RUSS WEGE
http://www.dailygazette.com/news/2009/jun/21/0621_wege/
My career aspirations led me to study petroleum engineering in the 1950s. Upon graduation, I was employed by an energy company in the Southwest. It took years to develop an understanding of the problems concerning oil and gas production. Eventually, I became fairly proficient, and was involved in designing and performing fracture treatments of oil and gas reservoirs in order to increase production.
A Viewpoint column by Patricia O’Reilly Rush, on June 14, suggests that hydrofracturing of the Marcellus Shale for development of natural gas resources would endanger water supply resources.
This simply would not occur.
Need for facts
Since very few people in the Northeast have had experience with well stimulation, I believe your readers should have a better understanding of the facts before forming an opinion on this aspect of energy development.
Although oil production was first developed in Titusville, Pa., in 1859, the national search for oil energy began after the Spindletop discovery in East Texas during 1901.
Oil and gas reservoirs deplete over time. Often, a well can be stimulated to produce at a greater rate. Initially, well stimulation was achieved by the very dangerous procedure of placing several gallons of nitroglycerine opposite the oil-bearing formation. Upon detonation, the well bore would be increased from perhaps seven inches to two to three feet. The greater exposed surface area would allow increased flow into the well bore, which produced well stimulation.
The introduction of breaking oil and gas reservoirs using hydraulic pressure began in the 1940s. Initially, only a few hundred gallons of oil was used to crack the reservoir rock and stimulate the well. This technique was better than using nitroglycerine, and certainly was safer, but the procedure left something to be desired.
The thinking was that the crack that was propagated by hydraulic pressure immediately “healed” after the pressure was released. This problem was solved by adding sand to the hydraulic fluid. The sand would flow into the cracked reservoir rock, propping the crack open, in effect, greatly increasing the diameter of the well bore and stimulating oil or gas production.
The “frac” treatment technology is very successful and has been used countless times over the past 60 years to stimulate oil and gas reservoirs around the world.
During the early days of the oil industry, natural gas was considered a waste product and was often flared. Eventually, inexpensive natural gas began to displace manufactured gas in our cities. The demand for natural gas rapidly grew, and is still growing. Energy companies soon began to develop natural gas reserves.
The energy industry has long known there were vast quantities of oil and gas reserves in very low permeability or “tight” rock formations. Such deposits are in the oil shales of the Rocky Mountains, the tar sands in Canada, and natural gas in the Marcellus Shale in the Northeast.
The days of cheap energy are over. Domestic oil production peaked in the 1970s. Imported oil to meet our national needs now approaches 75 percent.
Congress should not have allowed this to happen, but it did. The good news is that the United States has massive coal reserves. The bad news is that coal does not burn as cleanly as natural gas and the Obama administration is making moves to diminish — if not shut down, this needed source of energy.
Natural gas burns very cleanly and we are producing about 87 percent of our needs, with the remainder coming from Canada. We must continue to develop additional gas reserves. Therefore, the vast gas reserves locked into the “tight” Marcellus Shale must be developed. Directional drilling into this massive shale formation exposes additional length of this gas-bearing reservoir to production and improved fracturing techniques opens up this valuable resource for decades of reliable production.
Rush’s recent Viewpoint column suggests fracture treatments of this resource will threaten water supplies, and she urges that development of this needed resource be terminated. The possibility of “frac” fluids contaminating water supplies is simply zero. I have never heard of a “frac” treatment ever adversely affecting another formation — let alone reaching the surface to pollute a stream!
What happens after a huge injection of water into a well is a backflow of water following the treatment. The backflow may last for weeks but it will end. The chemicals that concern Rush reduce pipe friction and carry the propping agent, such as sand, that keeps the fracture open.
No reason to stop
Treatment of the backflow should be a permit condition and not a reason to condemn the effort to develop this resource.
Finally, well treatments that involve the use of millions of gallons of water may be a concern to regulators and riparian interests, but can be addressed through the well permit system issued by the state Department of Environmental Conservation.
It is good to develop wind, solar, geothermal and other alternative energy sources but they will never replace oil, gas, coal and nuclear energy sources in the foreseeable decades of time. We must recognize the energy realities and not jeopardize our safety and well-being by eliminating sources of energy, thinking that some energy alternative or small-car mandate will solve our energy needs.
Russ Wege lives in Glenville. The Gazette encourages readers to submit material on local issues for the Sunday Opinion section.
Monday, June 22, 2009
Sunday, June 21, 2009
Natural Gas Plentiful in Barnett Shale
http://www.star-telegram.com/dallas_news/story/1444043.html
Chesapeake Energy Chairman and CEO Aubrey McClendon said Friday that the Barnett Shale has surpassed the venerable San Juan Basin as the biggest natural gas producer in the United States.
