It’s one of dozens of stark figures energy expert Ken Morgan drew at the Eagle Ford Consortium conference Friday, breaking down why America could be in the driver’s seat for production and consumption of cheap, abundant natural gas, but is still in the back seat.

That’s despite the United States leading global energy consumption, at 20 percent, with China and Europe following at 17 percent and 16 percent, respectively.

“This is a three-horse race for global energy,” said Morgan, director of Texas Christian University’s Energy Institute. “I haven’t even thrown in India, Brazil, some of the other places coming on.”

Morgan sees a nationwide fleet of natural gas vehicles as key to increasing energy independence, lower energy costs and a smaller environmental footprint. Smaller, he said, even than electric cars, which require rare earth elements that pose radioactivity and other environmental hazards.

Eagle Ford Shale and the dozen or more other shale basins in North America are key to unlocking the potential for a homegrown solution to America’s gasoline dependence, he said.

Yet the country is so far behind on support infrastructure for natural gas that its consumption has been relatively stagnant while exports have soared. Americans consumed about 25 billion cubic feet in 2012 while exporting about 125 billion, according to the U.S. Energy Information Administration.

It’s one of the reasons companies such as Cheniere Energy, working on a $10 billion liquefied natural gas export terminal on Corpus Christi Bay, are rushing to finish projects. Countries such as Japan, facing growing energy demands and reeling from its nuclear disaster, are looking to the world’s shale gas producers for help.

“Everybody else wants it; we just haven’t figured out how to aggressively go after it,” Morgan said.

From a cost standpoint, he sees it as an obvious alternative to gasoline. While oil sells at about $100 a barrel, the natural gas equivalent averages about $20, he said.

“It’s just an unbelievable asset sitting in the ground that’s so dirt cheap,” he said.

Of course, as demand and consumption of natural gas grow, market forces are likely to bolster its price and could curtail exports. Natural gas prices are expected to have higher annual growth than gasoline in the long term, but will remain a fraction of what oil costs, the Energy Information Administration projects.

There are encouraging signs that the United States can ramp up its natural gas infrastructure, Morgan reported.

The Texas Clean Transportation Triangle, a state-funded program to convert vehicle fleets to natural gas and improve infrastructure, started with plans for 20 fueling stations in the San Antonio-Houston-Dallas triangle. It’s now planning for at least 50, Morgan said.

GE is developing a $500 “compressed natural gas-in-a-box” home fueling station that hooks up to existing gas lines. Homeowners can fuel up their cars for about $1 a day at a home station that’s about the size of an additional bedroom.

More states and the U.S. military are converting their fleets, Morgan said.

And a few gasoline companies are establishing networks of natural gas stations along major U.S. highways for long-haul truckers.

Morgan noted one transportation pioneer, Henry Ford, didn’t worry about infrastructure when he developed and marketed his Model T. He figured the transportation networks would catch up with his innovation, nevermind the bumpy roads.

“What roads?” Morgan said. “They were ruts.”

The annual Eagle Ford Consortium conference ended Friday. Information: www.eaglefordconsortium.org.

BY THE NUMBERS

500 quadrillion

Annual global energy consumed, in BTUs

100 quadrillion

Amount consumed in the United States

600 quadrillion

World consumption by 2030

$26,305

Starting price of Honda Civic natural gas car

$2

Price of natural gas equivalent to 1 gallon of gasoline at a fueling station

Sources: TCU Energy Institute, Honda.com, CNGprices.com

Proponents say it’s easier on the environment.

Mayor Michael Bloomberg and Texas oil and gas investor T. Boone Pickens are discussing the details Thursday at City Hall Park in Manhattan.

“The resource is huge,” says Jane Nakano, a fellow of the Energy and National SecurityProgram at the Center for Strategic and International Studies in Washington DC. “But the shale deposits are more complex than ours, and the above-ground challenges are probably even larger” than the geological ones.

To offset some of the coal use that contributes to its status as the world’s largest greenhouse-gas emitter, China wants to boost natural gas from around 4% of the country’s energy mix to 10% by 2020. Much of that gas will be imported. But in March 2012, the Chinese government estimated the country’s reserves at 25 trillion cubic meters, and an earlier estimate from the US Energy Information Administration was even larger. China’s leaders resolved to boost annual shale-gas production from near zero today to at least 60 billion cubic meters by 2020. The United States, by comparison, produced more than 150 billion cubic meters in 2010.

There, the abundant, cheap gas has displaced coal as a fuel for power plants, contributing to a nearly 4% fall in the country’s fossil-fuel emissions in 2012. If China could repeat that success, the emissions reductions could be globally significant. But its shale-gas auction — only the second so far — has bolstered skepticism. China’s Ministry of Land and Resources awarded leases in 19 areas, mostly in the nation’s central Sichuan Basin. Analysts were surprised to see national oil and gas companies, such as PetroChina and Sinopec, lose out to state-owned coal and utility companies, as well as to local government entities that have no expertise in the oil and gas arena.

Nakano says that the national oil firms may be playing it safe and did not truly compete to win. Price controls on natural gas may have reduced their appetite for risk, she says, and they have little experience with the hydraulic fracturing needed to release gas from shale.

Shu Jiang, a petroleum engineer who worked in China before moving to the University of Utah in Salt Lake City, is more optimistic, pointing out that major oil and gas companies are investing in shale-gas wells in areas already leased for conventional oil and gas development. He says that early results from the Sichuan basin are promising and that “China’s vast shale resources will be extracted”.

