WASHINGTON (AP) — Nearly one-third of the natural gas yet to be discovered in the world is north of the Arctic Circle and most of it is in Russian territory, according to a new analysis led by researchers at the U.S. Geological Survey.
"These findings suggest that in the future the ... pre-eminence of Russian strategic control of gas resources in particular is likely to be accentuated and extended," said Donald L. Gautier, lead author of the study published in Friday's edition of the journal Science.
Russia is already the world's leading natural gas producer, noted Gautier, of the Geological Survey's office in Menlo Park, Calif.
The report, by an international scientific team, estimated that the Arctic also contains between 3 and 4 percent of the world's oil resources remaining to be discovered.
Two-thirds of the undiscovered gas is in just four areas — South Kara Sea, North Barents Basin, South Barents Basin and the Alaska Platform — the report said.
Indeed, the South Kara Sea off Siberia contains 39 percent of the Arctic's undiscovered gas, the researchers said.
Russia has been active in asserting its claim to parts of the Arctic. It first submitted a claim to the United Nations in 2001, but was rejected for lack of evidence. The United States, Canada, Denmark and Norway have also sought to assert jurisdiction over parts of the Arctic.
Now, Russia is working to prove that an underwater mountain range crossing the polar region is part of its continental shelf. In 2007 two Russian civilian mini-submarines descended to the seabed to collect geological and water samples and drop a titanium canister containing the Russian flag.
Arctic oil reserves are much smaller than those of natural gas and are unlikely to lead to any shift in world oil balance, Gautier said in a recorded briefing provided by Science.
But they could be of importance locally if developed by individual countries, he said, citing in particular the United States and Greenland, which is governed by Denmark.
However, Gautier added, the study looked only at the geological setting and the chance that energy resources are present.
"If these resources were to be found they would not be found all at once, they would be found incrementally and they would be produced incrementally," he said, urging caution about assuming that the oil might extend world production significantly.
Gautier said the study focused on geological conditions in the Arctic and how they compared to other parts of the world where oil and gas have been found.
Because so much of this territory is unexplored and data is so limited the researchers had to develop a new method to do assessments, Gautier said.
They collected the best information they could for the region and then subdivided it into geological areas. Those areas were compared with other geological regions around the world where gas or oil have been found in order to produce their assessment of where more resources are likely to be located.
Gas and oil tend to be found in sedimentary basins, he said, and "each one of these basins has a story, a geologic story."
"As new data become available our understanding of the resources in the Arctic will change," he added.
Sunday, May 31, 2009
Saturday, May 30, 2009
Natural Gas Rigs Down in the USA in May 2009
The number of rigs actively exploring for oil and natural gas in the United States fell by one this week to 899, as declines in gas rigs outstripped increases in oil rigs, The Associated Press reported Friday based on data from Houston-based oilfield services firm Baker Hughes Inc.
Rigs drilling for natural gas fell by eight, to 703, the lowest since late 2002. Oil rigs rose by seven, to 187, the first increase in six weeks, but less than half the 442 active oil rigs on Nov. 7. Drilling activity has plummeted along with the collapse of energy prices from record highs last summer. The total U.S. rig count hit a 22-year high in late summer, peaking at 2,031, more than twice the current 899.
The number of rigs drilling for oil and natural gas in Texas fell by one this week, to 330. As of Friday, there were 72 rigs drilling for natural gas in the Barnett Shale in North Texas, down five rigs from a week earlier, according to RigData. There were 27 rigs operating in Tarrant County, 15 in Johnson County and 11 in Wise County. — Jack Z. Smith
Rigs drilling for natural gas fell by eight, to 703, the lowest since late 2002. Oil rigs rose by seven, to 187, the first increase in six weeks, but less than half the 442 active oil rigs on Nov. 7. Drilling activity has plummeted along with the collapse of energy prices from record highs last summer. The total U.S. rig count hit a 22-year high in late summer, peaking at 2,031, more than twice the current 899.
The number of rigs drilling for oil and natural gas in Texas fell by one this week, to 330. As of Friday, there were 72 rigs drilling for natural gas in the Barnett Shale in North Texas, down five rigs from a week earlier, according to RigData. There were 27 rigs operating in Tarrant County, 15 in Johnson County and 11 in Wise County. — Jack Z. Smith
Friday, May 29, 2009
Russian Natural Gas in the Arctic
By RANDOLPH E. SCHMID – 6 hours ago
WASHINGTON (AP) — Nearly one-third of the natural gas yet to be discovered in the world is north of the Arctic Circle and most of it is in Russian territory, according to a new analysis led by researchers at the U.S. Geological Survey.
"These findings suggest that in the future the ... pre-eminence of Russian strategic control of gas resources in particular is likely to be accentuated and extended," said Donald L. Gautier, lead author of the study published in Friday's edition of the journal Science.
Russia is already the world's leading natural gas producer, noted Gautier, of the Geological Survey's office in Menlo Park, Calif.
The report, by an international scientific team, estimated that the Arctic also contains between 3 and 4 percent of the world's oil resources remaining to be discovered.
Two-thirds of the undiscovered gas is in just four areas — South Kara Sea, North Barents Basin, South Barents Basin and the Alaska Platform — the report said.
Indeed, the South Kara Sea off Siberia contains 39 percent of the Arctic's undiscovered gas, the researchers said.
Russia has been active in asserting its claim to parts of the Arctic. It first submitted a claim to the United Nations in 2001, but was rejected for lack of evidence. The United States, Canada, Denmark and Norway have also sought to assert jurisdiction over parts of the Arctic.
Now, Russia is working to prove that an underwater mountain range crossing the polar region is part of its continental shelf. In 2007 two Russian civilian mini-submarines descended to the seabed to collect geological and water samples and drop a titanium canister containing the Russian flag.
Arctic oil reserves are much smaller than those of natural gas and are unlikely to lead to any shift in world oil balance, Gautier said in a recorded briefing provided by Science.
But they could be of importance locally if developed by individual countries, he said, citing in particular the United States and Greenland, which is governed by Denmark.
However, Gautier added, the study looked only at the geological setting and the chance that energy resources are present.
"If these resources were to be found they would not be found all at once, they would be found incrementally and they would be produced incrementally," he said, urging caution about assuming that the oil might extend world production significantly.
Gautier said the study focused on geological conditions in the Arctic and how they compared to other parts of the world where oil and gas have been found.
Because so much of this territory is unexplored and data is so limited the researchers had to develop a new method to do assessments, Gautier said.
They collected the best information they could for the region and then subdivided it into geological areas. Those areas were compared with other geological regions around the world where gas or oil have been found in order to produce their assessment of where more resources are likely to be located.
Gas and oil tend to be found in sedimentary basins, he said, and "each one of these basins has a story, a geologic story."
"As new data become available our understanding of the resources in the Arctic will change," he added.
WASHINGTON (AP) — Nearly one-third of the natural gas yet to be discovered in the world is north of the Arctic Circle and most of it is in Russian territory, according to a new analysis led by researchers at the U.S. Geological Survey.
"These findings suggest that in the future the ... pre-eminence of Russian strategic control of gas resources in particular is likely to be accentuated and extended," said Donald L. Gautier, lead author of the study published in Friday's edition of the journal Science.
Russia is already the world's leading natural gas producer, noted Gautier, of the Geological Survey's office in Menlo Park, Calif.
The report, by an international scientific team, estimated that the Arctic also contains between 3 and 4 percent of the world's oil resources remaining to be discovered.
Two-thirds of the undiscovered gas is in just four areas — South Kara Sea, North Barents Basin, South Barents Basin and the Alaska Platform — the report said.
Indeed, the South Kara Sea off Siberia contains 39 percent of the Arctic's undiscovered gas, the researchers said.
Russia has been active in asserting its claim to parts of the Arctic. It first submitted a claim to the United Nations in 2001, but was rejected for lack of evidence. The United States, Canada, Denmark and Norway have also sought to assert jurisdiction over parts of the Arctic.
Now, Russia is working to prove that an underwater mountain range crossing the polar region is part of its continental shelf. In 2007 two Russian civilian mini-submarines descended to the seabed to collect geological and water samples and drop a titanium canister containing the Russian flag.
Arctic oil reserves are much smaller than those of natural gas and are unlikely to lead to any shift in world oil balance, Gautier said in a recorded briefing provided by Science.
But they could be of importance locally if developed by individual countries, he said, citing in particular the United States and Greenland, which is governed by Denmark.
However, Gautier added, the study looked only at the geological setting and the chance that energy resources are present.
"If these resources were to be found they would not be found all at once, they would be found incrementally and they would be produced incrementally," he said, urging caution about assuming that the oil might extend world production significantly.
Gautier said the study focused on geological conditions in the Arctic and how they compared to other parts of the world where oil and gas have been found.
Because so much of this territory is unexplored and data is so limited the researchers had to develop a new method to do assessments, Gautier said.
They collected the best information they could for the region and then subdivided it into geological areas. Those areas were compared with other geological regions around the world where gas or oil have been found in order to produce their assessment of where more resources are likely to be located.
Gas and oil tend to be found in sedimentary basins, he said, and "each one of these basins has a story, a geologic story."
"As new data become available our understanding of the resources in the Arctic will change," he added.
Thursday, May 28, 2009
Natural Gas Bus for Boomer Sooners
By Associated Press
6:51 PM CDT, May 27, 2009
OKLAHOMA CITY (AP) — A natural gas-powered shuttle bus soon will be making its way around the University of Oklahoma Health Sciences Center campus in Oklahoma City.
Oklahoma City-based Chesapeake Energy Corp. on Wednesday donated the bus, which is a compressed natural gas, or CNG, vehicle.
The shuttle will be utilized throughout the campus as part of the center's fleet.
The school's Vice President for Health Affairs Dr. Dewayne Andrews says the addition of the CNG shuttle helps with its goal of focusing on environmental protection and clean air.
6:51 PM CDT, May 27, 2009
OKLAHOMA CITY (AP) — A natural gas-powered shuttle bus soon will be making its way around the University of Oklahoma Health Sciences Center campus in Oklahoma City.
Oklahoma City-based Chesapeake Energy Corp. on Wednesday donated the bus, which is a compressed natural gas, or CNG, vehicle.
The shuttle will be utilized throughout the campus as part of the center's fleet.
The school's Vice President for Health Affairs Dr. Dewayne Andrews says the addition of the CNG shuttle helps with its goal of focusing on environmental protection and clean air.
Wednesday, May 27, 2009
Repsol Find Natural Gas in Brazil - Again!
MADRID – Spain’s Repsol YPF said on Monday it found natural gas and gas condensate in Brazil’s offshore Santos basin, making it the Spanish firm’s third hydrocarbons find in the area this year.
The find was made by the consortium that includes Repsol, which has a 40 percent stake and is the operating company, Brazilian state oil company Petrobras, with a 35 percent interest, mining giant Vale, with a 12.5 percent stake, and Woodside, which also has a 12.5 percent interest.
The well, called Panoramix, is located in area BM-S-48, some 180 kilometers (112 miles) off the coast of Sao Paulo state, at a depth of 170 meters (557 feet), Repsol said.
Tests found the well’s maximum gas flow to be 378,600 cubic meters per day, with 1,570 barrels per day of condensate at depths between 4,410 meters (14,459 feet) and 4,480 meters (14,688 feet).
Repsol YPF confirmed the commercial viability last month to Brazilian authorities of the Piracuca field, which was found in January in block BM-S-7, in shallow waters in the Santos basin.
The company also confirmed the discovery of the Iguazu well in block BM-S-9 in the deepwater Santos basin.
The Santos Basin projects are one of the 10 key points in the 2008-2012 Strategic Plan, offering great potential and making it a major growth area, the Spanish oil company said.
Repsol YPF, which has announced more than 10 finds so far this year, is the leading foreign company in offshore oil and gas exploration in Brazil, with interests in 24 blocks, including 11 in which it is the operating company. EFE
The find was made by the consortium that includes Repsol, which has a 40 percent stake and is the operating company, Brazilian state oil company Petrobras, with a 35 percent interest, mining giant Vale, with a 12.5 percent stake, and Woodside, which also has a 12.5 percent interest.
The well, called Panoramix, is located in area BM-S-48, some 180 kilometers (112 miles) off the coast of Sao Paulo state, at a depth of 170 meters (557 feet), Repsol said.
Tests found the well’s maximum gas flow to be 378,600 cubic meters per day, with 1,570 barrels per day of condensate at depths between 4,410 meters (14,459 feet) and 4,480 meters (14,688 feet).
Repsol YPF confirmed the commercial viability last month to Brazilian authorities of the Piracuca field, which was found in January in block BM-S-7, in shallow waters in the Santos basin.
The company also confirmed the discovery of the Iguazu well in block BM-S-9 in the deepwater Santos basin.
The Santos Basin projects are one of the 10 key points in the 2008-2012 Strategic Plan, offering great potential and making it a major growth area, the Spanish oil company said.
Repsol YPF, which has announced more than 10 finds so far this year, is the leading foreign company in offshore oil and gas exploration in Brazil, with interests in 24 blocks, including 11 in which it is the operating company. EFE
Tuesday, May 26, 2009
Natural Gas Opportunities in Asia
By Florence Tan
Of DOW JONES NEWSWIRES
SINGAPORE (Dow Jones)--StatoilHydro ASA (STO) is seeking opportunities to expand its oil and gas output in the Asia-Pacific region, a company executive said Monday.
The Norwegian energy major, which already has projects in Indonesia and India, is also looking at Australia's North West Shelf, Torgeir Kydland, senior vice president international exploration and production, said at a press briefing.
The offshore North West Shelf is "a place where we can make use of our experience from the North Sea," he added.
Asia has robust energy demand and higher liquified natural gas prices compared with other regions, Kydland said.
In India, its joint venture may start drilling an exploration well by next year, Kydland said. Statoil holds a 10% stake in the Krishna-Godavari Basin's DWN-98/2 gas-rich block led by Oil & Natural Gas Corp. (500312.BY).
Statoil also expects to start exploration drilling in its two blocks in the Makassar Strait in Indonesia in 2011, Kydland said.
In November the company was also shortlisted by PT Pertamina as a potential partner to develop the offshore Natuna D-Alpha gas reserve in Indonesia.
As gas in Natuna has high carbon dioxide content, the project will have to include carbon capture, Kydland said.
However, the company is due to stop oil production at its only field in the South China Sea "in summer" which has an output lower than 10,000-15,000 barrels a day now, he added.
"We will leave the field when production ceases," Kydland said.
Asia won't contribute significantly to Statoil's production target of 2.2 million barrels a day of oil and gas equivalent in 2012 as projects take time to develop and are highly capital intensive, Jon Jacobsen, Statoil's executive vice president of manufacturing and marketing said.
"We have seen costs coming down already. We're working to make it come down further," he said, adding costs have fallen by 5%-20%.
In the oil markets, Statoil will focus on crude, condensates, liquefied petroleum gas and naphtha trade in Asia after it closed its oil products trading desk in Singapore in November last year.
Jacobsen said the company has no "physical position" or access to local supply and oil products trading is "not on our agenda now."
