Natural Gas: America's Energy Salvation 49 comments
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Natural gas will be America’s energy salvation.
If you think solar, biomass, wind, lithium ion-powered, ocean thermal, currents and tides, and even tried-and-true geothermal and hydroelectric will somehow in the aggregate equal natural gas as a share of energy production, read here and here.
It’s time we stopped hiding our heads in the sand about today’s energy problems while spending / wasting tens of billions of dollars on taxpayer-funded grants, incentives and subsidies for tomorrow’s solutions. We need – and have readily available – an American source of relatively clean energy today for today’s needs, if only the politicians would stop spending on pork and get the hell out of the way of private industry that is trying to provide this source: clean-burning natural gas.
We pay much more for the electricity to power and light our homes and offices, the coal, heating oil or gas to heat our homes, and the gasoline to fill our automobiles, than we typically recognize.
We pay once to the utilities or at the pump, and once more when our taxes are withheld from our paychecks. Big government pork for ethanol subsidies, solar subsidies, biomass subsidies, and every other kind of can’t-stand-on-its-own-economics power are costing us, not just in monetary terms but in time value – we are looking so far down the road we don’t even see the 30-foot drop-off right in front of us. Think $4 a gallon for gasoline is high? Add in the subsidies your tax dollars are diverted to for a $0 return and you’re probably paying closer to $6 a gallon.
I say remove the subsidies, credits, and grants from all sources of energy. Big oil gets no special allowances for depletion. That’s the industry you chose, bubbas. You knew it was a wasting asset when you decided to enter the business. Same for natural gas and coal companies. And the same for nuclear, wind, solar, biomass, et al.
Clean renewable energy that is not a wasting asset remains the Holy Grail of energy production. If we shut off the spigot of vote-buying that comes from dispensing grants and subsidies, energy companies will still seek ways to harness the power of the sun and the wind. As long as the sun still shines, those who can turn this diffuse energy into a concentrated form will make money. But I’m tired of effectively paying $6 a gallon for gasoline when alternatives exist that are being ignored. Why are they being ignored? Mostly, so some people can feel morally superior while they freeze in the dark. Me. I’m not into moral superiority. I’d rather have a clean, well-lit place to work and live than to feel smug about my energy “consciousness.”
I’d like to see clean solar and wind as much as the next guy, but I won’t wear rose-colored glasses. I can’t ignore the fact that, after 30 years and $30 billion in subsidies, wind now meets 7/10 of 1% of US energy needs (about the same as when farmers used windmills 150 years ago) and solar is 12/100 of 1%. Let’s round those up to 1%. There are 1,440 minutes in a day. Are you willing to have your lights, air conditioner, computer, stove and every other appliance and convenience on just 14.4 minutes a day? Welcome to Baghdad.
Why Natural Gas
Natural gas is the second-most abundant fossil fuel in America. Coal is first. We are the Saudi Arabia of coal worldwide. China and India together don’t have as much coal as the US, which has 28% of the entire world’s reserves. But coal is dirty. Lots of for-profit firms are doing breakneck research to clean it up, but it’s – currently – dirty.
So is our choice dirty polluting coal or 14.4 minutes of power a day? Of course not. There’s imported oil. However, with the exception of tar-sands oil from Canada, when you add, to the $70 a barrel oil costs when ready for export, the transportation costs, the cost of keeping the Straits of Hormuz open, the costs of foreign wars to assure the continuing supply, the cost of the inevitable oil spills from time to time, and the foreign aid and sweetheart deals our nation makes to keep tyrants, misogynists, and perverts atop otherwise-shaky regimes, the true cost of oil is probably already $200-$300 a barrel (click to enlarge).
That leaves natural gas as the only fuel we actually use in abundance and have in abundance right now, today, this minute.
I created the chart below from the raw numbers of quadrillions of BTUs reported by the Department of Energy’s Energy Information Administration of the current mix of fuels used in the United States to produce energy.
Journalists, however, are more enamored of something new! and different! and therefore write reams on renewables and virtually nothing about something old and boring (but tried and true) like fossil fuels, so it’s easy to believe renewables constitute a larger proportion than they really do. Note, for instance, in the previous chart, the less-than-amazing ascent of heavily-subsidized solar from 8/100 of 1% 20 years ago to 12/100 of 1% today. That’s not to denigrate solar or to “wish” that it couldn’t have gone from 8/100 to 8% or 100%. But we must deal in facts if we are to ever wean ourselves from foreign oil and stop walking on eggshells around despots and ideological and religious fanatics.
HERE’s “Why Natural Gas”
1. According to Oil & Gas Weekly and the Energy Information Administration we have upwards of 100 years of natural gas remaining in the US at current rates of usage.
2. The estimate of proven reserves leapt *35%* in just the past year (creating downward pressure on prices in the short term.) No surprise to me. Every year of my 40 years in this business, I’ve been hearing about peak oil in some variation or another. “The world is running out of fossil fuels! We’re all going to freeze to death! We must subsidize unproven technologies to save us from Armageddon!”
What a bunch of hooey. Every year since the first Cassandra screamed this nonsense in my ear, we have increased our estimates of proven reserves. As technology allows us to find and produce gas from previously unknown or inaccessible formation, we’ll find even more.
3. Add Canada’s natural gas to the mix, since Canada is our biggest trading partner and the US is their closest (thus cheapest-to-transport-to) customer, and they have an abundance of nat-gas beyond the needs of their population. And since liquefying natural gas is expensive and potentially dangerous, it’s best to pipeline it from close-by fields rather than ship it liquefied across the world’s oceans.
4. If we use more U.S. natural gas, we can tell the likes of Saudi Arabia, Iran, Iraq, Russia, Nigeria and Venezuela “no thanks” to their bribery, corruption and fleecing.
Take a look at the map below (click to enlarge). These are our now-known, proven shale gas reserves. Now note how close most are to population centers... 
Okay, But Why NOW?
In previous articles, I began making the case for both nuclear and natural gas. I still believe both offer remarkably good investment opportunities in the months, years and decades ahead -- but I think natural gas will be the first to benefit. Why?
1. People are beginning to realize, in spite of Al Gore’s conflict-of-interest hawking of renewables he’s invested in, that nat-gas is the cleanest burning fossil fuel, is available in quantity right here at home, and is used to heat our homes, cook our food, power the electricity that turns on our lights and fuel the 7 million natural gas vehicles currently in use around the world.
2. The glut in supply of natural gas is both temporary and price-sensitive. The glut was created by new production coming online from shale gas plays. But at today’s prices, those wells are being shuttered. What company could stay in business if they were to sell gas at $2.56 per million BTUs (MMBtu) when it costs them $5.15 per MMBtu to get it out of the ground?
3. The natural gas glut is not only price-sensitive, it is seasonal, as well. As the winter season cranks up over the coming months, utilities will need to produce more natural gas-generated heat. As the days grow longer, we’ll turn our lights on earlier in the day and, if this year is like every other, we’ll settle in, turn up the electric blankets, play more electronic games, and cook more at home – primarily benefiting nat-gas and coal as the two primary generators of electricity in this country. (With nuclear close behind, the three of them accounting for 90% of our electrical generating fuel sources. Add hydroelectric and that leaves just 4% generated by oil, biomass, vegetable oil, solar, wind, etc.)
I believe natural gas is unlikely to remain depressed.
This is a seasonal play that hasn't changed in 50 years, yet the media always project declines or rises -- in any commodity, trend or stock -- as if they were linear. The market, however, is cyclical, not linear...
4. The Farmers' Almanac is predicting a cold winter. The squirrels, chipmunks and birds in my large yard seem to agree. All are scurrying about hiding food from each other earlier than I’ve ever seen. The Almanac predicts numbing cold from the Rocky Mountains to the Appalachians, with milder weather on the coasts. The National Weather Service is calling for a warmer-than-normal winter because of El Nino. In my experience, the animals get it right more often than the humans…
5. Natural gas-fired plants are currently operating at less than 50% capacity. If this administration and this country is really serious about cutting carbon emissions we will turn to natural gas now, not when two guys in their garage find the solar Holy Grail.
Next week, I will write an article on the three E&P (exploration and production) firms I believe will benefit most from an increase in America’s reliance upon “home-grown,” abundant, and cheap natural gas. I’ll also review what I think are the smartest natural gas pipelines for both income and growth. 
If you can’t wait until then, here’s an ETF that I believe accurately covers the whole industry: the First Trust ISE-Revere Natural Gas Index Fund (FCG). I know and respect some of the principals at Revere (“Revere Data”) and am quite familiar with their methodology and hierarchy that creates a product- and service-based classification system to map where and how companies interact and compete.
