http://blogs.reuters.com/james-pethokoukis/
* Says hedged production of about 1.39 bln cubic feet/day
* Says hedged at average price of $6.21/Mcf
* Hedging expected to increase certainty in cash flow
June 15 (Reuters) - EnCana Corp (ECA.TO), Canada's biggest energy company, established fixed price hedges on about 35 percent of its expected natural gas production as part of its extended risk management program for 2010.
EnCana said it had hedged about 1.4 billion cubic feet of natural gas per day at an average price of $6.21 per thousand cubic feet (Mcf) for the 2010 gas year, which runs from Nov. 1, 2009 to Oct. 31, 2010.
"Our hedging program increases certainty in cash flow and helps ensure that we meet our capital investment and dividend requirements. It also brings greater certainty to the economics of our projects," Chief Executive Officer Randy Eresman said in a statement.
At an average price of $6/Mcf, the company expects to earn an after-tax rate of return on gas projects in excess of 20 percent, Eresman added.
Shares of the Alberta-based company closed at C$61.99 Friday on the Toronto Stock Exchange. (Reporting by Isheeta Sanghi in Bangalore; Editing by Himani Sarkar)
Tuesday, June 16, 2009
Monday, June 15, 2009
Natural Gas Drillers to Leave it in the Ground
http://www.chron.com/disp/story.mpl/headline/biz/6476969.html
By KRISTEN HAYS Copyright 2009 Houston Chronicle
June 13, 2009, 3:08AM
Natural gas producers have been idling rigs for six months, trying to reduce output and boost prices that fell sharply amid bloated inventories and recession-shrunken demand.
That sweet spot remains elusive, despite a 56 percent reduction in the number of rigs drilling for natural gas, to 700 from the September peak of more than 1,600.
“It’s a self-correcting mechanism,” said David Pursell, an analyst with Tudor, Pickering, Holt & Co. Securities in Houston. “Prices go low, the rig count follows, and voila, production falls and the market fixes itself.”
But natural gas prices have largely lingered below $4 per million British thermal units since March after falling 78 percent from a high of more than $13 last summer.
Pursell said this down cycle has been more severe than is typical because the recession-fueled fall in demand followed rapid supply growth last year thanks to a boom in producing gas from thick shale rock. And inventories keep rising as producers have yet to dial down production enough to decrease underground stockpiles. Natural gas in storage reached 2.443 trillion cubic feet for the week ending June 5, the U.S. Energy Information Administration reported Thursday, up from 2.337 trillion a week earlier and 1.875 trillion in early June last year.
The agency, an arm of the Department of Energy, also projected in its monthly short-term outlook that total natural gas consumption is projected to fall by 2.2 percent this year and then increase slightly in 2010.
Headed for a record
By October, the EIA expects gas in storage to reach 3.659 trillion cubic feet — 94 billion cubic feet above the previous record of 3.565 trillion cubic feet in October 2007. The nation’s total storage capacity is about 3.8 trillion cubic feet.
“We’re producing a ton of gas. It’s dropped off some, but we’re producing from wells already drilled,” said James Williams, head of WTRG Economics, an Arkansas-based energy consulting firm.
“Clearly, we have more supply than demand,” Williams said.
Likely won’t follow oil
The Energy Information Administration doesn’t expect natural gas prices to mimic crude’s recent uptick. Instead, the agency projects that natural gas prices will average $4.13 per million Btu this year and creep up to an average of $5.49 in 2010.Natural gas for July delivery closed at $3.86 per million Btu Friday on the New York Mercantile Exchange.
“There certainly has been no indication on the price side that the market thinks we’re digging out of that supply situation,” said Karr Ingham, head of Ingham Economic Reporting in Amarillo. “We’re relatively early into this contractionary period.”
Pursell said the shrunken rig count will result in less production, but not as quickly as the industry would like. Weak demand will linger as long as industrial usage falls, as it will when GM shutters factories for nine weeks this summer. Car manufacturing requires lots of natural gas to produce steel, rubber and plastic, he noted.
The Energy Information Administration expects industrial consumption to fall by 8 percent this year.
New factors
And the storage side of the issue has some new factors that didn’t exist in previous times of oversupply, Pursell said.
