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I attended a sparsely attended meeting regarding the possibility of drilling for NG in the Marcellus Shale region last night, sponsored by local Community Board 8 in Manhattan. The Marcellus Shale is home to 90% of New York City's drinking water. Although there were only about a dozen audience members, some of whom served on the community board, those who were there knew what they were talking about, and about the dangers of commercial fracturing to obtain Natural Gas (NG).
There comments are partially summed up by Manhattan Borough President Scott Stringer's white paper (dismissed as a "literature review" by the NY State Petroleum Council's Rep: Cathy Kenny) here:
click here />
Unfortunately, the NY State Petroleum Council does not have an online link to their counter-report, but basically they say the Stringer report "should not be regarded as scientific analysis, but rather a literature survey" and that the findings of the Stringer report, and of the sources such as Propublica:
click here />click here />
of contaminated water wells, exploding houses from NG buildup, cancer clusters and other health effects, should not be applied to the wells to be drilled in New York, because they will not use the same sorts of containment pits as the western states where there have been the biggest problems. The industry rep did not say what will be used in place of containment pits, however. It is hard to see why the New York projects differ from the rest of the country except in scale, and in that sense, the results should be only worse for the industry's position. Kenny cited the NY Dept. of Conservation's null findings on harm from "fraking" without mentioning that the DEC basically has never studied the issue (as confirmed by Propublica and audience attendees last night), so it is, for now, unqualified to comment. The DEC plan to remedy this later in the spring with a new report, but admit they are on a learning curve.
I think members of the Pickens Plan (like me) should be advised that there are currently several restrictive proposals in the works to limit or outright ban NG drilling in what is arguably the largest source of NG in the country. As a NYC resident, I can hardly be considered impartial, and it is clear that if our watershed becomes polluted by the industry's stew of 250+ - and proprietary list of - chemicals, it will be a long-term catastrophe for the region. NYC gets 90% of its water unfiltered, so constructing a multi-billion plant to begin filtering the water - even assuming the technical hurdles could be overcome - is essentially a non-solution.Despite my membership in the Pickens' Plan, I have to oppose NG drilling, at least anywhere near the 9% of area that constitutes the watershed. There are currently proposals to restrict drilling to 1-2 miles form the watershed, but with reports of chemical migration over 20 miles underground, even in smaller projects than proposed for New York, it's unclear, at best, whether this will be enough.
Also, as was pointed out in the meeting, this restriction should not mean that we should endorse fraking elsewhere in the state, just that the limited constituency of CB8 and the city does not represent the rest of the state and so cannot speak for them. Of course, the state DOES seem to feel entitled to speak for the city by allowing/disallowing drilling to commence.
Opposing drilling upstate is a difficult decision for me, since I do recognize that drilling would bring substantial revenues into a particularly depressed area of New York State, and that ending the half trillion a year import cost of oil will require some viable domestic alternative to imported oil. As a long-term member of the Pickens' Plan, I am well aware of the arguments to get off the petrostate teat.
But, wind (supported by the Pickens Plan too) and other renewables can provide for our base load power, while electric, hybrid electric/flywheel, electric/compressed air, or hydrogen fuel cells can answer our transportation needs as well as natural gas, without the CO2 contribution and the substantial local environmental damage. As even T. Boone Pickens recognizes, NG is a medium-term solution, until we can move on to something else. Perhaps the something else will not occur in his lifetime, or even some of ours, but we need to start preparing for it now, rather than add to our environmental messes.
http://newthinking.blogspot.com/
Thursday, April 30, 2009
Wednesday, April 29, 2009
Natural Gas Pricing Still Midwest Uncertain
HOUSTON
Petroleumworld.com, Apr. 28, 2009
Spot natural gas prices in the Upper Midwest fell in most areas Monday as the May NYMEX gas contract followed equity markets down on fears of a world-wide swine flu epidemic, and the possibility of major storms forecast for the Midcontinent reaching as far as Illinois.
Prices between Nicor Gas' city-gates and other Chicago city-gate points--Peoples Gas Light and Coke and Nipsco--remained far apart. Nicor, however, dropped nearly 10 cents after it announced that all delivery caps to its city-gates would be lifted on Tuesday.
It averaged in the mid-$3/MMBtu on IntercontinentalExchange. Peoples and Nipsco were more stable, gaining around a cent and losing a couple of cents, respectively, to hit a similar mid-point to Nicor.
Michigan city-gate prices dropped considerably more, with Michigan Consolidated Gas losing almost 15 cents to land in the mid-$3.40s/MMBtu. Consumers Energy, however, came off only half as much, coming in almost 10 cents above MichCon.
Cash in the production area dropped as well, with Northern Natural Gas' demarcation point prices weathering the drops the best, losing less than 5 cents for a mid-point in the mid-$2.80s/MMBtu.
Ventura, Iowa, prices fell around 10 cents, with Northern Border Pipeline-Ventura hovering around $3/MMBtu, and Northern Natural-Ventura more than 10 cents under that.
A tornado touched down in eastern Iowa over the weekend and more may reach there from storms in the Mississippi valley, according to forecasts.
Story by Joshua Starnes from Platts
- joshua_starnes@platts.com
Petroleumworld.com, Apr. 28, 2009
Spot natural gas prices in the Upper Midwest fell in most areas Monday as the May NYMEX gas contract followed equity markets down on fears of a world-wide swine flu epidemic, and the possibility of major storms forecast for the Midcontinent reaching as far as Illinois.
Prices between Nicor Gas' city-gates and other Chicago city-gate points--Peoples Gas Light and Coke and Nipsco--remained far apart. Nicor, however, dropped nearly 10 cents after it announced that all delivery caps to its city-gates would be lifted on Tuesday.
It averaged in the mid-$3/MMBtu on IntercontinentalExchange. Peoples and Nipsco were more stable, gaining around a cent and losing a couple of cents, respectively, to hit a similar mid-point to Nicor.
Michigan city-gate prices dropped considerably more, with Michigan Consolidated Gas losing almost 15 cents to land in the mid-$3.40s/MMBtu. Consumers Energy, however, came off only half as much, coming in almost 10 cents above MichCon.
Cash in the production area dropped as well, with Northern Natural Gas' demarcation point prices weathering the drops the best, losing less than 5 cents for a mid-point in the mid-$2.80s/MMBtu.
Ventura, Iowa, prices fell around 10 cents, with Northern Border Pipeline-Ventura hovering around $3/MMBtu, and Northern Natural-Ventura more than 10 cents under that.
A tornado touched down in eastern Iowa over the weekend and more may reach there from storms in the Mississippi valley, according to forecasts.
Story by Joshua Starnes from Platts
- joshua_starnes@platts.com
Tuesday, April 28, 2009
Natural Gas Sells in Brazil
RIO DE JANEIRO (Dow Jones)--Brazilian state-run energy giant Petrobras (PBR) successfully launched its first auction of natural gas, with 16 gas distributors participating, the company said late Friday.
Petrobras said it sold 3.59 million cubic meters of natural gas a day for May delivery, with the gas fetching an average price of $4.20 per British thermal unit, or BTU. In addition, Petrobras sold 3.24 million cubic meters of gas a day for June delivery at an average price of $4.25 per BTU.
Petrobras created the auctions as a way to sell excess gas in the company's pipeline system. The short-term contracts will allow the company greater flexibility to meet demand, the company said previously.
A combination of factors has crimped demand for natural gas in Brazil to start 2009, leaving Petrobras with excess supply.
Heavy rainfall earlier this year left reservoirs in Brazil's hydroelectric system at high levels, damping demand for electricity at gas-fired power plants. Slumping international oil prices also made fuel oil a cheaper alternative for local industry.
The slide in domestic natural gas consumption started just as Petrobras ramped up imports of liquefied natural gas and installed two regasification plants. The company has also curtailed imports of natural gas from neighboring Bolivia.
-By Jeff Fick, Dow Jones Newswires; 55-21-2586-6085; jeff.fick@dowjones.com
Petrobras said it sold 3.59 million cubic meters of natural gas a day for May delivery, with the gas fetching an average price of $4.20 per British thermal unit, or BTU. In addition, Petrobras sold 3.24 million cubic meters of gas a day for June delivery at an average price of $4.25 per BTU.
Petrobras created the auctions as a way to sell excess gas in the company's pipeline system. The short-term contracts will allow the company greater flexibility to meet demand, the company said previously.
A combination of factors has crimped demand for natural gas in Brazil to start 2009, leaving Petrobras with excess supply.
Heavy rainfall earlier this year left reservoirs in Brazil's hydroelectric system at high levels, damping demand for electricity at gas-fired power plants. Slumping international oil prices also made fuel oil a cheaper alternative for local industry.
The slide in domestic natural gas consumption started just as Petrobras ramped up imports of liquefied natural gas and installed two regasification plants. The company has also curtailed imports of natural gas from neighboring Bolivia.
-By Jeff Fick, Dow Jones Newswires; 55-21-2586-6085; jeff.fick@dowjones.com
Natural Gas Storage in Sacramento, CA
The state Public Utilities Commission will hold a public hearing in Sacramento on Tuesday about the proposed Sacramento Natural Gas Storage project.
The PUC will hold a meeting on the project’s draft environmental impact report, followed by a 7 p.m. hearing during which it will take public comments. Both events will be held in the Depot Park conference center at 8215 Ferguson Ave.
Sacramento Natural Gas Storage LLC, founded by Donald B. Russell, Jim Fossum and Derek Jones, plans to build and operate a facility that would store up to 7.5 billion cubic feet of natural gas underground in south Sacramento. It would hook up to a Sacramento Municipal Utility District pipeline to provide natural gas to fuel the Cosumnes Power Plant.
SMUD has signed a 20-year contract to store natural gas at the site. Sacramento Natural Gas Storage plans to sign up other customers if the project receives approval from the PUC and the city of Sacramento.
Last year the company raised $60 million for the project from group of investors led by Wells Fargo Energy Capital Inc., a non-bank subsidiary of Wells Fargo & Co.
The PUC will hold a meeting on the project’s draft environmental impact report, followed by a 7 p.m. hearing during which it will take public comments. Both events will be held in the Depot Park conference center at 8215 Ferguson Ave.
Sacramento Natural Gas Storage LLC, founded by Donald B. Russell, Jim Fossum and Derek Jones, plans to build and operate a facility that would store up to 7.5 billion cubic feet of natural gas underground in south Sacramento. It would hook up to a Sacramento Municipal Utility District pipeline to provide natural gas to fuel the Cosumnes Power Plant.
SMUD has signed a 20-year contract to store natural gas at the site. Sacramento Natural Gas Storage plans to sign up other customers if the project receives approval from the PUC and the city of Sacramento.
Last year the company raised $60 million for the project from group of investors led by Wells Fargo Energy Capital Inc., a non-bank subsidiary of Wells Fargo & Co.
Monday, April 27, 2009
Fiat Powered Natural Gas Cars
April 26, 2009, 1:46 am
An Alternate-Fuel Wild Card in Fiat’s Deck
By Nelson D. Schwartz
In Europe, Fiat is well-known for its mastery of diesel engines. In fact, one reason General Motors bought a 20 percent stake in Fiat’s auto division back in 2000 was to help expand the diesel offerings of its Opel unit. That partnership didn’t work out so well: G.M. paid Fiat $2 billion to extricate itself from the partnership four years later, although Opel did benefit from better diesel technology.
Now as Fiat negotiates with Washington, lenders and labor leaders on a deal to rescue Chrysler (a subject I covered in this article in Sunday’s Times), as well as acquiring Opel from G.M., another fuel that Fiat engineers have advanced could loom large: natural gas.
Fiat is the biggest player in the market for natural gas engines, which produce lower levels of greenhouse gases and other pollutants than either diesel or gasoline engines. In Italy this year the company hopes to sell 120,000 vehicles powered by natural gas, up from 68,000 in 2008.
Generous scrapping incentives from the Italian government will help — you get 3,000 euros if you trade in an old clunker for a new model powered by natural gas, double the allowance of 1,500 euros for junking a standard car. But over the long term, Fiat has a major opportunity to carve out a niche among motorists seeking power and performance while driving green, especially in markets like Germany and Britain, where Opel is strong, and possibly one day in the United States.
The challenge, of course, is fueling up. In Italy, Fiat is collaborating with fuel companies and the Italian government to provide more than a 1,000 stations where motorists can fill their tanks with natural gas. Many cars are equipped to operate on dual fuels, switching from natural gas to the diesel or gasoline tank as needed, depending on what is available.
Natural gas cars and commercial vehicles have been available in the United States for years, but the notion has never hit it big in the mass market, in large part because filling stations have been scarce by comparison. But that was then. An urge to reduce greenhouse gases — and the prospect of another spike in oil prices — could make Fiat’s engine technology very appealing to American drivers eager for an alternative to today’s hybrids.
An Alternate-Fuel Wild Card in Fiat’s Deck
By Nelson D. Schwartz
In Europe, Fiat is well-known for its mastery of diesel engines. In fact, one reason General Motors bought a 20 percent stake in Fiat’s auto division back in 2000 was to help expand the diesel offerings of its Opel unit. That partnership didn’t work out so well: G.M. paid Fiat $2 billion to extricate itself from the partnership four years later, although Opel did benefit from better diesel technology.