He also said the Barnett, which has speckled North Texas with roughly 10,000 natural gas wells, "will be producing at least 50 years" and "probably" for a century.
McClendon made the comments in a speech to the Rotary Club of Fort Worth and in a brief telephone interview with the Star-Telegram.
He said Chesapeake officials estimate Barnett production at 5.5 billion cubic feet a day but acknowledged that no one knows precisely. The San Juan is in the Four Corners region of the Southwest, with production concentrated in northwestern New Mexico and Colorado.
Gene Powell, publisher of the Barnett Shale Newsletter, has estimated Barnett production at 4.9 billion cubic feet per day, but that was as of Jan. 1. Barnett drilling activity has been centered most heavily in Tarrant and Johnson counties but also extends into Hood, Palo Pinto, Parker, Somervell, Denton, Jack, Montague and Wise counties.
Not what it was
Steve Grape, an official with the Dallas office of the U.S. Department of Energy, said the Barnett and San Juan are "probably running neck and neck nowadays" in gas production. The San Juan led the nation in production in 2007, Energy Department figures show, but no comparison of production for specific fields has been released for 2008.
There is still substantial drilling in the Barnett, with 74 rigs active Friday, according to RigData. But that’s only slightly more than one-third the peak rig count of 214 for the Barnett, a gas-rich geological zone about 6,500 to 8,500 feet below the surface. Drilling has declined sharply as a result of a steep decline in natural gas prices in the wake of a severe recession that has weakened energy demand.
Texas Railroad Commission spokeswoman Stacie Fowler said that 10,539 wells had been drilled in the Barnett through March and that there are 9,732 producing wells.
Reaping benefits
McClendon, who has come under fire recently for the $112.5 million compensation package he received in 2008, told Rotarians that Fort Worth and North Texas are "fortunate to overlay one of the largest energy deposits" in the nation, with residents to reap benefits for many decades to come from lease bonuses, royalties and jobs.
Since entering the Barnett, in 2004, Chesapeake has made 225,000 lease agreements in the area, McClendon said. The company, which is based in Oklahoma City and has a large regional office in Fort Worth, directly employs 700 people in the area; 5,000 others have worked with Chesapeake as contractors in activities such as leasing and drilling, he said.
McClendon urged that the U.S. embrace natural gas as a transportation fuel to reduce reliance on foreign oil and coal. He said he drives a "dual-fuel" Chevrolet Tahoe that can run on gasoline or compressed natural gas. The natural gas has cost him only 95 cents a gallon for the past two months, he said.
He acknowledged, however, that America lacks the kind of well-developed infrastructure for refueling natural gas-powered vehicles that has been available for gasoline-powered vehicles for many decades.
JACK Z. SMITH, 817-390-7724
Chesapeake Energy Chairman and CEO Aubrey McClendon said Friday that the Barnett Shale has surpassed the venerable San Juan Basin as the biggest natural gas producer in the United States.
He also said the Barnett, which has speckled North Texas with roughly 10,000 natural gas wells, "will be producing at least 50 years" and "probably" for a century.
McClendon made the comments in a speech to the Rotary Club of Fort Worth and in a brief telephone interview with the Star-Telegram.
He said Chesapeake officials estimate Barnett production at 5.5 billion cubic feet a day but acknowledged that no one knows precisely. The San Juan is in the Four Corners region of the Southwest, with production concentrated in northwestern New Mexico and Colorado.
Gene Powell, publisher of the Barnett Shale Newsletter, has estimated Barnett production at 4.9 billion cubic feet per day, but that was as of Jan. 1. Barnett drilling activity has been centered most heavily in Tarrant and Johnson counties but also extends into Hood, Palo Pinto, Parker, Somervell, Denton, Jack, Montague and Wise counties.
Not what it was
Steve Grape, an official with the Dallas office of the U.S. Department of Energy, said the Barnett and San Juan are "probably running neck and neck nowadays" in gas production. The San Juan led the nation in production in 2007, Energy Department figures show, but no comparison of production for specific fields has been released for 2008.
There is still substantial drilling in the Barnett, with 74 rigs active Friday, according to RigData. But that’s only slightly more than one-third the peak rig count of 214 for the Barnett, a gas-rich geological zone about 6,500 to 8,500 feet below the surface. Drilling has declined sharply as a result of a steep decline in natural gas prices in the wake of a severe recession that has weakened energy demand.
Texas Railroad Commission spokeswoman Stacie Fowler said that 10,539 wells had been drilled in the Barnett through March and that there are 9,732 producing wells.
Reaping benefits
McClendon, who has come under fire recently for the $112.5 million compensation package he received in 2008, told Rotarians that Fort Worth and North Texas are "fortunate to overlay one of the largest energy deposits" in the nation, with residents to reap benefits for many decades to come from lease bonuses, royalties and jobs.
