The number of rigs actively exploring for oil and natural gas in the United States dropped by 44 this week to 1,126, as weak energy demand continues to hamper oilfield activity.
Of the rigs running nationwide, 884 were exploring for natural gas and 228 for oil, Houston-based Baker Hughes Inc. reported Friday. A total of 14 were listed as miscellaneous.
A year ago, the rig count stood at 1,792. The U.S. count is down more than 40 percent since the end of August. Oil prices peaked near $150 a barrel in July before plunging. Light, sweet crude for April delivery fell 42 cents to $46.61 in trading Friday on the New York Mercantile Exchange.
Of the major oil- and gas-producing states, Texas lost 24 rigs, Oklahoma and North Dakota each lost five, Louisiana and Wyoming each lost three, Arkansas and Colorado each lost two and California lost one. New Mexico picked up one, and Alaska was unchanged.
Baker Hughes has tracked rig counts since 1944. The tally peaked at 4,530 in 1981, during the height of the oil boom. The industry posted several record lows in 1999, bottoming out at 488.
Saturday, March 14, 2009
Friday, March 13, 2009
New Colorado Natural Gas Processing Plant Online
NEW YORK, March 12 (Reuters) - Enterprise Products Partners LP (EPD.N) said on Thursday it began operations at the Meeker II natural gas processing plant in the Piceance Basin of Colorado, doubling processing capacity to 1.5 billion cubic feet per day.
The Meeker II complex also has the capability to extract up to 70,000 barrels per day of natural gas liquids, the company said in a statement.
Enterprise also began operations at its recently expanded Shilling and Thompsonville gas processing plants in South Texas, and expects the partnership's relocated Chaparral facility in the Permian Basin to begin processing natural gas later in March.
The Meeker complex is supported by long-term commitments from 10 of the largest producers in the Piceance Basin, Enterprise said.
Current inlet volume at Meeker is approximately 750 million cubic feet per day with approximately 38,000 barrels per day of natural gas liquids being extracted.
Natural gas volumes are projected to reach approximately 1.1 bcf per day by the end of 2009, producing approximately 60,000 bpd of natural gas liquids.
"This expansion will facilitate the continuing growth in natural gas production from the Piceance Basin that is expected in 2009 and 2010 despite the effects of the recent decrease in drilling activity. Based on producer estimates, there are over 300 wells that have been completed in the basin that are waiting for pipeline connections," said A.J. Teague, Enterprise executive vice president and chief commercial officer.
Meeker, through its connection with the White River natural gas hub, provides producers with access to markets through connections with six interstate pipelines that have approximately 2.5 bcf per day of total takeaway capacity.
The Chaparral facility was an idle plant acquired in the merger with GulfTerra Energy Partners LP in 2004 and recently relocated from southeast Texas to serve producers in the Permian Basin.
The facility can handle up to 40 mmcf per day of natural gas and extract more than 2,000 bpd of natural gas liquids, serving the partnership's approximately 900-mile (1,450-km) Carlsbad Gathering System in southeast New Mexico.
As part of the project, Enterprise constructed a new 13-mile, 4-inch diameter natural gas liquids pipeline that links the processing plant to TEPPCO Partners LP's (TPP.N) Chaparral pipeline, transporting to the world's largest fractionation complex at Mont Belvieu, Texas.
Additionally, interconnects with major interstate natural gas transmission lines provide producers with access to markets in the western United States.
Expansion projects were also completed and placed into service at two gas processing facilities that are part of Enterprise's South Texas system
At the Shilling plant in Webb County, capacity was increased from 60 mmcf per day to 110 mmcf per day as part of a project that involved relocating equipment from idle plants and modifying existing infrastructure.
The work allowed Enterprise to increase its market share in the region and provide added flexibility in accessing industrial end users along the Gulf Coast and the Houston Ship Channel.
The partnership modified existing equipment rather than build new systems to expand its Thompsonville gas processing plant in Jim Hogg County.
The Meeker II complex also has the capability to extract up to 70,000 barrels per day of natural gas liquids, the company said in a statement.