Now as Fiat negotiates with Washington, lenders and labor leaders on a deal to rescue Chrysler (a subject I covered in this article in Sunday’s Times), as well as acquiring Opel from G.M., another fuel that Fiat engineers have advanced could loom large: natural gas.
Fiat is the biggest player in the market for natural gas engines, which produce lower levels of greenhouse gases and other pollutants than either diesel or gasoline engines. In Italy this year the company hopes to sell 120,000 vehicles powered by natural gas, up from 68,000 in 2008.
Generous scrapping incentives from the Italian government will help — you get 3,000 euros if you trade in an old clunker for a new model powered by natural gas, double the allowance of 1,500 euros for junking a standard car. But over the long term, Fiat has a major opportunity to carve out a niche among motorists seeking power and performance while driving green, especially in markets like Germany and Britain, where Opel is strong, and possibly one day in the United States.
The challenge, of course, is fueling up. In Italy, Fiat is collaborating with fuel companies and the Italian government to provide more than a 1,000 stations where motorists can fill their tanks with natural gas. Many cars are equipped to operate on dual fuels, switching from natural gas to the diesel or gasoline tank as needed, depending on what is available.
Natural gas cars and commercial vehicles have been available in the United States for years, but the notion has never hit it big in the mass market, in large part because filling stations have been scarce by comparison. But that was then. An urge to reduce greenhouse gases — and the prospect of another spike in oil prices — could make Fiat’s engine technology very appealing to American drivers eager for an alternative to today’s hybrids.
Sunday, April 26, 2009
Natural Gas Summit for Europe
SOFIA (AFP) — Seeking to secure Europe's energy supplies, gas producer, consumer and transit countries Saturday urged greater cooperation and diversification of gas sources, at the end of a two-day summit in Sofia.
The leaders from 28 European, Caspian and Central Asian countries failed however to iron out difficulties over the supply of two major new pipeline projects -- the EU's Nabucco and the Russia-backed South Stream.
In a common declaration, they called for the "rapid development of international gas infrastructure, pipelines, liquefied natural gas terminals and strategic storages to guarantee diversification of gas supplies to Europe in a sustainable and viable way."
To achieve this, "a working and lasting bond of co-operation between producer, transit and consumer countries" had to be developed, they added.
But officials recognised on the sidelines that clashing opinions were far from being reconciled.
The summit followed a Russia-Ukraine price row in January that cut off gas supplies across Europe.
Noting that Europe's demand for imported natural gas would increase over the next 20 years, the summit steered away from specifically endorsing the two projects already under way.
But the rival EU-backed Nabucco and Moscow-backed South Stream pipelines nevertheless took centre stage in all discussions at the summit.
The 3,300-kilometre (2,000 mile) Nabucco pipeline aims to wean Europe off its dependence on Russian supplies by channeling natural gas from the Caspian region and Central Asia via Turkey and Austria to Western Europe.
The six Nabucco countries -- Austria, Hungary, Romania, Bulgaria, Turkey and Germany -- are expected to sign an intergovernmental agreement on the project by June, officials said Friday.
The rival South Stream project of Russian gas giant Gazprom and Italy's Eni is meanwhile seen as strengthening Russia's grip on Europe, allowing Moscow to bypass contentious Ukraine and pump gas directly to Europe via an alternative route under the Black Sea.
But while most Balkan states at the summit supported both projects in an attempt to diversify their supplies and pocket hefty transit fees, analyst Jacques Percebois of France's Montpellier University said "the current context of scanty cash" made it highly improbable to have both.
The summit had noted that huge amounts of funding would have to be poured into new pipelines to serve Europe's soaring demand.
Moreover, with both projects relying on gas supplies from the Caspian region and the Middle East, competition has grown fierce between producers as Brussels and Moscow also intensified efforts to woo potential suppliers to their side.
"There will not be enough gas to feed both pipelines," Colette Lewiner, another analyst from French agency Capgemini added.
"They talk about Iranian gas for Nabucco but this is highly unlikely to happen," she added, noting the current political situation in Iran.
However, Richard Morningstar, US special envoy for Eurasian energy, the first official in President Barack Obama's administration to confirm Washington's backing for Nabucco, said that he did not exclude Iran from the list of potential suppliers for the project.
"Obviously right now gas from Iran creates some difficulties with the United States as well as with other countries," he told journalists Saturday.
"We reached out to Iran, we want to engage with Iran, but it also takes two to go to the dance and we're hoping there will be positive responses from Iran," he added.
Lewiner also said that the EU project -- which Nabucco opponents call "an empty pipe" -- "lacks clear agreements with its potential suppliers of gas."
Russia's Energy Minister Sergei Shmatko assured Friday that Russia could find the gas to feed South Stream and also offer better gas prices than Nabucco.
But he failed to ease the United States' concern on the Moscow-back project.
"We have doubts about South Stream.... We do have serious questions," Morningstar said.
Analysts meanwhile added that apart from political wrangling, lack of clear financial commitments to the costly and technically complex projects also severely stalled progress on both South Stream and Nabucco.
And this would most probably push their opening beyond the 2014 deadlines, they said.
Copyright © 2009 AFP. All rights reserved
The leaders from 28 European, Caspian and Central Asian countries failed however to iron out difficulties over the supply of two major new pipeline projects -- the EU's Nabucco and the Russia-backed South Stream.
In a common declaration, they called for the "rapid development of international gas infrastructure, pipelines, liquefied natural gas terminals and strategic storages to guarantee diversification of gas supplies to Europe in a sustainable and viable way."
To achieve this, "a working and lasting bond of co-operation between producer, transit and consumer countries" had to be developed, they added.
But officials recognised on the sidelines that clashing opinions were far from being reconciled.
The summit followed a Russia-Ukraine price row in January that cut off gas supplies across Europe.
Noting that Europe's demand for imported natural gas would increase over the next 20 years, the summit steered away from specifically endorsing the two projects already under way.
But the rival EU-backed Nabucco and Moscow-backed South Stream pipelines nevertheless took centre stage in all discussions at the summit.
The 3,300-kilometre (2,000 mile) Nabucco pipeline aims to wean Europe off its dependence on Russian supplies by channeling natural gas from the Caspian region and Central Asia via Turkey and Austria to Western Europe.
The six Nabucco countries -- Austria, Hungary, Romania, Bulgaria, Turkey and Germany -- are expected to sign an intergovernmental agreement on the project by June, officials said Friday.
The rival South Stream project of Russian gas giant Gazprom and Italy's Eni is meanwhile seen as strengthening Russia's grip on Europe, allowing Moscow to bypass contentious Ukraine and pump gas directly to Europe via an alternative route under the Black Sea.
But while most Balkan states at the summit supported both projects in an attempt to diversify their supplies and pocket hefty transit fees, analyst Jacques Percebois of France's Montpellier University said "the current context of scanty cash" made it highly improbable to have both.
The summit had noted that huge amounts of funding would have to be poured into new pipelines to serve Europe's soaring demand.
Moreover, with both projects relying on gas supplies from the Caspian region and the Middle East, competition has grown fierce between producers as Brussels and Moscow also intensified efforts to woo potential suppliers to their side.
"There will not be enough gas to feed both pipelines," Colette Lewiner, another analyst from French agency Capgemini added.
"They talk about Iranian gas for Nabucco but this is highly unlikely to happen," she added, noting the current political situation in Iran.
However, Richard Morningstar, US special envoy for Eurasian energy, the first official in President Barack Obama's administration to confirm Washington's backing for Nabucco, said that he did not exclude Iran from the list of potential suppliers for the project.
"Obviously right now gas from Iran creates some difficulties with the United States as well as with other countries," he told journalists Saturday.
"We reached out to Iran, we want to engage with Iran, but it also takes two to go to the dance and we're hoping there will be positive responses from Iran," he added.
Lewiner also said that the EU project -- which Nabucco opponents call "an empty pipe" -- "lacks clear agreements with its potential suppliers of gas."
Russia's Energy Minister Sergei Shmatko assured Friday that Russia could find the gas to feed South Stream and also offer better gas prices than Nabucco.
But he failed to ease the United States' concern on the Moscow-back project.
"We have doubts about South Stream.... We do have serious questions," Morningstar said.
Analysts meanwhile added that apart from political wrangling, lack of clear financial commitments to the costly and technically complex projects also severely stalled progress on both South Stream and Nabucco.
And this would most probably push their opening beyond the 2014 deadlines, they said.
Copyright © 2009 AFP. All rights reserved
Saturday, April 25, 2009
El Paso Natural Gas Pipeline
NEW YORK, April 24 (Reuters) - El Paso (EP.N) said Friday it lifted force majeure on its Southern Natural Gas unit after divers confirmed a leak in the area of its 18-inch West Delta 105 natural gas pipeline in the Gulf of Mexico was not on its system.
Personnel were in the process of restoring the pipeline, according to a website posting. About 42 million cubic feet per day of gas was shut in due to the investigation.
It was not immediately known what pipeline the reported leak was on.
An earlier website posting said several receipt points on Southern's system had been shut in.
The 7,600-mile (12,200-km) Southern Natural Gas pipeline is part of El Paso's 42,000-mile interstate pipeline system. (Reporting by Eileen Moustakis; Editing by Marguerita Choy)
Personnel were in the process of restoring the pipeline, according to a website posting. About 42 million cubic feet per day of gas was shut in due to the investigation.
It was not immediately known what pipeline the reported leak was on.
An earlier website posting said several receipt points on Southern's system had been shut in.
The 7,600-mile (12,200-km) Southern Natural Gas pipeline is part of El Paso's 42,000-mile interstate pipeline system. (Reporting by Eileen Moustakis; Editing by Marguerita Choy)
Thursday, April 23, 2009
EU Serious About Transportation of Natural Gas
By Jonathan Stearns
April 22 (Bloomberg) -- The European Union agreed to make dominant electricity and natural-gas companies improve access to transmission networks for competitors, ending 19 months of contentious negotiations with a compromise to open markets.
The European Parliament approved legislation forcing EU nations to choose one of three options to ease access to the power and gas grids of such producers as Electricite de France SA and E.ON AG. The choices are to force the companies to sell or spin off the transmission business; require them to hand over management of the grid to an independent operator; or oblige them to make the unit more independent through internal actions.
Germany and France added the last option, fending off calls for the breakup of national champions or the removal of their network-management role. At the same time, EU regulators opened a second front in the battle for more energy competition by using existing European antitrust rules to force some grid sales in Germany, threaten such a step in Italy and leave open the possibility of similar actions in France.
“We are moving toward a separation of the transmission networks one way or the other,” said Alejo Vidal-Quadras, a Spanish member who helped steer the new legislation through the EU Parliament today in Strasbourg, France. National governments’ final approval of the package, which also establishes an Agency for the Cooperation of Energy Regulators and creates rules to facilitate energy flows, is a formality in the coming weeks.
Improving Access
The EU goal is to facilitate network access for energy companies such as Centrica Plc without their own grids. After 2003 laws gave customers the right to choose suppliers, the EU’s 300 billion-euro ($388 billion) power and gas market remains fragmented by national barriers, according to the European Commission, the 27-nation bloc’s regulatory arm that proposed the new rules in September 2007.
The commission said electricity and gas producers should sell or spin off their transmission business -- steps known as ownership unbundling -- or hand over operation of the network to an independent entity. The regulator said such structural separation was necessary to remove a conflict of interest that leads incumbents to discriminate against new entrants when it comes to network access.
‘Detailed Obligations’
The third, looser option demanded by Germany and France includes devising an in-house program to ensure non- discrimination on grid access and appointing an authority to monitor it. This approach also requires the transmission business to have its own information-technology equipment, imposes “cooling-off” periods for ties between the unit’s managers and the parent company and forces the grid business to submit network-development plans annually to regulators.
“There are quite detailed obligations,” said Sylvie Maudhuit, a Brussels-based partner at law firm Howrey LLP. “The third option could work, but it remains to be seen what happens in practice.”
EU countries will have up to 30 months after the rules are published to enact one of the three options. Publication will probably be within the next five or six months.
While EU lawmakers debated and diluted the draft unbundling legislation, the commission probed companies including EDF, E.ON, Gaz de France SA -- now GDF Suez SA -- RWE AG and Eni SpA for possible illegal business practices. Last year, Germany’s E.ON agreed to sell its electricity-transmission grid and fellow German supplier RWE chose to sell its gas-transmission network to settle commission investigations.
‘Message Is Clear’
Last month, the commission charged Italy’s Eni with possible abuse of its dominant position by limiting gas-pipeline investment. The charges prompted Eni and Italian Prime Minister Silvio Berlusconi to say the forced sale of the company’s pipeline stakes would threaten gas supplies.
“The message is clear: the commission will do everything possible to achieve unbundling,” Maudhuit said.
