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 October 05, 2010
NGSA expects stable winter prices with more demand, supplies
    Publisher: Oil & Gas Journal
    Author: Nick Snow
 WASHINGTON, DC, Oct. 5 -- Pressure on natural gas prices is likely to be flat this winter compared to last despite higher overall demand because of higher production, the Natural Gas Supply Association said as it released its 2010-11 winter outlook.

"We expect to see industrial demand coming back strong, and we also expect to see coal-to-gas fuel switching through the winter, if prices remain strong," NGSA Pres. R. Skip Horvath said. Fuel switching has increased by 10% since it began in 2008 and has continued because of competitive gas prices, he indicated.

"Projections show domestic production among the highest levels in decades," Horvath added. "Drilling activity has increased as the economy has improved."

NGSA's 2010-11 winter outlook said that data developed by Energy Ventures Analysis project 2.4% higher overall demand than a year earlier, with the strongest growth in power generation (7%) and industrial consumption (5%). Residential and commercial demand are expected to decrease, it indicated.

US supplies are also expected to grow as production approaches its highest level in decades, driven by onshore and shale activity, NGSA added, quoting data developed by ICF International. "Producers have responded to the challenge and have been actively investing and working," said NGSA Chairman Steven P. Kirchhoff, who also is vice-president for the Americas of ExxonMobil Gas & Power Marketing.

NGSA's forecast indicated that the US economy will probably continue its strained recovery, with concerns about high unemployment lingering as manufacturing shows some strength. It also projected robust storage, although not quite reaching last year's record level, and nearly normal weather with a similar number of heating degree days as the 2009-10 winter period.

NGSA's Oct. 5 forecast came a day after the American Gas Association, which represents local distribution companies, also predicted that supplies would be plentiful and prices would be reasonable this winter.

"Continuing investments in production, pipeline, and storage infrastructure, and applications for the most efficient direct use of gas has positioned our diverse supply sources to meet and even exceed expected demand during the coldest winter months," AGA Pres. David N. Parker said.
 July 16, 2010
T. Boone Pickens puts Polish on Plan to Curb Oil Imports
    Publisher: Daily Energy Newsletter
    Author: Jay F. Marks

 Ideas gaining acceptance in D.C.

Some facets of Boone Pickens' plan to cut oil imports are among several pieces of legislation, including:

The New Alternative Transportation to Give Americans Solutions Act (HR 1835 and S 1408);

The American Power Act (S 1733) introduced by Sens. John Kerry, D-Mass., and Joe Lieberman, indpendent-Conn.;

The Next Generation Energy Security Act (S 3535) introduced by Sens. Saxby Chambliss, R-Ga., and Richard Burr, R-N.C.

Pickens spokesman Jay Rosser said some facets of the plan are expected to be included in a new energy plan being discussed in the U.S. Senate. He said Senate Majority Leader Harry Reid on Wednesday stated the bill will incorporate Pickens' call for tax incentives to fuel America's heavy duty fleet vehicles on domestic natural gas.

Boone Pickens is confident a national energy plan is on the horizon:

"America is as close to an energy plan as it's been in 40 years," Pickens said. "We can't let any more time go by as we continue to spend $27.3 billion per month on foreign oil. "We have to act now or risk watching oil rise to $300-$400 a barrel in the next ten years, with import numbers jumping to 75 percent.

"So instead of spending $365 billion a year on foreign oil, we would be wasting $1 trillion a year. That just won't work. "Congress needs to move fast to enact legislation promoting the greater use of natural gas as a transportation fuel. The future of our economy and national security depend on it."

The billionaire oilman posted a whiteboard presentation on his website Thursday, updating the eponymous plan he has touted at his own expense for more than two years. It is the first in a series of planned video presentations. Pickens maintains it is vital for the United States to stop importing oil from unfriendly nations.

"There are eight years left on the president's campaign pledge to eliminate Middle East oil in 10 years, and we want to help him and our nation get there," he said. "The Pickens Plan is the only real plan that can make dramatic progress on that goal using our abundance of natural gas as a transportation fuel.

"We encourage Congress and all Americans to get behind this plan now. There is no more time to waste. We have an opportunity, and we need to take advantage of it."

Pickens said Americans use 21 million barrels of oil a day --- about a quarter of what is being produced worldwide --- with 13 million barrels a day coming from foreign sources. Five million barrels a day comes from the Middle East, the Organization of the Petroleum Exporting Countries.

"That's my target. I want to get rid of this, because I think we're importing oil from the enemy," he said, circling that figure. "We're paying for both sides of the war when we're buying OPEC oil. "This is not smart."

CNG for trucks

The main pillar of Pickens' plan remains increased use of natural gas as a vehicle fuel. He said it is abundant and cheaper and cleaner than diesel. Pickens is targeting 8 million 18-wheel trucks in the U.S. He said converting those trucks to run on compressed natural gas can cut America's OPEC oil habit in half.

The rest can be addressed by increased use of CNG by drivers of the other 240-plus million vehicles in the United States, he said. "I somehow see this as a great opportunity to pull America together," Pickens said. "You are going to create a tremendous number of jobs out of this." Pickens' latest presentation drew plaudits from America's Natural Gas Association.

"He makes some great points about the abundant supplies of natural gas in the United States and the benefits that presents to our country," spokesman Dan Whitten said. "In addition, we think increased natural gas use for power generation provides an incredible opportunity for the environment, for energy security and for the economy."

Oklahoma City University professor Steve Agee, who oversaw a study into the benefits of switching to natural gas, said the United States is lagging behind other countries in using it as an alternative fuel.

"Many other countries are ahead of the United States with respect to the use and development of natural gas powered automobiles," he said. "Pakistan, for example, has an estimated 2 million natural gas vehicles; and Argentina and Brazil are close behind. "In comparison, the U.S. had 110,000 as of 2009."

Agee said natural gas is an excellent source of energy, but the United States needs more fueling stations and affordable ways to convert vehicles to run on CNG before it takes hold as a transportation fuel.
 December 14, 2009
Exxon Bets on U.S. Natural Gas with $31 Billion XTO Buy
    Author: Jim Polson and Jessica Resnick-Ault
 (Bloomberg) -- Exxon Mobil Corp., the biggest U.S. oil company, agreed to buy XTO Energy Inc. for $31 billion in a bet that U.S. emissions restrictions will spur increased demand for natural gas.
 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.

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