That is unlikely to happen quickly, however, says Julio Friedmann, chief energy technologist at the US energy department’s Lawrence Livermore National Laboratory in California. “In the United States, it took 60 years and 200,000 wells” to lay the groundwork for the shale-gas revolution. China has drilled fewer than 100 wells, and its geology is different. Many of the Chinese shale formations have a high clay content, for instance, which makes them more pliable and less apt to fracture. Many are also deeper. “We simply have no idea about whether or not the geology is going to produce,” Friedmann says.

The United States also has a unique abundance of small independent oil and gas companies with a tradition of risk-taking. China does not have such a ‘wildcatter’ culture, nor does it have the same mechanisms for developing and sharing geological data. Even a simple shortage of drilling rigs could slow things down.

Many expect that shale gas would at first be used in China as a feedstock for the chemical and fertilizer industries, reducing the use of gasified coal. In theory, that could lower the nation’s annual carbon dioxide emissions by as much 100 million to 150 million tons, or roughly 1–1.5% of the nation’s cumulative carbon emissions, Friedmann estimates.

Some of the climate benefits would be lost, however, if the wells leak methane — a potent greenhouse gas — and a shale-gas rush would raise the usual concerns about air and water quality. Water is scarce in the gas-rich Tarim basin (see ‘Promising grounds’), whereas the Sichuan basin is heavily populated.

Groups such as the Clean Air Task Force, in Boston, Massachusetts, are encouraging companies and officials to adopt drilling practices that will minimize environmental impacts. Jonathan Banks, the force’s climate-policy coordinator, says that the goal is to help China avoid mistakes made in the United States.

“China is going to be able to leapfrog over some of the stages that the United States went through,” Banks says. “We are pushing to make sure that it is leapfrogging the environmental impacts as well.”

This article is reproduced with permission from the magazine Nature. The article was first published on February 20, 2013.

The Davis Lectureship will bring distinguished speakers with expertise in energy-related fields to promote knowledge about the energy industry, energy management, cutting-edge energy technology and other energy-related subject matter to the TCU campus. With the gift Davis intends to provide unique learning experiences and support the University’s priorities to teach, develop and promote dialogue by engaging formal and informal exchanges with students, faculty and the community.

“TCU has always taken on the responsibility to establish an innovative and aggressive approach to educate its students in cutting edge developments important to the progress of America.  It is my great pleasure TCU has afforded me the honor to be associated with those efforts,” said Ken Davis.

The TCU Energy Institute continues to develop new ways to provide leading research and teaching opportunities. Establishing a national energy speaker’s forum will enrich the educational experience of all of our students along with the surrounding industry and community. The Energy Institute strives to be the leader in local, national and global energy discussions on energy management, emerging technologies, sustainable solutions and developing energy policies.

“This generous contribution provided by Kenneth W. Davis, Jr. will enable TCU to bring our nation’s prominent energy industry speakers to our campus. This significant gift will provide opportunities to conduct critical discussions about domestic and foreign energy-related issues that are essential to the energy industry’s future,” said Dr. Ken Morgan, director of the TCU Energy Institute.

About TCU Energy Institute

The TCU Energy Institute provides unique opportunities for students, faculty and industry professionals to conduct leading-edge research and to explore energy and land management issues. They serve as an educational link between industry and the community, and as a forum for experts seeking viable solutions. TCU sits at the epicenter of our nation’s energy future: Fort Worth is home to the latest technologies for natural gas extraction and is in close proximity to one of the largest wind initiatives in the country. Because of its unique location and strong commitment to education and research, the TCU Energy Institute provides an important link for students, faculty and the community. It serves as a center of information as innovative energy technologies and strategies are developed and policies determined. For more information, visit www.energyinstitute.tcu.edu.

– Star-Telegram

The workshops, which are being held in Fort Worth and San Antonio, are the first sanctioned by the National Association of Royalty Owners, Ken Morgan, director of the Energy Institute, said.

Morgan explained how he and his colleagues took upon themselves to propose the idea of framing the program since the NARO had not previously offered training on its website.

“One of the most important things that we have in this country is that we are the only one in the world that you may own your mineral rights,” he said.

Three different intensive courses are offered every two weeks each month.Participants will receive a certificate of completion after all courses are completed, according to the Energy Institute.

According to the Energy Institute, the instructors are certified mineral managers and experienced mineral owners who have experience teaching landowners fundamental skills that royalty owners must learn.

Harriet Burrow Shields, the TCU Energy Institute news and media relations specialist, said the classes will help the public to understand and become aware of their mineral rights and the decisions that will aid them in the future.

“It’s really there for the public to help them understand their rights, and a lot of people have come by throughout the years and asked if we would be interested in offering a program like this because there isn’t another one out there like this,” Burrow Shields said.

The next available courses will be held on Tues., Feb. 26 at Cattlemen’s in Fort Worth and on Tuesday, Feb. 19 as well as Tuesday, March 5 in San Antonio.

For more information on registration and pricing, visit energyinstitute.tcu.edu.

US President Barack Obama addresses a crowd of supporters on stage on election night November 6, 2012 in Chicago, Illinois.

Texas Watches State of the Union with an Eye on Energy

Even before the President’s State of the Union Address was over last night, some environmental and renewable energy groups were sending out congratulatory emails.

“We thank President Obama for his leadership” read one from the Solar Energy Industries Association. The speech outlined “clean energy solutions”  said the group Environment Texas.

And while some observed that the president’s proposals lacked specifics, most agreed that he was sounding a bolder tone on global climate change.

“Climate change, it’s no longer a forbidden topic,” Michael Webber, co-chair of UT Austin’s Clean Energy Incubator and head of the Webber Energy Group told StateImpact Texas.

He said a few of the President’s proposals could specifically impact the economy and environment right here in Texas.

