Tag Archives: Robert Menendez

US Congress approves $150 million for natural gas vehicle research

natural-gas-vehicle

Natural gas vehicles are lacking in North America

The US Congress has overwhelming voted for a bill authorizing $150 million (USD) for the US Energy Department to conduct a 5-year research program on natural gas vehicles (“NGV”).  According to reports the program will be for “the continued improvement and development of new, cleaner, more efficient light-duty, medium-duty, and heavy-duty natural gas vehicle engines.” The first $30 million will be available in the 2010 budget.

The overwhelming support for the bill (393 For vs. 35 Against) is further evidence that the US Congress recognizes the benefits of natural gas and is moving towards increasing the use of natural gas to reduce dependence on foreign oil and  reduce carbon emissions. It is becoming increasingly obvious that the demand for natural gas will be going up in the US not only from an improving economy, but from its increasing share of the energy mix. And it should. It is abundant, clean and proven as a reliable source of energy in electricity generation and in motor vehicles.

Natural gas has been on quite a role in the last couple weeks. Earlier this month, the Natural Gas Act (“NatGas Act”) was introduced by Senate Majority Leader Harry Reid, and Sens. Orrin Hatch, and Robert Menendez along with the deep support of Texas billionaire T. Boone Pickens. (See HRN: “More tax incentives for natural gas vehicles in the United States” ) The NatGas Act would increase tax credits for buying a natural gas vehicle from $5,000 to $12,500; increase  grants to create additional natural gas filling stations and  natural gas engine development.

Shale gas discoveries in the Horn River basin of northern British Columbia and US have provided an amazing opportunity for North America to become more energy self sufficient, and reduce carbon emissions by using more natural gas in the transport network and electricity generation.

US coal lobbying money beats natural gas down

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Source: SANDIA

The USA is heading for a power showdown that will pit coal against natural gas for electricity generation. According to the Wall Street Journal, electric utilities used coal for 59% of their power generation in 2007, while natural gas was used 13 percent of the time, as reported by the Energy Information Administration. Coal has been less expensive, making it more profitable for utilities to use as a fuel source. But that was 2007 and a lot has changed since that time.

Since 2007, we have seen a major recession depress demand and the prices for all commodities. During the same time, technology advancements in horizontal drilling and fracturing have increase the natural gas reserves across North America putting further downward pressure on natural gas prices.

According to the WSJ, utilities spent $35.1 million on lobbying while the natural gas industry spent less than $3.3 million in the first quarter of this 2009. The WSJ also stated that out of the top 10 industries with a stake in climate legislation, natural gas put the least money into lobbying in the first quarter.

Coal lobbyists want to slow down government plans to cap carbon emissions and make businesses buy allowances for those emissions. While coal and natural gas are the two top sources of fuel for electricity generation, utilities favor coal as a cheaper source fuel which provides higher profits. The massive amount of lobbying by utilities in the the USA has resulted in a bill that makes coal carbon competitive to natural gas on paper instead of looking at the real merits of each fuel source on its true carbon emissions. Natural gas emits about half the amount of carbon for the same amount of power generated as coal does.

Energy is strategic for all countries. And the solution to generating cleaner energy today and for generations to come is by utilizing the most practical energy sources that will have an immediate impact on carbon emissions while investing in technology for both clean sustainable sources such as wind, and solar, as well as investing in technology that makes existing sources like oil and coal cleaner sources (carbon capture etc).

 The problem implementing bills that make certain fuels more carbon competitive on paper takes away any incentive to making those sources cleaner. The $35 million spent on lobbying on behalf of the coal industry, may have been better spent on technology advancement for the coal industry.

Meanwhile, on Energy Independence Day (July 8) in the US, T. Boone Pickens participated in a bi-partisan press conference to introduce the Nat Gas Act in the US Senate along with the original sponsors of the bill; Robert Menendez (D-NJ), Orrin Hatch (R-UT) and Senate Majority Leader Harry Reid (D-NV).  Yesterday, T. Boone Pickens reported that they now have 70 bi-partisan co-sponsors of the Nat Gas Act (HR.1835)  in the House.

 The “Pickens Plan” is simple. Power more of the grid with wind and power more vehicles with natural gas. The end result is less dependance on foreign oil, and less carbon emissions. However, no where does Mr. Pickens state that coal and oil are not needed. He fully understands that energy independence comes from domestic sources that are cleaner then they have been in the past, or new domestic sources that are simply clean. (Unfortunately, economic conditions and the lack of suitable transmission facilities have lead to some delays with T. Boone Picken’s wind farm in Pampa, Texas)

Why natural gas? Because there is lots of it; its proven; its readily available; its cleaner; and it sets down the foundation for a future energy economy based on hydrogen.

