Canadians Seeking Chinese Natural Gas Money

Watching a kitchen faucet burst into flames is startling to say the least.

That’s one of the outrageous scenes you will see if you watch the new documentary Gasland, which was aired last week on HBO.

Produced like the in-your-face sensationalism of Michael Moore, director Josh Fox exposes his take on the negative effects of natural gas drilling in the United States.

Much of the criticism centers on the effects of hydraulic fracturing on drinking water, and the drilling frenzy in the Marcellus shale underneath Pennsylvania.

Actually, the movie wasn’t broadcast in Canada so I haven’t seen it yet. I’ve only smiled through the exaggerated trailer on YouTube and read through the predictably contemptuous blogs.

So I’m not really qualified to review the flick, even though much of the content looks thin on objectivity and fat on sketchy facts (apparently the gas coming out of the kitchen sink is naturally occurring biogenic gas, not natural gas as implied).

Anyway, Gasland is unlikely to have much effect on the booming North American drilling trend.

Like it or not, there is too much economic momentum behind the business – jobs and wealth creation in depressed regions have a tendency to trump fringe concerns.

And now there is a new twist to the real-life shale gas story – unfolding week-by-week to industry participants like an exciting movie plot – that will continue to keep drilling activity robust: the influx of Asian capital.

Historically, low natural gas prices have been effective in quickly crimping exploration and development investment, sending rigs home and moderating production output.

Waiting for investment to dry up has been the part of the shale gas movie everyone in the natural gas business has been anticipating.

Yet, an announcement by EnCana last week confirms that the plot is taking on a different direction.

Putting pen to paper in a memorandum of understanding, EnCana and the China National Petroleum Company (CNPC) now have a framework for the two companies to negotiate a potential joint-venture investment in prolific unconventional gas regions of Northeastern British Columbia, specifically, plays in the Horn River, Greater Sierra and Cutbank Ridge areas.

In other words, EnCana will be able to tap into deep, long-term Chinese pockets for exploration and development capital.

The dollar amount is not specified, but I know first hand that Chinese state-owned petroleum companies have difficulty thinking in anything less than 10 figures.

EnCana is not a pioneer in bringing Asian money to shale gas.

About a week ago Chesapeake Energy Corp., one of the biggest independent shale gas producers announced that it had sold $900 million in preferred stock to a group of private investors, mostly from Asian sources including China Investment Corp., Korea Investment Corp. and Temasek Holdings of Singapore. Money from India is spilling into North American shale gas too; recently Reliance Industries agreed to pay $1.36b for a 45% stake in Texan shale gas assets, including the liquids-rich Eagle Ford play.

The deal was the second by Reliance since April when it paid $1.7 billion to form a venture with Atlas Energy, a major player in the Marcellus country portrayed by Fox’s Gasland.

Assure yourself that there will be a lot more Asian capital pouring into resource rich areas of Canada and the United States.

But the plot underlying the natural gas movie will have to reach a denouement over the next couple of years, because investment dollars and low gas prices do not mix for long even if the dollars come from the other side of the world.

Relentless drilling at the current pace will continue to pressurize the continent with excess natural gas, to the point where Americans and Canadians will have natural gas coming out of every structural orifice, from kitchen faucets to manhole covers.

Something will have to give before that happens.

You know you have a real energy megatrend when someone makes a contrarian documentary with outrageous claims. Yet the story of natural gas using hydraulic fracturing is no longer just about new technology, aggressive drilling, environmental concern and production growth.

There is a broader plot here that will take the North American shale gas story through another twist or two: the influx of Asian capital followed by reciprocal exports of LNG to Asian markets.

Announcements by large natural gas producers over the past few weeks are like a movie trailer for what’s to come.

© Copyright (c) The Calgary Herald

Israel Working on Secure Plan for Its Natural Gas Field

By Dina Kraft · June 28, 2010

TEL AVIV (JTA) – More than a year after a massive natural gas find in the Mediterranean Sea off the Israeli coast sparked hopes in Israel of a new era of energy independence, the project is running into concerns about how the gas can be delivered safely.