Since entering the Barnett, in 2004, Chesapeake has made 225,000 lease agreements in the area, McClendon said. The company, which is based in Oklahoma City and has a large regional office in Fort Worth, directly employs 700 people in the area; 5,000 others have worked with Chesapeake as contractors in activities such as leasing and drilling, he said.
McClendon urged that the U.S. embrace natural gas as a transportation fuel to reduce reliance on foreign oil and coal. He said he drives a "dual-fuel" Chevrolet Tahoe that can run on gasoline or compressed natural gas. The natural gas has cost him only 95 cents a gallon for the past two months, he said.
He acknowledged, however, that America lacks the kind of well-developed infrastructure for refueling natural gas-powered vehicles that has been available for gasoline-powered vehicles for many decades.
JACK Z. SMITH, 817-390-7724
Saturday, June 20, 2009
Natural Gas Rig Count Up June 19, 2009
NEW YORK, June 19 (Reuters) - The number of rigs drilling for natural gas in the United States unexpectedly rose by seven to 692 this week, the first gain in the rig count in seven months, according to a report on Friday by oil services firm Baker Hughes in Houston.
U.S. natural gas drilling rigs have been in a mostly steady decline since peaking above 1,600 in September.
Despite the modest gain, the total still stands at about 822 rigs, or 54 percent below the same week last year.
Near record-high gas production last year and a deep recession that sharply cut demand led to a severe oversupply that pressured gas prices this spring below the $4 per mmBtu level from their peak above $13 last July.
The 75 percent slide in natural gas prices during the last 11 months and tighter access to credit have forced many producers to scale back drilling operations.
But sources said new rigs in some prolific shale plays such as Haynesville in Louisiana or Marcellus in Appalachia may have been the reason for the unexpected gain.
The last time the gas drilling rig count rose was on Nov. 21, when the number climbed by 13 to 1,511.
With the natural gas drilling rig count still below the 700 mark, most analysts expect to see year-on-year output declines soon, probably by early summer, which should help tighten the overall supply-demand balance. (Reporting by Joe Silha
U.S. natural gas drilling rigs have been in a mostly steady decline since peaking above 1,600 in September.
Despite the modest gain, the total still stands at about 822 rigs, or 54 percent below the same week last year.
Near record-high gas production last year and a deep recession that sharply cut demand led to a severe oversupply that pressured gas prices this spring below the $4 per mmBtu level from their peak above $13 last July.
The 75 percent slide in natural gas prices during the last 11 months and tighter access to credit have forced many producers to scale back drilling operations.
But sources said new rigs in some prolific shale plays such as Haynesville in Louisiana or Marcellus in Appalachia may have been the reason for the unexpected gain.
The last time the gas drilling rig count rose was on Nov. 21, when the number climbed by 13 to 1,511.
With the natural gas drilling rig count still below the 700 mark, most analysts expect to see year-on-year output declines soon, probably by early summer, which should help tighten the overall supply-demand balance. (Reporting by Joe Silha
Friday, June 19, 2009
Natural Gas Talk Heats Up as Supply Rises
By CHRISTINE BUURMA and VERONICA DAGHER
NEW YORK -- Natural-gas futures finished lower Thursday after U.S. government data showed a bigger-than-expected build in gas inventories last week, adding to already-ample supplies as weak demand and mild weather continue to pressure prices.
Natural gas for July delivery on the New York Mercantile Exchange settled 16 cents lower, or 3.8%, at $4.093 a million British thermal units. The contract fell as low as $4.065 a million BTUs earlier in the day.
The U.S. Energy Information Administration reported Thursday an injection into storage of 114 billion cubic feet of gas for the week ended June 12, outpacing the 104 billion-cubic-foot build that analysts and traders had forecast in a Dow Jones Newswires survey.
The latest build brings the total amount of gas in storage to 2.557 trillion cubic feet, about 23% above the five-year average and 32% above last year's level as of June 12.
Supplies of gas have ballooned as U.S. onshore production, particularly from tight rock formations called shales, has boomed. This supply glut has developed just as the economic downturn has suppressed gas demand as large industrial consumers cut spending, driving gas futures prices down 70% from last July.
"Demand is still weak," said Larry Young of Infinity Futures in Chicago. "That's why we still have a bias to downside."
Producers have reined in drilling activity as prices have fallen, with the number of rigs drilling for gas in the U.S. falling by more than half since September, according to oil-field-services company Baker Hughes. Signs of a significant drop in output have yet to emerge, however.
Gas futures prices are getting little support from weather forecasts.
Hot weather in the Midwest over the next two weeks could be offset by cooler-than-normal temperatures in the Northeast over the same period, limiting the demand for additional gas-fired power for cooling, meteorologists said.