Another part of the legislative package approved today establishes an agency to oversee national authorities and transmission-system operators, advise EU regulators on market regulation and decide on cross-border issues. A third part creates a “European Network of Transmission System Operators” for electricity and gas whose task will be to develop codes for matters such as grid access, congestion management, interoperability and transparency.
To contact the reporter on this story: Jonathan Stearns in Strasbourg, France, at jstearns2@bloomberg.net
April 22 (Bloomberg) -- The European Union agreed to make dominant electricity and natural-gas companies improve access to transmission networks for competitors, ending 19 months of contentious negotiations with a compromise to open markets.
The European Parliament approved legislation forcing EU nations to choose one of three options to ease access to the power and gas grids of such producers as Electricite de France SA and E.ON AG. The choices are to force the companies to sell or spin off the transmission business; require them to hand over management of the grid to an independent operator; or oblige them to make the unit more independent through internal actions.
Germany and France added the last option, fending off calls for the breakup of national champions or the removal of their network-management role. At the same time, EU regulators opened a second front in the battle for more energy competition by using existing European antitrust rules to force some grid sales in Germany, threaten such a step in Italy and leave open the possibility of similar actions in France.
“We are moving toward a separation of the transmission networks one way or the other,” said Alejo Vidal-Quadras, a Spanish member who helped steer the new legislation through the EU Parliament today in Strasbourg, France. National governments’ final approval of the package, which also establishes an Agency for the Cooperation of Energy Regulators and creates rules to facilitate energy flows, is a formality in the coming weeks.
Improving Access
The EU goal is to facilitate network access for energy companies such as Centrica Plc without their own grids. After 2003 laws gave customers the right to choose suppliers, the EU’s 300 billion-euro ($388 billion) power and gas market remains fragmented by national barriers, according to the European Commission, the 27-nation bloc’s regulatory arm that proposed the new rules in September 2007.
The commission said electricity and gas producers should sell or spin off their transmission business -- steps known as ownership unbundling -- or hand over operation of the network to an independent entity. The regulator said such structural separation was necessary to remove a conflict of interest that leads incumbents to discriminate against new entrants when it comes to network access.
‘Detailed Obligations’
The third, looser option demanded by Germany and France includes devising an in-house program to ensure non- discrimination on grid access and appointing an authority to monitor it. This approach also requires the transmission business to have its own information-technology equipment, imposes “cooling-off” periods for ties between the unit’s managers and the parent company and forces the grid business to submit network-development plans annually to regulators.
“There are quite detailed obligations,” said Sylvie Maudhuit, a Brussels-based partner at law firm Howrey LLP. “The third option could work, but it remains to be seen what happens in practice.”
EU countries will have up to 30 months after the rules are published to enact one of the three options. Publication will probably be within the next five or six months.
While EU lawmakers debated and diluted the draft unbundling legislation, the commission probed companies including EDF, E.ON, Gaz de France SA -- now GDF Suez SA -- RWE AG and Eni SpA for possible illegal business practices. Last year, Germany’s E.ON agreed to sell its electricity-transmission grid and fellow German supplier RWE chose to sell its gas-transmission network to settle commission investigations.
‘Message Is Clear’
Last month, the commission charged Italy’s Eni with possible abuse of its dominant position by limiting gas-pipeline investment. The charges prompted Eni and Italian Prime Minister Silvio Berlusconi to say the forced sale of the company’s pipeline stakes would threaten gas supplies.
“The message is clear: the commission will do everything possible to achieve unbundling,” Maudhuit said.
Another part of the legislative package approved today establishes an agency to oversee national authorities and transmission-system operators, advise EU regulators on market regulation and decide on cross-border issues. A third part creates a “European Network of Transmission System Operators” for electricity and gas whose task will be to develop codes for matters such as grid access, congestion management, interoperability and transparency.
To contact the reporter on this story: Jonathan Stearns in Strasbourg, France, at jstearns2@bloomberg.net
Wednesday, April 22, 2009
Honda Civic GX is a Natural Gas Runner
http://content.usatoday.com/communities/openroad/post/2009/04/65760005/1
Open Roader James R. Healey is in Orlando today for at the Alternative Fuels and Vehicles 2009 conference and reports that oil and natural-gas baron T. Boone Pickens predictss "$75 oil by the end of the year." He says oil suppliers will "cut and cut again" to reduce inventories and drive up prices. Oil's at about $48 a barrel today and gasoline's averaging about $2.06 a gallon. If he's is right and that math holds, $75 oil = gas in the low $3 range by yearend.
In case you've been on Mars for a year, Pickens is the natural gas evangelist buying ads touting it as the clean car fuel of the future. He makes no secret that he owns a ton of it and would get even richer, but his argument for hisPickens Plan is that America has a lot of it -- so we're not hostage to nations run by bad guys who hate us -- and it doesn’t cause much pollution.
More wisdom from T. Boone:
-- Oil will be $300 a barrel in 10 years if the U.S. doesn't find some other fuel. That'd be $12 gasoline.
-- It'll be 3-5 years before many pesonal cars run on natural gas. Honda's Civic GX is the only mainline showroom model now -- and try buying one, especially outside California. He drives one, loves it: "You get to drive single occupancy in the HOV lane, that's what I like." Honda civic GXpg-horizontal High Occupancy Vehicle express lanes normally require two or three occupants.
-- Money's key to the popularity of natural gas vehicles, just like most things. "There's a patriotic issue here," he says, but "how much will you pay for that?" His natural gas Civic was about $6,500 more than the similar gasoline model.
Photo of 2009 Honda Civic GX by Honda
Posted by Fred Meier
Open Roader James R. Healey is in Orlando today for at the Alternative Fuels and Vehicles 2009 conference and reports that oil and natural-gas baron T. Boone Pickens predictss "$75 oil by the end of the year." He says oil suppliers will "cut and cut again" to reduce inventories and drive up prices. Oil's at about $48 a barrel today and gasoline's averaging about $2.06 a gallon. If he's is right and that math holds, $75 oil = gas in the low $3 range by yearend.
In case you've been on Mars for a year, Pickens is the natural gas evangelist buying ads touting it as the clean car fuel of the future. He makes no secret that he owns a ton of it and would get even richer, but his argument for hisPickens Plan is that America has a lot of it -- so we're not hostage to nations run by bad guys who hate us -- and it doesn’t cause much pollution.
More wisdom from T. Boone:
-- Oil will be $300 a barrel in 10 years if the U.S. doesn't find some other fuel. That'd be $12 gasoline.
-- It'll be 3-5 years before many pesonal cars run on natural gas. Honda's Civic GX is the only mainline showroom model now -- and try buying one, especially outside California. He drives one, loves it: "You get to drive single occupancy in the HOV lane, that's what I like." Honda civic GXpg-horizontal High Occupancy Vehicle express lanes normally require two or three occupants.
-- Money's key to the popularity of natural gas vehicles, just like most things. "There's a patriotic issue here," he says, but "how much will you pay for that?" His natural gas Civic was about $6,500 more than the similar gasoline model.
Photo of 2009 Honda Civic GX by Honda
Posted by Fred Meier
Tuesday, April 21, 2009
One Trader Likes Natural Gas Price Futures
There is no shortage of natural gas bears in the investment community. Natural gas prices have been falling for months and so far bearish bets have paid off.
But if they’re smart, the bears will take their profits now and hibernate for the rest of the year. Natural gas has bottomed and is ready to rally – big time.
Of course, the bears will argue otherwise. But they’re wrong… They’re letting logic cloud their thinking and it’s blinding them to the opportunity in front of them.
Logic says there is a glut of natural gas the market. Logic dictates the oversupply of natural gas should pressure prices lower until the forces of supply and demand deal with the glut. And logic is correct.
What the bears are missing here, though, is the market already knows this. The market knows there’s a glut. The market knows natural gas prices have to move lower to correct the supply-and-demand imbalance. And the market has already responded.
Last week, natural gas prices dropped as low as $3.50 per million British thermal units (BTUs). That’s as low as prices have been in nearly seven years. In fact, $3.50 is widely regarded as the "shut in" price for natural gas. That’s the price at which natural gas drillers are better off closing down the well than continuing because it costs more to extract the gas than what the drillers can sell it for.
In other words, natural gas cannot fall much below $3.50 before drillers start shutting wells. Once that happens, the forces of supply and demand start going the other way. And the market knows this…
Which is why natural gas bounced off of the $3.50 price level and is now trading at $3.86. The market has already discounted the natural gas supply glut. It started discounting it in the fourth quarter last year when, for the first time in a decade, natural gas prices fell during the last three months of the year.
Now the market is ready to start discounting a drawdown in natural gas supplies. The drawdown won’t happen immediately. Heck, it may not happen for several more months. But the market is a discounting mechanism. Prices will start to increase well before the fundamental factors support such a move.
We should soon see natural gas prices begin to trade more in line with their historic relationship with oil.
As you can tell from the following chart, it now takes roughly 15 million BTUs of natural gas to buy one barrel of oil…
Historically, this ratio has trended around 10. In fact, for most of the past decade, the ratio has been closer to eight.
The current 15-to-1 ratio is the most extreme reading of the past 20 years. This means one of two things has to be true: Either oil is too expensive or natural gas is too cheap.
If oil is too expensive, then oil prices will fall while natural gas holds steady. If natural gas is too cheap, then there’s the potential for a huge rally in the works.
Either way, the downside to buying natural gas right here is limited and the upside is huge.
Best regards and good trading,
Jeff Clark
http://jutiagroup.com/2009/04/20/natural-gas-is-ready-to-rally/
But if they’re smart, the bears will take their profits now and hibernate for the rest of the year. Natural gas has bottomed and is ready to rally – big time.
Of course, the bears will argue otherwise. But they’re wrong… They’re letting logic cloud their thinking and it’s blinding them to the opportunity in front of them.
Logic says there is a glut of natural gas the market. Logic dictates the oversupply of natural gas should pressure prices lower until the forces of supply and demand deal with the glut. And logic is correct.
What the bears are missing here, though, is the market already knows this. The market knows there’s a glut. The market knows natural gas prices have to move lower to correct the supply-and-demand imbalance. And the market has already responded.
Last week, natural gas prices dropped as low as $3.50 per million British thermal units (BTUs). That’s as low as prices have been in nearly seven years. In fact, $3.50 is widely regarded as the "shut in" price for natural gas. That’s the price at which natural gas drillers are better off closing down the well than continuing because it costs more to extract the gas than what the drillers can sell it for.
In other words, natural gas cannot fall much below $3.50 before drillers start shutting wells. Once that happens, the forces of supply and demand start going the other way. And the market knows this…
Which is why natural gas bounced off of the $3.50 price level and is now trading at $3.86. The market has already discounted the natural gas supply glut. It started discounting it in the fourth quarter last year when, for the first time in a decade, natural gas prices fell during the last three months of the year.
Now the market is ready to start discounting a drawdown in natural gas supplies. The drawdown won’t happen immediately. Heck, it may not happen for several more months. But the market is a discounting mechanism. Prices will start to increase well before the fundamental factors support such a move.
We should soon see natural gas prices begin to trade more in line with their historic relationship with oil.
As you can tell from the following chart, it now takes roughly 15 million BTUs of natural gas to buy one barrel of oil…
Historically, this ratio has trended around 10. In fact, for most of the past decade, the ratio has been closer to eight.
The current 15-to-1 ratio is the most extreme reading of the past 20 years. This means one of two things has to be true: Either oil is too expensive or natural gas is too cheap.
If oil is too expensive, then oil prices will fall while natural gas holds steady. If natural gas is too cheap, then there’s the potential for a huge rally in the works.
Either way, the downside to buying natural gas right here is limited and the upside is huge.
Best regards and good trading,
Jeff Clark
http://jutiagroup.com/2009/04/20/natural-gas-is-ready-to-rally/
Monday, April 20, 2009
Natural Gas Still No Buy for Hedge Fund Managers
By GREGORY MEYER - Wall Street Journal
While U.S. natural-gas prices have drifted to levels last seen in 2002, a number of hedge-fund managers specializing in the commodity still aren't buying.
A smaller, more domestic market than oil, gas is notorious for burning traders. The 2006 blowups of hedge funds Amaranth Advisors and MotherRock are legendary.
The market has stayed volatile since then, with the front-month gas future contract soaring above $13 a million British thermal units last summer and then plunging, settling Friday at $3.729. But few seem ready to put money on a price rebound.
"I'm not bullish on natural gas," said Andrew Rowe, managing director of SandRidge Capital LP, a $650 million gas-trading firm that returned 21% last year. "The markets always rally, but I think it would be hard for natural gas to sustain rallies this year."
Natural gas plummeted alongside other commodities in 2008 as the U.S. recession deepened. Unlike several other commodities, notably crude oil, it has kept falling this year. Industry is expected to consume far less gas, and there also are signs that despite a colder-than-normal winter, some consumers reined in home gas use to keep heating bills down. Mr. Rowe recounts a conversation with a banker from Boston who said he'd set his thermostat at 15 degrees Celsius to save cash.
U.S. gas is widely traded by hedge funds, with 74 large speculators betting futures prices will fall and 57 betting on a gain as of Tuesday, according to the Commodity Futures Trading Commission.
