America is awash in natural gas, thanks to the controversial practice of hydraulic fracturing, or fracking. And now a San Francisco startup company, Siluria Technologies, has a new way to turn that gas into chemicals, jet fuel and gasoline, The Houston Chronicle reports. The ability to make liquid fuels from natural gas has existed since the 1920s. But up until now it hasn't been cheap, requiring high heat and pressure to work. Siluria's technology needs less heat and less energy—and therefore costs less. The company is gearing up to build its first demonstration plant. And it has hired a new chief executive officer with deep experience in the chemical industry to guide Siluria out of the lab and into the marketplace. "There's going to be this long period of time when we have this excess gas," says Edward Dineen, the company's new CEO. "If you believe that, and I do, then having technologies that give you better options for that gas would make sense." Dineen most...
BP has signed a 20-year agreement to ship liquefied natural gas processed at a terminal in Freeport, Texas, which is the first of several facilities awaiting federal approvals for natural gas exports, a Freeport LNG executive announced today. The agreement would commit BP to pay for processing of 4.4 million tons of LNG per year at the Freeport LNG facility, where it would be loaded onto BP tankers and shipped abroad, Freeport LNG CEO Michael Smith tells The Houston Chronicle. "I think it sends a very strong message that a super major made this commitment," Smith says. "It makes sense to export gas, and they want to be in one of the first facilities of its kind to be able to export gas." BP marks the third company to sign an agreement to buy LNG exported from the facility; two Japanese companies, Osaka Gas and Chubu Electric Power, have contracted for another 4.4 million tons of LNG per year from the facility. The construction and shipping of natural gas from the Freeport site...
Louisiana and the Gulf Coast likely will be the prime beneficiaries of a natural gas–fueled industrial building boom over the next several years, says David Dismukes of LSU's Center for Energy Studies. However, several variables— such as tax reform, which will be a hot topic at this year's legislative session—could affect the economics of some of those potential projects, he says. "Everybody's sitting back waiting and watching," Dismukes says, when asked about the state-level tax reform conversation. "They will sit down and redo the books on these projects as soon as they get a more concrete idea of how it's going to change things." The Jindal administration wants to protect incentives such as exemptions for business utilities and purchases of manufacturing machinery and equipment. However, Dismukes says the state's Quality Jobs and Enterprise Zone programs could be in play. Changes in federal tax policy and environmental regulations also could make a difference,...
As lawmakers review the state's tax breaks, Don Briggs, president of the Louisiana Oil & Gas Association, hopes an incentive for horizontal drilling survives. While some estimates show the incentive costs the state more than $200 million a year, Briggs says that number is unrealistic when there are only about 17 rigs drilling in the Haynesville Shale, as compared to 140 when natural gas prices were high. He says $36 million over the next two years is a more realistic cost estimate. "It's an important credit, especially with prices as low as they are," Briggs says. "I know one company just last night told us they were moving four rigs [into the Haynesville Shale], and they're very concerned about losing this exemption." The Haynesville, a natural gas play in north Louisiana, is competing with formations in other states, such as the Marcellus Shale in the Northeast, which is rich with liquids as well as natural gas. As for other tax benefits important to his members, Briggs mentions a...
The oil and gas industry, which usually finds itself doing battle with politicians and regulators, has recently been taking on an unlikely foe: Matt Damon. Locally, the Louisiana Oil & Gas Association is churning out responses to the actor's new film, Promised Land. The flick, shot in Pennsylvania, digs into a national debate over fracking with disturbing images of groundwater contamination and flaming water faucets. LOGA President Don Briggs first issued a column entitled "Facts Not Required" characterizing the film as a "mass scale public relations campaign" against hydraulic fracturing and urging the oil and gas industry to better educate the public on the safety of the process to "beat Hollywood to the punch." The organization followed up this afternoon with the release of a five-minute video offering the history of hydraulic fracturing and facts about the process meant to "debunk the deceptive content of Promised Land." This isn't the first time the industry has...
Driven by the shale boom, the United States in 2014 will hit its highest daily oil production level since 1988 and will grow oil output at the highest rate ever, the U.S. Energy Information Administration predicted Tuesday. As The Houston Chronicle reports, U.S. daily oil production—which averaged 6.4 million barrels a day in 2012—will surge 23% to average 7.9 million barrels a day in 2014, according to administration projections. The daily production rate will jump 900,000 barrels between 2012 and 2013, a record for growth in a single year, EIA Administrator Adam Sieminski announced during a conference call with reporters. The previous record of 800,000 barrels per day was set a year ago and was the largest one-year jump since 1951. Oil was first produced in the United States in 1859. "That is the largest single-year growth in U.S. production all the way back to the drake oil well in Titusville, Pennsylvania, in 1859," Sieminski says. "That is pretty impressive."...
Apache Corp. this month is set to become the first company to power an entire hydraulic fracturing job with engines running on natural gas, cutting fuel costs by about 40%, an executive tells The Houston Chronicle. The Houston-based oil and gas company has been working in recent months with Schlumberger, Halliburton and Caterpillar to advance its use of natural gas in oil field operations, says Mike Bahorich, Apache's executive vice president of technology. The goal is to reduce costs, while increasing use of the domestically produced fossil fuel and cutting emissions, Bahorich adds. Other companies have fueled part of their fracking projects with natural gas, but Apache plans to be the first to run a full spread of 12 hydraulic fracturing pumps on the fuel this month. "I would challenge you to think of an idea that could generate more value for our economy and our environment than switching from oil to natural gas," Bahorich says. The full story can be found
David Constable, CEO of Sasol—the South African energy company that is planning to spend between $16 billion and $21 billion to develop the United States' first gas-to-liquids plant in south Louisiana—tells The New York Times the project "can be a game-changer" for the nation. However, the focus of the article is the risky nature of gas-to-liquids technology, which is in use at just a handful of plants worldwide. "The record for converting gas to liquids is spotty," the article says. "The newest and largest plant in operation, Royal Dutch Shell's giant Pearl plant, … in Qatar, cost the leviathan sum of $19 billion, more than three times its original projected cost, and has been plagued with unexpected maintenance problems." The article also notes that BP and ConocoPhillips built and briefly operated demonstration plants in Alaska and Oklahoma, but stopped short of full development of the technology. Exxon Mobil and ConocoPhillips, too, announced plans to...
A new study by the Pew Center on the States says Louisiana is among a number of states that have created tax traps for themselves by offering incentives for economic development that are open-ended or lacking sufficient controls. According to the study, called "Avoiding Blank Checks: Creating Fiscally Sound State Tax Incentives," Louisiana's exemption for horizontal natural gas drilling, created in 1994, cost the state just $285,000 in forgone revenues in fiscal year 2007. But at the end of fiscal year 2010, the price tag of the exemption had grown to $239 million, the study says. To avoid creating such tax traps, the study suggests that states do their homework before implementing them, including: gathering reliable economic impact projections, making lawmakers aware of any uncertainties surrounding the potential cost, linking cost estimates to policy making, and making the process transparent. Setting caps on how much the state will provide in tax exemptions through incentive...
Gov. Bobby Jindal's administration has pledged an incentive package valued at more than $135 million to South African energy company Sasol Ltd., which is developing a multibillion-dollar complex in southwest Louisiana to turn natural gas into chemicals, diesel and other fuels. Incentives include tax breaks, a $20 million worker training facility, and a $115 million payment to the company for land and infrastructure that will be left to a future governor's administration and lawmakers to fund. Sasol announced on Monday it plans to spend between $16 billion and $21 billion on the construction of a chemical plant and a gas-to-liquids plant at a site in Westlake, near Lake Charles. The project is described as the largest manufacturing investment in Louisiana's history. The governor's office says Sasol will create 1,250 new permanent jobs, while an LSU study says the project will generate an economic impact of $46 billion over 20 years. Landing the facility in Louisiana comes with a...