"Warm weather for the Northeast is not likely" for the next 10 to 15 days, Joe Bastardi, a meteorologist with AccuWeather.com, said in a note to clients Thursday.
The National Weather Service was predicting warmer-than-normal temperatures across the Midwest from June 23 to June 27, with below-normal temperatures along the East Coast.
NEW YORK -- Natural-gas futures finished lower Thursday after U.S. government data showed a bigger-than-expected build in gas inventories last week, adding to already-ample supplies as weak demand and mild weather continue to pressure prices.
Natural gas for July delivery on the New York Mercantile Exchange settled 16 cents lower, or 3.8%, at $4.093 a million British thermal units. The contract fell as low as $4.065 a million BTUs earlier in the day.
The U.S. Energy Information Administration reported Thursday an injection into storage of 114 billion cubic feet of gas for the week ended June 12, outpacing the 104 billion-cubic-foot build that analysts and traders had forecast in a Dow Jones Newswires survey.
The latest build brings the total amount of gas in storage to 2.557 trillion cubic feet, about 23% above the five-year average and 32% above last year's level as of June 12.
Supplies of gas have ballooned as U.S. onshore production, particularly from tight rock formations called shales, has boomed. This supply glut has developed just as the economic downturn has suppressed gas demand as large industrial consumers cut spending, driving gas futures prices down 70% from last July.
"Demand is still weak," said Larry Young of Infinity Futures in Chicago. "That's why we still have a bias to downside."
Producers have reined in drilling activity as prices have fallen, with the number of rigs drilling for gas in the U.S. falling by more than half since September, according to oil-field-services company Baker Hughes. Signs of a significant drop in output have yet to emerge, however.
Gas futures prices are getting little support from weather forecasts.
Hot weather in the Midwest over the next two weeks could be offset by cooler-than-normal temperatures in the Northeast over the same period, limiting the demand for additional gas-fired power for cooling, meteorologists said.
"Warm weather for the Northeast is not likely" for the next 10 to 15 days, Joe Bastardi, a meteorologist with AccuWeather.com, said in a note to clients Thursday.
The National Weather Service was predicting warmer-than-normal temperatures across the Midwest from June 23 to June 27, with below-normal temperatures along the East Coast.
By BEN GEMAN AND KATHERINE LING, Greenwire
Published: June 18, 2009
The release of a major new study today that boosts estimates of U.S. natural gas resources is shaking debates over the use and regulation of a fuel that could help slow global warming but could create other environmental concerns.
The report by the Potential Gas Committee, a nonprofit group that provides closely watched analyses of U.S. resources, shows a 35 percent jump in domestic gas estimates.
The United States has a total resource base of 1,836 trillion cubic feet (tcf) worth of likely and potential resources, the report says, a sharp jump from the last estimate two years ago of 1,321 tcf, and the highest in the group's 44-year history.
With the addition of Energy Department estimates of proved reserves, the total U.S. future supply is 2,074 tcf, a rise of more than 35 percent from the committee's last biennial estimate.
The increase is largely due to the viability of tapping gas from shale formations, such as the Barnett in Texas, the Marcellus in Appalachia, the Haynesville in Louisiana and the Rocky Mountains.
"New and advanced exploration, well drilling and completion technologies are allowing us increasingly better access to domestic gas resources -- especially 'unconventional' gas -- which, not all that long ago, were considered impractical or uneconomical to pursue," said John Curtis, professor of geology and geological engineering at the Colorado School of Mines, which supports the committee's work.
But the increasing use of a technique called hydraulic fracturing to access these shale plays has sparked a Capitol Hill battle over regulating the extraction method. Several Democrats have introduced legislation that would bring the technique under Safe Drinking Water Act regulation -- reversing an exemption in a 2005 energy law -- and require disclosure of chemicals used in the process.
The industry and allied groups are fighting the effort. They say it would slow access to what the new report demonstrates is an abundant domestic energy source.
"Hydraulic fracturing is the Rosetta Stone of natural gas development. With it, otherwordly amounts of shale and tight-pocket gas can be found, produced and delivered to Americans who need it. Without it, those resources remain trapped underground," said Chris Tucker, a spokesman for Energy In Depth, an industry-backed group that recently launched an effort to fight the legislation.
A spokesman for Rep. Diana DeGette (D-Colo.), the sponsor of the fracturing legislation, said her bill is not about preventing gas production, which she supports, but that the extraction technique must have more oversight and disclosure.
"I would definitely say that she believes it is a necessary technology for the energy market. She also believes we need to ensure the health of the public as these processes are taking place," said DeGette spokesman Kristofer Eisenla.
Report sparks climate debate
Meanwhile, the report is also significant in light of pending congressional efforts to enact a sweeping bill to place mandatory limits on U.S. greenhouse gas emissions.