It will take two things to solve our energy needs and reduce carbon emissions. 1) Technology; and 2) Profit. These two parts together are a powerful force. Its too bad that the coal industry is trying to justify its current carbon emissions instead of focusing this lobbying money and effort into tecnology to make it cleaner. Coal is a valuable and needed source of energy. It simply has to reduce it’s carbon footprint at the point of power generation and not on paper and in the halls of the Senate.

Wall Street Journal: At the Centre Ring in Senate Climate Debate: Coal vs. Natural Gas

Will the Horn River Basin make Alberta the next “have not” province?

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Preimier Ed Stelmach

The beginning of the end may be when Premier Ed Stelmach raised the royalties exploration companies were paying to the province of Alberta. The industry warned that such changes would only force them to move to Alberta’s more competitive  neighbours British Columbia,  and Saskatchewan where the royalty rates were lower and remaining in place.

At the same time that these royalty changes were being tabled in Alberta, companies started to announce massive discoveries in shale plays in the BC’s  Horn River basin and across North America. The laws were passed, oil and gas prices were running high on demand… and then the market crashed. And the price of oil and natural gas crashed along with it in the months to follow. Recently, Premier Stelmach changed the royalty scheme again… perhaps its all too late and may be irrelevant given the overall economics of shale gas vs. conventional gas.

Many predict that the gas production of British Columbia will surpass the total production of Alberta by 2020. More recently analyst Michael Mazar of  BMO Capital Markets has stated; The Horn River Basin “has the potential to render those plays obsolete.”

The problem is that in Alberta, companies drill shallow gas wells to get 1,000 cubic feet per day with a break-even point of $7.00 to $7.50.  In the Horn River basin, the initial costs are higher but the long life and high daily production potential provide better economics. Most majors state that the break-even point for them is in the $5.00 to $5.50 range in the Horn River. Higher up-front costs are coming down though, and the BC government along with industry players are making major investments into the area which will dramatically reduce the up-front costs. Some estimate that the break-even point comes down to ~$4.00.

Earlier this week Tim Cejka, head of global exploration at Exxon Mobil Corp. (NYSE:XOM) stated in an interview with the Wall Street Journal that initial results on three of their Horn River Basin wells suggest production levels of 16 million and 18 million cubic feet of gas per day. Exxon and others are making the Horn River basin their primary investment area for natural gas.

Current, prices in natural gas are hovering at just above $3.00. Investments being made today  in the Horn River basin will pay off when gas prices firm up and provide companies a faster return.  Conventional natural gas production and exploration has been scaled back and to many anlysts,  including Calgary’s Tristone Capital,  the turning point for natural gas is July and appreciating prices are inevitable as we will see current inventories begin to decline and lead to appreciation in prices. (see Horn River News: “The time to buy natural gas stocks is now”)

The second point of upward price pressure will come from increased demand.  There are two areas that demand for natural gas. The first is the return around in economic activity will lead to increased demand. No one can say with 100% certainty when this will occur, but there seems to be a general consensus for the first quarter of 2010.  The second area of demand will be from new customers. Natural gas is a cleaner burning fossil fuel comparative to others such as coal and oil. In 1971, natural gas represented a 32% market share of the energy mix in the US. Today it is merely 22%.  This will likely increase as governments look to reduce carbon emissions. (see Horn River News: “Natural gas will play increased role in the North American energy mix”)

And perhaps the biggest “new” customer may be the North American transport network. Specifically, cars and trucks. Around the world, natural gas has been extensively used as a fuel source for vehicles. In North America the primary fuel source is gasoline and then diesel – both oil based fuels.

This past week, T. Boone Pickens met with nearly 40 members of the U.S. House and Senate and participated in the introduction of the NAT GAS Act in the U.S. Senate, sponsored by Senator Robert Menendez (D-NJ) and co-sponsored by Senator Orrin Hatch (R-UT) and Majority Leader Harry Reid (D-NV). (see Horn River News: “Natural gas is critical to the environment and energy security”)  This legislation would increase the tax incentives to offset the costs of natural gas vehicles and conversion of vehicles in hopes to dramatically increase the number of vehicles using natural gas. This means new demand and consumption.

When demand for natural gas increases, exploration companies will focus their efforts on those areas with the lowest costs and the best returns. Increasingly this appears to be production from shale gas, and increasingly in the Horn River basin where investments will reduce the front end costs and further improve the economics and competitiveness. It may not be in conventional production from Alberta. Which is a big problem for Alberta.