Investment in Asia refineries are also "not high on its priority list" as the region has seen a "tremendous boom" in new projects, he added.
Statoil imports 130,000-150,000 barrels a day of crude into Asia and has access to 16 million barrels of oil storage in Yeosu, South Korea, said Marthe Hoff, Asia-Pacific president of oil trading and supply.
The company has also increased the volume of naphtha it ships from Europe to Asia, she added.
"This is an area which we will expand. Asia is the largest market for naphtha in the world," she said.
-By Florence Tan, Dow Jones Newswires; 65-6415-4067; florence.tan@dowjones.co
Of DOW JONES NEWSWIRES
SINGAPORE (Dow Jones)--StatoilHydro ASA (STO) is seeking opportunities to expand its oil and gas output in the Asia-Pacific region, a company executive said Monday.
The Norwegian energy major, which already has projects in Indonesia and India, is also looking at Australia's North West Shelf, Torgeir Kydland, senior vice president international exploration and production, said at a press briefing.
The offshore North West Shelf is "a place where we can make use of our experience from the North Sea," he added.
Asia has robust energy demand and higher liquified natural gas prices compared with other regions, Kydland said.
In India, its joint venture may start drilling an exploration well by next year, Kydland said. Statoil holds a 10% stake in the Krishna-Godavari Basin's DWN-98/2 gas-rich block led by Oil & Natural Gas Corp. (500312.BY).
Statoil also expects to start exploration drilling in its two blocks in the Makassar Strait in Indonesia in 2011, Kydland said.
In November the company was also shortlisted by PT Pertamina as a potential partner to develop the offshore Natuna D-Alpha gas reserve in Indonesia.
As gas in Natuna has high carbon dioxide content, the project will have to include carbon capture, Kydland said.
However, the company is due to stop oil production at its only field in the South China Sea "in summer" which has an output lower than 10,000-15,000 barrels a day now, he added.
"We will leave the field when production ceases," Kydland said.
Asia won't contribute significantly to Statoil's production target of 2.2 million barrels a day of oil and gas equivalent in 2012 as projects take time to develop and are highly capital intensive, Jon Jacobsen, Statoil's executive vice president of manufacturing and marketing said.
"We have seen costs coming down already. We're working to make it come down further," he said, adding costs have fallen by 5%-20%.
In the oil markets, Statoil will focus on crude, condensates, liquefied petroleum gas and naphtha trade in Asia after it closed its oil products trading desk in Singapore in November last year.
Jacobsen said the company has no "physical position" or access to local supply and oil products trading is "not on our agenda now."
Investment in Asia refineries are also "not high on its priority list" as the region has seen a "tremendous boom" in new projects, he added.
Statoil imports 130,000-150,000 barrels a day of crude into Asia and has access to 16 million barrels of oil storage in Yeosu, South Korea, said Marthe Hoff, Asia-Pacific president of oil trading and supply.
The company has also increased the volume of naphtha it ships from Europe to Asia, she added.
"This is an area which we will expand. Asia is the largest market for naphtha in the world," she said.
-By Florence Tan, Dow Jones Newswires; 65-6415-4067; florence.tan@dowjones.co
Monday, May 25, 2009
Natural Gas Supplies EU from Russia - Still an Issue
ROME (Dow Jones)--Continuous spats between Ukraine and Russia over natural gas contracts are inspiring a rethink of supplies to Western Europe to be discussed in October, the head of the International Energy Agency said Sunday.
The remarks come after Russian President Dmitry Medvedev Friday said Moscow doubted that Ukraine - which transits Russian gas to Western Europe - had enough money to pay for the supplies, hinting at more disruptions to come. "The Ukrainian issue triggers lots of discussion between the European Union and the IEA," Nobuo Tanaka told Dow Jones.
The IEA, which represents the most industrialized energy consumers, will be "discussing gas security in October with energy ministers" of its member countries, he said. They will talk about "what kind of coordination" they could have to confront the supply insecurity risk, Tanaka said. "IEA members should have as many possible alternatives, invest into energy efficiency and diversify sources of transmission. [Liquefied natural gas] is a good alternative," he said.
Russian gas supplies - long seen as among the most reliable in the world - have been subject to interruptions in past years due to disputes over pricing and debts related to the supply and transit of gas to Ukraine.
The spats have led to several shutdowns of exports of this major route to Western Europe. Gazprom cut deliveries of 90 million cubic meters of natural gas per day, destined to Ukraine, on Jan. 1 over unpaid debts, hitting supplies to countries in the region, such as Bulgaria and Moldova. The supply was fully restored after three weeks but it followed another shutdown over a pricing dispute in 2005-2006 and a threat to cut supply late in 2007.
More recently, a blast, apparently accidental, in a breakaway Moldavian region temporarily halted some Russia natural gas supplies to the Balkans.
-By Benoit Faucon, Dow Jones Newswires; +44-20-7842-9266; benoit.faucon@dowjones.com
The remarks come after Russian President Dmitry Medvedev Friday said Moscow doubted that Ukraine - which transits Russian gas to Western Europe - had enough money to pay for the supplies, hinting at more disruptions to come. "The Ukrainian issue triggers lots of discussion between the European Union and the IEA," Nobuo Tanaka told Dow Jones.
The IEA, which represents the most industrialized energy consumers, will be "discussing gas security in October with energy ministers" of its member countries, he said. They will talk about "what kind of coordination" they could have to confront the supply insecurity risk, Tanaka said. "IEA members should have as many possible alternatives, invest into energy efficiency and diversify sources of transmission. [Liquefied natural gas] is a good alternative," he said.
Russian gas supplies - long seen as among the most reliable in the world - have been subject to interruptions in past years due to disputes over pricing and debts related to the supply and transit of gas to Ukraine.
The spats have led to several shutdowns of exports of this major route to Western Europe. Gazprom cut deliveries of 90 million cubic meters of natural gas per day, destined to Ukraine, on Jan. 1 over unpaid debts, hitting supplies to countries in the region, such as Bulgaria and Moldova. The supply was fully restored after three weeks but it followed another shutdown over a pricing dispute in 2005-2006 and a threat to cut supply late in 2007.
More recently, a blast, apparently accidental, in a breakaway Moldavian region temporarily halted some Russia natural gas supplies to the Balkans.
-By Benoit Faucon, Dow Jones Newswires; +44-20-7842-9266; benoit.faucon@dowjones.com
Sunday, May 24, 2009
CO2 Emission Reductions Target 30% in EU
May 22 (Bloomberg) -- The European Union may have to scale back its goals to reduce global-warming emissions after a less- ambitious plan won initial approval in U.S. Congress.
The 27-nation bloc has asked all industrialized countries to reduce greenhouse gases an average 30 percent over 30 years. The first U.S. legislation ever to cap emissions, which passed a committee vote yesterday, calls for a 5 percent cut by American industry in the period. The gap poses a potential conflict when global talks on a new climate treaty resume June 1 in Bonn.
Lower targets ease costs for coal-burning utilities such as RWE AG of Germany and Ohio-based American Electric Power Co. At the same time, United Nations scientists have said gas output should peak by 2015 or temperatures may rise more than 2 degrees Celsius (3.6 degrees Fahrenheit) above pre-industrial levels, adding to the risk of droughts and flooding from climate change.
“The U.S. bill is clearly an advance on the past,” said James Cameron, vice chairman of the London-based fund manager Climate Change Capital and a former treaty negotiator. Still, “the middle ground of scientific opinion tells us we need to make reductions in a much larger amount over a shorter period.”
The UN-led talks are scheduled to produce a climate- protection agreement by year-end in Copenhagen.
The U.S. is not likely to accept “more aggressive” reduction targets for itself in a treaty that Congress is now considering for domestic regulations, said Ben Feldman, environmental markets executive director at JPMorgan Chase & Co. in New York. The U.S. goals “are unlikely to be sufficient for the EU to move to 30 percent” reductions, Feldman said.
Bridging Gaps
The EU, the largest group of developed countries at the UN negotiating table, will try to bridge gaps with envoys from the U.S. and more than 150 other countries in the June talks that run for 12 days. President Barack Obama has endorsed the bill in Congress led by Democratic Representative Henry Waxman, chairman of the House Energy and Commerce Committee. The panel approved the measure by a 33-25 vote.
The EU defended its more ambitious goals, saying it hasn’t lost hope for reconciling U.S. and European stances.
“The U.S. position is evolving,” said Barbara Helfferich, environment spokeswoman at the European Commission, the EU’s executive arm in Brussels. “We hope to see an improvement in the targets that have been put forward by industrialized countries generally so that the 30 percent goal can be reached.”
Strategy Split?
A split now among wealthy nations will threaten their strategy to present a united front to emerging economies including China, the world’s biggest producer of greenhouse gases. China has been pushed by the EU and the U.S. to join in adopting limits in heat-trapping emissions.
The EU is on course to slash gas output 20 percent by 2020 from 1990 and aims to deepen the cut to 30 percent over the period, provided other wealthy nations make comparable efforts.
The bloc isn’t alone in making conditional promises. Australia has pledged a 5 percent to 15 percent cut in 2020 from 2000 levels and Prime Minister Kevin Rudd said May 4 that his country is prepared to reduce it by 25 percent provided other nations agree to an “ambitious global deal.”
The draft U.S. law would trim discharges 17 percent in 2020 from 2005. That’s a 5 percent drop from the internationally accepted base year of 1990, according to EU calculations.
“It doesn’t look very promising what’s coming out of the U.S.,” said Christian Egenhofer, head of the energy and climate program at the Centre for European Policy Studies in Brussels. “I don’t see how the EU can go to 30 percent” in negotiations.
Cap-and-Trade
The cuts Congress approves will form the foundation for U.S. proposals at international talks. The legislation would enforce new limits through a cap-and-trade system similar to the European program, which began in 2005 and is the world’s biggest greenhouse-gas market.
Cap-and-trade requires companies that exceed their emission quotas to buy spare permits from businesses that emit less. The EU program covers companies from RWE, the biggest greenhouse-gas producer in Europe, to steelmaker ArcelorMittal of Luxembourg.
The U.S. plan targets such businesses as Chevron Corp., General Electric Co., Caterpillar Inc. and American Electric, the largest U.S. power generator from coal.
Europe accounts for about 14 percent of global emissions. It needs help from China and the U.S., the second-biggest emitter, to prevent irreversible environmental damage from climate change, scientists say.
One possible compromise is for the U.S. to give more aid to poor countries to fight global warming in return for a weaker American emissions-reduction goal. Developing nations may need as much as 54 billion euros ($75 billion) a year by 2030 to adapt to climate change, UN projections cited by the EU show.
‘Big Climate Check’
“The less of a reduction you make, the bigger the climate check you write,” said Sanjeev Kumar, a Brussels-based emissions-policy analyst at the environmental group WWF. “That’s where the politics are going.”
In return for aid, poorer countries should commit to limiting emissions growth in 2020 to 15 percent to 30 percent below “business as usual,” the EU proposes.
“Let’s see some leadership from industrialized countries and let’s see some clarity on stable and predictable financial support for developing countries,” said Yvo de Boer, executive secretary of the UN Framework Convention on Climate Change, which is guiding the negotiations. “Then we can talk about what developing countries are able to do.”
The U.S. refused to ratify the 1997 Kyoto Protocol, whose limits expire in 2012. Senators said it gave an advantage to factories in China and elsewhere by sparing those businesses from pollution controls. Obama reversed eight years of U.S. opposition to emissions curbs under former President George W. Bush and has pledged action to fight climate change.
Recession Effect
The recession makes it harder for Obama to seek a stricter cap in the draft law. Republican Representative Mike Pence of Indiana called the plan, which also needs the Senate’s support, “an economic declaration of war on the Midwest,” which relies more than coastal states on power from burning emissions- intensive coal.
“Nobody wants a repeat of Kyoto,” said Jake Schmidt, the Washington-based international climate policy director at the Natural Resources Defense Council. “They don’t want the U.S. to come in and commit to something it can’t deliver at home.”
In addition to the June session, other rounds of talks are scheduled for September and November.
“I’m confident the numbers will be improved on by December,” the UN’s de Boer said.
To contact the reporters on this story: Jonathan Stearns in Brussels at jstearns2@bloomberg.netAlex Morales in London at amorales2@bloomberg.net
Last Updated: May 22, 2009 10:33 EDT
The 27-nation bloc has asked all industrialized countries to reduce greenhouse gases an average 30 percent over 30 years. The first U.S. legislation ever to cap emissions, which passed a committee vote yesterday, calls for a 5 percent cut by American industry in the period. The gap poses a potential conflict when global talks on a new climate treaty resume June 1 in Bonn.
Lower targets ease costs for coal-burning utilities such as RWE AG of Germany and Ohio-based American Electric Power Co. At the same time, United Nations scientists have said gas output should peak by 2015 or temperatures may rise more than 2 degrees Celsius (3.6 degrees Fahrenheit) above pre-industrial levels, adding to the risk of droughts and flooding from climate change.
“The U.S. bill is clearly an advance on the past,” said James Cameron, vice chairman of the London-based fund manager Climate Change Capital and a former treaty negotiator. Still, “the middle ground of scientific opinion tells us we need to make reductions in a much larger amount over a shorter period.”
The UN-led talks are scheduled to produce a climate- protection agreement by year-end in Copenhagen.
The U.S. is not likely to accept “more aggressive” reduction targets for itself in a treaty that Congress is now considering for domestic regulations, said Ben Feldman, environmental markets executive director at JPMorgan Chase & Co. in New York. The U.S. goals “are unlikely to be sufficient for the EU to move to 30 percent” reductions, Feldman said.
Bridging Gaps
The EU, the largest group of developed countries at the UN negotiating table, will try to bridge gaps with envoys from the U.S. and more than 150 other countries in the June talks that run for 12 days. President Barack Obama has endorsed the bill in Congress led by Democratic Representative Henry Waxman, chairman of the House Energy and Commerce Committee. The panel approved the measure by a 33-25 vote.
The EU defended its more ambitious goals, saying it hasn’t lost hope for reconciling U.S. and European stances.
“The U.S. position is evolving,” said Barbara Helfferich, environment spokeswoman at the European Commission, the EU’s executive arm in Brussels. “We hope to see an improvement in the targets that have been put forward by industrialized countries generally so that the 30 percent goal can be reached.”
Strategy Split?
A split now among wealthy nations will threaten their strategy to present a united front to emerging economies including China, the world’s biggest producer of greenhouse gases. China has been pushed by the EU and the U.S. to join in adopting limits in heat-trapping emissions.
The EU is on course to slash gas output 20 percent by 2020 from 1990 and aims to deepen the cut to 30 percent over the period, provided other wealthy nations make comparable efforts.
The bloc isn’t alone in making conditional promises. Australia has pledged a 5 percent to 15 percent cut in 2020 from 2000 levels and Prime Minister Kevin Rudd said May 4 that his country is prepared to reduce it by 25 percent provided other nations agree to an “ambitious global deal.”
The draft U.S. law would trim discharges 17 percent in 2020 from 2005. That’s a 5 percent drop from the internationally accepted base year of 1990, according to EU calculations.
