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 March 05, 2014
U.S. Hopes Boom in Natural Gas Can Curb Putin
    Author: Coral Davenport and Steven Erlange

 
http://www.nytimes.com/2014/03/06/world/europe/us-seeks-to-reduce-ukraines-reliance-on-russia-for-natural-gas.html?emc=eta1&_r=0
 WASHINGTON --- The crisis in Crimea is heralding the rise of a new era of American energy diplomacy, as the Obama administration tries to deploy the vast new supply of natural gas in the United States as a weapon to undercut the influence of the Russian president, Vladimir V. Putin, over Ukraine and Europe.

The crisis has escalated a State Department initiative to use a new boom in American natural gas supplies as a lever against Russia, which supplies 60 percent of Ukraine's natural gas and has a history of cutting off the supply during conflicts. This week, Gazprom, Russia's state-run natural gas company, said it would no longer provide gas at a discount rate to Ukraine, a move reminiscent of more serious Russian cutoffs of natural gas to Ukraine and elsewhere in Europe in 2006, 2008 and 2009.

The administration's strategy is to move aggressively to deploy the advantages of its new resources to undercut Russian natural gas sales to Ukraine and Europe, weakening such moves by Mr. Putin in future years. Although Russia is still the world's biggest exporter of natural gas, the United States recently surpassed it to become the world's largest natural gas producer, largely because of breakthroughs in hydraulic fracturing technology, known as fracking.

"We're engaging from a different position because we're a much larger energy producer," said Jason Bordoff, a former senior director for energy and climate change on the White House's National Security Council.

Over the past week, Congressional Republicans have joined major oil and gas producers like ExxonMobil in urging the administration to speed up oil and natural gas exports. Although environmentalists, some Democrats and American manufacturing companies that depend on the competitive advantage of cheap domestic natural gas oppose the effort, they have fallen to the sidelines in the rush.

For Russia, energy supplies are as important to keeping a hold on Ukraine and the other former countries of the Soviet Union as is the Russian Army itself. Ukraine would freeze without Russian gas, and its flow has been a considerable source of wealth and corruption in both countries. But Russia is also obligated by contract to provide natural gas to Western Europe, and Moscow remains highly dependent on Ukrainian pipelines to get it there.

David Dalton, the editor of the Economist Intelligence Unit, said: "Russia has always used gas as an instrument of influence. The more you owe Gazprom, the more they think they can turn the screws."

But this time, there is a major difference. As recently as 2007, American natural gas supplies were believed to be dwindling, and the George W. Bush administration was considering importing natural gas from Russia. Since then, fracking, which environmentalists say could contaminate America's water supplies, has transformed the strategic landscape.

The United States does not yet export its natural gas. But the Energy Department has begun to issue permits to American companies to export natural gas starting in 2015. American companies have submitted 21 applications to build port facilities in the United States to export liquefied natural gas by tanker. The agency has approved six of the applications.

About 80 percent of Russian gas exports to Europe pass through Ukraine. Europe, in turn, depends on Russia for 40 percent of its imported fuel. According to Mikhail Korchemkin, head of East European Gas Analysis, a consulting firm in Pennsylvania, the most important pipelines that run through Ukraine are the ones leading to Slovakia. They will eventually take gas to Germany, Austria and Italy.

However, even if the Energy Department approves all the pending permits from companies seeking to export natural gas, the fuel could not begin flowing overseas for at least a few years. Most American natural gas export terminals are in the early stages of construction. While one, in Sabine Pass, La., is tentatively scheduled to open in late 2015, most others will not start operating until 2017 or later.

At the helm of the new energy diplomacy effort is Carlos Pascual, a former American ambassador to Ukraine, who leads the State Department's Bureau of Energy Resources. The 85-person bureau was created in late 2011 by Hillary Rodham Clinton, the secretary of state at the time, for the purpose of channeling the domestic energy boom into a geopolitical tool to advance American interests around the world.

In an interview, Mr. Pascual asserted that his team's efforts had already weakened Mr. Putin's hand, and had helped lower Ukraine's dependence on Russia for natural gas supplies to 60 percent, down from 90 percent.

Mr. Pascual said that his team had worked to help Ukraine and other European countries break away from dependence on Russian gas by finding supplies elsewhere, including Africa, and assisting the Europeans to build up their natural gas storage. The team, he said, is working with Ukraine and the European Union on completing a European energy charter, which already allows natural gas to move more quickly through Europe and permits countries to negotiate lower rates with Gazprom.

In addition, he said, the team is helping countries develop their own natural gas resources, including in partnership with American energy giants. Halliburton has started fracking for natural gas in Poland, while Shell last year signed a contract to explore for natural gas in Ukraine.

Mr. Pascual said that although the prospective American exports would not immediately solve the problems in Europe, "it sends a clear signal that the global gas market is changing, that there is the prospect of much greater supply coming from other parts of the world."

A gas pipeline in a village outside Kiev. About 63 percent of all Russian gas exports to Europe pass through Ukrainian pipelines.

"This is a radically changed market," he added. "Our challenge is to look at U.S. production in the global context and understand how we can influence what happens."

In the coming years, Gazprom's influence will be further weakened as American supplies are shipped onto the global market, Mr. Pascual said.

This week, Republicans escalated their calls for the administration to speed those exports.

On Tuesday, Speaker John A. Boehner, Republican of Ohio, said: "One immediate step the president can and should take is to dramatically expedite the approval of U.S. exports of natural gas. The United States has abundant supplies of natural gas --- an energy source that is in demand by many of our allies --- and the U.S. Department of Energy's excruciatingly slow approval process amounts to a de facto ban on American natural gas exports that Vladimir Putin has happily exploited to finance his geopolitical goals.

"We should not force our allies to remain dependent on Putin for their energy needs," he said.