Investor withdrawals from hedge funds have contributed to declining gas-trading volumes on the New York Mercantile Exchange. They've added challenges for smaller fund managers trying to attract capital.
"It's very hard," said Larry Roche, portfolio manager at Battalion Capital Management LLC, a $15 million gas-focused fund firm whose trades returned 15% last year.
Mr. Roche said supplies of liquefied natural gas are poised to increase, potentially crippling any price gains. "Right now there's no reason for natural gas to rally," he said.
Plunging gas prices have translated into big profits for some funds. The Citigroup AAA Master Fund, which is managed by AAA Capital Management Advisers Inc., returned 64.6% in 2008 partly because natural gas "prices plunged from $14 to about $5," a recent securities filing disclosed.
Write to Gregory Meyer at greg.meyer@dowjones.com
While U.S. natural-gas prices have drifted to levels last seen in 2002, a number of hedge-fund managers specializing in the commodity still aren't buying.
A smaller, more domestic market than oil, gas is notorious for burning traders. The 2006 blowups of hedge funds Amaranth Advisors and MotherRock are legendary.
The market has stayed volatile since then, with the front-month gas future contract soaring above $13 a million British thermal units last summer and then plunging, settling Friday at $3.729. But few seem ready to put money on a price rebound.
"I'm not bullish on natural gas," said Andrew Rowe, managing director of SandRidge Capital LP, a $650 million gas-trading firm that returned 21% last year. "The markets always rally, but I think it would be hard for natural gas to sustain rallies this year."
Natural gas plummeted alongside other commodities in 2008 as the U.S. recession deepened. Unlike several other commodities, notably crude oil, it has kept falling this year. Industry is expected to consume far less gas, and there also are signs that despite a colder-than-normal winter, some consumers reined in home gas use to keep heating bills down. Mr. Rowe recounts a conversation with a banker from Boston who said he'd set his thermostat at 15 degrees Celsius to save cash.
U.S. gas is widely traded by hedge funds, with 74 large speculators betting futures prices will fall and 57 betting on a gain as of Tuesday, according to the Commodity Futures Trading Commission.
Investor withdrawals from hedge funds have contributed to declining gas-trading volumes on the New York Mercantile Exchange. They've added challenges for smaller fund managers trying to attract capital.
"It's very hard," said Larry Roche, portfolio manager at Battalion Capital Management LLC, a $15 million gas-focused fund firm whose trades returned 15% last year.
Mr. Roche said supplies of liquefied natural gas are poised to increase, potentially crippling any price gains. "Right now there's no reason for natural gas to rally," he said.
Plunging gas prices have translated into big profits for some funds. The Citigroup AAA Master Fund, which is managed by AAA Capital Management Advisers Inc., returned 64.6% in 2008 partly because natural gas "prices plunged from $14 to about $5," a recent securities filing disclosed.
Write to Gregory Meyer at greg.meyer@dowjones.com
Sunday, April 19, 2009
Natural Gas Pipeline Status Quo in Indiana
By James P. Miller | Tribune reporter
3:20 PM CDT, April 17, 2009
NiSource Inc. disclosed Friday in a regulatory filing that the Indiana energy holding company has thrown in the towel on a plan to monetize its big Columbia Gulf natural gas pipeline by establishing a master limited partnership.
In a terse one-page document, NiSource Energy Partners LP – citing "current public market conditions" – asked to withdraw the registration statement filed in December 2007, covering plans for an initial public offering.
NiSource Inc. created the limited partnership that year to own and operate the holding company's 3,400-mile Columbia Gulf gas line. The IPO documents indicated that NiSource would indirectly serve as general partner of Energy Partners and hold a 59 percent limited partnership stake in the entity.
The IPO envisioned sale to the public of 12.5 million common units of NiSource Energy Partners, with proceeds estimated at about $235 million.
The offering plan hit a hitch early on and later seemed to go to the back burner at the Merrillville, Ind.-based energy concern.
3:20 PM CDT, April 17, 2009
NiSource Inc. disclosed Friday in a regulatory filing that the Indiana energy holding company has thrown in the towel on a plan to monetize its big Columbia Gulf natural gas pipeline by establishing a master limited partnership.
In a terse one-page document, NiSource Energy Partners LP – citing "current public market conditions" – asked to withdraw the registration statement filed in December 2007, covering plans for an initial public offering.
NiSource Inc. created the limited partnership that year to own and operate the holding company's 3,400-mile Columbia Gulf gas line. The IPO documents indicated that NiSource would indirectly serve as general partner of Energy Partners and hold a 59 percent limited partnership stake in the entity.
The IPO envisioned sale to the public of 12.5 million common units of NiSource Energy Partners, with proceeds estimated at about $235 million.
The offering plan hit a hitch early on and later seemed to go to the back burner at the Merrillville, Ind.-based energy concern.
Saturday, April 18, 2009
Natural Gas Rig Count at 760 Today
NEW YORK, April 17 (Reuters) - The number of rigs drilling for natural gas in the United States fell 30 to 760 last week, the lowest level in more than six years, according to a report issued on Friday by oil services firm Baker Hughes Inc in Houston.
U.S. natural gas drilling rigs have been in a steady decline since peaking above 1,600 in September and now stand about 701 below the same week last year, the lowest level since March 14, 2003, when there were 754 gas rigs operating.
Traders and analysts have said tight credit and a 70 percent slide in gas prices over the last nine months forced many producers to scale back drilling operations.
Near record-high gas production last year and a deepening recession that sharply cut demand led to a severe oversupply that collapsed gas prices to below the $4 per mmBtu level from their peak above $13 in July.
With the natural gas drilling rig count falling at a record pace this year, most analysts expect year-on-year output declines soon, probably by summer.
Gas rigs are expected to decline another 10 percent or so this year before bottoming at about 700, a level that should turn output negative and help tighten the overall supply-demand balance. (Reporting by Joe Silha, editing by John Picinich)
U.S. natural gas drilling rigs have been in a steady decline since peaking above 1,600 in September and now stand about 701 below the same week last year, the lowest level since March 14, 2003, when there were 754 gas rigs operating.
Traders and analysts have said tight credit and a 70 percent slide in gas prices over the last nine months forced many producers to scale back drilling operations.
Near record-high gas production last year and a deepening recession that sharply cut demand led to a severe oversupply that collapsed gas prices to below the $4 per mmBtu level from their peak above $13 in July.
With the natural gas drilling rig count falling at a record pace this year, most analysts expect year-on-year output declines soon, probably by summer.
Gas rigs are expected to decline another 10 percent or so this year before bottoming at about 700, a level that should turn output negative and help tighten the overall supply-demand balance. (Reporting by Joe Silha, editing by John Picinich)
Friday, April 17, 2009
Natural Gas Player Reduces Output
Wall Street Journal
HOUSTON (Dow Jones)--Chesapeake Energy Corp. (CHK) said Thursday that it will curb its production by another 200 million cubic feet of natural gas a day in response to lower natural gas prices.
Chesapeake, the largest independent producer of natural gas by volume, has cut its natural gas output by a total 400 million cubic feet, or about 13% of its gross operated natural gas production capacity, since March. The bulk of the production curtailments have occurred in the Mid-Continent and the Barnett shale, a vast natural gas field in North Texas.
The company also said it would limit production from most of its newly completed wells in the Barnett shale and Arkansas' Fayetteville shale to 2 million cubic feet of natural gas a day. In the Marcellus shale in Appalachia, Chesapeake will limit production at 5 million cubic feet a day, and in the Haynesville shale, a gas field in Louisiana and Texas, the company will limit production at 10 million cubic feet of natural gas a day.
The move underscores efforts by natural gas companies to stem the flow of gas into a market that has seen sharp price declines amid lower demand and robust supplies.
"As a result of recession-related reduced demand and abundant U.S. production, natural gas prices have remained soft in recent months," Aubrey McClendon, Chesapeake's chief executive, said in a news release, adding that lower drilling activity will help rebalance the natural gas market by late 2009 or early 2010.
Natural gas producers such as Devon Energy Corp. (DVN) and SandRidge Energy Inc. (SD) have been throttling back on drilling activity to cope with lower gas prices. Natural gas prices have plunged about 74% since reaching a peak last summer of 13.694 a million British thermal units.
The number of rigs drilling for natural gas has also plunged, falling by about half from its peak last September of 1,606 rigs, according to data from oilfield services company Baker Hughes Inc. (BHI)
But the steep decline in drilling activity has yet to make a sizable dent in natural gas production, which has soared as companies like Chesapeake learned to tap huge new gas fields known as shales.
Cameron Horwitz, an analyst with SunTrust Robinson Humphrey in Houston, said that the curtailment makes sense for Chesapeake.
"It's not a huge shock given where gas prices are today," Horwitz said.
Natural gas for May delivery settled floor trade Thursday 9.4 cents lower, or 2.55%, at 3.599/MMBtu.
-By Jason Womack, Dow Jones Newswires; 713-547-9201; jason.womack@dowjones.com
Order free Annual Report for Chesapeake Energy Corp.
Visit http://djnewswires.ar.wilink.com/?link=CHK or call 1-888-301-0513
HOUSTON (Dow Jones)--Chesapeake Energy Corp. (CHK) said Thursday that it will curb its production by another 200 million cubic feet of natural gas a day in response to lower natural gas prices.
Chesapeake, the largest independent producer of natural gas by volume, has cut its natural gas output by a total 400 million cubic feet, or about 13% of its gross operated natural gas production capacity, since March. The bulk of the production curtailments have occurred in the Mid-Continent and the Barnett shale, a vast natural gas field in North Texas.
The company also said it would limit production from most of its newly completed wells in the Barnett shale and Arkansas' Fayetteville shale to 2 million cubic feet of natural gas a day. In the Marcellus shale in Appalachia, Chesapeake will limit production at 5 million cubic feet a day, and in the Haynesville shale, a gas field in Louisiana and Texas, the company will limit production at 10 million cubic feet of natural gas a day.
The move underscores efforts by natural gas companies to stem the flow of gas into a market that has seen sharp price declines amid lower demand and robust supplies.
"As a result of recession-related reduced demand and abundant U.S. production, natural gas prices have remained soft in recent months," Aubrey McClendon, Chesapeake's chief executive, said in a news release, adding that lower drilling activity will help rebalance the natural gas market by late 2009 or early 2010.
Natural gas producers such as Devon Energy Corp. (DVN) and SandRidge Energy Inc. (SD) have been throttling back on drilling activity to cope with lower gas prices. Natural gas prices have plunged about 74% since reaching a peak last summer of 13.694 a million British thermal units.
The number of rigs drilling for natural gas has also plunged, falling by about half from its peak last September of 1,606 rigs, according to data from oilfield services company Baker Hughes Inc. (BHI)
But the steep decline in drilling activity has yet to make a sizable dent in natural gas production, which has soared as companies like Chesapeake learned to tap huge new gas fields known as shales.
Cameron Horwitz, an analyst with SunTrust Robinson Humphrey in Houston, said that the curtailment makes sense for Chesapeake.
"It's not a huge shock given where gas prices are today," Horwitz said.
Natural gas for May delivery settled floor trade Thursday 9.4 cents lower, or 2.55%, at 3.599/MMBtu.
-By Jason Womack, Dow Jones Newswires; 713-547-9201; jason.womack@dowjones.com
Order free Annual Report for Chesapeake Energy Corp.
Visit http://djnewswires.ar.wilink.com/?link=CHK or call 1-888-301-0513
Thursday, April 16, 2009
Natural Gas Drilling Meeting in San Francisco April 16
On Thursday, Secretary of the Interior Ken Salazar will hold a public hearing in San Francisco on the future of expanded development of America's vast energy resources. At stake will be whether continued, or expanded, offshore petroleum production will be allowed. While the topic can be made complex, it affords perhaps the simplest stimulus to our ailing economy.
Greater access to the oil and gas reserves right off our coast would mean new job opportunities at home, right now. That's noteworthy, especially to the 494,000 Californians who lost their jobs last year. The labor market generated by allowing domestic energy companies access to those natural resources would include rig operators, engineers, environmental and safety specialists, and many more. According to a recent study by the American Energy Alliance, an energy and environmental think tank, California stands to gain about 300,000 new, well-paying, long-lasting jobs.
The American Energy Alliance estimates that as energy companies purchase leases for access and pay additional taxes while drilling, $2.2 trillion would flow to federal, state and local government coffers.
Mineral royalty payments are one of the U.S. Treasury's largest contributors, totaling some $22 billion in 2008 from oil and natural gas production, according to the American Petroleum Institute.
The promise of new production would also attract investors. Economic insecurity is a serious concern for thousands of Americans with pension funds invested in domestic energy companies. By simply allowing U.S. companies to develop our country's vast oil and natural gas resources, Congress can stimulate our energy industry, bolster the market for energy stocks, and help to secure the retirement funds of our nation's pension holders.
It's no wonder the majority of Americans - even the majority of Obama voters - supported increased access to offshore drilling in polls conducted in summer of 2008.
