Industry Problems and Community Recap

Hello fellow bloggers. This will be my last blog post on thenaturalgas ALTERNATIVE because the semester has come to an end. I would like to take this time to recap the blogs I wrote throughout the blog.

My first blog post was Cabot Oil & Gas and Chesapeake Energy. In this post I highlighted what Cabot and Chesapeake have been doing in their local communities.

Cabot Oil & Gas is a leading partner with Endless Mountains Health Systems in a $45 million hospital project in Montrose.  They started off the project with a $1 million leadership gift to get the project underway.

Chesapeake Energy is working with their local United Way and has become the first-ever corporate sponsor for their communities united way 2013 campaign. They have also been extremely helpful with the flood recovery efforts in Bradford County.

My next blog post was Wastewater and Casella Waste Systems. In this post I highlighted a major problem in the natural gas industry, wastewater.

Wastewater is the left over water from hydraulic fracturing. The problem with this wastewater is that it can have anywhere for 3 to 12 additive chemicals used for fracking in them.  Potentially this water could be treated at a plant so that it may be used in the future and the is what Casella Waste Systems has been doing. The landfills that Casella Waste Systems sends the wastewater to have a gas collection system they use to collect extra gas in the water and to produce energy for their plants.

My next blog was Natural Gas Pipelines and Bake Hughes. In this blog I highlighted some problems that companies are having with their natural gas pipelines. These problems have caused deaths in the apst but luckily Baker Hughes designed GEOPIGs that are high-resolution caliper in-line inspection services. These PIGs are sent through the pipeline and scan for any weak points they can find.

My last blog was Giving Back to the Community. In this blog I wrote about natural gas companies that are giving back to their communities.

Columbia Gas of Virginia has donated over $3000 to a variety of non-profit organizations in their communities. Virginia Gas has been partnering with their local Salvation Army’s Energy Share program as well as with their local Special Olympics. Briggy Bandz donates between $1 to 40% of each Bandz sold to many non-profit organizations.

I hope you enjoyed reading my posts and don’t forget to check out the other posts by my group members!

Technological Recap

As we have seen over the past weeks, Natural Gas has the versatility and ability to answer all of our energy needs. This versatility stems from the high efficiencies of its energy production. As I spoke about in my 2nd blog post, “Natural Gas Powering Industry” the ability to compress and cool Natural Gas gives a huge increase in molecular components to store additional energy by forming more bonds. Through this storage we gain a higher amount of energy extraction when we combust the same amount of Natural Gas.

With all of these substantial benefits, countries have begun exploration of their own Natural Gas Resources. There is a large consensus in the world that Natural Gas should be used and it will provide many countries a higher level of energy independence. However, with relatively no exports between countries right now (Natural Gas Reserves Around the World Bridging Future and Current Energy Sources) the world must undertake a substantial amount of development in order for this resource to become as wide spread and interchanged as oil.

Within the next few decades, it is detrimental that we find a new energy source. With the combination of climate change, depletion of resources and the volatility of the countries we import oil from, the current and future economy cannot be supported by the current system.

Thats not to say Natural Gas has no issues. There aspects of its production need to be addressed, however if we implement the right regulation and the right strategies we can begin taking steps towards a cleaner world.

I await a period that is powered by all renewable sources of energy and a time that we can begin to turn back the effects of climate change. However, we have to be realistic about the time and amount of money developing these resources will take. As we implement development we must have an energy source to sustain us.  If we must pick from what our current system have now or a system that can power more homes, cities and nations, cheaper, more effectively and cleaner why would we not take this option.

It is now up to you all, you are the voice of our nation and you will be the ones to make the decision on this resource as key elections and votes are undertaken in the coming years. Use your new found knowledge and make the judgement you best see fit.

Remember that at the end of the day we must power our society and all paths will have large costs and benefits.

The choice is up to you.

Pushing the Economy Forward

The recent discoveries of natural gas reserves in the US is helping to expand the US economy and are also projected to continue driving this growth into the future. The fact of the matter is natural gas in the North American region is abundant and affordable which in turn significantly drives up job creation and again our economic growth.