The efforts this week are not the first time that the State Department has used newfound energy resources to gain geopolitical advantage. In 2012, in response to Iran's nuclear program, the United States urged the Europeans to impose financial sanctions that greatly limited Iran's ability to sell oil on the world market. Other countries feared that the move would raise prices, but officials assured other nations that a surge in American oil production would keep prices stable.

Earlier this year, the United States worked to broker a sale of Israeli natural gas to Jordan, in an effort to stabilize relations in the Middle East.

"In World War II, we were the arsenal of democracy," said Robert McNally, who was the senior director for international energy issues on the National Security Council during the Bush administration. "I think we're going to become the arsenal of energy."
 
 December 12, 2013
ExxonMobil's Outlook for Energy Says All Forms of Energy Required to Meet Growing Demand
    Author: Exxon Mobil Corporation

 
  • Demand growth expected to be about 35 percent between 2010 and 2040
  • Technology, efficiency key to meeting expected growth; without efficiency gains, global energy demand could more than double
  • Oil and natural gas expected to continue to meet nearly 60 percent of global energy demand
IRVING, TEXAS, December 12, 2013 - The world will require all forms of energy over the next quarter century to meet a greater than one-third increase in demand that will be driven by population growth, improved living standards and expanded urbanization, according to ExxonMobil's Outlook for Energy: A View to 2040, which was released today.

"Understanding global energy trends is absolutely critical for effective energy policy," said Rex W. Tillerson, chairman and chief executive officer of Exxon Mobil Corporation. "The world depends on safe, reliable and affordable energy development to support economic growth and our modern way of life."

In its annual forecast, ExxonMobil projects that future energy needs - expected to be about 35 percent higher in 2040 than 2010 - will be supported by more efficient energy-saving practices and technologies, increased use of less-carbon-intensive fuels such as natural gas, nuclear and renewables as well as the continued development of technology advances to develop new energy sources. Without gains in efficiency, global energy demand could have risen by more than 100 percent.

Driving increased energy demand is anticipated population growth that will reach nearly 9 billion in 2040 from about 7 billion today, and a projected doubling of the global economy - at an annual growth rate of nearly 3 percent - largely in the developing world where rising living standards will continue to lift millions of people out of poverty.

The outlook projects that oil and natural gas will continue to meet about 60 percent of energy needs by

2040. Liquid fuels - gasoline, diesel, jet fuel and fuel oil - will remain the energy of choice for most types of transportation because they offer a unique combination of affordability, availability, portability and high energy density.

An expected 25 percent increase in demand for oil, led by increased commercial transportation activity, will be met through technology advances that enable deep-water production and development of oil sands and tight oil.

Natural gas will continue to be the fastest-growing major fuel source as demand increases by about 65 percent. Natural gas is projected to account for more than one quarter of all global energy needs by 2040 and it is expected to overtake coal as the largest source of electricity.

Nuclear energy will see solid growth despite some countries scaling back their nuclear expansion plans following the 2011 Fukushima incident in Japan. Growth will be led by the Asia Pacific region, where nuclear output is projected to increase from 3 percent of total energy in 2010 to nearly 9 percent by 2040. Renewable energy supplies - including traditional biomass, hydro and geothermal as well as wind, solar and biofuels - will grow by nearly 60 percent. Wind, solar and biofuels are likely to make up about 4 percent of energy supplies in 2040, up from 1 percent in 2010.

Energy used for power generation will continue to be the largest component of global demand and is expected to grow by more than 50 percent by 2040 as improved living standards that come with urbanization and rising incomes lead to increased household and industrial electricity consumption through wider penetration of electronics, appliances and other modern conveniences. The growth reflects an expected 90 percent increase in electricity use, led by developing countries where 1.3 billion people are currently without access to electricity.

The Outlook for Energy is ExxonMobil's long-term global view of energy demand and supply and its findings help guide investments that underpin the company's business strategy. The outlook is developed by examining energy supply and demand trends in more than 100 countries and 15 demand sectors, such as transportation, industrial and power generation. Twenty different types of energy that will be available to future consumers are evaluated while taking into account assessments of future technologies, government policies and cross-border trade flows.

Other key findings from the 2014 Outlook for Energy include:
  • Market forces and emerging public policies will continue to have an impact on energy-related carbon dioxide emissions. After decades of growth, worldwide energy-related carbon dioxide emissions are expected to plateau around 2030 before gradually declining toward 2040, despite a steady rise in overall energy use.
  • New technologies will continue to play an important role in development of reliable and affordable energy. Significant advancements in oil and natural gas technologies have safely unlocked vast new supplies, already changing the energy landscape in North America and expanding supplies to help meet growing global energy demand.
  • Through most of the outlook period, more than half of the growth in unconventional natural gas supply will be in North America, providing a strong foundation for increased economic growth across the United States, and most notably in industries such as energy, chemicals, steel and manufacturing.
  • About 65 percent of the world's recoverable crude and condensate resource will have yet to be produced by 2040.
  • The number of cars on the road worldwide is expected to approximately double by 2040, but fuel demand will plateau and gradually decline as consumers turn to smaller, lighter vehicles and technologies improve fuel economy.
  • Demand for energy in non-OECD nations will grow by about two thirds, accounting for essentially all of the increase in global energy use.
  • Global chemicals energy demand is expected to rise by about 55 percent from 2010 to 2040 and will account for 35 percent of the growth in the industrial sector. Most of the energy demand growth in the chemicals sector will be for the feedstocks to make the building blocks for a wide range of essential products. Fuel demand will grow more slowly as improvements to efficiency reduce demand growth.
  • Oil and natural gas are the most widely traded energy sources and maintaining a robust global energy marketplace will remain critical to meeting rising energy demand.
  • Traded volumes of natural gas in 2040 are expected to be two-and-a-half times the 2010 level, with most of this growth coming from liquefied natural gas.
For more information about ExxonMobil's Outlook for Energy, visit www.exxonmobil.com/energyoutlook.

