By SHANNON MUCHMORE World Staff Writer
Published: 3/6/2009 1:04 PM
Last Modified: 3/6/2009 1:04 PM
STILLWATER – Oklahoma State University will convert more than 20 of its buses to run on compressed natural gas with money expected through the federal stimulus package.
The $4.2 million in stimulus funds would be allocated to OSU through the Oklahoma Department of Transportation, and was approved Friday by the Oklahoma A&M Board of Regents.
Also at the meeting, OSU officials announced the university has saved more than $5 million in the past 18 months through an energy conservation program.
Those systemwide savings will offset the utility cost to the university for bringing five buildings online at the Stillwater campus this year.
Before the meeting, Rick Krysiak, the director of the OSU Physical Plant, said the conservation program has taught students and faculty simple ways to save energy costs.
"We're not going out replacing equipment, we're changing people's habits," he said.
By SHANNON MUCHMORE World Staff Writer
Saturday, March 7, 2009
Friday, March 6, 2009
T.Boone Natural Gas Promoter Says Oil to 60 Before Below 40
Los Angeles, CA - T. Boone Pickens says the price of oil will be 60 dollars per barrel before it will drop below 40 again.
Pickens appeared on CNBC Thursday and said the price will rise to 75 dollars or more by the end of the year and even higher if the world economy recovers.
"If they do recover, then the price will move on up and if it's slow in coming out of the recession, it will stabilize for some period of time," he said Pickens said oil prices are steadily rising because "OPEC needs the money" to fund their internal programs and that he predicts "you'll see 60 [dollars per barrel] before you see 40."
Oil was trading at around 43 dollars a barrel this week.
Pickens says the U.S. imported 62-percent of its oil last month, which is down 5-percent from January.
"Have we had a breakthrough? Probably not," Pickens said. "We've had demand destruction because of the recession and all, but we're still paying 13-billion dollars (a month). That is 328-thousand dollars per hour sent to foreign governments."
Pickens also criticized Treasury Secretary Tim Geithner's plan to raise taxes on oil and natural gas companies.
"(Oil and gas companies) are on their back right now because, with prices like they are, you've shut down five hundred or six hundred rigs already. And, so you want to get those people back to work. You don't do it by raising taxes."
Pickens is in California where he was speaking at the ECOnomics Conference.
On The Net:
Pickens appeared on CNBC Thursday and said the price will rise to 75 dollars or more by the end of the year and even higher if the world economy recovers.
"If they do recover, then the price will move on up and if it's slow in coming out of the recession, it will stabilize for some period of time," he said Pickens said oil prices are steadily rising because "OPEC needs the money" to fund their internal programs and that he predicts "you'll see 60 [dollars per barrel] before you see 40."
Oil was trading at around 43 dollars a barrel this week.
Pickens says the U.S. imported 62-percent of its oil last month, which is down 5-percent from January.
"Have we had a breakthrough? Probably not," Pickens said. "We've had demand destruction because of the recession and all, but we're still paying 13-billion dollars (a month). That is 328-thousand dollars per hour sent to foreign governments."
Pickens also criticized Treasury Secretary Tim Geithner's plan to raise taxes on oil and natural gas companies.
"(Oil and gas companies) are on their back right now because, with prices like they are, you've shut down five hundred or six hundred rigs already. And, so you want to get those people back to work. You don't do it by raising taxes."
Pickens is in California where he was speaking at the ECOnomics Conference.
On The Net:
Thursday, March 5, 2009
Synthetic Natural Gas for Freeport, Texas
State regulators OK synthetic natural gas plant
By TOM FOWLER
March 4, 2009, 5:50PM
State environmental regulators have granted an air permit to a Freeport project that will turn a refining byproduct into natural gas while capturing carbon dioxide created by the process.
Hunton Energy of Houston says the plant will take pet coke, a common refinery waste product, and turn it into a synthetic form of natural gas that can be used by a chemical plant to create other products. Dow Chemical in Freeport has said it is interested in buying the gas.
The steam generated by the process will be used to run an electric turbine capable of creating up to 400 megawatts, which Dow could also purchase, while the 8 million tons of carbon dioxide created by the plant each year will be sold for injection into older oil fields to help improve production.