“There is a lot of good news for Texas in this speech, especially the emphasis in natural gas and other low carbon fuel in reducing red tape for oil and gas production and reinvesting in new pipelines,” he said.

Webber points out that Texas companies control a lot of pipelines across the country. Some of those companies might see his call for investment in U.S. energy infrastructure as good news.

The industry group America’s Natural Gas Alliance (which has donated to KUT in the passed) released a statement applauding the President’s plan to encourage gas drilling on federal lands. Though that call earned criticism from anti-fracking activists online.

Though some had speculated he would announce new initiatives to curb CO2 emissions from existing coal plants, Mr. Obama did not go that far. Instead, he left the door open for more EPA regulation on CO2 in his speech.

“If Congress won’t act soon to protect future generations,” he said, ” will direct my Cabinet to come up with executive actions we can take, now and in the future, to reduce pollution, prepare our communities for the consequences of climate change, and speed the transition to more sustainable sources of energy.”

Many Texas officials probably took notice of that comment. After all, the EPA and the state of Texas have been engaged in a series of lawsuits over regulation since the president’s first term in office.

Heavy hitters on both sides of the natural gas debate warned senators Tuesday that the natural gas boom could fizzle if the U.S. takes the wrong tack.

The goal, Senate Energy and Natural Resources Chairman Ron Wyden (D-Ore.) said, is to allow the U.S. to reap the benefits of natural gas development and exports while protecting consumers and reducing the trade deficit.

“We’re going to look at all of the possibilities to find the sweet spot,” Wyden said after Tuesday’s hearing, the first the committee has held this session.

The U.S. is in the midst of a shale revolution, with fracking making accessible deposits of gas trapped deep in shale rock that a decade ago were unreachable. The abundance has shifted U.S. energy thinking from one of scarcity to one in which the nation could begin to export natural gas through liquefaction plants along the coasts. A number of projects are awaiting approval from the Department of Energy.

But some industry groups say exporting too much of the nation’s gas bounty could backfire.

“Natural gas is an indispensable ingredient for everything that is made in this country,” said Andrew Liveris, CEO of Dow Chemical. “So, when natural gas is not solely used as an export, and is used as a building block for manufactured goods, it creates eight times more value across the entire economy. In this way, American’s natural gas bounty is more than a simple commodity. It’s a once-in-a-generation opportunity to export advanced products and not just BTUs.”

Allowing both exports and increased production of manufactured goods, said Liveris, would create a four-fold win: lower energy costs for Americans, stable prices for manufacturers, more exports for producers and a competitive advantage for the economy.

But rushing policy on liquefied natural gas exports could lead the U.S. down the wrong path, he said, especially given that no one can predict where we’ll be 10 years from now.

“This is only year four or five of a 100-year advantage,” Liveris said. “We have the time. We should take the time to get this right.”

Natural Resources Defense Council President Frances Beinecke said the only way for the U.S. to move forward responsibly is to ensure that there’s public confidence around natural gas development.

 Click here to watch the Ken Morgan – The Barnett Powering Progress video.

TCU Energy Institute hosted 19 guests from Japanese energy agencies, universities and natural gas companies who are interested in expanding their international alliances for cleaner natural gas resources.
More than 50 North Texas companies also attended the luncheon, sponsored by Quicksilver Resources.

Officials Say The Future of Energy Independence is Here

Carthage, Texas - Some say the future of energy independence is gaining ground in East Texas. Officials met for the Compressed Natural Gas Forum at Panola College in Carthage, Texas today to discuss what CNG is– and can do for the Ark-La-Tex.

Remember when you could get by with paying $1.89 for gas? Supporters of Natural Gas in our area say we can get back there and the answer could be right underneath your nose. Dr. Ken Morgan is the Director of The Energy Institute at Texas Christian University. He says, “(People will see) how much cleaner burning it is, and how much of a bargain it is for every american including companies, industries and right there at your house.” Hundreds met for the Natural Gas Forum at Panola College Tuesday morning. Their goal was to educate the public and address issues facing the country’s energy independence. Officials say the natural gas revolution will be started by the average American. “I don’t think it’ll come down from Washington, lets be honest, I think it’ll be more grassroots. It’s cheaper, the economy demands it and you’re sitting on top of it,” Dr. Morgan said.

“Panola county historically, has been one of the largest producers of natural gas in the state of Texas. So, it was a natural fit for us and compressed natural gas is the wave of the future.” said Panola College President Gregory Powell. Panola College’s Petroleum Technology Program is one of the schools largest fields of study. And the ark-la-tex is prime for natural gas industries. Cheniere energy is building a natural gas export facility in Louisiana. “It’s about an 11 billion dollar investment into the region and we’ll be able to export about 2.2 billion cubic feet of natural gas per day. There’s a real price advantage that we have here and an opportunity to create jobs and economic opportunity in the U.S.” said Jason French with Cheniere Energy.

Right now, natural gas powers more than 12 million vehicles on the road today. Unfortunately, only 250,000 of those are being used in the U.S. One of the biggest problems with switching over to cng cars is that there aren’t a lot of places to fuel up. Around the world there are 12 thousand stations but there are only 500 public compressed natural gas stations in the us and only 6 here in the Ark-La-Tex. Officials hope to plan for more stations as the demand increases.

There’s a wall along New York’s southern border that’s dividing us against each other. Built with fear and misinformation about natural gas development, this hollow wall casts a shadow over our economic future. But with little foundation in reality, it can’t stand up to mounting evidence of the safety and widely shared benefits of a responsible local natural gas industry.