House Democratic leaders plan to bring a sweeping climate bill to the floor in the coming weeks that is sponsored by Energy and Commerce Chairman Henry Waxman (D-Calif.) and Rep. Ed Markey (D-Mass.). The greenhouse gas caps in the Waxman-Markey bill would curb U.S. emissions by 17 percent by 2020 from 2005 levels, with an 83 percent cut by 2050.
Burning natural gas currently provides about a fifth of U.S. electric power, and gas produces half the greenhouse gas emissions of coal. However, switching to gas creates concerns about the costs that could accompany increased demand if supplies were tight.
Joe Romm of the Center for American Progress, a liberal think tank, has called attention in recent weeks to the higher U.S. supply estimates driven by shale gas plays. He calls increased estimates a "game changer" and very good news.
Romm said the new report underscores that the 2020 emissions reduction targets in the Waxman-Markey bill are certainly achievable and may even be too weak. That is because with ample supply, gas will remain at a moderate price -- around $5 to $6 per million British thermal units -- and will keep compliance costs down, he said.
He noted that a key factor behind the cost of capping carbon is the cost to replace existing coal plants. With cheaper natural gas, that can more easily be done with idle natural gas plants built during a overbuild in the 1990s that are connected to the grid system, but the fuel has been too costly to use until now, said Romm, a former DOE official.
"I think this is a big deal," Romm said of the higher estimates. Additional gas will also encourage more utilities to build wind generation, as natural gas is currently the best backup power for the intermittent energy, he said.
Pickens plan
But others have their eye on these U.S. supplies as a way to power vehicles.
Famed Texas oilman T. Boone Pickens is spending aggressively to promote his plan to transition vehicles such as heavy-duty trucks and city fleets to natural gas in order to curb demands for oil imports. Pickens also supports a major build-out of wind for electricity, which would help free up natural gas for vehicles.
He quickly seized on the new report.
"Obviously, this underscores what Boone has spoken about for well over a year and gives further credibility to a key aspect of the Pickens plan, and that is using natural gas as a transportation fuel alternative to foreign oil, diesel and gasoline," said Jay Rosser, a spokesman for Pickens.
"This should quiet any skeptic who is concerned about using our abundant supplies of natural gas as an important transitional fuel," he added.
Copyright 2009 E&E Publishing. All Rights Reserved.
For more news on energy and the environment, visit www.greenwire.com.
Published: June 18, 2009
The release of a major new study today that boosts estimates of U.S. natural gas resources is shaking debates over the use and regulation of a fuel that could help slow global warming but could create other environmental concerns.
The report by the Potential Gas Committee, a nonprofit group that provides closely watched analyses of U.S. resources, shows a 35 percent jump in domestic gas estimates.
The United States has a total resource base of 1,836 trillion cubic feet (tcf) worth of likely and potential resources, the report says, a sharp jump from the last estimate two years ago of 1,321 tcf, and the highest in the group's 44-year history.
With the addition of Energy Department estimates of proved reserves, the total U.S. future supply is 2,074 tcf, a rise of more than 35 percent from the committee's last biennial estimate.
The increase is largely due to the viability of tapping gas from shale formations, such as the Barnett in Texas, the Marcellus in Appalachia, the Haynesville in Louisiana and the Rocky Mountains.
"New and advanced exploration, well drilling and completion technologies are allowing us increasingly better access to domestic gas resources -- especially 'unconventional' gas -- which, not all that long ago, were considered impractical or uneconomical to pursue," said John Curtis, professor of geology and geological engineering at the Colorado School of Mines, which supports the committee's work.
But the increasing use of a technique called hydraulic fracturing to access these shale plays has sparked a Capitol Hill battle over regulating the extraction method. Several Democrats have introduced legislation that would bring the technique under Safe Drinking Water Act regulation -- reversing an exemption in a 2005 energy law -- and require disclosure of chemicals used in the process.
The industry and allied groups are fighting the effort. They say it would slow access to what the new report demonstrates is an abundant domestic energy source.
"Hydraulic fracturing is the Rosetta Stone of natural gas development. With it, otherwordly amounts of shale and tight-pocket gas can be found, produced and delivered to Americans who need it. Without it, those resources remain trapped underground," said Chris Tucker, a spokesman for Energy In Depth, an industry-backed group that recently launched an effort to fight the legislation.
A spokesman for Rep. Diana DeGette (D-Colo.), the sponsor of the fracturing legislation, said her bill is not about preventing gas production, which she supports, but that the extraction technique must have more oversight and disclosure.
"I would definitely say that she believes it is a necessary technology for the energy market. She also believes we need to ensure the health of the public as these processes are taking place," said DeGette spokesman Kristofer Eisenla.
Report sparks climate debate
Meanwhile, the report is also significant in light of pending congressional efforts to enact a sweeping bill to place mandatory limits on U.S. greenhouse gas emissions.