FCG would be a good adjunct to the pipelines mentioned above in that it selects companies on the exploration and production side of the business. It selects only the top 30 stocks based upon an internal ranking system, then rebalances on a quarterly basis. Be aware that this methodology will add a level of “active” management versus the passive nature of many ETFs. That might be good, it might be bad, but I see FCG as a great way to give us broad exposure to the entire industry.
Full Disclosure: We are long pilot positions in FCG.
The Fine Print: As Registered Investment Advisors, we see it as our responsibility to advise the following: We do not know your personal financial situation, so the information contained in this communiqué represents the opinions of the staff of Stanford Wealth Management, and should not be construed as personalized investment advice.
Also, past performance is no guarantee of future results, rather an obvious statement if you review the records of many alleged gurus, but important nonetheless – especially so you are not over-impressed by the fact that our Investors Edge ® Growth and Value Portfolio has beaten the S&P 500 for 10 years running. What if this is the year we under-perform it?
It should not be assumed that investing in any securities we are investing in will always be profitable. We take our research seriously, we do our best to get it right, and we “eat our own cooking,” but we could be wrong, hence our full disclosure as to whether we own or are buying the investments we write about.
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This article has 49 comments:
Income orientated people should consider the Pipeline companies like KMP or WMZ but you expect to cover this at a later date while I include these Just in case something happens between now and then.
I have a question on Hydro though, why has it declined over the years? Is it just that overall production has increased while the sources of Hydro have remained fixed?
The BTU % generated by oil seems excessively high since only 2% of Utilities still use oil to generate electricity, what have you included to get it to that percentage?
Solar may be your Holy Grail, Mine is an Environmentally safe way to extract the Shale Gas, using water is not the answer.
and, I have NO idea where U get your distorted figures from but they are so OLD and SO BEHIND, it aint funny how U can distort the truth of the matter!
Spain, Portugal, Denmark, Germany all get over 15% from Wind, we could too once the Obama administration gets another term!
BUT what we don’t have is a market place where suppliers, end use industries, and long-term investors can buy & sell it. The option traders/traitors have destroyed the spot market by making it a place for gambling and speculation. The media has portrayed some investor instruments as villains, and are relentless with their destruction.
We have allowed the Bush years of deregulation of the markets to foster a short-term mentality that has infected every corner of our financial world and even our energy world, too. Until we put an end to all this manipulation due to short-term traders/traitors we will never have a cohesive energy policy no matter what fuel we use.
Policy leadership through carbon taxes, subsidies, and research is required to produce a smooth transition. If we removed taxes/controls from the market, it would be boom and consume until critical shortages occur. A steep decline into Anarchy, at which time it is doubtful there will be the ingenuity remaining to manage the transition.
On Sep 06 06:49 AM wind4me wrote:
> the world as we know it today is going to wind whether U agree or
> dont, the next megatrend is wind energy plain and simple
>
> and, I have NO idea where U get your distorted figures from but they
> are so OLD and SO BEHIND, it aint funny how U can distort the truth
> of the matter!
>
> Spain, Portugal, Denmark, Germany all get over 15% from Wind, we
> could too once the Obama administration gets another term!
On Sep 06 08:41 AM John Petersen wrote:
> In spite of the current romantic and wholly unrealistic political
> fever for PHEVs and EVs, I'll give long odds that the customer's
> preference will ultimately be a micro, mild or full hybrid with a
> CNG engine. Gas is already the cleanest fuel on the market. Enhancing
> CNG with hybrid vehicle technologies that cut fuel use by up to 40%
> through a combination of idle elimination, electric launch and recuperative
> braking only makes the good better.
Every “mcf” of United States natural gas that is produced and consumed will not only benefit every citizen of our nation, it will also make this world a better place and pay real and tangible dividends to future generations.
Total world demand for oil will be reduced and the world price for oil will be lower. Energy for developing nations will be less expensive.
The world’s ecological / environmental situation will be improved due to lower “greenhouse gas” emissions.
Development of this nation’s natural gas provides real and absolute stimulus to our economy and credit system. This type of tangible absolute stimulus with its multiplier effect will produce significant and ongoing dividends for our nation.
Not only will the United States’ economy be stimulated, the dollar will be strengthened. Our nation’s deficits will be reduced more quickly.
The United States will be less vulnerable to “financial coercion” by foreign powers; the wealth now being transferred to oil producers will remain in the United States and can be used to benefit this nation’s future generations.
As the tangible benefits to the world and the United States are significant and compelling, there must be a single historic legislative act that articulates, memorializes, and provides gravitas to this monumental undertaking to ensure the future of the American dream and our national security.
To wit;
The United States of America Proclamation for Increased Energy Security (US PIES); Natural Gas Act of 2009
To move as expeditiously and conclusively as possible to avoid any further energy crises and in light of the now abundant supplies of natural gas with which our nation is blessed, the Congress of the United States of America hereby sets forth the Natural Gas Act of 2009 to bridge this nation’s destiny to increased energy independence.
In that our national security and economy are threatened and may be perilously further threatened and compromised by our nation’s current over dependence on imported oil and the concomitant transfer of our national wealth, it is imperative and essential our nation move with purpose and urgency to employ our God given natural gas resources and in so doing ensure the future strength and prosperity of our nation by increasing our energy security by reducing our dependence on foreign oil.
Elucidation: May God Almighty help forge these words with the flame of His Truth and Wisdom.
Illumination: Let the guiding light for this nation’s energy future be the glowing embers of the spirit of the Americans’ that have sacrificed and continue to sacrifice for our freedom, security and liberty to prosper. May these flames be light onto us.
The United States currently imports the majority of its oil from overseas National Oil Companies (NOC’s). This debilitating situation can be remedied.
Recent American technological breakthroughs, horizontal drilling and multi-stage fracture stimulation of reservoirs, have made the drilling and completing of natural gas wells much more efficient and productive and vast new reserves new of natural gas accessible here within our borders.
According to a recent study by Navigant Consulting Inc., the United States now has an estimated 2,247 trillion cubic feet of natural gas reserves, enough to last approximately 118 years at 2007 demand levels.
In that the world’s ecological future and world peace may be threatened by “global warming” and or having reached or in time soon reaching “world peak oil production”, it is imperative and essential our nation move with purpose and urgency to employ our God given natural gas resources and in so doing ensure to the maximum extent of our ability the energy security of the Untied Stats, the future world’s peace, prosperity and environmental harmony.
Note; this would be an expanded version of the New Alternative Transportation to Give Americans Solutions Act, that includes incentives for gas fired power generation and natural gas producers.
I realize all the above is easy to write and will require great effort and will not be unanimously embraced; however, there is much to be gained if we act.
There is all too much to be lost, if we do not act.
It is our American spirit and energy that make this nation great.
This natural resource is no longer supply constrained. It is demand constrained. U.S. gas supply increased by an unprecedented 8% in 2008 compared to 2007. The aforementioned new technologies make further substantial increases in our natural gas supply and consumption viable.
The development, distribution, and consumption of these abundant natural gas reserves provide the currently sought economic stimulus and creates powerful lasting long term dividends to this nation not seen since the construction of the interstate high system in the fifties or the WPA.
Natural gas is the fuel to power this nation’s economic resurgence as the world’s largest and most dynamic economy.
Natural gas is the “fast lane bridge” to this nation’s reducing dependence on imported oil.
Natural gas is the cleanest burning hydrocarbon fuel. Natural gas emits 45% less carbon dioxide than coal and 30% less carbon dioxide than oil. This transition fuel will provide the “time bridge” until solar, hydro, wind-power, and cleaner coal technologies become more available and cost effective.
New clean burning “natural gas” powered electric plants need to be constructed to reduce “greenhouse gases.”
Natural gas is the fuel for this nation’s future prosperity and growth. Increasing demand for natural gas will create tangible and lasting economic benefits for this nation; tangible and real and long lasting economic dividends and expeditious environmental benefits.
In line with the previously cited Navigant Consulting Inc. study, if we immediately doubled our current annual consumption we would have approximately sixty years to implement current “renewable” energy technologies and other heretofore undiscovered new technologies.
Boone Pickens Plan has stated every thousand cubic of domestically produced natural gas used for transportation could reduce the need for eight gallons of imported gasoline.
20,000,000,000,000 twenty trillion cubic feet per year =
20,000,000,000 20 billion MCF per year =
160,000,000,000 gallons of gasoline per year @ eight gallons per MCF =
3,809,523,810 barrels of gasoline per year =
10,437,052 barrels of gasoline per day
NYMEX April natural gas futures are now under four dollars per million cubic feet. In gross BTU parity terms before pipeline transportation charges and taxes; eight gallons of gasoline can be purchased for fewer than four dollars.
Assuming $55 per barrel of imported oil, then for every additional trillion cubic feet of natural gas produced and utilized annually, we can reduce payments for imported oil to produce gasoline by approximately ten billion dollars per year.