Enterprise also began operations at its recently expanded Shilling and Thompsonville gas processing plants in South Texas, and expects the partnership's relocated Chaparral facility in the Permian Basin to begin processing natural gas later in March.
The Meeker complex is supported by long-term commitments from 10 of the largest producers in the Piceance Basin, Enterprise said.
Current inlet volume at Meeker is approximately 750 million cubic feet per day with approximately 38,000 barrels per day of natural gas liquids being extracted.
Natural gas volumes are projected to reach approximately 1.1 bcf per day by the end of 2009, producing approximately 60,000 bpd of natural gas liquids.
"This expansion will facilitate the continuing growth in natural gas production from the Piceance Basin that is expected in 2009 and 2010 despite the effects of the recent decrease in drilling activity. Based on producer estimates, there are over 300 wells that have been completed in the basin that are waiting for pipeline connections," said A.J. Teague, Enterprise executive vice president and chief commercial officer.
Meeker, through its connection with the White River natural gas hub, provides producers with access to markets through connections with six interstate pipelines that have approximately 2.5 bcf per day of total takeaway capacity.
The Chaparral facility was an idle plant acquired in the merger with GulfTerra Energy Partners LP in 2004 and recently relocated from southeast Texas to serve producers in the Permian Basin.
The facility can handle up to 40 mmcf per day of natural gas and extract more than 2,000 bpd of natural gas liquids, serving the partnership's approximately 900-mile (1,450-km) Carlsbad Gathering System in southeast New Mexico.
As part of the project, Enterprise constructed a new 13-mile, 4-inch diameter natural gas liquids pipeline that links the processing plant to TEPPCO Partners LP's (TPP.N) Chaparral pipeline, transporting to the world's largest fractionation complex at Mont Belvieu, Texas.
Additionally, interconnects with major interstate natural gas transmission lines provide producers with access to markets in the western United States.
Expansion projects were also completed and placed into service at two gas processing facilities that are part of Enterprise's South Texas system
At the Shilling plant in Webb County, capacity was increased from 60 mmcf per day to 110 mmcf per day as part of a project that involved relocating equipment from idle plants and modifying existing infrastructure.
The work allowed Enterprise to increase its market share in the region and provide added flexibility in accessing industrial end users along the Gulf Coast and the Houston Ship Channel.
The partnership modified existing equipment rather than build new systems to expand its Thompsonville gas processing plant in Jim Hogg County.
Thursday, March 12, 2009
10% AT&T Fleet to Go Natural Gas
By PETER SVENSSON – 12 hours ago
NEW YORK (AP) — AT&T Inc. said Wednesday it will spend up to $350 million over five years to buy more than 8,000 Ford Motor Co. vans and trucks, then convert them to run on compressed natural gas.
It is the largest commitment by a U.S. corporation to vehicles using alternative fuels, the phone company said.
Natural gas is a fossil fuel, but burning it produces 25 percent less carbon emissions than using gasoline, AT&T said. Compared with oil, the U.S. produces a greater proportion of the natural gas it uses.
The company said it will spend the money over five years. While AT&T will buy the chassis from Ford, it has not yet selected a vendor to perform the conversion to natural gas, AT&T spokesman Fletcher Cook said.
The vehicles will be used by technicians who perform installations and maintain the telecommunications network, Cook said. The company will build 40 natural-gas filling stations to keep them rolling.
Compressed natural gas is already used by some cities and counties for their vehicle fleets, particularly for buses.
AT&T will also spend $215 million over 10 years to replace 7,100 passenger cars with hybrids, and eventually cars powered by other fuel sources, it said.
Dallas-based AT&T currently has 88,000 vehicles, Cook said.
Copyright © 2009 The Associated Press. All rights reserved.
NEW YORK (AP) — AT&T Inc. said Wednesday it will spend up to $350 million over five years to buy more than 8,000 Ford Motor Co. vans and trucks, then convert them to run on compressed natural gas.