House Democratic leaders plan to bring a sweeping climate bill to the floor in the coming weeks that is sponsored by Energy and Commerce Chairman Henry Waxman (D-Calif.) and Rep. Ed Markey (D-Mass.). The greenhouse gas caps in the Waxman-Markey bill would curb U.S. emissions by 17 percent by 2020 from 2005 levels, with an 83 percent cut by 2050.
Burning natural gas currently provides about a fifth of U.S. electric power, and gas produces half the greenhouse gas emissions of coal. However, switching to gas creates concerns about the costs that could accompany increased demand if supplies were tight.
Joe Romm of the Center for American Progress, a liberal think tank, has called attention in recent weeks to the higher U.S. supply estimates driven by shale gas plays. He calls increased estimates a "game changer" and very good news.
Romm said the new report underscores that the 2020 emissions reduction targets in the Waxman-Markey bill are certainly achievable and may even be too weak. That is because with ample supply, gas will remain at a moderate price -- around $5 to $6 per million British thermal units -- and will keep compliance costs down, he said.
He noted that a key factor behind the cost of capping carbon is the cost to replace existing coal plants. With cheaper natural gas, that can more easily be done with idle natural gas plants built during a overbuild in the 1990s that are connected to the grid system, but the fuel has been too costly to use until now, said Romm, a former DOE official.
"I think this is a big deal," Romm said of the higher estimates. Additional gas will also encourage more utilities to build wind generation, as natural gas is currently the best backup power for the intermittent energy, he said.
Pickens plan
But others have their eye on these U.S. supplies as a way to power vehicles.
Famed Texas oilman T. Boone Pickens is spending aggressively to promote his plan to transition vehicles such as heavy-duty trucks and city fleets to natural gas in order to curb demands for oil imports. Pickens also supports a major build-out of wind for electricity, which would help free up natural gas for vehicles.
He quickly seized on the new report.
"Obviously, this underscores what Boone has spoken about for well over a year and gives further credibility to a key aspect of the Pickens plan, and that is using natural gas as a transportation fuel alternative to foreign oil, diesel and gasoline," said Jay Rosser, a spokesman for Pickens.
"This should quiet any skeptic who is concerned about using our abundant supplies of natural gas as an important transitional fuel," he added.
Copyright 2009 E&E Publishing. All Rights Reserved.
For more news on energy and the environment, visit www.greenwire.com.
Thursday, June 18, 2009
Natural Gas Exploration for Florida Coming
By H. JOSEF HEBERT – 3 hours ago
WASHINGTON (AP) — Legislation that would require greater use of renewable energy, make it easier to build power lines and allow oil and gas drilling near the Florida coastline advanced Wednesday in the Senate.
The Energy and Natural Resources Committee approved the bill by a 15-8 bipartisan vote. But both Democrats and Republicans expressed concerns about the bill and hoped to make major changes when it reaches the Senate floor, probably in the fall.
The measure's primary thrust is to expand the use of renewable sources of energy such as wind, solar and geothermal sources as well as deal with growing worries about the inadequacies of the nation's high-voltage power grid.
But the bill also would remove the last congressional barrier to offshore oil and gas development, lifting a ban on drilling across a vast area in the eastern Gulf of Mexico that Congress put off limits three years ago. Drilling would be allowed within 45 miles of most of Florida's coast and as close as 10 miles off the state's Panhandle area.
The Senate bill for the first time would establish a national requirement for utilities to produce 15 percent of their electricity from renewable sources, a contentious issue that is likely to attract heated debate.
Twenty-eight states currently have some renewable energy requirement for utilities, but supporters of the measure argue a national mandate is needed to spur such energy development.
The legislation also would give much wider authority to federal regulators over the nation's electricity grid.
The Federal Energy Regulatory Commission would be given authority to approve the siting of high voltage power lines if states fail to act and would be given additional powers over cyber security on the grid.
Senate Majority Leader Harry Reid, D-Nev., has said he hopes to take up energy legislation after the August recess, although it's uncertain whether it will be merged with separate legislation addressing climate change. The House is working on a climate bill that includes many of the same energy issues addressed by the Senate bill.
While the bill was approved by a safe margin in the committee its prospects in the full Senate are anything but certain. Several senators called it too weak in its support of renewable energy development, while others said it ignored nuclear energy and greater domestic oil and gas production.
"None of us got all we wanted," said Sen. Jeff Bingaman, D-N.M., the committee's chairman, who was forced to agree to a variety of compromises to give the bill a chance of advancing. Nevertheless, he said the bill would help shift to cleaner, more secure sources of energy.