South African chemicals and energy company Sasol Ltd. announced today it anticipates spending between $16 billion and $21 billion to build a complex in Louisiana to convert natural gas into diesel, other fuels and chemicals. When, and if, that projection comes to fruition, Gov. Bobby Jindal says it would represent the largest industrial investment in state history. "It also represents one of the largest foreign direct investment manufacturing projects in the history of the entire United States," says the governor, who joined Sasol officials today to shed additional light on the scope of the project, which has been in development for years. Sasol says it will soon begin initial engineering work on a complex in Westlake that will use domestic natural gas—which is among the cheapest in the world—to make higher-value chemicals and fuels. The company plans to first spend $5 billion to $7 billion on a chemical plant, and later add an $11 billion to $14 billion gas-to-liquids...
LED Secretary Stephen Moret has been predicting a sustained industrial construction boom in Louisiana, thanks partly to low, stable natural gas prices. The main caveat he has mentioned has been the possibility of an adversarial stance by the Obama administration against hydraulic fracturing, or "fracking," a controversial technique used to unlock vast supplies of fuel. But Moret tells Daily Report the benefits that cheap natural gas bring to the nation—and the fact natural gas is cleaner than other energy alternatives such as coal—make it unlikely that the federal government will want to limit fracking. "I'm hopeful there will be a largely supportive federal administration on that issue," he says. Moret remains concerned about possible environmental regulations, perhaps aimed at curbing greenhouse gases, that could slow down some industrial projects. "It's not a certainty," he says. "I'm just raising it as a point of concern we're going to be watching carefully."...
Only a few years ago, people were beginning to worry about the future of the petrochemical industry in the United States, which was being threatened by the availability of inexpensive fuel and labor overseas. Today, cheap, abundant natural gas has local industry watchers more optimistic than at any time in recent memory.
Nucor Corp. announced today it has agreed to team up with the U.S. division of Encana Corp. on a project that would provide natural gas for its steelmaking facilities—including the massive $750 million iron plant under development in St. James Parish. Financial terms were not disclosed. Nucor says that Encana will drill and operate onshore natural gas wells. Nucor will pay its share of the costs plus an additional amount of carried interest as each well is drilled, subject to caps. Either company may suspend drilling if natural gas prices fall below a predetermined threshold. Nucor, like other manufacturing companies, is striving to take advantage of cheap natural gas to fuel its operations while supply is high. The Charlotte, N.C.-headquartered firm says that with today's deal in place it expects to be able to better manage its exposure in the natural gas commodities market. It also will give Nucor a competitive advantage in natural gas costs for its Louisiana facility, which...
Big Oil's bottom line is expected to take a pretty big hit in third-quarter earnings reports because of sharply lower natural gas prices in North America and downtime at production and refining facilities due to hurricanes and seasonal maintenance, The Houston Chronicle reports. ConocoPhillips reports its earnings today, followed by next week's blitz from BP, Exxon, Chevron and Shell. Tudor, Pickering, Holt & Co. analyst Robert Kessler says that among the biggest unknowns is the extent to which shutdowns affected profits at the major oil and gas companies. "Whether it be Alaska or the Gulf of Mexico or the North Sea, all faced some asset downtime, which affected the companies depending on where their assets are," Kessler says. Falling oil prices hit large crude producers like ConocoPhillips, which also could see cash flow constraints because of slower-than-expected asset sales, says James Sullivan, senior analyst for Alembic Global Advisors. Oil prices remain a key driver of...
Horizontal drilling has been in the oil and gas industry's toolbox for a long time. But it was the development about five years ago of new chemicals that prevent algae growth that revolutionized hydraulic fracturing—or "fracking"—says Winston Porter, a former assistant administrator at the Environmental Protection Agency. "And it looks like most of this stuff is pretty benign stuff," Porter says. Porter is one of the guest speakers at the National Ground Water Association forum on Wednesday, Oct. 17, at the Baton Rouge Marriott, 5500 Hilton Ave. The two-day series of speakers and presentations begins on Tuesday, Oct. 16. A chemical engineer by trade, Porter has made his presentation "America's Energy Future" around the country. Now averaging about $3 per British thermal unit, natural gas is cheap in the United States, but is selling between $10 and $15 per Btu in India and China. Porter says overseas demand will eventually push domestic natural gas prices higher. Before...
As of the end of the second quarter, Louisiana ranks sixth in the country for total oil production and third for gas production, according to a newly released overview of drilling and production activity from the Oil & Gas Journal. While the northern portion of the state continues to be dominated by natural gas production along the Haynesville Shale, the report notes 2012 will not be as fruitful as in recent years. "During the last three years, gas production in the state has doubled, and in 2011, 62% of state gas production was sourced from the Haynesville," it reads. "Production levels have recently declined due to weak gas prices and a significant retrenchment in the number of rigs working in the Haynesville. Gas production in 2012 will fall from the 2011 level." The boom that hydraulic fracking has created in recent years is reflected in the ratio of gas to oil wells in the state, the report says. "In the mid-1980s, oil wells outnumbered gas wells two to one," it says,...
The biggest, baddest engines in the world, long chained to diesel fuel, are on the verge of a mass transformation because of cheap natural gas—with oil field equipment holding particular potential, reports The Houston Chronicle. The newspaper quoted executives gathered Thursday in Houston in the middle of a three-day summit of heavy fuel users and producers. "Here's the first reason that large engines are going gas: large engines burn the most fuel. I could try to make it harder, but that's pretty straightforward," says Joel Feucht, director of gas engine strategy for Caterpillar's energy and power systems division. Oil companies alone use nearly 1.2 billion gallons of diesel fuel a year just for pressure pumping equipment that supports hydraulic fracturing, says David Hill, vice president of natural gas economy operations for Encana Corp. After the diesel used to power drilling rigs themselves has been added to the equation, the total is more than 2.8 billion gallons...
On the campaign trail, both Mitt Romney and President Barack Obama have vowed to liberate the United States from reliance on foreign oil, offering voters a pledge of at least North American "energy independence." In some ways, that's an easy promise to make. As The Houston Chronicle reports, no matter who resides in the White House during the next four years, the United States is already on a trajectory to derive much of its oil and all of its natural gas from within its own borders, thanks to technologies allowing energy companies to harvest the fossil fuels from dense rock formations. But abundant domestic supplies don't guarantee a drop in the cost of energy, most analysts agree. That's because oil prices are set on a world market, subject to a complex mix of factors outside the United States' control. And even if the United States or North American oil imports plummeted to zero, the nation would still be connected to that global market. Michael Levi, a senior fellow for...
For more than a decade, the world's biggest liquefied natural gas producers led by Royal Dutch Shell plotted how to move their $170 billion industry onto barges at sea to tap remote fields. Now they're finally doing it. The Houston Chronicle reports Shell will forge the hull of a floating LNG plant in South Korea by year-end that will be the world's largest vessel, weighing six times as much as the biggest aircraft carrier, a Nimitz-class warship. Some 5,000 workers will build the factory to produce LNG off Australia's northwest coast in a $13 billion project that also will shield Shell from escalating costs it would have to pay at the country's onshore plants. Rivals, including both Malaysia's Petroliam Nasional Bhd. and GDF Suez SA of France, likewise want to compress gas into liquid at sea, where many of the largest finds were made in the last decade. It's a generational change for a land-based industry that started about 50 years ago in Algeria, where Shell provided...
