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   Gold/Mining/EnergyShale Natural Gas, Oil and NGLs and ESA

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From: jrhana10/8/2010 5:36:28 PM
   of 6158
Some good news in recession: Natural gas prices remain low this year

By TONY REID - H&R Staff Writer | Posted: Thursday, October 7, 2010 12:01 am

DECATUR - Stagnant prices for natural gas are a good news/bad news story for Central Illinois families this winter.

The good news is that heating bills should be held down to pretty much what they were for the winter of 2009-10. Natural gas, measured in therms, cost 63 cents a therm then and is expected to cost 64 cents a therm for the 2010-11 heating season.

But the cost estimates issued by the new combined Ameren Illinois utility company also tell another story: The economic recovery being relied on to put people back to work isn't heating up much, either.

Commenting on the gas price forecast, Scott A. Glaeser, Ameren Illinois vice president of gas and electric technical services, said: "This moderate trend is the result of sluggish domestic and global economies, coupled with soft worldwide demand for all forms of energy."

Glaeser said Ameren Illinois, which uses a complex mix of hedging strategies and spot buying to lock in gas supplies at the best prices, has secured enough gas to meet expected demand. The utility passes on the cost of natural gas without a price markup and makes its profit on the fee charged to deliver the fuel to homes and businesses.

Ameren Illinois warns that the gas supply remains subject to unexpected price shocks, however, which could be sparked by anything from storms to acts of terrorism. Whatever the gas price, the company is still concerned that too many customers will be paying too much to heat their homes because their furnaces are inefficient or house insulation inadequate.

Ameren Illinois spokesman Leigh Morris said a raft of bonuses were offered by the company to encourage customers to save some money. One example, he said, was a $200 credit if you install the right kind of high-efficiency natural gas forced air furnace.

Morris acknowledged that persuading families to spend might be a hard sell in a tough economy, but he said customers should see it another way: "You need to look at things like a furnace upgrade as an investment," he said.

"You are going to get your investment back in savings and then, once you get that initial investment back, it's going to continue to pay you dividends."

He said a modern furnace can achieve an efficiency rating of more than 90 percent, compared to just 50 percent for older models. "If your furnace is only 50 percent efficient, 50 cents of every dollar you spend is used to heat your home and the other 50 cents is not," Morris added. "So you are just wasting that money."|421-7977

Copyright 2010 All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Posted in Local on Thursday, October 7, 2010 12:01 am Updated: 12:46 am. | Tags: Tony Reid, Ameren

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From: jrhana10/8/2010 5:39:52 PM
   of 6158
Ameren sees moderate gas prices again this winter

The Associated Press October 7, 2010, 10:49AM ET

Ameren Illinois has good news for natural gas customers. The utility company says moderate prices during the past year's heating season are expected to continue this winter.

Ameren's Scott Glaeser says that's because of the sluggish economy and soft worldwide demand for energy. Glaeser is the company's vice president of gas and electric technical services.

He says Ameren Illinois has most of its natural gas supplies hedged or "price protected" for the upcoming winter to insulate customers from market volatility.

Ameren customers can get tips on saving energy - and money - at the website

Ameren Illinois, a subsidiary of Ameren Corp., serves more than 1 million electric customers and more than 800,000 natural gas customers in downstate Illinois.

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To: austrieconomist who wrote (3854)10/8/2010 5:47:44 PM
From: jrhana
   of 6158
great move.

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From: jrhana10/8/2010 5:49:41 PM
   of 6158
Marcellus Shale Drilling: Gas Migration

Oct 7, 2010 10:03 pm US/Eastern


The economic benefits of drilling in the Marcellus Shale are many, but can it be done safely?

KDKA Investigator Andy Sheehan is looking into the environmental impacts, including claims that gas is getting into some people's water pipes.

One local homeowner says she can actually set her tap water on fire.

It's called gas migration – methane gas moving underground into people's well water.

When drillers began drilling near her home in Mt. Pleasant, Leann McCaffery took a lighter to her faucet and flames ignited.

Andy Sheehan: "So you think this is gas migrating?"

McCaffery: "I absolutely do."

"There has been migration of gas from these shale plays," Dan Volz, a University of Pittsburgh professor, said.

