 |
| |
Articles
| | 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
|
| |
| |
| | October 05, 2010
NGSA expects stable winter prices with more demand, supplies
Publisher: Oil & Gas Journal
Author: Nick Snow
|
| | - http://www.ogj.com/index/article-tools-template.articles.oil-gas-journal.general-interest-2.economics-markets.2010.10.ngsa-expec
|
| | 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
|
| | - http://www.bloomberg.com/apps/news?pid=email_en&sid=anlPM8zJ_rE4
|
| | (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
Publisher: seekingalpha.com
|
| | 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. |
| |
| | You can return to the Top of this page
|
| |