As Isaac rumbles slowly across Louisiana today, leaving floodwaters, downed trees and power outages in its wake, energy companies are preparing to resume operations in the Gulf of Mexico, The Houston Chronicle reports. Along the coast, refinery crews have begun to assess the damage to prepare to restart, too. BP says it will attempt flyover surveys of key facilities in the Gulf as weather permits, and then begin redeploying offshore personnel. Chevron says it has begun to deploy personnel to both onshore and offshore facilities to assess the impact of Hurricane Isaac, although it declined to comment on any possible impact to operations. And Shell announced that it expected to begin flyover inspections today in anticipation of restarting operations Friday. Ten Gulf Coast refineries with combined crude oil processing capacity of about 2.4 million barrels a day were offline or running at reduced rates as of Wednesday, according to the Oil Price Information Service. According to...
Based on operators' reports, 78% of the current daily oil production and 48% of the daily natural gas production in the Gulf of Mexico have been shut in by Tropical Storm Isaac, the Bureau of Safety and Environmental Enforcement says. Isaac has caused 58%, or 346 of 596, of manned production platforms in the Gulf to evacuate personnel, according to BSEE. Production platforms are the structures located offshore from which oil and natural gas are produced. Unlike drilling rigs, which typically move from location to location, production facilities remain in the same location throughout a project's duration. Personnel have been evacuated from 41 of 76 rigs, or 54%, currently drilling for oil and gas in the Gulf. After Isaac has passed, BSEE says all facilities will be inspected; and once all standard checks have been completed, production from undamaged facilities will be brought back online immediately. See BSEE's complete update as of this afternoon
The hundreds of hotel rooms planned or under construction in Shreveport-Bossier City might be missing their intended clients. The hotel operators had counted on guests in town for business in the Haynesville shale oil field, but a slowdown of natural gas production has cut into room nights. More than 1,300 hotel rooms are in final planning phases or under construction in Shreveport-Bossier City. An additional 169 rooms have gone into operation this year in Bossier City: the 85-room Holiday Inn and Suites and the 84-room Windgates by Wyndham. Four more hotels in Bossier City and two in Shreveport—with 541 rooms between them—are in the final planning stages. "Much of that construction and planning began in 2010 when the Haynesville shale was in full swing," says Shreveport-Bossier Convention and Tourism Bureau President Stacy Brown. "Those are mostly limited-service locations which are interested in capturing a more transient business." The Shreveport Times has the...
Chesapeake Energy Corp., which calls itself America's Champion of Natural Gas, has announced that it's basically giving up on gas drilling this year, adding to an industrywide retreat from what has been deemed the fuel of the future. The Houston Chronicle reports that the nation's second-largest natural gas producer—after Exxon Mobil Corp.—says, as part of a major contraction in its operations, it has cut its plan for new gas exploration by 83%. Chesapeake previously had planned to operate 47 gas rigs in 2012, but now hopes to cut that rig count to eight by the end of the year, executives revealed during a conference call with analysts on Tuesday to discuss the company's second-quarter earnings. That shift by the most prominent proponent of natural gas came as fossil fuel producers across the spectrum are shying away from gas drilling, even though they have invested billions of dollars in its promise as a major energy resource for the future. The problem is price.
The company planning a $220 million, 141-mile pipeline from Norco to Mississippi hopes to begin work in Lake Pontchartrain—the first stage of the year-long construction process—in the coming weeks, The Times-Picayune. The underground 16-inch pipeline, which will carry gasoline and diesel, will run from the Valero St. Charles Refinery to Collins, Miss., where it will tie into other distribution pipelines. Valero and Kinder Morgan Energy Partners have formed a company called Parkway Pipeline to build and operate the pipeline. Company spokesman Allen Fore says the project has received the needed permits from state agencies but is awaiting a permit from the Army Corps of Engineers before it can begin construction. He says he understood the corps permit could be granted as early as next week. "We'd like to begin by Aug. 13,'' Fore says of the construction along the bottom of Lake Pontchartrain. But that date may be optimistic: The corps likely won't rule on the permit...
New data from energy industry analysts and the federal government suggests the Marcellus Shale is about to overtake the Haynesville Shale as the most productive natural gas field in the United States. Though serious drilling only began five years ago, the sheer volume of Marcellus production suggests that in some ways there's no going back, even as New York debates whether to allow drilling in its portion of the shale, which also lies under large parts of Pennsylvania, West Virginia and Ohio. In 2008, Marcellus production barely registered on national energy reports. In July, the combined output from Pennsylvania and West Virginia wells was about 7.4 billion cubic feet per day, according to Kyle Martinez, an analyst at Bentek Energy. That's more than double the 3.6 billion cubic feet from last April and represents over 25% of national shale gas production. That's neck-and-neck with production from the Haynesville region—which encompasses portions of Louisiana, Texas and...
Israel, reliant on imported energy since the state's foundation in 1948, now has more natural gas than it can handle, Bloomberg reports. Noble Energy Inc., Delek Group Ltd. and other explorers have discovered enough gas under the Mediterranean Sea to supply Israel's needs for 150 years. To profit from the finds sooner, the companies want to export the gas by pipeline or ship. As the Ministry of Energy prepares to publish a blueprint for developing the fields later this month, officials say the country's economy and security must come first and that shipments abroad should be limited. Exporting natural gas presents challenges. Environmental opposition and a shortage of land complicate building a plant to liquefy the fuel for export, while an offshore facility or pipelines to nearby countries will be hard to protect. Tapping all of Israel's discoveries, which include Leviathan, a single field holding more gas than Middle East exporter Yemen has in reserves, may prove uneconomic...
According to new data out from the U.S Energy Department, natural gas output along the Haynesville Shale in Louisiana and Texas dipped in May, but the area was still producing the highest daily output among all American shale formations. The Haynesville Shale's average output in May was 6.92 billion cubic feet a day. That's down from 6.93 bcf in April, but up from 6.43 bcf in May 2011, according to a Bloomberg report on the data. But output in the Marcellus Shale in the Northeastern U.S. appears to be poised to soon outpace the Haynesville. Output along the Marcellus averaged 6.85 bcf a day in May, up 6.4% from the previous month—and more than double the 3.37 bcf daily output recorded in May 2011. Natural-gas production from all American shale formations rose in May on increased supplies from the Marcellus, even after prices fell to a 10-year low during the month. Total output from shale formations in the continental U.S. averaged 25.58 bcf in May—24% higher than a...
The worst U.S. drought in a half century is putting pressure on natural gas drillers to conserve the millions of gallons of water used in hydraulic fracturing to free trapped gas and oil from underground rock, Bloomberg reports. From Texas to Colorado to Pennsylvania, farmers, activists and opponents of the drilling technique, also known as fracking, are using the shortage of rain to push the industry to recycle water and reduce usage—efforts that could prove costly to the industry. One company, Devon Energy Corp.—which is leading drilling efforts in the Tuscaloosa Shale in the parishes just north of East Baton Rouge—estimates that recycling is as much as 75% costlier than pumping wastewater into deep wells. That disposal method, common in the industry, has also drawn complaints because it is linked to earthquakes. "We just would like the oil and gas companies to figure out better...
The pace of things is a little slower in Mansfield these days. The drive across town takes a little less time. The line at the gas station is a little shorter and the parking lots are less crowded every day. "It's really been a tremendous change since February," Shelby Spurlock, co-owner of Café 171 in Mansfield, in northwest Louisiana, tells The (Alexandria) Town Talk. "It's gotten to the point where we wonder if we can keep the doors open or not." Café 171 opened in September 2010, targeting the droves of oil and natural gas workers meeting the booming demand on the Haynesville Shale. And for almost two years the eatery has had a house packed with roughnecks, surveyors, supervisors and anyone else working the nearby rigs. "I just don't know how long we can hold on," Spurlock says. "The way things are falling, every day we get closer to nothing." What's falling—and taking a lot of local business with it—is the price of natural gas; which has hit dramatic lows over...