First, increased liquefied natural gas imports could add more to storage and keep prices low. LNG is natural gas chilled to liquid form so it can be shipped via tanker or truck when pipelines aren’t available.
More LNG has been expected to arrive in the U.S. this year because of weak demand elsewhere and increased capacity to liquefy natural gas at plants in other parts of the world, including Qatar, Algeria and Russia.
“There’s lots of LNG out there and uncertain global demand,” Pursell said.
Second, technological advances in shale gas production have created more prolific wells. A tried-and-true vertical well is drilled straight down. Now producers also drill horizontal wells, where the bit dives vertically and then turns to drill sideways through a formation, gaining access to more gas than a vertical well. More access means more production per well.
Best wells drilled first
And while the overall natural gas rig count has plummeted, producers are ditching more rigs that drill vertically than ones drilling horizontally. Pursell said the horizontal rig count is down 40 percent, while the vertical rig count is down 64 percent.
“When times are tough, cash matters, and you’re trying to survive, you tend to keep drilling your best wells and you tend to try not to drill your worst wells. In simple terms, you drill your best stuff first,” he said.
Ingham said the pullback in drilling lays the foundation for prices to spike when demand recovers with the economy, storage thins out and production is slow to restart.
“We go through these very defined cycles and over the course of the contraction, we sideline so much production capacity that we generally get caught a little flat-footed. There’s an ugly intersection between strengthening demand and falling supply,” he said.
kristen.hays@chron.com
By KRISTEN HAYS Copyright 2009 Houston Chronicle
June 13, 2009, 3:08AM
Natural gas producers have been idling rigs for six months, trying to reduce output and boost prices that fell sharply amid bloated inventories and recession-shrunken demand.
That sweet spot remains elusive, despite a 56 percent reduction in the number of rigs drilling for natural gas, to 700 from the September peak of more than 1,600.
“It’s a self-correcting mechanism,” said David Pursell, an analyst with Tudor, Pickering, Holt & Co. Securities in Houston. “Prices go low, the rig count follows, and voila, production falls and the market fixes itself.”
But natural gas prices have largely lingered below $4 per million British thermal units since March after falling 78 percent from a high of more than $13 last summer.
Pursell said this down cycle has been more severe than is typical because the recession-fueled fall in demand followed rapid supply growth last year thanks to a boom in producing gas from thick shale rock. And inventories keep rising as producers have yet to dial down production enough to decrease underground stockpiles. Natural gas in storage reached 2.443 trillion cubic feet for the week ending June 5, the U.S. Energy Information Administration reported Thursday, up from 2.337 trillion a week earlier and 1.875 trillion in early June last year.
The agency, an arm of the Department of Energy, also projected in its monthly short-term outlook that total natural gas consumption is projected to fall by 2.2 percent this year and then increase slightly in 2010.
Headed for a record
By October, the EIA expects gas in storage to reach 3.659 trillion cubic feet — 94 billion cubic feet above the previous record of 3.565 trillion cubic feet in October 2007. The nation’s total storage capacity is about 3.8 trillion cubic feet.
“We’re producing a ton of gas. It’s dropped off some, but we’re producing from wells already drilled,” said James Williams, head of WTRG Economics, an Arkansas-based energy consulting firm.
“Clearly, we have more supply than demand,” Williams said.
Likely won’t follow oil
The Energy Information Administration doesn’t expect natural gas prices to mimic crude’s recent uptick. Instead, the agency projects that natural gas prices will average $4.13 per million Btu this year and creep up to an average of $5.49 in 2010.Natural gas for July delivery closed at $3.86 per million Btu Friday on the New York Mercantile Exchange.
“There certainly has been no indication on the price side that the market thinks we’re digging out of that supply situation,” said Karr Ingham, head of Ingham Economic Reporting in Amarillo. “We’re relatively early into this contractionary period.”
Pursell said the shrunken rig count will result in less production, but not as quickly as the industry would like. Weak demand will linger as long as industrial usage falls, as it will when GM shutters factories for nine weeks this summer. Car manufacturing requires lots of natural gas to produce steel, rubber and plastic, he noted.
The Energy Information Administration expects industrial consumption to fall by 8 percent this year.
New factors
And the storage side of the issue has some new factors that didn’t exist in previous times of oversupply, Pursell said.
