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Michael Fitzsimmons  

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  • Natural Gas: The Fastest Growing Transportation Fuel In The U.S. [View article]
    Yes, but Obama has been a huge disappointment in energy policy. John Podesta was a big-wig in the Obama machine when he first entered office. I was expecting a big shift to natural gas transportation considering Podesta wrote a note in Robert Hefner's seminal book "The Grand Energy Transition". What happened instead was the SuperPACs took over and we had more wastefull billions on "clean coal", solar, ethanol and electric vehicles. The US government has wasted hundreds of billions on everything but the one mature, proven, economical, and practical solution: natural gas transportation. As a result, the US is still importing $1 billion/day of foreign oil, printing money out of thin air to "buy" it, and the planet keeps getting warmer. What a country.
    May 24, 2013. 08:24 AM | 4 Likes Like |Link to Comment
  • Natural Gas: The Fastest Growing Transportation Fuel In The U.S. [View article]
    GTL is one way to go, but you already pointed out the expense of having to do so. The beauty of natural gas is that it can simply be compressed and used as a transport fuel. GTL also negates the advantage of the natural gas pipeline infrastructure the US has. That is one of the US's biggest economic advantages over all other countries - a pipepline system that goes to over 130,000,000 homes and businesses where NGVs can be refueled. Lastly, if GTL is the way to go, why have the EU, China, and Russia all passed strategic long-term energy policies prioritizing natural gas transportation (CNG & LNG) and not GTL despite them paying ~3x the prices in the US?

    The only reason the US isn't adopting nat gas transportation is because SuperPAC control of Congress won't allow the US to transition away from gasoline in any way. Look at what Congress has funded (bigtime): ethanol, EVs, "clean coal", biofuels...all these "distractions" are made to do one thing: keep the average American reliant on gasoline. And it is working. What a country.
    May 24, 2013. 08:18 AM | 2 Likes Like |Link to Comment
  • Natural Gas: The Fastest Growing Transportation Fuel In The U.S. [View article]
    Roger - yes, I agree. Now if the US only knew how to leverage this advantage. As Robert Hefner pointed out, the combination of huge natural gas reserves & production, with the 2+ million miles of natural gas pipelines connecting every major metropolitan city and over 130,000,000 homes and businesses is the US's #1 economic advantage over all other countries. As a Chinese energy policymaker once said, if China had the natural gas pipeline system the US has, natural gas transportation would be a "no-brainer" (rough translation). And that despite they are importing most of their natural gas at prices ~3x the US!
    May 24, 2013. 08:12 AM | Likes Like |Link to Comment
  • Natural Gas: The Fastest Growing Transportation Fuel In The U.S. [View article]
    There are a host of reference documents listed on the EIA webpage where I lifted the diagram from. Whether or not you'd consider it "real data" I supposed depends on your perspective. But, like any projection, I am sure it's debatable. I question the flat-lined growth in light duty vehicles. With a current near $2 advantage in the price of natural gas over gasoline in the US, and with my own feeling that future oil prices will continue to rise faster than nat gas prices will, I don't know how the EIA rationalizes no growth in light duty cars and trucks over the next 30 years. That certainly is not the case in other countries.
    May 24, 2013. 08:07 AM | 1 Like Like |Link to Comment
  • Permian Basin Royalty Trust: The Merry Merry Month Of May [View article]
    The majority of PBT is composed of the properties of Waddell Ranch in Crane county. My understanding is these Waddell properties are not part of the Cline shale. However, some of the Texas Royalty Properties' holdings are in Howard and Glasscock counties, and yes - these counties are in Cline shale.
    May 24, 2013. 07:56 AM | Likes Like |Link to Comment
  • Will ConocoPhillips Benefit From Freeport LNG's Export Approval? [View article]
    Well, there is significant nat gas production coming online in AsiaPac but in my opinion it cannot be produced at prices competitive to domestic US natural gas.
    May 23, 2013. 08:58 PM | Likes Like |Link to Comment
  • Natural Gas: The Fastest Growing Transportation Fuel In The U.S. [View article]
    A data point: in Q1 2013, CLNE delivered 49.9 million gallons of natural gas or about 554,000 gallons/day. US refiners average about 10 gallons of diesel and 19 gallons of gasoline per barrel of oil (the rest being other refined products like gasoline, heating oil, lubricants, etc):

    http://1.usa.gov/189JDq7
    May 23, 2013. 07:51 PM | Likes Like |Link to Comment
  • Will ConocoPhillips Benefit From Freeport LNG's Export Approval? [View article]
    Hi stuart, you bring up a valid question. What makes the US different is a number of important factors:

    1) the US's biggest economic advantage against all other countries is its abundant natural gas reserves and production combined with its 2+ million miles of natural gas pipelines which connect every major metropolitan area and 130,000,000 homes and businesses. No other country in the world has a nat gas pipeline system like the US.

    2) the extensive # of energy service firms

    3) an extensive and mature transportation system to deliver services and materials any place in the country in a very efficient cost effective manner

    4) the best petroleum engineers in the world

    So the combination of these factors puts the US at an extreme advantage vis-a-vis the rest of the world. Take China for instance. A Chinese energy policymaker was once quoted that if China had the same natural gas pipeline system that the US had, nat gas transportation would be "no-brainer" (rough translation..). What does that say about US energy policy?

    So while I am quite sure many other countries have significant shale gas reserves, how long will it take for the infrastructure to enable its efficient production? Why would US companies devote cap-ex for it in foreign countries when they could more cheaply simply exploit the US advantage? Not to mention there are billions of dollars already invested in many natural gas projects around the world - the highest profile ones being in Australia and Qatar.

    No one thinks the US advantage will last forever, at least not at today's prices. But note the BP and Osaka both signed 20 year agreements for all of the capacity for the first two LNG trains at Freeport. That's a pretty big commitment and says a lot about the long-term nature of the US advantage. Also note the number of new chemical plants being announced along the gulf coast. This is a long-term play in my opinion.
    May 23, 2013. 07:38 PM | 1 Like Like |Link to Comment
  • Natural Gas: The Fastest Growing Transportation Fuel In The U.S. [View article]
    James: my understanding is that a quadrillion Btu is equal to about 170,000,000 barrels of crude so we are looking at a savings of about a half million barrels of oil a day in the US. But if you look at the graphic in the article, notice the EIA's prediction is based on the status quo in the US: long haul trucking and buses. That is, light duty vehicle (passenger cars and trucks - represented by the green line in the graph) growth is non-existent . I believe this is because the EIA is a government agency and energy policy in the US is set by the SuperPac agenda i.e. keeping gasoline the only option for the majority of Americans. But one has to wonder, how long can the US stay addicted to oil? How come the EU, China, and Russia have all implemented strategic natural gas transportation based energy policies when the EU and China pay ~3x the cost of natural gas as does the US? Russia is a big nat gas producer and it will leverage that advantage by pushing oil out of its transportation sector. Why doesn't the US? I wonder what kind of competitive position the US will be in in 2040 if its vehicles still require gasoline and our economic competitors are using more abundant and cheaper natural gas. Seems like the US is setting itself up for another economic melt-down like $150/barrel helped bring about in 2008....
    May 23, 2013. 07:29 PM | 3 Likes Like |Link to Comment
  • Will ConocoPhillips Benefit From Freeport LNG's Export Approval? [View article]
    Hi Bruce. IMy understanding is that Freeport LNG will charge terminal and liquefaction fees, and the actual owner of the molecules (as you nicely coined it) will be the primary benefactor of the nat gas price spread between domestic origination and foreign destination.

    In July 2012, Freeport LNG signed a 20-Year Liquefaction Tolling Agreement with Osaka Gas and Chubu Electric for 100% of the capacity of the initial LNG train.

    In Feb of this year, Freeport LNG signed a 20-Year Tolling Contract with BP Energy company for the 2nd train.