The BP spill in the Gulf of Mexico has raised concerns in Israel about processing the gas and its delivery within the country.

"You don't just open the valve and everyone's happy," said Zeev Aizenshtat, a fossil fuels expert who works as a chemistry professor at Jerusalem’s Hebrew University. "In a country that has security problems, especially with the imminent threat of missiles coming in, you need to makes sure the pipes are well protected.”

The question is how to bring the gas, which was discovered in February 2009 one mile below the sea floor approximately 50 miles off the Haifa coast, to Israel, and then how to distribute it throughout the country. Natural gas is highly flammable, and Israel also lacks the infrastructure of piping needed to distribute the gas nationwide.

If Israel finds a way to deliver it safely and efficiently, the treasure trove of some 24 trillion cubic feet of natural gas could be Israel's ticket to energy independence, providing the country with some 70 percent of its energy needs for the next 20 years, according to experts.

The trove is a combination of two major gas fields -- called Leviathan and Tamar, named for the granddaughter of Israeli energy mogul Yitzhak Tshuva. It was Tshuva’s Delek Group and a U.S. partner that were responsible for the drilling that led to the finds.

Israel’s energy needs are now provided mostly by coal. Israel imports natural gas from Egypt via a pipeline, and it imports coal and oil from countries around the globe, including Russia, Mexico and Norway.

"This discovery is nothing short of a geopolitical game changer," Gal Luft, executive director of the Institute for the Analysis of Global Security, a Washington-based NGO that deals with energy and security issues, wrote earlier this month in the Haaretz newspaper.

But several challenges come first. Lebanon claims it has rights to the Leviathan find because they say the northern part of the find is in Lebanese territorial waters. Israel dismisses the claim, saying it is firmly within its own maritime boundaries.

“We will not hesitate to use our force and strength to protect not only the rule of law but the international maritime law,” Minister of National Infrastructure Uzi Landau told the Bloomberg news agency last week, responding to the Lebanese claims.

Then there is the question of how to deliver the gas and avoid accidents like the BP spill especially if, as is now being considered, Israel builds a natural gas processing plant in the sea rather than on land.

The underwater plant has two potential benefits. It could offer the processing plant additional protection from attack by terrorists or enemy aircraft, and it could circumvent the not-in-my-backyard syndrome that stands as an obstacle to the construction of a processing plant near Israeli population centers along the coast. Local opponents already have emerged against each of six potential sites for the plant on land.

Israelis are concerned that the gas power plants could become military targets or turn into fireballs, said Amit Bracha, executive director of the advocacy group Adam Teva V'Din, The Israeli Union for Environmental Defense.

"The not-in-my-backyard syndrome takes on new meaning in Israel, which is so small," Bracha said.

Adam Teva V'Din supports the alternative option of establishing the plant underwater.

"No one can bomb it," Bracha said, "and it's safer because it's not near any neighborhoods."

But safety concerns attend to that option, too.

A spill in the water would cause serious environmental damage, albeit less than a toxic oil spill. Even on land, Israel would have to build a network of pipes that would be secure and able to shut down automatically if there is a leak.

The government is conducting a survey to determine the best option for constructing the natural has processing plant. In any case, the gas itself won't be tapped until 2012 because it takes time to set up a distribution infrastructure.

In a statement to JTA, the National Infrastructure Ministry wrote that even if a decision is made to build an underwater plant, it does not preclude the possibility that one might also be built on land.

Aizenshtat said the natural gas find could help Israel achieve newfound independence.

"We were promised a land of milk and honey by God, but nothing was ever said about petroleum," he said. "But the moment you do have it, people start looking at you differently.

"Energy today is a commodity that countries live and die by," he said. "Whoever has control of the faucet can have a strong influence on the world. Politically this find is very important."

EOG Back Drilling in PA

By MARC LEVY (AP) – 2 days ago

HARRISBURG, Pa. — A company that had a blowout three weeks ago at one of its natural gas wells is being allowed to resume breaking up shale at its other wells in Pennsylvania.

