GE Buys Into Natural Gas Business

DALLAS – Global energy infrastructure technology and service provider Dresser Inc., majority-owned by private equity firms Riverstone Holdings LLC and First Reserve Corp., has agreed to be acquired by GE for $3 billion. 

The deal includes all of the Dresser businesses, which provide products and services for compression, flow technology, measurement and distribution infrastructure for customers in more than 150 countries. 

Dresser president and CEO John Ryan said, “Joining the GE family will enhance our company’s capability to provide best-in-class energy technologies to a much broader segment of the energy sector.” 

Fairfield, Conn.-based GE’s energy business provides a range of solutions across the energy value chain, from supply and conversion to delivery, utilization and services. Part of that model is natural gas-fired turbines for power generation and water treatment and recycling for oil and gas drilling operations. “Dresser is a great fit for the GE business model,” said John Krenicki, vice chairman of GE and president and CEO of GE Energy. 

“Dresser has a global franchise and brand with 60% of revenues outside of North America which will be accelerated by GE’s global footprint. Through the acquisition we will bring to bear our focus on research and development to Dresser’s highly-engineered custom solutions and create an opportunity for Dresser’s 6,300 talented employees to dramatically expand their businesses,” he continued. 

More than 85% of Dresser’s revenues are derived from energy customers on a global basis. 

Morgan Stanley acted as exclusive financial advisor to Dresser on this transaction, while Barclays Capital Inc. acted as exclusive financial advisor to GE. 

Headquartered in Addison, Texas, Dresser is a privately held company with revenues of $2 billion and earnings of $318 million in 2009. 

Source:  GE, Dresser Inc.

Clean Energy and Flying J Setting Up Natural Gas Filing Stations

Clean Energy Fuels Corp. said Tuesday it will build and operate natural gas fueling stations for trucks around the nation.

The company said it signed an agreement with Pilot Travel Centers LLC to place the stations at Pilot Flying J truck stops. Pilot Flying J operates more than 550 facilities in 43 states and six Canadian provinces.

Clean Energy officials said increased availability of trucks that run on natural gas has caused trucking firms to consider switching their fleets from other fuels.

Clean Energy said it now provides fuel daily for more than 18,300 vehicles, including 5,000 transit buses. It runs a methane gas production facility in Dallas and liquefied natural gas plants in Willis, Texas, and Boron, Calif.

Shares of Clean Energy rose 65 cents, or 4.9 percent, to $13.91 in afternoon trading.

Natural Gas Price $3.55/mmBTU

Natural gas futures fell to the lowest level in more than five weeks on speculation weak demand and a lack of storms in Gulf of Mexico production regions will boost a stockpile surplus.

Gas dropped as no major storms hit the Gulf in September, statistically the most active month of the hurricane season. Gas inventories were 6.3 percent above the five-year average in the week ended Sept. 24, according to the Energy Department, as mild weather reduced demand for gas for cooling and heating.

“We have fewer bullish fundamentals to stop the slide,” said Brad Florer, a trader at Kottke Associates Inc., an energy trading firm in Louisville, Kentucky. “Storms were not a situation as we close out the storm season, and we have plenty of gas.”

Natural gas for November delivery fell 7 cents, or 1.8 percent, to $3.727 per million British thermal units on the New York Mercantile Exchange, the lowest settlement price since Aug. 27. Gas futures have fallen 33 percent this year.

Cool weather in the U.S. Northeast will “give way to much warmer weather” later this week and next week, according to MDA Federal Inc.’s EarthSat Energy Weather in Rockville, Maryland.

About 53 percent of U.S. households use natural gas for heating.

New York will have a high temperature of 71 degrees Fahrenheit (22 Celsius) on Oct. 9 and a low of 51, according to the National Weather Service. The city will have a high of 58 degrees today.

Hedge Fund Speculators Cut Natural Gas

Hedge funds cut bullish bets on natural gas by the most since August as storms steered clear of production in the Gulf of Mexico and weak demand boosted a U.S. stockpile surplus.

Hedge funds and other large speculators reduced wagers on rising prices by 25 percent in the seven days ended Sept. 28, according to the weekly Commitments of Traders report from the Commodity Futures Trading Commission. Natural gas declined 2.1 percent that week.

“There’s no one as bearish as a disappointed bull,” said Tim Evans, an energy analyst with Citi Futures Perspective in New York. “Speculators and money managers liked the long side of the market. They positioned themselves net-long. And they have been very, very disappointed,” he said.

Natural gas has declined 32 percent this year on speculation demand will be slow to recover as the U.S. emerges from the deepest recession since the 1930s and forecasters expect higher-than-normal temperatures in the heating season.