First, increased liquefied natural gas imports could add more to storage and keep prices low. LNG is natural gas chilled to liquid form so it can be shipped via tanker or truck when pipelines aren’t available.
More LNG has been expected to arrive in the U.S. this year because of weak demand elsewhere and increased capacity to liquefy natural gas at plants in other parts of the world, including Qatar, Algeria and Russia.
“There’s lots of LNG out there and uncertain global demand,” Pursell said.
Second, technological advances in shale gas production have created more prolific wells. A tried-and-true vertical well is drilled straight down. Now producers also drill horizontal wells, where the bit dives vertically and then turns to drill sideways through a formation, gaining access to more gas than a vertical well. More access means more production per well.
Best wells drilled first
And while the overall natural gas rig count has plummeted, producers are ditching more rigs that drill vertically than ones drilling horizontally. Pursell said the horizontal rig count is down 40 percent, while the vertical rig count is down 64 percent.
“When times are tough, cash matters, and you’re trying to survive, you tend to keep drilling your best wells and you tend to try not to drill your worst wells. In simple terms, you drill your best stuff first,” he said.
Ingham said the pullback in drilling lays the foundation for prices to spike when demand recovers with the economy, storage thins out and production is slow to restart.
“We go through these very defined cycles and over the course of the contraction, we sideline so much production capacity that we generally get caught a little flat-footed. There’s an ugly intersection between strengthening demand and falling supply,” he said.
kristen.hays@chron.com
Sunday, June 14, 2009
Exxon Natural Gas Project in Alaska?
By Kirsten Korosec
http://industry.bnet.com/energy/10001438/exxon-joins-transcanada-pipeline-worries-abound-for-mackenzie-gas-project/
ExxonMobil’s reversal from foe to friend of an Alaskan natural gas pipeline proposed by TransCanada has given the state-sponsored project some much-need momentum. And while many are cheering Exxon’s announcement, some folks are worried it will derail another pipeline project in northern Canada. Not to mention a rival Alaska gas project from BP and ConocoPhliips.
Exxon has been viewed as a crucial player for the success of the TransCanada pipeline. So Exxon’s decision to help finance and build the $26 billion project was met with a sigh of relief and ethusiasm from government officials including Gov. Sarah Palin.
The 1,700-mile pipeline would carry natural gas from Alaska’s North Slope, where Exxon holds the largest natural gas reserves. Natural gas from the Point Thomson field, where Alaska state officials recently scrapped efforts to evict Exxon and partners BP and Conoco for decades of inaction, is expected to begin production in 2014, according to a Bloomberg article.
Exxon’s decision to join TransCanada poses a problem for two separate pipeline projects.
One is the rival Alaska gas project proposed by BP and Conoco. BP and Conoco decided to build its own pipeline after TransCanada won an exclusive state license under the Alaska Gasline Inducement Act, legislation backed by Palin. The companies said their project, dubbed Denali, will move forward, but added they were open to alternative plans.
The other pipeline considered at risk is the Mackenzie Gas Project in northern Canada. TransCanada and Exxon are both financially involved in the project. TransCanada invested $500 million in the Aboriginal Pipeline Group, which owns a third of the Mackenzie pipeline. Exxon owns a majority of Imperial Oil, the lead partner on the project.
The Alaska pipeline would carry more natural gas — four billion compared to one billion cubic feet — making it cheaper. In addition, there’s concern TransCanada’s pipeline will come online first because of a provision included in a broad U.S. energy bill that would bring costs down. The provision would increase federal loan guarantees for the Alaska gas pipeline from $18 billion to $30 billion. Meanwhile, the Mackenzie project has suffered from delays and cost overruns, which is only adding to fears for its chance of survival.
http://industry.bnet.com/energy/10001438/exxon-joins-transcanada-pipeline-worries-abound-for-mackenzie-gas-project/
ExxonMobil’s reversal from foe to friend of an Alaskan natural gas pipeline proposed by TransCanada has given the state-sponsored project some much-need momentum. And while many are cheering Exxon’s announcement, some folks are worried it will derail another pipeline project in northern Canada. Not to mention a rival Alaska gas project from BP and ConocoPhliips.