A state Department of Environmental Protection spokesman told The Associated Press on Friday that a review found no violations at the well sites of Houston-based EOG Resources.

While EOG can resume the hydraulic fracturing that frees the gas from the shale, it does not yet have approval to do the finishing work that allows the gas to be extracted from the wells.

The June 3 accident in Clearfield County allowed explosive gas and toxic wastewater to spew out for 16 hours before it was stopped.

No one was injured, but state officials ordered EOG to stop all drilling operations while they investigate.

Copyright © 2010 The Associated Press. All rights reserved.

Report from MIT Advocates Natural Gas

Jeff Tollefson

If the United States — and by extension the world — has a hope of shifting to a low-carbon future, that shift will almost certainly involve burning a vast volume of natural gas. So concludes an assessment by researchers at the Massachusetts Institute of Technology in Cambridge, who estimate that the US could reduce greenhouse gas emissions from the electricity sector by at least 10 percent virtually overnight by shutting down inefficient coal-fired plants and ramping up gas-powered generators.

"In a carbon-constrained future, gas plays a particularly important role as a bridge," says Ernest Moniz, who headed the project as director of MIT's Energy Initiative (MITEI).

Burning natural gas to generate electricity emits roughly half as much carbon dioxide as coal. Following up on earlier reports covering nuclear power and coal, Moniz and his colleagues took an in-depth look at natural gas supplies and the role they could play as the world moves toward a low-carbon energy system. The new report on The Future of Natural Gas comes at a time when 'hydraulic fracturing' technologies have opened up huge reserves of gas associated withshale formations across the US. The technique, which involves injecting high-pressure fluid into rock to open cracks and release gas, has also raised environmental concerns because of contamination risks to aquifers and surface water.

"The environmental risks are manageable but challenging," says study co-chair and MITEI Visiting Engineer Anthony (Tony) Meggs who is a retired group vice-president of technology for BP. He notes that a typical high-volume 'frac job' may return 50 to 100 thousand barrels of fluid to the surface, which would require safe disposal to avoid contamination. To safeguard against environmental problems, the report calls for transparency in gas-field practices, integrated water use and disposal plans and mandatory disclosure of the ingredients in fracture fluids.

Fuelling up

The MIT study pegs the US supply at around 2,100 trillion cubic feet, which is enough to fuel the country for roughly 92 years at 2009 consumption levels. That puts the United States behind only Russia and the Middle East as a whole in terms of supply — a dramatic transformation compared to less than a decade ago, when falling production rates triggered price spikes and speculation that the US would soon be forced to begin importing large quantities of liquefied natural gas. According to the report, the greatest potential for growth is in the electricity sector, although natural gas could also be deployed to fuel fleet vehicles, buses and long-haul trucks in the transport sector.Significantly, the study found that with a 'level playing field' approach in which the relative prices of various energy sources are set to reflect the carbon dioxide they produce, gas could almost entirely displace coal burning in the US by 2035. Under such a policy regime, natural gas consumption would begin to taper off by 2050 because of the need to limit all sources of carbon, says Moniz, "but for a good period of time, if we are going to crank down on carbon emissions, we need natural gas to play a critical role."

As a concrete example, the study includes an in-depth modelling analysis of the Texas electric system, which is largely self contained, and found that a 22 percent reduction of greenhouse emissions from the power sector was achievable in the short term, with similar opportunities available across the United States.

Applying leverage

"Gas is where you have the most leverage over climate on the energy supply side right now, and I think this report does a good job of emphasizing that," says Mark Thurber, associate director for research at Stanford University's Program on Energy and Sustainable Development. Although there are no technical barriers, the political challenge is getting the monetary incentives or regulations in place to help gas displace coal, Thurber says. "In my mind, the next discussion should be, 'Okay, well how do we do it?'"

ExxonMobil Closes XTO Natural Gas Deal

(AP) – 7 hours ago

FORT WORTH, Texas — ExxonMobil Corp. said Friday that it has completed its $30 billion acquisition of XTO Energy Inc.