“It doesn’t look very promising what’s coming out of the U.S.,” said Christian Egenhofer, head of the energy and climate program at the Centre for European Policy Studies in Brussels. “I don’t see how the EU can go to 30 percent” in negotiations.
Cap-and-Trade
The cuts Congress approves will form the foundation for U.S. proposals at international talks. The legislation would enforce new limits through a cap-and-trade system similar to the European program, which began in 2005 and is the world’s biggest greenhouse-gas market.
Cap-and-trade requires companies that exceed their emission quotas to buy spare permits from businesses that emit less. The EU program covers companies from RWE, the biggest greenhouse-gas producer in Europe, to steelmaker ArcelorMittal of Luxembourg.
The U.S. plan targets such businesses as Chevron Corp., General Electric Co., Caterpillar Inc. and American Electric, the largest U.S. power generator from coal.
Europe accounts for about 14 percent of global emissions. It needs help from China and the U.S., the second-biggest emitter, to prevent irreversible environmental damage from climate change, scientists say.
One possible compromise is for the U.S. to give more aid to poor countries to fight global warming in return for a weaker American emissions-reduction goal. Developing nations may need as much as 54 billion euros ($75 billion) a year by 2030 to adapt to climate change, UN projections cited by the EU show.
‘Big Climate Check’
“The less of a reduction you make, the bigger the climate check you write,” said Sanjeev Kumar, a Brussels-based emissions-policy analyst at the environmental group WWF. “That’s where the politics are going.”
In return for aid, poorer countries should commit to limiting emissions growth in 2020 to 15 percent to 30 percent below “business as usual,” the EU proposes.
“Let’s see some leadership from industrialized countries and let’s see some clarity on stable and predictable financial support for developing countries,” said Yvo de Boer, executive secretary of the UN Framework Convention on Climate Change, which is guiding the negotiations. “Then we can talk about what developing countries are able to do.”
The U.S. refused to ratify the 1997 Kyoto Protocol, whose limits expire in 2012. Senators said it gave an advantage to factories in China and elsewhere by sparing those businesses from pollution controls. Obama reversed eight years of U.S. opposition to emissions curbs under former President George W. Bush and has pledged action to fight climate change.
Recession Effect
The recession makes it harder for Obama to seek a stricter cap in the draft law. Republican Representative Mike Pence of Indiana called the plan, which also needs the Senate’s support, “an economic declaration of war on the Midwest,” which relies more than coastal states on power from burning emissions- intensive coal.
“Nobody wants a repeat of Kyoto,” said Jake Schmidt, the Washington-based international climate policy director at the Natural Resources Defense Council. “They don’t want the U.S. to come in and commit to something it can’t deliver at home.”
In addition to the June session, other rounds of talks are scheduled for September and November.
“I’m confident the numbers will be improved on by December,” the UN’s de Boer said.
To contact the reporters on this story: Jonathan Stearns in Brussels at jstearns2@bloomberg.netAlex Morales in London at amorales2@bloomberg.net
Last Updated: May 22, 2009 10:33 EDT
Natural Gas Development Congressional Discussion Continues
By Anita Kumar
Washington Post Staff Writer
Sunday, May 24, 2009
RICHMOND -- The federal government's decision to lift its longtime ban on offshore drilling has thrust the hot-button issue of coastal drilling to the forefront of the Virginia governor's race.
The three Democrats vying for their party's nomination next month are taking strikingly different positions on whether Virginia should join Alaska, Texas and Louisiana in setting up offshore platforms to drill for oil and natural gas.
Brian Moran, a former delegate from Alexandria, opposes all drilling, a position that is in keeping with his strategy to stake out progressive stances on a variety of issues in the hopes of appealing to the party's more liberal base.
Terry McAuliffe, former chairman of the Democratic National Committee, has said he supports exploratory gas drilling as long as it occurs at least 50 miles off the coast. And state Sen. R. Creigh Deeds (Bath) supports drilling for gas and maybe oil, too, if environmental and economic negatives can be minimized.
In a contest where the candidates agree on most major issues and offer similar approaches to tackling the economic crisis and to improving Virginia's transportation and education systems, their positioning on this key environmental question has set them apart. They have clashed on drilling repeatedly during their five debates, and each has tried to distinguish himself on the issue.
Robert F. McDonnell, the Republican nominee for governor, has sent a strong signal that he plans to make drilling a prominent issue during the general election.
"Offshore production of natural gas and oil is not the entire solution to our economic and energy challenges, but it is part of the solution," McDonnell said. "We need to stop with the delays and start making progress."
McDonnell came out early for oil and gas drilling as a way to mine new sources of energy, create jobs and boost tax revenue. He sent a letter to Interior Secretary Ken Salazar, urging him to allow Virginia to start drilling as soon as possible. And this weekend, he appeared at his first rally with Michael Steele, chairman of the Republican National Committee, who last year turned the phrase "Drill, baby, drill," into a rallying cry.
Drilling became a major issue in last year's presidential campaign after Sen. John McCain (Ariz.) and the Republicans highlighted their support to open more of the country's coastline for drilling to reduce escalating gas prices. Then-Sen. Barack Obama (D) eventually agreed that drilling needed to be part of a broad energy plan.
Environmental groups, including the Sierra Club, argue that possible spills and new infrastructure on and offshore could harm plants, animals, tourism and the world's largest naval base, in Norfolk. "When the price of oil is high, people panic and want a solution," said Athan Manuel, the Sierra Club's offshore drilling expert.
But as the United States searches for alternative energy sources, petroleum companies wonder why Virginia would want to ignore a potential piece of the solution off its coast. "It's going to take a joint package," said Mike Ward, executive director of the Virginia Petroleum Council, part of a national group that represents 400 companies. "To exclude oil or gas is going to put us a long way back."
The last study of the Atlantic Ocean by the federal government, conducted two decades ago, estimates that at least 130 million barrels of oil and at least 1.14 trillion cubic feet of natural gas could be off Virginia's coast. That's equal to the amount of oil used in a week and the amount of gas used in a year in the United States.
Late last year, the Minerals Management Service, part of the Interior Department, included Virginia in its five-year plan and began soliciting companies to drill off the coast in 2011. It is the only state on the East Coast included in the plan.
But early this year, Salazar halted the process to review the plan and get input from the public.
The Democratic hopefuls have unveiled proposals calling for clean, renewable energy sources, but they disagree on whether any new energy should come from offshore drilling.
Moran is the only one who has come out against all forms of drilling, saying he wants to protect the tourism industry and the Navy and guard the Chesapeake Bay from further pollution.
Deeds and McAuliffe have said they are trying to balance the nation's need for new energy with a desire to respond to environmentally conscious constituents. They are calling for gas exploration and no oil drilling in the near future. They say that if an accident occurred, gas could easily dissipate but oil could contaminate the ocean.
"As governor, you have to explore what your possibilities are," McAuliffe said. "I'll look at it and balance everything."
Deeds and McAuliffe also say the state should only proceed if it can share in the profits.
"If we can receive royalties and protect the environment, protect fisheries, naval operations and tourism, then we ought to drill for oil," Deeds said. "What's wrong with that?"
In 2006, the General Assembly overwhelmingly passed an energy bill that would allow exploratory gas drilling 50 miles off the coast. Deeds and Moran voted for the final version of the 2006 bill.
McAuliffe frequently criticizes Moran for voting for the bill then but opposing drilling now as he runs for governor. But Moran said he has not flip-flopped. He said he voted for the final version of the 2006 bill solely to protect the state from a previous version, which had called for more drilling.
"There are any number of reasons to oppose offshore drilling," he said. "I oppose it."
Washington Post Staff Writer
Sunday, May 24, 2009
RICHMOND -- The federal government's decision to lift its longtime ban on offshore drilling has thrust the hot-button issue of coastal drilling to the forefront of the Virginia governor's race.
The three Democrats vying for their party's nomination next month are taking strikingly different positions on whether Virginia should join Alaska, Texas and Louisiana in setting up offshore platforms to drill for oil and natural gas.
Brian Moran, a former delegate from Alexandria, opposes all drilling, a position that is in keeping with his strategy to stake out progressive stances on a variety of issues in the hopes of appealing to the party's more liberal base.
Terry McAuliffe, former chairman of the Democratic National Committee, has said he supports exploratory gas drilling as long as it occurs at least 50 miles off the coast. And state Sen. R. Creigh Deeds (Bath) supports drilling for gas and maybe oil, too, if environmental and economic negatives can be minimized.
In a contest where the candidates agree on most major issues and offer similar approaches to tackling the economic crisis and to improving Virginia's transportation and education systems, their positioning on this key environmental question has set them apart. They have clashed on drilling repeatedly during their five debates, and each has tried to distinguish himself on the issue.
Robert F. McDonnell, the Republican nominee for governor, has sent a strong signal that he plans to make drilling a prominent issue during the general election.
"Offshore production of natural gas and oil is not the entire solution to our economic and energy challenges, but it is part of the solution," McDonnell said. "We need to stop with the delays and start making progress."
McDonnell came out early for oil and gas drilling as a way to mine new sources of energy, create jobs and boost tax revenue. He sent a letter to Interior Secretary Ken Salazar, urging him to allow Virginia to start drilling as soon as possible. And this weekend, he appeared at his first rally with Michael Steele, chairman of the Republican National Committee, who last year turned the phrase "Drill, baby, drill," into a rallying cry.
Drilling became a major issue in last year's presidential campaign after Sen. John McCain (Ariz.) and the Republicans highlighted their support to open more of the country's coastline for drilling to reduce escalating gas prices. Then-Sen. Barack Obama (D) eventually agreed that drilling needed to be part of a broad energy plan.
Environmental groups, including the Sierra Club, argue that possible spills and new infrastructure on and offshore could harm plants, animals, tourism and the world's largest naval base, in Norfolk. "When the price of oil is high, people panic and want a solution," said Athan Manuel, the Sierra Club's offshore drilling expert.
But as the United States searches for alternative energy sources, petroleum companies wonder why Virginia would want to ignore a potential piece of the solution off its coast. "It's going to take a joint package," said Mike Ward, executive director of the Virginia Petroleum Council, part of a national group that represents 400 companies. "To exclude oil or gas is going to put us a long way back."
The last study of the Atlantic Ocean by the federal government, conducted two decades ago, estimates that at least 130 million barrels of oil and at least 1.14 trillion cubic feet of natural gas could be off Virginia's coast. That's equal to the amount of oil used in a week and the amount of gas used in a year in the United States.
Late last year, the Minerals Management Service, part of the Interior Department, included Virginia in its five-year plan and began soliciting companies to drill off the coast in 2011. It is the only state on the East Coast included in the plan.
But early this year, Salazar halted the process to review the plan and get input from the public.
The Democratic hopefuls have unveiled proposals calling for clean, renewable energy sources, but they disagree on whether any new energy should come from offshore drilling.
Moran is the only one who has come out against all forms of drilling, saying he wants to protect the tourism industry and the Navy and guard the Chesapeake Bay from further pollution.
Deeds and McAuliffe have said they are trying to balance the nation's need for new energy with a desire to respond to environmentally conscious constituents. They are calling for gas exploration and no oil drilling in the near future. They say that if an accident occurred, gas could easily dissipate but oil could contaminate the ocean.
"As governor, you have to explore what your possibilities are," McAuliffe said. "I'll look at it and balance everything."
Deeds and McAuliffe also say the state should only proceed if it can share in the profits.
"If we can receive royalties and protect the environment, protect fisheries, naval operations and tourism, then we ought to drill for oil," Deeds said. "What's wrong with that?"
In 2006, the General Assembly overwhelmingly passed an energy bill that would allow exploratory gas drilling 50 miles off the coast. Deeds and Moran voted for the final version of the 2006 bill.
McAuliffe frequently criticizes Moran for voting for the bill then but opposing drilling now as he runs for governor. But Moran said he has not flip-flopped. He said he voted for the final version of the 2006 bill solely to protect the state from a previous version, which had called for more drilling.
"There are any number of reasons to oppose offshore drilling," he said. "I oppose it."
Saturday, May 23, 2009
Natural Gas Rig Count Down One This Week
NEW YORK -(Dow Jones)- The number of rigs drilling for oil and natural gas in the U.S. fell this week as producers continued to curb drilling activity amid slumping energy prices.
The number of oil and gas rigs fell to 900, down 18 from the previous week, according to rig data from oil-field services company Baker Hughes Inc. (BHI). The number of gas rigs was 711, a drop of 17 rigs from last week, while the oil rig count fell to 180, a decrease of one rig. The number of miscellaneous rigs was unchanged at nine.
The number of gas rigs in use peaked at 1,606 in September.
Natural gas prices have plunged about 74% from summer highs amid robust production from U.S. onshore natural gas fields and slumping demand. Large industrial consumers have scaled back gas use to cut costs during the recession. In response to falling gas prices, producers such as Chesapeake Energy Corp. ( CHK) and Devon Energy Corp. (DVN) have slashed their spending plans and rig counts to reduce the flow of new gas supplies into the market.
Analysts anticipate that the sharp decline in natural gas drilling activity will eventually bring supply back in line with demand and help bolster gas prices.
Gas for June delivery on the New York Mercantile Exchange was recently down 7.3 cents, or 2.03%, at $3.53 a million British thermal units.
-By Christine Buurma, Dow Jones Newswires; 201-938-2061; christine.buurma@ dowjones.com
The number of oil and gas rigs fell to 900, down 18 from the previous week, according to rig data from oil-field services company Baker Hughes Inc. (BHI). The number of gas rigs was 711, a drop of 17 rigs from last week, while the oil rig count fell to 180, a decrease of one rig. The number of miscellaneous rigs was unchanged at nine.
The number of gas rigs in use peaked at 1,606 in September.
Natural gas prices have plunged about 74% from summer highs amid robust production from U.S. onshore natural gas fields and slumping demand. Large industrial consumers have scaled back gas use to cut costs during the recession. In response to falling gas prices, producers such as Chesapeake Energy Corp. ( CHK) and Devon Energy Corp. (DVN) have slashed their spending plans and rig counts to reduce the flow of new gas supplies into the market.
Analysts anticipate that the sharp decline in natural gas drilling activity will eventually bring supply back in line with demand and help bolster gas prices.
Gas for June delivery on the New York Mercantile Exchange was recently down 7.3 cents, or 2.03%, at $3.53 a million British thermal units.
-By Christine Buurma, Dow Jones Newswires; 201-938-2061; christine.buurma@ dowjones.com
Friday, May 22, 2009
Natural Gas Cars for a New York City
By A.J. Carter
The Huntington Town Board moved Tuesday night toward converting some of the town’s garbage collection fleet to compressed natural gas, helping to reduce the town’s reliance on foreign oil and help preserve the environment.
The board approved a resolution authorizing Supervisor Frank P. Petrone to apply for $260,000 in federal stimulus funds administered by the Long Island Clean Cities Coalition to help purchase two new compressed natural gas garbage trucks and to retrofit two existing trucks to run on compressed natural gas. The total cost of the project is $574,000; the application is for the maximum reimbursable amount.