Now, here's the significance of the Department of the Interior's upcoming hearing in San Francisco: Many of the existing environmental laws and regulations concerning offshore energy production are decades old and simply do not reflect the technological breakthroughs that have enabled us to produce energy and protect the environment at the same time. These outdated laws - and those who file frivolous lawsuits based on them - threaten to stop forward progress on greater offshore energy production.
That's why it is critical for Californians to let Washington know that they support increased production of the energy resources they own. At this critical juncture, it is vital that all options be kept open.
Energy plan hearing
The U.S. Department of the Interior will hold a public hearing Thursday in San Francisco to take testimony on a five-year energy plan. Proposed new federal offshore oil and gas leases are the most controversial part of that plan.
Interior Secretary Ken Salazar also wants to include plans for wind, wave and tidal power generation.
The Department of the Interior oversees more than 1.7 billion acres on the Outer Continental Shelf - an area roughly three-fourths the size of the United States.
When: 9 a.m., Thursday
Where: Mission Bay Conference Center at UCSF, San Francisco
Tom Tanton is a former policy adviser with the California Energy Commission and currently an environmental fellow at the Pacific Research Institute in San Francisco. He is the president of T2 & Associates, an energy consulting firm.
This article appeared on page A - 15 of the San Francisco Chronicle
Greater access to the oil and gas reserves right off our coast would mean new job opportunities at home, right now. That's noteworthy, especially to the 494,000 Californians who lost their jobs last year. The labor market generated by allowing domestic energy companies access to those natural resources would include rig operators, engineers, environmental and safety specialists, and many more. According to a recent study by the American Energy Alliance, an energy and environmental think tank, California stands to gain about 300,000 new, well-paying, long-lasting jobs.
The American Energy Alliance estimates that as energy companies purchase leases for access and pay additional taxes while drilling, $2.2 trillion would flow to federal, state and local government coffers.
Mineral royalty payments are one of the U.S. Treasury's largest contributors, totaling some $22 billion in 2008 from oil and natural gas production, according to the American Petroleum Institute.
The promise of new production would also attract investors. Economic insecurity is a serious concern for thousands of Americans with pension funds invested in domestic energy companies. By simply allowing U.S. companies to develop our country's vast oil and natural gas resources, Congress can stimulate our energy industry, bolster the market for energy stocks, and help to secure the retirement funds of our nation's pension holders.
It's no wonder the majority of Americans - even the majority of Obama voters - supported increased access to offshore drilling in polls conducted in summer of 2008.
Now, here's the significance of the Department of the Interior's upcoming hearing in San Francisco: Many of the existing environmental laws and regulations concerning offshore energy production are decades old and simply do not reflect the technological breakthroughs that have enabled us to produce energy and protect the environment at the same time. These outdated laws - and those who file frivolous lawsuits based on them - threaten to stop forward progress on greater offshore energy production.
That's why it is critical for Californians to let Washington know that they support increased production of the energy resources they own. At this critical juncture, it is vital that all options be kept open.
Energy plan hearing
The U.S. Department of the Interior will hold a public hearing Thursday in San Francisco to take testimony on a five-year energy plan. Proposed new federal offshore oil and gas leases are the most controversial part of that plan.
Interior Secretary Ken Salazar also wants to include plans for wind, wave and tidal power generation.
The Department of the Interior oversees more than 1.7 billion acres on the Outer Continental Shelf - an area roughly three-fourths the size of the United States.
When: 9 a.m., Thursday
Where: Mission Bay Conference Center at UCSF, San Francisco
Tom Tanton is a former policy adviser with the California Energy Commission and currently an environmental fellow at the Pacific Research Institute in San Francisco. He is the president of T2 & Associates, an energy consulting firm.
This article appeared on page A - 15 of the San Francisco Chronicle
Wednesday, April 15, 2009
Shell's Liquid Natural Gas Project for Long Island is DEAD!
Shell-backed plan for natural gas terminal in Long Island Sound nixed
News Wire Services
Tuesday, April 14th 2009, 4:20 AM
The U.S. Commerce Department said Monday it opposed a proposed massive floating liquefied natural gas terminal in Long Island Sound.
Environmentalists hailed the decision as a victory over "the corporate Goliaths of our time."
Politicians in New York and Connecticut have fought for years to stop what would have been the world's first floating liquefied natural gas terminal. It would be four football fields in length and about eight stories high and 9 miles off Long Island and Connecticut.
After Gov. Paterson ruled against the project last year, Broadwater - a consortium of Shell Oil and TransCanada Pipelines Ltd. - appealed to the feds.
The Commerce Department said Monday that the project's "adverse coastal impacts outweighed its national interest."
"Today's decision is the final nail in Broadwater's coffin," said Rep. Timothy Bishop (D-L.I.).
Broadwater may appeal the decision in court. Former Mayor Rudy Giuliani's consulting firm, Giuliani Partners, was among its supporters. In a paid security study, the firm found the terminal would be "as safe a facility in design as you could possibly have."
News Wire Services
Tuesday, April 14th 2009, 4:20 AM
The U.S. Commerce Department said Monday it opposed a proposed massive floating liquefied natural gas terminal in Long Island Sound.
Environmentalists hailed the decision as a victory over "the corporate Goliaths of our time."
Politicians in New York and Connecticut have fought for years to stop what would have been the world's first floating liquefied natural gas terminal. It would be four football fields in length and about eight stories high and 9 miles off Long Island and Connecticut.
After Gov. Paterson ruled against the project last year, Broadwater - a consortium of Shell Oil and TransCanada Pipelines Ltd. - appealed to the feds.
The Commerce Department said Monday that the project's "adverse coastal impacts outweighed its national interest."
"Today's decision is the final nail in Broadwater's coffin," said Rep. Timothy Bishop (D-L.I.).
Broadwater may appeal the decision in court. Former Mayor Rudy Giuliani's consulting firm, Giuliani Partners, was among its supporters. In a paid security study, the firm found the terminal would be "as safe a facility in design as you could possibly have."
Tuesday, April 14, 2009
Natural Gas Sources Will Continue to Develop in USA
By KATIE HOWELL, Greenwire
Published: April 13, 2009
Unconventional sources of natural gas will account for more than half of North American supply by 2020, despite a current industry downturn, according to a new report by a Calgary-based energy consultant.
Ziff Energy Group says unconventional plays from shales, coalbed methane and other sources will account for 53 percent of U.S. and Canadian natural gas supplies within 11 years -- up from 30 percent in 2000.
"Growing shale gas production is changing the mix of North American gas supply," said Simon Mauger, director of gas services for Ziff Energy, in a statement.
Energy companies have long known about extensive reserves trapped in compact shales like the Barnett in Texas, the Fayetteville in Arkansas and the Marcellus in Appalachia. But until recent technological developments, they have been unable to tap them.
Advances in horizontal drilling and hydraulic fracturing to break apart the compact rock, as well as rising natural gas prices through most of the last decade, allowed shales to become a viable natural gas source, the report says.
Last year, shale gas production was more than 5 billion cubic feet a day, or 8 percent of North American gas production.
But a sharp dip in natural gas prices from more than $13 per million British thermal units in July to about $3.50 today has contributed to a production decline in most of the reservoirs.
All but the Haynesville Shale in Louisiana have seen the drilling frenzy slow as capital budgets are slashed, the report says. But the consultants expect producers to continue evaluating emerging shale reservoirs, increasing their technical understanding of extraction techniques and evaluating the potential of emerging and developing areas.
Areas where companies will likely continue to focus their limited resources include the Barnett, Fayetteville, Haynesville and Marcellus; the Woodford in Texas and Oklahoma; and the Horn River in British Columbia, the report says.
Companies will likely continue to evaluate and explore new shale reservoirs in the medium to long term, which will also contribute to growth, the report says.
Copyright 2009 E&E Publishing. All Rights Reserved.
http://www.nytimes.com/gwire/2009/04/13/13greenwire-dramatic-growth-seen-in-unconventional-plays-10513.html
Published: April 13, 2009
Unconventional sources of natural gas will account for more than half of North American supply by 2020, despite a current industry downturn, according to a new report by a Calgary-based energy consultant.
Ziff Energy Group says unconventional plays from shales, coalbed methane and other sources will account for 53 percent of U.S. and Canadian natural gas supplies within 11 years -- up from 30 percent in 2000.
"Growing shale gas production is changing the mix of North American gas supply," said Simon Mauger, director of gas services for Ziff Energy, in a statement.
Energy companies have long known about extensive reserves trapped in compact shales like the Barnett in Texas, the Fayetteville in Arkansas and the Marcellus in Appalachia. But until recent technological developments, they have been unable to tap them.
Advances in horizontal drilling and hydraulic fracturing to break apart the compact rock, as well as rising natural gas prices through most of the last decade, allowed shales to become a viable natural gas source, the report says.
Last year, shale gas production was more than 5 billion cubic feet a day, or 8 percent of North American gas production.
But a sharp dip in natural gas prices from more than $13 per million British thermal units in July to about $3.50 today has contributed to a production decline in most of the reservoirs.
All but the Haynesville Shale in Louisiana have seen the drilling frenzy slow as capital budgets are slashed, the report says. But the consultants expect producers to continue evaluating emerging shale reservoirs, increasing their technical understanding of extraction techniques and evaluating the potential of emerging and developing areas.
Areas where companies will likely continue to focus their limited resources include the Barnett, Fayetteville, Haynesville and Marcellus; the Woodford in Texas and Oklahoma; and the Horn River in British Columbia, the report says.
Companies will likely continue to evaluate and explore new shale reservoirs in the medium to long term, which will also contribute to growth, the report says.
Copyright 2009 E&E Publishing. All Rights Reserved.
http://www.nytimes.com/gwire/2009/04/13/13greenwire-dramatic-growth-seen-in-unconventional-plays-10513.html
Monday, April 13, 2009
Domestic Home Natural Gas Prices Down
Glut of natural gas could spell lower bills this winter
By Alfred Lee, Staff Writer
Posted: 04/10/2009 05:50:56 PM PDT
The 60 million American homes that rely on natural gas for heat can expect substantially lower bills next winter thanks to a glut in supply and the weak economy.
Just as distributors start to lock in contracts for the coming winter, natural gas prices have fallen almost 75 percent. Not all of that will show up as savings on the heating bill, but it should still mean noticeable savings.
Southern California Gas Co. customers have already been seeing lower bills as natural gas prices go down, Customers will continue to benefit if prices fall further, spokeswoman Denise King said Friday.
"It's great news, actually, for our customers," King said. "We've seen a steady decrease in natural gas prices since last summer. That downward turn in the prices is passed directly on to our customers."
About half the average customer's Southern California Gas Co. bill comes from a commodity rate, while the other half is from transportation costs, King said. The company adjusts its commodity rates every month to reflect the actual costs it pays for natural gas.
The company's commodity rate is down to 31 cents per therm - a decrease from 36 cents per therm in March and a high of $1.23 per therm in July.
"This past winter, our customer bills were about 20 percent lower than the year before," King said.
Utilities also generate about a fifth of the nation's electricity with gas, and many of their customers should notice price breaks as well.
Electric utilities burn natural gas at power turbines, so homes that use electric heat could see big price breaks, too. And barring a scorching summer or a brutal hurricane season, analysts say prices could fall even further.
The reason: New technology this decade has unlocked massive reserves of natural gas in North America, and the sudden jump in supply has collided with a recession, the worst since World War II, that has sapped demand.
The result has been a collapse even more dramatic than the drop in oil prices.
Natural gas futures ended this week at $3.61 per 1,000 cubic feet, down from a July peak of $13.69. That's a decline of 74 percent, compared with a decline of 64 percent in oil prices over the same period.
Households have yet to see those huge drops reflected in their heating bills because the companies that buy and distribute natural gas in bulk are still passing on the premium prices they paid last summer.
But lower rates are almost certainly coming. Distributors are already signing contracts for next winter that lock in today's low rates.
- The Associated Press contributed to this story
By Alfred Lee, Staff Writer
Posted: 04/10/2009 05:50:56 PM PDT
The 60 million American homes that rely on natural gas for heat can expect substantially lower bills next winter thanks to a glut in supply and the weak economy.
Just as distributors start to lock in contracts for the coming winter, natural gas prices have fallen almost 75 percent. Not all of that will show up as savings on the heating bill, but it should still mean noticeable savings.
Southern California Gas Co. customers have already been seeing lower bills as natural gas prices go down, Customers will continue to benefit if prices fall further, spokeswoman Denise King said Friday.
"It's great news, actually, for our customers," King said. "We've seen a steady decrease in natural gas prices since last summer. That downward turn in the prices is passed directly on to our customers."
About half the average customer's Southern California Gas Co. bill comes from a commodity rate, while the other half is from transportation costs, King said. The company adjusts its commodity rates every month to reflect the actual costs it pays for natural gas.
The company's commodity rate is down to 31 cents per therm - a decrease from 36 cents per therm in March and a high of $1.23 per therm in July.
"This past winter, our customer bills were about 20 percent lower than the year before," King said.