Our nation currently consumes roughly 20 trillion cubic feet of gas a year. So doubling are current consumption of natural gas would reduce annual payments for imported oil by approximately $200 billion per year. The U.S. dollar would be stronger. To continue as the world’s leading nation, we need a strong dollar in this global economy.
In addition to this national savings, there would be tens of thousands of good high paying careers created in this country.
Every “drilling rig” directly employees about 40 people; indirect job creation can be expected to be 5 times the 40 direct jobs; or 240 direct and indirect jobs per drilling rig.
Current drilling rigs can be expected to have a useful life of at least 20 years.
Every one thousand additional drilling rigs would create 240,000 potential careers and the concomitant opportunities for advancement; careers, not temporary employment. These careers, these jobs cannot be transferred to other lesser developed countries.
Each new state of the art drilling rig required will cost about $ US 16 million
So, 1000 new rigs will provide an economic boost to machinery manufacturers, steel fabricators and others equal to $US 16 billion.
Additional tens of thousands of new jobs and opportunities will be created by expanding and revamping the nation’s natural gas pipe line and local distribution infrastructure.
The American automotive industry can be revitalized by being incentivized to manufacture compressed natural gas vehicles. In concert with the auto manufacturers, the car dealerships and automotive aftermarket industries should gear toward retrofitting existing vehicles with natural gas fuel capability.
A natural gas refueling” infrastructure will need to be added to the current refueling infrastructure; this will create further economic activity.
Legislation should require all government vehicles to be powered by natural gas.
United States industries such as steel, other metals, chemicals, and fertilizer will become more competitive in U.S. markets and possibly internationally. With lower fuel/power other U.S. industries will have the opportunity to return as competitive forces in the global market.
The misguided and wasteful “ethanol debacle” needs to be terminated immediately. Productive agricultural land needs to be used to feed the world’s hungry children. Natural gas should be used to fuel our automobiles. The United States can feed the world’s hungry children.
The United States needs to move will all haste to capitalize the new found abundance of this environmentally friendlier and plentiful resource.
The future of North American natural gas requires the development of unconventional resource basins, which require better economics for E&P companies.
• The basins require large scale drilling programs, advanced drilling techniques and technologies, and large amounts reservoir stimulation.
• These basins include shale gas, tight sands, and coalbed methane (CBM)
In the early 1980’s there were over 4,500 drilling rigs operating drilling for oil and gas on land in the U.S.A. 4,500 rigs active rigs is the all time high for this nation. Advanced technology produced 2008’s unprecedented supply increase with the natural gas rig count reaching a peak of 1,606 in late August
Right now, natural gas exploration and production companies are cutting their capital budgets and suspending drilling operations at unprecedented rate because the price of natural gas is too low.
The United States active drilling rig count has fallen precipitously to under 900 rigs at this time; tens of thousands of jobs and careers have been put on hold or lost.
An excerpt from the March 2009, Land Rig Newsletter Monthly Report follows:
Small oil and gas operators are worried about changes to federal tax law affecting the amortization of intangible drilling and completion costs. Operators say they can withstand efforts to change the item from an expense to amortization over three years, or even five. Get beyond half a decade and the impact on drilling would be devastating for the small, privately held companies who account for more than 40 percent of rig activity.
There is an oversupply of natural gas in storage as we continue to import foreign oil and dilute the U.S. dollar.
Increased natural gas consumption is the most logical, expedient and beneficial means for keeping the USA moving forward as the world's economic and international leader.
The greater the focus and effort put on powering our transportation and electricity generation needs with this now abundant resource, the sooner we, the USA, will move forward with tangible and lasting economic dividends for our nation.
• Reduced imported oil for gasoline
• Reduced greenhouse gases from cleaner burning natural gas
• Real and lasting tangible economic growth in the United States
• Strengthening of the U.S. dollar
It is sinful in light of the blessed abundance of this natural resource and national treasure, that we, the American people, currently send our hard earned dollars overseas to those who, in too many instances, oppose our best interest and even our existence.
Our nation’s currency is no longer backed by gold…
This all the more reason our energy security, economic prosperity and freedom, and our environmental future should be backed by “U.S. natural gas”.
Immediate and increasingly urgent economic, environmental, and national security issues will be powered forward by increase usage of natural gas.
The stifling national debt will be reduced and future generations' "American dream" and way of life will be illuminated and preserved by this value adding investment in America.
What is required to achieve this is the American peoples' supporting this vision (why would we not) and leadership with the courage to passionately ensure moving proactively forward with the vision.
I am very proud to work for
• an American company,
• a company registered in the United States,
• a company that pays its full United States taxes,
• a company that has recently invested billions of dollars in U.S, manufactured drilling equipment and machinery,
• a company that created thousands of safe high paying American jobs,
• a company that has been in business for nearly 90 years creating value and wealth for its shareholders and employees; a company I pray that will be in business for many more generations,
• an industry that has invested hundreds of billions of dollar to better the American peoples’ standard of living
• an industry that has provided millions of careers and hard earned well deserved retirements for its employees
• that has and will protect and preserve this nation’s interest by providing cost effective energy,
• an industry to which this nation can and must turn in this nations great time of need; I pray this nation’s government will not turn its back to this great industry in this great nation’s time of need.
My father, a World War 2 veteran, had only a sixth grade education, but because of his work ethic and the opportunities in the great American oil and gas industry he was able to retire with a good pension and medical benefits from a major oil company. I am sure there are hundreds of thousands of similar American “big oil” stories.
American “big oil” has led the effort throughout our history to bring energy and a higher standard of living to the people of the world while investing hundreds of billions of dollars and creating hundred thousands of careers. Yes, “big oil” has profited, but not any more so than other capital intensive and innovative enterprises. There have been mistakes, but the benefits to this nation and the world outweigh by order of magnitude the negatives.
Today, America’s much maligned “big oil” companies are faced with severe and unfair restrictions, terms, and conditions leveled at them by “national oil companies” that now control the vast majority of the world’s oil and gas reserves. These national oil companies in the large majority of the cases subsidize the cost of fuel and energy for their internal economic industries.
The “national oil companies” are controlled by governments that choose to artificially control prices, limit free enterprise, confiscate American investments, and maintain the American addiction to foreign oil and liquefied natural gas. There is great danger that U.S. natural gas industry will be inundated by a deluge of imported LNG, if this nation’s government does not act swiftly and decisively to counter our nation’s increasing dependence on foreign sources of energy.
Today our nation’s economy is melting from the destructive heat of criminal avarice.
Greed that seeks to gain at the imperilment of the innocent people of this nation; premeditated greed and avarice that have stolen innocent peoples’ dreams while decimating the value of years of hard work and destroying hopes for higher education or golden years.
Meanwhile, the great American oil and gas industry that has once again discovered and created new value through visionary investment, innovation, technology, and plain old hard work finds itself being slowly and painfully paralyzed while our government flounders about attempting to bail the masters of greed out of their self-created toxic morass.
By supporting natural gas development in the United States we can begin to end the misguided and senseless dissolution of the "health and wealth of this great nation’s and this planet's future".
The American dream is not a pipe dream! Wake up!
Our government needs to step boldly forward out of this toxic quagmire and put forth the necessary legislation and tax incentives to stimulate natural gas usage in this country! This is real economic stimulus. This is absolutely imperative for the security and the well being of future generations of this great nation.
We have to move forward purposefully with the development of the God given resources we have to create value and wealth for this nation’s people. Let’s get on with it!
We owe it to future generations! Exploiting and developing this nation’s abundant natural gas supply is simply the common sense use of this nation’s God given resources. To paraphrase the heroic passengers of 11 September 2001, “Let’s roll with natural gas!”
May God speed and continue to bless this nation.
Alan Orr
Executive Vice President
Engineering & Development
Helmerich & Payne I.D.C.
Mr. Orr has worked over 33years at H&P and prior to his current position was Vice President and Chief Engineer from 1991 to 2005. He holds a B.S. in General Engineering from the United States Military Academy at West Point.
He has worked in H&P’s U.S. and international divisions in both operations and engineering assignments.
In field operations he has worked as roughneck, driller, toolpusher, and superintendent and division operations manager. In engineering assignments, he has worked as drilling engineer, project engineer, and Chief Engineer.
As Executive Vice President Engineering & Development he is responsible for development of all H&P engineering functions, technology, new rig construction, and upgrade projects – both onshore and offshore. Mr. Orr has pioneered numerous innovations and advances in the drilling industry and holds several patents.
Recognizing his role as the principal architect of H&P’s industry changing FlexRig and other significant industry contributions, Mr. Orr was the 2005 recipient of the International Association of Drilling Contractors’ Contractor of the Year award. The prestigious Contractor of the Year award, sponsored by Reed-Hycalog, was established in 1988 to recognize an individual drilling contractor representative’s outstanding lifetime achievements in technical innovation, safety, and economic efficiency in the drilling industry. It is the only award that exclusively honors drilling contractors.