“This step reinforces Huntington’s commitment to go green,” said Petrone, who sponsored the resolution. “This is proof that the town board’s adoption of the United States Conference of Mayors Climate Protection Agreement last month was more than lip service. We look forward to implementing other planet-saving measures in the future.”
“The Town of Huntington is dedicated to clean and renewable energy across the board," said Councilwoman Susan Berland, who co-sponsored the resolution. "We have a great relationship with the Long Island Clean Cities Coalition and we're looking forward to continuing that partnership. I would eventually like to see our entire fleet of trucks run on natural compressed gas."
Councilman Stuart Besen, the other co-sponsor, said, “To convert refuse trucks to natural gas is another mechanism in which the town has taken to lead the charge in our Keep Huntington Green movement.” Besen added, “By retrofitting our refuse vehicles with natural gas, this program encourages and promotes the residents of the Town of Huntington to think and act green.”
The town already has 18 hybrid vehicles and one alternate fuel vehicle, the car assigned to Petrone. The town hopes to have the first of the trucks in service by the end of the year.
In other action, the Board:
-- Authorized the Town Attorney to begin legal action against the owners of the East Northport shopping center that includes Home Depot because the home improvement retailer, despite paying extensive fines, has continued to display and store merchandise outside the building without approval from the Zoning Board of Appeals.
“Due to the consistent and flagrant disregard of Town of Huntington covenants and restrictions that maintain our quality of life, we are seeking an injunction against the Home Depot store of East Northport,” Councilman Mark Cuthbertson said. “Despite yearly fines, summonses and threats of injunction this particular branch has been in perpetual violation of Town Code without any genuine attempt to rectify the situation. As the Town holds all businesses to the same standard regardless of size, we cannot let any one business assume it is above the law.”
-- Approved the use of up to $429,000 from the Affordable Housing Trust fund to help acquire properties at 4/6 and 14 Columbia Street as part of the Take Back the Blocks program. The amount represents half the estimated cost of the properties plus closing and maintenance costs. The remainder is to come from a Suffolk County fund. Once acquired, the properties will be transferred to the Town’s Community Development Agency for demolition and redevelopment. “The Take Back the Block Program allows the Town to essentially make lemonade out of lemons. The Columbia Street homes are a perfect example of that. These blighted properties were bought through grant opportunities, renovated and are now put back on the market as affordable homes for first time homebuyers. Take Back the Block is revitalizing communities across the nation and we are grateful to be able to use funding towards Huntington Station this time around,” Councilwoman Glenda Jackson said.
-- Authorized a formal application for $242,411 in federal Community Development Block Grant stimulus funds.
-- Approved the zoning changes necessary to allow construction of a Lowe’s Home Center at the site of the former Huntington Town House in Huntington Station.
A.J. Carter is the town’s public information officer.
The Huntington Town Board moved Tuesday night toward converting some of the town’s garbage collection fleet to compressed natural gas, helping to reduce the town’s reliance on foreign oil and help preserve the environment.
The board approved a resolution authorizing Supervisor Frank P. Petrone to apply for $260,000 in federal stimulus funds administered by the Long Island Clean Cities Coalition to help purchase two new compressed natural gas garbage trucks and to retrofit two existing trucks to run on compressed natural gas. The total cost of the project is $574,000; the application is for the maximum reimbursable amount.
“This step reinforces Huntington’s commitment to go green,” said Petrone, who sponsored the resolution. “This is proof that the town board’s adoption of the United States Conference of Mayors Climate Protection Agreement last month was more than lip service. We look forward to implementing other planet-saving measures in the future.”
“The Town of Huntington is dedicated to clean and renewable energy across the board," said Councilwoman Susan Berland, who co-sponsored the resolution. "We have a great relationship with the Long Island Clean Cities Coalition and we're looking forward to continuing that partnership. I would eventually like to see our entire fleet of trucks run on natural compressed gas."
Councilman Stuart Besen, the other co-sponsor, said, “To convert refuse trucks to natural gas is another mechanism in which the town has taken to lead the charge in our Keep Huntington Green movement.” Besen added, “By retrofitting our refuse vehicles with natural gas, this program encourages and promotes the residents of the Town of Huntington to think and act green.”
The town already has 18 hybrid vehicles and one alternate fuel vehicle, the car assigned to Petrone. The town hopes to have the first of the trucks in service by the end of the year.
In other action, the Board:
-- Authorized the Town Attorney to begin legal action against the owners of the East Northport shopping center that includes Home Depot because the home improvement retailer, despite paying extensive fines, has continued to display and store merchandise outside the building without approval from the Zoning Board of Appeals.
“Due to the consistent and flagrant disregard of Town of Huntington covenants and restrictions that maintain our quality of life, we are seeking an injunction against the Home Depot store of East Northport,” Councilman Mark Cuthbertson said. “Despite yearly fines, summonses and threats of injunction this particular branch has been in perpetual violation of Town Code without any genuine attempt to rectify the situation. As the Town holds all businesses to the same standard regardless of size, we cannot let any one business assume it is above the law.”
-- Approved the use of up to $429,000 from the Affordable Housing Trust fund to help acquire properties at 4/6 and 14 Columbia Street as part of the Take Back the Blocks program. The amount represents half the estimated cost of the properties plus closing and maintenance costs. The remainder is to come from a Suffolk County fund. Once acquired, the properties will be transferred to the Town’s Community Development Agency for demolition and redevelopment. “The Take Back the Block Program allows the Town to essentially make lemonade out of lemons. The Columbia Street homes are a perfect example of that. These blighted properties were bought through grant opportunities, renovated and are now put back on the market as affordable homes for first time homebuyers. Take Back the Block is revitalizing communities across the nation and we are grateful to be able to use funding towards Huntington Station this time around,” Councilwoman Glenda Jackson said.
-- Authorized a formal application for $242,411 in federal Community Development Block Grant stimulus funds.
-- Approved the zoning changes necessary to allow construction of a Lowe’s Home Center at the site of the former Huntington Town House in Huntington Station.
A.J. Carter is the town’s public information officer.
Thursday, May 21, 2009
Midwest Power Plants Looking at Natural Gas
By JUDY NEWMAN
608-252-6156
jdnewman@madison.com
By December 2013, the UW-Madison’s Charter Street heating plant will be off its diet of coal and may start digesting wood chips, if state lawmakers approve a $251 million project.
The project, which was detailed on Tuesday, calls for:
• Retiring three of the heating plant’s coal-burning boilers, installed in the 1950s, and replacing them with a natural-gas boiler.
Modifying the fourth coal-fired boiler to accommodate biomass and natural gas.
• Maintaining a fifth boiler, fueled by natural gas, as is.
• Designing and installing a new boiler, bigger than any of the others, to operate on biomass and natural gas.
The project is included in Gov. Jim Doyle’s biennial capital budget and will need approval from the Joint Finance Committee and the full Legislature.
The changes would eliminate the need for nearly 110,000 tons of coal a year, replacing that fuel with as much as 250,000 tons of biomass, such as waste wood and agricultural products. They also would decrease pollution and create a market for biomass in Wisconsin, state officials said.
"That’s really the fundamental change we’re going for here," said Andrew Moyer, executive assistant to Wisconsin Department of Administration Secretary Michael Morgan.
"It’s exactly the path that we need to be on," said Jennifer Feyerherm, director of the Sierra Club’s Wisconsin Clean Energy Campaign.
Wisconsin is one of the best states in the country for biofuel, said Alan Fish, UW-Madison associate vice chancellor for facilities planning and management. State forests are laden with waste wood and Wisconsin’s once-thriving paper industry has shrunk dramatically. Creating a market for wood chips or pellets of waste wood and plastic would create jobs and help the economy, Fish said.
At the same time, crops grown for fuel, like switchgrass, and agricultural waste such as corn stalks are abundant, he said.
The new boiler would use circulating fluidized bed combustion, in which jets of air swirl the fuel around like a tornado, as Fish put it. The technology makes it easier to use different types and amounts of biomass, and to mix it with natural gas, he said.
Fish said the system is most efficient with 80 percent biomass and 20 percent natural gas, but it will take a while for the biofuel market to get organized and supply that much product. "We think we can probably accommodate two trainloads of renewable fuels a day, at full capacity," Fish said. Currently, trains bring coal in about every other day, he said.
A proposed $20 million biomass research lab, could be built adjacent to the heating plant. It is not included in the Charter Street proposal.
The new boiler will nearly eliminate sulfur dioxide emissions from the Charter Street plant, and could reduce particulates enough to put Dane County back into compliance for that type of pollution, according to a study by Titus, a Milwaukee firm.
The Charter Street plant is the largest of three that provide steam for heat and for chilled air for UW campus buildings. The other two are Walnut Street and the West Campus power plant co-owned by Madison Gas & Electric. Both burn natural gas.
The Capitol heat and power plant, at Blair and Main streets, which uses about one-third coal, will be converted to all natural gas, in a separate $25 million project.
608-252-6156
jdnewman@madison.com
By December 2013, the UW-Madison’s Charter Street heating plant will be off its diet of coal and may start digesting wood chips, if state lawmakers approve a $251 million project.
The project, which was detailed on Tuesday, calls for:
• Retiring three of the heating plant’s coal-burning boilers, installed in the 1950s, and replacing them with a natural-gas boiler.
Modifying the fourth coal-fired boiler to accommodate biomass and natural gas.
• Maintaining a fifth boiler, fueled by natural gas, as is.
• Designing and installing a new boiler, bigger than any of the others, to operate on biomass and natural gas.
The project is included in Gov. Jim Doyle’s biennial capital budget and will need approval from the Joint Finance Committee and the full Legislature.
The changes would eliminate the need for nearly 110,000 tons of coal a year, replacing that fuel with as much as 250,000 tons of biomass, such as waste wood and agricultural products. They also would decrease pollution and create a market for biomass in Wisconsin, state officials said.
"That’s really the fundamental change we’re going for here," said Andrew Moyer, executive assistant to Wisconsin Department of Administration Secretary Michael Morgan.
"It’s exactly the path that we need to be on," said Jennifer Feyerherm, director of the Sierra Club’s Wisconsin Clean Energy Campaign.
Wisconsin is one of the best states in the country for biofuel, said Alan Fish, UW-Madison associate vice chancellor for facilities planning and management. State forests are laden with waste wood and Wisconsin’s once-thriving paper industry has shrunk dramatically. Creating a market for wood chips or pellets of waste wood and plastic would create jobs and help the economy, Fish said.
At the same time, crops grown for fuel, like switchgrass, and agricultural waste such as corn stalks are abundant, he said.
The new boiler would use circulating fluidized bed combustion, in which jets of air swirl the fuel around like a tornado, as Fish put it. The technology makes it easier to use different types and amounts of biomass, and to mix it with natural gas, he said.
Fish said the system is most efficient with 80 percent biomass and 20 percent natural gas, but it will take a while for the biofuel market to get organized and supply that much product. "We think we can probably accommodate two trainloads of renewable fuels a day, at full capacity," Fish said. Currently, trains bring coal in about every other day, he said.
A proposed $20 million biomass research lab, could be built adjacent to the heating plant. It is not included in the Charter Street proposal.
The new boiler will nearly eliminate sulfur dioxide emissions from the Charter Street plant, and could reduce particulates enough to put Dane County back into compliance for that type of pollution, according to a study by Titus, a Milwaukee firm.
The Charter Street plant is the largest of three that provide steam for heat and for chilled air for UW campus buildings. The other two are Walnut Street and the West Campus power plant co-owned by Madison Gas & Electric. Both burn natural gas.
The Capitol heat and power plant, at Blair and Main streets, which uses about one-third coal, will be converted to all natural gas, in a separate $25 million project.
Wednesday, May 20, 2009
Natural Gas Inventories in U.S. Getting Full UP
By Reg Curren
May 20 (Bloomberg) -- Natural gas was little changed amid forecasts that a government report tomorrow will show an above- average rise in U.S. supplies.
The Energy Department will probably say gas inventories rose 93 billion cubic feet in the week ended May 15, according to the median of 12 analyst estimates compiled by Bloomberg. The five-year average change is an increase of 90 billion. Gas storage is heading toward a record high before the fall, when heating-fuel demand begins to siphon off supplies.
“Natural gas is struggling because we’re well supplied,” said Michael Rose, a director of trading at Angus Jackson Inc., a brokerage in Fort Lauderdale, Florida. “You would have thought with the amount of speculators that had come into the market over the past several weeks that gas would be more bullish because of equities and the other energies.”
Natural gas for June delivery fell 0.6 cent to $3.908 per million British thermal units at 12:15 p.m. on the New York Mercantile Exchange. Gas has declined 30 percent this year.
The Energy Department is scheduled to release its storage report tomorrow at 10:30 a.m. in Washington. Supplies were 23 percent higher than the five-year average in last week’s report.
Shares of U.S. commodity producers rose as investors bet on the recession easing and factories ramping up. The Standard & Poor’s index of 500 stocks gained as much as 1.8 percent.
Companies injected 2.178 trillion cubic feet of gas into storage between April and November 2008, according to the Energy Department. A similar rebuilding of inventories this year would put stockpiles near 3.8 trillion cubic feet by Oct. 31, 8 percent above the record 3.545 trillion cubic feet in storage on Nov. 2, 2007.
Gas Demand
Industrial demand for gas may decline 8 percent this year because of the recession, the Energy Department said on May 12. Overall U.S. consumption is expected to contract 1.9 percent, outpacing reductions in output. Factory and power-plant consumption together accounts for 58 percent of U.S. gas use.
“Until the economy recovers, U.S. demand and even world demand, for that matter, can’t come back,” said Ryan Moe, a risk management consultant for FC Stone LLC in Minneapolis. “A lot of people aren’t sold yet that we’re ready to rally in natural gas.”
Overwhelming inventories and slack demand will weigh on the market for much of 2009, limiting the size of price moves to the up side, said Cameron Horwitz, an analyst at SunTrust Robinson Humphrey Inc. in Houston.
“It seems like people want to push it lower, but it’s getting too much support from the broader conditions,” he said. “Right now, all eyes are on storage and people are concerned about what happens if we bump up on those physical limits and what that will do to prices in the fall.”
Horwitz said prices probably won’t drop much further, having put in a low last month. Gas tumbled to $3.155 per million Btu on April 27 and rallied 45 percent to $4.575 on May 13 before stalling and heading lower again.
To contact the reporters on this story: Reg Curren in Calgary at rcurren@bloomberg.net.
May 20 (Bloomberg) -- Natural gas was little changed amid forecasts that a government report tomorrow will show an above- average rise in U.S. supplies.
The Energy Department will probably say gas inventories rose 93 billion cubic feet in the week ended May 15, according to the median of 12 analyst estimates compiled by Bloomberg. The five-year average change is an increase of 90 billion. Gas storage is heading toward a record high before the fall, when heating-fuel demand begins to siphon off supplies.
“Natural gas is struggling because we’re well supplied,” said Michael Rose, a director of trading at Angus Jackson Inc., a brokerage in Fort Lauderdale, Florida. “You would have thought with the amount of speculators that had come into the market over the past several weeks that gas would be more bullish because of equities and the other energies.”