Exxon has been viewed as a crucial player for the success of the TransCanada pipeline. So Exxon’s decision to help finance and build the $26 billion project was met with a sigh of relief and ethusiasm from government officials including Gov. Sarah Palin.
The 1,700-mile pipeline would carry natural gas from Alaska’s North Slope, where Exxon holds the largest natural gas reserves. Natural gas from the Point Thomson field, where Alaska state officials recently scrapped efforts to evict Exxon and partners BP and Conoco for decades of inaction, is expected to begin production in 2014, according to a Bloomberg article.
Exxon’s decision to join TransCanada poses a problem for two separate pipeline projects.
One is the rival Alaska gas project proposed by BP and Conoco. BP and Conoco decided to build its own pipeline after TransCanada won an exclusive state license under the Alaska Gasline Inducement Act, legislation backed by Palin. The companies said their project, dubbed Denali, will move forward, but added they were open to alternative plans.
The other pipeline considered at risk is the Mackenzie Gas Project in northern Canada. TransCanada and Exxon are both financially involved in the project. TransCanada invested $500 million in the Aboriginal Pipeline Group, which owns a third of the Mackenzie pipeline. Exxon owns a majority of Imperial Oil, the lead partner on the project.
The Alaska pipeline would carry more natural gas — four billion compared to one billion cubic feet — making it cheaper. In addition, there’s concern TransCanada’s pipeline will come online first because of a provision included in a broad U.S. energy bill that would bring costs down. The provision would increase federal loan guarantees for the Alaska gas pipeline from $18 billion to $30 billion. Meanwhile, the Mackenzie project has suffered from delays and cost overruns, which is only adding to fears for its chance of survival.
Saturday, June 13, 2009
Natral Gas Rigs Down Again 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 rein in drilling activity amid slumping energy prices.
The number of oil and gas rigs fell to 876, down 11 from the previous week, according to rig data from oil-field services company Baker Hughes Inc (BHI). The number of gas rigs was 685, a drop of 15 rigs from last week, while the oil rig count rose to 183, an increase of four rigs. The number of miscellaneous rigs was unchanged at eight rigs.
The number of gas rigs in use peaked at 1,606 in September.
Natural gas prices have tumbled about 70% from summer highs amid robust production from U.S. onshore natural gas fields and weak demand. Large industrial consumers have curbed 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 July delivery on the New York Mercantile Exchange was recently down 7.3 cents, or 1.86%, at $3.86 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 876, down 11 from the previous week, according to rig data from oil-field services company Baker Hughes Inc (BHI). The number of gas rigs was 685, a drop of 15 rigs from last week, while the oil rig count rose to 183, an increase of four rigs. The number of miscellaneous rigs was unchanged at eight rigs.
The number of gas rigs in use peaked at 1,606 in September.
Natural gas prices have tumbled about 70% from summer highs amid robust production from U.S. onshore natural gas fields and weak demand. Large industrial consumers have curbed 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 July delivery on the New York Mercantile Exchange was recently down 7.3 cents, or 1.86%, at $3.86 a million British thermal units.
-By Christine Buurma, Dow Jones Newswires; 201-938-2061; christine.buurma@dowjones.com
Friday, June 12, 2009
ONGC is a Natural Gas Player
By Rakteem Katakey
June 11 (Bloomberg) -- Oil & Natural Gas Corp., India’s biggest energy explorer, may have lost 30 billion rupees ($630 million) selling natural gas at below production costs in the year ended March 31, Chairman and Managing Director R.S. Sharma said in New Delhi today.
ONGC sells natural gas to power and fertilizer companies, from fields allotted to it before India started auctioning oil blocks in 1999, below cost as the nation attempts to keep electricity and food prices in check and meet demand in the world’s second-fastest growing major economy. Inflation in India slowed to a three-decade low as the weakest economic growth in seven years sapped domestic demand.
The government has yet to implement an increase in the price of gas that was approved in May 2005, Sharma said May 18.
The explorer has asked the government to increase the price of gas produced at fields allocated to it to $4 per million British thermal units from $2.1 per million British thermal units, the Hindu Business Line reported March 17.
ONGC produced 22.5 billion cubic meters, or 60 percent of India’s output of gas, in the year ended March 31, according to the Oil Ministry’s Web site.