Shareholders of XTO, major holder of natural gas assets, approved the sale Friday at a special meeting. Each share of XTO was converted into the right to receive 0.7098 shares of ExxonMobil common stock.

ExxonMobil said XTO, which will keep its name, will be headquartered in Fort Worth, Texas. All of XTO's 3,300 employees will be transferred to the new entity.

The oil giant announced plans to buy XTO in December, a move that positions it to capitalize on the growing supply of domestic natural gas. XTO has a resource base of natural gas equivalent to 45 trillion cubic feet, and has holdings of shale gas, coal bed methane, shale oil and conventional oil.

ExxonMobil shares closed down 97 cents, or 1.6 percent, to $59.10.

Copyright © 2010 The Associated Press. All rights reserved.

Peabody Energy Predicts Growth of Coal

Global demand for coal is at the beginning of a multiyear growth period, driven by consumption from China and India and the recovering U.S. economy, Peabody Energy Corp. said today.

“We’re in the early stages of a 30-year super cycle in global coal markets,” Chief Executive Officer Gregory Boyce said at the IHS McCloskey Group Coal USA Conference in New York.

Peabody, the biggest U.S. coal producer, operates eight mines in Australia’s Queensland and New South Wales states and is targeting the Asia Pacific region for growth to feed power stations and steel mills in China.

China, the world’s largest user of coal, increased imports of the fuel by 17 percent from a year earlier to 11 million metric tons, according to data released June 20 by the General Administration of Customs.

Peabody fell 38 cents, or 1 percent, to $42.45 at 9:54 a.m. in New York Stock Exchange composite trading. The shares have fallen 6 percent this year.

Global steel demand will surge 50 percent by 2020 leading to more consumption of metallurgical coal, used to make steel, Boyce said.

JFE Holdings Inc., Japan’s second-largest steelmaker, and two rivals agreed to a $225-a-metric-ton-coking-coal contract for the July-to-September quarter, 13 percent higher than the $200 a ton for the three months started April 1, three people with knowledge of the agreements said. The contract is considered an industry benchmark.

Asian Shipments

Peabody is shipping coal mined from Wyoming’s Powder River Basin to China, Korea and Chile, Boyce said. The region holds the largest and least expensive U.S. reserves of coal.

“We’re also seeing rising export potential not only from the East Coast, but from the Illinois Basin” and the Powder River Basin, he said.

Boyce said the company is working to develop a port on the U.S. West Coast to supply the Pacific markets. He declined to disclose a time frame as to when it will be built.

“The real goal here is to see if we can’t get large volumes of Powder River Basin coal to Asia,” Boyce said.

The U.S., which holds the world’s largest reserves of coal, relies on the fuel for about half of its power generation, compared with about 20 percent for natural gas.

To contact the reporters on this story: Mario Parker in New York at mparker22@bloomberg.net;Noah Buhayar at nbuhayar@bloomberg.net.

One More Foreign Company in to the U.S. Natural Gas Shale Formations

by STUART on JUNE 23, 2010

On the face of it, Reliance Industries of India’s purchase of a stake in Pioneer Natural Resources for US$1.35 bn looks like a simple diversification by India’s largest listed company into a solid long term investment. The report in FinancierWorldWide.com states that Reliance will take a 45% stake in the Eagle Ford shale gas field in southern Texas. This comes on top of Reliance’ joint venture with Atlas Energy in April and resulting 40% stake in its Marcellus Shale operations in the eastern US.

That all makes good sense, although the price of natural gas has plummeted in North America (and indeed worldwide). This, driven by a surge in supply from new shale gas deposits and the low cost of shale bed drilling makes these deposits still attractive. A Times of India blog article explains why Anadarko Petroleum is ramping up drilling in the relatively low yielding Marcellus Shale (stretching hundreds of miles from West Virginia to New York), even though natural gas prices are low. The firm is aiming to achieve a 10% rate of return at a gas price of $2.50/mm British Thermal Unit. This is well below the current US price of $3.70, and a fraction of the $13 last seen in June 2008.