Natural gas for June delivery fell 0.6 cent to $3.908 per million British thermal units at 12:15 p.m. on the New York Mercantile Exchange. Gas has declined 30 percent this year.
The Energy Department is scheduled to release its storage report tomorrow at 10:30 a.m. in Washington. Supplies were 23 percent higher than the five-year average in last week’s report.
Shares of U.S. commodity producers rose as investors bet on the recession easing and factories ramping up. The Standard & Poor’s index of 500 stocks gained as much as 1.8 percent.
Companies injected 2.178 trillion cubic feet of gas into storage between April and November 2008, according to the Energy Department. A similar rebuilding of inventories this year would put stockpiles near 3.8 trillion cubic feet by Oct. 31, 8 percent above the record 3.545 trillion cubic feet in storage on Nov. 2, 2007.
Gas Demand
Industrial demand for gas may decline 8 percent this year because of the recession, the Energy Department said on May 12. Overall U.S. consumption is expected to contract 1.9 percent, outpacing reductions in output. Factory and power-plant consumption together accounts for 58 percent of U.S. gas use.
“Until the economy recovers, U.S. demand and even world demand, for that matter, can’t come back,” said Ryan Moe, a risk management consultant for FC Stone LLC in Minneapolis. “A lot of people aren’t sold yet that we’re ready to rally in natural gas.”
Overwhelming inventories and slack demand will weigh on the market for much of 2009, limiting the size of price moves to the up side, said Cameron Horwitz, an analyst at SunTrust Robinson Humphrey Inc. in Houston.
“It seems like people want to push it lower, but it’s getting too much support from the broader conditions,” he said. “Right now, all eyes are on storage and people are concerned about what happens if we bump up on those physical limits and what that will do to prices in the fall.”
Horwitz said prices probably won’t drop much further, having put in a low last month. Gas tumbled to $3.155 per million Btu on April 27 and rallied 45 percent to $4.575 on May 13 before stalling and heading lower again.
To contact the reporters on this story: Reg Curren in Calgary at rcurren@bloomberg.net.
Natural Gas Prices Competing Against LNG
Anadarko Petroleum Corp. Chief Executive Officer Jim Hackett said he sees headwinds for natural gas prices in part because of increased liquefied natural gas supplies.
“Our feeling is that natural gas prices have some challenges because of the LNG that may be coming this way due to our storage capability in the United States and the reduced industrial demand overseas,” Hackett said today in an interview in The Woodlands, after the company’s annual shareholders meeting.
Hackett said there needs to be a “reasonable market as well as a reasonable price,” and he called for gas to be used more in vehicles. There may be more than 100 years’ worth of supply to be found, he said. Gas futures on the New York Mercantile Exchange have dropped about 30 percent this year, compared with oil’s 33 percent increase.
“We need to have natural gas be the alternative fuel for the next 10 to 20 years until new technologies are developed and brought online,” Hackett said.
The crude oil “headwinds” may be less than for gas even though it also is in a full-storage situation, Hackett said. He said lower commodity prices for consumers are “effectively a fiscal stimulus that was not needed by government handouts.” He said prices need to be high enough for continued investment.
“One of the things we of course are pleased by is a modest rise in the price of oil recently, which we need to be able to continue to do deepwater drilling and remote exploration,” he said.
Anadarko is the second-largest independent oil and natural gas producer in the U.S. after Devon Energy Corp.
www.bloomberg.com
“Our feeling is that natural gas prices have some challenges because of the LNG that may be coming this way due to our storage capability in the United States and the reduced industrial demand overseas,” Hackett said today in an interview in The Woodlands, after the company’s annual shareholders meeting.
Hackett said there needs to be a “reasonable market as well as a reasonable price,” and he called for gas to be used more in vehicles. There may be more than 100 years’ worth of supply to be found, he said. Gas futures on the New York Mercantile Exchange have dropped about 30 percent this year, compared with oil’s 33 percent increase.
“We need to have natural gas be the alternative fuel for the next 10 to 20 years until new technologies are developed and brought online,” Hackett said.
The crude oil “headwinds” may be less than for gas even though it also is in a full-storage situation, Hackett said. He said lower commodity prices for consumers are “effectively a fiscal stimulus that was not needed by government handouts.” He said prices need to be high enough for continued investment.
“One of the things we of course are pleased by is a modest rise in the price of oil recently, which we need to be able to continue to do deepwater drilling and remote exploration,” he said.
Anadarko is the second-largest independent oil and natural gas producer in the U.S. after Devon Energy Corp.
www.bloomberg.com
Tuesday, May 19, 2009
Natural Gas Has Bumpy Ride
May 18 (Bloomberg) -- Natural gas futures are poised to give back of their recent gains as a head-and-shoulders pattern that formed last week signaled a reversal, according to a technical analysis by John Kilduff, senior vice president of energy at MF Global Inc.
The pattern was created during trading May 12 through May 15, with a surge above $4.50 per million British thermal units on May 13 forming the head, Kilduff said in a telephone interview. Gas reached $4.575 before beginning a decline.
Natural gas futures had risen from $3.155 per million Btu on April 27, the lowest since Sept. 5, 2002, amid speculation that supplies will decline as drilling slows. Prices gained 22 percent in the week ended May 8, the biggest increase in more than two years.
“We’re going to give back the majority of this move, so I’d look for it to give back $1,” he said. “It’s going to be pretty quick because there’s not been a lot of conviction in this buying. This was a rally built on sand.”
A similar formation in early January, with an intraday high of $6.24 on Jan. 6, set off a 31 percent decline to $4.28 on Feb. 2, Kilduff said. Gas rallied for a short period from the Feb. 2 low before tumbling more into late April.
A break of the 10-day moving average on May 15 indicates “an extended move lower” to between $3.50 and $3.75, Kilduff said.
Natural gas for June delivery fell 19.4 cents, or 4.5 percent, to settle at $4.098 per million Btu on May 15 on the New York Mercantile Exchange.
Technical traders monitor patterns on daily charts for clues to price direction, and may sell or buy based on those signals.
To contact the reporter on this story: Reg Curren in Calgary at rcurren@bloomberg.net.
The pattern was created during trading May 12 through May 15, with a surge above $4.50 per million British thermal units on May 13 forming the head, Kilduff said in a telephone interview. Gas reached $4.575 before beginning a decline.
Natural gas futures had risen from $3.155 per million Btu on April 27, the lowest since Sept. 5, 2002, amid speculation that supplies will decline as drilling slows. Prices gained 22 percent in the week ended May 8, the biggest increase in more than two years.
“We’re going to give back the majority of this move, so I’d look for it to give back $1,” he said. “It’s going to be pretty quick because there’s not been a lot of conviction in this buying. This was a rally built on sand.”
A similar formation in early January, with an intraday high of $6.24 on Jan. 6, set off a 31 percent decline to $4.28 on Feb. 2, Kilduff said. Gas rallied for a short period from the Feb. 2 low before tumbling more into late April.
A break of the 10-day moving average on May 15 indicates “an extended move lower” to between $3.50 and $3.75, Kilduff said.
Natural gas for June delivery fell 19.4 cents, or 4.5 percent, to settle at $4.098 per million Btu on May 15 on the New York Mercantile Exchange.
Technical traders monitor patterns on daily charts for clues to price direction, and may sell or buy based on those signals.
To contact the reporter on this story: Reg Curren in Calgary at rcurren@bloomberg.net.
Monday, May 18, 2009
Natural Gas Uptick May Go Downtick
May 18 (Bloomberg) -- Natural gas futures are poised to give back of their recent gains as a head-and-shoulders pattern that formed last week signaled a reversal, according to a technical analysis by John Kilduff, senior vice president of energy at MF Global Inc.
The pattern was created during trading May 12 through May 15, with a surge above $4.50 per million British thermal units on May 13 forming the head, Kilduff said in a telephone interview. Gas reached $4.575 before beginning a decline.
Natural gas futures had risen from $3.155 per million Btu on April 27, the lowest since Sept. 5, 2002, amid speculation that supplies will decline as drilling slows. Prices gained 22 percent in the week ended May 8, the biggest increase in more than two years.
“We’re going to give back the majority of this move, so I’d look for it to give back $1,” he said. “It’s going to be pretty quick because there’s not been a lot of conviction in this buying. This was a rally built on sand.”
A similar formation in early January, with an intraday high of $6.24 on Jan. 6, set off a 31 percent decline to $4.28 on Feb. 2, Kilduff said. Gas rallied for a short period from the Feb. 2 low before tumbling more into late April.
A break of the 10-day moving average on May 15 indicates “an extended move lower” to between $3.50 and $3.75, Kilduff said.
Natural gas for June delivery fell 19.4 cents, or 4.5 percent, to settle at $4.098 per million Btu on May 15 on the New York Mercantile Exchange.
Technical traders monitor patterns on daily charts for clues to price direction, and may sell or buy based on those signals.
To contact the reporter on this story: Reg Curren in Calgary at rcurren@bloomberg.net.
Last Updated: May 17, 2009 19:00 EDT
The pattern was created during trading May 12 through May 15, with a surge above $4.50 per million British thermal units on May 13 forming the head, Kilduff said in a telephone interview. Gas reached $4.575 before beginning a decline.
Natural gas futures had risen from $3.155 per million Btu on April 27, the lowest since Sept. 5, 2002, amid speculation that supplies will decline as drilling slows. Prices gained 22 percent in the week ended May 8, the biggest increase in more than two years.
“We’re going to give back the majority of this move, so I’d look for it to give back $1,” he said. “It’s going to be pretty quick because there’s not been a lot of conviction in this buying. This was a rally built on sand.”
A similar formation in early January, with an intraday high of $6.24 on Jan. 6, set off a 31 percent decline to $4.28 on Feb. 2, Kilduff said. Gas rallied for a short period from the Feb. 2 low before tumbling more into late April.
A break of the 10-day moving average on May 15 indicates “an extended move lower” to between $3.50 and $3.75, Kilduff said.
Natural gas for June delivery fell 19.4 cents, or 4.5 percent, to settle at $4.098 per million Btu on May 15 on the New York Mercantile Exchange.
Technical traders monitor patterns on daily charts for clues to price direction, and may sell or buy based on those signals.
To contact the reporter on this story: Reg Curren in Calgary at rcurren@bloomberg.net.
Last Updated: May 17, 2009 19:00 EDT
Sunday, May 17, 2009
Natural Gas Rig Count Still Going Down
Colorado rig count up 2; US total falls by 10
Associated Press - May 15, 2009 2:44 PM ET
HOUSTON (AP) - The number of working oil and gas rigs in Colorado is up two from last week, according to a Houston company that keeps nationwide counts.
But Baker Hughes Inc. says the overall number of rigs actively exploring in the U.S. dropped by 10 to 918.
Officials say 728 of those are exploring for natural gas, and 181 are oil rigs.
Nine are listed as miscellaneous.
Among other major oil- and gas-producing states, Texas lost 13 rigs, Arkansas lost four, New Mexico and North Dakota each lost three and California lost one.
Louisiana added eight rigs, and Wyoming and Alaska each added one. Oklahoma was unchanged.
The rig count has dropped 50.7% from its total of 1,862 a year ago.
Baker Hughes has been tracking rig counts since 1944.
On the Net:
Baker Hughes Inc.: http://www.bakerhughesdirect.com
Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Associated Press - May 15, 2009 2:44 PM ET
HOUSTON (AP) - The number of working oil and gas rigs in Colorado is up two from last week, according to a Houston company that keeps nationwide counts.
But Baker Hughes Inc. says the overall number of rigs actively exploring in the U.S. dropped by 10 to 918.
Officials say 728 of those are exploring for natural gas, and 181 are oil rigs.
Nine are listed as miscellaneous.
Among other major oil- and gas-producing states, Texas lost 13 rigs, Arkansas lost four, New Mexico and North Dakota each lost three and California lost one.
Louisiana added eight rigs, and Wyoming and Alaska each added one. Oklahoma was unchanged.
The rig count has dropped 50.7% from its total of 1,862 a year ago.
Baker Hughes has been tracking rig counts since 1944.
On the Net:
Baker Hughes Inc.: http://www.bakerhughesdirect.com
Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Friday, May 15, 2009
Mexico Natural Gas Prices Lowered for Consumers
MEXICO CITY, May 14 (Reuters) - Mexico's state-run gas company Pemex will lower natural gas prices for consumers by 10 percent beginning at the end of June this year, the company said on Thursday.
Mexico -- a crude oil exporter -- is a net importer of natural gas despite having sizable resources. Pemex has set a goal to increase output enough to halve gas imports, possibly as soon as this year.
Natural gas and electricity prices in the United States have been dropping recently, tracking oil prices and falling demand because of the financial crisis.
June natural gas futures NGM9 eased 4.1 cents to close at $4.292 per mmBtu area on Thursday after slipping early to $4.125, then bouncing late to $4.349. (Reporting by Mica Rosenberg; Editing by Gary Hill)
Mexico -- a crude oil exporter -- is a net importer of natural gas despite having sizable resources. Pemex has set a goal to increase output enough to halve gas imports, possibly as soon as this year.
Natural gas and electricity prices in the United States have been dropping recently, tracking oil prices and falling demand because of the financial crisis.
June natural gas futures NGM9 eased 4.1 cents to close at $4.292 per mmBtu area on Thursday after slipping early to $4.125, then bouncing late to $4.349. (Reporting by Mica Rosenberg; Editing by Gary Hill)
Thursday, May 14, 2009
Natural Gas Price Up No Mystery
NEW YORK, May 13 (Reuters) - Recent concerns that growth in the United States Natural Gas Fund (UNG.P) (UNG) has been the primary driver behind the strong gas price run-up this month may be overblown, some industry analysts said.
Some analysts have estimated UNG could hold as much as 80 percent of New York Mercantile Exchange June natural gas open interest, stirring concerns that such a huge share could impact price volatility.
But some said the share was probably a lot lower.
"There's been a lot of attention paid to the growing open interest held by UNG, but it's completely disingenuous to say that it currently represents 80 percent of the futures market. That completely overstates the case," said Addison Armstrong, director of market research at Tradition Energy in Connecticut.
Armstrong noted that data from May 12 showed UNG held the June futures equivalent of about 42,000 contracts, or only about a quarter of the NYMEX June gas open interest, which includes both swaps and futures contracts.
UNG is an exchange-traded fund, or ETF, that tracks the price of natural gas futures on the New York Mercantile Exchange. It's one way for smaller players to invest in commodities like gas by buying shares in the fund without worrying about margin calls if their bet goes wrong.
The fund on Wednesday began the first of four days of rolling June positions into July, but had only minimal impact on the price spread, which widened by just 1.3 cents today.
Growth in the fund triggered talk this week about its impact on the sharp rally in gas this month despite bearish fundamentals that helped drive prices down some 75 percent in the last 10 months to 6-1/2-year lows of $3.155 per million British thermal units in late April.
But prices have since staged an impressive recovery, spiking some 30 percent this month to the $4.50 area though inventories remain near record highs and industrial demand is down sharply due to a severe recession.
"We have no doubt that the flood of money into the UNG established a floor in the NYMEX (natural gas) market - regardless of extant weak fundamentals - and is now propelling the market higher," said Stephen Schork, editor of the Schork Report, in a report this week.