In addition, your explanation and prognosis for America's expanded reliance on our own vast natural gas resources hopefully may encourage investors to make sensible energy portfolio choices that, first, will enable our natural gas industry to have sufficient capital to expand natural gas utilization, resources, and infrastructure. Moreover, such investments represent a more sensible investment then speculating over dramatic short-term market turnarounds, e.g., UNG. In contrast, a longer-term investment horizon in the natural gas industry together with prudent patience may be the safest bet one can make these days, one that has a pay off for both the country and for the investors. U. S. workers rightfully cry out: "buy American." U.S. investors might be wise to cry a little louder: "invest America!" . Thank you.
Thank you for a very thorough response to an interesting article.
Laserveteeg
An excellent article! Now, if you'd only pass it along to TPTB (and if they'd only read it). Fwiw, I agree with the commentor who suggested pipeline MLPs for those of us who construct/hold portfolios geared towards income generation.
Disclosure: long KMR, MMP
HOUSTON CHRONICLE
August 31, 2009
A little shale gas skepticism from Matt Simmons
This weekend we reported on a perspective that the oil industry's 150th anniversary may be the beginning of a natural gas era in the U.S., thanks to the lower CO2 releases from the fuel and the abundance of gas-bearing shale.
Matt Simmons, (he of Twilight in the Desert) believes the excitement of huge domestic reserves of natural gas in shale is overblown and outright incorrect.
"In the 40 years I've followed the industry I've been continuously amazed at the tangent people are willing to go off on without any data, or by getting the data wrong," Simmons said.
When producers tap natural gas in shale formations the output is very high at first, with as much as 70 percent of the reserves tapped in the first year, Simmons said. Another 20 percent of the total is tapped in the second year while the remaining 10 percent, in theory, plays out over the next decade or more.
Simmons simply doesn't believe all the gas is there that many believe and that the process of getting at it - the water-intensive hydraulic fracturing method - is a huge waste of otherwise drinkable water. A report linking contaminated drinking water to the process could be troubling for the procedure, he says.
"I don't think natural gas will be this bridge fuel to the future," Simmons said. "I don't think the reserves will ever prove up enough to make them viable in the long term."
blogs.chron.com/newswa...
And see:
www.theoildrum.com/nod...
And the EIA concludes much the same, see the section "Substitution of Natural Gas for Petroleum Consumption" a little more than half way down the page:
www.eia.doe.gov/oiaf/a...
and then these data about how fast oil supply reduction is occurring for the U.S:
survivingpeakoil.blogs...
The capital for natural gas conversions and supply infrastructure will disappear as oil supply reduction impacts the U.S. economy.
And these article do not even take into account declining oil supplies and how that will impact the economy:
seekingalpha.com/insta...
www.commodityonline.co...
www.guardian.co.uk/wor...
And the IEA indicates that "the oil crisis begins to grip after 2010:"
survivingpeakoil.blogs...
Best regards,
Cliff Wirth
Before I do, let me thank all those who have already commented and answer some questions posed.
One eye, my best guess as to why hydro has declined is that it has only barely declined in absolute terms and then only for sound environmental concerns. In RELATIVE terms, however, we’ve probably tapped every major river we can and hydro’s percent of power generation will continue to slide relative to all the other sources. As for the BTU % generated by oil, I took these numbers directly from the Dept of Energy website. My GUESS – and it is only that – is that the 2% of utilities using oil slurp up a huge amount of the stuff because they are the oldest and biggest utilities near the biggest population centers. Newer plants built in the later-settled sections of the country use newer sources of fuel. If someone knows another reason, I’m all ears.
Wind4me, as stated in the text above the chart, I get my – what you in your blind obeisance to an appealing Siren song call “distorted figures” – from DOE. If I’m not mistaken, I believe the head of that organization, which currently spends $26 billion a year to maintain its vast bureaucracy of grants, subsidies and pork, is a direct report of President Obama.
John Peterson, there will always be those who hide their head in the sand and pretend that just because electricity is clean AT THE OUTLET, why, Santa’s elves must produce it at the North Pole. You are spot on. Clean-burning hybrids make the most sense economically, geopolitically and environmentally.
Grey Road, have the mighty fallen so far that the choices are “wind freak” or “Nat Gas freak”? //grins // I don’t believe espousing a sane, geopolitically, environmentally and economically feasible solution to our energy crisis is freaky at all!
And, last, AO. Thank you for your stirring words written from someone inside the business from roughneck to EVP... I tend to downplay the geopolitical side on an economic and investing forum like SA only because my many years as a world and regional geopolitical analyst in the US Intelligence Community already predisposes me to be more concerned about those issues, and I don't want to stray too far from how an investor might approach all this. They are clearly, however, the most important national strategic consideration. How can we maintain our strength as a nation if our leaders are blind to this massive drain on America’s future? “There are none so blind as those who will not see…” Thank you for taking the time to address all the issues attendant to this state of affairs.
Parenthetically, when I was a wee lad just entering this business there were two companies I became very familiar with and recommended to my clients as being run by ethical, smart and aggressive energy leaders. Helmerich & Payne was one and Houston Oil & Minerals (if anyone even remembers that name so many years, national mis-steps, and OPEC-inflicted pain later.)
Finally, my comments, in the past, in this article, and in the future, are not about some food fight over whether natural gas or wind or solar are cooler to contemplate, but about advocacy for a sane national energy policy. Let the facts lead us to the most intelligent course of action, not the volume of rhetoric.
First I'd like to applaud the author for his call to stop all subsidies and we should tax fuels for all their costs. These subsidies are the cause of our current energy problem. Once each energy source pays it's full true cost, only then will a true free market happen to pull us out of this mess.
NG is the best fossil fuel by far with the least subsidy. Oil, coal by far is the most subsidized.
Oil subsidies especially has brought our country to it's knees. Oil subsidies for pollution, tax breaks, sweetheart royalty deals, depletion allowances and even more the huge military costs of the Persian Gulf and oil wars, balance of payments need to be in it instead of in our income taxes. This comes to $1.5T/yr now and rising. It's enough to balance our budget in 10 yrs!!
Coal costs in destroying land, water and air are huge and should be in it
Let's get to the solutions. NG is fairly clean, plentiful and the best fuel to power the future that RE can't.
I take exception to anyone who thinks RE can't be the major future energy source. The only reason it isn't is the massive subsidies oil, coal get.
Why is wind, solar CSP are very simple, eff, low cost once in real mass production in home. small business sizes. You can now buy wind at $2k/kw if you search with inverter. $1k/kw for DC versions to charge EV's, PHEV's and home batteries for 24-7 availability. Magnets4less and google axial flux wind generators to find those prices among others. 2kw of wind makes 8-30kwhrs/day avarage depending on site.
Solar CSP is just a 5hp steam engine with a 200sq' trough collector plus a 3kw alternator that directly connects to the grid, no inverter needed. This makes 9-20kwhrs/day in electric and 27-72 kwhrs/dat heat as a bonus. A larger collector can up power in cold areas and heat storage of $1k/kw can or a wood pellet of any other fuel can make it 24/7/365 availability. This in mass production would cost under $3k/kw.
Not a chance coal, nuke or oil can beat that now with their $4k/kw, $9-18k/kw new plant prices for coal, nuke. Oil is just too expensive to consider in the coming yrs.
Another tech, kinetic hydro. We have river/tidal resources in the US enough to replace every coal plant. Sadly they haven't made good generators yet but they will. I built 10 back in the 70's that put out so much they had to be turned off most of the time.
Facts are these are simple, low cost though almost all up front but they last 50 yrs. No reason 50% of homes, businesses can't use these at far less cost than any fueled source once they are widely available.
Sadly for cars, NG isn't a good option as it takes too much space and can't go through tunnels. But it's the only smart choice for trucks, semi's who have the room.
But EV's charged from NG, RE is very viable. I as many people drive them every day though most use lead batteries. My 2 seat EV sportwagon gets 250mpg fuel cost equivalent and about the same battery cost. As Lithium matures it will make them even better.
All this is current tech though it isn't in mass production though that will change very soon as oil, coal prices rise, forcing this to happen. Luckily we could produce enough of them in 10 yrs to become energy independent with many making their own energy. Those that bet against this will pay the price.
This statement my be true but it is also misleading. Reading it may lead the uninformed to conclude that the entire shale play will be tapped out in 10 years. The truth is that 'fracking" an individual well only liberates a small portion of the gas in the formation. Shale gas requires continuous drilling and "fracking" to fully exploit the reserves.
The switch to Natural Gas is easy. The technology and companies already exit:
www.cleanenergyfuels.com/ installs the pumps. - NO PROBLEM THERE.
www.capstoneturbine.com/ makes the engines – NO PROBLEM THERE.
www.capstoneturbine.co... - Ford can put the engines in their cars – NO PROBLEM THERE. New York City buses, among others already have it.