ONGC is attempting to start producing gas from new fields off India’s east coast by 2012, director of exploration D.K. Pande said Feb 23. The KG-DWN-98/2 field lies adjacent to Reliance Industries Ltd.’s KG-D6 field which began producing gas on April 2.
Reliance aims to supply more than 40 percent of the country’s oil and gas needs by March 2010.
ONGC plans to borrow 270 billion rupees for projects of units in the next three to four years, he said. These include a chemical plant in Gujarat and a power plant in Tripura, he said.
The company may borrow 50 billion rupees by January to redeem commercial paper that was used to fund the purchase of Imperial Energy Plc, he said.
The rise in oil prices was “worrisome” for the Indian economy, he said.
To contact the reporter on this story: Rakteem Katakey in New Delhi at rkatakey@bloomberg.net.
Last Updated: June 11, 2009 10:41 EDT
June 11 (Bloomberg) -- Oil & Natural Gas Corp., India’s biggest energy explorer, may have lost 30 billion rupees ($630 million) selling natural gas at below production costs in the year ended March 31, Chairman and Managing Director R.S. Sharma said in New Delhi today.
ONGC sells natural gas to power and fertilizer companies, from fields allotted to it before India started auctioning oil blocks in 1999, below cost as the nation attempts to keep electricity and food prices in check and meet demand in the world’s second-fastest growing major economy. Inflation in India slowed to a three-decade low as the weakest economic growth in seven years sapped domestic demand.
The government has yet to implement an increase in the price of gas that was approved in May 2005, Sharma said May 18.
The explorer has asked the government to increase the price of gas produced at fields allocated to it to $4 per million British thermal units from $2.1 per million British thermal units, the Hindu Business Line reported March 17.
ONGC produced 22.5 billion cubic meters, or 60 percent of India’s output of gas, in the year ended March 31, according to the Oil Ministry’s Web site.
ONGC is attempting to start producing gas from new fields off India’s east coast by 2012, director of exploration D.K. Pande said Feb 23. The KG-DWN-98/2 field lies adjacent to Reliance Industries Ltd.’s KG-D6 field which began producing gas on April 2.
Reliance aims to supply more than 40 percent of the country’s oil and gas needs by March 2010.
ONGC plans to borrow 270 billion rupees for projects of units in the next three to four years, he said. These include a chemical plant in Gujarat and a power plant in Tripura, he said.
The company may borrow 50 billion rupees by January to redeem commercial paper that was used to fund the purchase of Imperial Energy Plc, he said.
The rise in oil prices was “worrisome” for the Indian economy, he said.
To contact the reporter on this story: Rakteem Katakey in New Delhi at rkatakey@bloomberg.net.
Last Updated: June 11, 2009 10:41 EDT
Thursday, June 11, 2009
T. Boone Talking Again About Natural Gas
By Michael Newsom / The Sun Herald, Biloxi, Miss.
Wednesday, June 10, 2009 - Added 4h ago
BILOXI -- The creator and namesake of the "Pickens Plan" for more renewable energy and less foreign oil said Tuesday he expects significant energy legislation by year’s end. He also called for pressure on Washington to produce solutions.
T. Boone Pickens -- well-known for the $58 million advertising campaign for his energy plan -- addressed the Southern Growth Policies Board, which Gov. Haley Barbour chairs, on the last day of the group’s conference here. The summit was sponsored by Chevron and Southern Company, which owns Mississippi Power Company, among others.
Pickens, founder and chairman of BP Capital Management and author of the New York Times [NYT] Bestseller "The First Billion is the Hardest," said his ideas are attainable and there are examples of successes, particularly with natural gas, wind and solar technology. He lamented the U.S. has gone the last 40 years without developing an energy plan, but said it’s imperative to develop one now.
He said for years politicians agreed with him on foreign oil, but many kept getting elected and nothing ever happened.
"Now we are 68 percent imports, and over half of that comes from Venezuela, the Middle East and Africa, which are all unstable areas," Pickens said. "The biggest fear I have is the security issue. As long as we import the oil from where it is coming from, our security is in jeopardy."
According to Pickens, the United States presently uses about 25 percent of the world’s oil, but only represents 4 percent of the global population. He said there’s hope for alternatives to gasoline and diesel fuel, particularly natural gas, which is abundant in the United States.