UNG's share of open interest is significant and buying by that fund probably did contribute to some of the recent upside, but traders said other factors were also at work.
While total volume and open interest in natural gas futures are up sharply so far this month, chart traders point out that some of those gains would be expected in a market that blew through some key technical resistance points in the last two weeks.
They note that speculative hedge funds were caught holding a sizable net short natural gas futures position and probably fueled some of the rally as they scrambled to cover, or lock in profits, as prices moved against them.
In addition, traders said end-user buying probably also backed some of the upside as players who missed the recent lows tried to lock in prices in case the market heads even higher. (Reporting by Joe Silha; Editing by Christian Wiessner)
Some analysts have estimated UNG could hold as much as 80 percent of New York Mercantile Exchange June natural gas open interest, stirring concerns that such a huge share could impact price volatility.
But some said the share was probably a lot lower.
"There's been a lot of attention paid to the growing open interest held by UNG, but it's completely disingenuous to say that it currently represents 80 percent of the futures market. That completely overstates the case," said Addison Armstrong, director of market research at Tradition Energy in Connecticut.
Armstrong noted that data from May 12 showed UNG held the June futures equivalent of about 42,000 contracts, or only about a quarter of the NYMEX June gas open interest, which includes both swaps and futures contracts.
UNG is an exchange-traded fund, or ETF, that tracks the price of natural gas futures on the New York Mercantile Exchange. It's one way for smaller players to invest in commodities like gas by buying shares in the fund without worrying about margin calls if their bet goes wrong.
The fund on Wednesday began the first of four days of rolling June positions into July, but had only minimal impact on the price spread, which widened by just 1.3 cents today.
Growth in the fund triggered talk this week about its impact on the sharp rally in gas this month despite bearish fundamentals that helped drive prices down some 75 percent in the last 10 months to 6-1/2-year lows of $3.155 per million British thermal units in late April.
But prices have since staged an impressive recovery, spiking some 30 percent this month to the $4.50 area though inventories remain near record highs and industrial demand is down sharply due to a severe recession.
"We have no doubt that the flood of money into the UNG established a floor in the NYMEX (natural gas) market - regardless of extant weak fundamentals - and is now propelling the market higher," said Stephen Schork, editor of the Schork Report, in a report this week.
UNG's share of open interest is significant and buying by that fund probably did contribute to some of the recent upside, but traders said other factors were also at work.
While total volume and open interest in natural gas futures are up sharply so far this month, chart traders point out that some of those gains would be expected in a market that blew through some key technical resistance points in the last two weeks.
They note that speculative hedge funds were caught holding a sizable net short natural gas futures position and probably fueled some of the rally as they scrambled to cover, or lock in profits, as prices moved against them.
In addition, traders said end-user buying probably also backed some of the upside as players who missed the recent lows tried to lock in prices in case the market heads even higher. (Reporting by Joe Silha; Editing by Christian Wiessner)
Wednesday, May 13, 2009
Natural Gas Costs May Have Added CO2 Abatement Cost
NEW YORK, May 12 (Reuters) - Proposed U.S. climate change legislation could cause power prices in the ERCOT market in Texas to jump about $10 billion or $27 per month for the average consumer by 2013, the Electric Reliability Council of Texas (ERCOT) said Tuesday.
To reduce carbon emissions in the region to 2005 levels by 2013, ERCOT, the grid for most of Texas, forecast carbon allowance costs must rise to between $40 and $60 per ton.
Burning fossil fuels such as coal and natural gas to generate electricity produces about 30 percent of U.S. carbon dioxide emissions.
More than 80 percent of the generation in ERCOT burns fossil fuels, with 41 percent from natural gas, 27 percent from natural gas and oil, and 16 percent from coal.
Coal plants, which produce about twice the CO2 of a comparable natural gas plant, usually operate around the clock because coal plants are less expensive to run. All but the most efficient natural gas plants usually run only during peak hours.
To come up with its projections, ERCOT forecast natural gas prices of $7 per million British thermal units and consumer demand at currently forecast growth levels.
If natural gas prices rise over $7 per mmBtu, the cost of the allowances would climb, boosting power costs. With natural gas at $10 per mmBtu, for example, ERCOT forecast power costs could climb by about $20 billion by 2013.
Natural gas prices have swung widely over the past year, peaking last summer above $13 before skidding as low as $3.15 a couple of weeks ago. Natural gas prices are currently trading on the NYMEX in the $4.50 per mmBtu area.
But electric costs would not rise as much as forecast if higher rates cause consumers to cut back on power usage and/or generating companies build more wind farms than forecast, Continued...
To reduce carbon emissions in the region to 2005 levels by 2013, ERCOT, the grid for most of Texas, forecast carbon allowance costs must rise to between $40 and $60 per ton.
Burning fossil fuels such as coal and natural gas to generate electricity produces about 30 percent of U.S. carbon dioxide emissions.
More than 80 percent of the generation in ERCOT burns fossil fuels, with 41 percent from natural gas, 27 percent from natural gas and oil, and 16 percent from coal.
Coal plants, which produce about twice the CO2 of a comparable natural gas plant, usually operate around the clock because coal plants are less expensive to run. All but the most efficient natural gas plants usually run only during peak hours.
To come up with its projections, ERCOT forecast natural gas prices of $7 per million British thermal units and consumer demand at currently forecast growth levels.
If natural gas prices rise over $7 per mmBtu, the cost of the allowances would climb, boosting power costs. With natural gas at $10 per mmBtu, for example, ERCOT forecast power costs could climb by about $20 billion by 2013.
Natural gas prices have swung widely over the past year, peaking last summer above $13 before skidding as low as $3.15 a couple of weeks ago. Natural gas prices are currently trading on the NYMEX in the $4.50 per mmBtu area.
But electric costs would not rise as much as forecast if higher rates cause consumers to cut back on power usage and/or generating companies build more wind farms than forecast, Continued...
Tuesday, May 12, 2009
Alabama Natural Gas Under Repair
NEW YORK, May 11 (Reuters) - El Paso Corp (EP.N) unit Southern Natural Gas Co said Monday it removed from service for repair a portion of the 24-inch north main line, located in north central Alabama between its Providence and Tarrant compressor stations, on its natural gas pipeline system.
"Based on the best information available at this time the line is not anticipated to return to service until late this week," the company said in a website posting.
While the outage had not impacted operations and was not likely to impact firm transportation on the line, the company said there could be an impact to some interruptible service and peak hourly capacity at points downstream of the Providence station.
Interruptible customers typically pay lower fees to ship gas with the understanding that volumes can be curtailed during periods of peak demand or during unplanned outages.
The 7-600-mile Southern Natural Gas pipeline system is part of El Paso's 42,000-mile interstate pipeline system connecting the nation's most prolific gas supply regions with the largest consuming regions in the U.S., transporting more than a quarter of daily natural gas consumption in the country. (Reporting by Eileen Moustakis; Editing by John Picinich)
"Based on the best information available at this time the line is not anticipated to return to service until late this week," the company said in a website posting.
While the outage had not impacted operations and was not likely to impact firm transportation on the line, the company said there could be an impact to some interruptible service and peak hourly capacity at points downstream of the Providence station.
Interruptible customers typically pay lower fees to ship gas with the understanding that volumes can be curtailed during periods of peak demand or during unplanned outages.
The 7-600-mile Southern Natural Gas pipeline system is part of El Paso's 42,000-mile interstate pipeline system connecting the nation's most prolific gas supply regions with the largest consuming regions in the U.S., transporting more than a quarter of daily natural gas consumption in the country. (Reporting by Eileen Moustakis; Editing by John Picinich)
Monday, May 11, 2009
Natural Gas Up in Moscow Smoke
MOSCOW (AP) — A natural gas pipeline exploded in southwestern Moscow early Sunday, the Emergency Services Ministry said, sending flames soaring more than 100 meters (yards) into the sky.
Yevgeny Bobylyov, Emergency Services Ministry spokesman, said the pipeline exploded shortly after midnight and that a three-story building caught fire.
The flames lit up the low clouds and were visible from rooftops around the city.
Russian news agencies reported that at least three people were being treated for burns.
The Vesti-24 television channel carried live pictures of the fire and reported that parked cars were being removed within a radius of half a kilometer (550 yards) of the fire.
Residential buildings near the fire were also being evacuated, news agencies reported. The blast occurred near a gasoline station, they said.
(This version CORRECTS UPGRADES sourcing, ADDS details, corrects location to southwestern Moscow. For global distribution.)
Copyright © 2009 The Associated Press. All rights reserved.
Yevgeny Bobylyov, Emergency Services Ministry spokesman, said the pipeline exploded shortly after midnight and that a three-story building caught fire.
The flames lit up the low clouds and were visible from rooftops around the city.
Russian news agencies reported that at least three people were being treated for burns.
The Vesti-24 television channel carried live pictures of the fire and reported that parked cars were being removed within a radius of half a kilometer (550 yards) of the fire.
Residential buildings near the fire were also being evacuated, news agencies reported. The blast occurred near a gasoline station, they said.
(This version CORRECTS UPGRADES sourcing, ADDS details, corrects location to southwestern Moscow. For global distribution.)
Copyright © 2009 The Associated Press. All rights reserved.
Sunday, May 10, 2009
730 US Rigs Explorinjg for Natural Gas
HOUSTON (AP) — The number of rigs actively exploring for oil and natural gas in the United States fell by 17 this week to 928, down nearly half from a year ago.
Of the rigs running nationwide, 730 were exploring for natural gas and 190 for oil, Houston-based Baker Hughes Inc. reported Friday. Eight were listed as miscellaneous.
A year ago, the rig count stood at 1,846. The U.S. count is down 54 percent since the end of August as weak energy demand has hampered oilfield activity.
Oil prices peaked at almost $150 a barrel in July before plunging. Light, sweet crude rose 65 cents to $57.36 a barrel in trading Friday on the New York Mercantile Exchange.
Of the major oil- and gas-producing states, Texas lost 20 rigs, Oklahoma lost four, Colorado lost two and North Dakota lost one. California added four rigs, Louisiana added three, Alaska and Wyoming each added one while Arkansas and New Mexico were unchanged.
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.
Of the rigs running nationwide, 730 were exploring for natural gas and 190 for oil, Houston-based Baker Hughes Inc. reported Friday. Eight were listed as miscellaneous.
A year ago, the rig count stood at 1,846. The U.S. count is down 54 percent since the end of August as weak energy demand has hampered oilfield activity.
Oil prices peaked at almost $150 a barrel in July before plunging. Light, sweet crude rose 65 cents to $57.36 a barrel in trading Friday on the New York Mercantile Exchange.
Of the major oil- and gas-producing states, Texas lost 20 rigs, Oklahoma lost four, Colorado lost two and North Dakota lost one. California added four rigs, Louisiana added three, Alaska and Wyoming each added one while Arkansas and New Mexico were unchanged.
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.
Saturday, May 9, 2009
El Paso Natural Gas
HOUSTON (Reuters) - El Paso Corp (EP.N) posted better-than-expected results on realized gains on oil and natural gas hedges and pipeline growth, sending its shares soaring 11 percent.
Investors pushed the stock of the natural gas producer and pipeline company to the largest one-day gain in more than five months in morning trade on the New York Stock Exchange.
El Paso and other oil and gas companies have cut 2009 budgets and slowed drilling to help weather a more than 40 percent slide in natural gas prices. Even so, El Paso said its financial position is strong.
"We have maintained a strong liquidity position with more than sufficient liquidity to meet 2009 debt maturities, fund our 2009 capital program, and carry us well into 2010," Doug Foshee, El Paso's chief executive officer, said in a statement accompanying the results on Friday.
Larger price realizations for the company's exploration and production arm and stronger-than-expected results at its pipeline unit fueled the Wall Street beat, energy research firm Tudor Pickering Holt Securities & Co wrote in a note to clients.
El Paso, based in Houston, reported a net loss of $978 million or $1.41 per share, compared with a profit of $200 million, or 29 cents per share a year earlier.
But, excluding $1.3 billion, or $1.92 per share, in non-cash charges, El Paso posted adjusted earnings of 47 cents per share.
Analysts on average had expected 27 cents per share, according to Reuters Estimates. Continued...
Investors pushed the stock of the natural gas producer and pipeline company to the largest one-day gain in more than five months in morning trade on the New York Stock Exchange.
El Paso and other oil and gas companies have cut 2009 budgets and slowed drilling to help weather a more than 40 percent slide in natural gas prices. Even so, El Paso said its financial position is strong.
"We have maintained a strong liquidity position with more than sufficient liquidity to meet 2009 debt maturities, fund our 2009 capital program, and carry us well into 2010," Doug Foshee, El Paso's chief executive officer, said in a statement accompanying the results on Friday.
Larger price realizations for the company's exploration and production arm and stronger-than-expected results at its pipeline unit fueled the Wall Street beat, energy research firm Tudor Pickering Holt Securities & Co wrote in a note to clients.
El Paso, based in Houston, reported a net loss of $978 million or $1.41 per share, compared with a profit of $200 million, or 29 cents per share a year earlier.
But, excluding $1.3 billion, or $1.92 per share, in non-cash charges, El Paso posted adjusted earnings of 47 cents per share.
Analysts on average had expected 27 cents per share, according to Reuters Estimates. Continued...
Friday, May 8, 2009
Natural Gas Going Forward
Natural gas prices are about a third of what they were last summer, and oil and gas companies are cutting their capital spending to the bone. But it’s hard to turn off the spigots in the enormous shale fields that have been developed from Pennsylvania to Texas over the last few years.
The Dallas Morning News noted on Thursday that the three largest natural gas companies operating in the Barnett Shale of north Texas — thus far the motherload of shale fields — produced significantly more gas during the first quarter of this year compared to last.
This comes despite a plummeting number of rigs and dwindling industrial demand for gas due to the current economic slowdown. The abundance of the gas output reflects the fact that new shale wells are extremely productive in their first year or two, and it means that it could take several more months for the price of gas to rebound as production slows and balances with reduced demand.
“We really have a hard time slowing Barnett growth down,” said Keith Hutton, chief executive of XTO Energy of Fort Worth on a conference call.
The chairman of the company, Bob Simpson, said on the same call: “Who wants to grow gas and production in a $3 price environment? We don’t.”
Natural gas ended the first quarter of 2008 at $10 per million BTUs. It now hovers at just above $4, having risen in recent days along with oil and other commodities.
XTO produced 29 percent more natural gas in the quarter than last year. Devon Energy, the biggest producer in the Barnett, boosted production by 7 percent. Chesapeake Energy, an aggressive player in shale across the country, raised its production by 5 percent.
Nevertheless, profits have been shrinking across the industry.
Many experts say that by early next year production will be down, and prices could be $7 per million BTUs or higher.
The Dallas Morning News noted on Thursday that the three largest natural gas companies operating in the Barnett Shale of north Texas — thus far the motherload of shale fields — produced significantly more gas during the first quarter of this year compared to last.