He has spent the past year studying the impacts of shale drilling. He says most migration could be prevented if the drilling companies line their gas wells with proper casing.

Companies like Range Resources say casing makes migration virtually impossible.

"There are five layers of fully encased steel which is made by US Steel right here in Pennsylvania that isolates fresh water aquifers," Matt Pitazrelli, a spokesman for Range Resources, said.

In Pennsylvania, the worst case of gas migration has occurred in Dimock in the eastern part of the state where more than a dozen residents have methane in their wells.

The environmental group, Clean Water Action, interviewed Norma Fiorentino who says her well actually blew up and she can no longer drink the water.

"It smells and it's white and foamy," she said.

"The drilling that was done there by Cabot was substandard," John Hanger, head of the Pennsylvania Department of Environmental Protection, said.

The DEP says it ordered the gas well plugged and fined Cabot Oil and Gas of Houston, Texas, more than $250,000, in part for not having proper casing on its wells.

Range's Pitazrelli agrees that all companies should be held to high standards.

"If an operator, a company, does not follow these kinds of casing standards, you could have issues of say gas migration," he said. "If a company's caught doing that, they pay really big fins, they get in big trouble – they should. We say if you don't follow those rules, then get out of Pennsylvania because we want to do this the right way."

But gas migration is not limited to Marcellus drilling. In fact, the industry says most cases have nothing to do with it.

Professor Volz says that other sources could be shallower and abandoned gas or oil wells which are common throughout the state.

"We live in an area that's rich in petrology and coal and gas and oil and there can be natural migration," Volz said.

Pitzarella vigorously denies that a Range drill 1.5 miles from McCaffrey's home has anything to do with her gassy faucet. More likely sources, Pitzarelli says, are some old natural gas and oil wells that were drilled and abandoned decades ago.

Still, like others, McCaffery is worried about the effect Marcellus drilling may have on the environment.

"I have horses that are drinking out of the stream right now," she said. "I don't know if their water supply is going to be contaminated."

Gas migration is a real problem, but most agree that proper casing will prevent it – at least in cases involving drilling in the Marcellus Shale.

Still, Dr. Volz warns that research on this is not complete and the case in Dimock raises concerns that drilling could puncture shallow pockets of gas and cause that gas to migrate.

(© MMX, CBS Broadcasting Inc. All Rights Reserved.)

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To: jrhana who wrote (3860)10/8/2010 5:51:42 PM
From: jrhana
   of 6158
<But gas migration is not limited to Marcellus drilling. In fact, the industry says most cases have nothing to do with it.

Professor Volz says that other sources could be shallower and abandoned gas or oil wells which are common throughout the state.

"We live in an area that's rich in petrology and coal and gas and oil and there can be natural migration," Volz said.

Pitzarella vigorously denies that a Range drill 1.5 miles from McCaffrey's home has anything to do with her gassy faucet. More likely sources, Pitzarelli says, are some old natural gas and oil wells that were drilled and abandoned decades ago.>

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To: jrhana who wrote (3861)10/8/2010 5:53:13 PM
From: jrhana
   of 6158
There must be some scientific way to establish who is telling the truth. We need some scientifically adept and non-partisan (so to speak) neutral investigation.

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From: jrhana10/8/2010 5:59:47 PM
   of 6158
MARKET WATCH: Bearish gas report, stronger dollar lower energy prices

Oct 8, 2010

Sam Fletcher
OGJ Senior Writer

HOUSTON, Oct. 8 -- Energy prices fell Oct. 7 with the front-month crude contract coming off a 5-month high, reached through rallies in five of the previous six trading sessions on the New York market, as a favorable US jobs report provided support for the dollar.

“Both crude and natural gas closed the day in the red, down 1.9% and 6.4% respectively,” said analysts in the Houston office of Raymond James & Associates Inc. Gas prices fell after the Energy Information Administration reported a bearish injection of 85 bcf into US underground storage in the week ended Oct. 1, well above the consensus estimate of 78 bcf (OGJ Online, Oct. 7, 2010).

At Standard New York Securities Inc., part of the Standard Bank Group, analyst Walter de Wet said, “The sell-off in crude comes on the back of dollar strength,” which continued Oct. 8. It showed the fragility of the oil market without strong fundamental support.” He said, “Although we believe oil is very likely to stay range-bound well into the fourth quarter, we are cautious on a break-out on the upside caused by increased dollar liquidity by some new Federal Reserve Bank policy.”