Currently only one natural gas-powered car model, a Honda Civic, which he owns, is for sale in the United States, he said. But General Motors makes nearly 20 different natural gas vehicles, none of which are sold in the United States.
The substance is also powerful enough to propel an 18-wheeler, but there is about a $65,000 difference in the price of a natural gas truck and a diesel model. He favors incentives to encourage natural gas.
Other countries, particularly Iran, are moving toward natural gas engines. About 10 million vehicles run on natural gas worldwide, but only about 142,000 of them are in the United States, Pickens said. Los Angeles, Denver and Seattle operate buses on natural gas, and San Francisco is studying it, Pickens said. Barbour also noted some buses in Jackson currently run on it.
"It’s cleaner and it’s cheaper," Pickens said.
Pickens is also noted for being in the wind energy business. He said the U.S. is the world’s number one wind producer, having overtaken Germany. Wind and solar technology can work well, Pickens said, although some critics say it isn’t always sunny or windy. Pickens said wind sometimes works better at night and solar works better in daylight.
He said that he talked with then Republican presidential hopeful Sen. John McCain and then Democratic presidential hopeful Sen. Barack Obama about energy before the November elections last year. If both, who supported energy independence, were given an energy quiz then, they’d fail, he said.
"They did not know energy," Pickens said. "Look at their backgrounds. They never worked in energy."
McCain wanted more battery-powered cars, but didn’t realize there was no battery capable of moving an 18-wheeler. Obama talked with Pickens about a goal of having 1 million hybrid U.S. cars in 10 years, but finally agreed with Pickens that was too low a goal, given there are about 250 million cars in the United States now, Pickens said.
Congress is currently talking about two major energy-related bills. One, the Waxman-Markey bill, is designed to promote clean energy and reduce greenhouse gases, and another, known as the NAT GAS Act of 2009, promotes natural gas technologies. Pickens believes there is a "50-50" percent chance an energy bill will pass this year, possibly near the August recess. The climate change legislation, which many conference panelists expressed concern over how it would affect energy costs, might not make the final version, he believes.
He encouraged the audience, which included several state governors and many from the business and nonprofit sectors, to get involved in the fight.
Wednesday, June 10, 2009 - Added 4h ago
BILOXI -- The creator and namesake of the "Pickens Plan" for more renewable energy and less foreign oil said Tuesday he expects significant energy legislation by year’s end. He also called for pressure on Washington to produce solutions.
T. Boone Pickens -- well-known for the $58 million advertising campaign for his energy plan -- addressed the Southern Growth Policies Board, which Gov. Haley Barbour chairs, on the last day of the group’s conference here. The summit was sponsored by Chevron and Southern Company, which owns Mississippi Power Company, among others.
Pickens, founder and chairman of BP Capital Management and author of the New York Times [NYT] Bestseller "The First Billion is the Hardest," said his ideas are attainable and there are examples of successes, particularly with natural gas, wind and solar technology. He lamented the U.S. has gone the last 40 years without developing an energy plan, but said it’s imperative to develop one now.
He said for years politicians agreed with him on foreign oil, but many kept getting elected and nothing ever happened.
"Now we are 68 percent imports, and over half of that comes from Venezuela, the Middle East and Africa, which are all unstable areas," Pickens said. "The biggest fear I have is the security issue. As long as we import the oil from where it is coming from, our security is in jeopardy."
According to Pickens, the United States presently uses about 25 percent of the world’s oil, but only represents 4 percent of the global population. He said there’s hope for alternatives to gasoline and diesel fuel, particularly natural gas, which is abundant in the United States.
Currently only one natural gas-powered car model, a Honda Civic, which he owns, is for sale in the United States, he said. But General Motors makes nearly 20 different natural gas vehicles, none of which are sold in the United States.
The substance is also powerful enough to propel an 18-wheeler, but there is about a $65,000 difference in the price of a natural gas truck and a diesel model. He favors incentives to encourage natural gas.
Other countries, particularly Iran, are moving toward natural gas engines. About 10 million vehicles run on natural gas worldwide, but only about 142,000 of them are in the United States, Pickens said. Los Angeles, Denver and Seattle operate buses on natural gas, and San Francisco is studying it, Pickens said. Barbour also noted some buses in Jackson currently run on it.