Gov. Andrew Cuomo promised a science-based decision, and the reliable science is in. Yet the wall still stands — propped up by politics and blocking opportunity where it’s needed most.

Patient Southern Tier residents must stand up for their rights and demand action: Gov. Cuomo, tear down this wall!

Despite more delay to study “unknown” health effects of shale gas development, state officials have known the facts for months. A Feb. 2012 review from New York’s Health Commissioner Dr. Nirav Shah states that “significant adverse impacts on human health are not expected from routine HVHF (hydrofracking) operations.”

Contrary to every significant charge leveled by opponents, the unreleased review finds that “the state’s proposed regulations would prevent any potential health risks from air emissions, water contamination, and radioactive materials unearthed during the drilling process.”

The proposed safeguards under the Supplemental Generic Environmental Impact Statement are even stronger.

Concerned about economic health?

According to U.S. Department of Labor statistics for 2001-2011, employment in Broome, Tioga and Chemung counties declined by 8.6 percent. But just over the Pennsylvania border in Susquehanna and Bradford counties, it increased by 5.2 percent.

From 2008 to 2011, as gas drilling activity surged, total wages paid rose by 28 percent. In the Southern Tier counties, wages were stagnant. In 2012, Bradford County government received $8.4 million in tax revenue from gas production, enabling a 5.9 percent cut in 2013 property taxes and a 4.5 percent pay raise for county employees.

Worried about climate change?

Experienced researchers, including Cornell’s Lawrence Cathles, conclude that replacing coal with clean natural gas for electricity production will significantly lower greenhouse gas emissions over both the short and long term. It has already reduced U.S. carbon emissions below 1995 levels.

Experts from the Massachusetts Institute of Technology report in the journal Environmental Research Letters that claims of potential increased warming from escaped gas at well sites rely on an “unreasonable assumption.”

Real world data used by MIT, the federal Department of Energy and Carnegie Mellon University refute leakage estimates which ignore today’s “green completion” technology and regulations mandating emission reductions. The flickering nighttime glow we see from flaring of new gas wells just over the border is a visible sign of greenhouse gas control, as well as a glimmer of hope for our long-suffering communities.

The writing is on the wall. Shale gas development is here to stay and coming to New York. It’s the real key to our region’s economic recovery and our nation’s energy independence.

Our state cannot cling to obsolete 1970s narratives that assume a bleak future of scarce and expensive energy. Cuomo must tear down the wall of pessimism along the border and let natural gas lift up his new New York.

Bob Poloncic is chairman of the Vestal Gas Coalition in Vestal, Broome County.

FORTUNE — America is awash in natural gas. Prices are low and by some estimates we have a 100-year supply of it. Today we produce more than we use so why not export it? By doing so, natural gas could act as the driver of a comprehensive U.S. energy plan that would make sense in terms of our economy, national security and public health. Better yet, it could rally support from interest groups previously at odds. How? Embracing natural gas exports would not only take the slack out of the U.S. natural gas market, which would help producers, but also would enable renewable energy to replace natural gas as the backbone of America’s power-generation infrastructure. In other words, there is a clear alignment between renewable energy supporters and the oil and gas industry based on a shared interest in seeing natural gas prices rise a notch or two..

If gas prices were still at the levels they were three years ago, wind and solar would be solidly competitive with fossil-fired power, and the utility-scale renewable industry wouldn’t be fighting the headwinds it is today. But wouldn’t natural gas exports just increase the amount of carbon we’re putting into the atmosphere? One of the big downsides of our gas glut in the U.S. is that we’re now exporting our coal to Europe. Cheap domestic gas is replacing coal at home but that coal is simply being burned elsewhere. Thus the result of low gas prices is to increase global carbon emissions because total fossil fuel consumption is exploding.

MORE: Bringing GM back from the brink

Exporting natural gas would be more likely to displace coal both at home and abroad, resulting in a lower net carbon emissions overall. This alone gives climate advocates a reason to support the export of natural gas. Beyond that, any economist will tell you that raising the price of a commodity should increase rationing of that product. In other words, raising the price of gas in the U.S. should result in burning less of it and lead to more selective consumption.

A gas export initiative is clearly the best policy for dealing with the current gas glut and provides the least offensive role for government to play in restoring balance to power markets. The Department of Energy already has approved one export terminal, the Sabine Pass Liquefaction LLC in Louisiana, so progress is underway. A natural gas export initiative has significant potential to garner broad political support by aligning the interest of historical adversaries on energy issues. This latter point is exciting. It suggests a potential political opening for the kind of comprehensive energy plan our nation needs to move forward.

Members of the the Texas Christian University Energy Institute have been studying the impact of the play and made a trip to San Antonio to talk to industry participants about the prospects of the play.

They say there is actually more to South Texas Oil and Natural gas than just the Eagle Ford. The Pearsall play lies beneath the Eagle Ford, plus there are oil fields above the Eagle Ford.

That all adds up to big oil and big money.

“There’s going to be $25 billion spent in the eagle ford next year,” said Dr. John Breyer, former professor of Geology at TCU.

Thanks to new technology, oil companies are heading back to old wells.

“Like a Phoenix, we thought they were dead but they are all coming back,” Breyer said.

While wells are pumping up oil, the price of natural gas has slowed production, but there is still a bright future.

“Wait until you get this thing rolling in the next three to five years. You are going to see a game changer down here, ” said Dr. Ken Morgan, Director of the TCU Energy Institute.

The game could really change if oil prices get back to $4-5 a gallon.

Morgan says filling stations are on the horizon, automobiles equipped for natural gas just need to start coming off the assembly line.

In the meantime, enough oil could be produced in the states to make a huge dent in oil the US imports.