The project previously had financial backing by a unit of Goldman Sachs but that deal has been called off. Hunton President Rocky Sembritzky said the company is in the process of raising funds overseas.
tom.fowler@chron.com
By TOM FOWLER
March 4, 2009, 5:50PM
State environmental regulators have granted an air permit to a Freeport project that will turn a refining byproduct into natural gas while capturing carbon dioxide created by the process.
Hunton Energy of Houston says the plant will take pet coke, a common refinery waste product, and turn it into a synthetic form of natural gas that can be used by a chemical plant to create other products. Dow Chemical in Freeport has said it is interested in buying the gas.
The steam generated by the process will be used to run an electric turbine capable of creating up to 400 megawatts, which Dow could also purchase, while the 8 million tons of carbon dioxide created by the plant each year will be sold for injection into older oil fields to help improve production.
The project previously had financial backing by a unit of Goldman Sachs but that deal has been called off. Hunton President Rocky Sembritzky said the company is in the process of raising funds overseas.
tom.fowler@chron.com
Wednesday, March 4, 2009
Natural Gas Summary for Week Ending February 24
Submitted by The City Wire staff on Mon, 03/02/2009 - 9:41am.
The monthly “Natural Gas Market Indicators” report from the American Gas Association provides some glimpse into the factors behind the thousands of jobs in Arkansas and the Fort Smith region tied to the exploration, production, transmission and management of natural gas.
Natural gas prices at the closely watched Henry Hub — a connecting point of 13 pipelines in south-central Louisiana — fell below $4.25 mmBtu, according to the AGA February 25 report.
The price reflects a downward trend that is causing financial pain for exploration and production companies — including some of those active in Arkansas’ Fayetteville Shale Play — that made investment and exploration decisions based on a higher price.
Falling natural gas demand in the nation’s manufacturing sector, moderate weather and large amounts of gas in underground storage have caused the price decline, AGA noted in the report. Unfortunately, the AGA notes that most futures contracts have natural gas priced below $6 per mmBtu.
Other key metrics of the AGA report include:
• Working Gas in Underground Storage
Net storage withdrawals for the week ending Feb. 13, were only 24 Bcf (billion cubic feet), which is significantly less than the 172 Bcf withdrawn at this time last year. At 1,996 Bcf, working gas remaining in underground storage has jumped to 9.7% above the volume one year ago and 8.4% higher than the five-year average.
• Natural Gas Production
After averaging 55.6 Bcf per day for the 10-day period Feb. 15-24, natural gas production prior to extraction losses is down about 1 Bcf per day compared to the
first two weeks of the month. However, average daily production prior to extraction losses for February 2009 (56.2 Bcf per day) is 5% higher than in February 2008 (53.7 Bcf per day).
• Rig Counts
Total national rig counts for the week ending Feb. 20, stood at 1,300, having tumbled 36% from 2,031 rigs in late summer 2008. At 1,018, gas-directed operations are down 29% from one-year earlier. However, rigs operating today described as drilling horizontal wells (like many of those in the Fayetteville Shale Play), which tend to be newer and more efficient drilling systems, numbered 475 on Feb. 20. One year ago that number was 464. This also tends to support the notion that operations in less conventional reservoirs remain relatively solid.
The monthly “Natural Gas Market Indicators” report from the American Gas Association provides some glimpse into the factors behind the thousands of jobs in Arkansas and the Fort Smith region tied to the exploration, production, transmission and management of natural gas.
Natural gas prices at the closely watched Henry Hub — a connecting point of 13 pipelines in south-central Louisiana — fell below $4.25 mmBtu, according to the AGA February 25 report.
The price reflects a downward trend that is causing financial pain for exploration and production companies — including some of those active in Arkansas’ Fayetteville Shale Play — that made investment and exploration decisions based on a higher price.
Falling natural gas demand in the nation’s manufacturing sector, moderate weather and large amounts of gas in underground storage have caused the price decline, AGA noted in the report. Unfortunately, the AGA notes that most futures contracts have natural gas priced below $6 per mmBtu.
