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Environmental Protection Agency Signs Off On Hydraulic Fracturing By Brandon Davis

One of the most contentious issues surrounding the process of hydraulic fracturing (commonly called “fracking”) is the belief that it leads to groundwater contamination. Yet, according to Environmental Protection Agency Administrator Lisa Jackson, the process “is perfectly capable of being clean.” Moreover, she agrees with U.S. President Barack Obama in that hydraulic fracturing can benefit the economy through job creation without sacrificing the environment.

Despite these and other compelling arguments, fears surrounding the procedure continue to drive a wedge between citizens, legislators, and gas-extracting operators. Nowhere has this confrontation been clearer than in New York State. Concerns about groundwater contamination in several towns have spurred the passage of recent anti-fracking legislation. The issue has become such a lightning rod that the New York Supreme Court recently ruled that local drilling in the town of Dryden should be prohibited. The ruling essentially constitutes a ban.

Below, Brandon Davis explain how hydraulic fracturing works, and present the concerns posed by critics of the procedure. He then takes a closer look at evidence suggesting their fears are unwarranted.

Brief Overview of Fracking: How It Works

The main purpose of fracking is to extract natural gas and oil from shale formations. The procedure represents a relatively recent advancement in technology, and has made gas and oil extraction economical. Back in the 1970s, before hydraulic fracturing was widely used, reaching deposits trapped within shale formations was cost-prohibitive. Today, due in large part to fracking, gas production in the United States is much higher. Many proponents of the process argue that it will help the U.S. reduce its reliance upon foreign oil imports.

A well is drilled thousands of feet below the surface to reach the layer of shale rock. It descends vertically until it reaches the shale formation.

More than a million gallons of water, along with sand and various chemicals are sent through the well. Most fracks contain 99% water and sand. This introduces a high level of pressure into the rock layer, which causes fissures to form. The sand keeps the fissures open, allowing natural gas to escape into the well through small perforations made in the steel casing. The gas flows from the well into a special container. The pressurized water is then removed and transported to a treatment center.

Concerns Regarding Potential Water Contamination

Swan Energy knows that primary concern posed by fracking critics is that groundwater – water found below the surface – is contaminated by the gas-extraction procedure. They particularly complaint is about contamination of water wells in highly-populated areas, since the general public is exposed to such wells. Critics allege that the chemicals added to wells escape from the casing, and thus jeopardize the safety of the public’s drinking water.

Arguments That Dispel Groundwater Contamination Fears

There are few, if any, reliable studies that clearly demonstrate the contamination argued by critics of hydraulic fracturing. In fact, EPA Administrator Lisa Jackson testified in front of a House Oversight Committee in May 2011 that she was unaware of any documented cases showing such results. She stated, “I’m not aware of any proven case where the fracking process itself has affected water.”

Additionally, Mr. Brandon Davis points to a report titled “Fact-Based Regulation For Environmental Protection In Shale Gas Development” that shows many of the issues attributed to fracking actually stem from other causes. The report’s authors demonstrated that if contamination occurs, it is due to poor well construction as opposed to the fracking procedure. Such problems can be found in all gas and oil drilling projects, implying that the focus on hydraulic fracturing is misplaced.

The Path Ahead For Hydraulic Fracturing

The industry is in favor of smart regulations that will improve the construction of wells, and thus minimize the likelihood of gas and fluid seepage. To that end, many operators are working with state legislators. The danger is that unwarranted concerns lacking factual support may prompt many states to impulsively pass laws banning fracking, despite its proven benefits. While the road ahead is uncertain, Ms. Jackson’s testimony and recent comments should prove helpful toward forging a reasonable path forward, say Brandon Davis of Swan Energy.

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Swan Energy Continues Drilling the Golden Trend Uplift of Oklahoma

Over the past several years Swan Energy, Inc., through and alongside their strategic partners, has benefited from a successful drilling program that targets the Bromide formation of the McClain County.

Historical Data Highlights of currently targeted sections in McClain County, Oklahoma:

Total BOE                                                                      550,221,750

Wells Drilled                                                                   4,575

Dry Holes                                                                       33

Completion %/(Geological Success)                                 92.7%

BOE Completion                                                             129,708

Avg. IP                                                                           146 BOPD

To date Swan Energy has drilled 17 wells in the Golden Trend, out of which 17 have found oil and/or natural gas: 12 wells are producing, and 4 close to completion.