It is the largest commitment by a U.S. corporation to vehicles using alternative fuels, the phone company said.
Natural gas is a fossil fuel, but burning it produces 25 percent less carbon emissions than using gasoline, AT&T said. Compared with oil, the U.S. produces a greater proportion of the natural gas it uses.
The company said it will spend the money over five years. While AT&T will buy the chassis from Ford, it has not yet selected a vendor to perform the conversion to natural gas, AT&T spokesman Fletcher Cook said.
The vehicles will be used by technicians who perform installations and maintain the telecommunications network, Cook said. The company will build 40 natural-gas filling stations to keep them rolling.
Compressed natural gas is already used by some cities and counties for their vehicle fleets, particularly for buses.
AT&T will also spend $215 million over 10 years to replace 7,100 passenger cars with hybrids, and eventually cars powered by other fuel sources, it said.
Dallas-based AT&T currently has 88,000 vehicles, Cook said.
Copyright © 2009 The Associated Press. All rights reserved.
Wednesday, March 11, 2009
Natural Gas Exploration Will Continue
By KRISTEN HAYS Copyright 2009 Houston Chronicle
March 10, 2009, 10:56PM
In recent years, Anadarko Petroleum Corp. has spent big to beef up and diversify its production portfolio in the U.S. and elsewhere. Now’s the time to bring exploration success to fruition by developing mega-projects already in the pipeline, CEO James Hackett said Tuesday.
Even if crude prices continue their recent upswing, he said, the best use of that additional cash is to reinvest it in exploration and production projects.
“We’ll make that decision as it comes,” Hackett said at the company’s annual meeting with analysts, noting no immediate plans for more acquisitions.
The Houston-based independent explorer and producer expects to increase production by up to 3 percent this year and spend a fifth of its reduced capital spending budget of $4 billion to $4.5 billion on exploration.
Fewer cuts
While Anadarko cut spending amid lower oil and natural gas prices and slumping demand in the global recession, other independents have slashed more.
Al Walker, Anadarko’s chief operating officer, said the company also is spending one-fifth of its budget on mega-projects, including finds in the Gulf of Mexico, offshore Ghana and offshore Brazil. Several major projects are slated to start producing from 2011 through 2013, Walker said.
Chevron also has a string of new projects scheduled to begin production in the coming years, executives from the San Ramon, Calif.-based oil major said at its annual analyst meeting, also Tuesday.
Those include Chevron’s Gorgon and Wheatstone liquefied natural gas projects in Australia as well as Gulf crude production from its Jack and St. Malo fields.
George Kirkland, executive vice president of global upstream and gas, told analysts that Chevron has begun engineering and design for a new Gulf production platform for the Jack and St. Malo fields that will have capacity to produce 120,000 to 150,000 barrels of oil equivalent per day.
Higher profile
Anadarko’s international positions, as well as its foothold in U.S. natural gas shale plays, has transformed it from a high-cost, low-return and spotty exploration company to one “poised to dramatically improve its exploration,” Bernstein Research analyst Neil McMahon said in a recent report to investors.
That, McMahon said, makes Anadarko “an increasingly attractive acquisition target for the majors.”
Such rumblings about Anadarko aren’t new, and other analysts have speculated that oil majors may consider buying independents to increase reserves and gain new positions in the downturn. However, so far deals haven’t stretched beyond buying certain assets, such as BP’s acquisitions of some Chesapeake Energy U.S. gas shale stakes last year.
Hackett told reporters Tuesday that the company will do right by its shareholders, “and as a public company, we obviously have to be mindful of the fact that if somebody believes we’ve done a good job, there is some risk that somebody may make you an offer you can’t refuse.”
Tax criticism
However, Anadarko isn’t seeking buyers.
“Our view is you don’t necessarily plan your business around that, and we never have,” he said.
Asked by an analyst about the Obama administration’s proposal to repeal some tax breaks for U.S. production while imposing a new excise or severance tax on Gulf production, Hackett answered with his trademark bluntness.