The shale boom has made American factories more competitive than recent years and has sparked a domestic manufacturing renaissance, leading to capital investment, new high-wage manufacturing jobs, and an increase in US exports of added value product.

The U.S. is the world’s largest manufacturing economy, and growth in domestic manufacturing has a multiplier effect on the broader state of the economy.

Here are several examples of how the multiplier effect works:

First, manufacturing creates more jobs outside its own sector than any other industry. For every one manufacturing job, there are five additional domestic jobs. Hence, creating more jobs within the manufacturing industry will create five times more domestic jobs which will stimulate economic growth.

Second, manufacturing also creates value-added products for export. Meaning instead of exporting simple raw materials, every dollar invested in domestic manufacturing creates a portion of income from finished products.

Lastly, manufacturing drives innovation. Manufacturing companies are starting to realize it is more efficient to conduct research and development near or on their factory floors than anywhere else. The countries who investment more in these manufacturing sectors have a head start in the development of next generation products.

Now is the time when our policy makers have an opportunity to grow America’s vital manufacturing sector through a sensible, all-encompassing natural gas policy that will allow for the manufacturing companies to use natural gas for production and in turn push the economy forward.

Manufacturing is very sensitive to natural gas, which powers many of its operations and supplies the raw components of thousands of essential products. When the price of natural gas is high, companies cannot afford to operate and thus are not as efficient as a company who can operate with natural gas at a lower cost. This is why America is a manufacturing company’s dream place to operate; the US offers some of the lowest prices on natural gas out of any country. As the demand for natural gas in the US continues to rise, it pushes the economy to new heights and will continue to push the economy forward into future years.

The Power of Natural Gas Exploration Rights, Cyprus

As many of you may already be aware of, the small island country of Cyprus is currently in financial ruins and seeking a bailout plan.  While there is a pending bailout offer from the EU, many citizens are outraged by the contingents of it and are seeking another plan.  Amidst the outrage, sources have reported that the Russian energy company Gazprom has extended to Cyprus a bailout offer of their own.

 

Gazprom is the largest natural gas company in the world and is responsible for nearly 10% of Russia’s GDP (New York Times).  In other words, the company has billions and billions of dollars worth of revenue, which it is looking to invest into the further expansion of their natural gas business. 

 

Meanwhile, Cyprus’ neighbor to the Southeast, Israel, just discovered one of the largest offshore gas fields in the past decade, the Leviathan natural gas field.  After this discovery, exploration for natural gas in this Mediterranean region is rampant and Cyprus is likely to withhold the mining rights to a great amount of natural gas.  Thus, a natural gas giant such as Gazprom would be eager to obtain exclusive exploration and mining rights of Cyprus’ natural gas fields, exactly what Gazprom’s bailout plan entails.

 

Gazprom’s reported proposal to Cyprus entails a bailout option in which Cyprus would concede exclusive rights of it’s natural gas fields to Gazprom.  In turn, Gazprom would single handedly bail out the country of Cyprus, who would need around 10 billion Euros to re-stabilize its economy.

 

While this may initially seem like an easy and reasonable solution to Cyprus’ troubled economic state, there are many underlying affects and motives.  Gazprom effectively has a monopoly on the natural gas market in Europe, providing it with about 40% of its imported gas.  The bailout of Cyprus’ would give the country the means to sell rights of its natural gas reserves to be mined by different gas companies.  In theory, Cyprus would have the power to create its own gas industry, which if productive enough, could become and export business to the likes of many European nations.

 

If Cyprus were to create its own gas industry and export to Europe, Gazprom would be undercut and be potentially forced to lower their prices and loosen their grasp on the European market.  This occurrence would be very detrimental to the revenues of Gazprom.

 

As it stands now, Gazprom has not made a release stating its offer to Cyprus, nor has Cyprus given any definitive evidence suggesting consideration of the proposal.  This example however, shows how powerful the rights to natural gas exploration are and to what lengths some companies will go to claim those rights.