Bingaman and many of the panel's other Democrats had wanted at least a 20 percent renewable energy requirement. The bill requires 15 percent renewable use by 2021, but also would allow utilities to avoid a fourth of that mandate by showing improvements in efficiency. Renewable energy use could be cut further for utilities that increase their use of nuclear energy either from a new reactor or increased reactor output.
"This is an extraordinary weak bill," said Sen. Bernie Sanders, I-Vt.
But Sanders voted to advance the bill, as did Sen. Bob Corker, R-Tenn. Both senators said they hoped the bill will be strengthened.
"I suspect their definition of strengthening might be somewhat different," quipped Sen. Evan Bayh, D-Ind., whose own support of the bill came despite strong opposition to the federal renewable energy requirements on utilities.
Sanders wants the renewable energy requirement to be much higher, at 25 percent. Corker said the bill needs more to promote nuclear energy and domestic oil and gas production.
"We simply must do more to increase our domestic (oil and gas) production and use of nuclear energy," said Sen. Lisa Murkowski of Alaska, the committee's ranking Republican. Still, she voted for the bill which includes a commitment to increase loan guarantees for a natural gas pipeline in her state from $18 billion to $30 billion.
The bill also calls for establishing a new office to steer grants and loan guarantees to clean energy projects, including nuclear and those using technology to capture carbon dioxide; creating an oil products reserve to be used if there are supply problems; and creating federal standards for efficiency standards for new building.
The Chamber of Commerce said the bill shows progress toward crafting a comprehensive energy policy, but some environmentalists said it falls short of shifting the country away from fossil fuels. With its new offshore drilling, support for coal and nuclear energy "this bill fails to live up to the vision of a clean energy future," complained Brent Blackwelder, president of Friends of the Earth.
Copyright © 2009 The Associated Press. All rights reserved.
WASHINGTON (AP) — Legislation that would require greater use of renewable energy, make it easier to build power lines and allow oil and gas drilling near the Florida coastline advanced Wednesday in the Senate.
The Energy and Natural Resources Committee approved the bill by a 15-8 bipartisan vote. But both Democrats and Republicans expressed concerns about the bill and hoped to make major changes when it reaches the Senate floor, probably in the fall.
The measure's primary thrust is to expand the use of renewable sources of energy such as wind, solar and geothermal sources as well as deal with growing worries about the inadequacies of the nation's high-voltage power grid.
But the bill also would remove the last congressional barrier to offshore oil and gas development, lifting a ban on drilling across a vast area in the eastern Gulf of Mexico that Congress put off limits three years ago. Drilling would be allowed within 45 miles of most of Florida's coast and as close as 10 miles off the state's Panhandle area.
The Senate bill for the first time would establish a national requirement for utilities to produce 15 percent of their electricity from renewable sources, a contentious issue that is likely to attract heated debate.
Twenty-eight states currently have some renewable energy requirement for utilities, but supporters of the measure argue a national mandate is needed to spur such energy development.
The legislation also would give much wider authority to federal regulators over the nation's electricity grid.
The Federal Energy Regulatory Commission would be given authority to approve the siting of high voltage power lines if states fail to act and would be given additional powers over cyber security on the grid.
Senate Majority Leader Harry Reid, D-Nev., has said he hopes to take up energy legislation after the August recess, although it's uncertain whether it will be merged with separate legislation addressing climate change. The House is working on a climate bill that includes many of the same energy issues addressed by the Senate bill.
While the bill was approved by a safe margin in the committee its prospects in the full Senate are anything but certain. Several senators called it too weak in its support of renewable energy development, while others said it ignored nuclear energy and greater domestic oil and gas production.
"None of us got all we wanted," said Sen. Jeff Bingaman, D-N.M., the committee's chairman, who was forced to agree to a variety of compromises to give the bill a chance of advancing. Nevertheless, he said the bill would help shift to cleaner, more secure sources of energy.
Bingaman and many of the panel's other Democrats had wanted at least a 20 percent renewable energy requirement. The bill requires 15 percent renewable use by 2021, but also would allow utilities to avoid a fourth of that mandate by showing improvements in efficiency. Renewable energy use could be cut further for utilities that increase their use of nuclear energy either from a new reactor or increased reactor output.
"This is an extraordinary weak bill," said Sen. Bernie Sanders, I-Vt.
But Sanders voted to advance the bill, as did Sen. Bob Corker, R-Tenn. Both senators said they hoped the bill will be strengthened.
"I suspect their definition of strengthening might be somewhat different," quipped Sen. Evan Bayh, D-Ind., whose own support of the bill came despite strong opposition to the federal renewable energy requirements on utilities.
Sanders wants the renewable energy requirement to be much higher, at 25 percent. Corker said the bill needs more to promote nuclear energy and domestic oil and gas production.