But maybe the Reliance investment in the US shale gas market should be seen in the wider trend by foreign oil companies to buy into US gas explorers to secure access to the technology for exploration at home. Much as BP, Statoil and Total have each struck deals with Chesapeake Energy partly to buy into solid investments but also to position themselves for the flurry of exploration opportunities in Europe, Reliance could have an eye on the potential for shale gas back in India. India has huge shale deposits across the Gangetic plain, Assam, Gujarat, Rajasthan, and many coastal areas. Natural gas from shale could be accessed at a fraction of the cost of the offshore fields Reliance is developing in the Krishna-Godavari Basin in Andhra Pradesh basin.

You may ask why shale gas is not already a hot topic in India and you will not be surprised to hear the reason is government bureaucracy. India’s exploration policy allows companies to produce only conventional oil and gas from their exploration blocks. If they find non-conventional energy — such as coal-bed methane or shale gas — they are forbidden to produce it! Why? Because, the petroleum ministry regards any non-conventional deposit as an unwarranted windfall for the exploring company, and wants separate bidding for non-conventional energy. Clearly this has to change and you can be sure Reliance is playing its part lobbying the shadowy halls of power in Delhi (they may even have advance warning that the rules are going to be changed). Regardless, Reliance investments are a hopeful indication that shale gas could begin to be a significant power supply source in India where dispersed electricity generation facilities are desperately needed across the whole country. In the case of shale gas this could be done with much lower levels of environmental pollution than would be the case with the current coal fired power program underway in the country.

–Stuart Burns

Pickens Says America is Ready for 10 Year Plan

By ELIDA S. PEREZ (AP) – 1 hour ago

DALLAS — Texas billionaire T. Boone Pickens said Americans are ready for the challenge if President Barack Obama will commit to a 10-year plan to reduce U.S. dependence on foreign oil.

Pickens said Tuesday he believes the U.S. has enough natural gas reserves to "replace dirty foreign oil."

Speaking at the Sustainable Innovation Summit in Dallas, Pickens reiterated his belief that wind and solar power also are keys to energy independence.

The Texas oilman said nothing has happened in the two years since Obama pledged to implement a 10-year plan for exploring alternative energy sources.

Pickens also criticized the U.S. for being behind China in trying to solve energy problems.

"America has never had a plan," Pickens said. "They have a plan to solve their problem, we don't."

Pickens said the money that would be saved by using the alternative energy he proposes would far outweigh any initial costs.

His plan includes creating new jobs from expanding on the wind and solar energy industry, providing incentives for homeowners and commercial building owners to upgrade their insulation and other energy saving options and to use the country's natural gas reserves to replace imported oil as fuel until another more viable option is available.

Pickens does not think using natural gas reserves is a permanent solution. He said it is a bridge to help buy the U.S. time to further develop alternative strategies for fuel.

"We can save two and a half million barrels of fuel a day by changing 18-wheelers to natural gas," Pickens said.

Switching to natural gas would also help the U.S. keep more of the $350 to $430 billion spent on imported oil every year, Pickens said.

In January, Pickens bought about 300 wind turbines — less than half of what he planned to order to build the world's largest wind farm in Texas. The wind farm initially called for 687 turbines.

Copyright © 2010 The Associated Press. All rights reserved.

BP to Let American Take Charge of Oil Spill

By RAPHAEL SATTER and TOM MURPHY – 59 minutes ago

LONDON — BP's new strategy to clean up its image and the Gulf Coast is to hand the job from its British CEO, widely criticized for tone-deaf comments and yachting amid the crisis, to one of its top-ranking Americans.

Bob Dudley is no stranger to tough situations, having protected his company's interests in rough dealing in Russia even after he was barred from the country. Perhaps most importantly, he is a fresh face for the oil giant as it attempts to fix the spill and protect its future.

Dudley will take over as BP's point man on the spill response, reporting to CEO Tony Hayward. Company officials have variously put the time frame at anywhere from immediately until after the spill is plugged, which isn't likely to happen until August.