Adam Sieminski, chief energy economist for Deutsche Bank in Washington, DC, said, “We see continuing pressure on US natural gas price based on evidence that high heating intensities this summer may have been underestimated. We have raised our fourth quarter oil price forecast to $80/bbl, based on the likelihood that a higher Standard & Poor’s 500 index and weaker US dollar will support the oil market.”

Sieminski observed global demand growth for jet fuel and kerosine is up 2% so far this year, driven by a recovery in air traffic. “If this growth rate is sustained for the rest of the year, 2010 will be the first year we observe demand growth since 2007,” he said.

Olivier Jakob at Petromatrix in Zug, Switzerland, said, “Crude oil had a strong price set-back yesterday but there was no change to the oil fundamentals. It is just that the oil fundamentals were never behind the $10/bbl gained since Sept. 24. We take yesterday’s setback as a first warning that QE2 [the second round of ‘quantitative easing’ by the Federal Reserve in an effort to boost the economy] starts to be already priced-in” (OGJ Online, Oct. 7, 2010).

Jakob said, “The dollar correlation has been increasing across asset classes, and we believe that this starts to be an increasing systemic risk [that] is not well taken in account in traditional measures of risk or in the volatility index.”

Meanwhile, he said, “We have not seen one economist volunteer to say that QE2 will solve the US unemployment problem within the next 12 months. Maybe QE10 would, but that would be at the expense of the rest of the world, which in the end is a zero-sum game.”

Jakob said, “The expectations of QE2 have transformed the world arena again into a big boxing ring, and the resulting increase in global political risk is a negative for economic growth and confidence. The interesting thing about the expectations of QE2 is that it has contributed to an asset price increase but also to increasing concerns about the side effect of the medicine. Given that the markets have been pricing QE2, it is now allowing the US Fed to have a better feel of what could be the global reaction to it and we will not discount that the Fed could start to weigh the asset price benefits vs. the breakdown of global political coordination and the greater loss of confidence in the market valuations (the expectations of QE2 have not stopped outflows from equity mutual funds, or brought more volume to the stock markets).”

US stocks of natural gas have increased in the last 4 weeks “at a greater than average speed and overall levels are trending back to the highs of last year,” Jakob said. “The US has no shortage of energy stock cushion. Going into the winter, natural gas is priced at the lowest price since 2003 while heating oil is at the second highest winter price ever. Despite the [price] spread between oil and gas—which should maximize the use of natural gas—the rate of growth in gas stocks is not declining.”

Energy prices
The November contract for benchmark US light, sweet crudes dropped $1.56 to $81.67/bbl Oct. 7 on the New York Mercantile Exchange. The December contract fell $1.61 to $82.38/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down $1.56 to $81.67/bbl. Heating oil for November delivery lost 5.6¢ to $2.25/gal on NYMEX. Reformulated blend stock for oxygenate blending for the same month declined 3.79¢ to $2.12/gal.

The November contract for natural gas fell 24.8¢ to $3.62/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., was down 10¢ to $3.51/MMbtu.

In London, the November IPE contract for North Sea Brent lost $1.63 to $83.43/bbl. Gas oil for October dropped $12.50 to $721/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes was down 44¢ to $81.07/bbl.

Contact Sam Fletcher at

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From: jrhana10/8/2010 6:03:03 PM
1 Recommendation   of 6158
Investing in Natural Gas Vehicles

* By Peter Staas
* 10/8/2010

Dwindling output from conventional plays elevated US natural gas prices from 2003-08, prompting independent operators such as Chesapeake Energy Corp (NYSE: CHK) to invest heavily in efforts to advance technologies and techniques that would make shale-gas production a commercially viable enterprise.

As I discussed in Cheniere Energy and LNG Exports, their success has transformed the US from a country that was expected to depend heavily on imports of liquefied natural gas (LNG) into the world’s top producer of the commodity.

Superior economics and leasehold drilling have accelerated activity in many of the nation’s top shale plays despite depressed natural gas prices. Although the oversupply should abate a bit once producers’ leases are “held by production,” low natural gas prices and the sheer abundance of the country’s reserves have prompted producers to push for new demand outlets.

