion McClendon has received in capital investments for the purchase of 110,000 acres worth of Utica Shale land came from the Energy & Minerals GroupFirst Reserve CorporationBlackRock Inc. and Magnetar Capital.

McClendon — a central figure in Gregory Zuckerman’s recent book “The Frackers” — is currently under investigation by the U.S. Securities and Exchange Commission. He left Chesapeake in January 2013 following a shareholder revolt over controversial business practices.

In departing, he was given a $35 million severance package, access to the company’s private jets through 2016 and a 2.5% stake in every well Chesapeake fracks through June 2014 as part of the Founder’s Well Participation Program.

Little discussed beyond the business press, McClendon has teamed up with a prominent business partner for his new start-up: former ExxonMobil CEO Lee Raymond.

Power Mapping McClendon’s New Venture

“[Lee] Raymond has emerged as a director alongside Mr. McClendon in American Energy Ohio Holdings LLC… according to [an SEC] regulatory filing,” The Wall Street Journal reported in October.

The former Exxon CEO’s brother son John Raymond is the Managing Partner, Chief Financial Officer, and Chief Executive Officer of Minerals & Energy Group, currently the largest capital investor in McClendon’s start-up venture. He is also a partner McClendon’s new venture. Ryan Turner, Chesapeake’s Stock Plan Manager has also joined the team as a partner.

“Jefferies Group LLC gave financial advice to American Energy” for the deal,according to Bloomberg — and is listed as such on American Energy Ohio Holdings LLC’s SEC Form D.

Ralph Eads III — McClendon’s fraternity brother at Duke University — serves as Global Head of Energy Investment Banking at Jefferies Group, Inc.

“Mr. Eads…is a prince of this world,” the New York Times reported in October 2012. ”His financial innovations helped feed the gas drilling boom, and he has participated in $159 billion worth of oil and gas deals since 2007.”

Eads maintained tight financial ties with McClendon when he was at the helm of Chesapeake Energy.

High Stakes Game

In teaming up with Lee Raymond, the former CEO of ExxonMobil — notorious for its role in funding climate change denial — and his brother John, McClendon has shown he is back in Ohio ready to play ball.

But a recent Environmental Integrity Project report indicates the life-cycle climate change impacts of fracking are more severe than previously thought.

With the U.S. Navy predicting an ice-free Arctic summer by 2016 due to climate change, it’s a ball game with undeniably high stakes.

Frackademia: University of Tennessee Set to Lease Forest For Fracking, Enriching Governor’s Family

3:34 pm in Uncategorized by Steve Horn

Cross-Posted from DeSmogBlog

Gov. Bill Haslam

8,600 acres of the Cumberland Forest owned by University of Tennessee-Knoxville will be leased off to the oil and gas industry this August in a new form of “frackademia” – and one of the top financial beneficiaries will be the family of Republican Gov. Bill Haslam, who sits on UT-Knoxville’s Board of Trustees.

“Frackademia” is usually thought of as “studies” conducted by university-based “frackademic” researchers and funded by Big Oil, the old “Tobacco Playbook” in action. But UT-Knoxville has taken the game to a whole new level, leasing off land it owns so that it can study “best practices” for fracking in the Volunteer State.

“It would create a rare, controlled environment in which experts could study the environmental impact of the controversial drilling technique, while also generating revenue to finance research,” explained a New York Times article on the proposal.

The deal with the oil and gas industry for the acerage includes an initial fee of $300,000, plus $300,000 per year, 15-percent royalties on any gas sold and aminimum of $35 per acre paid to UT-Knoxville.

The 8,600 acres sits within the Chattanooga Shale basin, a field still untapped by the industry via hydraulic fracturing (“fracking”), the toxic horizontal drilling process through which oil and gas is obtained from shale rock basins. Atlas Energy – purchased as a subsidiary by Chevron in Nov. 2010 - owns 105,000 acres in the Chattanooga, a clear example the industry has its cross-hairs on the untapped Chattanooga basin.

UT-Knoxville’s new “leasing agency” program will be run under the auspices of the university’s Institute of Agriculture, officially referred to as the UT Institute of Agriculture Gas and Oil Research Initiative and a pre-bid proposal conference for prospective industry partners is set for June 21. Leases will be five years long, with a maximum allowance of three renewals, or 20 years total.

Fracking could become a major source of revenue for UT-Knoxville during a time of severe budget cuts to the UT System. In 2010, the state government slashed $56 million from the UT-Knoxville budget, following another $75 million in budget cuts in 2009 for the UT System at-large.

And one of the top beneficiaries of the fracking frenzy – overlooked thus far – will be the powerful Haslam family.

Haslam Family: Leveraging UT-Knoxville Ties for Fracking Profits

Gov. Haslam, the former Mayor of Knoxville, took $398,110 from the oil and gas industry before his Nov. 2010 gubernatorial race victory.

The Haslam family is an oil and gas family through and through, standing to profit immensely from a fracking boom in Tennessee and nationwide.