Cautionary Statement: The Outlook and this release contain forward-looking statements. Actual future conditions (including economic conditions and growth, population growth, energy demand growth and mix, future energy supply sources, efficiency gains, the impact of technology, and carbon emissions ) could differ materially due to changes in supply and demand and market conditions affecting oil, gas, and other energy prices; changes in law or government regulation and other political events; changes in technology; the actions of competitors; the development of new supply sources; demographic changes; and other factors discussed in The Outlook and under the heading "Factors Affecting Future Results" on the Investors page of our website at www.exxonmobil.com. See also Item 1A of ExxonMobil's latest Form 10-K.

About ExxonMobil
ExxonMobil, the largest publicly traded international oil and gas company, uses technology and innovation to help meet the world's growing energy needs. ExxonMobil holds an industry-leading inventory of resources, is the largest refiner and marketer of petroleum products, and its chemical company is one of the largest in the world. Follow ExxonMobil on Twitter at www.twitter.com/exxonmobil
 
 November 20, 2012
Obama and the Coming Carbon Tax
    Publisher: Casey Research
    Author: Marin Katusa

 
http://www.caseyresearch.com/cdd/obama-and-coming-carbon-tax
 We know Obamarama is going to tax the rich, but I bet many didn't think he would weasel in the carbon tax as quickly as he is going to now. A Romney win would have been bullish for coal producers in the US -- but Romney lost, and now so has coal, at least in the near term. The biggest winner from Obamarama? Natural gas.

Exxon Mobil Corp (XOM), which is the largest of the former Seven Sisters (if you don't know what companies comprised the Seven Sisters, you really need to sign up for a risk-free Casey Energy Dividend trial), is now supporting Obama in bringing a carbon tax to the US.

Why would Exxon (and other big energy companies) join forces to bring on the carbon tax?

The answer is simple: profits.

Exxon has made significant purchases, buying unconventional North American gas companies. For example, it recently bought Canadian firm Celtic Exploration for over C$2.5 billion. Let's not forget that a couple of years back, Exxon bought out XTO Energy for over US$30 billion.

How much pull does Exxon have in Washington, DC? Exxon has one of the largest lobbying groups on Capitol Hill. And how ironic: Exxon is also one of the largest holdings for all of the US Congress members. Exxon has always had clout in Washington and always will. Exxon is one of the former Rockefeller oil companies, one that has now positioned itself as one of the dominant unconventional North American companies.

How does a carbon tax benefit Exxon? Natural gas and coal race neck-and-neck when it comes to electricity generation in the United States. By increasing the cost to produce coal, natural gas becomes more attractive for utilities. This means a better bottom line for Exxon... and a fatter paycheck for its executives.

But why unconventional natural gas in the United States?

First off, it's hard for a company as large as Exxon to find deposits that will move the needle on its production meter. Unfortunately for Exxon, most of the world-class deposits that they are looking for are in regions where US companies like them have lost their advantage. For example, in Russia and former USSR states, Exxon has to now play by Putin's rules, which could change at any minute.

South America has also proven to be very dangerous for American companies. Chevron has just had US$18 billion worth of assets seized in Argentina. Before that, Chávez in Venezuela taught Shell and Exxon about doing business in Venezuela. Nationalization drives also followed in Bolivia and Ecuador. All this means is that there are fewer places companies like Exxon can go to make a consistent return on an investment without insane political risk.

Obama isn't dumb; he knows that just taxing the rich won't be enough to fill the deficit gap in the United States. A carbon tax would help both financially as well as politically: Obama would look like a hero standing up to the "dirty polluters," as well as bring in another US$100 billion in revenues.

Coal, both metallurgical as well as thermal, is already suffering: metallurgical coal prices are down because of lower demand in Europe and Asia, while thermal coal is down because of pricing pressure from natural gas and the success of shale gas. A carbon tax would be a knockout blow to the thermal-coal industry in the United States.

With the backing of Exxon, expect Obama to not only bring in a carbon tax, but to do it a lot quicker than anyone has expected -- and he will be viewed as a hero by many for doing it.
 
 April 10, 2012
Natural Gas Signals a "Manufacturing Renaissance"
    Publisher: New York Times
    Author: Jim Motavalli

 
http://www.nytimes.com/2012/04/11/business/energy-environment/wider-availability-expands-uses-for-natural-gas.html?pagewanted=2&
 AS horizontal drilling and the controversial extraction technique known as fracking have made domestically produced natural gas more available and sharply cheaper, that gas has been widely embraced by industry, electric utilities and trucking fleets.

There are about 1,000 natural gas stations in the United States (compared with nearly 160,000 gasoline stations) and only half of those are open to the public.

The rapid development of shale gas technology has helped reduce energy imports and, in some cases, encouraged companies producing petrochemicals, steel, fertilizers and other products to return to the United States after relocating overseas. Natural gas exports are growing and terminals built to hold imported supplies are being repurposed for international sales.

The American petrochemical industry, for example, uses natural gas as both its primary raw material, in the form of liquid ethane, and as an energy fuel. And cheaper prices have led to a major expansion of capacity in the United States.

The hydrocarbon molecules in natural gas are split apart and then recombined as building blocks for many products, including bulk chemicals and fertilizers. The chemical ethylene, which is largely derived from natural gas, is used to make things like pool liners, building insulation and food packaging.

According to Kevin Swift, chief economist at the American Chemistry Council, European producers mostly use oil-derived raw materials for making these same products. "The U.S. has a competitive advantage when oil is seven times as expensive as natural gas, but now we have more like a 50-to-1 advantage," he said. "The 'shale gale' is really driving this. A million B.T.U.'s of natural gas that might cost $11 in Europe and $14 in South Korea is $2.25 in the U.S. Partly because of that, chemical producers have plans to expand ethylene capacity in the U.S. by more than 25 percent between now and 2017."