    So the 8.8 million tons per anum of the 13.4 mtpa total planned LNG capacity is fully subscribed for 20 years. However, I would suspect that the contracts for the actual natural gas to be moved is open for negotiations and who knows if those will be short term or long-term contracts of a mixture of both? Either way, COP is a big producer and marketer of natural gas and my assumption is they will be a the catbird seat when it comes to selling the actual molecules. And, the third train's capacity, as far as I know, is not spoken for. Theoretically I suppose COP could sign a contract for it.

    As far as whose gas was purchased by Osaka and BP, I have no idea. Since the plant won't be built for 4-5 years, it could be they haven't even signed actual nat gas purchase contracts yet. I have no idea what BP's intention is. I would think they will move the gas to wherever they can achieve the highest profit.
    May 23, 2013. 01:52 PM | Likes Like |Link to Comment
  • Permian Basin Royalty Trust: The Merry Merry Month Of May [View article]
    Hi Strebor - I'm not familiar with the specifics of the SandRidge Permian Trust (PER), but by the name I would assume their distributions are based at least in part on Permian oil realized prices. All things being equal, I would assume they would see an increase in realized prices as did PBT. But realize also that PBT's excellent monthly production results were the result of increased cap-ex spending which started last year, so this part of the equation may be specific to PBT. As for the increase in proved reserves story, I would encourage you to review PER's annual reports and see if you can detect a similar (bullish) trend. Hope that helps.
    May 22, 2013. 09:16 PM | Likes Like |Link to Comment
  • Will ConocoPhillips Benefit From Freeport LNG's Export Approval? [View article]
    That's a very good point treyminator. The structure of the entire Freeport LNG seems quite complex. COP has two members on the board of directors and is "managing" Freeport LNG Development L.P. under which the LNG export business reports. So, I believe there will be some serious negotiations about how the business will be run. When you think of all the possible issues (like you did), it's a complex scenario. One thing is for sure: COP is going to look out for its best interests. And I would think one of those would be selling natural gas to the liquefaction trains. Another, as you pointed out, will be to protect any investments it has in the terminal. At this point, I don't know if the loans COP made have been entirely paid off. Considering the dearth of LNG imports, if I had to guess...I'd say that someone out there was left holding the bag wrt the original LNG import investment.
    May 22, 2013. 04:55 PM | 1 Like Like |Link to Comment
  • Will ConocoPhillips Benefit From Freeport LNG's Export Approval? [View article]
    Thanks Holt - and I totally agree with you wrt using natural gas used in the transportation sector. In fact, I would go so far as to say that it should be a much higher priority than is exporting. After all, the US still imported a whopping 296 million barrels of foreign oil - or 52% of the petroleum consumed in the U.S. - in March. At a per barrel price of more than $108, that works out to over $32 billion - more than $1 billion a day. That's insane energy policy considering nat gas is $4.10/MMBtu here in the states. Just crazy.
    May 22, 2013. 04:50 PM | 1 Like Like |Link to Comment
  • Permian Basin Royalty Trust: The Merry Merry Month Of May [View article]
    I think it is due to new pipeline capacity. Check out this interesting article on the subject:

    http://reut.rs/17ZlFeC
    May 22, 2013. 04:25 PM | Likes Like |Link to Comment
  • Will ConocoPhillips Benefit From Freeport LNG's Export Approval? [View article]
    TwistTie: Remember the original objective of Freeport LNG was importing LNG, not exporting it. The GP was likely formed (I am guessing here) to maximize the profits of COP's other businesses: in the import case that would have been the marketing of natural gas to domestic buyers. Now, in the export case, I would assume the COP board members of Freeport LNG will work to enhance COP's sales of natural gas to the end consumers who are buying the exported LNG.

    This is a quite complex arrangement. While talking to a spokesperson, I got the understanding that the LNG export plant acts kind of like a toll booth. The actual end consumer buying the LNG is responsible for the commercial deal to buy the natural gas that will be sent to the plant. Note the "tolling contracts" on this webpage:

    http://bit.ly/10TRQXO
    May 22, 2013. 01:09 PM | Likes Like |Link to Comment
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