The issue is that we cannot have a small group of commodity and option trdaers dictating our future thru their short-term trading gains. How to stop the short-term mentality and promote a cohesive energy policy:
Place capital gains taxes of 50%+ on gains under 6 months, and let those revenues go to building NG stations nationwide. Cuts back on the insane trading practices and starts the build out of clean energy.
On Sep 06 08:41 AM John Petersen wrote:
> In spite of the current romantic and wholly unrealistic political
> fever for PHEVs and EVs, I'll give long odds that the customer's
> preference will ultimately be a micro, mild or full hybrid with a
> CNG engine. Gas is already the cleanest fuel on the market. Enhancing
> CNG with hybrid vehicle technologies that cut fuel use by up to 40%
> through a combination of idle elimination, electric launch and recuperative
> braking only makes the good better.
As for the money making side of pipelines, most small retail investors who do their own taxes should choose a closed-end fund such as TYY.
On Sep 06 10:35 AM laservet wrote:
> I agree with both the NG group and the alternate energy group. There
> is plenty of room for all and no real down side over a five year
> investing plan. I think that the T. Boone Pickens lovers are alittle
> too optomistic about NG but it will take over 10 years for a real
> alternate energy plan to drain through the oil lobbied government,
> and only after the oil monopoly has positioned themselves to gain
> from both NG and alternate energy. So lets all get on the EFT's and
> have some fun. Don't invest what you can't afford not to spend at
> Star Bucks.
> Laserveteeg
The cost of energy is a major factor in competitiveness, globally. China is building a new clean coal fired power plant about once a week or so. They are building 40 nuclear power plants over the next 15 years. They are building more hydro-electric plants and are in the process of completing one of the world's largest.
These plants will provide the energy for the new cities the size of Philadelphia they build every month or so. These new cities, spreading out across the rural areas of China are being linked with interstates (will pass U.S. in interstates this next year) rail, over 100 new airports, pipelines, and power grids to the rest of the nation. New factories powered by electricity that is competitive with the cost of electricity here and in other developed nations make them better prepared for the future than developed nations.
The result is that we will see a continued loss of jobs and business here. Alcoa has recently announced they will leave the U.S. for cheap electricity in Iceland if the policies this administration is calling for passes. Microsoft has also said they will have to leave.
But, regarding hybrids and batteries. China has 95% of the rare earths that are needed for much of the new technology and companies are locating in China to have access to those rare earths. China is cutting exports of them so that those companies locating there will have adequate supplies.
Thus, there is a lot more to this energy situation than meets the eye. Also, many solar fields, wind farms, power grid expansions are being blocked with lawsuits by "green" and "environmentalist" organizations that don't want anything "gumming up the environment."
It reminds me of the power plant built near where I lived. I went to the meeting that covered the "endangered specie study" that was done on the river that went by the site the plant would be located at.
The person who was reporting on the study began with, "the study was difficult to complete on the endangered species in the river because the river is dry most of the year."
Things like this delay and add cost to virtually every project we try to do in this nation. We can't compete in a global economy when you add costs like this to everything we do. Regardless of whether it is wind, solar, gas, oil, geothermal, etc. we have to have a cost for energy that is competitive or business will go where the cost of energy is lower.
We don't live in a closed loop nation. We are part of a global economy and the power is rapidly shifting from developed nations to emerging markets because of "costs." If we have higher costs in one area, then we need to find a way to lower costs the same in other areas if we are to compete. Or, we have to find some other way to level the playing field and our Congress doesn't seen willing to look for those things in earnest.
This isn't just about energy but about survival in a changing global economy. We are even losing R&D and high tech to other nations now. We have seen our infrastructure decay to where the Society of Engineers gives the best a "C" and overall ranks it at "D" and it is still getting worse. We can build new stuff but we can't maintain what we have and that includes the power grid.
Energy isn't a "separate" issue. It is part of an overall picture that has to be in balance if we are to survive and not become a 2nd world nation or worse. Our private sector can't keep up with the growth in debt and interest on debt now and anything that adds costs and reduces our competitiveness globally will only make that worse and speed up our decline to a 2nd world nation status.
We in the Great Lakes are taking a different approach. We realize that shale gas reserves are relatively abundant in the region. But to extract these reserves requires a huge amount of water and other chemicals in the fracturing process. Full development of these reserves will require careful thought, consideration of alternatives, and consideration of the costs involved with extraction in order to protect both water quantity and quality.
We are also aware that renewable energy sources cannot be the total answer to our energy needs in the near term (ie, the current need to use natural gas for space heating). But renewables can meet most of our energy needs of the future. Wind is a perfect example.
The Great Lakes region (US and Canada) is served by 75+ gigawatts of generating capacity. This electricity supports a population of more than 40 million people in a very concentrated load center that is described correctly as the third largest economy in the world. The region is also responsible for 10-15% of the world's greenhouse gas emissions. The wind resource of the Great Lakes (onshore and offshore) is one of the best on the planet and is estimated now to be 300+ gigawatts. The US and Canada have set as a goals the generation of roughly a quarter of our electricity by wind by 2030. That translates into 15-20+ gigawatts of wind capacity, MINIMUM, from the Great Lakes. With enough east-west and north-south diversity within a robust Great Lakes power grid, those 15-20+ gigawatts of wind capacity (nicely balanced with several gigawatts of existing hydro and pumped hydro capacity to account for wind variability) can be considered base load capacity. No need to wheel electricty generated by wind from the plains of Canada and the US.
The real key to our energy future is to first decarbonize the electric grid and then procede to decarbonize our transportation system. The final push would logically be to decarbonize space heating through energy efficent design, solar thermal, geothermal and other technologies powered by wind and solar generated electicity. This is not pie-in-the-sky. Decarbonization of the electric grid is already occuring at a rapid pace within the Great Lakes which now depends on fossil fuels for about half of its electric generating capacity. More megawatts of wind generating capacity are being built than coal capacity in the region, even as we speak.
For more information see the Great Lakes Wind Collaborative website at <glc.org/energy/wind>;.
Just talking about oil. The multi-trillion dollar oil infrastructure of the US, that took over 100 years to build, is not going to be replaced by one fuel source nor vehicle type, and it is not going to be replaced in just a couple of decades. Plus, the world's thirst for energy is increasing at a strong pace.
Sure, natural gas is going to be huge in the future and it should be. But, solar is also going to be huge once system prices are at grid parity which will only be a few years away. Wind is going to continue to grow as prices steadily drop. Nuclear, I believe, will make a comeback in the US as our buddy Canada has plenty of it.
Also, personal transportation is not going to be just one type. There will be everything from all-electric, to plug-in "series" hybrids, to non plug-in "parallel" hybrids, to high efficiency engine/transmission vehicles. Which type of vehicle a person buys will depend on all the factors that go into such decisions such as rural or city location, commuting distance, personal income, fashion, etc.
Conclusion. The future is going to be a “mish mash” of energy sources and vehicle types where no one energy source or vehicle type dominates.
It is weird that more cars don't run on it's liquified form in the States, when it is used in the Netherlands.
For the longer term, renewables can't do the job on their own, and the compact power of nuclear energy is needed.
The regulatory authority in the US needs to adopt an attitude of promoting nuclear power rather than creating every possible obstruction and hindering it's use.
For instance, they charge $240/hour to study new nuclear designs, effectively ruling out most progress, and a flat rate per plant to authorise, which almost prohibits small reactors.
If the attitude to nuclear power does not change then either the lights will go out, or more coal which desecrates the countryside and emits it's pollutants including uranium and mercury straight into the atmosphere.
Many tens of thousands of lives are being sacrificed every year, in an effort to avoid the theoretical risks of nuclear power.
The containment structure at Three Mile Island did it's job, and no-one died.
The coal industry must love the Greens. They are the force which unwittingly allow it to continue in it's hugely polluting activities.
What we need a better outreach and a grass roots action plan. BP Capital is doing their part, but there needs to be more groups doing the same. Pressure needs to be placed on Washington to end ethanol subsidies, increase the tax on oil, then private investment needs to be directed (create investment trusts) to invest in NG infrastructure, finance engine conversions, install NG turbines at coal plants. Individuals would like to invest, they just need some sound guidance and investment vehicles. Individuals want to support the nation, they just need guidance on how to support the initiatives and how to support ending government subsidies that are uneconomical, unenvironmental, and down right unamerican.
We need an agenda.
We need an action plan.
We need a report card.
On Sep 06 09:17 AM AO wrote:
> Natural gas manifesto; May the flame be light unto us!
>
> Every “mcf” of United States natural gas that is produced and consumed
> will not only benefit every citizen of our nation, it will also make
> this world a better place and pay real and tangible dividends to
> future generations.