A 2011 PricewaterhouseCoopers study estimates that high rates of shale gas recovery could result in a million new manufacturing jobs by 2025. Robert McCutcheon, United States industrial products leader at PricewaterhouseCoopers, said in a statement that the revived natural gas industry "has the potential to spark a manufacturing renaissance in the U.S., including billions in cost savings, a significant number of new jobs and a greater investment in U.S. plants."

The growing commitment to natural gas faces some headwinds because of continuing concern over the safety of fracking, which involves forcing pressurized fluids into shale formations to fracture the rock and release the gas deposits.

Some environmentalists say that fracking can cause drinking water to become contaminated with chemicals and released methane, which is a powerful naturally occurring greenhouse gas and the primary ingredient in natural gas. Other complaints tie the disposal of fracking wastewater to a series of small earthquakes. Some states and municipalities with questions about fracking have imposed temporary moratoriums on the extraction technique.

Despite these issues, natural gas is expanding its reach in manufacturing. The Nucor Corporation, which makes direct-reduced iron in a process heavily reliant on natural gas, said in 2010 that it would build a $750 million facility in Louisiana. In 2004, the company dismantled a similar Louisiana plant and shipped it to Trinidad.

According to Nucor, affordable domestic natural gas means its made-in-Louisiana direct-reduced iron, which is sold in pellet or briquette form as a raw material for steel mills, can be delivered at the same price as the product shipped from Trinidad. "Affordable American shale gas has completely changed the economics for us," said Katherine Miller, a Nucor spokeswoman.

Methanex, a Canadian company that makes methanol from natural gas is planning to move a plant from Chile to Louisiana, with production to begin in 2014. Gary Rowan, a Methanex vice president, said that his company had also shut down a Louisiana plant in the early 2000s. "Certainly, the outlook for low North American natural gas prices is one of the reasons we selected Louisiana as a new location for our methanol plant," he said.

Electric utilities see a significant natural gas price advantage over other fuels, but because of pending and potential environmental regulations they are also motivated by its status as the fossil fuel with the lowest carbon emissions. On March 27, the Obama administration proposed the first-ever rule to limit greenhouse gas emissions from new power plants. Natural gas plants are expected to meet the standard, but coal burners will have a much harder time. "The electricity sector is the principal growth area for natural gas under carbon dioxide emission constraints," said an M.I.T. study titled "The Future of Natural Gas."

Another advantage, according to Richard McMahon, a vice president of finance and energy supply at the Edison Electric Institute, is that natural gas plants are cheaper to build than coal plants.

"Natural gas generally has a smaller footprint," he said. "Coal plants need to store coal, but natural gas plants get their fuel from a pipeline and don't need physical storage." The Obama greenhouse rules would widen the price gap by requiring new coal plants to include carbon capture technology.

The United States still has a big investment in coal plants, and a transition will be gradual. The federal Energy Information Administration estimates that electricity generation from natural gas will increase about 9 percent in 2012, at the same time that coal production declines almost 5 percent. If there is a constraint on utility commitment to natural gas, it is the fuel's history of large price fluctuations.

Thomas Farrell, chairman and chief executive of Dominion Resources, a utility that delivers electric power and natural gas to four states, describes natural gas as "very volatile in its pricing. We're a utility whose customers rely on us to think through 60-year power plant investments, and we've found that the best approach is to have diverse sources and not depend on one predominant source of fuel."

But he added that the company was definitely benefiting from low natural gas prices now. Dominion Virginia Power's 13 percent natural gas electricity production in 2010 jumped to 17 percent in 2011. The company recently completed a natural gas plant and is constructing another, but it also has large nuclear and coal investments.

The share of natural gas as a transportation fuel has never been large, but it is growing rapidly. Refueling is an issue, because there are about 1,000 natural gas stations in the United States (compared with nearly 160,000 gasoline stations) and only half of those are open to the public. Only one automaker, Honda, sells a natural gas passenger car on the American market, and consumers are unlikely to buy them in large numbers any time soon. But the opportunities for truck fleets are quite different.

Almost 40 percent of new garbage trucks and 25 percent of new transit buses can run on natural gas, said the trade organization Natural Gas Vehicles for America. Dan Ustian, chief executive of the truck maker Navistar, said that garbage truck number could grow to 50 percent by the end of next year. Navistar is also building long-range trucks.

Although natural gas cars and small trucks usually run on compressed natural gas, known as C.N.G., to avoid frequent refueling, the larger trucks will mostly use the liquefied form, L.N.G., which has much greater energy density per volume (but must be kept at very cold "cryogenic" temperatures).

Mr. Ustian estimates that, because of quick paybacks with a $1.50 a gallon equivalent price advantage, natural gas could capture 10 percent to 20 percent of the new tractor-trailer vehicle market within a year.

Chrysler, Ford and General Motors have all recently introduced "bifuel" pickup trucks that can run on both natural gas and gasoline. To ensure that such trucks have a place to fill up, Navistar has joined with a natural gas provider, Clean Energy Fuels, and Pilot-Flying J Travel Centers to locate stations 250 miles apart along Interstates. By the end of the year, Clean Energy hopes to have 75 stations open in 33 states.

Andrew Littlefair, president and chief executive of Clean Energy, said that the aim was to make natural gas refueling available on the major trucking corridors. "You don't need 23,000 truck stops with natural gas," he said. "You need hundreds in the right places and you can move a lot of fuel. These stations will be where the trucks go now, and the economics look very good."

In March, Chesapeake Energy, a major natural gas producer, and General Electric said they would collaborate on developing natural gas infrastructure for vehicles, including construction of more than 250 C.N.G. stations beginning this fall.

The prospects exist for American producers to become significant natural gas exporters. In 2011, Dominion won approval from the Energy Department to export L.N.G. from its Cove Point terminal in the Chesapeake Bay to about 20 countries that have free trade agreements with the United States. It has applied for a permit to service the rest of the world. Dominion said that its terminal work force --- initially intended to handle imports before the United States became a powerhouse producer --- could nearly double with the added workload.