Utilities also generate about a fifth of the nation's electricity with gas, and many of their customers should notice price breaks as well.
Electric utilities burn natural gas at power turbines, so homes that use electric heat could see big price breaks, too. And barring a scorching summer or a brutal hurricane season, analysts say prices could fall even further.
The reason: New technology this decade has unlocked massive reserves of natural gas in North America, and the sudden jump in supply has collided with a recession, the worst since World War II, that has sapped demand.
The result has been a collapse even more dramatic than the drop in oil prices.
Natural gas futures ended this week at $3.61 per 1,000 cubic feet, down from a July peak of $13.69. That's a decline of 74 percent, compared with a decline of 64 percent in oil prices over the same period.
Households have yet to see those huge drops reflected in their heating bills because the companies that buy and distribute natural gas in bulk are still passing on the premium prices they paid last summer.
But lower rates are almost certainly coming. Distributors are already signing contracts for next winter that lock in today's low rates.
- The Associated Press contributed to this story
Sunday, April 12, 2009
Utah State's Natural Gas Shuttle!
The Associated Press
Updated: 04/11/2009 01:28:40 PM MDT
LOGAN » Utah State University's natural gas-powered shuttle service has marked a ridership milestone, serving its 850,000th passenger.
Jordan Earley, a junior studying business and marketing was the 850,000 rider. USU awarded him a pin, a plaque and a bookstore gift card.
Aggie Shuttle supervisor Alden Erickson says USU compressed natural gas-powered shuttle is the only alternative-fuel bus system in Utah.
Erickson says the school runs nine shuttles, five days a week and travels more than 110,000 miles annually. He says the cost of the shuttle is about one-third the cost of any diesel-fueled system.
The service is funded almost entirely through student fees.
Updated: 04/11/2009 01:28:40 PM MDT
LOGAN » Utah State University's natural gas-powered shuttle service has marked a ridership milestone, serving its 850,000th passenger.
Jordan Earley, a junior studying business and marketing was the 850,000 rider. USU awarded him a pin, a plaque and a bookstore gift card.
Aggie Shuttle supervisor Alden Erickson says USU compressed natural gas-powered shuttle is the only alternative-fuel bus system in Utah.
Erickson says the school runs nine shuttles, five days a week and travels more than 110,000 miles annually. He says the cost of the shuttle is about one-third the cost of any diesel-fueled system.
The service is funded almost entirely through student fees.
Saturday, April 11, 2009
Natural Gas Drilling Rig Count Down by 38
Number of active oil rigs drops by 38
© 2009 The Associated Press
April 9, 2009, 12:32PM
HOUSTON — The number of rigs actively exploring for oil and natural gas in the United States decreased by 38 this week to 1,005.
Of the rigs running nationwide, 790 were exploring for natural gas and 204 for oil, Houston-based Baker Hughes Inc. reported Thursday. A total of 11 were listed as miscellaneous.
Of the major oil- and gas-producing states, Texas lost 22 rigs, Colorado lost five and Oklahoma lost four. Alaska lost three, California and North Dakota dropped two each and New Mexico lost one. Louisiana added five and Arkansas gained one.
Baker Hughes has tracked rig counts since 1944. The tally peaked at 4,530 in 1981, during the height of the oil boom. The industry posted several record lows in 1999, bottoming out at 488.
© 2009 The Associated Press
April 9, 2009, 12:32PM
HOUSTON — The number of rigs actively exploring for oil and natural gas in the United States decreased by 38 this week to 1,005.
Of the rigs running nationwide, 790 were exploring for natural gas and 204 for oil, Houston-based Baker Hughes Inc. reported Thursday. A total of 11 were listed as miscellaneous.
Of the major oil- and gas-producing states, Texas lost 22 rigs, Colorado lost five and Oklahoma lost four. Alaska lost three, California and North Dakota dropped two each and New Mexico lost one. Louisiana added five and Arkansas gained one.
Baker Hughes has tracked rig counts since 1944. The tally peaked at 4,530 in 1981, during the height of the oil boom. The industry posted several record lows in 1999, bottoming out at 488.
Friday, April 10, 2009
Natural Gas Drilling in the Park
http://www.shreveporttimes.com/article/20090409/NEWS01/90409038/1060
Caddo Parish commissioners have agreed to allow natural gas drilling and a pipeline in Eddie D. Jones Park in the southern part of the parish.
The decision came today after much public comment. More than 25 people spoke on the issue.
Residents of Spring Ridge Estates, a subdivision just outside the park’s western boundary, want a rig and road in the park. Chesapeake Energy Corp. pledged to stop driving heavy trucks on roads in front of homes if it can use the road it has proposed to improve in the park.
The meeting prompted several people to attend today’s meeting. They included representatives from Chimp Haven and a local biking group. The two wanted Caddo to reconsider a paved road in the park that would carry heavy equipment close to the chimpanzee sanctuary and possibly disrupt biking trails.
The decision means the natural gas companies may use the new roads to haul equipment through the park rather than the nearby Spring Ridge Estates subdivision.
Caddo Parish commissioners have agreed to allow natural gas drilling and a pipeline in Eddie D. Jones Park in the southern part of the parish.
The decision came today after much public comment. More than 25 people spoke on the issue.
Residents of Spring Ridge Estates, a subdivision just outside the park’s western boundary, want a rig and road in the park. Chesapeake Energy Corp. pledged to stop driving heavy trucks on roads in front of homes if it can use the road it has proposed to improve in the park.
The meeting prompted several people to attend today’s meeting. They included representatives from Chimp Haven and a local biking group. The two wanted Caddo to reconsider a paved road in the park that would carry heavy equipment close to the chimpanzee sanctuary and possibly disrupt biking trails.
The decision means the natural gas companies may use the new roads to haul equipment through the park rather than the nearby Spring Ridge Estates subdivision.
Thursday, April 9, 2009
Russia & Shell Sign Natural Gas Deal for USA
http://www.businessweek.com/ap/financialnews/D97ES7781.htm
The world's largest natural gas company, Russia's Gazprom, has after years of attempts finally gotten a foothold in the U.S., the world's biggest gas market.
A supply agreement, part of a multipart contract reached with Royal Dutch Shell, was announced late Wednesday.
The contract, signed in Moscow by Gazprom CEO Alexei Miller and his Shell counterpart Jeroen Van der Veer, guarantees the two companies will deliver 1 million tons of Russian liquefied natural gas annually until 2028.
Under the arrangement, Gazprom gets access to a Shell terminal in Baja California, Mexico, that will turn Russian liquefied gas into gas that can be sent through pipelines to the United States. The LNG will be shipped from Sakhalin Island in the Pacific.
In return, Shell gets an equivalent amount of regular pipeline gas for distribution in Europe, a statement by the companies said.
Analysts noted that the U.S. market isn't as lucrative as Europe, since U.S. natural gas prices are lower and there's more competition.
But the deal is still significant because Gazprom has tried for years to get a slice of the U.S. market; until now, most of Gazprom's gas supplies to the United States have been swap deals with other companies.
Gazprom has developed Sakhalin's huge, difficult-to-access gas fields with an eye toward Japan and Western markets. Officials recently celebrated the opening of Russia's first LNG plant on Sakhalin -- a major leap forward for Russia's efforts to be a player in the growing world market for LNG.
Japan -- which will be the largest importer of gas from the Sakhalin projects -- last month received the first tanker shipments from the plant, which is expected to produce about 4.5 million tons this year.
The world's largest natural gas company, Russia's Gazprom, has after years of attempts finally gotten a foothold in the U.S., the world's biggest gas market.
A supply agreement, part of a multipart contract reached with Royal Dutch Shell, was announced late Wednesday.
The contract, signed in Moscow by Gazprom CEO Alexei Miller and his Shell counterpart Jeroen Van der Veer, guarantees the two companies will deliver 1 million tons of Russian liquefied natural gas annually until 2028.
Under the arrangement, Gazprom gets access to a Shell terminal in Baja California, Mexico, that will turn Russian liquefied gas into gas that can be sent through pipelines to the United States. The LNG will be shipped from Sakhalin Island in the Pacific.
In return, Shell gets an equivalent amount of regular pipeline gas for distribution in Europe, a statement by the companies said.
Analysts noted that the U.S. market isn't as lucrative as Europe, since U.S. natural gas prices are lower and there's more competition.
But the deal is still significant because Gazprom has tried for years to get a slice of the U.S. market; until now, most of Gazprom's gas supplies to the United States have been swap deals with other companies.
Gazprom has developed Sakhalin's huge, difficult-to-access gas fields with an eye toward Japan and Western markets. Officials recently celebrated the opening of Russia's first LNG plant on Sakhalin -- a major leap forward for Russia's efforts to be a player in the growing world market for LNG.
Japan -- which will be the largest importer of gas from the Sakhalin projects -- last month received the first tanker shipments from the plant, which is expected to produce about 4.5 million tons this year.
Wednesday, April 8, 2009
Additional Florida Natural Gas Pipeline Needed
NEW YORK, April 7 (Reuters) - Florida Power & Light Co said Tuesday it filed a proposal with the Florida Public Service Commission for construction of a new underground natural gas pipeline in Florida to meet increasing demand for the clean fuel to generate electricity.
The proposed Florida EnergySecure pipeline, approximately 300 miles (480 km) in length, would be built in the eastern portion of the state from Palm Beach County in the south to Bradford County in the north.
The proposal calls for the new pipeline to enter service as early as 2014.
In a release, FPL said the line would increase the state's access to natural gas supplies, diversify sources of supply beyond offshore Gulf of Mexico to additional onshore sources, create thousands of new jobs and generate more than $400 million in additional property taxes across 14 counties.
"We are continuing to invest in diversifying our fuel sources through expansion of nuclear capacity and through new solar power generation, but natural gas is our most important source of fuel and an essential ingredient in a clean energy future for the state of Florida," said FPL President Armando J. Olivera.
FPL received more than 60 proposals as part of an extensive evaluation of options for its natural gas requirements.
The option to build a third pipeline was determined to provide the best combination of benefits for FPL customers, including cost effectiveness and security of supply, while helping to ensure a competitive environment among suppliers that benefits consumers through lower prices.
Based on the initial proposal, approximately 90 percent of the pipeline would use existing rights-of-way associated with utilities, roads or railroads.
FPL is planning a comprehensive public outreach process to obtain feedback about the route. This input will help the company make a final route selection.
Florida Power & Light, a unit of FPL Group (FPL.N: Quote, Profile, Research), is the largest electric utility in Florida and one of the largest rate-regulated utilities in the United States, serving some 4.5 million customer accounts in Florida. (Reporting by Joe Silha; Editing by Marguerita Choy)
The proposed Florida EnergySecure pipeline, approximately 300 miles (480 km) in length, would be built in the eastern portion of the state from Palm Beach County in the south to Bradford County in the north.
The proposal calls for the new pipeline to enter service as early as 2014.
In a release, FPL said the line would increase the state's access to natural gas supplies, diversify sources of supply beyond offshore Gulf of Mexico to additional onshore sources, create thousands of new jobs and generate more than $400 million in additional property taxes across 14 counties.
"We are continuing to invest in diversifying our fuel sources through expansion of nuclear capacity and through new solar power generation, but natural gas is our most important source of fuel and an essential ingredient in a clean energy future for the state of Florida," said FPL President Armando J. Olivera.
FPL received more than 60 proposals as part of an extensive evaluation of options for its natural gas requirements.
The option to build a third pipeline was determined to provide the best combination of benefits for FPL customers, including cost effectiveness and security of supply, while helping to ensure a competitive environment among suppliers that benefits consumers through lower prices.
Based on the initial proposal, approximately 90 percent of the pipeline would use existing rights-of-way associated with utilities, roads or railroads.
FPL is planning a comprehensive public outreach process to obtain feedback about the route. This input will help the company make a final route selection.
Florida Power & Light, a unit of FPL Group (FPL.N: Quote, Profile, Research), is the largest electric utility in Florida and one of the largest rate-regulated utilities in the United States, serving some 4.5 million customer accounts in Florida. (Reporting by Joe Silha; Editing by Marguerita Choy)
Tuesday, April 7, 2009
Frozen Natural Gas is Ice That Burns
ScienceDaily (Apr. 6, 2009) — In a step toward using gas hydrates as a future energy source, researchers in New York are reporting the first identification of an optimal temperature and pressure range for maximizing production of natural gas from the icy hydrate material.
Marco Castaldi, Yue Zhou, and Tuncel Yegualp note that gas hydrates, also known as "ice that burns," are a frozen form of natural gas (methane). This material exists in vast deposits beneath the ocean floor and Arctic permafrost in the United States and other areas. Scientists believe that fuel from these frozen chunks, formed at cold temperatures and high pressures, may help fuel cars, heat homes, and power factories in the future. Although scientists have identified several different methods for extracting the fuel, including depressurization, researchers have not found an practical approach for producing the gas on an industrial scale.