Futures for November delivery fell 7.5 cents, or 1.9 percent, to settle at $3.797 per million British thermal units on the New York Mercantile Exchange on Oct. 1.

Net-long positions in futures and options combined in four natural-gas contracts decreased by17,373 futures equivalents to 51,306 in the week ended Sept. 28, the CFTC data showed.

The measure of natural-gas net longs includes an index of four contracts adjusted to futures equivalents: Nymex natural gas futures, Nymex Henry Hub Swaps, Nymex Henry Hub Penultimate Swaps, and ICE Henry Hub Swaps. Henry Hub in Erath, Louisiana, is the delivery point for the Nymex futures, a benchmark price for the fuel.

Lost Momentum

“The bulls don’t have any momentum,” said Hamza Khan, an analyst at the Schork Group Inc., a consulting company in Villanova, Pennsylvania. “They don’t have a leg to stand on.”

Gas stockpiles rose 74 billion cubic feet in the week ended Sept. 24 to 3.414 trillion, the Energy Department said last week. The five-year average gain for the week is 67 billion cubic feet. A surplus to the five-year average climbed to 6.3 percent from 6.2 percent the previous week.

Inventories will peak at 3.687 trillion cubic feet before cold-weather demand prompts utilities to pull gas from storage, the department predicted in its monthly Short-Term Energy Outlook on Sept. 8. Stockpiles rose to a record 3.837 trillion cubic feet last November.

Speculation that the hurricane season would curb production in the Gulf of Mexico has begun to fade, Khan said. The federal waters in the Gulf produce 10 percent of U.S. natural gas, according to the Energy Department.

Hurricane Season

The most active part of the Atlantic hurricane season is from Aug. 20 to about Oct. 20, according to William Gray, who pioneered seasonal forecasts at Colorado State University in Fort Collins.

A total of 7.9 billion cubic feet of gas production was shut in from June through August because of storms, lower than projections of 57.4 billion, the Energy Department said in its Sept. 8 outlook.

A low pressure area over the Northern Caribbean Sea has a 10 percent chance of becoming a tropical cyclone during the next 48 hours, according to the National Hurricane Center. A weather system 900 miles east of the Lesser Antilles has a 30 percent chance of becoming a cyclone.

Storms can hurt natural gas demand when they miss the Gulf of Mexico and drench the U.S. East Coast, curbing air- conditioning demand, Khan said. Traders are also anticipating a U.S. winter that is forecast to be warmer than usual, he said.

Warmer Weather

Northeast and central U.S. states are predicted to be warmer than normal from October to December, while the Southeast and the Pacific Northwest will have cooler weather, according to The Weather Channel’s WSI Corp.

About 23 percent of U.S. electricity is generated using natural gas, according to the Energy Department. About 53 percent of U.S. households use it for heating.

In other markets, hedge funds and other large speculators raised bets that gasoline prices would climb for the fourth straight week, increasing net-long positions by 2,606 futures and options combined, or 13 percent, to 22,732.

Managed money net-long positions in crude oil rose 10,583, or 10 percent, to 116,906. Net-long positions in heating oil climbed 787, or 2.6 percent, to 31,266.

To contact the reporters on this story: Asjylyn Loder in New York at aloder@bloomberg.net; Moming Zhou in New York at Mzhou29@bloomberg.net

Campus Cleared with Natural Gas Leak

OREM -- Officials have cleared several buildings on Utah Valley University's campus after receiving reports of an odd odor.

University spokesman Brad Plothow said the liberal arts and physical education buildings and the library have been evacuated.

Officials have heard various reports of an odd odor, possibly natural gas, in just the liberal arts building, but all three were evacuated because they're on the same HVAC system.

"They got a reading in one of the liberal arts classrooms here that there was natural gas potentially, and that it was bordering on combustible levels," Plothow said. "When we got that news, the decision was made to evacuate not only the liberal arts building, but physical education building as well as the library."

The Orem City Fire Department was on scene and two students were taken to the hospital as a precaution with complaints of runny noses and itchy eyes.

University spokesman Brad Plothow says firefighters confirmed combustible levels of natural gas in a classroom that dissipated when they turned off a gas supply.

When they turned gas back on, they couldn't detect any leak, and Plothow says the source remains a mystery.

Officials think it came from an outside source and was sucked in by the HVAC system.

Students waited outside the buildings for about two hours while officials investigated.