The United States is at risk of relying too much on natural gas as transportation, manufacturing and electric-power industries vie for the cheap fuel, top executives of three power utilities tell Bloomberg. While greater use of gas instead of coal for generation cuts air pollution and carbon-dioxide emissions linked to climate change, the executives say the nation needs a diverse fuel mix to hedge against cost increases in any one source. "Having one focus is never good, just like a portfolio having one stock," says Michael Yackira, chief executive officer of Las Vegas-based NV Energy Inc. Energy companies are developing vast reserves of natural gas by hydraulic fracturing underground to push gas out of shale rock. The process, also called fracking, has sent gas prices down about 38% over the past year, benefiting industries that use the fuel in production, such as chemical manufacturers. The three executives with whom Bloomberg recently sat down disagree on whether the...
The drilling boom that has led to a glut of natural gas and sent prices spiraling downward is causing a quandary for President Barack Obama and his administration, which is struggling to decide whether the United States should share the bounty with foreign countries, and if so, how much. Although the Energy Department recently approved Houston-based Cheniere Energy's plans to begin exporting liquefied natural gas from its Sabine Pass terminal outside Lake Charles, The Houston Chronicle reports, the government has put off verdicts on similar applications from at least seven other companies. Administration officials say they'll make those decisions after they get the results of a study commissioned by the Energy Department on how allowing companies to sell U.S.-produced natural gas overseas would affect prices for American consumers. The study is due out this summer. The Obama administration supports domestic natural gas and isn't opposed to exports, White House energy adviser...
With natural gas at decade-low prices, state economic officials are working to catch a wave of new investment interest from industries eager to tap into the abundant supply of the clean-burning fuel to power their plants. "We're working hard to position ourselves to get a disproportionate share of that new activity," Stephen Moret, secretary of LED, tells The Times-Picayune. Moret expects the state will add seven to 15 projects over the next five years—in the range of $500 million to $5 billion apiece—with most topping out around $1.5 billion. Those predictions will likely hinge on several factors, including the pace of environmental permitting for new manufacturing projects, steady domestic natural gas exploration using hydraulic fracturing, and the world's markets steering clear of a severe global recession. Competitive fuel prices have already been at least partially responsible for several new industrial projects in the state, including a new natural gas-fired...
Replacing coal with natural gas reduces the creation of greenhouse gases that cause global warming, a Cornell University researcher has concluded, rebutting the findings of colleagues at the university. Bloomberg reports Lawrence Cathles, a professor in the Department of Earth and Atmospheric Sciences, has released a paper that says even if high rates of natural gas are leaking out after hydraulic fracturing and during transport, gas will still provide a net benefit over time. "The only thing that really counts is the amount of carbon dioxide you put in the atmosphere," Cathles says. Because gas releases less carbon dioxide than coal or oil when combusted, "the story is quite clear that we would be very well advised to substitute natural gas." The impact of natural gas on climate change has attracted attention as the spurt in production from hydraulic fracturing, or fracking, has pushed down prices and prompted power producers to shift from coal to gas. Utilities generated as...
North Carolina Republicans successfully overrode Gov. Bev Perdue's veto of a fracking bill during a dramatic vote taken just after 11 p.m. Monday. But as The Charlotte Observer reports, the vote to override was just as controversial as the legislation that would have banned the drilling technique in that state. Rep. Becky Carney, a Democrat who opposes fracking, pushed the wrong button and accidentally voted with Republicans to override the veto. A maneuver by Republican Paul "Skip" Stam prevented her from changing her vote, giving the GOP a historic one-vote margin of victory. "It was a huge mistake," Carney says. "I take full responsibility." Democrats denounced Stam's quick parliamentary maneuver as a dirty trick that resulted in the passage of a landmark energy overhaul that could create a natural gas production industry in the state. "I am shocked and profoundly disappointed," says Rep. Pricey Harrison, a Democrat. "First the speaker cut off debate, which is unfortunate...
Cheniere Energy Inc., the first company to win approval to export natural gas from the continental U.S., plans to complete as much as $4 billion in financing for the south Louisiana project in the next few days, Bloomberg reports. "We're working with our eight lead arrangers to secure the project financing and it will be announced in the next few days," Chairman and CEO Charif Souki says. Earlier this month, Cheniere said it expected to complete debt financing arrangements by the end of this month for the estimated $4.5 billion to $5 billion it needs to build liquefaction units at its Sabine Pass facility in Cameron Parish. The company hired JPMorgan Chase & Co., Morgan Stanley and others in April to help arrange the funding. "More than likely, they'll get the debt financing done," speculates William Frohnhoefer, an analyst at BTIG LLC. "If they are late a few days, it won't have a significant impact on their work schedule or costs." Read the full story
Offshore oil and gas operators in the Gulf of Mexico are reboarding platforms and rigs and restoring production following Tropical Storm Debby, says the Bureau of Safety and Environmental Enforcement. The BSEE Hurricane Response Team is monitoring the operators' activities, and reports personnel remain evacuated from 10 production platforms, or about 1.6% of the 596 manned platforms in the Gulf, as of this afternoon. Production platforms are the structures from which oil and natural gas are produced. Unlike drilling rigs, which typically move from location to location, production facilities remain in the same location throughout a project's duration. Of the 70 rigs currently operating in the Gulf, none are still evacuated. From operator reports, it is estimated that approximately 3.21% of the current daily oil production in the Gulf has been shut-in, as is 3.64% of the current daily natural gas production. The production percentages are calculated using estimates submitted by...
Congressional Republicans are pressing the Obama administration to say whether a new interagency task force focused on natural gas drilling will push new federal regulations on top of existing state mandates. The Houston Chronicle reports 11 Republicans on the House Energy and Commerce Committee also want to know more about how the working group is coordinating with the Environmental Protection Agency, as the EPA prepares new studies, regulations and guidance for hydraulic fracturing techniques used to extract natural gas. In a letter sent to EPA Administrator Lisa Jackson and White House adviser Heather Zichal on Tuesday, the GOP lawmakers took issue with the presidential order establishing the task force on April 13. President Barack Obama's executive order instructs the working group to "facilitate coordinated administration policy efforts to support safe and responsible unconventional natural gas development." However, the Republicans pointed out, the same order also says...
Startup turning natural gas into liquid fuels
America is awash in natural gas, thanks to the controversial practice of hydraulic fracturing, or fracking. And now a San Francisco startup company, Siluria Technologies, has a new way to turn that gas into chemicals, jet fuel and gasoline, The Houston Chronicle reports. The ability to make liquid fuels from natural gas has existed since the 1920s. But up until now it hasn't been cheap, requiring high heat and pressure to work. Siluria's technology needs less heat and less energy—and therefore costs less. The company is gearing up to build its first demonstration plant. And it has hired a new chief executive officer with deep experience in the chemical industry to guide Siluria out of the lab and into the marketplace. "There's going to be this long period of time when we have this excess gas," says Edward Dineen, the company's new CEO. "If you believe that, and I do, then having technologies that give you better options for that gas would make sense." Dineen most...