“I am excited to announce the continuation of our latest exploration efforts in the Golden Trend of Oklahoma.  It is a 3-well project that will target the Bromide formations with back up zones in the Hunton, Viola and Deese Sands,” says CEO of Swan Energy Brandon Davis.

The Three Queens Joint Venture will drill three wells in the exploration area, starting with an offset to two of the better wells Swan Energy Inc. has drilled in McClain County, Oklahoma.   The first well being offset has already made 50,000 BOE out of the 1st Bromide, and has significant reserves in the Hunton, Viola and Hart Formations to be tapped.  The second well offsets a well that has made 12,000 BOE in the last 90 days from the Hunton/Viola formations.

“The Three Queen JV is getting an opportunity offset to wells we have already drilled and had success with.  Moreover Joint Venture partners have the opportunity to come on board with Swan Energy and our operator who combined have drilled over 35 wells in the immediate area, and have over a dozen more wells to be drilled by the years end.   This is a chance to participate with the leaders of exploration in McClain County, OK,” said John S. Herring, Director of Exploration, Swan Energy Inc.

 
 

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Unexpected Top Oil Field Found in Swan Energy’s Backyard

Unexpected Top Oil Field Found in Swan Energy’s Backyard

After 39 years of developmental history, the Wattenberg oil and gas field was a close miss. Wattenberg was supposed to have already peaked as a gas field and not considered much of an oil field says Swan Energy.  Although it was expected to produce natural gas for just a few years, Wattenberg has been steadily producing gas since 1970. Wattenberg now is the 7th largest gas field in the United States.

That all changed in 2009 when the first Niobrara shale horizontal well (famously known as the Jake) was drilled and produced 50,000 barrels of oil in the first 90 days.   A year later the Jake well is still producing more then 2,500 barrels of oil per month.  In 2010 Swan Energy noted that, using the Jake well as a model, several other companies drilled comparably performing wells in the Niobrara shale using horizontal drilling and fracking techniques.

Two years ago the oil rush began in Colorado.  The Wattenberg is not considered the largest oil field in terms of acreage but it is what we at Swan Energy call “oil dense”.  It is two to four times more “oil dense” than the Bakken field (based on 25 -40 OOIP MMBEO/Section for the Wattenburg).

It is estimated that the Wattenberg field can produce 55 Million Barrels of Oil Equivalent per year in the Niobrara shale formation.

The Wattenberg oil and gas field is 20 miles north of the Swan Energy Inc corporate headquarters in Colorado.

The Niobrara shale formation is about 6,800 – 7,200 feet deep with an average thickness of 400 feet. However, the northwest portion of the Wattenberg field can be as much as 1,400 feet thick.  With recent advances in horizontal drilling and hydraulic fracturing the Niobrara shale found in the Wattenberg field is quickly becoming one of the hot oil plays of the west.

Public companies like Anadarko, Chesapeake, Noble Energy, Devon and ConocoPhillips are grabbing as many mineral and land leases as possible.   These companies are going after the estimated 55 million barrels of oil equivalent per year sitting untapped in the Wattenberg field found in the Niobrara formation.  The Barrels of Oil Equivalent (BOE) per year expectation and the increased ability to extract the oil quickly through horizontal drilling and fracturing has created an oil race that Colorado has never seen before.

High oil prices have created even more urgency.  Horizontal fracturing wells make sense to drill while oil prices are high.  The cost of one well is between 4 to 5 million dollars.  Oil companies are willing to take this risk because they know, based on the results from the development testing wells they drilled in 2010 and 2011, that they will hit oil and will see a 30% increase in both initial production (IP) and one year cumulatives over vertical wells.

Anadarko is projecting a payout in 10 months on a typical horizontal well drilled in the Wattenberg field.  These factors explain why public oil companies are racing to get as many land and mineral leases as possible. They have an aggressive drilling schedule of 10 to 12 wells per month because they are projecting a much larger production in a shorter time span when compared to typical vertical well projects.

Any investor looking to invest in the oil and gas sector should keep an eye on the Wattenberg oil and gas field.   Most of the companies that are drilling here are seeing well averages triple their Expected Ultimate Recovery (EUR) revenue production levels in the last several months.

In 2009, when horizontal drilling and fracturing started in this field, the Wattenberg saw at least a 20% year-on-year growth rate in Barrels of Oil Equivalent (BOE) since the wells have come online.