This comes despite a plummeting number of rigs and dwindling industrial demand for gas due to the current economic slowdown. The abundance of the gas output reflects the fact that new shale wells are extremely productive in their first year or two, and it means that it could take several more months for the price of gas to rebound as production slows and balances with reduced demand.
“We really have a hard time slowing Barnett growth down,” said Keith Hutton, chief executive of XTO Energy of Fort Worth on a conference call.
The chairman of the company, Bob Simpson, said on the same call: “Who wants to grow gas and production in a $3 price environment? We don’t.”
Natural gas ended the first quarter of 2008 at $10 per million BTUs. It now hovers at just above $4, having risen in recent days along with oil and other commodities.
XTO produced 29 percent more natural gas in the quarter than last year. Devon Energy, the biggest producer in the Barnett, boosted production by 7 percent. Chesapeake Energy, an aggressive player in shale across the country, raised its production by 5 percent.
Nevertheless, profits have been shrinking across the industry.
Many experts say that by early next year production will be down, and prices could be $7 per million BTUs or higher.
Thursday, May 7, 2009
Natural Gas Price Up Another Day
By Reg Curren
May 6 (Bloomberg) -- Natural gas futures rose more than 7 percent, the biggest gain since March, after an employment report spurred speculation that the worst of the recession may be over.
Gas rose after an ADP Employer Services report today showed companies in the U.S. cut 491,000 workers from payrolls in April, less than the median estimate of 645,000 in a Bloomberg News survey of 28 economists. A rebound in the economy would help lift gas consumption by factories and power producers, which together account for 58 percent of U.S. demand.
“You can’t dismiss the economic optimism that has grown with the ADP number,” said Phil Flynn, senior trader at Alaron Trading Corp. in Chicago. “We’re starting to look forward and this isn’t just a U.S. phenomenon because we’re starting to see numbers from around the globe that are better than expected. We’ve looked into the abyss and we’re pulling back from it.”
Natural gas for June delivery rose 27.2 cents, or 7.5 percent, to settle at $3.887 per million British thermal units at 3:03 p.m. on the New York Mercantile Exchange, the biggest one-day gain since futures rose 13 percent on March 19.
Gas has fallen 31 percent this year as companies including Chrysler LLC and General Motors Corp. idled plants because of sliding demand. Gas use by factories in the U.S. may drop 7.4 percent this year as the recession cuts consumption, the Energy Department said in a report on April 14.
Chrysler filed for bankruptcy protection on April 30 and General Motors may have to follow suit.
Economic Reports
The ADP figures followed other economic reports in the past two weeks that have shown an easing of the slump. On April 24, orders for U.S. durable goods fell less than forecast and sales of new houses were higher than projected, the Commerce Department said.
“There’s some positive information out there that people are looking to build on,” said Brad Florer, a trader at Kottke Associates Inc. in Louisville, Kentucky. “Bulls are looking at two things right now: some economic news that they can grab hold of and maybe verify that a bottom has been put in, and that under $4, physical buyers look at this as a good place to get in.”
A move for gas prices toward $4 per million Btu may trigger additional buying as futures break through the top of a down channel that has been in place since prices started falling in July, Florer said.
“Until then, you’ve got to be looking at this as an opportunity to sell” into the rally, he said. “This market still has a long way to go, there’s tons of gas and there’s no real weather threat and the economy is still a big giant question mark.”
Stockpile Forecast
The Energy Department will probably say that gas in storage increased 92 billion cubic feet in the week ended May 1, according to the median of 17 analyst estimates compiled by Bloomberg. Estimated gains ranged from a low of 88 billion to a high of 101 billion cubic feet. Supplies in the previous week’s report were 23 percent higher than the five-year average.
The typical change for the week over the past five years is an increase of 68 billion cubic feet. The department is set to release its weekly supply report tomorrow at 10:30 a.m.
A decline in U.S. drilling will begin to show up in supplies later this year, said Chris Jarvis, president of Caprock Risk Management LLC in Hampton Falls, New Hampshire.
“People are playing the recovery, and the area that will do well is commodities,” he said. “There’s a huge supply of natural gas, though it’s not going to take much for these production cuts, which were driven by lower prices, to show once the economy starts to turn.”
Rig Count
The number of gas rigs operating in the U.S. has dropped 54 percent since September as prices collapsed, data published by Baker Hughes Inc. show. As rigs idle, natural gas production in the U.S. is forecast to be 5.4 percent lower in the fourth quarter of this year compared with the same period in 2008, according to a report from the Energy Department on April 14.
Devon Energy Corp., the largest independent oil and natural-gas producer in the U.S., said today the company expects output in the Barnett Shale gas formation in North Texas to crest in the current quarter after reductions in drilling.
The company has eight rigs drilling in the region, down from a peak of 39 in the fourth quarter, David Hager, executive vice president for exploration and production at Oklahoma City- based Devon, told investors today on a conference call.
The Barnett Shale helped lift U.S. production 7.2 percent to 21.5 trillion cubic feet in 2008, according to the Energy Department.
To contact the reporter on this story: Reg Curren in Calgary at rcurren@bloomberg.net.
May 6 (Bloomberg) -- Natural gas futures rose more than 7 percent, the biggest gain since March, after an employment report spurred speculation that the worst of the recession may be over.
Gas rose after an ADP Employer Services report today showed companies in the U.S. cut 491,000 workers from payrolls in April, less than the median estimate of 645,000 in a Bloomberg News survey of 28 economists. A rebound in the economy would help lift gas consumption by factories and power producers, which together account for 58 percent of U.S. demand.
“You can’t dismiss the economic optimism that has grown with the ADP number,” said Phil Flynn, senior trader at Alaron Trading Corp. in Chicago. “We’re starting to look forward and this isn’t just a U.S. phenomenon because we’re starting to see numbers from around the globe that are better than expected. We’ve looked into the abyss and we’re pulling back from it.”
Natural gas for June delivery rose 27.2 cents, or 7.5 percent, to settle at $3.887 per million British thermal units at 3:03 p.m. on the New York Mercantile Exchange, the biggest one-day gain since futures rose 13 percent on March 19.
Gas has fallen 31 percent this year as companies including Chrysler LLC and General Motors Corp. idled plants because of sliding demand. Gas use by factories in the U.S. may drop 7.4 percent this year as the recession cuts consumption, the Energy Department said in a report on April 14.
Chrysler filed for bankruptcy protection on April 30 and General Motors may have to follow suit.
Economic Reports
The ADP figures followed other economic reports in the past two weeks that have shown an easing of the slump. On April 24, orders for U.S. durable goods fell less than forecast and sales of new houses were higher than projected, the Commerce Department said.
“There’s some positive information out there that people are looking to build on,” said Brad Florer, a trader at Kottke Associates Inc. in Louisville, Kentucky. “Bulls are looking at two things right now: some economic news that they can grab hold of and maybe verify that a bottom has been put in, and that under $4, physical buyers look at this as a good place to get in.”
A move for gas prices toward $4 per million Btu may trigger additional buying as futures break through the top of a down channel that has been in place since prices started falling in July, Florer said.
“Until then, you’ve got to be looking at this as an opportunity to sell” into the rally, he said. “This market still has a long way to go, there’s tons of gas and there’s no real weather threat and the economy is still a big giant question mark.”
Stockpile Forecast
The Energy Department will probably say that gas in storage increased 92 billion cubic feet in the week ended May 1, according to the median of 17 analyst estimates compiled by Bloomberg. Estimated gains ranged from a low of 88 billion to a high of 101 billion cubic feet. Supplies in the previous week’s report were 23 percent higher than the five-year average.
The typical change for the week over the past five years is an increase of 68 billion cubic feet. The department is set to release its weekly supply report tomorrow at 10:30 a.m.
A decline in U.S. drilling will begin to show up in supplies later this year, said Chris Jarvis, president of Caprock Risk Management LLC in Hampton Falls, New Hampshire.
“People are playing the recovery, and the area that will do well is commodities,” he said. “There’s a huge supply of natural gas, though it’s not going to take much for these production cuts, which were driven by lower prices, to show once the economy starts to turn.”
Rig Count
The number of gas rigs operating in the U.S. has dropped 54 percent since September as prices collapsed, data published by Baker Hughes Inc. show. As rigs idle, natural gas production in the U.S. is forecast to be 5.4 percent lower in the fourth quarter of this year compared with the same period in 2008, according to a report from the Energy Department on April 14.
Devon Energy Corp., the largest independent oil and natural-gas producer in the U.S., said today the company expects output in the Barnett Shale gas formation in North Texas to crest in the current quarter after reductions in drilling.
The company has eight rigs drilling in the region, down from a peak of 39 in the fourth quarter, David Hager, executive vice president for exploration and production at Oklahoma City- based Devon, told investors today on a conference call.
The Barnett Shale helped lift U.S. production 7.2 percent to 21.5 trillion cubic feet in 2008, according to the Energy Department.
To contact the reporter on this story: Reg Curren in Calgary at rcurren@bloomberg.net.
Wednesday, May 6, 2009
Natural Gas Find in Spain
By Carlos Manuel Rodriguez
May 5 (Bloomberg) -- Ecopetrol SA said it signed an agreement to build a natural-gas plant at the Gibraltar Field after drilling results determined the area has the potential for production.
Union Temporal Gas Gibraltar will design, build and operate the facility in the northeastern part of the South American country, Ecopetrol said today in a statement.
The treatment plant will have a capacity to process 30 million cubic feet per day and should start operating “by the end of this year,” said Ecopetrol, Colombia’s state- controlled oil company.
A well named Gibraltar 3 had natural-gas production between 28 million cubic feet a day and 30 million, the company said. Combined with earlier tests on two additional wells, it guarantees gas volumes of 30 million cubic feet a day projected previously by Ecopetrol.
TransOriente E.S.P. will build a gas pipeline to send the fuel from the Gibraltar Field to the national-gas transport system at Bucaramanga. Gas Natural E.S.P. will sell the fuel.
Ecopetrol didn’t say how much the contracts for construction of the gas plant and pipeline system were worth.
To contact the reporter on this story: Carlos M. Rodriguez in Mexico City at carlosmr@bloomberg.net.
May 5 (Bloomberg) -- Ecopetrol SA said it signed an agreement to build a natural-gas plant at the Gibraltar Field after drilling results determined the area has the potential for production.
Union Temporal Gas Gibraltar will design, build and operate the facility in the northeastern part of the South American country, Ecopetrol said today in a statement.
The treatment plant will have a capacity to process 30 million cubic feet per day and should start operating “by the end of this year,” said Ecopetrol, Colombia’s state- controlled oil company.
A well named Gibraltar 3 had natural-gas production between 28 million cubic feet a day and 30 million, the company said. Combined with earlier tests on two additional wells, it guarantees gas volumes of 30 million cubic feet a day projected previously by Ecopetrol.
TransOriente E.S.P. will build a gas pipeline to send the fuel from the Gibraltar Field to the national-gas transport system at Bucaramanga. Gas Natural E.S.P. will sell the fuel.
Ecopetrol didn’t say how much the contracts for construction of the gas plant and pipeline system were worth.
To contact the reporter on this story: Carlos M. Rodriguez in Mexico City at carlosmr@bloomberg.net.
Tuesday, May 5, 2009
Natural Gas Payday for CEO
HOUSTON, May 4 (Reuters) - Chesapeake Energy Corp (CHK.N) defended its decision to award a $75 million one-time bonus to its CEO and sought to explain other deals the gas company has struck with the executive, including the purchase of a collection of his maps for $12.1 million, a regulatory filing on Monday showed.
The bonus was first disclosed in January when Chesapeake's board renewed Chief Executive Aubrey McClendon's employment contract, but recent newspaper reports and the company's annual proxy statement have intensified scrutiny.
Chesapeake's directors said they gave the bonus to McClendon to recognize his "extraordinary contribution" to production deals struck during 2008 that added $10 billion in "intrinsic value" to the company, the filings said.
Chesapeake, led by McClendon, struck a number of billion-dollar production and acreage deals in 2008 with companies including Norway's StatoilHydro (STL.OL), raising valuable cash for the heavily-leveraged company.
But while the deals created value, Chesapeake stock investors did not have a great year.
The company's shares fell nearly 60 percent in 2008, underperforming a 35 percent drop in the American Stock Exchange index of natural gas companies .XNG.
In the latest SEC filing, the company also defends the $12.1 million purchase of a map collection that McClendon owned and the company's sponsorship of a National Basketball Association team, the Oklahoma City Thunder, in which the executive has an interest.
In December 2008, Chesapeake bought an extensive collection of antique historical maps of the American Southwest from McClendon for $12.1 million at cost, the filing said.
"These maps complement the interior design features of our campus buildings and contribute to our workplace culture," the filing said.
Chesapeake is due to report first-quarter earnings after the close of trading on Monday. (Reporting by Anna Driver, editing by Gerald E. McCormick)
© Thomson Reuters 2009 All rights reserved
The bonus was first disclosed in January when Chesapeake's board renewed Chief Executive Aubrey McClendon's employment contract, but recent newspaper reports and the company's annual proxy statement have intensified scrutiny.
Chesapeake's directors said they gave the bonus to McClendon to recognize his "extraordinary contribution" to production deals struck during 2008 that added $10 billion in "intrinsic value" to the company, the filings said.
Chesapeake, led by McClendon, struck a number of billion-dollar production and acreage deals in 2008 with companies including Norway's StatoilHydro (STL.OL), raising valuable cash for the heavily-leveraged company.
But while the deals created value, Chesapeake stock investors did not have a great year.
The company's shares fell nearly 60 percent in 2008, underperforming a 35 percent drop in the American Stock Exchange index of natural gas companies .XNG.
In the latest SEC filing, the company also defends the $12.1 million purchase of a map collection that McClendon owned and the company's sponsorship of a National Basketball Association team, the Oklahoma City Thunder, in which the executive has an interest.
In December 2008, Chesapeake bought an extensive collection of antique historical maps of the American Southwest from McClendon for $12.1 million at cost, the filing said.
"These maps complement the interior design features of our campus buildings and contribute to our workplace culture," the filing said.
Chesapeake is due to report first-quarter earnings after the close of trading on Monday. (Reporting by Anna Driver, editing by Gerald E. McCormick)
© Thomson Reuters 2009 All rights reserved
Monday, May 4, 2009
Pelham Gets a Natural Gas Compressor
By Terry Date
tdate@eagletribune.com
PELHAM — Neighbors of a natural gas compressor station being built off Mammoth Road will pay close attention to noise from the plant once it is up and running.
Tennessee Gas Pipeline Co. started clearing land on its 7-acre site in the Pelham Industrial Park Wednesday and plans to have the facility running by Nov. 1, Richard Wheatley said.
Wheatley is a spokesman for El Paso Corp. of Houston, the parent company of Tennessee Gas.
The Pelham compressor itself will cover 3 acres near the Windham town line, Wheatley said. It will boost natural gas capacity for customers between Dracut, Mass., and Laconia, Wheatley said.
Pelham has no natural gas outlets nor does it have any plans to draw service from the plant, town Planning Director Jeff Gowan said.
There are about 181 residences within a half-mile radius of the compressor, according to the Federal Energy Regulatory Commission. Eighty of those units are across Beaver Brook at the nearby Whispering Winds neighborhood in Windham.