BP inks 20-year LNG export contract for Texas terminal
BP has signed a 20-year agreement to ship liquefied natural gas processed at a terminal in Freeport, Texas, which is the first of several facilities awaiting federal approvals for natural gas exports, a Freeport LNG executive announced today. The agreement would commit BP to pay for processing of 4.4 million tons of LNG per year at the Freeport LNG facility, where it would be loaded onto BP tankers and shipped abroad, Freeport LNG CEO Michael Smith tells The Houston Chronicle. "I think it sends a very strong message that a super major made this commitment," Smith says. "It makes sense to export gas, and they want to be in one of the first facilities of its kind to be able to export gas." BP marks the third company to sign an agreement to buy LNG exported from the facility; two Japanese companies, Osaka Gas and Chubu Electric Power, have contracted for another 4.4 million tons of LNG per year from the facility. The construction and shipping of natural gas from the Freeport site...
Manufacturing boom predicted in La. despite uncertainty
Louisiana and the Gulf Coast likely will be the prime beneficiaries of a natural gas–fueled industrial building boom over the next several years, says David Dismukes of LSU's Center for Energy Studies. However, several variables— such as tax reform, which will be a hot topic at this year's legislative session—could affect the economics of some of those potential projects, he says. "Everybody's sitting back waiting and watching," Dismukes says, when asked about the state-level tax reform conversation. "They will sit down and redo the books on these projects as soon as they get a more concrete idea of how it's going to change things." The Jindal administration wants to protect incentives such as exemptions for business utilities and purchases of manufacturing machinery and equipment. However, Dismukes says the state's Quality Jobs and Enterprise Zone programs could be in play. Changes in federal tax policy and environmental regulations also could make a difference,...
Association head defends drilling tax breaks
As lawmakers review the state's tax breaks, Don Briggs, president of the Louisiana Oil & Gas Association, hopes an incentive for horizontal drilling survives. While some estimates show the incentive costs the state more than $200 million a year, Briggs says that number is unrealistic when there are only about 17 rigs drilling in the Haynesville Shale, as compared to 140 when natural gas prices were high. He says $36 million over the next two years is a more realistic cost estimate. "It's an important credit, especially with prices as low as they are," Briggs says. "I know one company just last night told us they were moving four rigs [into the Haynesville Shale], and they're very concerned about losing this exemption." The Haynesville, a natural gas play in north Louisiana, is competing with formations in other states, such as the Marcellus Shale in the Northeast, which is rich with liquids as well as natural gas. As for other tax benefits important to his members, Briggs mentions a...
LOGA takes on Matt Damon
The oil and gas industry, which usually finds itself doing battle with politicians and regulators, has recently been taking on an unlikely foe: Matt Damon. Locally, the Louisiana Oil & Gas Association is churning out responses to the actor's new film, Promised Land. The flick, shot in Pennsylvania, digs into a national debate over fracking with disturbing images of groundwater contamination and flaming water faucets. LOGA President Don Briggs first issued a column entitled "Facts Not Required" characterizing the film as a "mass scale public relations campaign" against hydraulic fracturing and urging the oil and gas industry to better educate the public on the safety of the process to "beat Hollywood to the punch." The organization followed up this afternoon with the release of a five-minute video offering the history of hydraulic fracturing and facts about the process meant to "debunk the deceptive content of Promised Land." This isn't the first time the industry has...
U.S. oil production expected to reach fastest rate ever in 2014
Driven by the shale boom, the United States in 2014 will hit its highest daily oil production level since 1988 and will grow oil output at the highest rate ever, the U.S. Energy Information Administration predicted Tuesday. As The Houston Chronicle reports, U.S. daily oil production—which averaged 6.4 million barrels a day in 2012—will surge 23% to average 7.9 million barrels a day in 2014, according to administration projections. The daily production rate will jump 900,000 barrels between 2012 and 2013, a record for growth in a single year, EIA Administrator Adam Sieminski announced during a conference call with reporters. The previous record of 800,000 barrels per day was set a year ago and was the largest one-year jump since 1951. Oil was first produced in the United States in 1859. "That is the largest single-year growth in U.S. production all the way back to the drake oil well in Titusville, Pennsylvania, in 1859," Sieminski says. "That is pretty impressive."...
Fracking with natural gas could trim fuel costs by as much as 40%
Apache Corp. this month is set to become the first company to power an entire hydraulic fracturing job with engines running on natural gas, cutting fuel costs by about 40%, an executive tells The Houston Chronicle. The Houston-based oil and gas company has been working in recent months with Schlumberger, Halliburton and Caterpillar to advance its use of natural gas in oil field operations, says Mike Bahorich, Apache's executive vice president of technology. The goal is to reduce costs, while increasing use of the domestically produced fossil fuel and cutting emissions, Bahorich adds. Other companies have fueled part of their fracking projects with natural gas, but Apache plans to be the first to run a full spread of 12 hydraulic fracturing pumps on the fuel this month. "I would challenge you to think of an idea that could generate more value for our economy and our environment than switching from oil to natural gas," Bahorich says. The full story can be found
Sasol CEO says La. gas-to-liquids plant 'can be a game-changer' despite risks
David Constable, CEO of Sasol—the South African energy company that is planning to spend between $16 billion and $21 billion to develop the United States' first gas-to-liquids plant in south Louisiana—tells The New York Times the project "can be a game-changer" for the nation. However, the focus of the article is the risky nature of gas-to-liquids technology, which is in use at just a handful of plants worldwide. "The record for converting gas to liquids is spotty," the article says. "The newest and largest plant in operation, Royal Dutch Shell's giant Pearl plant, … in Qatar, cost the leviathan sum of $19 billion, more than three times its original projected cost, and has been plagued with unexpected maintenance problems." The article also notes that BP and ConocoPhillips built and briefly operated demonstration plants in Alaska and Oklahoma, but stopped short of full development of the technology. Exxon Mobil and ConocoPhillips, too, announced plans to...
La. gas drilling tax incentive highlighted in new Pew Center study
A new study by the Pew Center on the States says Louisiana is among a number of states that have created tax traps for themselves by offering incentives for economic development that are open-ended or lacking sufficient controls. According to the study, called "Avoiding Blank Checks: Creating Fiscally Sound State Tax Incentives," Louisiana's exemption for horizontal natural gas drilling, created in 1994, cost the state just $285,000 in forgone revenues in fiscal year 2007. But at the end of fiscal year 2010, the price tag of the exemption had grown to $239 million, the study says. To avoid creating such tax traps, the study suggests that states do their homework before implementing them, including: gathering reliable economic impact projections, making lawmakers aware of any uncertainties surrounding the potential cost, linking cost estimates to policy making, and making the process transparent. Setting caps on how much the state will provide in tax exemptions through incentive...
Sasol getting incentives package worth $135M from Louisiana
Gov. Bobby Jindal's administration has pledged an incentive package valued at more than $135 million to South African energy company Sasol Ltd., which is developing a multibillion-dollar complex in southwest Louisiana to turn natural gas into chemicals, diesel and other fuels. Incentives include tax breaks, a $20 million worker training facility, and a $115 million payment to the company for land and infrastructure that will be left to a future governor's administration and lawmakers to fund. Sasol announced on Monday it plans to spend between $16 billion and $21 billion on the construction of a chemical plant and a gas-to-liquids plant at a site in Westlake, near Lake Charles. The project is described as the largest manufacturing investment in Louisiana's history. The governor's office says Sasol will create 1,250 new permanent jobs, while an LSU study says the project will generate an economic impact of $46 billion over 20 years. Landing the facility in Louisiana comes with a...
