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Oil and Gas Roundup — June 20

June 20, 2013
TOPICS: In the news
A roundup of oil and natural gas news from the state, nation and world:

Oklahoma City group trying to turn U.S. Postal Service on to natural gas

An idea launched on the Internet is becoming closer to reality, thanks to the timely intervention of a former U.S. Air Force pilot.

Oilman Ron Mercer and adman Bob Hammack hatched their plan almost two years ago: Save the U.S. Postal Service from going broke by switching from gasoline to cheaper natural gas.

Their idea was spelled out in a 15-minute YouTube video titled “Pump Fiction.” It has drawn more than 10,000 views since it was posted in July 2011.

“We had some pretty significant response,” Mercer said. “A lot of people wanted to support the idea that the video forwarded, utilizing the U.S. Postal Service to access the transportation sector for natural gas use.”

Mercer spoke to some oil and natural gas industry groups, finding many people who wanted to help, but his day job limited the amount of time he could spend pushing the plan.

“We didn't really know what to do,” he said. “We just did it. We had no expectations.”

That changed when Air Force veteran Dave Evans was hired as project director.
“He's done a great job taking this ball and running with it since February,” Mercer said.

Evans, who wanted to get involved in the oil and gas industry, has been busy meeting with lawmakers trying to gain traction for the plan, leading to a planned meeting in June with the postmaster.

Evans has also talked with representatives of the United Auto Workers about the potential impact on manufacturers of increased demand for natural gas vehicles.

Read The Oklahoman story:

Tulsa eyed for new gas-to-liquids facility from California-based firm

A California-based company is looking to the Tulsa area to expand its natural gas processing capabilities.

The proposed facility would take natural gas and convert it to liquid fuels like gasoline, a process being done in some locations on a large scale.

But Carbon Sciences Inc. wants its first U.S. gas-to-liquids facility to operate on a smaller scale for small- to medium-sized fields, the company said in a press release Tuesday.

A preliminary study done by the company found that the Tulsa area suits its needs for the facility.

"We are very impressed by the business opportunity we find in Oklahoma," Carbon Sciences CEO Bill Beifuss said in a statement. "Natural gas is abundant in this part of the country, and Oklahoma and the Tulsa area are centrally located and very business-friendly. Also, Tulsa offers a well-trained and experienced oil and gas workforce, and one of our key technology providers is located in the area."

The gas-to-liquids plant would need about 15 acres, Beifuss said. The company said it is currently evaluating several sites in the Tulsa area.

Read the Tulsa World story:

Illinois community colleges to offer oil and natural gas training

HARRISBURG, Ill. — Responding to recent legislation, officials from Southeastern Illinois College and Rend Lake College, both in southern Illinois, have signed a cooperative agreement to provide an array of training opportunities for the emerging oil and natural gas industry. Combined, the two college districts have more acreage under lease to the industry than anywhere else in the state.

“This is another example of a community college alliance that reaches across district boundaries and works to provide industry and residents of our region the training they need,” said Terry Wilkerson, RLC president.

Officials said that as the industry takes root, workforce needs will have to be met. Workers will need custom training, as well as other possible credentials, such as certificate and degree programs.

“Since the state has passed legislation to regulate this energy sector, colleges like SIC and RLC will be asked to train our local workforce for a variety of jobs as this industry emerges in the region,” said Dr. Jonah Rice, SIC president.

Both colleges will provide SAFELAND training, a custom safety program, as well as other special training needed by the industry. SIC has submitted a custom training certificate program to the state for approval. RLC plans on creating an associate degree program in oil and natural gas.

Related educational needs for associated jobs in the industry include truck driving, welding and diesel mechanics, among other programs each college offers individually.

The U.S. Energy Information Administration predicts shale gas will account for nearly half of the natural gas produced in the U.S. by 2035. 

Read more:

Global natural gas prices moving away from link to oil

LONDON — Last month, Mitsui and Mitsubishi, of Japan, and GDF Suez of France said they would join with Sempra Energy, based in San Diego, California, to build a $10 billion liquefied natural gas plant in Hackberry, Louisiana.

They joined several other non-U.S. companies, including Korea Gas and GAIL, a large Indian utility, in trying to lock up prospective U.S. exports of abundant, low-cost shale gas.

Current low prices may not be the only attraction. Jean-Marie Dauger, the executive vice president of GDF Suez’s gas business, said in an interview that the company was trying to gain access to the U.S. natural gas pricing process: Unlike prices in much of the rest of the world, U.S. prices are set by market forces.

“The U.S. market will bring not only diversity in terms of physical sources, but economy,” he said. “We don’t know what the price will be, but we know it will be a market and price structure that is not the same as elsewhere in the world.”