Other key metrics of the AGA report include:
• Working Gas in Underground Storage
Net storage withdrawals for the week ending Feb. 13, were only 24 Bcf (billion cubic feet), which is significantly less than the 172 Bcf withdrawn at this time last year. At 1,996 Bcf, working gas remaining in underground storage has jumped to 9.7% above the volume one year ago and 8.4% higher than the five-year average.
• Natural Gas Production
After averaging 55.6 Bcf per day for the 10-day period Feb. 15-24, natural gas production prior to extraction losses is down about 1 Bcf per day compared to the
first two weeks of the month. However, average daily production prior to extraction losses for February 2009 (56.2 Bcf per day) is 5% higher than in February 2008 (53.7 Bcf per day).
• Rig Counts
Total national rig counts for the week ending Feb. 20, stood at 1,300, having tumbled 36% from 2,031 rigs in late summer 2008. At 1,018, gas-directed operations are down 29% from one-year earlier. However, rigs operating today described as drilling horizontal wells (like many of those in the Fayetteville Shale Play), which tend to be newer and more efficient drilling systems, numbered 475 on Feb. 20. One year ago that number was 464. This also tends to support the notion that operations in less conventional reservoirs remain relatively solid.
Tuesday, March 3, 2009
Mid Continent Natural Gas Production Halted
BY JOHN-LAURENT TRONCHE
March 02, 2009
http://www.fwbusinesspress.com/display.php?id=9664
Fort Worth Business Press
Chesapeake Energy Corp. will halt production of about 240 million cubic feet of natural gas equivalent in the company’s mid-continent operations due to “unusually low prices” of commodities.
The Oklahoma City-based company will stop production, much in western Oklahoma, for at least the month of March, which represents about 7 percent of Chesapeake Energy’s gross operated production capacity, according to a March 2 press release. Also, the company is considering a further 10 percent reduction in drilling activity if oil and natural gas prices remain low throughout the year.
Currently, oil is at about $41 per barrel while natural gas is about $4.30 per million British thermal units - both well below the peaks of summer 2008, or even desirable levels of $100 per barrel and at least $8 per Btu, respectively.
Chesapeake Energy CEO Aubrey K. McClendon said the company expects “drilling activity to decline well beyond the 40 percent drop already seen since August 2008,” and natural gas production should continue to fall as the industry struggles to reduce the gap between a supply surplus and shrinking demand.
“We have elected to temporarily curtail approximately 7 percent of our gross natural gas and oil production in order to protect shareholder and royalty interest owner value during this time of extraordinarily low prices, especially for Mid-Continent natural gas,” McClendon said in the statement. “During March 2009, most Mid-Continent natural gas prices at major interstate pipeline delivery points will average around $2.70 per thousand cubic feet, a price at which most natural gas production is unprofitable.”
Chesapeake Energy currently operates 110 rigs, down from 158 in August 2008. Should the company elect to implement the additional 10 percent cut in drilling activity, it would do so in areas without joint ventures – one of which is, at least currently, the Barnett Shale.
Shares of Chesapeake Energy currently trade above $14 per share, having fallen about 69 percent in the last 12 months. Shares are down 13 percent for the year.
jtronche@bizpress.net
March 02, 2009
http://www.fwbusinesspress.com/display.php?id=9664
Fort Worth Business Press
Chesapeake Energy Corp. will halt production of about 240 million cubic feet of natural gas equivalent in the company’s mid-continent operations due to “unusually low prices” of commodities.
The Oklahoma City-based company will stop production, much in western Oklahoma, for at least the month of March, which represents about 7 percent of Chesapeake Energy’s gross operated production capacity, according to a March 2 press release. Also, the company is considering a further 10 percent reduction in drilling activity if oil and natural gas prices remain low throughout the year.
Currently, oil is at about $41 per barrel while natural gas is about $4.30 per million British thermal units - both well below the peaks of summer 2008, or even desirable levels of $100 per barrel and at least $8 per Btu, respectively.
Chesapeake Energy CEO Aubrey K. McClendon said the company expects “drilling activity to decline well beyond the 40 percent drop already seen since August 2008,” and natural gas production should continue to fall as the industry struggles to reduce the gap between a supply surplus and shrinking demand.