In 2012, the Haslam family – owners of Pilot Flying J truck fueling stations, a corporation where Bill Haslem used to serve as president - purchased Western Petroleum and Maxum Petroleum. Both Western and Maxum are major suppliers of fuel and lubricants for fracking operations. Pilot Flying J is the nation’s No. 1 retailer of diesel fuel and is the 6th most profitable corporation in the U.S., earning over $29 billion in 2012.

Pilot Flying J also has 63 of its stations nationwide retrofitted with natural gas pumpsfor 18-wheelers owned by T. Boone Pickens‘ Clean Energy Fuels Corporation (CEF) as part of CEF’s “America’s Natural Gas Highway.” Some perspective: CEF currently has 67 U.S. fueling stations in total.

By the end of 2013 - an article in EcoWatch explains - Pilot Flying J ”plan[s] to have 100 truck stops capable of fueling 18-wheelers with … natural gas.”

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Chesapeake Energy Tied to Mansfield, OH Bill of Rights Astroturf Attack

1:10 pm in Uncategorized by Steve Horn

Cross-Posted from DeSmogBlog

The oil and gas industry is waging an 11th hour astroturf campaign in Mansfield, OH in an attempt to defeat the “Community Bill of Rights“ referendum.

A “yes” vote would, in effect, prohibit hydraulic fracturing (“fracking”) injection wells in Mansfield, a city of 48,000 located in the heart of the Utica Shale basin between Cleveland and Columbus.

In March 2012, the Ohio Department of Natural Resources (ODNR) conducted a study linking the 12 earthquakes that have occurred in Youngstown, OH to injection wells located in the city. Further, recent investigative reports by ProPublica show that these new dumping grounds – with a staggering 150,000 injection wells in 33 states and 10 trillion gallons of toxic fluid underground - are a public health hazard in the making.

And yet, for the most part, hardly anyone is talking about it.

Preferred Fluids Management LLC is the upstart business that received two well injection permits from the ODNR in the spring of 2011 that motivated the “Bill of Rights” initiative. Industry front groups ranging from Energy in Depth (EID), Energy CitizensOhio Energy Resource Alliance and “Mansfielders for Jobs” are leading the charge in the astroturf campaign to defeat it.

Why, though, has the fracking industry put so much time and effort into the placement of a measly two injection wells in Mansfield for this relatively unheard of LLC? Michael Chadsey of EID Ohio explained the importance of the waste dumping grounds at a forum on Jan. 30, 2012, stating,

If for some reason they just said, you know, we’re going to stop this process, eventually the tanks that are on-site are going to get filled up. And then all the drilling pads are going to have to shut down and all of the truck drivers will have to stop.

So…this is the part of the process that is the end part of the process. When you shut down the end, you can’t even start or continue because you have to have all the pieces of the puzzle to make this thing move. Everything is interconnected.

There’s that and then there’s the fact that Preferred Fluids Management LLC isn’t merely a “new kid on the block.” Owned and founded by Steven Mobley, the business has a story of its own worthy of sharing, as it’s closely connected to gas industry powerhouse, Chesapeake Energy.

Preferred Fluids Management LLC: A Quick Primer

According to documents on the Ohio Secretary of State’s Division of Corporations website, Preferred Fluids Management was originally incorporated in February 2010. Since then, fracking waste injection wells have been in the eye of the backlash storm from grassroots activists, environmental NGOs, lawyers, and both federal- and state-level regulators nationwide.

In Ohio, this ongoing backlash motivated Preferred Fluids to withdraw its Mansfield well permits on June 26, 2012.

“While this withdrawal appears to be a city victory over a company that sought to injection toxic poison into our soil, the city must remain vigilant against other companies,” Mansfield Mayor Tim Theaker and Law Director John Spon declared.

Roughly three weeks later, Preferred Fluids responded by filing a federal lawsuit in the Northern District Court of Ohio, stating that Mansfield “has no right under Ohio law to regulate the injection wells,” according to the Cleveland Plain Dealer. In response to the lawsuit, on Sept. 9 the Mansfield City Council voted to put the “Community Bill of Rights” referendum on the ballot for the Nov. 6 election.

The crazy set of twists and turns continued, when on Oct. 19, perhaps seeing that it’d been one-upped by the citizens of Mansfield, Preferred Fluids decided to drop its federal lawsuit.

“The need to adopt the charter amendment is even greater because it’s very possible that this industry is just regrouping to commence another assault,” Mansfield Law Director John Spon told the Mansfield News Journal, foreshadowing the astroturf battle citizens and grassroots activists are facing in Mansfield.

On Oct 5, 2011 Preferred Fluids Management owner Steven Mobley also incorporated a new company, Buckeye Brine LLC, according to the Ohio Department of State’s Division of Corporations. “It seeks to be a positive force in the communities in which it operates, buying and hiring locally whenever possible, with a strong commitment to local community causes,” according to Buckeye Brine’s website.

The Coshocton Tribune explained that, like Mobley’s Preferred Fluids Management proposal in Mansfield, the plan is to place two injection wells in Coshocton, a city of just over 11,000 southeast of Mansfield.

Buckeye Brine says it will only bring five jobs to Coshocton and has the capacity to process 4,000 to 5,000 barrels of waste fluids a day, according to the Tribune.