Sasol: Gas-to-liquids plant in La. could cost as much as $21B
South African chemicals and energy company Sasol Ltd. announced today it anticipates spending between $16 billion and $21 billion to build a complex in Louisiana to convert natural gas into diesel, other fuels and chemicals. When, and if, that projection comes to fruition, Gov. Bobby Jindal says it would represent the largest industrial investment in state history. "It also represents one of the largest foreign direct investment manufacturing projects in the history of the entire United States," says the governor, who joined Sasol officials today to shed additional light on the scope of the project, which has been in development for years. Sasol says it will soon begin initial engineering work on a complex in Westlake that will use domestic natural gas—which is among the cheapest in the world—to make higher-value chemicals and fuels. The company plans to first spend $5 billion to $7 billion on a chemical plant, and later add an $11 billion to $14 billion gas-to-liquids...
Moret cautiously optimistic about Obama's natural gas policy
LED Secretary Stephen Moret has been predicting a sustained industrial construction boom in Louisiana, thanks partly to low, stable natural gas prices. The main caveat he has mentioned has been the possibility of an adversarial stance by the Obama administration against hydraulic fracturing, or "fracking," a controversial technique used to unlock vast supplies of fuel. But Moret tells Daily Report the benefits that cheap natural gas bring to the nation—and the fact natural gas is cleaner than other energy alternatives such as coal—make it unlikely that the federal government will want to limit fracking. "I'm hopeful there will be a largely supportive federal administration on that issue," he says. Moret remains concerned about possible environmental regulations, perhaps aimed at curbing greenhouse gases, that could slow down some industrial projects. "It's not a certainty," he says. "I'm just raising it as a point of concern we're going to be watching carefully."...
Halycon days
Only a few years ago, people were beginning to worry about the future of the petrochemical industry in the United States, which was being threatened by the availability of inexpensive fuel and labor overseas. Today, cheap, abundant natural gas has local industry watchers more optimistic than at any time in recent memory.
Nucor, Encana sign natural gas agreement
Nucor Corp. announced today it has agreed to team up with the U.S. division of Encana Corp. on a project that would provide natural gas for its steelmaking facilities—including the massive $750 million iron plant under development in St. James Parish. Financial terms were not disclosed. Nucor says that Encana will drill and operate onshore natural gas wells. Nucor will pay its share of the costs plus an additional amount of carried interest as each well is drilled, subject to caps. Either company may suspend drilling if natural gas prices fall below a predetermined threshold. Nucor, like other manufacturing companies, is striving to take advantage of cheap natural gas to fuel its operations while supply is high. The Charlotte, N.C.-headquartered firm says that with today's deal in place it expects to be able to better manage its exposure in the natural gas commodities market. It also will give Nucor a competitive advantage in natural gas costs for its Louisiana facility, which...
Lower prices to hit Big Oil's 3Q profit
Big Oil's bottom line is expected to take a pretty big hit in third-quarter earnings reports because of sharply lower natural gas prices in North America and downtime at production and refining facilities due to hurricanes and seasonal maintenance, The Houston Chronicle reports. ConocoPhillips reports its earnings today, followed by next week's blitz from BP, Exxon, Chevron and Shell. Tudor, Pickering, Holt & Co. analyst Robert Kessler says that among the biggest unknowns is the extent to which shutdowns affected profits at the major oil and gas companies. "Whether it be Alaska or the Gulf of Mexico or the North Sea, all faced some asset downtime, which affected the companies depending on where their assets are," Kessler says. Falling oil prices hit large crude producers like ConocoPhillips, which also could see cash flow constraints because of slower-than-expected asset sales, says James Sullivan, senior analyst for Alembic Global Advisors. Oil prices remain a key driver of...
Conference on groundwater and fracking in B.R. next week
Horizontal drilling has been in the oil and gas industry's toolbox for a long time. But it was the development about five years ago of new chemicals that prevent algae growth that revolutionized hydraulic fracturing—or "fracking"—says Winston Porter, a former assistant administrator at the Environmental Protection Agency. "And it looks like most of this stuff is pretty benign stuff," Porter says. Porter is one of the guest speakers at the National Ground Water Association forum on Wednesday, Oct. 17, at the Baton Rouge Marriott, 5500 Hilton Ave. The two-day series of speakers and presentations begins on Tuesday, Oct. 16. A chemical engineer by trade, Porter has made his presentation "America's Energy Future" around the country. Now averaging about $3 per British thermal unit, natural gas is cheap in the United States, but is selling between $10 and $15 per Btu in India and China. Porter says overseas demand will eventually push domestic natural gas prices higher. Before...
Louisiana ranks 6th for oil production, 3rd for gas
As of the end of the second quarter, Louisiana ranks sixth in the country for total oil production and third for gas production, according to a newly released overview of drilling and production activity from the Oil & Gas Journal. While the northern portion of the state continues to be dominated by natural gas production along the Haynesville Shale, the report notes 2012 will not be as fruitful as in recent years. "During the last three years, gas production in the state has doubled, and in 2011, 62% of state gas production was sourced from the Haynesville," it reads. "Production levels have recently declined due to weak gas prices and a significant retrenchment in the number of rigs working in the Haynesville. Gas production in 2012 will fall from the 2011 level." The boom that hydraulic fracking has created in recent years is reflected in the ratio of gas to oil wells in the state, the report says. "In the mid-1980s, oil wells outnumbered gas wells two to one," it says,...
Natural gas winning place as new oil field fuel
The biggest, baddest engines in the world, long chained to diesel fuel, are on the verge of a mass transformation because of cheap natural gas—with oil field equipment holding particular potential, reports The Houston Chronicle. The newspaper quoted executives gathered Thursday in Houston in the middle of a three-day summit of heavy fuel users and producers. "Here's the first reason that large engines are going gas: large engines burn the most fuel. I could try to make it harder, but that's pretty straightforward," says Joel Feucht, director of gas engine strategy for Caterpillar's energy and power systems division. Oil companies alone use nearly 1.2 billion gallons of diesel fuel a year just for pressure pumping equipment that supports hydraulic fracturing, says David Hill, vice president of natural gas economy operations for Encana Corp. After the diesel used to power drilling rigs themselves has been added to the equation, the total is more than 2.8 billion gallons...
Energy independence won't guarantee low prices
On the campaign trail, both Mitt Romney and President Barack Obama have vowed to liberate the United States from reliance on foreign oil, offering voters a pledge of at least North American "energy independence." In some ways, that's an easy promise to make. As The Houston Chronicle reports, no matter who resides in the White House during the next four years, the United States is already on a trajectory to derive much of its oil and all of its natural gas from within its own borders, thanks to technologies allowing energy companies to harvest the fossil fuels from dense rock formations. But abundant domestic supplies don't guarantee a drop in the cost of energy, most analysts agree. That's because oil prices are set on a world market, subject to a complex mix of factors outside the United States' control. And even if the United States or North American oil imports plummeted to zero, the nation would still be connected to that global market. Michael Levi, a senior fellow for...
Shell leads LNG competitors out to sea with biggest ship
For more than a decade, the world's biggest liquefied natural gas producers led by Royal Dutch Shell plotted how to move their $170 billion industry onto barges at sea to tap remote fields. Now they're finally doing it. The Houston Chronicle reports Shell will forge the hull of a floating LNG plant in South Korea by year-end that will be the world's largest vessel, weighing six times as much as the biggest aircraft carrier, a Nimitz-class warship. Some 5,000 workers will build the factory to produce LNG off Australia's northwest coast in a $13 billion project that also will shield Shell from escalating costs it would have to pay at the country's onshore plants. Rivals, including both Malaysia's Petroliam Nasional Bhd. and GDF Suez SA of France, likewise want to compress gas into liquid at sea, where many of the largest finds were made in the last decade. It's a generational change for a land-based industry that started about 50 years ago in Algeria, where Shell provided...
The price of natural gas
Lafayette and Houma are the biggest oil towns in Louisiana. When the price for a barrel of oil rises, those cities thrive.
