Energy Firms Should Look to U.S. Shale - Barron's 20 comments
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Many of the major energy players are busy searching the world for more oil and natural gas reserves. Barron's Dimitra Defotis thinks they should be looking closer to home, as U.S. shale fields hold enormous potential as a source of energy.
BP (BP) is already charting a course in this direction. In July, it made a deal to pay Chesapeake Energy (CHK) $1.75B for land in Oklahoma's Woodford Shale. Exxon Mobil (XOM) would do well to follow suit.
Yet smaller U.S. oil and gas companies with shale assets, like St. Mary Land & Exploration (SM) and Quicksilver Resources (KWK), are finding that their share prices don't reflect the value of the companies' shale holdings. The reason is that investors are concerned an oversupply of natural gas could cause prices to dip below $6, roughly the threshold for shale-gas profitability.
Barron's believes demand is likely to stay strong, so oversupply shouldn't be a problem. And for smaller companies that can't profitably invest in their shale assets, a buyout from a larger, well-capitalized company may be the best option for all parties involved. Neil McMahon, an analyst at Bernstein Research, says oil companies with limited debt are "licking their lips at the prospect of picking up cheap bargains." Even some smaller U.S. firms could become buyers in this environment, as XTO Energy (XTO) demonstrated with its recent purchase of $15B in shale assets.
St. Mary Land & Exploration (SM) has strong potential as a buyout target. Will Nasgovitz of Heartland Select Value Fund thinks the stock is worth $75, nearly twice its current trading price. Quicksilver Resources (KWK) could be a merger target, and Jefferies & Co. recently raised its one-year target price to $56 from its trading price of $24.
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This article has 20 comments:
If we want energy independence in the next 25 years we need to first elect McCain. Second through fourth are equal - develop onshore and off shore resources including ANWR. Figuring out how to build 100-150 nuclear power plants. (Where is all of the lectricity for plug in hybrids and electric cars coming from). Develop coal gasification technology.
Lets eat corn and soybeans and be the bread basket for the world. Yes someday(~ 100 years) we will run out of hydrocarbon in the ground, but by then hopefully we will be self sufficient in nuclear power. Also we should conserve and develop technologies that better utilize energy. The US government (USCAR / PNGV) sponsored a program and gave $100's of millions to the US auto industry to develop a high mileage car. The US OEMs studied and talked about it, spent the money while Honda introduced the Insight and Toyota the Prius and Detroit delivered the mobil Subdivision and three versions fo the Hummer.
But we could solve all of our problems by electimg Obama who will bless the 5 barrels of biodiesel and 2 wind farms and we will have our fill with baskets of energy left over.
the way to solve our problems is a national policy to keep the oil price high in the USA. in 1980 we had every discussion we are having now, and as soon as the oil price dropped there was no incentive to do anything but import it and burn it. all you have to do is look at the initiative that kicked in when oil went over $100 this time and imagine if that had continued for 28 years.
Oil shale is by magnitudes more difficult to produce.
It ought be cheaper to develop nuclear, solar, and wind.
Hydrogen is the answer. Since the entire universe consists of hydrogen, there is little chance, or none, that we will ever run out of it. Therefore, we must put on a full-court press to develop and implement it as our primary source of energy. Additionally, there is no way that business and government can create a believable shortage of it with the result of price gouging.
If you think of it, with abundant energy at very low prices, government and business take a back seat to the will of the people as their main control over our destiny is removed.
"Gas to Gas"
Get this: the leader of the opposition tio the drillers is a former oil and gas prospector.
Water usage and pollution is a huge issue that Mac and O'Bama will have to face.
I just wonder what the greenies are going to do with O'Bama if he goes against them
This is (water) the big boogey man in T. Boone'splans od self suffiicency that no on's talking about.
Here we go, beating around the bush again., Oil? Energy crisis. What energy crisis? There is no energy crisis - there is a transportation crisis.
Transportation is getting anything and/or anyone transported to somewhere else, and transportation is the area that requires the bulk of our energy. And without transportation our world will certainly change for the worst. Anyway, the days of wind transportation are past (Boone Pickens) and the days of powering by hydrogen are yet to come (automotive industry.) So,
The solution:
Ample energy sources already exist, the manufacturing process exists, the delivery infrastructure exists, the storage facility exists, the vehicle technology exists, the price competitiveness exists - all things exist, that's why it's called the Solution. It's even been successfully tested.