Mobley Family Connection to Chesapeake, Injection Wells, Earthquakes

The unanswered question remains on the table: who is Steven Mobley?

Steven Mobley’s brother is David Mobley, who currently serve as Chief Adminstrative Officer and formerly served as Land Manager of Chesapeake Operating Inc., a subsidiary of Chesapeake Energy.

Steven and David were both formerly partial co-owners of their family business, Mobley Environmental Services, according to Securities and Exchange Commission (SEC) forms. Businessweek‘s profile for Mobley Environmental Services reads,

In May 1997, Mobley Environmental Services, Inc. sold its only operating division, waste management services, to United States Filter Corporation…It also provided oilfield services, including transporting, marketing, storing, and disposing of various liquid materials used or produced as waste throughout the lifecycle of oil and gas wells.

In 1999, Vivendi Environnement aquired United States Filter Corporation for $6.2 billion. Vivendi Environnement is now known as Veolia Environnement and remains in the oil and gas industry wastewater treatment sector. Facing hard financial times in 2004, Veolia sold US Filter for $1 billion to the German corporation, Siemens, which is also in the oil and gas industry wastewater treatment business.

The frightening and growing nexus between the water privatization industry, the shale gas industry, and the wastewater treatment industry has been pointed out in reports authored by both the Colorado Independent and Food and Water Watch.

Like Mobley Environmental Services and its predecessors – and like Preferred Fluids Management and Buckeye Brine – Chesapeake Operating is also in the fracking wastewater injection business, notorious for its activity in Arkansas.

Paralleling Ohio, Arkansas, home of the Fayetteville Shale basin, has seen over 1,200 waste injection well-related earthquakes, leading the Arkansas Oil and Gas Commission to place a ban on injection wells in July 2011 in the area where the earthquakes were most prevalent, though there are still wells in other areas across the state. A February 2011 magnitude 4.7 earthquake near Greenbrier, “was the most powerful to hit the state in 35 years,” according to the Associated Press.

AP further explained that Chesapeake Energy was one of the main well injection operating culprits:

The two injection wells are used to dispose of wastewater from natural-gas production. One is owned by Chesapeake Energy, and the other by Clarita Operating. They agreed March 4 to temporarily cease injection operations at the request of the Arkansas Oil and Gas Commission.

The barrage of earthquakes served as a motivation for an ongoing class action lawsuit filed by Emerson Poynter LLP in May 2011 at the federal-level Faulkner County Circuit Court in Conway, AR against Chesapeake Operating, as well as BHP Billiton, Petroleum Americas Inc., and Clarita Operating LLC.

In a press release, Emerson Poynter explained it is suing for “millions of dollars in damages for property damage, loss of fair market value in real estate, emotional distress, and damages related to the purchase of earthquake insurance.”

Since the closure of the two injection wells, the number of earthquakes occuring in the area has fallen dramatically, according to the Arkansas Geological Survey.

Chesapeake is closely tethered to or is a member of all of the front groups waging the gas industry’s astroturf campaign in Mansfield, except for the shadowy “Mansfielders for Jobs,” including Energy in DepthAmerican Petroleum Institute, the Buckeye Energy Forum (API front group), and the Ohio Energy Resource Alliance (OERA).

OERA is an API front group led by the former head of the Koch-funded Americans for Prosperity Ohio, Rebecca Heimlich, who now also serves as Campaign Manager for API Ohio. OERA’s members include EID Ohio, API, the Ohio Oil & Gas Association (OOGA), and America’s Natural Gas Alliance, among others. Chesapeake is also a member of OOGA and ANGA.

Big Picture: Chesapeake’s Big Plans in the Utica Shale

Cheseapeake, a company currently in deep financial straits, sees the Utica Shale basin as a potential saving grace, with Forbes saying that the Utica is “crucial for Cheseapeake’s future” in a July article.

In a recent call with investors, controversial CEO Aubrey McClendon said he’s “thrilled” with its potential. He also said that Chesapeake is particularly focused on production in Columbiana, Carroll and Harrison counties.

These counties are all within 50-100 miles of Richland and Coshocton counties, the two counties where Preferred Fluid Management LLC’s and Buckeye Brine LLC’s operations are both set to be located, respectively. That makes Richland and Coshocton easily accessible dumping grounds for Chesapeake’s toxic waste.

The fracking waste injection business is a burgeoning and lucrative one, but with it comes huge costs that go above and beyond earthquakes alone.

“In 10 to 100 years we are going to find out that most of our groundwater is polluted,” Mario Salazar, an engineer who worked for 25 years at the EPA’s underground injection program told ProPublica. “A lot of people are going to get sick, and a lot of people may die.”

Grassroots activists have pledged to fight this one tooth and nail as the high stakes battle goes down to the wire.

“The battle lines are being drawn between the greed of the oil and gas industry and the rights of individuals at the local level, Bill Baker, an organizer for Frack Free Ohio told DeSmogBlog in an interview. ”Powerful organizations with no vested interest in the Mansfield community, other than to turn it into a toxic waste dump, are spending millions in advertising to convince citizens to vote ‘no’ on the Bill of Rights.”