Brandon Davis of Swan Energy Inc thinks there are several factors that make Wattenberg a very advantageous and conservative oil play:

  • High-quality, liquids-rich reservoir
  • Strong proven well performance
  • High hydrocarbon saturations per acre (2 to 4x over the Bakken)
  • Large continuous reservoirs
  • Horizontal drilling and fracturing ability to tap into reservoirs that are 12 times larger then the vertical wells in the same area.
  • High Barrels of Oil Equivalent per Day (BOED) production numbers
  • Short 10 day drilling schedules.
  • Quick payout points based on EUR range of 300,000 – 600,000 BOE per well.
  • With only a few dozen horizontal wells starting to produce in the 3rd Quarter of 2011, the Wattenberg field still was able to set a new record for quarterly sales volume for horizontal wells of 72,400 BOEPD – that’s a 22% increase over 3rd quarter 2010.

With the modern horizontal drilling and fracturing techniques and short Expected Ultimate Recovery curves, Wattenberg has been proven to be a very conservative oil move for investors and companies that are drilling here.

Considering high oil prices, the pressure cooker that is heating up in Iran and the Middle East, the discovery of this oil field could not have come at a better time for the United States.  In 2012, the Wattenberg oil and gas field will play an important role in decreasing our dependence on foreign oil while increasing domestic jobs.   With the Wattenberg field in Swan Energy’s backyard you can rest assured that we will be looking at this tremendous opportunity.

 
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Posted by on March 12, 2012 in Oil and Gas Production

 

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Current Improvements In Oil And Gas Industry by Swan Energy

Around 40 percent of coal generation plants either tend not to fulfill the new U.S. Environmental Protection Agency (EPA) criteria of formidable limitations on mercury, sulfur and NOx or are 50 years or older; this opens the door to recent new developments in gas and oil technology that could take the place of coal production for U.S. energy consumers


In the foreseeable future Swan Energy thinks that Americans are going to turn toward gas generation simply because gas factories will be less costly to assemble, less costly to run (at projected gas prices), and regulating approvals for new construction will be less complicated to obtain.

More power generators utilize gas for electrical energy, escalating the American need for natural gas. Engineering has enabled the drilling of natural gas from shale and various other formations found in large proportions throughout the U.S.

The exploration and development industry of gas and oil has improved operations and raised the size of American resources since 2006 by 39 percent, making the exploration and generation of natural gas more efficient, risk-free and ecologically favorable.

New oil and gas improvements in technologies include 3-D and 4-D seismic imaging, CO2 sand fracturing, coiled tubing, measurement-while-drilling (MWD), slimhole drilling, and hydraulic fracturing. 3-D and 4-D seismic imaging mixes seismic imaging techniques with personal computer processors to create either a three-dimensional or four-dimensional time model of the subsurface levels facilitating the recognition of deposits

One way that can help oil and natural gas to circulate more openly via larger cracks in the earth is to utilize a mixture of sand proppants and solution called CO2 sand fracturing.

Coiling tubing takes the place of the traditional rigid drill pipe with an elongated coiled pipe string that bends very easily to reduce oil-drilling costs. MWD systems assist in the collection of data from the bottom of a well during drilling and supply technical engineers and drilling teams with up-to-date data with regards to the dynamics of rock clusters. Drilling a slimmer hole in the ground to get to gas and oil deposits is referred to as slimhole drilling. Hydraulic fracturing is used to free natural gas caught in shale rock clusters and over 90 percent of U . S . gas wells utilize it to boost production. Colorado gas exploration pioneers utilize the environmentally friendly technique of drilling 15 or more wells from a single pad. This engineering decreases the traffic affiliated with pump trucks, proppant delivery and water removal along with improving upon the way that water is dealt with.

All these latest innovations in the oil and gas industry, along with the more challenging restrictions the EPA is leveling on coal plants predicts a bright future for nationally acquired and developed oil and natural gas; America’s need for a reliable energy source for the long term might have been discovered right under our feet.

 
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Posted by on November 7, 2011 in Oil and Gas Production

 

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What is Direct Participation in Oil and Gas? by Swan Energy

Direct participation in oil and gas is not about buying stock options in gas and oil organizations or investing in general public businesses

Direct participation in the industry means that a trader or participant places their money into an endeavor which is going to get out there and drill a specific number of wells (these projects may include more than one wells) with the intent of these wells generating oil and/or gas that will then deliver income back to the investor.