"It's definitely ironic," Mr. Farrell said. "Ten years ago, even the futurists wouldn't have predicted that we'd be exporting natural gas today."
 
 July 01, 2011
Goodbye Gasoline? GM Gives Natural Gas Cars a Boost
    Publisher: Reuters
    Author: Edward McAllister

 
http://www.reuters.com/article/2011/07/01/us-energy-natgas-vehicles-idUSTRE76022220110701?feedType=RSS&feedName=businessNews&dlv
 American automobiles have a limited diet, but gasoline's monopoly at the pump may be ending. The giant of U.S. automakers is turning to something cheaper and cleaner: natural gas.

General Motors Corp announced plans this week to develop its first natural gas-powered engine, overcoming its long aversion to alternative fuels and joining a host of smaller players working to put natural gas in car engines.

In Indianapolis, Marlon Kirby has built a new supercar that looks much like all the others - sleek, curvy, low to the ground - but which differs from its gasoline-guzzling counterparts in one major way: it runs on liquid natural gas.

After 21,000 man hours, the $1 million Maxximus LNG 2000 is ready for speed trials and Kirby expects it to top 200 miles per hour.

GM, the automobile powerhouse and Kirby, the niche mechanic, are at opposite ends of the same movement; to make car engines that use the country's abundant, cheap supplies of natural gas.

The United States has more natural gas than it knows what to do with - up to 100 years of supply, experts say - thanks to a new drilling technique called hydraulic fracturing which releases huge reserves of natural gas trapped in shale rock.

Natural gas is used mainly in electricity generation and for industry, but with just 120,000 natural gas vehicles on the road and only 900 filling stations, transport remains a tiny fraction of total demand.

However, assuming production forecasts are correct, natural gas will likely remain cheap for years and could help cut U.S. reliance on oil. While crude prices soared above $110 a barrel this year due to unrest in the Middle East, U.S. natural gas prices, impervious to international influence, remained low as there was no shortage of natural gas at home.

Drivers who fill up with natural gas at the pump saved up to $2 per gallon when gasoline prices hit $4 a gallon. (Graphic: here: r.reuters.com/get42s )

Car makers, manufacturers and fleet owners are quietly scrambling to run their engines on the cleaner-burning fossil fuel which was formerly the preserve of trash trucks and city buses.

"With all the activity in shale gas, the natural gas price is decoupled from diesel. Natural gas is a lot more attractive given the situation in the market," said Ian Scott, president of Westport Innovations Light-Duty Division.

Vancouver-based Westport, which develops technologies to convert engines to run on natural gas, is working with GM on the multimillion-dollar project to develop a natural gas vehicle.

GM and Westport will look at light-weight engines, as small as 0.5 liters, opening up the market to smaller consumer vehicles previously overlooked by engine manufacturers.

This would be only the second passenger vehicle in the United States made at the factory to run on natural gas, following Honda's Civic GX.

Westport Chief Executive David Demers described this as the company's "breakout year" in a recent interview with Reuters. The company has sold 500 heavy-duty engine systems already this financial year, up from 25 the previous year.

Separately, Mack Trucks has seen a 50-100 percent rise in natural gas vehicle sales in recent years, mainly to refuse companies, said Curtis Dorwart, Mack Trucks' vocational marketing product manager.

"The big draw is the difference in the fuel price, especially with diesel above $4 a gallon," Dorwart said.

BEEN HERE BEFORE

Interest in natural gas has waxed and waned over the years, generally in reverse proportion to the price of oil. What may be different now is the massive and long-term oversupply.

"Over the past five years, we have seen that when there is slump in oil prices a lot of people forget about transitioning to a domestic fuel," said Carla York, chief executive of Innovation Drive consultants in Reston, Virginia. Innovation Drive helps manage a Clean Cities program in Connecticut which involves grants from the Department of Energy to build natural gas infrastructure.

Mack Trucks was heavily involved in natural gas vehicles in the 1990s, with 400 or so on the road, but falling gasoline prices dented demand enough that they were discontinued.

In the 1990s, GM offered the Chevrolet Kodiak and GMC Top Kick that were retrofitted to run on natural gas, but these were discontinued during restructuring in the mid 2000s.

Even if oil prices retreat again, some in the industry say natural gas will remain attractive due to its long-term abundance and the potential for government support.

"The movement again toward natural gas is greater than in the late 1990s and this time it looks like it might have legs," said Curtis Dorwart, Mack Trucks' vocational marketing product manager.

Richard Kolodziej, president of NGV America, a natural gas vehicle trade association, said natural gas displaced 360 million gallons of gasoline in 2010. He forecasts that could rise to 10 billion gallons in 15 years.

"The difference now is that there is confidence about the supply of natural gas," Kolodziej said. "The United States has a lot of natural gas."

In Connecticut, the Clean Cities program covers the extra cost of a natural gas vehicle. Taxi firm Metro Taxi in West Haven has taken delivery of a fleet of converted Ford transit cars.

"The costs savings at the pump are incredible," said Metro Taxi head Bill Scalzi, who has tested the vehicles. In West Haven, the difference is now about $1.50 per gallon, he said.

Much hinges on politics. The Natural Gas Act launched in the House of Representatives in April proposes incentives for purchasing and building natural gas vehicles, replacing a previous bill whose sweeteners for users of the fuel have recently expired.

The proposed incentives include a 50 cent per gallon fuel credit, a purchasing credit that covers up to 80 percent of the extra cost of a natural gas vehicle, and tax breaks for building fueling infrastructure. The bill has bipartisan support and some say it could pass this year.

GAS GUZZLERS

Some of the most innovative work to get natural gas into car engines is happening not in Washington but in a gas-guzzling city in the American heartland, Indianapolis. Marlon Kirby -- a stocky, fast-talking mechanic -- began racing cars when he was six and working on hotrods when he was 10.