1. Ample energy source = Coal. 100 years known energy reserves.
2. Manufacturing process = Fischer-Tropsch, coal to clean diesel..
3. Delivery = use existing pipelines, tankers, trucks.
4. Storage = use existing refiner tanks & gas station tanks.
5. Vehicle technology = ships, plans, trains, trucks, cars run on diesel. This is exceptionally clean diesel.
6. Competitiveness = cost equivalent to $30±. per barrel of oil.
7. Successfully tested = German army, Second World War.
P.S. There are many other very useful advantages, e.g., solid waste into clean diesel that would downsize our landfill and run our garbage trucks. Meat processing wastes into clean diesel and power our military jet engine planes, etc. on & on, & on. These plants are being built as we speak.
Probably the solution is too easy to accept without feeling totally foolish, since it's been right in our face for so long. If, the solution is too simple to figure out by the people back in Washington and you want some help, give me a call.
Sincerely,
famos
(email: famos@bresnan.net)
There are literally miles upon miles of "mountains" of coal culm in PA that are unsightly, which would disappear if coal to diesel conversion could somehow "get off the ground".
China can use all the coal we can export to them, but they are "hell-bent" to develop the new tech "small" nuclear plants that can be readily installed in their myriad of towns.
I heard about the new nuclear technology while visiting Knoxville, Tn this past Spring, but haven't seen any "press" about its safety and cost-effectiveness. For some reason (conspiracy??), it is under the medias' radar!?
Guess we must contact the U. of Tenn - Knoxville for info. That is the source of this leading-edge technology.
As I have said in other blogs, the grid needs to be beefed up and expanded, and also provide for solar and wind hook-up. And I grossly stated that high power transmission lines are probably within 25-50 miles of any future installation.
Take a look at where all the hydro installations are (Grand Coulee Dam in the middle of nowhere is the equivalent of 8 (eight) 1000 MWe nuc plants. No look at the rest of the hydro locations west/midwest/southeast... etc. As for nucs; we have over 100 1000 MWe plants scattered around the US - few states without - most state are less than 200 mi in one direction or another. Then there is the coal - everywhere??
So, the grid problem is just a bunch of roadblocks (policy/politics/regul... - we have the technology and wherewithall to improve it and expand it immediately. Report abuse
nakedjaybird
Sep 01 09:20 PMYou know, in the NYTimes article, a FERC member member is quoted saying we need an "INTERSTATE TRANSMISSION SUPERHIGHWAY SYSTEM" - he is so right.
And where they should run that grid is alongside/between/abov... the US Interstate hiway system that exists. And then, put the electrified ferries on steel-wheeled rails in the same space. Then we simply take the cargo off the diesel (biodiesel hybrid) trucks and ferry it electrically powered by solar and wind - that's a good role for solar and wind.
Centainly takes the wind out of the sails of the contras that continually talk about balancing the grid.
This idea solves two if not three problems at the same time. Since the Gov't steamrolled for the interstate highway system, let them steamroll for electrifying it. Simple. The right of way is there. Who's going to argure?. Yes, I know, someone will.
And what's the distance between interstate hiways? Do they go thru wind mill and solar land, and do they eventually move right into cities, and go thru where all the people are. DUH??
I hope someone in FERC reads this.
Help out, guys. I'm like solarPV on a native hut, with a microwave, color TV, cell phone, but connected to no one.
Report abuse
nakedjaybird
Sep 01 09:27 PMOh yes, and wireless internet!
But I'm as helpless as all the steers running around me and that just reminds me of Washington DC every time I look at them and feed them. And what do I get in return - about the same stuff - let me help you city folks, it's hot, wet, sort of like putty, and smells like shit. If it looks like, smells like, feels like, it probably is.........yup!
Happy Memorial Day to all the Vets and all those enjoying the freedom they have provided in the US and worldwide - regardless of the naysayers.
I thought Picken's had substantial water rights in the Panhandle of Texas and a pipeline to move it. If so. how timely can that be?
typically in america, sept 1 is labor day and not memorial day......