“We have elected to temporarily curtail approximately 7 percent of our gross natural gas and oil production in order to protect shareholder and royalty interest owner value during this time of extraordinarily low prices, especially for Mid-Continent natural gas,” McClendon said in the statement. “During March 2009, most Mid-Continent natural gas prices at major interstate pipeline delivery points will average around $2.70 per thousand cubic feet, a price at which most natural gas production is unprofitable.”
Chesapeake Energy currently operates 110 rigs, down from 158 in August 2008. Should the company elect to implement the additional 10 percent cut in drilling activity, it would do so in areas without joint ventures – one of which is, at least currently, the Barnett Shale.
Shares of Chesapeake Energy currently trade above $14 per share, having fallen about 69 percent in the last 12 months. Shares are down 13 percent for the year.
jtronche@bizpress.net
Monday, March 2, 2009
Obama Attacks Small Producing Natural Gas & Oil Wells
Louisiana Oil and Gas Association: Obama budget attacks the oil and gas industry
Don G. Briggs • news@theadvertiser.com • March 1, 2009
In a time of global insecurity, it is imperative that the United States becomes less reliant on foreign oil sources, to ensure our nation's security.
However, President Barack Obama's unconscionable proposed tax increase, aimed at increasing revenue from the oil and natural gas industry, flies in the face of that goal.
On Thursday, Obama released his FY 2010 budget, which is titled "A New Era of Responsibility Renewing America's Promise." The budget provides for a $30 billion-plus tax increase on the nation's oil and natural gas producers, designed to help pay for alternative energy projects. In the proposed budget, Obama strips from the oil and gas industry incentives that have been the "holy grail" of the industry for years, incentives that are critical in a high-risk investment industry.
Obama has made it very clear his administration intends to redistribute the wealth in our country. The record profits posted by the major oil companies in 2008 have become a target for the Obama administration.
What administration fails to understand is that American independent oil and natural gas producers drill 90 percent of the wells drilled in the U.S. American independents produce 68 percent of the oil and 82 percent of the natural gas in the United States.
Stripping the much-needed incentives from the thousands of American producers across the country will shut down oil and gas exploration and cause thousands of producing wells to be shut in.
The budget proposal includes:
# Repeal Expensing of Intangible Drilling Costs - This attracts capital for high-risk, cost-intensive businesses.
Repeal of Percentage Depletion - As an oil or natural gas well produces over time, it depletes the natural resource. This tax incentive allows for the "depreciation" of these wells, many of which are small, barely economic wells. Without this provision, many wells would be shut in.
# Repeal Marginal Well Tax Credit - A credit that is given for wells that produce small amounts of oil and gas and are barley economical. These marginal wells produce about 20 percent of the nation's oil and 12 percent of its natural gas.
# Excise tax on Gulf of Mexico production - The U.S. produces much of its oil and natural gas from the Gulf today, and will in the future.
# Repeal of Manufacturing Tax Deduction - A deduction given to every other American manufacturer.
At a time when the American oil and gas industry is reeling from free falling oil and gas prices, coupled with a world financial and capital crisis, Obama has now created the perfect storm by stripping industry of vital incentives.
Without the incentives listed above and others that are not listed, domestic oil and natural gas production will decline at a rapid rate. The United States will become ever more reliant on foreign countries for its energy resources, putting our nation's security at a greater risk.
Obama's budget must be approved by Congress to become law. Both Republicans and Democrats from producing states will be working to block Obama's attack on the American oil and gas industry.
Don G. Briggs • news@theadvertiser.com • March 1, 2009
In a time of global insecurity, it is imperative that the United States becomes less reliant on foreign oil sources, to ensure our nation's security.
However, President Barack Obama's unconscionable proposed tax increase, aimed at increasing revenue from the oil and natural gas industry, flies in the face of that goal.
On Thursday, Obama released his FY 2010 budget, which is titled "A New Era of Responsibility Renewing America's Promise." The budget provides for a $30 billion-plus tax increase on the nation's oil and natural gas producers, designed to help pay for alternative energy projects. In the proposed budget, Obama strips from the oil and gas industry incentives that have been the "holy grail" of the industry for years, incentives that are critical in a high-risk investment industry.
Obama has made it very clear his administration intends to redistribute the wealth in our country. The record profits posted by the major oil companies in 2008 have become a target for the Obama administration.