“It’s remarkable to me that we have an administration potentially penalizing its domestic champions at the same time they say they want energy security,” he said
kristen.hays@chron.com
March 10, 2009, 10:56PM
In recent years, Anadarko Petroleum Corp. has spent big to beef up and diversify its production portfolio in the U.S. and elsewhere. Now’s the time to bring exploration success to fruition by developing mega-projects already in the pipeline, CEO James Hackett said Tuesday.
Even if crude prices continue their recent upswing, he said, the best use of that additional cash is to reinvest it in exploration and production projects.
“We’ll make that decision as it comes,” Hackett said at the company’s annual meeting with analysts, noting no immediate plans for more acquisitions.
The Houston-based independent explorer and producer expects to increase production by up to 3 percent this year and spend a fifth of its reduced capital spending budget of $4 billion to $4.5 billion on exploration.
Fewer cuts
While Anadarko cut spending amid lower oil and natural gas prices and slumping demand in the global recession, other independents have slashed more.
Al Walker, Anadarko’s chief operating officer, said the company also is spending one-fifth of its budget on mega-projects, including finds in the Gulf of Mexico, offshore Ghana and offshore Brazil. Several major projects are slated to start producing from 2011 through 2013, Walker said.
Chevron also has a string of new projects scheduled to begin production in the coming years, executives from the San Ramon, Calif.-based oil major said at its annual analyst meeting, also Tuesday.
Those include Chevron’s Gorgon and Wheatstone liquefied natural gas projects in Australia as well as Gulf crude production from its Jack and St. Malo fields.
George Kirkland, executive vice president of global upstream and gas, told analysts that Chevron has begun engineering and design for a new Gulf production platform for the Jack and St. Malo fields that will have capacity to produce 120,000 to 150,000 barrels of oil equivalent per day.
Higher profile
Anadarko’s international positions, as well as its foothold in U.S. natural gas shale plays, has transformed it from a high-cost, low-return and spotty exploration company to one “poised to dramatically improve its exploration,” Bernstein Research analyst Neil McMahon said in a recent report to investors.
That, McMahon said, makes Anadarko “an increasingly attractive acquisition target for the majors.”
Such rumblings about Anadarko aren’t new, and other analysts have speculated that oil majors may consider buying independents to increase reserves and gain new positions in the downturn. However, so far deals haven’t stretched beyond buying certain assets, such as BP’s acquisitions of some Chesapeake Energy U.S. gas shale stakes last year.
Hackett told reporters Tuesday that the company will do right by its shareholders, “and as a public company, we obviously have to be mindful of the fact that if somebody believes we’ve done a good job, there is some risk that somebody may make you an offer you can’t refuse.”
Tax criticism
However, Anadarko isn’t seeking buyers.
“Our view is you don’t necessarily plan your business around that, and we never have,” he said.
Asked by an analyst about the Obama administration’s proposal to repeal some tax breaks for U.S. production while imposing a new excise or severance tax on Gulf production, Hackett answered with his trademark bluntness.
“It’s remarkable to me that we have an administration potentially penalizing its domestic champions at the same time they say they want energy security,” he said
kristen.hays@chron.com
Tuesday, March 10, 2009
Harrisburg PA Double Tax on Natural Gas
HARRISBURG -- Natural gas from the vast Marcellus Shale reserve will be taxed under the ground and when it is extracted, if Democratic lawmakers and the governor have their way.
Fifty-four of 67 counties would be able to levy real estate taxes on the underground value of natural gas and oil under a bill proposed Monday by House Majority Whip Bill DeWeese, D-Greene County.
It's similar to a bill DeWeese introduced in May 2007 that died in the House Finance Committee.
"The Marcellus Shale phenomenon was not at its dizzying zenith (then)," DeWeese said, when asked how the bill differs from the one that stalled.
Gov. Ed Rendell last month proposed a state severance tax on extracted natural gas. Rep. Bud George, D-Clearfield County, is expected to propose the severance tax in legislation.
Forty-five of the poorest school districts would benefit from levying a real estate tax on natural gas, said Timothy Allwein, an official with the Pennsylvania School Boards Association, one of several groups that joined DeWeese at a news conference.