>
> Total world demand for oil will be reduced and the world price for
> oil will be lower. Energy for developing nations will be less expensive.
>
>
> The world’s ecological / environmental situation will be improved
> due to lower “greenhouse gas” emissions.
>
> Development of this nation’s natural gas provides real and absolute
> stimulus to our economy and credit system. This type of tangible
> absolute stimulus with its multiplier effect will produce significant
> and ongoing dividends for our nation.
> Not only will the United States’ economy be stimulated, the dollar
> will be strengthened. Our nation’s deficits will be reduced more
> quickly.
>
> The United States will be less vulnerable to “financial coercion”
> by foreign powers; the wealth now being transferred to oil producers
> will remain in the United States and can be used to benefit this
> nation’s future generations.
>
> As the tangible benefits to the world and the United States are significant
> and compelling, there must be a single historic legislative act that
> articulates, memorializes, and provides gravitas to this monumental
> undertaking to ensure the future of the American dream and our national
> security.
> To wit;
>
> The United States of America Proclamation for Increased Energy Security
> (US PIES); Natural Gas Act of 2009
>
> To move as expeditiously and conclusively as possible to avoid any
> further energy crises and in light of the now abundant supplies of
> natural gas with which our nation is blessed, the Congress of the
> United States of America hereby sets forth the Natural Gas Act of
> 2009 to bridge this nation’s destiny to increased energy independence.
>
>
> In that our national security and economy are threatened and may
> be perilously further threatened and compromised by our nation’s
> current over dependence on imported oil and the concomitant transfer
> of our national wealth, it is imperative and essential our nation
> move with purpose and urgency to employ our God given natural gas
> resources and in so doing ensure the future strength and prosperity
> of our nation by increasing our energy security by reducing our dependence
> on foreign oil.
> Elucidation: May God Almighty help forge these words with the flame
> of His Truth and Wisdom.
>
> Illumination: Let the guiding light for this nation’s energy future
> be the glowing embers of the spirit of the Americans’ that have sacrificed
> and continue to sacrifice for our freedom, security and liberty to
> prosper. May these flames be light onto us.
>
> The United States currently imports the majority of its oil from
> overseas National Oil Companies (NOC’s). This debilitating situation
> can be remedied.
>
> Recent American technological breakthroughs, horizontal drilling
> and multi-stage fracture stimulation of reservoirs, have made the
> drilling and completing of natural gas wells much more efficient
> and productive and vast new reserves new of natural gas accessible
> here within our borders.
>
> According to a recent study by Navigant Consulting Inc., the United
> States now has an estimated 2,247 trillion cubic feet of natural
> gas reserves, enough to last approximately 118 years at 2007 demand
> levels.
>
> In that the world’s ecological future and world peace may be threatened
> by “global warming” and or having reached or in time soon reaching
> “world peak oil production”, it is imperative and essential our nation
> move with purpose and urgency to employ our God given natural gas
> resources and in so doing ensure to the maximum extent of our ability
> the energy security of the Untied Stats, the future world’s peace,
> prosperity and environmental harmony.
>
> Note; this would be an expanded version of the New Alternative Transportation
> to Give Americans Solutions Act, that includes incentives for gas
> fired power generation and natural gas producers.
>
> I realize all the above is easy to write and will require great effort
> and will not be unanimously embraced; however, there is much to be
> gained if we act.
>
> There is all too much to be lost, if we do not act.
>
> It is our American spirit and energy that make this nation great.
>
>
> This natural resource is no longer supply constrained. It is demand
> constrained. U.S. gas supply increased by an unprecedented 8% in
> 2008 compared to 2007. The aforementioned new technologies make
> further substantial increases in our natural gas supply and consumption
> viable.
>
> The development, distribution, and consumption of these abundant
> natural gas reserves provide the currently sought economic stimulus
> and creates powerful lasting long term dividends to this nation not
> seen since the construction of the interstate high system in the
> fifties or the WPA.
>
> Natural gas is the fuel to power this nation’s economic resurgence
> as the world’s largest and most dynamic economy.
>
> Natural gas is the “fast lane bridge” to this nation’s reducing dependence
> on imported oil.
>
> Natural gas is the cleanest burning hydrocarbon fuel. Natural gas
> emits 45% less carbon dioxide than coal and 30% less carbon dioxide
> than oil. This transition fuel will provide the “time bridge” until
> solar, hydro, wind-power, and cleaner coal technologies become more
> available and cost effective.
>
> New clean burning “natural gas” powered electric plants need to be
> constructed to reduce “greenhouse gases.”
>
> Natural gas is the fuel for this nation’s future prosperity and growth.
> Increasing demand for natural gas will create tangible and lasting
> economic benefits for this nation; tangible and real and long lasting
> economic dividends and expeditious environmental benefits.
>
>
> In line with the previously cited Navigant Consulting Inc. study,
> if we immediately doubled our current annual consumption we would
> have approximately sixty years to implement current “renewable” energy
> technologies and other heretofore undiscovered new technologies.
>
>
> Boone Pickens Plan has stated every thousand cubic of domestically
> produced natural gas used for transportation could reduce the need
> for eight gallons of imported gasoline.
> 20,000,000,000,000 twenty trillion cubic feet per year =
> 20,000,000,000 20 billion MCF per year =
> 160,000,000,000 gallons of gasoline per year @ eight gallons per
> MCF =
> 3,809,523,810 barrels of gasoline per year =
> 10,437,052 barrels of gasoline per day
>
> NYMEX April natural gas futures are now under four dollars per million
> cubic feet. In gross BTU parity terms before pipeline transportation
> charges and taxes; eight gallons of gasoline can be purchased for
> fewer than four dollars.
>
> Assuming $55 per barrel of imported oil, then for every additional
> trillion cubic feet of natural gas produced and utilized annually,
> we can reduce payments for imported oil to produce gasoline by approximately
> ten billion dollars per year.
>
> Our nation currently consumes roughly 20 trillion cubic feet of gas
> a year. So doubling are current consumption of natural gas would
> reduce annual payments for imported oil by approximately $200 billion
> per year. The U.S. dollar would be stronger. To continue as the
> world’s leading nation, we need a strong dollar in this global economy.
>
>
> In addition to this national savings, there would be tens of thousands
> of good high paying careers created in this country.
>
> Every “drilling rig” directly employees about 40 people; indirect
> job creation can be expected to be 5 times the 40 direct jobs; or
> 240 direct and indirect jobs per drilling rig.
>
> Current drilling rigs can be expected to have a useful life of at
> least 20 years.
> Every one thousand additional drilling rigs would create 240,000
> potential careers and the concomitant opportunities for advancement;
> careers, not temporary employment. These careers, these jobs cannot
> be transferred to other lesser developed countries.
>
> Each new state of the art drilling rig required will cost about $
> US 16 million
> So, 1000 new rigs will provide an economic boost to machinery manufacturers,
> steel fabricators and others equal to $US 16 billion.
> Additional tens of thousands of new jobs and opportunities will be
> created by expanding and revamping the nation’s natural gas pipe
> line and local distribution infrastructure.
>
> The American automotive industry can be revitalized by being incentivized
> to manufacture compressed natural gas vehicles. In concert with
> the auto manufacturers, the car dealerships and automotive aftermarket
> industries should gear toward retrofitting existing vehicles with
> natural gas fuel capability.
>
> A natural gas refueling” infrastructure will need to be added to
> the current refueling infrastructure; this will create further economic
> activity.
>
> Legislation should require all government vehicles to be powered
> by natural gas.
>
> United States industries such as steel, other metals, chemicals,
> and fertilizer will become more competitive in U.S. markets and possibly
> internationally. With lower fuel/power other U.S. industries will
> have the opportunity to return as competitive forces in the global
> market.
>
> The misguided and wasteful “ethanol debacle” needs to be terminated
> immediately. Productive agricultural land needs to be used to feed
> the world’s hungry children. Natural gas should be used to fuel
> our automobiles. The United States can feed the world’s hungry children.
>
>
> The United States needs to move will all haste to capitalize the
> new found abundance of this environmentally friendlier and plentiful
> resource.
>
> The future of North American natural gas requires the development
> of unconventional resource basins, which require better economics
> for E&P companies.
>
> • The basins require large scale drilling programs, advanced drilling
> techniques and technologies, and large amounts reservoir stimulation.
>
>
> • These basins include shale gas, tight sands, and coalbed methane
> (seekingalpha.com/symbo...)
>
> In the early 1980’s there were over 4,500 drilling rigs operating
> drilling for oil and gas on land in the U.S.A. 4,500 rigs active
> rigs is the all time high for this nation. Advanced technology produced
> 2008’s unprecedented supply increase with the natural gas rig count
> reaching a peak of 1,606 in late August
>
> Right now, natural gas exploration and production companies are cutting
> their capital budgets and suspending drilling operations at unprecedented
> rate because the price of natural gas is too low.