"It’s cleaner and it’s cheaper," Pickens said.
Pickens is also noted for being in the wind energy business. He said the U.S. is the world’s number one wind producer, having overtaken Germany. Wind and solar technology can work well, Pickens said, although some critics say it isn’t always sunny or windy. Pickens said wind sometimes works better at night and solar works better in daylight.
He said that he talked with then Republican presidential hopeful Sen. John McCain and then Democratic presidential hopeful Sen. Barack Obama about energy before the November elections last year. If both, who supported energy independence, were given an energy quiz then, they’d fail, he said.
"They did not know energy," Pickens said. "Look at their backgrounds. They never worked in energy."
McCain wanted more battery-powered cars, but didn’t realize there was no battery capable of moving an 18-wheeler. Obama talked with Pickens about a goal of having 1 million hybrid U.S. cars in 10 years, but finally agreed with Pickens that was too low a goal, given there are about 250 million cars in the United States now, Pickens said.
Congress is currently talking about two major energy-related bills. One, the Waxman-Markey bill, is designed to promote clean energy and reduce greenhouse gases, and another, known as the NAT GAS Act of 2009, promotes natural gas technologies. Pickens believes there is a "50-50" percent chance an energy bill will pass this year, possibly near the August recess. The climate change legislation, which many conference panelists expressed concern over how it would affect energy costs, might not make the final version, he believes.
He encouraged the audience, which included several state governors and many from the business and nonprofit sectors, to get involved in the fight.
Wednesday, June 10, 2009
Natural Gas Leases Approved Closer to Shore
By BEN GEMAN, Greenwire
Published: June 9, 2009
The Senate Energy and Natural Resources Committee approved expanded oil and gas leasing today in the eastern Gulf of Mexico in a bipartisan vote that would upend a 2006 compromise with Florida senators that provided their state at least a 125-mile buffer in most areas until mid-2022.
The committee voted 13-10 in favor of Sen. Byron Dorgan's (D-N.D.) plan to allow leasing as close as 45 miles from Florida's coast. It also allows leasing in a gas-rich region called the Destin Dome off the Florida Panhandle that is even closer to shore.
The drilling amendment vote was part of the committee's ongoing markup of a broad energy bill.
Dorgan said the measure should be part of a bill that also addresses alternative energy and efficiency. "I am interested in doing this to increase production," Dorgan said.
But Sen. Robert Menendez (D-N.J.) said wider drilling in the eastern gulf would endanger Florida's environment and tourist economy while failing to reduce gasoline prices. "This continues our dependency and at the end of the day just helps the oil industry," he said.
Florida Democratic Sen. Bill Nelson slammed the plan in a prepared statement, arguing it could hamper military training, while blaming prices at the pump on financial speculators.
"Congress ought to be looking at that and at a real alternative energy program, instead of trying to put oil rigs off the world-class tourist spots all along Florida's coast," Nelson said.
Nelson vowed to block the effort in remarks to reporters after the vote. "We will have a bunch of senators filibuster this if we have to protect the interests of the United States military," he said.
Environmentalists oppose Dorgan's effort. "The Dorgan amendment would threaten Florida's coasts with oil spills and pollution while increasing our dependence on oil and increasing global warming pollution," said Anna Aurilio, director of the Washington office of the group Environment America, this morning.
But American Petroleum Institute President Jack Gerard praised the action after the vote. "By allowing greater access to oil and natural gas leasing in promising areas of the eastern Gulf of Mexico, Senator Dorgan's amendment stands to help the American people by creating new jobs, adding new energy resources and providing new revenues to federal, state and local governments," he said in a prepared statement.
After a long debate, the committee rejected, 10-13, an amendment by Sen. Mary Landrieu (D-La.) to provide states with offshore production in adjacent federal waters with a 37.5 percent share of revenues, while steering 50 percent of their revenues to federal deficit reduction and 12.5 percent to the Land and Water Conservation Fund.
A 2006 gulf leasing law created a revenue-sharing program for Louisiana, Texas, Mississippi and Alabama. Landrieu's plan would have provided this share to Alaska and to states that might have offshore leasing in the future, which she calls a critical state incentive for allowing oil and gas drilling in the outer continental shelf.