DeWeese and other officials said the real estate tax is not a new tax. Counties could assess natural resources as property until a Supreme Court decision negated the practice in 2002. The court held that the Legislature did not explicitly recognize gas and oil as taxable.
Coal has long been taxed as property, officials said.
DeWeese said the real estate tax on natural gas would hit developers and drillers, not landowners and farmers.
David Coder, chairman of the County Commissioners Association of Pennsylvania, said the revenue would be used to lower property taxes or prevent the rise of property taxes.
Considering the economic downturn and drop in natural gas market prices, "This would be a very bad time to impose any additional taxes," said Matt Pitzarella, spokesman for Range Resources LLC, which has drilled more than 120 wells in Washington County.
Natural gas is selling for $3.87 per thousand cubic feet, or mcf, compared to $13.10 last July. The number of onshore drilling rigs in operation nationwide is down to 917 from 1,306 last fall and is expected to continue dropping.
The industry is especially vulnerable in Western Pennsylvania because the Marcellus Shale play is in its early stages of development, he said. More taxes "would ultimately cost people jobs and reduce the economic investment that the companies would be able to make," Pitzarella said.
Lou D'Amico, executive director of the Independent Oil & Gas Association of Pennsylvania, said DeWeese's proposal likely will spark court challenges if passed in its current form.
"He said this would be on the operator and not the land owner, and that's nice to say. I'd say it if I were a politician," D'Amico said, but state case law prohibits taxing the same revenue stream at different rates.
Thus a farmer who owns property in the Marcellus region would have to pay the same levy as a gas producer who leases the mineral rights to that land, he said.
Fifty-four of 67 counties would be able to levy real estate taxes on the underground value of natural gas and oil under a bill proposed Monday by House Majority Whip Bill DeWeese, D-Greene County.
It's similar to a bill DeWeese introduced in May 2007 that died in the House Finance Committee.
"The Marcellus Shale phenomenon was not at its dizzying zenith (then)," DeWeese said, when asked how the bill differs from the one that stalled.
Gov. Ed Rendell last month proposed a state severance tax on extracted natural gas. Rep. Bud George, D-Clearfield County, is expected to propose the severance tax in legislation.
Forty-five of the poorest school districts would benefit from levying a real estate tax on natural gas, said Timothy Allwein, an official with the Pennsylvania School Boards Association, one of several groups that joined DeWeese at a news conference.
DeWeese and other officials said the real estate tax is not a new tax. Counties could assess natural resources as property until a Supreme Court decision negated the practice in 2002. The court held that the Legislature did not explicitly recognize gas and oil as taxable.
Coal has long been taxed as property, officials said.
DeWeese said the real estate tax on natural gas would hit developers and drillers, not landowners and farmers.
David Coder, chairman of the County Commissioners Association of Pennsylvania, said the revenue would be used to lower property taxes or prevent the rise of property taxes.
Considering the economic downturn and drop in natural gas market prices, "This would be a very bad time to impose any additional taxes," said Matt Pitzarella, spokesman for Range Resources LLC, which has drilled more than 120 wells in Washington County.
Natural gas is selling for $3.87 per thousand cubic feet, or mcf, compared to $13.10 last July. The number of onshore drilling rigs in operation nationwide is down to 917 from 1,306 last fall and is expected to continue dropping.
The industry is especially vulnerable in Western Pennsylvania because the Marcellus Shale play is in its early stages of development, he said. More taxes "would ultimately cost people jobs and reduce the economic investment that the companies would be able to make," Pitzarella said.
Lou D'Amico, executive director of the Independent Oil & Gas Association of Pennsylvania, said DeWeese's proposal likely will spark court challenges if passed in its current form.
"He said this would be on the operator and not the land owner, and that's nice to say. I'd say it if I were a politician," D'Amico said, but state case law prohibits taxing the same revenue stream at different rates.
Thus a farmer who owns property in the Marcellus region would have to pay the same levy as a gas producer who leases the mineral rights to that land, he said.