Hayward's gaffes include saying, "I'd like my life back," and most recently enjoying a yacht race off the coast of England on Saturday while oil spill relief workers sweated it out. BP officials, however, say the switch is intended to allow Hayward to focus on running the company, rather than an attempt to bounce back from bad publicity.

Dudley, BP's managing director, spent part of his boyhood in Hattiesburg, Miss., an easy drive from the coast. The 54-year-old spent two decades climbing the ranks at Amoco Corp., which merged with BP, and lost out to Hayward on the CEO's slot three years ago.

Analysts say Dudley's job will involve nothing short of rehabilitating the environment, compensating everyone who has suffered a loss and generally salvaging BP's global image.

Dudley has plenty of experience protecting BP's interests under great pressure. As chief of TNK-BP, a joint venture with a consortium of Russian billionaires, he steered the firm through a series of politically explosive disputes that saw one employee charged with espionage, the company's offices raided by Russian intelligence, an investor boycott and a barrage of tax and labor investigations.

In the teeth of a Russian effort to remove him from office, Dudley clung on until 2008, at one point running the company from abroad after Russian authorities barred him from the country. Despite fears that BP's partners would expropriate the British company's share of the venture, BP has managed to keep its cut of TNK-BP's multibillion-dollar profits.

Managing Siberian energy fields and containing the 65 million- to 125 million-gallon Gulf slick aren't quite comparable, though the situations do have parallels, said Amy Myers Jaffe, an energy studies fellow at Rice University's public policy institute. Both involve a "complex situation involving multiple parties that might sue each other and multiple levels of government."

"I do think he did a good job in Russia, under the circumstances," she said.

Dudley also has shown a steady hand in his limited public appearances since the April 20 oil rig explosion that killed 11 workers and triggered the Gulf spill. He was the one tapped to make the rounds of the Sunday morning shows at the end of May when BP's latest bid to stanch the flow fell short.

"We failed to wrestle this beast to the ground," he said matter-of-factly.

A week later, he struck a conciliatory note as he toured the Louisiana coast with Gov. Bobby Jindal, saying he was frustrated and saddened by what he saw. He was there to promise that BP would fund state efforts to build sand berms to protect barrier islands from the oil.

"We understand the importance of this," he said. "We are deeply sorry."

BP did not respond to a request from the Associated Press for an interview with Dudley.

Industry insiders such as former Shell Oil president John Hofmeister have argued that BP from the start should have made an American the public face of its spill recovery efforts.

"I've been saying for weeks that Tony Hayward ought to pass this over to his top American executive," Hofmeister said Sunday. "He has completely competent people in the U.S. that can represent him in every instance."

Hofmeister said Dudley has been involved in the Gulf oil spill recovery effort from the start, and he expects no changes in BP's approach once he takes over.

"I think this is just a natural step for him to be exclusively focused on this aftermath," he said.

President Barack Obama has said he would fire Hayward if he could, and many Gulf Coast residents have had their fill of him as well.

Craig Bielkiewicz, a fisherman who's unemployed as a result of the spill, said as long as BP foots the bill for the cleanup, it's better that Hayward just stay away.

"As long as he foots the bill and does what he says he's going to do, then we don't need him," he said. "All we need is for him to back off and let us do what we need to do."

Tim Arnold, of U.K. media consultancy Arnold Strategy Ltd., said that the idea of throwing an American up for the sole purpose of placating a U.S. audience was "a very silly approach." He added, however, that Hayward has botched things and whoever handles the spill response next faces a considerable challenge.

"Effectively you need to relaunch the company," he said.

Ed Overton, an environmental chemist at Louisiana State University who has been tracking the spill, said Hayward's replacement would have to prove he was emotionally invested in the Gulf Coast's problems.

"Hayward never seemed to connect with any of the local people and was treating this as kind of a 'hold your nose and have to do it' type of job," he said.

He had some simple advice for Hayward's successor: "Show a genuine concern."

Tom Murphy reported from Indianapolis. AP video journalist Bonnie Ghosh in Grand Isle, La., contributed to this report.

Copyright © 2010 The Associated Press. All rights reserved.

