published by NGI’s Shale Daily: July 10, 2013

Colorado drillers may face more scrutiny about emissions from their oil and natural operations under regulations being pondered by the state’s Department of Public Health and Environment (CDPHE).

The Colorado Oil & Gas Conservation Commission has primary oversight of exploration and production and the state’s growing 500,000-plus wells. The CDPHE oversees the state’s air quality, and air pollution emissions from drilling operations are the No. 1 source of volatile organic compounds and the third-largest source of nitrogen oxides, officials said.

Several proposals are on the table to revamp CDPHE’s regulations, all part of a 2013 rulemaking effort by the department’s Air Quality Control Commission (AQCC). Among other things, regulators want to adopt in full the U.S. Environmental Protection Agency’s (EPA) New Source Performance Standards (NSPS) within the Clean Air Act.

EPA last year gave industry until 2015 to eliminate harmful emissions from drilling sites (see Shale Daily, April 19, 2012). The state may adopt rules, but they would have to be at least as stringent as EPA’s. The AQCC also is reviewing “overlaps and gaps” in state/federal oversight. The nine-member AQCC last year postponed fully adopting the EPA standards.

“As we move toward adopting EPA’s rules, we are also looking at cost-effective enhancements to the state’s existing air quality regulations,” CDPHE Air Pollution Control Division director Will Allison said.

The nine-member AQCC has several goals in mind that it hopes to achieve through the expansive rulemaking effort:

Identify and implement strategies to improve the program’s effectiveness and efficiency;

Find ways to reduce permitting burdens on both the division and the regulated community “without impacting environmental benefits” from the permit program;

Address oil and gas development growth by adopting “reasonable” emission reduction strategies; and

Lay the groundwork for ongoing efforts to reduce oil and gas emissions “while minimizing burdens that don’t provide environmental value.”

In line with those goals, proposed regulations are being considered to increase and streamline permit threshold criteria pollutants, and to remove catchall provisions that require permits for all sources subject to NSPS or maximum available control technologies.

New rules being considered include rules governing ozone and ozone precursors for tanks that would include more covered tanks (condensate, produced water, crude oil, etc.) and rules covering emission capture and routing to control devices or sales lines. Rules also are proposed to address:

Fugitive emissions and leaks by increasing their identification and requiring leaks be repaired;

Wellhead venting and flaring; and

Timely tie-ins of wells to natural gas sales lines to reduce venting or flaring.

Doug Flanders, policy director for the industry-led Colorado Oil and Gas Association (COGA), said the industry has pledged a commitment “to the continual pursuit of emissions reductions,” and COGA “will continue to partner with our communities and state regulators” to achieve it.

A meeting to present the AQCC proposals is set for Aug. 7, with a request for a hearing scheduled for Aug. 15

SHALE GAS

At this writing, there are 137 shale formations located in 41

countries throughout the world. These shale formations repre- sent 10% of the worlds crude oil and 32% of the worlds natural gas supply. Global supplies of shale oil and gas are globally abundant. Various projections are that the next discovery of shale formation will be in the Middle East and Caspian regions.

More than half of the identified shale oil reserves are located outside of the United States and are currently located in four countries —Russia, China, Argentina and Libya. With more than half of the non United States shale Gas reserves are con- centrated in five countries—China, Argentina, Algeria, Canada and Mexico. Currently the United States is ranked second after Russia for Shale Oil and forth after Algeria for Shale Gas. These numbers are based on 2013 Estimates and may change with-in the next year or two.

Based on recent estimates the United States has technically re- coverable resources of 345 billion barrels of the world shale oil reserves and 7,299 trillion cubic feet of the worlds shale gas re- serves. Currently only the United States and Canada are pro- ducing shale oil and shale gas in commercial quantities.

Carl

Zeeco, Inc. is exhibiting this week at the DUG Bakken and Niobrara Conference & Exhibition

Unconventional Oil: On the Rise Again!

DUG Bakken and Niobrara (formerly DUO Reservoirs) focuses on the world-class Bakken, the emerging Niobrara and oil- and liquids-rich resource plays throughout the Rocky Mountain region. The latest geological thinking, high-potential targets in the Denver-Julesburg, Uinta, Piceance, Powder River and Green River basins, best practices for drilling and completions, and midstream challenges are examined.

There are major changes taking place within the energy production industry in the US. Multiple factors are driving these changes such as environmental regulations and the newly found abundance of natural gas.

The new environmental regulations have put tighter restrictions on pollutants and emissions from coal fired power plants which have led to many being decommissioned or converted to natural

gas fired operation. At the recent ðÌð”Electric Power ConferenceðÌð• held in Chicago the keynote speaker stated ðÌð’it is virtually impossible to build new or add capacity to a coal fired plant todayðÌð“.

The new abundance of natural gas being harvested form the various shale plays has lowered the price of gas to such a level that has become very attractive for the power industry. This low cost fuel and combined cycle technology will drive the industry for the next several decades. In fact current forecasts indicate that 80% of all new electric generating capacity between 2013 and

2035 will be combined cycle plants. It is estimated there are about 200 combined Cycle Power

Plants currently in front end engineering.

The news of more and more shale gas plays being discovered is also affecting the energy infra- structure in the US. Where the US was previously and importer of oil and gas we are now shifting the paradigm to that of an energy exporter. Additionally where we previously were flowing various energy products from refineries and import terminals in the gulf coast to various regions in the US, we are now looking at reversing the flow of these pipelines to take the gas and NGLs

from the various shale plays to the gulf refineries and convert the import terminals to export facilities.

As a result of all these changes, TM Filtration is gearing up for this explosion in growth to capitalize on the opportunities presented by the ðÌð’new gas industryðÌð“. For example you will now see this catch phrase on the TM Filtration web page (www.tmfiltration.com) and in the next several weeks we will have a totally redesigned web site to address the gas market.

More importantly TM Filtration gas coalescing filters are now being used in the various ðÌð’streamsðÌð“

of the new gas market. Our equipment is being used in custody transfer stations in the

mid-stream transmission from the shale wells. We are also providing our coalescing filters to be used on Fuel Gas Conditioning packages that will be used to clean the fuel gas to enhance the performance of the downstream gas turbine generators. The illustration below shows typical applications for TM Filtration gas filters.

We are continuing to gather as much information as we can with regard to the shale oil and gas industry. We will send out information on a periodic basis as we discover projects in your various sales territories. Potential customers for our products will be energy and power engineering design firms, exploration and production companies, midstream gathering and distribution companies, refineries and power generation plants, including Simple Cycle and Combined Cycle technology. Keep in mind the power plants will also have requirements for the Fluid Engineering line of strainer products for cooling tower, water make up, and steam condensate

recovery applications.