Natural Gas Stocks Down
March 09, 2009: 10:39 AM ET
Shares of natural gas producers led gains in the energy sector, which drew strength from steady oil prices, a discovery by Anadarko Petroleum Corp. (APC) and analyst upgrades, as the broad market struggled back from opening losses.
The Amex Oil Index rose 0.3% to 781, with shares of refining giant Valero Energy Corp. (VLO) and Hess Corp. (HES) up nearly 3% each. The Amex Natural Gas Index rose 1.3% to 306, with Southwestern Energy Co.(SWN) up 4% to $29.86.
The Philadelphia Oil Service Index rose 2.6% to 112.
Crude oil futures rose 14 cents to $45.66.
Anadarko Petroleum shares rose 5% to $34.65 after the company announced an oil discovery at its Tweneboa-1 offshore well in Ghana.
"Tweneboa is an outstanding discovery and continues our success in Ghana," the company said. "We believe there is significant additional upside as we conduct appraisal activity closer to the perceived core of this stratigraphic trap, where a thicker reservoir section is mapped."
The well was drilled, logged and cased to a depth of approximately 11,790 feet, and is being deepened to further assess additional prospective hydrocarbon-bearing zones.
Halliburton Co. (HAL) jumped 7% to $16.16 after FBR upgraded the oil-service giant to outperform from market perform.
Drill-ship maker Transocean Ltd. (RIG) rose 3.7% to $52.99, also following an FBR upgrade to outperform from market perform.
Pritchard Capital Partners said Monday that Baker Hughes Inc.'s (BHI) rig count fell by 73 rigs last week to 1,170 rigs, down by 861 rigs or approximately 42% from the 2,031-rig peak set in September of last year. The 42% decline is outpacing those of the 1983 cycle, the 2001-2002 cycle, and the 1997-1998 cycle, Pritchard said.
Shares of Baker Hughes rose 5% to $28.
Total SA (TOT) said its Total Upstream Nigeria Ltd. (Tupni) unit started production earlier than expected on a major project off the shore of Nigeria. The Akpo Deep Offshore Field is one of the largest deep offshore projects ever undertaken and will be the largest brought on stream in 2009, Total said.
The ramp up of production to 175,000 barrels per day of condensate and 320 million standard cubic feet per day is expected to be reached during the summer. Total holds a 24% interest in the Akpo OML 130 block, alongside partners including Nigerian National Petroleum Corp., South Atlantic Petroleum of Nigeria, Cnooc Ltd. of China (CEO) and Brazil's Petrobras (PBR).
Total shares fell 1.3% to $45.18 in early U.S. trade.
-Steve Gelsi; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
03-09-09 1039ET
Copyright (c) 2009 Dow Jones & Company, Inc.
Shares of natural gas producers led gains in the energy sector, which drew strength from steady oil prices, a discovery by Anadarko Petroleum Corp. (APC) and analyst upgrades, as the broad market struggled back from opening losses.
The Amex Oil Index rose 0.3% to 781, with shares of refining giant Valero Energy Corp. (VLO) and Hess Corp. (HES) up nearly 3% each. The Amex Natural Gas Index rose 1.3% to 306, with Southwestern Energy Co.(SWN) up 4% to $29.86.
The Philadelphia Oil Service Index rose 2.6% to 112.
Crude oil futures rose 14 cents to $45.66.
Anadarko Petroleum shares rose 5% to $34.65 after the company announced an oil discovery at its Tweneboa-1 offshore well in Ghana.
"Tweneboa is an outstanding discovery and continues our success in Ghana," the company said. "We believe there is significant additional upside as we conduct appraisal activity closer to the perceived core of this stratigraphic trap, where a thicker reservoir section is mapped."
The well was drilled, logged and cased to a depth of approximately 11,790 feet, and is being deepened to further assess additional prospective hydrocarbon-bearing zones.
Halliburton Co. (HAL) jumped 7% to $16.16 after FBR upgraded the oil-service giant to outperform from market perform.