"We simply must do more to increase our domestic (oil and gas) production and use of nuclear energy," said Sen. Lisa Murkowski of Alaska, the committee's ranking Republican. Still, she voted for the bill which includes a commitment to increase loan guarantees for a natural gas pipeline in her state from $18 billion to $30 billion.
The bill also calls for establishing a new office to steer grants and loan guarantees to clean energy projects, including nuclear and those using technology to capture carbon dioxide; creating an oil products reserve to be used if there are supply problems; and creating federal standards for efficiency standards for new building.
The Chamber of Commerce said the bill shows progress toward crafting a comprehensive energy policy, but some environmentalists said it falls short of shifting the country away from fossil fuels. With its new offshore drilling, support for coal and nuclear energy "this bill fails to live up to the vision of a clean energy future," complained Brent Blackwelder, president of Friends of the Earth.
Copyright © 2009 The Associated Press. All rights reserved.
Wednesday, June 17, 2009
Natural Gas Decision in India at $2.34/mmBTU
The Bombay High Court ruling on natural gas supply from the Krishna-Godavari basin appears to have upheld contractual obligations on the part of
Reliance Industries Ltd (RIL) to Reliance Natural Resources Ltd (RNRL), now de-merged corporate entities. The court order calls on RIL to supply 28 mmscmd of gas at $2.34 per mmBtu over a 17-year period.
Yet the ruling hinges on a mere technicality. As per para 317 of the order, the ‘agreed price’ is governed by another contested contract, that between RIL and NTPC, the power major. The court has held that it ‘would not like to impinge on the merits of the suit pending between NTPC and RIL...’ and the former’s right to 12 mmscmd of gas at a price of $2.34 per unit. Note also that the contention of RNRL in the ‘marathon hearing’ has been that the NTPC price, which was supposed to have been arrived at on the basis of competitive bidding, can be deemed reasonable.
But then, according to the production sharing contract (PSC), when it comes to valuation of gas, just about two clauses seem to contain the mechanics of determining the price. As per article 21.6.2 (b) of the PSC, gas which is sold to the government or its nominee “shall be valued on the terms and conditions actually obtained including pricing formula and delivery”. And clause (c) adds that gas which is sold or disposed of otherwise...”shall be valued on the basis of competitive arms-length sales in the region for similar sales under similar conditions”. And the fact of the matter is that the admissibility of the NTPC contract price and its validity for supply to RNRL remains to be tested in a court of law.
Meanwhile, the Centre — the sovereign is the licenser and owner of all natural resources — has of late worked out the price of K-G basin gas at $4.20 per mmBtu. Now para 320 of the ruling does suggest that “even at” $2.34 per mmBtu price, “RIL makes a profit”. But should the profitability criteria be used to judge price? What’s clearly required is better scope for price discovery in the rather fledgling national market for gas. A stand-alone gas Act is required as well. There’s also an immediate policy issue involved. A clutch of fertiliser producers now have agreements with RIL to source gas at $4.2/unit and these new contracts ought surely to be honoured.
Reliance Industries Ltd (RIL) to Reliance Natural Resources Ltd (RNRL), now de-merged corporate entities. The court order calls on RIL to supply 28 mmscmd of gas at $2.34 per mmBtu over a 17-year period.
Yet the ruling hinges on a mere technicality. As per para 317 of the order, the ‘agreed price’ is governed by another contested contract, that between RIL and NTPC, the power major. The court has held that it ‘would not like to impinge on the merits of the suit pending between NTPC and RIL...’ and the former’s right to 12 mmscmd of gas at a price of $2.34 per unit. Note also that the contention of RNRL in the ‘marathon hearing’ has been that the NTPC price, which was supposed to have been arrived at on the basis of competitive bidding, can be deemed reasonable.
But then, according to the production sharing contract (PSC), when it comes to valuation of gas, just about two clauses seem to contain the mechanics of determining the price. As per article 21.6.2 (b) of the PSC, gas which is sold to the government or its nominee “shall be valued on the terms and conditions actually obtained including pricing formula and delivery”. And clause (c) adds that gas which is sold or disposed of otherwise...”shall be valued on the basis of competitive arms-length sales in the region for similar sales under similar conditions”. And the fact of the matter is that the admissibility of the NTPC contract price and its validity for supply to RNRL remains to be tested in a court of law.
Meanwhile, the Centre — the sovereign is the licenser and owner of all natural resources — has of late worked out the price of K-G basin gas at $4.20 per mmBtu. Now para 320 of the ruling does suggest that “even at” $2.34 per mmBtu price, “RIL makes a profit”. But should the profitability criteria be used to judge price? What’s clearly required is better scope for price discovery in the rather fledgling national market for gas. A stand-alone gas Act is required as well. There’s also an immediate policy issue involved. A clutch of fertiliser producers now have agreements with RIL to source gas at $4.2/unit and these new contracts ought surely to be honoured.
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