Certainly, the oil sands production of Alberta will generate significant revenues for Alberta – especially if it can put solutions in place that reduce the carbon footprint to a point comparable to other oil sources. But if gas exploration and development is not competitive, and Alberta loses this massive source of revenue it puts significant strain on the province’s budget. Strain that became evident with the dramatic reduction of exploration activity brought upon by the global economic downturn.

Canadian Press: “Analyst: Horn River bonanza could make Alberta natural gas drilling obsolete”

Exxon Mobil hints at world-class natural gas discovery in Horn River Basin

us~exmobExxon Mobil Corp. has been exploring the world for shale-gas and they may have found a world class discovery in the Horn River Basin.

Tim Cejka, Exxon’s head of global exploration, stated in an interview with the Wall Street Journal that the Company has been “bullish on shale-gas exploration since 2003, locating promising gas-bearing rock formations and snapping up leases on them.”

Exxon Mobil has 250,000 acres and intial results on each of the four wells completed indicates each well will produce between 16 and 18 million cubic feet per day which is nearly 5 times  the size of average wells in Texas’s Barnett shale and  Louisiana’s Haynesville shale, which seem to get most of the attention of investors.

Exxon Mobil’s announcement adds to the growing amount of shale gas discoveries in North America and should further advance the importance of this resource to providing secure energy to North America while reducing carbon emissions. And as natural gas prices still trading on lows, exploration and development companies continue to invest in the Horn River basin. In fact, it remains the most active area in Canada, and one of only three active areas in North America. Companies are looking at the long term energy requirements, and realize natural gas will pay a critical role in meeting energy demand while improving the continent’s carbon footprint.

While industry players continue to explore and develop, others in the US are pushing to encourage using natural gas more in the transport network by pushing legislation to increase tax incentives for consumers to offset the cost of natural gas vehicles.  The legislation is sponsored by Senator Robert Menendez (D-NJ), co-sponsor Senator Orrin Hatch (R-UT) and Majority Leader Harry Reid (D-NV) with the muscle and might of T. Boone Pickens – a texas oil billionaire turned natural gas/wind power champion.

Mr. Cejka went on to state;

“We are really interested in shale gas. The industry is going to have to bring on oil, gas, coal, nuclear, hydro, wind and solar to meet the world’s energy demand. The economies of the world will come back. Demand will grow again. We are going to be there [Horn River]  for the next 20, 30, 40, 50 years.”

Other major companies are also very excited about the Horn River Basin, and investing heavily in the areas massive potential. The BC Goverment has been proactive in providing the favorable royalty programs to encourage development and committed $187million into infrastructure; Encana has committed the first $400 million for a new gas processing plant; and TransCanada Pipelines is investing $380 million to build a pipeline south to increase distribution capacity; and Kitimiat LNG is building a new LNG plant to open Horn River gas to Asian markets.

The Horn River basin is likely the biggest gas discovery in North America. You are encouraged to read further on all the articles here on the Horn River News to get a understanding of the massive potential of the Horn River basin, and how natural gas is changing the energy market in North America.

Wall Street Journal: Exxon Shale-Gas Find Looks Big

Globe & Mail: Exxon results hint at BC gas bonanza

T. Boone Pickens confirms plan; supports natural gas tax credits

Moments ago, T. Boone Picken’s Team sent out an email summarizing the media coverage generated by the Pickens Plan and proposed legislation to increase the usage of natural gas vehicles.

*****************************************************************************************************

Army!

Anyone who wondered about the status of the Pickens Plan or claimed it had lost steam now knows the truth: The Pickens Plan is surging ahead at double-time speed.

Over the two days celebrating the first anniversary of the Pickens Plan, Boone was interviewed by two wire services, a major business magazine, more than a dozen TV stations and four national TV networks. He met with nearly 40 Members of the U.S. House and Senate and participated in the introduction of the NAT GAS Act in the U.S. Senate, sponsored by Senator Robert Menendez (D-NJ) and co-sponsored by Senator Orrin Hatch (R-UT) and Majority Leader Harry Reid (D-NV). You all know this: News media and politicians have very sensitive antennae. They gather around positive momentum and ignore inaction.

The amount of media and political attention Boone attracted in New York and Washington in the last 48 hours is a testament to your hard work.

As an example, Bloomberg reporter Margaret Carlson wrote the following:

Boone Pickens came to Ben’s Chili Bowl, a landmark Washington dive not far from the White House. He brought with him the “Pickens Car” and more importantly the “Pickens Plan,” a blueprint for weaning the U.S. off foreign oil, introduced a year ago.