Oil companies prepare to return to the Gulf, where most production remains shut in
As Isaac rumbles slowly across Louisiana today, leaving floodwaters, downed trees and power outages in its wake, energy companies are preparing to resume operations in the Gulf of Mexico, The Houston Chronicle reports. Along the coast, refinery crews have begun to assess the damage to prepare to restart, too. BP says it will attempt flyover surveys of key facilities in the Gulf as weather permits, and then begin redeploying offshore personnel. Chevron says it has begun to deploy personnel to both onshore and offshore facilities to assess the impact of Hurricane Isaac, although it declined to comment on any possible impact to operations. And Shell announced that it expected to begin flyover inspections today in anticipation of restarting operations Friday. Ten Gulf Coast refineries with combined crude oil processing capacity of about 2.4 million barrels a day were offline or running at reduced rates as of Wednesday, according to the Oil Price Information Service. According to...
Over half of all platforms, rigs in the Gulf evacuated
Based on operators' reports, 78% of the current daily oil production and 48% of the daily natural gas production in the Gulf of Mexico have been shut in by Tropical Storm Isaac, the Bureau of Safety and Environmental Enforcement says. Isaac has caused 58%, or 346 of 596, of manned production platforms in the Gulf to evacuate personnel, according to BSEE. Production platforms are the structures located offshore from which oil and natural gas are produced. Unlike drilling rigs, which typically move from location to location, production facilities remain in the same location throughout a project's duration. Personnel have been evacuated from 41 of 76 rigs, or 54%, currently drilling for oil and gas in the Gulf. After Isaac has passed, BSEE says all facilities will be inspected; and once all standard checks have been completed, production from undamaged facilities will be brought back online immediately. See BSEE's complete update as of this afternoon
Haynesville Shale slowdown hitting hotels
The hundreds of hotel rooms planned or under construction in Shreveport-Bossier City might be missing their intended clients. The hotel operators had counted on guests in town for business in the Haynesville shale oil field, but a slowdown of natural gas production has cut into room nights. More than 1,300 hotel rooms are in final planning phases or under construction in Shreveport-Bossier City. An additional 169 rooms have gone into operation this year in Bossier City: the 85-room Holiday Inn and Suites and the 84-room Windgates by Wyndham. Four more hotels in Bossier City and two in Shreveport—with 541 rooms between them—are in the final planning stages. "Much of that construction and planning began in 2010 when the Haynesville shale was in full swing," says Shreveport-Bossier Convention and Tourism Bureau President Stacy Brown. "Those are mostly limited-service locations which are interested in capturing a more transient business." The Shreveport Times has the...
Nation's No. 2 producer shunning natural gas, shrinking rig count
Chesapeake Energy Corp., which calls itself America's Champion of Natural Gas, has announced that it's basically giving up on gas drilling this year, adding to an industrywide retreat from what has been deemed the fuel of the future. The Houston Chronicle reports that the nation's second-largest natural gas producer—after Exxon Mobil Corp.—says, as part of a major contraction in its operations, it has cut its plan for new gas exploration by 83%. Chesapeake previously had planned to operate 47 gas rigs in 2012, but now hopes to cut that rig count to eight by the end of the year, executives revealed during a conference call with analysts on Tuesday to discuss the company's second-quarter earnings. That shift by the most prominent proponent of natural gas came as fossil fuel producers across the spectrum are shying away from gas drilling, even though they have invested billions of dollars in its promise as a major energy resource for the future. The problem is price.
Pipeline to run beneath Lake Pontchartrain to Miss.
The company planning a $220 million, 141-mile pipeline from Norco to Mississippi hopes to begin work in Lake Pontchartrain—the first stage of the year-long construction process—in the coming weeks, The Times-Picayune. The underground 16-inch pipeline, which will carry gasoline and diesel, will run from the Valero St. Charles Refinery to Collins, Miss., where it will tie into other distribution pipelines. Valero and Kinder Morgan Energy Partners have formed a company called Parkway Pipeline to build and operate the pipeline. Company spokesman Allen Fore says the project has received the needed permits from state agencies but is awaiting a permit from the Army Corps of Engineers before it can begin construction. He says he understood the corps permit could be granted as early as next week. "We'd like to begin by Aug. 13,'' Fore says of the construction along the bottom of Lake Pontchartrain. But that date may be optimistic: The corps likely won't rule on the permit...
Marcellus set to overtake Haynesville as top U.S. natural gas field
New data from energy industry analysts and the federal government suggests the Marcellus Shale is about to overtake the Haynesville Shale as the most productive natural gas field in the United States. Though serious drilling only began five years ago, the sheer volume of Marcellus production suggests that in some ways there's no going back, even as New York debates whether to allow drilling in its portion of the shale, which also lies under large parts of Pennsylvania, West Virginia and Ohio. In 2008, Marcellus production barely registered on national energy reports. In July, the combined output from Pennsylvania and West Virginia wells was about 7.4 billion cubic feet per day, according to Kyle Martinez, an analyst at Bentek Energy. That's more than double the 3.6 billion cubic feet from last April and represents over 25% of national shale gas production. That's neck-and-neck with production from the Haynesville region—which encompasses portions of Louisiana, Texas and...
Israel finds $240B gas hoard stranded by politics
Israel, reliant on imported energy since the state's foundation in 1948, now has more natural gas than it can handle, Bloomberg reports. Noble Energy Inc., Delek Group Ltd. and other explorers have discovered enough gas under the Mediterranean Sea to supply Israel's needs for 150 years. To profit from the finds sooner, the companies want to export the gas by pipeline or ship. As the Ministry of Energy prepares to publish a blueprint for developing the fields later this month, officials say the country's economy and security must come first and that shipments abroad should be limited. Exporting natural gas presents challenges. Environmental opposition and a shortage of land complicate building a plant to liquefy the fuel for export, while an offshore facility or pipelines to nearby countries will be hard to protect. Tapping all of Israel's discoveries, which include Leviathan, a single field holding more gas than Middle East exporter Yemen has in reserves, may prove uneconomic...
Haynesville Shale output leads U.S. in May
According to new data out from the U.S Energy Department, natural gas output along the Haynesville Shale in Louisiana and Texas dipped in May, but the area was still producing the highest daily output among all American shale formations. The Haynesville Shale's average output in May was 6.92 billion cubic feet a day. That's down from 6.93 bcf in April, but up from 6.43 bcf in May 2011, according to a Bloomberg report on the data. But output in the Marcellus Shale in the Northeastern U.S. appears to be poised to soon outpace the Haynesville. Output along the Marcellus averaged 6.85 bcf a day in May, up 6.4% from the previous month—and more than double the 3.37 bcf daily output recorded in May 2011. Natural-gas production from all American shale formations rose in May on increased supplies from the Marcellus, even after prices fell to a 10-year low during the month. Total output from shale formations in the continental U.S. averaged 25.58 bcf in May—24% higher than a...
Bona fide growth
Judging strictly by Business Report's annual “Top 100 Private Companies” roster, the Capital Region economy appears to be on an upswing.
Drought helps fracking foes push for recycling
The worst U.S. drought in a half century is putting pressure on natural gas drillers to conserve the millions of gallons of water used in hydraulic fracturing to free trapped gas and oil from underground rock, Bloomberg reports. From Texas to Colorado to Pennsylvania, farmers, activists and opponents of the drilling technique, also known as fracking, are using the shortage of rain to push the industry to recycle water and reduce usage—efforts that could prove costly to the industry. One company, Devon Energy Corp.—which is leading drilling efforts in the Tuscaloosa Shale in the parishes just north of East Baton Rouge—estimates that recycling is as much as 75% costlier than pumping wastewater into deep wells. That disposal method, common in the industry, has also drawn complaints because it is linked to earthquakes. "We just would like the oil and gas companies to figure out better...