Drill-ship maker Transocean Ltd. (RIG) rose 3.7% to $52.99, also following an FBR upgrade to outperform from market perform.
Pritchard Capital Partners said Monday that Baker Hughes Inc.'s (BHI) rig count fell by 73 rigs last week to 1,170 rigs, down by 861 rigs or approximately 42% from the 2,031-rig peak set in September of last year. The 42% decline is outpacing those of the 1983 cycle, the 2001-2002 cycle, and the 1997-1998 cycle, Pritchard said.
Shares of Baker Hughes rose 5% to $28.
Total SA (TOT) said its Total Upstream Nigeria Ltd. (Tupni) unit started production earlier than expected on a major project off the shore of Nigeria. The Akpo Deep Offshore Field is one of the largest deep offshore projects ever undertaken and will be the largest brought on stream in 2009, Total said.
The ramp up of production to 175,000 barrels per day of condensate and 320 million standard cubic feet per day is expected to be reached during the summer. Total holds a 24% interest in the Akpo OML 130 block, alongside partners including Nigerian National Petroleum Corp., South Atlantic Petroleum of Nigeria, Cnooc Ltd. of China (CEO) and Brazil's Petrobras (PBR).
Total shares fell 1.3% to $45.18 in early U.S. trade.
-Steve Gelsi; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
03-09-09 1039ET
Copyright (c) 2009 Dow Jones & Company, Inc.
Monday, March 9, 2009
Kentucky Government & Natural Gas Revenue
By JOE BIESK - Associated Press Writer
FRANKFORT, Ky. -- A proposal moving in the Kentucky General Assembly is looking to find some extra cash by searching underground.
As states across the country struggle to find money to pay their bills - federal stimulus help aside - state Sen. Tom Jensen has proposed Kentucky look to see if it can profit from any natural gas or oil brewing beneath state-owned property. That would include searching on land for state parks and public universities.
"We need to start thinking outside the box a little bit, instead of just thinking about cutting and taxing," Jensen, R-London, said.
Kentucky has pockets of underground oil and natural gas reserves. Exactly how much lies beneath the surface of state-owned land remains to be seen. Jensen, who is chairman of the Senate Natural Resources and Energy Committee, has proposed two separate measures aimed at finding out.
One proposal Jensen has offered would order the Kentucky Geological Survey at the University of Kentucky to study where state-owned land with underground natural gas or oil exists. Another would authorize the state to begin leasing that land and collect royalties.
The bill would also apply to public universities in Kentucky.
Souring national and state economies left Kentucky state government facing a projected $456.1 million budget shortfall in the current fiscal year that ends June 30. Next year's budget outlook is expected to get worse, although official projections are not yet available.
Kentucky lawmakers last month approved a plan to balance the budget by cutting some government services, doubling the state tax on cigarettes and imposing a 6 percent tax on alcohol - beer, wine and liquor. Lawmakers are also considering a plan for state government to keep about $130 million for road projects by blocking a 4 percent drop in Kentucky's gasoline tax from kicking in.
Jensen said any money that could be generated from oil and natural gas royalties could help.
"There's some potential here," Jensen said. "I'm hopeful that it'll help us in this time of need."
Brandon Nuttall, a geologist with the Kentucky Geological Survey, said exact numbers for how much oil and natural gas resources exist in the state, and how much reasonably can be removed, is unknown. Kentucky likely has about 1.3 billion or more barrels of oil and at least 12 trillion cubic feet of natural gas, Nuttall said.
If sold, what's there likely could bring in money for programs such as scholarships or habitat restoration, Nuttall said.
"If you're looking for enough revenue, for example, to make up the budget shortfall, that's not going to happen," Nuttall said. "There's lots of different programs that this income could help support."
Tom FitzGerald, head of the Kentucky Resources Council, an environmental advocacy group said there were some concerns about whether the legislation would allow leasing of public lands before the survey is completed. FitzGerald said he wanted the measure to ensure that land managers would have a say in whether lands such as nature preserves, wilderness or public park lands should be open to drilling.