Film Stirring the Pot of Natural Gas Drilling Controversy

(Reuters) - A new documentary purporting to expose the hazards of onshore natural gas drilling illustrates its point with startling images of people setting fire to water flowing from faucets in their homes.

"GasLand," which premiers on cable's HBO on June 21, fuels the debate over shale gas and the extraction process known as hydraulic fracturing, which involves blasting millions of gallons of water, sand and diluted chemicals into shale rock, breaking it apart to free the gas.

It comes at a time of heightened environmental awareness and scrutiny of the energy industry due to the BP oil disaster in the Gulf of Mexico.

Advocates promote shale gas as an abundant and relatively clean source of energy within the United States but critics including "GasLand" director Josh Fox assert there are environmental and health risks.

Fox, a Pennsylvania playwright, calls the industry's contention that such drilling is harmless too good to be true. He started asking questions about when his family was offered $100,000 plus royalties to allow hydraulic fracturing, also known as "fracking," on their property.

"I don't think it's a gold mine. I think it's a trap," Fox said. He turned down the offer but many neighbors took the money.

The documentary traces Fox's cross-country journey and includes interviews with families who signed leases with the gas industry and now regret it.

In Colorado, Fox shows families setting tap water alight due to what they say is gas that entered the water during the drilling process. Colorado authorities ruled out that scenario at one of the homes where Fox filmed.

"The film started with just a basic inquiry into what was happening with gas drilling," Fox told Reuters in an interview. "Quickly, though, I found out that it was a complete disaster for all the places that I visited."

The film, Fox's first feature-length documentary, won the Special Jury Prize for documentaries at the Sundance Film Festival.

INDUSTRY REBUTTAL

The gas industry disputes the film's findings, saying for example that methane migration that allows water to catch fire can occur naturally.

"This filmmaker, while well-intentioned, is getting a lot of attention but he's not qualified at all to be an authority on this issue," said Jim Smith, a spokesman for the Independent Oil and Gas Association in New York, an industry group.

In a lengthy "debunking" of the film, Chris Tucker at the Washington-based industry group Energy in Depth wrote, "Accuracy is too often pushed aside for simplicity, evidence too often sacrificed for exaggeration."

Fox's home sits on the massive Marcellus Shale formation, which extends across much of Pennsylvania and parts of West Virginia, Ohio and New York, and is the nation's largest known shale reserve.

His inquiry led him to the northeast Pennsylvania town of Dimock, where residents say gas drilling by Cabot Oil & Gas Corp contaminated their water wells with toxic chemicals, causing sickness and reducing property values.

The state's Department of Environmental Protection has since said Cabot contaminated the drinking water of 14 homes in Dimock by failing to comply with a order to fix defective well casings that discharged natural gas into ground water.

"The whole town was turned completely upside down," Fox said. "None of that stuff is mentioned when land men come to somebody's front door or send them a letter in the mail saying, 'Hey we're going to give you $100,000.'"

Smith said that while what happened in Dimock was "unacceptable," it was the result of operator error. He said there have been no cases of drinking water contamination that can be tied to fracking.

(Editing by Alan Elsner)

Catching Up with the BP Oil Spill

(AP) – 5 hours ago

A summary of events on Saturday, June 19, Day 60 of the Gulf of Mexico oil spill that began with the April 20 explosion and fire on the drilling rig Deepwater Horizon, owned by Transocean Ltd. and leased by BP PLC, which is in charge of cleanup and containment. The blast killed 11 workers. Since then, oil has been pouring into the Gulf from a blown-out undersea well.

BP CEO

BP chief executive Tony Hayward was the target of fresh outrage among many in the Gulf Coast who learned that the executive took a day off Saturday to see his 52-foot yacht "Bob" compete in a glitzy race off England's shore. BP spokespeople rushed to defend Hayward, who has drawn withering criticism as the public face of BP PLC's halting efforts to stop the spill. Company spokesman Robert Wine said the break is the first for Hayward since the Deepwater Horizon rig BP was leasing exploded. It was not clear whether Hayward actually took part in Saturday's J.P. Morgan Asset Management Round the Island Race or attended as a spectator. Meanwhile, some critics were also upset that President Barack Obama and Vice President Joe Biden played a round of golf Saturday near Washington, something they've done on other weekends since the spill.