Fuel switching at power plants with the capability to burn either coal or natural gas has picked up over the past year thanks to low natural gas prices, while concerns about limits on carbon emissions are prompting many utilities to close coal-fired facilities or convert them to cleaner-burning natural gas.

The US Energy Information Administration forecasts that coal-burning facilities, which accounted for 18 percent of new capacity in 2009, will decline to 10 percent of new builds in 2013. Meanwhile, natural gas-fired plants are expected to account for 82 percent of new capacity in 2013, up from 42 percent in 2009.

Interest in fuel switching has also hit the US transportation sector, where concerns about the country’s dependence on foreign oil and carbon-dioxide emissions have picked up. Energy magnate T. Boone Pickens has played a key role in raising public awareness about America’s massive natural gas reserves and the benefits of natural gas vehicles (NGV), sinking $58 million into an elaborate advertising campaign.

The National Gas Vehicle Coalition (NGVC) estimates that 110,000 NGVs are on the road in the US and about 1,000 fueling stations, roughly half of which are open to the public.

To date, limited fueling options have restricted interest in NGVs to trucks, buses and other vehicles that run predictable routes.

According to the American Public Transit Association, transit buses accounted for 66 percent of vehicular natural gas use in 2009, while 26 percent of new bus orders that year were for NGVs. About 18 percent of the nation’s buses run on natural gas. Not surprisingly, NGVs are also big in the waste management industry, which the NGVC says accounts for 11 percent of vehicular natural gas use.

Other industries are making the switch as well. Last year telecom giant AT&T (NYSE: T) announced that it would spend up to $350 million over five years to purchase more than 8,000 vans that it will convert to run on compressed natural gas. Such investments not only reduce fuel costs and lower greenhouse gas emissions by 20 to 30 percent, but also make for a good public relations story.

On the consumer side, Honda’s natural gas-powered version of the Civic is available in only four states, though individuals can also convert existing gasoline-powered cars to natural gas using a number of different kits that are available.

But widespread adoption of NGVs in all classes won’t occur until sufficient fueling infrastructure is in place. In other countries, strong government incentives for switching to NGVs have accelerated this transition.

Earlier this summer, Senate Majority Leader Harry Reid (D-NV) introduced legislation that included almost $3.8 billion in subsidies for NGVs, including federal rebates of $10,000 for natural-gas powered cars and up to $64,000 for heavy trucks. The proposal would also establish a Natural Gas Vehicle and Infrastructure Development Program whereby the Dept of Energy would disburse grants to support infrastructure construction and domestic manufacturing of NGVs and components.

Reid has acknowledged that an energy bill is unlikely to pass this year, though a version that includes support for nuclear power might achieve bipartisan support in 2011.

Meanwhile, developments at the state level are encouraging.

In May, Oklahoma’s governor signed the Oklahoma Energy Security Act, which set the goal of having at least one NGV fueling station every 100 miles along its interstate highway system by 2015. To move toward this goal, the law includes a 75 percent tax credit for NGV fueling stations.

Republicans in Pennsylvania’s House of Representatives are working on similar legislation that calls for transitioning the state’s fleet of 16,000 vehicles to natural gas and includes grants for local governments to upgrade their vehicles. The proposal would also build natural gas filling stations at half of the existing gas stations on the Pennsylvania Turnpike.

That being said, the amount of infrastructure investment needed to support widespread adoption of NGVs in the US is a significant challenge. Investors seeking to profit from this trend should consider companies with leverage to robust growth in foreign markets, particularly in Asian emerging markets.

According to the International Association for Natural Gas Vehicles, Asia is home to half of the world’s top 10 nations in terms of NGV adoption. Pakistan leads the way, with 2.3 million NGVs on the road, though the technology is becoming increasingly popular in China, India and Thailand. In fact, the Asia-Pacific Natural Gas Vehicle Association expects NGV use to increase 10 to 15 percent in 2010. Progress in emerging economies is easier than in the US because these countries often lack the legacy infrastructure, allowing NGVs to compete on equal footing.

Although India already boasts the world’s fifth-largest deployment of NGVs, many analysts believe that the market offers the best growth potential, thanks to a 7,500-mile, 15-state LNG pipeline that’s due for completion in 2012.