Unlike oil, which is a globally traded commodity, natural gas is priced depending on location and the arrangement under which it is sold.

In North America, gas is a traded commodity whose price is usually linked to benchmarks set at the Henry Hub, a meeting point of pipelines in Louisiana. In the rest of the world, gas prices are often indexed to oil products that gas might replace — a system that was developed to sell gas from the giant Groningen field in the Netherlands, in the 1960s.

But the linkage to oil is eroding, especially in Europe, as competition increases and multiple sources of gas emerge, largely through the increased use of liquefied natural gas, which can be transported globally by specialized ships. A surge of gas exports from the United States — not a sure thing — would add to the pressures on the indexed system.

Read more:

Natural gas to rival oil as road fuel, agency says
LONDON — Natural gas is set to emerge as a significant new transportation fuel over the next five years, raising the prospect of a challenge to oil's dominance in the sector, the International Energy Agency said Thursday.

Already, gas demand in road transport grew tenfold between 2000 and 2010, but cheap gas in the U.S. as a result of the boom in production of shale gas, and concerns over air pollution and oil dependency in China, could help it develop into a more mainstream fuel, the IEA said.

In its five-year gas outlook, the Paris-based energy watchdog said it expects natural gas use in road transportation to rise to 98 billion cubic meters by 2018, covering around 10 percent of incremental energy needs in the transport sector. According to the IEA, this shift will do more to reduce the medium-term growth in oil demand than both biofuels and electric cars combined.

"Gas is already a major fuel in power generation, but the next five years will also see it emerging as a significant transportation fuel, driven by abundant supplies as well as concerns about oil dependency and air pollution," said Maria van der Hoeven, the IEA's executive director.

Further down the line, the IEA said gas had significant potential for use in heavy-duty transport such as freight and rail, though such developments are unlikely over the next five years.

Despite this new demand factor, the IEA also highlighted challenges facing gas in all major regions, including the resilience of coal in North America, weak demand in Europe and production difficulties in the Middle East and Africa.

Read more:

Will Obama’s coming ‘climate change policy’ address Keystone XL pipeline?

The rallying hope this week among the radical anti-development lobby that makes up the far left wing of the environmental movement appears to be that President Obama will kill the Keystone XL pipeline and pursue more policies that would dramatically inhibit the development of the nation’s massive shale oil and natural gas resources as a part of the “Climate Change” policy he plans to announce in July.  If the President pursues either of those policy decisions, he will do the nation’s economy and national security interests severe damage, while doing nothing to actually help the environment.

The environmental benefits of replacing coal-fired electricity generation with power plants that burn natural gas have been well-chronicled here and many other places in the last few years. 

Significant fuel-switching in the power generation sector has helped enable to the U.S. to reduce its overall carbon emissions to pre-1994 levels, per the Energy Information Agency, with even more benefits in the offing as this dynamic inevitiably continues over the next several years.  That’s a better performance than any other developed nation on earth, without having to resort to any of the heavy-handed, command-and-control central planning policies so preferred by the environmental left.

Even if the anti-fractivists don’t get it, the President and his Administration certainly do understand by now that none of that would have been possible had it not been for access to and development of this nation’s natural gas shale plays via horizontal drilling and hydraulic fracturing.  Take away that access, you take away those environmental benefits.  Simple as that.

The same principle applies to the Keystone XL pipeline.  There has most likely never been an oil and gas-related project in this nation’s history that has been subjected to more concentrated levels of misinformation and politically-motivated foot dragging than the northern leg of this pipeline.

If you believe Keystone’s terminally-hyperbolic opponents, you would think that Keystone will alternately a) destroy the massive Ogalala aquifer, b) cause spills of oil more massive than anything the world has ever known, or c) cause the end of civilization as we know it.  Further, they want you to believe that Keystone is the only way for bitumen extracted from Canada’s oil sands to be transported to market, and that without Keystone’s northern leg, carbon emissions from refining and burning that bitumen will not happen anywhere else.

Here’s the truth:  Canada’s bitumen has been produced and transported to market for years already, some of it via pipelines that already exist, much of it via rail.  Canada’s government has made it quite clear that this bitumen will continue to be produced and transported to refineries and markets in increasing quantities regardless of what happens with the Keystone XL pipeline.  If it doesn’t go into the US via Keystone, much of it will in all likelihood be transported via an east/west pipeline to the West Coast and shipped to China.

Thus, the clear environmental consequences of refusing to allow the northern leg of Keystone to be built will be that much of this bitumen will be refined in Chinese refineries and burned in Chinese cars and factories, all of which have far lower environmental protection standards than U.S. refineries, cars and factories.  In other words, carbon emissions globally would go up, thanks to the anti-Keystone lobby.

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