Landrieu also argued that revenue-sharing compensates for the impact of infrastructure for offshore development on coastal states, and she also cited the conservation funding in an effort to corral support.
But revenue-sharing opponents said the OCS is a national resource and cited future losses to the Treasury if a large share of leasing and royalty payments is directed to coastal states.
Chairman Jeff Bingaman (D-N.M.) said the Interior Department has estimated that total future federal losses from revenue sharing could be between $653 billion and $790 billion dollars. "We are not in a position as a country today where we can give away $653-$790 billion in future revenue," Bingaman said.
Several lawmakers said they will look to revisit the revenue-sharing issue to seek a compromise as the bill proceeds toward the Senate floor.
Copyright 2009 E&E Publishing. All Rights Reserved.
Published: June 9, 2009
The Senate Energy and Natural Resources Committee approved expanded oil and gas leasing today in the eastern Gulf of Mexico in a bipartisan vote that would upend a 2006 compromise with Florida senators that provided their state at least a 125-mile buffer in most areas until mid-2022.
The committee voted 13-10 in favor of Sen. Byron Dorgan's (D-N.D.) plan to allow leasing as close as 45 miles from Florida's coast. It also allows leasing in a gas-rich region called the Destin Dome off the Florida Panhandle that is even closer to shore.
The drilling amendment vote was part of the committee's ongoing markup of a broad energy bill.
Dorgan said the measure should be part of a bill that also addresses alternative energy and efficiency. "I am interested in doing this to increase production," Dorgan said.
But Sen. Robert Menendez (D-N.J.) said wider drilling in the eastern gulf would endanger Florida's environment and tourist economy while failing to reduce gasoline prices. "This continues our dependency and at the end of the day just helps the oil industry," he said.
Florida Democratic Sen. Bill Nelson slammed the plan in a prepared statement, arguing it could hamper military training, while blaming prices at the pump on financial speculators.
"Congress ought to be looking at that and at a real alternative energy program, instead of trying to put oil rigs off the world-class tourist spots all along Florida's coast," Nelson said.
Nelson vowed to block the effort in remarks to reporters after the vote. "We will have a bunch of senators filibuster this if we have to protect the interests of the United States military," he said.
Environmentalists oppose Dorgan's effort. "The Dorgan amendment would threaten Florida's coasts with oil spills and pollution while increasing our dependence on oil and increasing global warming pollution," said Anna Aurilio, director of the Washington office of the group Environment America, this morning.
But American Petroleum Institute President Jack Gerard praised the action after the vote. "By allowing greater access to oil and natural gas leasing in promising areas of the eastern Gulf of Mexico, Senator Dorgan's amendment stands to help the American people by creating new jobs, adding new energy resources and providing new revenues to federal, state and local governments," he said in a prepared statement.
After a long debate, the committee rejected, 10-13, an amendment by Sen. Mary Landrieu (D-La.) to provide states with offshore production in adjacent federal waters with a 37.5 percent share of revenues, while steering 50 percent of their revenues to federal deficit reduction and 12.5 percent to the Land and Water Conservation Fund.
A 2006 gulf leasing law created a revenue-sharing program for Louisiana, Texas, Mississippi and Alabama. Landrieu's plan would have provided this share to Alaska and to states that might have offshore leasing in the future, which she calls a critical state incentive for allowing oil and gas drilling in the outer continental shelf.
Landrieu also argued that revenue-sharing compensates for the impact of infrastructure for offshore development on coastal states, and she also cited the conservation funding in an effort to corral support.
But revenue-sharing opponents said the OCS is a national resource and cited future losses to the Treasury if a large share of leasing and royalty payments is directed to coastal states.
Chairman Jeff Bingaman (D-N.M.) said the Interior Department has estimated that total future federal losses from revenue sharing could be between $653 billion and $790 billion dollars. "We are not in a position as a country today where we can give away $653-$790 billion in future revenue," Bingaman said.
Several lawmakers said they will look to revisit the revenue-sharing issue to seek a compromise as the bill proceeds toward the Senate floor.
Copyright 2009 E&E Publishing. All Rights Reserved.
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