Natural gas glut puts brakes on economy
The pace of things is a little slower in Mansfield these days. The drive across town takes a little less time. The line at the gas station is a little shorter and the parking lots are less crowded every day. "It's really been a tremendous change since February," Shelby Spurlock, co-owner of Café 171 in Mansfield, in northwest Louisiana, tells The (Alexandria) Town Talk. "It's gotten to the point where we wonder if we can keep the doors open or not." Café 171 opened in September 2010, targeting the droves of oil and natural gas workers meeting the booming demand on the Haynesville Shale. And for almost two years the eatery has had a house packed with roughnecks, surveyors, supervisors and anyone else working the nearby rigs. "I just don't know how long we can hold on," Spurlock says. "The way things are falling, every day we get closer to nothing." What's falling—and taking a lot of local business with it—is the price of natural gas; which has hit dramatic lows over...
Utility chiefs worry U.S. rush to natural gas will crowd out other fuels
The United States is at risk of relying too much on natural gas as transportation, manufacturing and electric-power industries vie for the cheap fuel, top executives of three power utilities tell Bloomberg. While greater use of gas instead of coal for generation cuts air pollution and carbon-dioxide emissions linked to climate change, the executives say the nation needs a diverse fuel mix to hedge against cost increases in any one source. "Having one focus is never good, just like a portfolio having one stock," says Michael Yackira, chief executive officer of Las Vegas-based NV Energy Inc. Energy companies are developing vast reserves of natural gas by hydraulic fracturing underground to push gas out of shale rock. The process, also called fracking, has sent gas prices down about 38% over the past year, benefiting industries that use the fuel in production, such as chemical manufacturers. The three executives with whom Bloomberg recently sat down disagree on whether the...
Natural gas glut dredges up a dilemma for Obama
The drilling boom that has led to a glut of natural gas and sent prices spiraling downward is causing a quandary for President Barack Obama and his administration, which is struggling to decide whether the United States should share the bounty with foreign countries, and if so, how much. Although the Energy Department recently approved Houston-based Cheniere Energy's plans to begin exporting liquefied natural gas from its Sabine Pass terminal outside Lake Charles, The Houston Chronicle reports, the government has put off verdicts on similar applications from at least seven other companies. Administration officials say they'll make those decisions after they get the results of a study commissioned by the Energy Department on how allowing companies to sell U.S.-produced natural gas overseas would affect prices for American consumers. The study is due out this summer. The Obama administration supports domestic natural gas and isn't opposed to exports, White House energy adviser...
La. working to turn low natural gas prices into big industrial investments
With natural gas at decade-low prices, state economic officials are working to catch a wave of new investment interest from industries eager to tap into the abundant supply of the clean-burning fuel to power their plants. "We're working hard to position ourselves to get a disproportionate share of that new activity," Stephen Moret, secretary of LED, tells The Times-Picayune. Moret expects the state will add seven to 15 projects over the next five years—in the range of $500 million to $5 billion apiece—with most topping out around $1.5 billion. Those predictions will likely hinge on several factors, including the pace of environmental permitting for new manufacturing projects, steady domestic natural gas exploration using hydraulic fracturing, and the world's markets steering clear of a severe global recession. Competitive fuel prices have already been at least partially responsible for several new industrial projects in the state, including a new natural gas-fired...
Researcher rebuts colleagues on fracking leak claims
Replacing coal with natural gas reduces the creation of greenhouse gases that cause global warming, a Cornell University researcher has concluded, rebutting the findings of colleagues at the university. Bloomberg reports Lawrence Cathles, a professor in the Department of Earth and Atmospheric Sciences, has released a paper that says even if high rates of natural gas are leaking out after hydraulic fracturing and during transport, gas will still provide a net benefit over time. "The only thing that really counts is the amount of carbon dioxide you put in the atmosphere," Cathles says. Because gas releases less carbon dioxide than coal or oil when combusted, "the story is quite clear that we would be very well advised to substitute natural gas." The impact of natural gas on climate change has attracted attention as the spurt in production from hydraulic fracturing, or fracking, has pushed down prices and prompted power producers to shift from coal to gas. Utilities generated as...
Mistaken vote makes possible N.C. override of fracking ban
North Carolina Republicans successfully overrode Gov. Bev Perdue's veto of a fracking bill during a dramatic vote taken just after 11 p.m. Monday. But as The Charlotte Observer reports, the vote to override was just as controversial as the legislation that would have banned the drilling technique in that state. Rep. Becky Carney, a Democrat who opposes fracking, pushed the wrong button and accidentally voted with Republicans to override the veto. A maneuver by Republican Paul "Skip" Stam prevented her from changing her vote, giving the GOP a historic one-vote margin of victory. "It was a huge mistake," Carney says. "I take full responsibility." Democrats denounced Stam's quick parliamentary maneuver as a dirty trick that resulted in the passage of a landmark energy overhaul that could create a natural gas production industry in the state. "I am shocked and profoundly disappointed," says Rep. Pricey Harrison, a Democrat. "First the speaker cut off debate, which is unfortunate...
Financing plan for La. LNG terminal nearly complete
Cheniere Energy Inc., the first company to win approval to export natural gas from the continental U.S., plans to complete as much as $4 billion in financing for the south Louisiana project in the next few days, Bloomberg reports. "We're working with our eight lead arrangers to secure the project financing and it will be announced in the next few days," Chairman and CEO Charif Souki says. Earlier this month, Cheniere said it expected to complete debt financing arrangements by the end of this month for the estimated $4.5 billion to $5 billion it needs to build liquefaction units at its Sabine Pass facility in Cameron Parish. The company hired JPMorgan Chase & Co., Morgan Stanley and others in April to help arrange the funding. "More than likely, they'll get the debt financing done," speculates William Frohnhoefer, an analyst at BTIG LLC. "If they are late a few days, it won't have a significant impact on their work schedule or costs." Read the full story
Debby still has about 3% of Gulf oil and gas production shut-in
Offshore oil and gas operators in the Gulf of Mexico are reboarding platforms and rigs and restoring production following Tropical Storm Debby, says the Bureau of Safety and Environmental Enforcement. The BSEE Hurricane Response Team is monitoring the operators' activities, and reports personnel remain evacuated from 10 production platforms, or about 1.6% of the 596 manned platforms in the Gulf, as of this afternoon. Production platforms are the structures from which oil and natural gas are produced. Unlike drilling rigs, which typically move from location to location, production facilities remain in the same location throughout a project's duration. Of the 70 rigs currently operating in the Gulf, none are still evacuated. From operator reports, it is estimated that approximately 3.21% of the current daily oil production in the Gulf has been shut-in, as is 3.64% of the current daily natural gas production. The production percentages are calculated using estimates submitted by...
Republicans press White House to explain natural gas task force
Congressional Republicans are pressing the Obama administration to say whether a new interagency task force focused on natural gas drilling will push new federal regulations on top of existing state mandates. The Houston Chronicle reports 11 Republicans on the House Energy and Commerce Committee also want to know more about how the working group is coordinating with the Environmental Protection Agency, as the EPA prepares new studies, regulations and guidance for hydraulic fracturing techniques used to extract natural gas. In a letter sent to EPA Administrator Lisa Jackson and White House adviser Heather Zichal on Tuesday, the GOP lawmakers took issue with the presidential order establishing the task force on April 13. President Barack Obama's executive order instructs the working group to "facilitate coordinated administration policy efforts to support safe and responsible unconventional natural gas development." However, the Republicans pointed out, the same order also says...