“Were spending a billion dollars a day now importing oil we could easily cut that in half and think what that does to the economy, ” Breyer said.

]]> http://www.energyinstitute.tcu.edu/2013/01/22/2012-civic-natural-gas-free-fuel-promotion/feed/ 0 http://www.energyinstitute.tcu.edu/2013/01/22/dallas-based-zeit-energy-builds-maintains-natural-gas-fueling-stations/ http://www.energyinstitute.tcu.edu/2013/01/22/dallas-based-zeit-energy-builds-maintains-natural-gas-fueling-stations/#comments Tue, 22 Jan 2013 19:47:48 +0000 newsfeed http://www.energyinstitute.tcu.edu/?p=1977

Cashing in on natural gas: Clint Beauchamp, at left, Zeit Energy founder and vice president of finance and marketing, and Patrick Zeiter, vice president engineering and operations, have seen rapid growth in their Dallas-based company. Revenue has grown to $4 million in about a year.

With gas prices remaining high over the past few years, consumers — individuals as well as commercial fleets — have searched for a more economical way to fuel up.

In response, natural gas is becoming one of the fastest growing sources of clean air fueling services.

Dallas-based Zeit Energy is focused on helping municipalities and commercial fleets improve their fuel costs.

Started in 2008, Zeit designs, builds and maintains natural gas fueling stations across the nation.

“What we do is new. The industry has been around for a long time, but this is new to a lot of people,” said Clint Beauchamp, founder and principal of Zeit Energy. “The public can use it, but that is not who we target. We target commercial and local government fleets.”

Zeit has been on a fast-growth track, according to Beauchamp. In 2011, the company started with $1.7 million in revenue, and is now at about $4 million. He is estimating about $20 million in sales for 2013.

“The reason why people switch is because compressed natural gas has lower emissions and because it is made in the United States,” Beauchamp said. “We have a lot of it. The U.S. is the Saudi Arabia of natural gas.”

The United States has a roughly 100 to 200-year supply of natural gas, according to Beauchamp. Being a commodity, however, it does fluctuate in price.

At the pump, prices for natural gas start at about $2 per gallon in comparison with today’s average of $3.91 per gallon of diesel. A regular user can realize fuel cost savings of 5 percent to 10 percent. The price of natural gas depends on volume, according to Beauchamp. For heavy users, such as transit or commercial fleets, the savings can hit 25 percent to 30 percent.

“It takes longer to get a payback when you factor in the increased cost of the vehicle. Costs will come down and savings will go up,” Beauchamp said. “In Europe, the same CNG vehicles that cost $10,000 to $12,000 of premium here have a $3,500 to $3,700 premium there.”

Beauchamp said that the company’s greatest challenge is “reducing our cost of capital and educating sources of financing,” meaning the banks and private equity firms that might get behind Zeit. “Neither can get good data by themselves on the residuals of CNG vehicles or net recovery values of the CNG station equipment,” he said.

Pensacola Energy, an energy company based in Pensacola, Fla., partnered with Zeit to build its first natural gas fueling station. It is now working on its third.

The natural gas industry is still in its infancy, said Dean Faessel, business development administrator of Pensacola Energy.

“This is a newer industry,” Faessel said. “We got in on the front end of it. We will begin to see more of this through the U.S in the next 5 to 10 years.”

Natural gas will begin to impact the community on a wider scale, as well, said Beauchamp.

“The natural gas business is a way to improve the economy,” he said. “When we put in a CNG station, we are putting in something new. We can involve people and therefore create a lot of new jobs creating state and local tax revenue.”

Dallas News, (January 4, 2013) - Late last month, Dallas’ City Plan Commission rejected a request by Trinity East Energy for three special-use permits to drill for natural gas in the Trinity River floodplain in northwest Dallas.

But the Plan Commission’s chairman, Joe Alcantar, asked the city staff Friday to bring the Trinity East permits up for reconsideration at the commission’s next scheduled hearing on Thursday. The move is sure to raise alarms among those concerned about drilling’s environmental impact and particularly about Trinity East’s request to drill in the floodplain, on city parkland and close to businesses and recreational facilities.

Alcantar, who supported granting the permits to Trinity East, confirmed that he wants the commission to take the issue up again. “There are still some areas we need to look at and make sure we did a good thorough job,” he said.

Jim Schermbeck, director of the environmental advocacy group Downwinders at Risk, blamed Mayor Mike Rawlings and City Manager Mary Suhm for trying to snatch a victory for the gas drilling company.

“The mayor and city manager are desperate to have this pass the Plan Commission level to give them cover at the council level,” he said. “It’s just not good government.”

The council is set to vote on the permits Jan. 23. Alcantar said he did not discuss the matter with Rawlings. The mayor has said he intends to support granting the permits to Trinity East, suggesting the company may not drill before its lease expires in 2014 because of depressed natural gas prices.

During its Dec. 20 meeting, the Plan Commission voted 7-5 against approving Trinity East’s permit applications. It then took a second, unanimous vote to deny them. If that denial stands, Trinity East will need the votes of a supermajority on the City Council, 12 members, to win the permits. But if the Plan Commission reconsiders and approves the permits, then a simple majority of the council could push them through.

Concern about drilling’s impact, and public outcry over it, has left many council members wary about drilling and unlikely to support it on city land. The likelihood that 12 council members would approve the permits is remote at best.

The city has been embroiled in controversy over natural gas drilling for years. In 2008, Suhm crafted an agreement with two companies, Trinity East and XTO Energy, to lease city land for drilling in return for a $33 million upfront payment. XTO withdrew applications for permits last year, but Trinity East has indicated it intends to act on its leases.

