GreenHunter Energy, Inc. (NYSE Amex: GRH)
The Company’s strategic shift into the water resource management business associated with the oil and natural gas sector is supported by funding and market approval as well. Greenhunter considers this direction to be a multi-billion dollar market opportunity .
Management’s oil field experience is being leveraged with their long term relationships with established oil and gas producers.
The Company’s focus is on:
- The Marcellus Shale in the Appalachian Basin
- The Eagle Ford Shale in West Texas
- The Bakken Shale in the Williston Basin
These unconventional shale plays are experiencing the most prolific growth in activity within the United States and Greenhunter intends to significantly increase their presence in these unconventional resources plays.
Additionally, because a significant business opportunity also exists in the proper handling and transportation of produced brine, frack-flowback and drilling mud, GreenHunter is planning to incorporate advanced logistics and asset management systems to help oil and gas operators reduce their total water resource management costs.
Greenhunter’s Market Cap on Friday, August 5, 2011, reached $20.95 million supported by strong trading volume.
On June 21, 2011, the Company announced the closing of a non-brokered private placement of 522,500 Units of GreenHunter Energy, Inc. at a price of $2.00 per unit, for aggregate gross proceeds of $1,045,000.
In conjunction with this closing, GreenHunter’s Chairman and Chief Executive Officer, Gary C. Evans, has also elected to convert $500,000 due under an existing promissory note to him into the equivalent Units (250,000 Units) of GreenHunter Energy pursuant to the terms of the offering.
Hydraulic Fracturing or Hydrofracking Requires an Injection of Large Amounts of Water
Recent improvements in drilling and completion technologies have unlocked large reserves of hydrocarbons in multiple unconventional resources plays in North America. These new drilling methods often involve a procedure called hydraulic fracturing or hydrofracking. This process involves the injection of large amounts of water, sand and chemicals under high pressures into rock formations to create and prop open fissures to stimulate the production of oil and natural gas. According to the American Petroleum Institute, more than 1 million wells have been safely fracked in the United States during the last 60 years.
Unconventional Wells Can Require More than Four Million Gallons of Water
Unconventional wells can require more than four million gallons of water to complete a hydrofracking procedure. The Environmental Protection Agency estimates that 70 to 140 billion gallons of water are pumped into 35,000 fracking wells every year. According to other industry sources, the number of fracking wells exceeds 50,000 annually. Because a portion of the water that is used in the hydrofracking process will return to the surface as a by-product or waste stream (commonly referred to by oil and gas operators as frack-flowback), industry procedures for the containment, treatment, transportation, reuse and disposal of these fluids have become well-established.
Oil Field Brine Creates Additional Costs for O&G Industry
In addition to frack-flowback, oil and natural gas wells also generate produced salt water or brine which is water from underground formations that is brought to the surface during the normal course of oil or gas production. Because the produced water has been in contact with hydrocarbon-bearing formations, it contains some of the chemical characteristics of the formations and the hydrocarbons. Produced water is the largest volume by-product or waste stream associated with oil and gas exploration and production. Estimates from the U.S. Department of Energy’s National Energy Technology Laboratory (NETL) suggest that the total volume of produced water generated by U.S. onshore and offshore oil and gas production activities is over 20 billion barrels or 882 billion gallons (1 barrel equals 42 U.S.gallons).
While produced water (also known as oil field brine or brine due to its high salinity content) can be reused if certain water quality conditions are met, approximately 95 percent of U.S. onshore produced water generated by the oil and gas industry is disposed of by using high-pressure pumps to inject the water into under-ground geologic formations or is discharged under National Pollutant Discharge Elimination System (NPDES) permits. The remaining 5 percent is managed through beneficial reuse or disposed through other methods including evaporation, percolation pits, and publicly owned treatment works.
Federal, state and local legislation is emerging as a result of the considerable focus that is being directed to the exploitation of North America’s abundant reserves of shale oil and natural gas. New legislation and regulatory initiatives relating to hydraulic fracturing are expected to result in increased costs and additional operating restrictions for oil and gas explorers and producers.
GreenHunter Looking at Water Treatment and Disposal Facilities
To rebuild GreenHunter as a water resource services provider in the oil field, company management is looking to acquire and develop water treatment and water disposal facilities. GreenHunter management is also in negotiations for partnerships, licensing agreements and joint ventures with providers of and owners of water treatment and water recycling systems and patent holders.
GreenHunter Water’s agreement to acquire approximately 99 mineral acres and 84 surface acres located in West Virginia is intended to support the development of a commercial water service facility. The acquisition includes an existing well that has been approved for commercial water disposal.
Planned uses for this location include:
- A treatment facility for oilfield produced water
- Frac water and drilling mud
- One or more salt water disposal (SWD) wells
- A heavy equipment and frac tank lay-down yard
The property to be acquired through this transaction is strategically located in the heart of the drilling activity within the Appalachian resource plays of the Marcellus Shale and new Utica Shale, as well as being strategically located nearby existing highways where water hauling trucks are very active.
This development by GreenHunter Water is a direct response to a request for a proposal for water management solutions to support the Marcellus Shale drilling activities of a number of active Appalachian exploration and production companies.
GreenHunter Energy, Inc.
Jonathan D. Hoopes President & COO
1048 Texan Trail Grapevine, TX 76051
Tel: (972) 410-1044
Any statements in this release regarding future expectations and prospects for GreenHunter Energy and its business and other statements containing the words “believes”, “anticipates”, “plans”, “expects”, “will” and similar expressions constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including the substantial capital expenditures required to fund its operations, the ability of the Company to implement its business plan, government regulation and competition. GreenHunter Energy undertakes no obligation to update these forward-looking statements in the future.
GRH Disclosure: StockGuru entered into an investor relations consulting and market awareness contract with GreenHunter Energy. We hold not shares and will not be receiving any shares. To avoid all potential conflicts of interest, we never sell shares into the open market during an active market awareness or investor relations program. This means that as we release new information about a particular client company either on our site or otherwise authored by us, you can be confident we are not selling shares at the same time. StockGuru is not a registered investment adviser or a broker/dealer. StockGuru makes no recommendation that the purchase of securities of companies profiled in this web site is suitable or advisable for any person, or that an investment in such securities will be profitable. The Company will compensate us three thousand dollars monthly in cash and four thousand two hundred dollars in 144 restricted shares based on the volume weighted average share price for the last five days of each month. Initially, we have been funded the first cash payment and are due the first five thousand shares of this contract as we begin our coverage on July 19, 2011. StockGuru – 1601 Berwick Drive – McKinney, Texas 75070 – (469) 252-3031.