What administration fails to understand is that American independent oil and natural gas producers drill 90 percent of the wells drilled in the U.S. American independents produce 68 percent of the oil and 82 percent of the natural gas in the United States.
Stripping the much-needed incentives from the thousands of American producers across the country will shut down oil and gas exploration and cause thousands of producing wells to be shut in.
The budget proposal includes:
# Repeal Expensing of Intangible Drilling Costs - This attracts capital for high-risk, cost-intensive businesses.
Repeal of Percentage Depletion - As an oil or natural gas well produces over time, it depletes the natural resource. This tax incentive allows for the "depreciation" of these wells, many of which are small, barely economic wells. Without this provision, many wells would be shut in.
# Repeal Marginal Well Tax Credit - A credit that is given for wells that produce small amounts of oil and gas and are barley economical. These marginal wells produce about 20 percent of the nation's oil and 12 percent of its natural gas.
# Excise tax on Gulf of Mexico production - The U.S. produces much of its oil and natural gas from the Gulf today, and will in the future.
# Repeal of Manufacturing Tax Deduction - A deduction given to every other American manufacturer.
At a time when the American oil and gas industry is reeling from free falling oil and gas prices, coupled with a world financial and capital crisis, Obama has now created the perfect storm by stripping industry of vital incentives.
Without the incentives listed above and others that are not listed, domestic oil and natural gas production will decline at a rapid rate. The United States will become ever more reliant on foreign countries for its energy resources, putting our nation's security at a greater risk.
Obama's budget must be approved by Congress to become law. Both Republicans and Democrats from producing states will be working to block Obama's attack on the American oil and gas industry.
Sunday, March 1, 2009
Natural Gas Tax Breaks to Disappear?
By BEN GEMAN, Greenwire
Published: February 26, 2009
New York Times
President Obama's budget proposal would repeal several oil industry tax incentives while imposing new taxes on Gulf of Mexico producers to close "loopholes" that have allowed companies to avoid royalty payments.The overall budget eliminates $31.5 billion in "oil and gas company preferences" over a decade, according to a slender summary released by the White House this morning.
Many provisions are certain to prompt resistance from the oil industry and from Republican and Democratic lawmakers from oil-producing states. The plan drew a swift rebuke today from the oil industry's most powerful trade group, which called the measures a bad idea, especially during a recession.
"New taxes could mean fewer American jobs and less revenue at a time when we desperately need both," American Petroleum Institute President Jack Gerard said in a statement. "More taxes also could reduce our nation's energy security by discouraging new investment in domestic oil and natural gas production and refining capacity and pushing those investments -- and American jobs -- abroad."
But critics of petroleum tax and royalty policies say the industry has received too much support, even during periods of record-breaking profits, and that repealing tax breaks can help fund alternative energy programs.
The plan includes a "new excise tax on offshore oil and gas production in the Gulf of Mexico to close loopholes that have given oil companies excessive royalty relief." The new tax would begin in 2011, which the document says is "after the economy has had time to recover," and the budget assumes it would bring in nearly $5.3 billion over a decade.
The excise tax plan is an effort to ensure payment from deepwater leases issued in the late 1990s that allow royalty waivers -- also called "royalty relief" -- even when oil prices are high. The leases were drafted without the clauses that end the incentive when oil and gas prices exceed certain limits.
Senate Energy and Natural Resources Chairman Jeff Bingaman (D-N.M.) floated a new gulf excise tax as part of a major 2007 energy bill, but it was not ultimately included in the final bill (E&ENews PM, June 19, 2007.).
That 2007 plan would have allowed a credit against the tax for royalties paid, and the new proposal is modeled on that earlier effort, an Interior Department spokesman said today. "Producers that pay royalties would receive a credit, so this provision only impacts current royalty-free production," said spokesman Frank Quimby.
Elsewhere, the budget would repeal oil and gas companies' ability to claim a deduction on domestic manufacturing income, which would do away with an incentive that last year's Wall Street bailout bill had already frozen. Ending the incentive would bring in more than $13 billion in federal revenues over a decade, according to the document.
Other tax provisions include the repeal of expensing of intangible drilling costs and of the percentage depletion for oil and natural gas, among other measures, the document states.