“We have a contractual obligation with the city on these gas leases, and we need to move forward,” said Dallas Cothrum, the company’s zoning consultant.

In 2011, after concerns about drilling had heightened, the council appointed a task force to recommend changes to the city’s gas drilling ordinance. The council has yet to consider those recommendations, however, so the Plan Commission has been forced to take up permit applications under an ordinance that is widely considered outdated and inadequate.

It’s not clear how the Plan Commission would vote if the matter were to come before the body again. Two commissioners, John Shellene and Liz Walley, were absent during the first vote. Commissioner Paul Ridley said that the special-use permit request raises myriad concerns and that he’s not likely to change his vote for denial.

“The most immediate [concern] was that we could not approve the gas drilling SUPs because they were contrary to existing ordinance,” he said.

The current ordinance prohibits drilling in parkland and floodplains. Trinity East is seeking to drill both in the floodplain and on city-owned parkland. Also, Ridney said, “There are numerous issues about noise, air and water pollution and the overall environmental effect on nearby property owners and users.”

The Plan Commission also needs to review the findings of the City Council-appointed Gas Drilling Task Force, Ridley said. Cothrum said the reconsideration is only fair. At the last hearing, he said, commissioners were frustrated with the council for pushing the gas drilling controversy on them. “We felt like some of the members voted against the request not on the merits but based on how they received it from council,” he said.

Schermbeck said opponents are ready to fight the plan again. And he believes the commission will once more see things their way. “If they stick to their guns, this vote should be even more lopsided in our favor,” he said.

Federal Motor Fuel Tax Credits

“There will not be any hegemonic power,” the 166-page report says. “Power will shift to networks and coalitions in a multipolar world.”

The product of four years of intelligence-gathering and analysis, the study, by the National Intelligence Council, presents grounds for optimism and pessimism in nearly equal measure. The council reports to the director of national intelligence and has responsibilities for long-term strategic analysis.

One remarkable development it anticipates is a spreading affluence that leads to a larger global middle class that is better educated and has wider access to health care and communications technologies like the Internet and smartphones. “The growth of the global middle class constitutes a tectonic shift,” the study says, adding that billions of people will gain new individual power as they climb out of poverty. “For the first time, a majority of the world’s population will not be impoverished, and the middle classes will be the most important social and economic sector in the vast majority of countries around the world.”

At the same time, it warns, half of the world’s population will probably be living in areas that suffer from severe shortages of fresh water, meaning that management of natural resources will be a crucial component of global national security efforts.

The study also warns of the risk that terrorists could mount a computer-network attack in which the casualties would be measured not by the hundreds or thousands killed but by the millions severely affected by damaged infrastructure, like electrical grids being taken down.

At least 15 countries are “at high risk of state failure” by 2030, the report predicts, among them Afghanistan and Pakistan, but also Burundi, Rwanda, Somalia, Uganda and Yemen.

The study acknowledges that the future “is malleable,” and it lists important “game changers” that will most influence the global scene through 2030: a crisis-prone world economy, shortcomings in governance, conflicts within states and between them, the impact of new technologies and whether the United States can “work with new partners to reinvent the international system.”

The best-case situation for global security until 2030, according to the study, would be a growing political partnership between the United States and China. But it could take a crisis to bring Washington and Beijing together — something like a nuclear standoff between India and Pakistan resolved only by bold cooperation between the United States and China.

The worst-case situation envisions a stalling of economic globalization that would preclude advancement of financial well-being around the world. That would be a likely outcome after an outbreak of a health pandemic that, even if short-lived, would result in closed borders and economic isolationism.

The chief author and manager of the project, Mathew Burrows, who is counselor for the National Intelligence Council, said the findings had been presented in advance in more than 20 nations to groups of academic experts, business leaders and government officials, including local intelligence officers.

In an interview, Mr. Burrows noted that the audiences in China were far more accepting of the American intelligence assessments — both those predicting China’s economic ascendancy and those warning of political dangers if there was no reform of governance in Beijing — than were audiences in Russia.

To assess the validity of this study, the research and analysis team graded its past work on global trends, an effort undertaken every four years since 1996. Past studies, it found, underestimated the speed with which changes arrived on the global scene.

Concerns were raised that past reports may have suffered “blind spots and biases.” And while grand “isms” like fascism and communism might not be on the horizon, this study noted, previous assessments should have paid greater attention to ideology.

The risk of conflict within a state — like a civil war or an insurgency — is expected to decline in Latin America, but will remain high in sub-Saharan Africa, in parts of the Middle East and South Asia, and in some Asia-Pacific island hot spots, the study warns.

“A more fragmented international system increases the risks” of conflict between states, the study says. “Additionally, increased resource competition, spread of lethal technologies and spillover from regional conflicts increase the potential for interstate conflicts.”

Most worrisome — and already a part of the global security dynamic — is an assessment that future wars in Asia and the Middle East could include nuclear weapons.

Other important demographic trends will be aging populations in Europe, Japan, South Korea and Taiwan, which could slow their economies further. The report warns that Russia’s economy will join those places in experiencing “slow relative declines.” The United States will benefit from its domestic oil and natural gas supplies and new technologies to tap them, allowing the nation to become energy independent and even a net exporter of fuel.

In general, it found, “the health of the global economy increasingly will be linked to how well the developing world does — more so than the traditional West.”

In addition to China, the developing nations that “will become especially important to the global economy” include Brazil, Colombia, India, Indonesia, Nigeria, South Africa and Turkey.