But, with the help of high-flying hedge fund manager Bruce McMahan, he's left gasoline behind. The two met when Kirby was doing some shifts driving a limousine in 2005. During a 20-minute ride, Kirby pitched his supercar plan. McMahan was interested; business cards were exchanged.

Six years and seven world speed records later, the two business partners have moved on to natural gas. They say the Maxximus LNG 2000 could beat world speed records.

"I looked at several different energy sources," Kirby said. "What could I use fuel-wise that we have a lot of, which is readily available and cleaner for the environment? It doesn't matter about your political views, we can all be better."

(Reporting by Edward McAllister; Editing by Claudia Parsons and David Gregorio)
 
 March 21, 2011
Natural Gas Now Viewed as Safer Bet
    Publisher: The New York Times
    Author: Jad Mouawad

 
http://www.nytimes.com/2011/03/22/business/global/22gas.html?_r=3
 Natural gas may be having its day, as its rival energy sources come under a cloud.

The serious problems at the nuclear power plant in Japan have raised new doubts about the safety of nuclear energy. New exploration has yet to resume in the Gulf of Mexico after last year's blowout of a BP oil well. And coal plants have been under a shadow because of their contribution to global warming.

Meanwhile, natural gas has overcome two of its biggest hurdles --- volatile prices and questionable supplies. In large part because of new discoveries in the United States and abroad that have significantly increased known reserves, natural gas prices have been relatively low in the last two years.

It is far too early to say for sure whether the calamitous events in Japan may roll back the global nuclear revival and lead to a surge in natural gas demand. It is also too early to say whether officials in charge of nuclear policy are just paying lip service to the public's safety concerns in the wake of the unfolding disaster.

Still, with the global demand for energy expected to grow by double digits in coming decades, analysts are anticipating a new boom in gas consumption. Given the growing concerns about nuclear power and the constraints on carbon emissions, one bank, Société Générale, called natural gas the fuel of "no choice."

"At the end of the day, when you look at the risk-reward equation, natural gas comes out as a winner," said Lawrence J. Goldstein, an economist at the Energy Policy Research Foundation. "It's a technical knockout."

Financial markets have already started to price in this new interest in gas. Since the disaster in Japan, uranium prices have dropped by 30 percent, while natural gas prices in Europe and the United States have risen by about 10 percent. Officials from several countries, including China, Germany, Finland and South Africa, said they would review their nuclear strategies.

Utilities are also reconsidering natural gas as a potential source of stable power, a function historically filled by coal and nuclear energy. Utility chiefs have been wary of price fluctuations of natural gas, particularly in the last two decades.

But that may be about to change, according to John Rowe, chairman of Exelon, the biggest nuclear utility in the United States. He argued that building a nuclear power plant would be prohibitively expensive, while new rules limiting carbon emissions by the Environmental Protection Agency would require costly investments to scrub emissions from coal-powered plants. This means that utilities will increasingly switch to natural gas.

"Natural gas is queen," Mr. Rowe told a panel at the American Enterprise Institute in Washington this month.

That view was endorsed by a report to be released on Tuesday by the Bipartisan Policy Center and the American Clean Skies Foundation, which predicts that natural gas consumption will increase because of an abundance of new supplies, some of them in the United States, that are likely to keep prices relatively low.

Global natural gas production rose by 44 percent in the two decades from 1990 and 2010, while gas reserves grew by 67 percent. After peaking at $13.58 per thousand cubic feet in 2008, gas prices in the United States averaged $4.38 last year. What is more, natural gas emits about half as much carbon dioxide as coal when it is burned to produce one kilowatt hour of electricity.

The immediate market for natural gas will likely be Japan, which is looking to raise its fuel imports after a fifth of its nuclear power capacity was shut down, including the troubled Fukushima Daiichi plant. And Tokyo Electric Power says that the rolling blackouts in the country will continue at least into next winter.

Japan already imports a third of global liquefied natural gas shipments and its import terminals, mostly in the south, were not damaged by the earthquake. Nuclear power and coal each accounts for a quarter of Japan's power generation, while natural gas accounts for 30 percent, according to analysts with the Raymond James financial company.

"It could be that the Honshu earthquake is the catalyst which fundamentally reshapes our approach to global energy," Bernstein Research analysts wrote last week.

Many oil companies have anticipated this shift. At Royal Dutch Shell, natural gas production overtook its oil output in recent years. Exxon Mobil bought XTO Energy last year to raise its presence in the growing domestic shale gas market. It has also developed significant resources in Qatar, which holds the third-largest reserves of natural gas in the world, after Russia and Iran.

Huge new projects dedicated to liquefied natural gas --- in which gas is frozen, compressed in liquid form for easier shipment, then returned to a gas state at import terminals --- have been mushrooming around the world.

In Papua-New Guinea, Exxon is leading a $15 billion project to build and develop an LNG plant to supply Asian customers. Chevron recently began engineering work on the $40 billion Gorgon gas project in Australia, along with Shell and Exxon. Russia, for its part, is planning to develop huge new fields in the Arctic.

Natural gas is not without problems. To unlock methane from hard shale rocks in the United States, energy companies use hydraulic fracturing, a method that has been criticized on the grounds of polluting water sources, including rivers and underground aquifers.

But energy policy must balance out these hazards with the concerns about nuclear power, as well as the still unresolved problem of what to do with spent nuclear fuel that remains radioactive for hundreds of years.

"Nuclear power has suddenly found itself going from being (arguably) part of the solution for future green energy to a now dangerous relic of the cold war era," Deutsche Bank said in a report last week.

In the United States, where no new reactor has been built since the Three Mile Island accident in 1979, the attitude toward nuclear power has been ambivalent. Last year, the president asked the Energy Department to provide some financial backing for nuclear operations, including two reactors planned for Georgia.

But in the aftermath of the Japanese disaster, the administration ordered a comprehensive review of safety at nuclear plants.