>
> The United States active drilling rig count has fallen precipitously
> to under 900 rigs at this time; tens of thousands of jobs and careers
> have been put on hold or lost.
>
> An excerpt from the March 2009, Land Rig Newsletter Monthly Report
> follows:
>
> Small oil and gas operators are worried about changes to federal
> tax law affecting the amortization of intangible drilling and completion
> costs. Operators say they can withstand efforts to change the item
> from an expense to amortization over three years, or even five.
> Get beyond half a decade and the impact on drilling would be devastating
> for the small, privately held companies who account for more than
> 40 percent of rig activity.
>
> There is an oversupply of natural gas in storage as we continue to
> import foreign oil and dilute the U.S. dollar.
>
> Increased natural gas consumption is the most logical, expedient
> and beneficial means for keeping the USA moving forward as the world's
> economic and international leader.
>
> The greater the focus and effort put on powering our transportation
> and electricity generation needs with this now abundant resource,
> the sooner we, the USA, will move forward with tangible and lasting
> economic dividends for our nation.
>
> • Reduced imported oil for gasoline
>
> • Reduced greenhouse gases from cleaner burning natural gas
>
> • Real and lasting tangible economic growth in the United States
>
>
> • Strengthening of the U.S. dollar
>
> It is sinful in light of the blessed abundance of this natural resource
> and national treasure, that we, the American people, currently send
> our hard earned dollars overseas to those who, in too many instances,
> oppose our best interest and even our existence.
>
> Our nation’s currency is no longer backed by gold…
>
> This all the more reason our energy security, economic prosperity
> and freedom, and our environmental future should be backed by “U.S.
> natural gas”.
>
> Immediate and increasingly urgent economic, environmental, and national
> security issues will be powered forward by increase usage of natural
> gas.
>
> The stifling national debt will be reduced and future generations'
> "American dream" and way of life will be illuminated and preserved
> by this value adding investment in America.
>
> What is required to achieve this is the American peoples' supporting
> this vision (why would we not) and leadership with the courage to
> passionately ensure moving proactively forward with the vision.
>
>
> I am very proud to work for
> • an American company,
>
> • a company registered in the United States,
>
> • a company that pays its full United States taxes,
>
> • a company that has recently invested billions of dollars in U.S,
> manufactured drilling equipment and machinery,
>
> • a company that created thousands of safe high paying American jobs,
>
>
> • a company that has been in business for nearly 90 years creating
> value and wealth for its shareholders and employees; a company I
> pray that will be in business for many more generations,
>
> • an industry that has invested hundreds of billions of dollar to
> better the American peoples’ standard of living
>
> • an industry that has provided millions of careers and hard earned
> well deserved retirements for its employees
>
> • that has and will protect and preserve this nation’s interest by
> providing cost effective energy,
>
> • an industry to which this nation can and must turn in this nations
> great time of need; I pray this nation’s government will not turn
> its back to this great industry in this great nation’s time of need.
>
>
>
> My father, a World War 2 veteran, had only a sixth grade education,
> but because of his work ethic and the opportunities in the great
> American oil and gas industry he was able to retire with a good pension
> and medical benefits from a major oil company. I am sure there are
> hundreds of thousands of similar American “big oil” stories.
>
> American “big oil” has led the effort throughout our history to bring
> energy and a higher standard of living to the people of the world
> while investing hundreds of billions of dollars and creating hundred
> thousands of careers. Yes, “big oil” has profited, but not any more
> so than other capital intensive and innovative enterprises. There
> have been mistakes, but the benefits to this nation and the world
> outweigh by order of magnitude the negatives.
>
> Today, America’s much maligned “big oil” companies are faced with
> severe and unfair restrictions, terms, and conditions leveled at
> them by “national oil companies” that now control the vast majority
> of the world’s oil and gas reserves. These national oil companies
> in the large majority of the cases subsidize the cost of fuel and
> energy for their internal economic industries.
>
> The “national oil companies” are controlled by governments that choose
> to artificially control prices, limit free enterprise, confiscate
> American investments, and maintain the American addiction to foreign
> oil and liquefied natural gas. There is great danger that U.S. natural
> gas industry will be inundated by a deluge of imported LNG, if this
> nation’s government does not act swiftly and decisively to counter
> our nation’s increasing dependence on foreign sources of energy.
>
>
> Today our nation’s economy is melting from the destructive heat of
> criminal avarice.
>
> Greed that seeks to gain at the imperilment of the innocent people
> of this nation; premeditated greed and avarice that have stolen innocent
> peoples’ dreams while decimating the value of years of hard work
> and destroying hopes for higher education or golden years.
>
> Meanwhile, the great American oil and gas industry that has once
> again discovered and created new value through visionary investment,
> innovation, technology, and plain old hard work finds itself being
> slowly and painfully paralyzed while our government flounders about
> attempting to bail the masters of greed out of their self-created
> toxic morass.
>
> By supporting natural gas development in the United States we can
> begin to end the misguided and senseless dissolution of the "health
> and wealth of this great nation’s and this planet's future". <br/>
>
> The American dream is not a pipe dream! Wake up!
>
> Our government needs to step boldly forward out of this toxic quagmire
> and put forth the necessary legislation and tax incentives to stimulate
> natural gas usage in this country! This is real economic stimulus.
> This is absolutely imperative for the security and the well being
> of future generations of this great nation.
>
> We have to move forward purposefully with the development of the
> God given resources we have to create value and wealth for this nation’s
> people. Let’s get on with it!
>
> We owe it to future generations! Exploiting and developing this
> nation’s abundant natural gas supply is simply the common sense use
> of this nation’s God given resources. To paraphrase the heroic passengers
> of 11 September 2001, “Let’s roll with natural gas!”
>
> May God speed and continue to bless this nation.
>
> Alan Orr
> Executive Vice President
> Engineering & Development
> Helmerich & Payne I.D.C.
>
> Mr. Orr has worked over 33years at H&P and prior to his current
> position was Vice President and Chief Engineer from 1991 to 2005.
> He holds a B.S. in General Engineering from the United States Military
> Academy at West Point.
> He has worked in H&P’s U.S. and international divisions in both
> operations and engineering assignments.
> In field operations he has worked as roughneck, driller, toolpusher,
> and superintendent and division operations manager. In engineering
> assignments, he has worked as drilling engineer, project engineer,
> and Chief Engineer.
> As Executive Vice President Engineering & Development he is responsible
> for development of all H&P engineering functions, technology,
> new rig construction, and upgrade projects – both onshore and offshore.
> Mr. Orr has pioneered numerous innovations and advances in the drilling
> industry and holds several patents.
> Recognizing his role as the principal architect of H&P’s industry
> changing FlexRig and other significant industry contributions, Mr.
> Orr was the 2005 recipient of the International Association of Drilling
> Contractors’ Contractor of the Year award. The prestigious Contractor
> of the Year award, sponsored by Reed-Hycalog, was established in
> 1988 to recognize an individual drilling contractor representative’s
> outstanding lifetime achievements in technical innovation, safety,
> and economic efficiency in the drilling industry. It is the only
> award that exclusively honors drilling contractors.
On Sep 06 06:38 AM one eye wrote:
> FCG is a great tool for those seeking Appreciation in the NG world
> without taking the risks any one selection may entail.
>
> Income orientated people should consider the Pipeline companies like
> KMP or WMZ but you expect to cover this at a later date while I include
> these Just in case something happens between now and then.
>
> I have a question on Hydro though, why has it declined over the years?
> Is it just that overall production has increased while the sources
> of Hydro have remained fixed?
>
> The BTU % generated by oil seems excessively high since only 2% of
> Utilities still use oil to generate electricity, what have you included
> to get it to that percentage?
>
> Solar may be your Holy Grail, Mine is an Environmentally safe way
> to extract the Shale Gas, using water is not the answer.
The trouble with natural gas is that no matter how much we predict, if the prices go up, the use of natural gas in the power sector will go down. The only thing that may arrest that is if coal plants are retired to make way for natural gas usage in the next two years (5% of all Coal capacity is on its last leg and are not profitable to run).
Truck / Car [$600.] Conversion is CHEAP ! ! !
[ Cash for CLUNKERS was $4000 ??? What BS is happening ?! ]
The USA has 90% of WORLDs Natural Gas !
Why are OUR USA OIL & Energy prices ALLOWED TO BE Shorted/ETF “traded” and KEPT HIGH by Wall Street ?!?
Other countries PROHIBIT it.
"THEY" ARE ! PREVENTING our Independence !
I played a part in the acquisition of the station and the vehicles.
Milo Wolff, PhD - Physics and biochemistry
In the long term NG is a transition fuel and while we must aggressively develop its use now we must also develop advanced nuclear reactors such as the IFR design to provide clean sustainable base load electricity for our future. The IFR design can burn accumulated nuclear waste as fuel converting it into much shorter half-life material. Davewmart has accurately described some of the many roadblocks to this progress that much be removed. Since this is a long term development it must be started now in order to be in place when we need it not to mention secure the U.S. future in the industry which is sure to grow.