“Thanks to technological advancements like hydraulic fracturing, our state and nation are enjoying an abundance of inexpensive natural gas,” said Chairman Barry Smitherman. “In fact, Texas is experiencing an unprecedented rate of natural gas production at some 7.2 trillion cubic feet a year. This domestic natural resource will make it easier for Texans to use natural gas as a transportation fuel and will help move us closer to energy independence as a nation.”

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Chairman Barry Smitherman was appointed to the Railroad Commission of Texas in July 2011, and was elected Chairman in February 2012. Chairman Smitherman currently serves as Texas’ representative on both the Interstate Oil and Gas Compact Commission and the Southern States Energy Board, and as Vice Chair of the National Association of Regulatory Utility Commissioners’ Gas Committee. He is on the Visiting Committee of the Bureau of Economic Geology with the Jackson School of Geosciences at The University of Texas at Austin, The University of Texas School of Law Center for Global Energy, International Arbitration, and Environmental Law, and the Eanes Education Foundation Advisory Board.

In the near term, production figures will continue to rise, even as rig counts start to fall.  Bentek, an analyst focusing in this area, predicts that Marcellus production will increase by 78% by 2015.  The main reason for the increased production is simple: more than 1000 wills drilled over the past year and half have not yet been brought on line.  That’s almost a third of the 2,879 wells currently completed in PA.

This overproduction is largely caused by a use-it-or-lose-it leasing dynamic which requires drillers to be actively producing hydrocarbons in order to extend leases.  As a consequence, drillers continued to punch holes in the ground even as the oversupply situation became clear.  But short-term and long-term market dynamics are two very different things.  The immediate land leasing rush is over, and producers are already responding to market prices and moving rigs south and west to the more lucrative oil shales in Louisiana, Texas, Ohio, and elsewhere.  In fact, the Baker Hughes rig count for PA dropped from 111 last October to just 63 this past month – the lowest number of rigs in three years.  To put that in some perspective, though, the rigs can do much more in a shorter time than just a few years ago, as learning curves come down and productivity increases.

To get a clear picture as to what exactly drives the shift away from Pennsylvania, it is instructive to read the Q3 transcripts from some of the major drilling companies.  Chesapeake’s transcript is perhaps the most interesting. They have been the largest driller for years, and they have a very explicit strategy in terms of rig deployment, production, and prices.  They are also very bullish on the forecast for gas.  CEO Aubrey McLendon notes “much to the amazement of most observers, the market has overcome an almost 900 bcf storage surplus from just seven months ago to a year-over-year storage surplus today of just about 120 bcf. We believe the small remaining storage overhang should soon go into a year-over-year deficit…Natural gas demand is growing across all sectors of consumption…we now expect to enjoy a multi-year rebound in natural gas prices driven by demand growth that is likely to be equally relentless.”

Chesapeake is putting its money where its mouth is, remaining largely unhedged for 2013.   That is, they haven’t locked in any futures prices for gas, expecting the decline in gas production to push prices up.  They forecast that just the decrease in number of their own rigs – from a high of 81 shale gas rigs to 5 in the Marcellus and 4 in other shale plays – will help move the market. As McLendon observes “today’s (forward price) strip for 2013 and frankly, for years beyond that, does not reflect a full appreciation of what happens when big producers like us reverse course and go in to managed decline…we’ll be down 7% year-over-year…Chesapeake has been responsible for about 30% of all the gas production growth the whole industry has generated in the past five years.  And so, when we roll over, we think we will pull the whole market with us and we think that the prices that we see out in 2013 do not reflect that.”

Where are these rigs going instead?  Into shale oils and gas liquids, where the money is.  Chesapeake has already moved 72 rigs to the Eagle Ford, Anadarko, and Utica basins in search of more profitable oil and liquids.  A re-direction of rigs back to gas country would come from either a decline in the price of oil, an increase in gas prices, or both.  Chesapeake indicates that at $4-5 per MMbtu, they will stick with their current oil shale focus, but at $5-6 “The Marcellus is certainly competitive with oil projects.”  That might also be true for the Haynesville and Barnett shales, though Chesapeake noted that the same use it or lose it leasing dynamic that kept rigs stuck in the gas plays would now apply to oil.  One must drill the one or two year shale oil options and produce in order to convert them to open-ended arrangements.

One of the other larger operators, Cabot Oil and Gas appears to be slightly bucking the trend, ramping up from 4 rigs to 5 and able to generate a slightly positive cash flow at $3.50 (the price is about 10% north of that at present, from a low of around $2.00 in March of this year).  However, they appear to be the anomaly.

Like Chesapeake, Range Resources is reducing its number of rigs in the northeast gas-rich portion of Marcellus next year, from 4 rigs to 1, with a refocus of capital on liquids-rich (ethane and propane) and oil projects.  CEO, Jeffrey Ventura affirms that it’s not just about the economics of gas production.  It’s really all about opportunity cost for rigs and development capital. “at $3 flat gas, it’s a 21% rate of return; at a $4 flat price, it’s 56%; at $5, it’s over 100%. So, it’s really price sensitive…we’ve got a really big bucket of dry gas opportunities, wet and super-rich opportunities and oil opportunities, and we have the operational flexibility to sort of throttle back and forth between those various buckets. And we’re looking at maximizing the returns for the dollars we spent, most efficiently drive enough cash flow per share, production per share, reserves per share.”  For now, it’s about opportunity cost.  And you can make a lot more money with $90 oil than with today’s $3.75 gas.