"We want to fully protect those values," FitzGerald said.
Nevertheless, there are questions remaining even if the legislature approves the plan.
Officials still would have to determine not only if the state owns the land, but whether it has mineral rights to any underground resources, Jensen said. Any drilling would have to be in the state's best interest and maintain the environment and local scenery, Jensen said.
The state may also want to look to drill under lakes, rivers and streams, he said. Other states already allow for oil and natural gas to be removed from government land, including Montana, Indiana and Louisiana, Jensen said.
Whether Kentucky could make thousands or millions in royalties remains to be seen, Jensen said. That's part of what he's hoping the survey can determine, Jensen said.
"I know it can generate some revenue, but is it going to generate a lot?" Jensen said. "I don't know."
FRANKFORT, Ky. -- A proposal moving in the Kentucky General Assembly is looking to find some extra cash by searching underground.
As states across the country struggle to find money to pay their bills - federal stimulus help aside - state Sen. Tom Jensen has proposed Kentucky look to see if it can profit from any natural gas or oil brewing beneath state-owned property. That would include searching on land for state parks and public universities.
"We need to start thinking outside the box a little bit, instead of just thinking about cutting and taxing," Jensen, R-London, said.
Kentucky has pockets of underground oil and natural gas reserves. Exactly how much lies beneath the surface of state-owned land remains to be seen. Jensen, who is chairman of the Senate Natural Resources and Energy Committee, has proposed two separate measures aimed at finding out.
One proposal Jensen has offered would order the Kentucky Geological Survey at the University of Kentucky to study where state-owned land with underground natural gas or oil exists. Another would authorize the state to begin leasing that land and collect royalties.
The bill would also apply to public universities in Kentucky.
Souring national and state economies left Kentucky state government facing a projected $456.1 million budget shortfall in the current fiscal year that ends June 30. Next year's budget outlook is expected to get worse, although official projections are not yet available.
Kentucky lawmakers last month approved a plan to balance the budget by cutting some government services, doubling the state tax on cigarettes and imposing a 6 percent tax on alcohol - beer, wine and liquor. Lawmakers are also considering a plan for state government to keep about $130 million for road projects by blocking a 4 percent drop in Kentucky's gasoline tax from kicking in.
Jensen said any money that could be generated from oil and natural gas royalties could help.
"There's some potential here," Jensen said. "I'm hopeful that it'll help us in this time of need."
Brandon Nuttall, a geologist with the Kentucky Geological Survey, said exact numbers for how much oil and natural gas resources exist in the state, and how much reasonably can be removed, is unknown. Kentucky likely has about 1.3 billion or more barrels of oil and at least 12 trillion cubic feet of natural gas, Nuttall said.
If sold, what's there likely could bring in money for programs such as scholarships or habitat restoration, Nuttall said.
"If you're looking for enough revenue, for example, to make up the budget shortfall, that's not going to happen," Nuttall said. "There's lots of different programs that this income could help support."
Tom FitzGerald, head of the Kentucky Resources Council, an environmental advocacy group said there were some concerns about whether the legislation would allow leasing of public lands before the survey is completed. FitzGerald said he wanted the measure to ensure that land managers would have a say in whether lands such as nature preserves, wilderness or public park lands should be open to drilling.
"We want to fully protect those values," FitzGerald said.
Nevertheless, there are questions remaining even if the legislature approves the plan.
Officials still would have to determine not only if the state owns the land, but whether it has mineral rights to any underground resources, Jensen said. Any drilling would have to be in the state's best interest and maintain the environment and local scenery, Jensen said.
The state may also want to look to drill under lakes, rivers and streams, he said. Other states already allow for oil and natural gas to be removed from government land, including Montana, Indiana and Louisiana, Jensen said.
Whether Kentucky could make thousands or millions in royalties remains to be seen, Jensen said. That's part of what he's hoping the survey can determine, Jensen said.
"I know it can generate some revenue, but is it going to generate a lot?" Jensen said. "I don't know."
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