Subsidies for oil and natural gas companies – why they’re not so good for our future

Under President Obama’s new budget plan, one proposed new source of revenue is from taxes and royalties from oil, natural gas, and coal companies. Currently there are many tax breaks that oil, gas, and coal companies can take advantage of. One tax break, mentioned by the Wall Street Journal is the Section 199 deduction. According to the IRS, this incentive allows (mainly) energy companies to deduct from 6 to 9% of qualifying income. President Obama has asked Congress to repeal the tax breaks for oil, natural gas and coal companies in an effort to raise revenue for his proposed budget. The second part of the proposed plan aims at increasing royalties that are gathered from energy production by private companies on federal lands and in federal waters.

What’s the reasoning for removing tax breaks for the above-mentioned energy companies? Well, if these tax breaks were removed, 44 billion dollars of revenue would be raised over the course of ten years. The increase in royalties would lead to 2.5 billion dollars in increased revenue in the same time period. 46.5 billion dollars would put only a small dent in the budget deficit, but it’s a start. President Obama plans to use 2 billion dollars from all the revenue generated from eliminating tax breaks and increasing royalties to fund clean-energy research.

With removed tax breaks, it is quite likely that oil, natural gas, and coal companies will increase the prices they charge consumers in an effort to maintain after-tax profit margins. If that is the case, then consumers of electricity, heating, and gasoline will be negatively affected in the short-run. However, I believe there will be a positive long-term impact. Non-renewable energy companies may find that they need to diversify into renewable energies as tax obligations increase. Also, if consumers are in fact negatively impacted by higher prices, they may use less energy by driving less, making their homes more energy efficient, and investing in higher-MPG vehicles. This, of course, is all speculation.

What is known for sure is that the money for the proposed budget has to come from somewhere and the proposed actions will help the United States move towards cleaner energy and less dependence on foreign oil.

Oil and Coal companies should receive no subsidies. They should, actually, be taxed more heavily because they produce negative externalities: pollution. Natural Gas is the better, cleaner alternative to the above-mentioned fossil fuels, but it is still a non-renewable source of energy.

Giving Back to the Community

The Natural Gas industry is full of companies that are not only producing better gas and power for their communities, but are also giving back to the communities they are in.

Columbia Gas of Virginia

Columbia Gas of Virginia believes that the vitality of their business depends on the health and well-being of the communities where they live and work. Last year alone they donated over $300,000 to a variety of non-profit organization in their communities. They look for opportunities to provide funding and volunteer support in the areas of human needs, public safety, community development, environmental and energy sustainability, and leadership and science education.

Recently they have contributed to “RACE – Are We So Different?” with a grant of over $10,000 to the Science Museum of Virginia to partly cover the field trip expenses for over 300 schoolchildren. They also recently contributed to Science Matter, Big brother and Sister of Harrisonburg-Rockingham County, HeatShare Fuel Fun, and many more.

Virginia Natural Gas

Virginia Natural Gas aims to make the most meaningful impact they can in their communities. They try to focus on the areas of Energy Assistance, Education, Environmental Stewardship, and Community Enrichment within their communities.

One of the big events that they support is the Special Olympics Annual Polar Plunge.  Virginia Natural Gas led the corporate fundraisers list by raising donations from more than 300 supporters. Also their employees took part in the festivities for the 13^th year in a row by volunteering behind the scenes and taking the plunge themselves.

Along with the Annual Polar Plunge, Virginia Natural Gas has been helping their local Salvation Army.  They contributed a matching gift of $108,000 to the Salvations Army’s EnergyShare program. The donations help areas with low-income residents pay for their winter heating bills.

Briggy Bandz

Briggy Bandz is not a natural gas company, but they are a service company for the industry and they have been going above and beyond the call of business. The company produces Bandz that are used to cool the workers at the natural gas companies. The workers typically have to wear layers of proper protective equipment regardless of the temperature so they often face the threat of overheating. The company donates between $1 to 40% of each Bandz sold to many non-profit organizations. These organizations include Caleb Regenski Memorial Fund, Down Syndrome, Law Enforcement (Concerns of Police Survivors), Autism, and many more.