To reach this goal, the researchers built what they believe to be the world's largest experimental reactor, filled with sand, water, and methane, to simulate the formation gas hydrates (at low temperatures and high pressure) and production of the gas. While depressurizing the hydrates to free the methane, they observed an optimal boost in gas production between a narrow range of temperatures and pressures. Maintaining gas production at these settings could be a key step in boosting production of methane at an industrial scale, the researchers suggest.
Marco Castaldi, Yue Zhou, and Tuncel Yegualp note that gas hydrates, also known as "ice that burns," are a frozen form of natural gas (methane). This material exists in vast deposits beneath the ocean floor and Arctic permafrost in the United States and other areas. Scientists believe that fuel from these frozen chunks, formed at cold temperatures and high pressures, may help fuel cars, heat homes, and power factories in the future. Although scientists have identified several different methods for extracting the fuel, including depressurization, researchers have not found an practical approach for producing the gas on an industrial scale.
To reach this goal, the researchers built what they believe to be the world's largest experimental reactor, filled with sand, water, and methane, to simulate the formation gas hydrates (at low temperatures and high pressure) and production of the gas. While depressurizing the hydrates to free the methane, they observed an optimal boost in gas production between a narrow range of temperatures and pressures. Maintaining gas production at these settings could be a key step in boosting production of methane at an industrial scale, the researchers suggest.
Monday, April 6, 2009
Colorado Natural Gas and LNG
By DENNIS WEBB/The Grand Junction Daily Sentinel
Saturday, April 04, 2009
An expansion of liquefied natural gas imports could drive down prices further this year, a Denver gas broker says.
That would bode poorly for western Colorado, where John Harpole, president of Mercator Energy, said drilling rig numbers already have dropped 71 percent in the past six months.
Speaking at the Club 20 spring meeting Saturday, Harpole said a 30 percent increase in liquefied natural gas capacity is coming online.
That gas can be transported by ship rather than pipeline. If imports of it increase enough, the price of natural gas could fall later this year to $1.50 per million British thermal units, about one-fourth of what it was a year ago, Harpole said.
Harpole said some of that gas would come from countries that otherwise would be forced to dispose of excess gas by flaring it off.
“By capturing it and selling it, at least they’re making something on that gas,” Harpole said.
Already, Harpole said, drilling activity in western Colorado has been hampered by factors such as limited pipeline capacity and uncertainty surrounding the state’s new oil and gas regulations.
Problems such as pipeline capacity eventually will go away, but Harpole said the new regulations will be permanent.
He said the question is what the state is doing to encourage natural gas producers to stay.
“That’s why I drove over here at 4 o’clock in the morning, because I wanted to ask a man who isn’t here right now that very question,” Harpole said.
Harpole served as a substitute luncheon speaker Saturday after aircraft and weather problems forced Gov. Bill Ritter to cancel plans to come to Grand Junction.
However, Ritter defended the new regulations in his speech that was prepared for the Club 20 meeting and released by his staff.
“I believe these rules will allow the industry to grow and move forward in a sustainable, 21st century way that is compatible with other West Slope sectors like tourism and recreation.
“I believe these rules strike the right balance, a balance that recognizes the importance of a healthy industry and the importance of healthy communities, water supplies and wildlife,” Ritter said.
The governor said his administration is working on helping develop uses for Colorado’s natural gas, including seeking speedy federal regulatory approval of an interstate pipeline project and pursuing legislation to extend a hybrid-vehicle tax credit to compressed natural gas cars and trucks.
Saturday, April 04, 2009
An expansion of liquefied natural gas imports could drive down prices further this year, a Denver gas broker says.
That would bode poorly for western Colorado, where John Harpole, president of Mercator Energy, said drilling rig numbers already have dropped 71 percent in the past six months.
Speaking at the Club 20 spring meeting Saturday, Harpole said a 30 percent increase in liquefied natural gas capacity is coming online.
That gas can be transported by ship rather than pipeline. If imports of it increase enough, the price of natural gas could fall later this year to $1.50 per million British thermal units, about one-fourth of what it was a year ago, Harpole said.
Harpole said some of that gas would come from countries that otherwise would be forced to dispose of excess gas by flaring it off.
“By capturing it and selling it, at least they’re making something on that gas,” Harpole said.
Already, Harpole said, drilling activity in western Colorado has been hampered by factors such as limited pipeline capacity and uncertainty surrounding the state’s new oil and gas regulations.
Problems such as pipeline capacity eventually will go away, but Harpole said the new regulations will be permanent.
He said the question is what the state is doing to encourage natural gas producers to stay.
“That’s why I drove over here at 4 o’clock in the morning, because I wanted to ask a man who isn’t here right now that very question,” Harpole said.
Harpole served as a substitute luncheon speaker Saturday after aircraft and weather problems forced Gov. Bill Ritter to cancel plans to come to Grand Junction.
However, Ritter defended the new regulations in his speech that was prepared for the Club 20 meeting and released by his staff.
“I believe these rules will allow the industry to grow and move forward in a sustainable, 21st century way that is compatible with other West Slope sectors like tourism and recreation.
“I believe these rules strike the right balance, a balance that recognizes the importance of a healthy industry and the importance of healthy communities, water supplies and wildlife,” Ritter said.
The governor said his administration is working on helping develop uses for Colorado’s natural gas, including seeking speedy federal regulatory approval of an interstate pipeline project and pursuing legislation to extend a hybrid-vehicle tax credit to compressed natural gas cars and trucks.
Sunday, April 5, 2009
Natural Gas True Price
Shale gas companies -- All talk, no walk?
By Keith Schaefer
03 Apr 2009 at 11:39 PM GMT-04:00
Natural gas prices and stocks have held up better than I had expected. In trying to find out why, I found a couple analysts now indicating the economics that shale gas companies present in their financial statements is not as good as what they talk about in their press releases.
This would actually be bullish for natural gas prices and natural gas stocks.
In other words, these gas companies allegedly talk the talk of cheap profitable gas in press releases but don’t walk the walk in showing it in their financials. Yet.
This newsletter has been part of the chorus that natural gas prices are going through a seismic shift downward because of the improved economics and technology behind horizontal drilling (HD) and multi-stage fracing (MSF).
I believe that the downturn in natural gas prices isn’t just cyclical because of the recession/depression and regular seasonal troughs; rather, it’s a systemic issue. HD/MSF increases production per well dramatically, and opens up many new low-cost reservoirs, taking the marginal cost of natural gas down from $7.50/mcf to more like $4-$5/mcf.
However, a couple prominent research firms have recently shown some data that could disprove this theory.
Ben Dell is the senior energy analyst at Bernstein Research in New York, one of the top sell-side research firms. In a March 27 research note, he notes “a growing discrepancy between the internal rates of return (IRR) presented in corporate presentations and company reported ROACE (return on average capital employed)… For example, in many plays companies claim to generate IRR’s above 100% at $7.50/mcf gas or claim that their production is economical even at $2-3/mcf gas prices, but at the same time report 6-7% ROACE at a corporate level over the last 3 years, when the average gas price was $7.50/mcf.”
(Copyright doesn’t allow me to reprint or post it here, nor could I find it on the web.)
Titled “Why the Haynesville Won’t Work…at $4, $5, or $6/mcf gas,” Dell posits that companies are overstating production, understating costs, or there is a terminology gap at work. For example, a producer could say the IP rate of a well (Initial Production) is 8 mmcf/d (million cubic feet per day). But was that a 30-day average, as is normal, or was it a 12-hour average just after coming online. These HD wells can decline in production so rapidly sometimes that for stock promotion purposes, companies issue figures that may have been correct for a short time, but have no context and are not really “best practices” type numbers.
Dell also questions if the all-in costs of a well are being amortized properly into the economics that appear in a company’s press release. If the cash operating cost of a well is $3/mcf, which is the number that appears in a release that does not include the $4-$7 million it cost to buy the land and drill the hole -- costs that Dell suggests basically doubles the breakeven level of the well to $6/mcf. And to get an acceptable return -- even to generate enough cash to drill the next well -- would be $8/mcf.
He told his readers how one operator in the Haynesville Shale in northern Louisiana (the most prolific shale play in North America) implied a greater than 100% IRR on a very large 14 mmcf/d well. But once Dell started amortizing in some of his own estimated costs for land and drilling and taxes, that came down to a very pedestrian 14% IRR.
I find that a very harsh set of economics, but his overall thesis could be valid. The cost inflation and land prices in the natural gas industry during the bull years of 2006-2008 meant many companies spent a fortune on a well before any production came out.
A Canadian firm, Peters & Co. out of Calgary, echoed those thoughts this week with a brief commentary “Where is All the Cheap Gas?”
They ran some numbers on costs on companies operating in shale gas plays on both sides of the border -- the FD&A, Finding, Development and Acquisition costs, and tried to adjust for currency differences.
And what they came up with is that:
Costs in the US are only about $1/boe (barrel of oil equivalent) lower than in Canada
costs have actually gone up slightly between the 1-year and 3-year average costs, over their universe of 33 companies.
When I look at the leading gas companies I know - Storm, Celtic, NuVista, Fairborne for example - all of them except Celtic had their costs go up, if only marginally.
What these two reports say is that, regardless of the reasons, the end fact is that as yet, lower cost gas is not showing up in the financial statements of the gas companies.
This would be quite bullish for natural gas prices and stocks. Concludes Peters & Co: “the prediction that natural gas prices will be capped at US$6.00 per Mcf may prove to be a little premature.”
Natural gas stocks would appear to agree.
Keith Schaefer is the publisher of www.oilandgas-investments.com. E-mail him at editor@oilandgas-investments.com.
By Keith Schaefer
03 Apr 2009 at 11:39 PM GMT-04:00
Natural gas prices and stocks have held up better than I had expected. In trying to find out why, I found a couple analysts now indicating the economics that shale gas companies present in their financial statements is not as good as what they talk about in their press releases.
This would actually be bullish for natural gas prices and natural gas stocks.
In other words, these gas companies allegedly talk the talk of cheap profitable gas in press releases but don’t walk the walk in showing it in their financials. Yet.
This newsletter has been part of the chorus that natural gas prices are going through a seismic shift downward because of the improved economics and technology behind horizontal drilling (HD) and multi-stage fracing (MSF).
I believe that the downturn in natural gas prices isn’t just cyclical because of the recession/depression and regular seasonal troughs; rather, it’s a systemic issue. HD/MSF increases production per well dramatically, and opens up many new low-cost reservoirs, taking the marginal cost of natural gas down from $7.50/mcf to more like $4-$5/mcf.
However, a couple prominent research firms have recently shown some data that could disprove this theory.
Ben Dell is the senior energy analyst at Bernstein Research in New York, one of the top sell-side research firms. In a March 27 research note, he notes “a growing discrepancy between the internal rates of return (IRR) presented in corporate presentations and company reported ROACE (return on average capital employed)… For example, in many plays companies claim to generate IRR’s above 100% at $7.50/mcf gas or claim that their production is economical even at $2-3/mcf gas prices, but at the same time report 6-7% ROACE at a corporate level over the last 3 years, when the average gas price was $7.50/mcf.”
(Copyright doesn’t allow me to reprint or post it here, nor could I find it on the web.)
Titled “Why the Haynesville Won’t Work…at $4, $5, or $6/mcf gas,” Dell posits that companies are overstating production, understating costs, or there is a terminology gap at work. For example, a producer could say the IP rate of a well (Initial Production) is 8 mmcf/d (million cubic feet per day). But was that a 30-day average, as is normal, or was it a 12-hour average just after coming online. These HD wells can decline in production so rapidly sometimes that for stock promotion purposes, companies issue figures that may have been correct for a short time, but have no context and are not really “best practices” type numbers.
Dell also questions if the all-in costs of a well are being amortized properly into the economics that appear in a company’s press release. If the cash operating cost of a well is $3/mcf, which is the number that appears in a release that does not include the $4-$7 million it cost to buy the land and drill the hole -- costs that Dell suggests basically doubles the breakeven level of the well to $6/mcf. And to get an acceptable return -- even to generate enough cash to drill the next well -- would be $8/mcf.
He told his readers how one operator in the Haynesville Shale in northern Louisiana (the most prolific shale play in North America) implied a greater than 100% IRR on a very large 14 mmcf/d well. But once Dell started amortizing in some of his own estimated costs for land and drilling and taxes, that came down to a very pedestrian 14% IRR.
I find that a very harsh set of economics, but his overall thesis could be valid. The cost inflation and land prices in the natural gas industry during the bull years of 2006-2008 meant many companies spent a fortune on a well before any production came out.
A Canadian firm, Peters & Co. out of Calgary, echoed those thoughts this week with a brief commentary “Where is All the Cheap Gas?”
They ran some numbers on costs on companies operating in shale gas plays on both sides of the border -- the FD&A, Finding, Development and Acquisition costs, and tried to adjust for currency differences.
And what they came up with is that:
Costs in the US are only about $1/boe (barrel of oil equivalent) lower than in Canada
costs have actually gone up slightly between the 1-year and 3-year average costs, over their universe of 33 companies.
When I look at the leading gas companies I know - Storm, Celtic, NuVista, Fairborne for example - all of them except Celtic had their costs go up, if only marginally.