'Use it or lose it'
In addition to the tax provisions, the budget proposal says Interior will ensure companies are "diligently" developing their existing leases or risk losing them, a concept that Democrats call "use it or lose it."
The plan says one step would be charging new fees on nonproducing Gulf of Mexico leases, which the outline claims would provide an incentive for companies to start producing from these leases or relinquish them.
The new fee on nonproducing leases would raise an estimated $1.2 billion total during the 2010-19 period, the document states.
The Obama administration is also proposing new user fees on oil companies for processing federal lands drilling permits and "increasing the return from oil and gas production on federal lands through administrative actions, such as reforming royalties and adjusting rates."
The budget also calls for ending federal funding for an ultra-deepwater oil and gas research and development program.
Copyright 2009 E&E Publishing. All Rights Reserved.
For more news on energy and the environment, visit www.greenwire.com.
Published: February 26, 2009
New York Times
President Obama's budget proposal would repeal several oil industry tax incentives while imposing new taxes on Gulf of Mexico producers to close "loopholes" that have allowed companies to avoid royalty payments.The overall budget eliminates $31.5 billion in "oil and gas company preferences" over a decade, according to a slender summary released by the White House this morning.
Many provisions are certain to prompt resistance from the oil industry and from Republican and Democratic lawmakers from oil-producing states. The plan drew a swift rebuke today from the oil industry's most powerful trade group, which called the measures a bad idea, especially during a recession.
"New taxes could mean fewer American jobs and less revenue at a time when we desperately need both," American Petroleum Institute President Jack Gerard said in a statement. "More taxes also could reduce our nation's energy security by discouraging new investment in domestic oil and natural gas production and refining capacity and pushing those investments -- and American jobs -- abroad."
But critics of petroleum tax and royalty policies say the industry has received too much support, even during periods of record-breaking profits, and that repealing tax breaks can help fund alternative energy programs.
The plan includes a "new excise tax on offshore oil and gas production in the Gulf of Mexico to close loopholes that have given oil companies excessive royalty relief." The new tax would begin in 2011, which the document says is "after the economy has had time to recover," and the budget assumes it would bring in nearly $5.3 billion over a decade.
The excise tax plan is an effort to ensure payment from deepwater leases issued in the late 1990s that allow royalty waivers -- also called "royalty relief" -- even when oil prices are high. The leases were drafted without the clauses that end the incentive when oil and gas prices exceed certain limits.
Senate Energy and Natural Resources Chairman Jeff Bingaman (D-N.M.) floated a new gulf excise tax as part of a major 2007 energy bill, but it was not ultimately included in the final bill (E&ENews PM, June 19, 2007.).
That 2007 plan would have allowed a credit against the tax for royalties paid, and the new proposal is modeled on that earlier effort, an Interior Department spokesman said today. "Producers that pay royalties would receive a credit, so this provision only impacts current royalty-free production," said spokesman Frank Quimby.
Elsewhere, the budget would repeal oil and gas companies' ability to claim a deduction on domestic manufacturing income, which would do away with an incentive that last year's Wall Street bailout bill had already frozen. Ending the incentive would bring in more than $13 billion in federal revenues over a decade, according to the document.
Other tax provisions include the repeal of expensing of intangible drilling costs and of the percentage depletion for oil and natural gas, among other measures, the document states.
'Use it or lose it'
In addition to the tax provisions, the budget proposal says Interior will ensure companies are "diligently" developing their existing leases or risk losing them, a concept that Democrats call "use it or lose it."
The plan says one step would be charging new fees on nonproducing Gulf of Mexico leases, which the outline claims would provide an incentive for companies to start producing from these leases or relinquish them.
The new fee on nonproducing leases would raise an estimated $1.2 billion total during the 2010-19 period, the document states.
The Obama administration is also proposing new user fees on oil companies for processing federal lands drilling permits and "increasing the return from oil and gas production on federal lands through administrative actions, such as reforming royalties and adjusting rates."
The budget also calls for ending federal funding for an ultra-deepwater oil and gas research and development program.
Copyright 2009 E&E Publishing. All Rights Reserved.
For more news on energy and the environment, visit www.greenwire.com.
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