The Natural Gas Industry continues to strive to make the world a better place one community at a time.

California Invests in Natural Gas

Trucking companies in California have begun ordering and switching their massive fleets of trucks over to Natural Gas. In particular, Cummins has began shipping large new Natural Gas burning engines to companies in California. Leading companies such as Procter and Gamble have begun partnering with shipping companies switching over, noticing the great potential for cost minimization transportation expenses. The New York Times has published a new article going in-depth on the companies transferring to Natural Gas and the future plans for expansion.

Of all states California is by far the leader in expanding access to Natural Gas fueling stations. As well as developing an infrastructure that supports the transfer from traditional means of transportation to a more energy-efficient and sustained process. This has a significant cost in the short-term, but if the efficiency of energy extracted from Natural Gas continues to increase, California could see substantial returns on its investment.

For years California has struggled with its tense energy policies, in hopes that renewable technologies would take over as cost-effective measures and replace California’s vast energy industry. However, many of these processes have not developed at the speed California has hopped and Natural Gas can be an investment that allows the state to continue the production of its renewable resources while staying competitive.

This micro-experiment could lead to big changes on the national level. If California’s experiment with Natural Gas succeeds the state could be a model of how the Federal government could implement a policy of research and development into renewables while adapting our current energy infrastructure into a natural gas-powered energy structure.

There are some dangers to allowing Natural Gas to grow to such a grandiose extent. In many ways the country could fall back into the same trap it fell into with “Big Oil“. However, in a recent Energy Summit I attend I heard an interesting quote I believe applies to both situations and one every American should know.

“We didn’t leave the stone age for the bronze age because we ran out of stones.”

Representing that we won’t leave the oil age because we run out of oil or Natural Gas; it will be because we found something substantially better.

If we continue to invest in our future we will see substantial returns. It is obvious not all investments will pan out, but the benefits we could gain greatly outweigh the risk of inaction. Hopefully, California’s experiment will provide a model for the nation.

LNG, What’s the big deal?

LNG is the key piece in making natural gas an internationally traded commodity, without it, supply and demand of the resource would be far out of balance.  Beyond this, LNG is important in the growing natural gas industry because it allows for the extraction from tough to reach reserves; it can be shipped efficiently and safely, and a has potentially great upside for exporting countries.

The largest benefit of LNG is that it opens up natural gas to world trade.  Prior to the technology which allows us to transform natural gas into its liquid state, natural gas could only be distributed regionally through gas pipelines.  This not only restricted the trade of natural gas, it also restricted the markets ability to grow.  For instance, Australia is currently producing two times more gas than what it consumes.  If it were to have no way to ship this excess over seas, the country would have no incentive to produce its maximum capacity of natural gas and their abundant supply would be a waste since it can’t get to countries who need the energy.

Top 6 exporters of LNG in 2011:

Thankfully however, we now have the ability to super cool natural gas to -162 degrees C, at which point the gas turns into its liquid state. Once in its liquid state, natural gas is 1/600 that of its gaseous volume, meaning that we can transport natural gas on tankers at and economic cost.

With the ability to ship LNG globally comes the ability to import and export natural gas.  Thus, countries such as Qatar and Australia have incentive to produce as much LNG as possible for export.  This benefits both the exporting countries economically and the importing countries because they now have the supply to meet their consumption, The Economist.

While LNG is the key to the international trade of natural gas, it is also important because we now have the ability to tap large natural gas reserves that were once considered inaccessible.  Prior to LNG, we were unable to tap any reserves that were much more than a few miles off any coast because the amount of pipeline that had to be laid under the ocean was unfeasible.  With LNG and LNG specific tankers, we are now able to pump what is extracted from these reserves directly into these ships for super cooling and transport.

By pumping extracted natural gas at sea directly onto the ships, not only are time and money being saved but the detrimental impact on the environment is being reduced.  When LNG is stored, it is put under no pressure and therefore is not explosive.  The ships that transport LNG are some of the most high tech on the sea with double hulls and massive amounts of insulation to prevent any sort of leak.  Even though a spill is not of great fear considering the quality of these ships, the impacts of and LNG spill would be minimal in that LNG is insoluble in water and would all evaporate in a matter of minutes.