What these two reports say is that, regardless of the reasons, the end fact is that as yet, lower cost gas is not showing up in the financial statements of the gas companies.
This would be quite bullish for natural gas prices and stocks. Concludes Peters & Co: “the prediction that natural gas prices will be capped at US$6.00 per Mcf may prove to be a little premature.”
Natural gas stocks would appear to agree.
Keith Schaefer is the publisher of www.oilandgas-investments.com. E-mail him at editor@oilandgas-investments.com.
Saturday, April 4, 2009
Natural Gas Rig Count UP
http://www.star-telegram.com/business/story/1298544.html
STAFF and Wire Report
The combined number of active oil and natural gas rigs in the U.S. rose for the first time in 19 weeks as oil-drilling operations increased for a second week, Bloomberg News reported, based on data published by oilfield services company Baker Hughes Inc. of Houston.
Meanwhile, the number of rigs drilling for natural gas in the Barnett Shale in North Texas totaled 85 on Friday.
That was unchanged from a week earlier, according to information provided by RigData.
Twenty-seven wells were being drilled in Tarrant County as of Friday, up one from a week earlier.
Johnson County was close behind with 25 active rigs, down one from the previous week.
The U.S. count of rigs exploring for or producing oil or gas showed a net gain of four this week, climbing to 1,043, Baker Hughes said Friday.
Last week, the count was at its lowest level since May 9, 2003, as operators cut back because of low prices.
U.S. oil rigs increased by seven, or 3.2 percent, to 224. It was the second gain after 15 consecutive declines.
But the oil rig count is down sharply from a peak of 442 on Nov. 7.
Baker Hughes said natural gas rigs fell by two to 808, the lowest since April 25, 2003. The gas rig count has fallen for 19 consecutive weeks.
The combined oil and gas rig count rose to a 22-year high last year, peaking at 2,031 in the weeks ended Aug. 29 and Sept. 12.
Staff writer Jack Z. Smith contributed to this report, which includes material from Bloomberg News.
STAFF and Wire Report
The combined number of active oil and natural gas rigs in the U.S. rose for the first time in 19 weeks as oil-drilling operations increased for a second week, Bloomberg News reported, based on data published by oilfield services company Baker Hughes Inc. of Houston.
Meanwhile, the number of rigs drilling for natural gas in the Barnett Shale in North Texas totaled 85 on Friday.
That was unchanged from a week earlier, according to information provided by RigData.
Twenty-seven wells were being drilled in Tarrant County as of Friday, up one from a week earlier.
Johnson County was close behind with 25 active rigs, down one from the previous week.
The U.S. count of rigs exploring for or producing oil or gas showed a net gain of four this week, climbing to 1,043, Baker Hughes said Friday.
Last week, the count was at its lowest level since May 9, 2003, as operators cut back because of low prices.
U.S. oil rigs increased by seven, or 3.2 percent, to 224. It was the second gain after 15 consecutive declines.
But the oil rig count is down sharply from a peak of 442 on Nov. 7.
Baker Hughes said natural gas rigs fell by two to 808, the lowest since April 25, 2003. The gas rig count has fallen for 19 consecutive weeks.
The combined oil and gas rig count rose to a 22-year high last year, peaking at 2,031 in the weeks ended Aug. 29 and Sept. 12.
Staff writer Jack Z. Smith contributed to this report, which includes material from Bloomberg News.
Friday, April 3, 2009
Natural Gas Vehicles Still A Talking Point
Associated Press
Natural gas vehicles touted at conference
By SEAN MURPHY , 04.02.09, 11:02 AM EDT
pic
Environmentally friendly natural gas cars could reduce America's dependence on foreign oil, lower fuel costs and provide an economic boost to Oklahoma companies, backers of these vehicles said.
Buses, garbage trucks, pickups and compact sedans, all powered by compressed natural gas, were on display during a workshop on natural gas vehicles in Midwest City on Wednesday.
As the nation looks for ways to reduce its dependence on foreign oil and the number of compressed natural gas fueling stations continues to rise, more companies, fleet managers and state agencies are looking to switch to natural gas-powered vehicles, said Stephe Yborra, a spokesman for NGV America, a natural gas vehicle industry trade association.
"Natural gas vehicles are a great extension of what we refer to in our industry as the many burner tips - the stove, the water heater, the gas fireplace," Yborra said. "Now we have one more technology, an advanced technology, that's a great use of the fuel.
"And it's American fuel - 98 percent of all the natural gas used in the United States comes from North America, and I think that's a very important factor in today's environment."
With an ample supply of natural gas in the region and a home to two of the country's largest independent producers of natural gas - Chesapeake Energy Corp. ( CHK - news - people ) and Devon Energy Corp. ( DVN - news - people ) - Oklahoma is among the leaders in embracing the technology, Yborra said.
Oklahoma already has about 40 compressed natural gas fueling stations, and that number is expected to increase, Yborra said.
Construction already is under way for another fueling station in northwest Oklahoma City just south of Chesapeake's campus, said Anthony Foster, fleet manager for the Oklahoma City-based energy company.
Natural gas vehicles touted at conference
By SEAN MURPHY , 04.02.09, 11:02 AM EDT
pic
Environmentally friendly natural gas cars could reduce America's dependence on foreign oil, lower fuel costs and provide an economic boost to Oklahoma companies, backers of these vehicles said.
Buses, garbage trucks, pickups and compact sedans, all powered by compressed natural gas, were on display during a workshop on natural gas vehicles in Midwest City on Wednesday.
As the nation looks for ways to reduce its dependence on foreign oil and the number of compressed natural gas fueling stations continues to rise, more companies, fleet managers and state agencies are looking to switch to natural gas-powered vehicles, said Stephe Yborra, a spokesman for NGV America, a natural gas vehicle industry trade association.
"Natural gas vehicles are a great extension of what we refer to in our industry as the many burner tips - the stove, the water heater, the gas fireplace," Yborra said. "Now we have one more technology, an advanced technology, that's a great use of the fuel.
"And it's American fuel - 98 percent of all the natural gas used in the United States comes from North America, and I think that's a very important factor in today's environment."
With an ample supply of natural gas in the region and a home to two of the country's largest independent producers of natural gas - Chesapeake Energy Corp. ( CHK - news - people ) and Devon Energy Corp. ( DVN - news - people ) - Oklahoma is among the leaders in embracing the technology, Yborra said.
Oklahoma already has about 40 compressed natural gas fueling stations, and that number is expected to increase, Yborra said.
Construction already is under way for another fueling station in northwest Oklahoma City just south of Chesapeake's campus, said Anthony Foster, fleet manager for the Oklahoma City-based energy company.
Thursday, April 2, 2009
Williams & Atlas Partner for Marcellus Natural Gas Venture
By Christine Buurma and Tess Stynes
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Williams Cos. (WMB) Wednesday said it is forming a natural gas gathering and processing joint venture with Atlas Pipeline Partners LP (APL), in a move that will strengthen Atlas' balance sheet and give Williams a foothold in one of the largest U.S. onshore gas fields.
As tumbling commodity prices and sliding gas demand squeeze small pipeline operators like Atlas Pipeline, Williams and other large, well-capitalized companies have been on the lookout for bargain buys. Companies including Atlas and Crosstex Energy (XTEX) have put transmission and gathering systems on the block, while Spectra Energy Cop. (SE) and Energy Transfer Partners (ETP) have said they would acquire midstream assets at the right price.
"This is an ideal midstream growth opportunity," said Jeff Pounds, a spokesman for Williams. "It gives us a strategic entry into one of the largest emerging natural gas plays in North America."
Atlas Pipeline shares rose sharply on the news, recently trading up 14% at $4.47 apiece. An spokesman for Atlas didn't immediately return a call for comment.
The joint venture will help Atlas to pay down debt, but investors are still awaiting a sale of Atlas' Ozark assets, says Selman Akyol, an analyst with Stifel, Nicolaus & Co. in St. Louis. Atlas has said it plans to divest its Ozark Gas Transmission unit.
"We believe the largest asset has yet to close, that being the Ozark Assets," Akyol said. "Today's transaction generated $90 million in cash and is certainly helpful. We continue to expect additional proceeds from other transactions in terms of significantly reducing debt."
The Williams-Atlas venture will own Atlas Pipeline's existing Appalachian Basin gathering system, which will be operated by Williams. Williams will contribute approximately $102 million and raise $25.5 million in short-term debt in exchange for a 51% stake in the joint venture, which will be called Laurel Mountain Midstream LLC.
Atlas Energy Resources LLC (ATN), a unit of Atlas Pipeline, will be the venture's main customer. Atlas Energy has driven 30% growth in the production area and currently operates 120 wells there. It has agreed to sell two gas processing plants to the venture for $12 million as part of the deal.
The Ozark assets including transmission lines and gathering systems from Oklahoma to Missouri.
Last month, Williams said it would keep its current structure, which includes pipeline, exploration and production segments. The company had considered spinning off businesses as its market value dropped along with commodity prices last year.
Williams' shares were recently up 16 cents, or 1.4%, at $11.54, while units of Atlas Energy Resources were up 8 cents at $10.63.
-By Christine Buurma and Tess Stynes, Dow Jones Newswires; 201-938-2473; tess.stynes@dowjones.com
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Williams Cos. (WMB) Wednesday said it is forming a natural gas gathering and processing joint venture with Atlas Pipeline Partners LP (APL), in a move that will strengthen Atlas' balance sheet and give Williams a foothold in one of the largest U.S. onshore gas fields.
As tumbling commodity prices and sliding gas demand squeeze small pipeline operators like Atlas Pipeline, Williams and other large, well-capitalized companies have been on the lookout for bargain buys. Companies including Atlas and Crosstex Energy (XTEX) have put transmission and gathering systems on the block, while Spectra Energy Cop. (SE) and Energy Transfer Partners (ETP) have said they would acquire midstream assets at the right price.
"This is an ideal midstream growth opportunity," said Jeff Pounds, a spokesman for Williams. "It gives us a strategic entry into one of the largest emerging natural gas plays in North America."
Atlas Pipeline shares rose sharply on the news, recently trading up 14% at $4.47 apiece. An spokesman for Atlas didn't immediately return a call for comment.
The joint venture will help Atlas to pay down debt, but investors are still awaiting a sale of Atlas' Ozark assets, says Selman Akyol, an analyst with Stifel, Nicolaus & Co. in St. Louis. Atlas has said it plans to divest its Ozark Gas Transmission unit.
"We believe the largest asset has yet to close, that being the Ozark Assets," Akyol said. "Today's transaction generated $90 million in cash and is certainly helpful. We continue to expect additional proceeds from other transactions in terms of significantly reducing debt."
The Williams-Atlas venture will own Atlas Pipeline's existing Appalachian Basin gathering system, which will be operated by Williams. Williams will contribute approximately $102 million and raise $25.5 million in short-term debt in exchange for a 51% stake in the joint venture, which will be called Laurel Mountain Midstream LLC.
Atlas Energy Resources LLC (ATN), a unit of Atlas Pipeline, will be the venture's main customer. Atlas Energy has driven 30% growth in the production area and currently operates 120 wells there. It has agreed to sell two gas processing plants to the venture for $12 million as part of the deal.
The Ozark assets including transmission lines and gathering systems from Oklahoma to Missouri.
Last month, Williams said it would keep its current structure, which includes pipeline, exploration and production segments. The company had considered spinning off businesses as its market value dropped along with commodity prices last year.
Williams' shares were recently up 16 cents, or 1.4%, at $11.54, while units of Atlas Energy Resources were up 8 cents at $10.63.
-By Christine Buurma and Tess Stynes, Dow Jones Newswires; 201-938-2473; tess.stynes@dowjones.com
Wednesday, April 1, 2009
Natural Gas CEO Wants Oklahoma Production Cut
Top energy CEO requests natural gas limits
Associated Press - March 31, 2009 10:45 AM ET
ENID, Okla. (AP) - The chairman of an Enid oil company wants state regulators to order operators of the state's largest natural gas wells to cut production.
Harold Hamm of Continental Resources says the economic recession has destroyed the demand for natural gas and limiting production would eliminate a market glut.
The Oklahoma Corporation Commission has set a May 5 hearing on the request.
It isn't clear whether other oil and gas companies will support or fight Hamm's request.
Representatives of Chesapeake Energy, Devon Energy and BP each told The Oklahoman they still are evaluating the proposal.
Information from: The Oklahoman, http://www.newsok.com
Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Associated Press - March 31, 2009 10:45 AM ET
ENID, Okla. (AP) - The chairman of an Enid oil company wants state regulators to order operators of the state's largest natural gas wells to cut production.
Harold Hamm of Continental Resources says the economic recession has destroyed the demand for natural gas and limiting production would eliminate a market glut.
The Oklahoma Corporation Commission has set a May 5 hearing on the request.
It isn't clear whether other oil and gas companies will support or fight Hamm's request.
Representatives of Chesapeake Energy, Devon Energy and BP each told The Oklahoman they still are evaluating the proposal.
Information from: The Oklahoman, http://www.newsok.com
Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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