FLORIDA BEACHES

Tar balls washed up on Destin, Fort Walton and Panama City Beach, the farthest east the oil has been reported in the Sunshine State. From Pensacola in the west to Panama City Beach in the east — spanning some 100 miles of coast famous for sugar white sand beaches — the aftermath of the spill continued its march. On Saturday evening, hundreds of clumps of tar mixed with sand littered the high tide line at Fort Walton Beach as people strolled, played in the sand and swam. Unfavorable onshore winds were pushing the oil closer, and more tar balls were expected to wash up in the next few days. A large plume of oil was about 30 miles offshore, officials said, and it would land on the Panama City-area beaches in the coming weeks unless the winds change for good.

OFFSHORE CONTAINMENT

About 50 miles off the coast, a newly expanded containment system is capturing or incinerating more than 1 million gallons of oil daily, the first time it has approached its peak capacity, according to the Coast Guard. BP hopes that by late June it will be able to keep nearly 90 percent of the flow from the broken pipe from hitting the ocean.

BP CLAIMS

The head of a new office created to process claims from the BP oil spill said a plan to handle the remaining damage claims will be in place in 30 to 45 days. Kenneth Feinberg was chosen by President Barack Obama and BP to oversee the Independent Claims Facility. Feinberg said he also plans to have a program going forward that would guarantee that people making claims in the future would receive them within 30 to 60 days of submitting it.

METHANE

Vast amounts of natural gas contained in crude escaping from the blown well could pose a serious threat to marine life by creating "dead zones" where oxygen is so depleted that nothing lives. The danger presented by the methane has been largely overlooked, with early efforts to monitor the oil spill focusing on the more toxic components of oil. But scientists are increasingly worried about the gas that can suffocate sea creatures in high concentrations. At least 4.5 billion cubic feet of natural gas — and possibly almost twice that amount — have leaked since April 20. That's based on estimates from the U.S. Geological Survey's "flow team" that 2,900 cubic feet of natural gas are escaping for every barrel of oil.

ENVIRONMENT

Oil industry groups said the spill doesn't necessarily indicate problems with how environmental laws are applied in granting drilling permits. Anadarko Petroleum, which has a part interest in the well that blew up, submitted comments to the White House Council on Environmental Quality, which is completing a 30-day review of the issue. So did the American Petroleum Institute, the oil and gas trade group. In the wake of the explosion, reports have suggested that government regulators skirted requirements in the National Environmental Policy Act. Anadarko said it did not believe implementation of environmental policies "in any way played a role in this event."

FOREIGN HELP

At least 22 nations — including Britain, where BP is based — have offered oil-collecting skimmers, boom, technical experts and more to help the U.S. cope with its worst-ever environmental disaster. But their generosity comes with a price tag. The State Department confirmed that nearly every offer of equipment or expertise from a foreign government since the rig explosion would require the U.S. to reimburse that country.

BP EMPLOYEES

Far from the spill in the Gulf of Mexico and their bosses' frantic attempts at damage control, BP workers for the oil giant are dodging awkward glances and tactfully avoiding any mention that they work for what may be America's public enemy No. 1. In interviews with The Associated Press, more than a dozen BP employees from Alaska to North Carolina say they still love the company that has paid and treated them well for years. Now, they are just careful whom they share it with. In BP's case, the public scorn is so great that a corporate security official felt compelled to send employees a memo warning them to keep a low profile and stay aware of their surroundings.

SPILL CAM

It's nearly impossible to avoid the live video of the coal-gray oil gushing from BP's well a mile below the Gulf of Mexico's surface. According to an Associated Press-GfK Poll this week, 88 percent of the public has viewed it. The video is a daily reminder that two months after the oil rig explosion that killed 11 and caused the massive leak and resulting environmental and economic damage, BP still hasn't plugged the well.

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