A former president of the neighborhood association, Phyllis Irvin, said Wednesday that residents in the 55-and-older community are primarily concerned about excessive noise coming from the plant.
"It's an older community, people sleep late," she said.
Irvin said she also is worried about the plant detracting from property values and the scenery along Beaver Brook.
On the Pelham side, resident Kevin Hebert said he, too, is concerned about excessive noise from the plant.
Hebert said he will wait and see what kind of a neighbor Tennessee Gas is. He and others expressed concerns about plant noise at public hearings and in letters last year.
"To be honest, we've accepted it," he said. "And if the noise is too loud, we will sell — no doubt at a loss."
The company, because it is a utility, is exempt from local oversight, but needed federal approval. The Federal Energy Regulatory Commission issued the certificate Aug. 28, 2008, authorizing construction.
Certificate conditions prohibit noise levels above 55 decibels in noise sensitive areas, FERC spokeswoman Tamara Young-Allen said. The noise sensitive areas range from 660 feet to 4,189 feet, depending on the direction.
The federal agency will monitor the noise level randomly once the plant is operational. In addition, the agency has an enforcement hot line, 1-888-889-8030, for people to lodge complaints, she said.
Wheatley said the station noise level should be well below the federal level. He said he thinks the facility's 6,130-horsepower compressor station will not exceed 46 to 48 decibels.
"We at all times want to be a good neighbor," Wheatley said.
Pelham fire Chief James Midgley has reviewed the site and met with company representatives. He said he has confidence it will be a safe facility.
"I have no fears or issues with that plant being there," Midgley said.
tdate@eagletribune.com
PELHAM — Neighbors of a natural gas compressor station being built off Mammoth Road will pay close attention to noise from the plant once it is up and running.
Tennessee Gas Pipeline Co. started clearing land on its 7-acre site in the Pelham Industrial Park Wednesday and plans to have the facility running by Nov. 1, Richard Wheatley said.
Wheatley is a spokesman for El Paso Corp. of Houston, the parent company of Tennessee Gas.
The Pelham compressor itself will cover 3 acres near the Windham town line, Wheatley said. It will boost natural gas capacity for customers between Dracut, Mass., and Laconia, Wheatley said.
Pelham has no natural gas outlets nor does it have any plans to draw service from the plant, town Planning Director Jeff Gowan said.
There are about 181 residences within a half-mile radius of the compressor, according to the Federal Energy Regulatory Commission. Eighty of those units are across Beaver Brook at the nearby Whispering Winds neighborhood in Windham.
A former president of the neighborhood association, Phyllis Irvin, said Wednesday that residents in the 55-and-older community are primarily concerned about excessive noise coming from the plant.
"It's an older community, people sleep late," she said.
Irvin said she also is worried about the plant detracting from property values and the scenery along Beaver Brook.
On the Pelham side, resident Kevin Hebert said he, too, is concerned about excessive noise from the plant.
Hebert said he will wait and see what kind of a neighbor Tennessee Gas is. He and others expressed concerns about plant noise at public hearings and in letters last year.
"To be honest, we've accepted it," he said. "And if the noise is too loud, we will sell — no doubt at a loss."
The company, because it is a utility, is exempt from local oversight, but needed federal approval. The Federal Energy Regulatory Commission issued the certificate Aug. 28, 2008, authorizing construction.
Certificate conditions prohibit noise levels above 55 decibels in noise sensitive areas, FERC spokeswoman Tamara Young-Allen said. The noise sensitive areas range from 660 feet to 4,189 feet, depending on the direction.
The federal agency will monitor the noise level randomly once the plant is operational. In addition, the agency has an enforcement hot line, 1-888-889-8030, for people to lodge complaints, she said.
Wheatley said the station noise level should be well below the federal level. He said he thinks the facility's 6,130-horsepower compressor station will not exceed 46 to 48 decibels.
"We at all times want to be a good neighbor," Wheatley said.
Pelham fire Chief James Midgley has reviewed the site and met with company representatives. He said he has confidence it will be a safe facility.
"I have no fears or issues with that plant being there," Midgley said.
Sunday, May 3, 2009
Natural Gas Rigs Down - Price is Up
By Reg Curren
May 1 (Bloomberg) -- Natural gas futures rose the most in six weeks on speculation a decline in drilling for the industrial and power-generating fuel will cut supplies later this year.
The number of gas rigs operating in the U.S. has dropped 54 percent since September as prices collapsed, data published by Baker Hughes Inc. showed. As rigs idle, natural gas production in the U.S. is forecast to be 5.4 percent lower in the fourth quarter of this year compared with the same period in 2008, according to a report from the Energy Department on April 14.
There is “some anticipatory buying that the bearish fundamentals we’ve been seeing are about to shift,” said Tim Evans, an energy analyst with Citi Futures Perspective in New York. “It’s the idea that supply is about to drop. We’ve had some shut-ins announced and had this dramatic decline in drilling activity.”
Natural gas for June delivery rose 17.3 cents, or 5.1 percent, to settle at $3.546 per million British thermal units at 3:05 p.m. on the New York Mercantile Exchange, the biggest one-day gain since March 19. Gas touched $3.155 per million Btu on April 27, the lowest price since September 2002.
Baker Hughes said natural gas rigs fell by one to 741, the lowest since Feb. 7, 2003. It was the smallest decline since November, the last time the gas rig count increased. The count was 54 percent below a peak of 1,606 on Sept. 12.
Gas supplies have yet to show a meaningful response to a decline in drilling as companies close off less productive areas first, Evans said.
Decline in Drilling
“This isn’t a subtle decline in activity,” he said. “The timing of the inflection point is unknown, though there is nothing we can do today to prevent a decline in U.S. gas production. It’s unavoidable.”
The drop in supplies will probably coincide with a recovery in the economy, pushing prices higher, Evans said.
“The further forward you look, over the next 18 to 24 months, the more likely you are to have a material decline in production and a recovery in demand and price,” he said. “This market will bottom. I don’t see a lot of risk-reward being short here.”
Confidence among U.S. consumers rose more than forecast in April to its highest level since before the collapse of credit late last year unleashed a financial panic that sent the economy into freefall.
The Reuters/University of Michigan final index of consumer sentiment rose to 65.1 from 57.3 in March, the biggest gain in more than two years. The index reached a three-decade low of 55.3 in November.
“We seem to be more optimistic about the economy,” said Evans.
Factory Report
Separately, an industry survey showed manufacturing in the U.S. shrank in April at the slowest pace in seven months. The Institute for Supply Management’s factory index rose to 40.1 last month, higher than forecast, from 36.3 in March. Readings less than 50 signal a contraction.
Rising crude oil prices also helped to support natural gas prices, said Chris Jarvis, president of Caprock Risk Management LLC in Hampton Falls, New Hampshire.
“Natural gas will have a tough time getting lower,” said Jarvis. “As long as crude oil moves higher toward that $55 level it will drag gas along.”
Crude Gains
Crude oil for June delivery rose 3.9 percent to $53.11 a barrel on the New York exchange as the consumer confidence and manufacturing reports sparked buying.
Gas futures have dropped 37 percent this year on signs tumbling demand from factories and power plants will send inventory levels to a record high. Gains today accelerated as traders who had made bad bets on falling prices bought contracts to cancel those positions.
U.S. natural gas inventories increased by 82 billion cubic feet in the week ended April 24 to 1.823 trillion cubic feet, the Energy Department said yesterday. Supplies were 23 percent higher than the five-year average.
“Markets don’t just discount bad news immediately. They don’t go down in straight-line fashion, they sell off 10 cents and recover and then head back down,” said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois.
To contact the reporter on this story: Reg Curren in Calgary at rcurren@bloomberg.net.
May 1 (Bloomberg) -- Natural gas futures rose the most in six weeks on speculation a decline in drilling for the industrial and power-generating fuel will cut supplies later this year.
The number of gas rigs operating in the U.S. has dropped 54 percent since September as prices collapsed, data published by Baker Hughes Inc. showed. As rigs idle, natural gas production in the U.S. is forecast to be 5.4 percent lower in the fourth quarter of this year compared with the same period in 2008, according to a report from the Energy Department on April 14.
There is “some anticipatory buying that the bearish fundamentals we’ve been seeing are about to shift,” said Tim Evans, an energy analyst with Citi Futures Perspective in New York. “It’s the idea that supply is about to drop. We’ve had some shut-ins announced and had this dramatic decline in drilling activity.”
Natural gas for June delivery rose 17.3 cents, or 5.1 percent, to settle at $3.546 per million British thermal units at 3:05 p.m. on the New York Mercantile Exchange, the biggest one-day gain since March 19. Gas touched $3.155 per million Btu on April 27, the lowest price since September 2002.
Baker Hughes said natural gas rigs fell by one to 741, the lowest since Feb. 7, 2003. It was the smallest decline since November, the last time the gas rig count increased. The count was 54 percent below a peak of 1,606 on Sept. 12.
Gas supplies have yet to show a meaningful response to a decline in drilling as companies close off less productive areas first, Evans said.
Decline in Drilling
“This isn’t a subtle decline in activity,” he said. “The timing of the inflection point is unknown, though there is nothing we can do today to prevent a decline in U.S. gas production. It’s unavoidable.”
The drop in supplies will probably coincide with a recovery in the economy, pushing prices higher, Evans said.
“The further forward you look, over the next 18 to 24 months, the more likely you are to have a material decline in production and a recovery in demand and price,” he said. “This market will bottom. I don’t see a lot of risk-reward being short here.”
Confidence among U.S. consumers rose more than forecast in April to its highest level since before the collapse of credit late last year unleashed a financial panic that sent the economy into freefall.
The Reuters/University of Michigan final index of consumer sentiment rose to 65.1 from 57.3 in March, the biggest gain in more than two years. The index reached a three-decade low of 55.3 in November.
“We seem to be more optimistic about the economy,” said Evans.
Factory Report
Separately, an industry survey showed manufacturing in the U.S. shrank in April at the slowest pace in seven months. The Institute for Supply Management’s factory index rose to 40.1 last month, higher than forecast, from 36.3 in March. Readings less than 50 signal a contraction.
Rising crude oil prices also helped to support natural gas prices, said Chris Jarvis, president of Caprock Risk Management LLC in Hampton Falls, New Hampshire.
“Natural gas will have a tough time getting lower,” said Jarvis. “As long as crude oil moves higher toward that $55 level it will drag gas along.”
Crude Gains
Crude oil for June delivery rose 3.9 percent to $53.11 a barrel on the New York exchange as the consumer confidence and manufacturing reports sparked buying.
Gas futures have dropped 37 percent this year on signs tumbling demand from factories and power plants will send inventory levels to a record high. Gains today accelerated as traders who had made bad bets on falling prices bought contracts to cancel those positions.
U.S. natural gas inventories increased by 82 billion cubic feet in the week ended April 24 to 1.823 trillion cubic feet, the Energy Department said yesterday. Supplies were 23 percent higher than the five-year average.
“Markets don’t just discount bad news immediately. They don’t go down in straight-line fashion, they sell off 10 cents and recover and then head back down,” said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois.
To contact the reporter on this story: Reg Curren in Calgary at rcurren@bloomberg.net.
Saturday, May 2, 2009
Liquied Natural Gas Terminal for Coos Bay
Fort Chicago Energy Partners said last week that the Jordan Cove Energy Project and the Pacific Connector Gas Pipeline received a final environmental impact statement from the Federal Energy Regulatory Commission for their plan to build a natural gas import terminal and pipeline in Oregon.
The impact statement “is a significant milestone for these projects,” said Stephen White, Fort Chicago’s president.
“The next step in the process will be for the FERC to issue a certificate of public convenience and necessity, which we expect to receive later this summer,” he said.
Jordan Cove Energy Project is a subsidiary of Fort Chicago, and Pacific Connector Gas Pipeline is a limited partnership between subsidiaries of Williams Cos., PG&E Corp. and Fort Chicago.
Construction of a liquefied natural gas terminal in Coos Bay will take about three years, and the 234-mile pipeline will take two years to build, Fort Chicago said.
The impact statement “is a significant milestone for these projects,” said Stephen White, Fort Chicago’s president.
“The next step in the process will be for the FERC to issue a certificate of public convenience and necessity, which we expect to receive later this summer,” he said.
Jordan Cove Energy Project is a subsidiary of Fort Chicago, and Pacific Connector Gas Pipeline is a limited partnership between subsidiaries of Williams Cos., PG&E Corp. and Fort Chicago.
Construction of a liquefied natural gas terminal in Coos Bay will take about three years, and the 234-mile pipeline will take two years to build, Fort Chicago said.
Friday, May 1, 2009
U.S. Natural Gas Inventories Up This Year
Increased stockpiles push natural gas futures prices down
By Tom Stundza -- Purchasing, 4/30/2009 11:33:00 AM
Natural gas storage levels rose slightly more than expected last week as demand for the fuel continues to be weak.
The Energy Information Administration’s weekly natural gas storage report says inventories held in underground storage in the lower 48 states rose by 82 billion cubic feet to about 1.82 trillion cubic feet for the week ended April 24, higher than analysts’ expectations.
The inventory level is 34% above the year-ago average of 1.36 trillion cubic feet, and 23% above the five-year average of 1.49 trillion cubic feet, according to the government data.
Since the EIA report was published this morning, natural gas futures for June deliveries had dropped 15¢ in midday trading on the New York Mercantile Exchange (Nymex) to $3.39 per 1,000 cubic feet.
Analysts had expected a boost of between 76 billion to 81 billion cubic feet, according to a survey by Platts, the energy information arm of McGraw-Hill ( MHP - news - people ) Cos.
The inventory level was 34 percent above the year-ago average of 1.34 trillion cubic feet, and 23 percent above the five-year average of 1.49 trillion cubic feet, according to the government data.
After the report, natural gas fell 10 cents to $3.306 per 1,000 cubic feet on the New York Mercantile Exchange.
By Tom Stundza -- Purchasing, 4/30/2009 11:33:00 AM
Natural gas storage levels rose slightly more than expected last week as demand for the fuel continues to be weak.
The Energy Information Administration’s weekly natural gas storage report says inventories held in underground storage in the lower 48 states rose by 82 billion cubic feet to about 1.82 trillion cubic feet for the week ended April 24, higher than analysts’ expectations.
The inventory level is 34% above the year-ago average of 1.36 trillion cubic feet, and 23% above the five-year average of 1.49 trillion cubic feet, according to the government data.
Since the EIA report was published this morning, natural gas futures for June deliveries had dropped 15¢ in midday trading on the New York Mercantile Exchange (Nymex) to $3.39 per 1,000 cubic feet.
Analysts had expected a boost of between 76 billion to 81 billion cubic feet, according to a survey by Platts, the energy information arm of McGraw-Hill ( MHP - news - people ) Cos.
The inventory level was 34 percent above the year-ago average of 1.34 trillion cubic feet, and 23 percent above the five-year average of 1.49 trillion cubic feet, according to the government data.
After the report, natural gas fell 10 cents to $3.306 per 1,000 cubic feet on the New York Mercantile Exchange.
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