This illustration by Swan Energy shows how direct participation in oil and gas works:

Direct Participation in Oil and Gas explained by Swan Energy

The income out of the manufacturing goes back to the enterprise and spread out to the participants proportionate to their Working Interest (minus taxes, charges, running cost, etc.).

Working interest is the term for primary liable portion of the ongoing expense associated with research, drilling and processing. Working interest owners furthermore completely engage in the earnings of any prosperous oil or gas wells.

An oil well at dawn

It is essential to take note that when anybody looks at taking part in a working interest endeavor they need to additionally be certain that the enterprise has a turnkey agreement so that they recognize what their charges is going to be up front.

These beforehand costs generally consist of research, drilling and assessment. Presently there may also be supplemental opportunities that will change from well project to well project. Fracking, pump jacks, and storage tanks are typical illustrations of typical additional expenses that are allotted to the participants. Make sure that you comprehend the financial requirement before getting engaged in a Joint Venture.

The notion of developing relationships or Joint Ventures to develop company connections has been all around for centuries. There are numerous distinct kinds of entities for direct participation in gas and oil undertakings; the most typical are Limited Liability Partnerships and Joint Ventures. A video presentation contrasting Limited Liability Partnerships and Joint Ventures in relation to direct participation in gas and oil undertakings may be found at Swan Energy’s web page.

If the endeavor is a Joint Venture (the entity that Swan Energy employs), there are two main functions that are important to understand. The very first role is the investor or participant. The participant puts up cash in return for Working Interest in the venture.

The next role is the managing venturer. The managing venturer runs the daily operations of the endeavor which might consist of, but is not limited to, developing the endeavor, managing the drilling and operations of each and every well, holding conference calls, dealing with any concerns that might come up, and controlling the financial aspect of the enterprise including obligations on oil and gas income back to the contributors based on profits which can be obtained from the production of each and every well.

In a Joint Venture, the participants have the command and make the judgements of Joint Venture. The Managing Venturer then implements these choices. In fact, the participants can substitute the Managing Venture with a simple majority vote

To illustrate, the contributors have the control to decide whether to cap a well or go to completion on a well. A lot of investors like this sort of oversight and control with their investments.

With any direct participation in oil and gas ventures comes risk. There’s constantly the chance that as soon as a well is drilled and tested that there’s no gas or oil found.

Swan Energy uses the Joint Venture structure to satisfy the targets of the participants in our programs to:

  1. Supply cash distributions from operations
  2. Provide increased tax benefits
  3. Place control of the operations and management of the oil and gas program in the hands of the participants.

With oil extraction costs between $8 to $10 per barrel and each barrel selling north of $80, Swan Energy thinks that it doesn’t take an engineer to figure out that the oil market is positioned to see high profits that may be made at the original source for unbiased investors by participating in oil wells directly.

 
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Posted by on October 25, 2011 in Oil and Gas Production

 

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Swan Energy, Inc. Helps Alleviate America’s Dependence on Foreign Oil

From Swan Energy, Inc.

Swan Energy, Inc., an independent oil and natural gas producer based in Denver, CO, is in the forefront of the search for domestic petroleum resource for the country. Specializing in the acquisition of petroleum-rich areas in the continental United States and their development into viable drilling fields, Swan Energy is gearing towards the country’s self reliance in energy resources.

The numbers clearly show it. According to the US Energy Information Administration (EIA), the US is the second biggest consumer of petroleum using up to 22.6 bbl/year per capita in 2008, but was only third in production at 8,514 103 bbl/d in the same year. Furthermore, the US EIA reports that the country imported an average of 12.220 103 bbl/day or 1,943 103m3/day in 2006 to address the large demand for petroleum.

Of the total US petroleum consumption, approximately 70% goes to transportation, the 30% to the industrial industry (23%), residential and commercial sector (5%), and electric power (2%). If the country can increase the domestic petroleum supply and depend less on foreign import, the price of gasoline will significantly decrease for the everyday consumer. Independence from foreign oil import also means more room for the government to pursue its own political directives.

From Swan Energy, Inc.

Swan Energy, Inc. is investing in the acquisition and development of domestic petroleum resources.

More information about Swan Energy and its services may be found at SwanEnergyInc.com.

From Swan Energy, Inc.
 
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Posted by on July 9, 2010 in Uncategorized

 

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