When most people think of CNG hybrids, they assume that the engine must be an internal combustion engine and that the drivetrain is a parallel (or "mild") hybrid like the Prius. I would suggest that a better CNG hybrid option would be (1) an external combustion engine with (2) a series hybrid electric drivetrain. An external combustion, Stirling engine would be the ultimate flex-fuel or multi-fuel engine. Because it is an external combustion engine, it can cleanly run on petroleum fuels, CNG, alcohol fuels, biogas or virtually any combustible liquid or gaseous fuel source. The Stirling engine runs a generator that would recharge the vehicle batteries. Unlike a PHEV, lithium ion batteries are not required with a series hybrid configuration in order to extend vehicle range. The vehicle would be a multi-fuel, electric drive car. Because the vehicle is multi-fuel, the transition to non-petroleum fuels becomes a realistic possibility, as Brazil has proven with its multi-fuel infrastructure and engine technologies (the latest of which is the Fiat/Chrysler Siena which is a "tetra-fuel" internal combustion engine). Stirling engine series hybrids permit an even greater expansion of the domestic fuel resource base for the transportation sector.
Could such a series hybrid vehicle ever be built? Yes, it was actually built in 1969 by General Motors and dubbed the Stir-Lec I. See, treehugger.com/files/2.... More recently, the DEKA Stirling engine has been used in a prototype series electric vehicle called the "Revolt". See, greencarcongress.com/2.... The mistake make by the Revolt's inventor is marketing the car as a PHEV. The Stir-Lec I from GM used conventional lead acid batteries and was a true series (or "full") electric hybrid, not a PHEV. The "car of the future" may prove to be 40 years old technology.
So, when considering CNG (or any other alternative fuel) hybrid technology, you may want to keep in mind the advantages of a multi-fuel, external combustion, series hybrid vehicle over a CNG-only, internal combustion hybrid as a means to reduce petroleum fuel dependence.
Thanks for your excellent contributions to SA.
George
On Sep 06 08:41 AM John Petersen wrote:
> In spite of the current romantic and wholly unrealistic political
> fever for PHEVs and EVs, I'll give long odds that the customer's
> preference will ultimately be a micro, mild or full hybrid with a
> CNG engine. Gas is already the cleanest fuel on the market. Enhancing
> CNG with hybrid vehicle technologies that cut fuel use by up to 40%
> through a combination of idle elimination, electric launch and recuperative
> braking only makes the good better.
the politicians are defending coal and ethanol. In the coming mid-term ask your rep or senator their position on NG and hold them accountable.
On Sep 06 08:13 AM apppro wrote:
> There is no doubt that NG will become our preferred energy of choice.
> It is clean (and XOM is building a plant to make it even cleaner),
> the technology to use it is here now, the technology to distribute
> is here now, we have loads of it, etc., etc.
>
> BUT what we don’t have is a market place where suppliers, end use
> industries, and long-term investors can buy & sell it. The option
> traders/traitors have destroyed the spot market by making it a place
> for gambling and speculation. The media has portrayed some investor
> instruments as villains, and are relentless with their destruction.
>
>
> We have allowed the Bush years of deregulation of the markets to
> foster a short-term mentality that has infected every corner of our
> financial world and even our energy world, too. Until we put an end
> to all this manipulation due to short-term traders/traitors we will
> never have a cohesive energy policy no matter what fuel we use.
On Sep 10 08:48 AM jay brebner wrote:
> "if only the politicians would stop spending on pork and get the
> hell out of the way of private industry that is trying to provide
> this source: clean-burning natural gas."
>
> the politicians are defending coal and ethanol. In the coming mid-term
> ask your rep or senator their position on NG and hold them accountable.
On Sep 06 01:29 PM terravario wrote:
> I do not agree with Joseph Shaefer that natural gas is America's
> total energy salvation. It is an essential fuel to heat America's
> homes and can be used with 95% effeciency. With well insulated homes
> and LEED building technology, natural gas can serve us as a heating
> fuel well into the future. To burn natural gas in an inefficient
> power plant to produce electricity is a terrible waste, even for
> peaking purposes.
>
> We in the Great Lakes are taking a different approach. We realize
> that shale gas reserves are relatively abundant in the region. But
> to extract these reserves requires a huge amount of water and other
> chemicals in the fracturing process. Full development of these reserves
> will require careful thought, consideration of alternatives, and
> consideration of the costs involved with extraction in order to protect
> both water quantity and quality.
>
> We are also aware that renewable energy sources cannot be the total
> answer to our energy needs in the near term (ie, the current need
> to use natural gas for space heating). But renewables can meet most
> of our energy needs of the future. Wind is a perfect example.<br/>
>
> The Great Lakes region (US and Canada) is served by 75+ gigawatts
> of generating capacity. This electricity supports a population of
> more than 40 million people in a very concentrated load center that
> is described correctly as the third largest economy in the world.
> The region is also responsible for 10-15% of the world's greenhouse
> gas emissions. The wind resource of the Great Lakes (onshore and
> offshore) is one of the best on the planet and is estimated now to
> be 300+ gigawatts. The US and Canada have set as a goals the generation
> of roughly a quarter of our electricity by wind by 2030. That translates
> into 15-20+ gigawatts of wind capacity, MINIMUM, from the Great Lakes.
> With enough east-west and north-south diversity within a robust Great
> Lakes power grid, those 15-20+ gigawatts of wind capacity (nicely
> balanced with several gigawatts of existing hydro and pumped hydro
> capacity to account for wind variability) can be considered base
> load capacity. No need to wheel electricty generated by wind from
> the plains of Canada and the US.
>
> The real key to our energy future is to first decarbonize the electric
> grid and then procede to decarbonize our transportation system.
> The final push would logically be to decarbonize space heating through
> energy efficent design, solar thermal, geothermal and other technologies
> powered by wind and solar generated electicity. This is not pie-in-the-sky.
> Decarbonization of the electric grid is already occuring at a rapid
> pace within the Great Lakes which now depends on fossil fuels for
> about half of its electric generating capacity. More megawatts of
> wind generating capacity are being built than coal capacity in the
> region, even as we speak.
>
> For more information see the Great Lakes Wind Collaborative website
> at <glc.org/energy/wind%3E;.
On Sep 06 06:38 AM one eye wrote:
> FCG is a great tool for those seeking Appreciation in the NG world
> without taking the risks any one selection may entail.
>
> Income orientated people should consider the Pipeline companies like
> KMP or WMZ but you expect to cover this at a later date while I include
> these Just in case something happens between now and then.
>
> I have a question on Hydro though, why has it declined over the years?
> Is it just that overall production has increased while the sources
> of Hydro have remained fixed?
>
> The BTU % generated by oil seems excessively high since only 2% of
> Utilities still use oil to generate electricity, what have you included
> to get it to that percentage?
>
> Solar may be your Holy Grail, Mine is an Environmentally safe way
> to extract the Shale Gas, using water is not the answer.
That was a very painful episode and one that you couldn't imagine would not have spurred the nation to devise a plan to do whatever it required to make certain that it would never ever be repeated. We talked volumes but effectively did nothing. The Reagan Doctrine decreed that we spend billions building a military sufficient to "take" whatever oil we might need and use that threat to keep crude supplies flowing our way---an idiotic and utterly mindless approach that engenders world wide hatred, Islamic terrorism and "oil wars". There are monstrous costs for American tax payers in such a "plan" if you can call it such.
Now, almost 40 years later we are still strangled by the same dependency that we "enjoyed" at the time of that 1973 embargo despite the many warnings of the dire consequences it represented. The simple fact remains that "Big Oil" is not and has never been America's friend. They bought control of Congress and dictated through that body what our fuel "choices" will be and at what cost---they pull the strings and we dance. Now, at long last it appears that the natural gas industry is awakening to the fact that their worst enemy is in fact the Big Oil boys. The farther the gas industry gets from the crude oil people the better they will be. With the tremendous pressures generated by environmental activism the natural gas industry has much to gain from their much cleaner, domestic and superior product. Both coal and crude are vastly more polluting and less desirable than American natural gas.
While virtually no one believes that natural gas is the long term solution to the nation's energy dilemma, we must have mobility if our economy is to function and short term it represents far and away the best solution. Truly renewable energy sources are under development and it will take time before those energy sources have widespread application. As one commenter noted, the industry is "demand constrained" at present and that impediment can be remedied fairly quickly if the Congress acts in the interest of the American people (and not in the interest of the current American politician).
The Congress needs to pass legislation compelling the transition to a natural gas fueled transportation sector---and the President is waiting to sign it. The sooner the better