At the same time, the industry has found it nearly impossible to develop and finance new plants. In December, for example, Exelon dropped its application to build a plant in Victoria County, Tex., in the face of opposition.

Utilities have also faced a challenge in renewing their existing operating licenses. The Pilgrim Nuclear Power Station, in Plymouth, Mass., has been waiting for a new license for five years because of litigation and court delays. State officials in Vermont have been battling to shut down Entergy's Vermont Yankee plant, which began operations in 1972.

There are 104 nuclear reactors in the United States, which contribute 23 percent of the nation's electrical power. Twenty reactors have applications pending with federal regulators to extend the plants' operating lives by as much as two decades, according to Bloomberg News.

"We are likely to do to nuclear licensing what we did to offshore permitting," Mr. Goldstein, of the energy policy foundation, said. "We will delay and stall."
 
 February 28, 2011
The Time Has Come for Natural Gas Transportation
    Author: Michael Fitzsimmons

 
http://seekingalpha.com/article/255376-the-time-has-come-for-natural-gas-transportation
 Gasoline prices were up $0.17/gallon last week. Not surprisingly the DJIA was down -2.1% and the S&P500 was off -1.7%. Events in North Africa reminded Americans their economy and equity markets are directly tied to the price of oil. Since the United States imports 60% of its petroleum at a cost of over $1 billion a day, it would certainly seem that now is the time to take dead aim at this problem, hit the bull's-eye, and solve it. The way to solve our dangerous addiction to foreign oil is by adopting natural gas transportation.

Natural gas is the only domestic fuel capable of significantly reducing foreign oil imports over the next 5-10 years. Transitioning half the cars and trucks in the U.S. to natural gas transportation over that timeframe could reduce foreign oil imports by 5,000,000 barrels every day. Natural gas is abundant, clean and cheap. More importantly, it is ours. Since the transportation sector uses 70% of total U.S. oil consumption, logically natural gas should be used in the transportation sector to directly replace and reduce gasoline derived from foreign oil.

How can this be done? How can we solve the chicken-and-egg problem of a lack of natural gas refueling stations and a lack of natural gas vehicles (NGVs)? While it would seem to be a daunting task, it need not be. According to NGV Global, countries like Brazil, Iran, Italy, Pakistan and Singapore have very successfully adopted natural gas transportation. Why can't the U.S.? The problem is certainly not of a technical nature. Clearly countries that have made a political decision to invest and deploy natural gas transportation have done so very easily.

NGVs have been around for nearly 100 years. According to NGV America, there are over 12,000,000 NGVs worldwide but only 110,000 in the United States. One reason for this sad statistic is that both GM (GM) and Ford (F) make NGVs but chose not to sell them in the United States. The Honda (HMC) Civic GX (the only NGV available to U.S. consumers and repeat winner of the ACEEE Green List) has been so successful Honda predicts it will double GX sales in the U.S. this year after doubling them in 2009. Utah, Oklahoma and California have been very successful in building out natural gas infrastructure and deploying NGVs that are refueling with natural gas. Today, natural gas is selling at an average price over one third cheaper than gasoline. Even better, natural gas is on average 42% cheaper than diesel.

According to NGV America, the International Association of Natural Gas Vehicles estimates there will be more than 50 million NGVs worldwide with in the next 10 years, or about 9% of the world's transportation fleet. Considering the U.S. has the most advanced and extensive natural gas pipeline distribution network and huge natural gas reserves (combined, the two are America's No. 1 competitive advantage over all other countries on earth), the only intelligent thing to do is to utilize this advantage and adopt natural gas in the transportation sector to reduce foreign oil imports.

So how do we do it? The first step in solving any problem is to acknowledge the problem. We will start here and continue in a logical fashion:
Acknowledge our addiction to foreign oil imports are a threat to our economic and national security interests.

Adopt a strategic long-term comprehensive energy policy with the goal of significantly reducing foreign oil imports.

Build out a strategic natural gas refueling network on the cross-country interstate highway system such that a driver could go coast-to-coast or north-to-south in an NGV. The stations should be prioritized around metropolitan areas.

Support and deploy natural gas home refueling appliances so that Americans can own an NGV as a second car/truck for the 95% of all daily trips that are less than 100 miles and refuel in their garages while they sleep.
Support cars like the concept vehicle Toyota (TM) unveiled years ago: a natural gas/electric hybrid vehicle. The natural gas/electric engine is superior to electric cars in that the battery pack is much smaller, it is cheaper, and it is a proven technology. Think a Prius that burns domestically produced natural gas instead of gasoline from foreign oil.

Appeal to Ford's and GM's patriotic and financial interests to begin selling their NGVs in America.

These initiatives are a good start. Before people fill up the comment section with their concerns, let me address one here. Folks always say we cannot afford a program such as a nationwide natural gas refueling network. Those were probably the same folks that fought against the cross-country interstate highway system, the telegraph and telephone systems as well as the goal of putting a man on the moon. Yet in each of those cases, the investments made by our government were paid back very quickly and then paid dividends to all Americans for decades into the future. At a cost of $1 billion a day for foreign oil, the cost of building out a natural gas refueling infrastructure will be paid back very quickly. Afterwards, the economic benefits of keeping our energy dollars in this country, and the multiplier effect of doing so, will usher in an era of prosperity that few today can even imagine. We could already have paid for such a refueling infrastructure today instead of wasting hundreds of billions of dollars on such wrong-headed initiatives as the "stimulus" package, ethanol mandates and the myth of "clean coal" research and development.

Who would benefit from adopting natural gas transportation? Answer: all Americans and all citizens of the world. Consumers would benefit in many ways:
Paying less to fill up their cars and trucks.

Paying less for food and products due to oil based transportation costs.
Natural gas royalty payments would go to American landowners, farmers and energy companies instead of foreign oil producers.

Millions of good paying jobs would be created in the energy, industrial and automobile sectors.

Our air and water would be cleaner.