Carlson also wrote in her Bloomberg piece:

In one year, Pickens got Congress to take notice. Yesterday, Senators Orrin Hatch and Robert Menendez introduced a bill (co-sponsored by Majority Leader Harry Reid) that mirrors legislation working its way through the House. It would extend for 18 years tax credits for natural gas fuel, vehicle and infrastructure (gas stations of the sort Barack Obama supported as a senator) to get more natural gas vehicles into production.

The Washington, DC affiliate of FOX did a great story on Boone’s day in Washington, including his visit with Army members like you at Ben’s Chili Bowl – click here to check it out.

In his article for the Salt Lake Tribune, reporter Robert Burr wrote about the introduction of the Senate NAT GAS Act:

Sen. Orrin Hatch teamed up with T. Boone Pickens on Wednesday to promote legislation that would boost natural-gas-fueled vehicles through tax incentives. The Utah Republican and the Texas oilman — along with Senate Majority Leader Harry Reid and Democratic Sen. Bob Menendez of New Jersey — say the measure could help curb pollution and create American energy independence at the same time.

“I’ve been very pleased with the growth and use of hybrid-electric vehicles in this country,” Hatch said at a Capitol news conference. “But I’ve been less pleased with the growth of natural gas as a transportation fuel. I believe strongly that we need an extra push to spur on the greater use of natural gas, to get more natural gas vehicles on our roads.”

These two articles and the TV clip are only a sampling of the great coverage Boone and the Pickens Plan have gotten recently – check out more at PickensPlan.com.

The Pickens Plan Army remains on the move! We’re going to need to stay together and continue our momentum to get the NAT GAS Act passed in the House and Senate and signed into law by President Obama. Click here to contact your Members of Congress today.

– The Pickens Team

** End of Email**

US investors load up on natural gas future.

UNG-logoUS investors snapped up the last new shares offered in the United States Natural Gas Fund as the fund waits government approval to issue more units. The fund has asked the Securities Exchange Commission for permission to issue 1 billion new shares.

This demand is an early indicator that natural gas prices are at a low and the participating investors are betting on higher prices in the future. Many analysts still forecast natural gas prices to be  in the $6-$7  range as cuts in conventional production begin to take effect in Q3/Q409. Soft demand for natural gas is expected to turn around with improvements in the economy. When that occurs is still to be determined, but most analysts see improvements in Q110. In addition, to increased demand as a results of economic recovery, legislation was  tabled yesterday in the US to increase tax credits to provide incentive to increase the usage natural gas vehicles (see article below). Legislation that is being sponsored by Senator Robert Menendez (D-NJ), co-sponsored by Senator Orrin Hatch (R-UT) and Majority Leader Harry Reid (D-NV) and supported/promoted by Texas billionaire oil tycoon turned wind turbine/natural gas champion, T. Boone Pickens.

Today, the US Natural Gas Fund owned ~124,926 natural gas futures contracts. The number of shares outstanding reached a record high of 322.3 million, more than 10 times the total at the beginning of the year and holding a value of $3.97 billion.

Bloomberg: U.S. Natural Gas Fund Grows to Record on Demand Surge

Natural gas is critical to the environment and energy security

T. Boone Pickens & Senator Robert Menandez

T. Boone Pickens & Senator Robert Menendez

Yesterday, US lawmakers unveiled legislation aimed at increasing the use of natural gas in vehicles as a way of reducing dependence on foreign oil, and reducing carbon emissions. Democratic Senator Robert Menendez, one of the sponsors of the bill stated:

“We saw last summer how the wild fluctuations in oil prices helped to wreck our economy, and we’ve seen how pollutants from dirty fuels are wrecking our planet.”

He added that the recent economic downturn also had;

“shined a spotlight on the urgent need for alternative, cleaner and cheaper sources of energy that we don’t have to import.”

Canada needs to take similar measures and pass legislation that will make use of the abundant and affordable natural gas reserves of Canada to the benefit of our environment’s health. By implementing incentives, and ensuring that all manufacturers offer the same natural gas vehicles in Canada that they sell to markets outside of Canada we begin to increase the usage of natural gas within our transport network, reduce carbon emissions in a meaningful and practical way and begin implementing the distribution infrastructure necessary to support a future hydrogen based energy network.

Massive shale gas discoveries have changed the energy market. British Columbia’s Horn River basin is the largest natural gas basin in Canada, and potentially North America. The BC government and major industry players have invested billions to bring this resource to market in North America and Asia.

Reuters: U.S lawmakers offer bill to spur natural gas vehicles