So, for now, drillers are generally going to prove up reserves and sit on them until the price of gas relative to oil makes it profitable to produce.  As McLendon states “right now, we have one of the biggest gas storage reservoirs in the world sitting there in the Haynesville and sitting there in the Barnett and sitting there in the Marcellus. And it has incredible option value and I think what you’ll see is the demand for gas increase over the next one to five years to get to a point where the gas curve is going to have to go be competitive with the oil curve for projects for additional drilling in these fields. And when the gas curve pays us to take on those responsibilities of drilling those additional wells, we’ll do so. But not until then.” (emphasis added)

On the demand side, LNG exports are set to boom in coming years (requested permits are equivalent to more than 60% of current consumption).  The demand for gas in power gen is increasing (coal to gas switching has been significant, and most new fossil power plants will be gas-fired).   Transportation (use of LNG for long haul trucking driven by Clean Energy‘s natural gas highway plan) is seen as pushing up future demand for gas as well.  And don’t forget the potential for rising industrial use where gas is utilized as a raw material feedstock.

As long as oil stays close to $90 per barrel, it appears likely that the gas supply will continue to throttle back, and the supply overhang will continue to dwindle.  In the meantime, demand is likely to grow in a variety of sectors, prices will rise, and a longer-term price equilibrium will eventually kick into place.  Gas at $5 to $6 per mmBtu may well be in our foreseeable future.

The game has changed: Energy independence, the goal first set by Nixon in the early 1970s, looks like being achievable, at least for the North American continent.

The game that has changed has profound implications for energy and climate policy.

Taken together, putting a cap on carbon emissions would accelerate this transition, and the U.S. would want to do this for fear that others who pushed ahead with current renewables — like the Europeans — would gain a competitive advantage as oil and gas prices rose. The cap would, on this view, give Europe a head start with renewables, and as these become economic against the higher oil and gas prices, fossil fuel dependent countries like the U.S. would lose out.

Almost everything that could be wrong with this approach has turned out to be so. The U.S. now has cheap natural and shale gas and it has rapidly rising oil production. Gas prices have more than halved in the last five years, and oil production is up over a quarter over the same period. Its carbon emissions have fallen to their lowest level for two decades in the first three months of 2012, partly because it has been able to switch from coal to gas, especially in electricity generation.

Without much by way of either an energy or a climate policy, it has both improved its security and reduced its emissions. So great are the potential oil and gas reserves that already North America is producing most of its energy needs. Canada is having to look to export from its west coast rather than sell its oil and gas to the U.S.

Indeed so great is the energy abundance that a process of repatriating energy intensive industries is now getting underway. The energy cost advantage of the U.S. looks likely to outweigh the labor cost advantage of China.

The U.S. has adopted only a few really significant policies affecting climate. One, the pursuit of ethanol as a fuel is proving very expensive — and tragic for world food markets. Another, the fuel efficiency standard for autos, is perhaps the sole example of effective policy on climate.

The new energy abundance is not however entirely good news: Contrary to what many environmentalists have claimed, there are enough fossil fuels to fry the planet several times over. The obvious implication is that going green is not going to happen automatically through higher prices.

On the contrary, low carbon technologies are going to be expensive and therefore out of the market for a long time to come. In the U.S., nuclear is the biggest casualty, but other renewables face the same challenge.

Nor are the major world economies going to accept top down Kyoto style carbon caps any time soon. Faced with a serious world economic crisis, and with the U.S. now in pole position on the energy competitiveness front, the willingness of both China and Europe to go further and faster on carbon caps has got even weaker.

At the Durban climate conference last year all that could be agreed was that nations would try to agree by 2015 what they might do after 2020.

In Doha this year, nobody has had any serious expectation of much progress. By 2020, on current growth rates, the Chinese and Indian economies will be twice their current sizes, with lots more coal burned, and global carbon emissions will be beyond the critical threshold of 400 parts per million and on their way towards 500 ppm, thereby resulting in the 2 degrees-plus temperature rises the scientific consensus predicts.

Faced with this new game, what should the U.S. — and indeed the rest of the world — do about energy and climate change? Two obvious recommendations are: Accept that Kyoto is not going anywhere and build on the new gas abundance to get out of coal. Broadly that is where the U.S. is heading.

The next steps are harder: A carbon price is a necessary condition for facing up to the pollution our consumption is causing. If we don’t want to pay the price of our pollution, then we don’t want to tackle climate change. So far, the sad reality is that we are not prepared to act. That is why nothing much has been achieved on the carbon front since 1990.

Why then might the U.S. consider putting a price on its carbon emissions, through taxing pollution? One powerful reason has nothing to do with climate change: It needs the money. Taxing carbon might be politically painful, but not as painful as taxing income. So for the wrong reason there are some grounds for optimism.

What would be even better is if some of the money were spent on new technologies. Current renewables can’t bridge the carbon gap. Low-density intermittent energy just doesn’t generate enough electricity to carry though decarbonisation. But future renewables just might, and here is not only the best hope on the climate front, but also precisely where the U.S. stars. Its deep technological base and its entrepreneurial culture provide one of the best places to drive through the necessary advances.

For the rest of the world, the lessons are much the same. Everyone needs to switch out of coal, and gas provides a now much more abundant alternative whilst we develop new technologies. Sadly Europe is engaged in a dash from nuclear and gas towards coal.

It needs to waste less money on current expensive renewables — especially the really expensive options like offshore wind — and get serious about future renewables. Next generation solar technology is an obvious candidate. And everyone needs to put a carbon price in place.

The climate change problem can be cracked, but not through current policies. And in the meantime the world needs to get used to the idea that the U.S. no longer needs the Middle East to keep its cars and industries moving.

Shell to Offer LNG to Power Ships, Trucks on Cheap U.S. Gas

By Eduard Gismatullin - Dec 3, 2012 7:37 AM CT