GE Working on Water Solution for Fracking

TREVOSE, Pa., Sep 30, 2010 (BUSINESS WIRE) -- Further advancing a solution for unconventional gas production, GE (GE 16.36, +0.11, +0.68%) today introduced a mobile evaporator, specifically designed to help natural gas producers recycle untreated waters that result from the hydraulic fracturing process at the well site. GE's new, completely mobilized evaporator is energy efficient, fully transportable, cost effective and will enable onsite frac water recycling, reducing the volume of wastewater and fresh water that needs to be hauled to and from the site.There are massive amounts of natural gas and oil buried deep below the earth's surface in shale reservoirs, which lack the natural permeability to flow to the surface for recovery. The process of hydraulic fracturing, which involves creating small fractures in the rock surrounding the reservoirs in order to create a path through which the natural gas and oil can flow, has enabled production from oil and gas resources that were otherwise thought unrecoverable.

While hydraulic fracturing increases the production rate of oil and gas wells, the process also uses a substantial amount of freshwater and produces billions of gallons of wastewater each year. To offset this impact on the environment, GE's mobile evaporator will treat the severely impaired waters, such as frac flowback and produced water, making it possible to reuse the water in the industrial process, reduce the amount of fresh water consumed and reduce any subsequent environmental impact from discharge.

GE's mobile evaporator will be used for all unconventional gas and frac water applications in regions of the world where shale gas can be found, including North America, Europe, China and Indonesia. Initial applications will be in various North American markets such as the Marcellus Shale reservoirs located in the Appalachian Basin.

Regions like the Marcellus Shale are unique in that they produce very high total dissolved solids (TDS) frac water, have limited deep well capacity and increasingly stringent discharge regulations. The mobile evaporator will enable natural gas producers to significantly decrease their transportation and disposal costs. Additionally, the communities will benefit from less truck traffic and decreased wear and tear on local roads. The first units will be available in early 2011.

"GE's objective is to create a solution that not only lessens the environmental impact of gas drilling, but also one that reduces the current treatment cost to service providers and producers. As the mobile evaporator illustrates, our research and development teams are continually working toward offering new solutions to meet our customers' challenges throughout the industry," said Jeff Connelly, vice president, engineered systems--water and process technologies for GE Power & Water.

The mobile evaporator is a 50-gallon per minute, horizontal, shell and tube, forced circulation, mechanical vapor recompression system. Unlike other treatment methods, thermal evaporation removes nearly all of the impurities in the water, allowing producers to easily meet the newly passed Pennsylvania discharge regulations of less than 500 TDS. The mobile evaporator is mounted on a single trailer that will allow it to reach the most remote drilling sites. Additionally, its unique design has been optimized for maximum energy efficiency.

GE has offered thermal evaporation technology for more than 40 years, but this is the first time that the technology used for the treatment of shale gas frac water has been completely mobilized.

About GE

GE (GE 16.36, +0.11, +0.68%) is a diversified infrastructure, finance and media company taking on the world's toughest challenges. From aircraft engines and power generation to financial services, health care solutions and television programming, GE operates in more than 100 countries and employs about 300,000 people worldwide. For more information, visit the company's website at www.ge.com.

GE serves the energy sector by developing and deploying technology that helps make efficient use of natural resources. With nearly 85,000 global employees and 2009 revenues of $37 billion, GE Energy www.ge.com/energy is one of the world's leading suppliers of power generation and energy delivery technologies. The businesses that comprise GE Energy--GE Power & Water, GE Energy Services and GE Oil & Gas--work together to provide integrated product and service solutions in all areas of the energy industry including coal, oil, natural gas and nuclear energy; renewable resources such as water, wind, solar and biogas; and other alternative fuels.

Photos/Multimedia Gallery Available: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=6448709&lang=en

SOURCE: GE

Lots of Natural Gas Available

Sept. 30 (Bloomberg) -- Natural Gas futures fell for the first time in three days before a government report that may show ample U.S. stockpiles.

The Energy Department may say today that U.S. gas stockpiles increased by 68 billion cubic feet in the week ended Sept. 24, according to the median of 23 analyst estimates compiled by Bloomberg. The five-year average gain is 67 billion. Inventories were 6.2 percent above the five-year average level in the week ended Sept. 17.

"Everybody is waiting for the report," said an analyst with PFG Best in Chicago. "Whatever the number happens to be today the storage is going to be more than ample. The fundamental is very bearish."

Natural gas for November delivery declined 7 cents, or 1.8 percent, to $3.892 per million BTU at 10:07 a.m. on the NYME. The futures have dropped 30 percent this year.

Gas supplies gained 73 billion cubic feet in the week ended Sept. 17 to 3.34 trillion, the Energy Department reported last week. A deficit to year-earlier supplies narrowed to 5 percent from 5.3 percent.