Investors seeking to profit from economic expansion in emerging markets and growing investment in NGVs should consider Cummins (NYSE: CMI), a leading manufacturer of hybrid and natural gas engines for trucks and buses. The firm should continue to benefit from stricter emissions regulations, and management has worked hard to build its market share in India and other emerging economies.

Plug in to the Energy Expert

Rapid economic development in emerging markets and technological innovations continue to change the complexion of the energy patch. Elliott Gue explains these trends and developments in The Energy Strategist and provides specific advice on how to profit. Click here to sign up for a free trial of the service.

In the Media

An interview with Elliott appeared recently in The Energy Report. Click here to read the conversation.
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Peter Staas

Peter Staas earned a BA from the State University of New York at Binghamton and attended graduate programs at the University of Delaware and the State University of New York at Buffalo. He also coauthored a textbook about real estate valuation models that's used by federal bank examiners. Peter is managing editor of Personal Finance and associate editor of Louis Rukeyser's Wall Street and Louis Rukeyser's Mutual Funds.

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From: jrhana10/8/2010 6:09:21 PM
   of 6158
WV Water Conference examines gas drilling, TDS

By Ben Adducchio

October 8, 2010 · The conference comes in the midst of changes being proposed to state water quality standards.

Drilling into the Marcellus Shale for natural gas is a topic of much discussion in northern West Virginia.

Many who are concerned worry about the activity’s effect on water quality.

But David McMahon, co-founder of the West Virginia Surface Owners Rights Organization, says there are other issues that need to be addressed, like the effect on roadways.

"Now they are drilling horizontal wells that take 4 million, 6 million gallons of water. All that is brought in tanker trucks," he said.

"So a road that used to have a pickup truck, and an occasional Lowe’s delivery truck, or moving van, is now going to have hundreds and hundreds and hundreds of tractor trailers full of water, and all the other traffic that deals with that."

The state Department of Environmental Protection is reviewing its Oil and Gas program.

It’s looking at the number of inspectors for drilling sites.

McMahon says the DEP has at most 20 people to inspect more than 50,000 wells.

"Pennsylvania doubled their inspector workforce last year; I understand they are going to double it again," he said.

"West Virginia DEP has said they understand the need and they are going to try to get an increase in their workforce. It’s just terribly needed."

Paul Ziemkiewicz is the director of the West Virginia Water Research Institute.

He’s interested in the water that comes back up at gas drilling sites.

"We’re looking at a technology to take Marcellus flow back water, and clean it up to the point where it can be used to make up water for the next frack job," he said.

"We call it Zero Discharge Water Management, so you’re actually taking all the water that comes back, which is maybe 20 percent of the water that goes down, we’d like to clean it up to the point where all of that can be used for recycle."

Another topic of great interest at the conference was water quality, specifically total dissolved solids.

These are any dissolved materials in water, including sodium, chloride and bromide.

The state does not have a standard for the amount of total dissolved solids that can be in a waterway, but it’s proposing a standard to the state legislature of 500 milligrams per liter.

Scott Mandirola is with the DEP’s Division of Water and Waste Management.

"We’ve committed to put it forward, and we’ve committed the resources to go over there and speak to this issue," he said.

"I think there’s enough interest in this issue, so that in some form or another, this TDS issue I believe will get through the legislature," he said, "I would be very surprised this year if it didn’t, simply because the amount of public opinion that’s out there right now."

But Mandirola expects industry opposition to the proposed standard.

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From: jrhana10/8/2010 6:12:24 PM
1 Recommendation   of 6158
Penn State has Marcellus Shale Web tool

Times Leader staff
Posted: October 8
Updated: Today at 9:43 AM

Penn State University’s Marcellus Center for Outreach and Research on Tuesday unveiled a new Internet resource that visually tracks the development of natural gas drilling in the Marcellus Shale.

Animated maps display data about drilling permits issued by the state Department of Environmental Protection and wells drilled in Pennsylvania from 2007 through August of this year, visually demonstrating the rapid growth of interest in the Marcellus Shale.

There were just 99 drilling permits issued state wide in 2007 compared to 2,108 in August, 2010.

The maps can be found under the resources tab at

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