Our equity markets would begin to thrive once again helping pension funds, investment returns and fiscal stability.

The country's debt would be reduced and our currency strengthened.

From an investment standpoint, there are many U.S. companies that would directly and indirectly benefit from natural gas transportation. The direct plays are:

Clean Energy Fuels (CLNE) - Clean Energy is building natural gas refueling infrastructure for fleets and selling fuel under long-term contracts.

Westport Innovations (WPRT) - Westport designs and builds natural gas engines.

Fuel Systems Solutions (FSYS) - FSYS concentrates on alternative fuel solutions and is the maker of the "Phill" (pictured above), the famous home garage natural gas refueling appliance.

Honda - Honda makes the Honda Civic GX.

General Electric (GE) - General Electric has been increasing its investments in the energy patch. Its recent acquisition of Dresser Industries and its leading position in building compressors puts GE in the natural gas infrastructure cat-bird seat.

CLNE, WPRT, and FSYS were all up last week despite the down market. HMC and GE were down a bit. Of the five suggestions, my favorite is FSYS. I just wish they'd quit issuing more shares and stand on their own two feet for awhile.

But one must be a realist, and reality is that U.S. government policy is now geared toward keeping the firmly entrenched coal and oil industry status quo. I'll never bring myself to invest in coal (although I do believe there are returns to be made there). But how can I not invest in companies like Exxon Mobil (XOM), Conoco Phillips (COP), Chevron (CVX), Marathon (MRO), Petrobras (PBR) and StatOil (STO)? Chevron is suffering more than most from BP's (BP) disaster in the Gulf of Mexico and the resulting lack of drilling permits.

However, Chevron is still one of the oiliest firms at around 70% of production. Conoco is a great restructuring and dividend play. Exxon Mobil produces more than twice the oil per day that Libya as a country produces. However, as 2008 taught us, when the high price of oil creates another economic "correction" (for lack of a better word), oil demand plummets and these energy stocks will go down as well. So, we are on an oil price dependent economic yo-yo and the buy and hold days are pretty much a relic of the past. Nothing is secure these days except gold and silver and other precious metals.

It is time the United States learns from the past. We suffered an oil embargo in the 1970s and the resulting economic and inflationary costs. We suffered the effects of $147/barrel oil and the aftershocks starting in 2008. Isn't it time we make a realistic plan to significantly reduce foreign oil imports? Yes, it is. Natural gas transportation is the solution to our foreign oil crisis.
 
 February 04, 2011
Thousands in NM without natural gas service
    Publisher: Associated Press
    Author: SUE MAJOR HOLMES

 
http://apnews.myway.com/article/20110204/D9L5RP6G1.html
 ALBUQUERQUE, N.M. (AP) - With tens of thousands of people across New Mexico without natural gas service, Gov. Susana Martinez on Thursday declared a state of emergency, ordered government offices be shut down Friday and urged schools to "strongly consider" remaining closed for the day.

Demand has soared because of extremely cold weather across the state since Tuesday. New Mexico Gas Company said rolling blackouts in West Texas also impeded the delivery of natural gas to New Mexico.

Martinez declared a state of emergency for the entire state, urging residents to turn down their thermostats, bundle up and shut off appliances they don't need for the next 24 hours.

She later announced all state operations not providing critical services would be closed Friday to decrease the strain on energy resources throughout New Mexico.

"Due to statewide natural gas shortages, I have ordered all government agencies that do not provide essential services to shut down and all nonessential employees to stay home" on Friday, Martinez said after meeting with public safety personnel in Albuquerque.

"I have also encouraged all schools that have not already announced closures to strongly consider doing so," she said.

New Mexico Gas Company said service was disrupted throughout the state - in Bernalillo, Placitas, Taos, Questa, Red River and parts of Albuquerque, Silver City, Alamogordo, Tularosa and La Luz.

Emergency shelters were set up in several areas. Martinez said residents needing help finding a shelter or getting to one should call the non-emergency police or fire phone number in their community.

"As New Mexicans, we've always gotten through difficult situations," Martinez said. "We will get through this situation as well."

Earlier Thursday, Taos Mayor Darren Cordova declared a state of emergency in the northern New Mexico community after gas service was disrupted. He urged area residents to conserve electricity to prevent an outage of that energy source.

Martinez also urged people to curb electrical use to prevent blackouts and allow compressors to function so the state can get natural gas supplies.

"The use of electricity and the use of natural gas are not isolated; one is impacting the other," she said.

The state's largest electrical utility, Public Service Company of New Mexico, asked customers in the southern New Mexico communities of Alamogordo, Tularosa and Ruidoso to reduce their use of electricity because a transmission line serving the area was over capacity.

The overload occurred because a second line into the area was out of service, but PNM said crews were repairing that line.
 
 February 03, 2011
Questar Sets Record for Natural Gas Delivery
    Publisher: KSL News
    Author: Jasen Lee

 
http://www.ksl.com/?nid=148&sid=14249157&s_cid=rss-148
 SALT LAKE CITY --- Questar Gas Co. hit a new high Wednesday as it set a single-day record for the amount of natural gas delivered to its area customers.

Freezing cold temperatures drove gas volumes to the highest levels in the
utility's 82-year history.

Questar Gas delivered 1.13 million decatherms of natural gas --- enough gas to supply more than 14,000 typical households for an entire year --- eclipsing the previous 24-hour record of 1.1 million decatherms set in Dec. 2009.

Based on current weather forecasts, Questar Gas expects continued high volume for the next few days. Questar Gas serves more than 900,000 customers in three states, including approximately 870,000 Utah homes and businesses, 30,000 in Wyoming and 2,000 in Preston, Idaho.
 
 January 31, 2011
D&D Securities Inc. Analyst Report on Thunderbird Energy
File: http://www.thunderbirdenergy.com/i/pdf/Jan-31-2011-Write-up.pdf
 205 KB, approx. 39 seconds at 56.6Kbps
 
 

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