The inside membrane of a LNG tanker, Chevron:

LNG has opened the world to natural gas trade providing import opportunities for countries lacking the resource, and export opportunities for countries fortunate enough to have excess.  It has allowed for the market to expand to new heights and with continued exploration by the worlds gas companies, the outlook is only bright for LNG.

Natural Gas Reserves Around the World Bridging Future and Current Energy Sources

As the info-graphic shows there is a substantial amount of Natural Gas reserves in the world today. As extraction techniques continue to improve and ground penetrating radar allows us to discover new reserves of Natural Gas we see an energy that has many applications and availability for the future.

TEDx had a speaker that provided some evidence of how the further development can impact America. We neither support nor dispute what the presenter has said, but believe it is a lecture worth hearing to further develop the linkage of Natural Gas as a future energy source.

In order for Natural Gas to make a true impact on the world countries must develop their exporting abilities.When exports were plotted on the graph they were so minuscule that they did not even appear compared to their reserves.  This shows how small the interconnection of Natural Gas supplies and demands between world economies. If there is to be a switch over to Natural Gas as a global energy source countries must begin exporting and importing different types of Natural Gas between each other.

This could be of particular benefit to Russia and its economy. As shown in the graph Russia by far has the largest amount of Natural Gas reserves in the world. If it were to harness that immense resource, its exports alone could power the world for  many years.

In comparison the United States has already taken steps towards becoming a net exporter of natural gas. It has begun converting current facilities made for Natural Gas imports and reforming them to be able to fill shipping transports and export Natural Gas.

China has seen the huge benefit Natural Gas provides to the countries that are able to develop it and has begun developing its own Natural Gas reserves. However, China faces many problems in the implementation of its extraction process. Firstly, China has a very different terrain compared to the United States. This difference in terrain has caused a huge a delay in the technology transfer of  the current facking technology developed in America.

In order for the Chinese to access their current reserves of Natural Gas they will need to develop a system allowing them to extract their reserves in an efficient manner and be cost sustaining.

Many United States companies have descended on China forming partnerships to help develop the Chinese’s Natural Gas Reserves. Companies like RMI have begun major developments in China. Hopping that the development of Natural Gas and renewables will help address the growing problems of contamination, pollution and climate change.

As this resource develops further we will see huge economies of scale continue to lower the costs of Natural Gas. Additionally, as renewable energy sources begin to take over the traditional role of fossil fuels natural gas will be able to power solely keep sectors and become much more widely available. While this process of conversion begins to occur, we will be able to give even cheaper energy to the rest of the world that cannot afford the new renewable technologies during their industrialization. This way Natural Gas can be both a bridge fuel for the industrial countries now and then for developing countries in the future.

 

Weekly Recap

Why is Liquefied Natural Gas (LNG) so important?

For starters, LNG is a key ingredient in making natural gas an internationally traded commodity, without this resource in use, the supply and demand for natural gas as a whole would dwindle. Not only that, but new developments have made the transportation of LNG across boarders easier and safer, which makes exporting and importing this resource more attractive.

In order to make LNG and other natural gas resources a globally traded commodity, countries with high reserves need to start exporting the natural gas to those countries with little to no reserves in natural gas.

For example, Russia has the largest number of natural gas reserves in the world; so much in fact that if they decided to export all of their reserves, they could power the entire world for several years alone.

On the other hand the United States has already taken steps towards becoming a net exporter of natural gas. There are plans to create a pipeline from the North Alaskan Coast inland. This project would not only provide many jobs for the unemployed, but also huge revenue for the state of Alaska. 2021 is the target year to have the pipeline fully up and running.

Now that natural gas is becoming a more popular use of energy, it would be a smart investment for countries to export their reserves into the global market. The use of natural gas has come a long way in the past couple years and it is projected to be the energy of the future.

This is from a 3-D animation tutorial of how the natural gas companies (Shell) turn natural gas into a liquid.