[Top News] from [REUTERS]
[Green Business]
Thu Mar 18, 2010 12:04pm EDT
Factbox: Shale gas stirs energy hopes, health concerns
(Reuters) - The boom in shale natural gas drilling has raised hopes that the United States will be able to rely on the cleaner-burning fuel to meet future energy needs, but concerns about its impact on water quality could slow the industry's ability to tap this resource.
The U.S. Environmental Protection Agency said on Thursday it will begin to take a closer look at the environmental and human health impact of shale gas drilling, which could mean new regulations on a booming sector of the energy market.
Following are some shale gas facts.
* Shale gas is natural gas -- largely methane -- produced and stored in shale formations a mile or more underground in many of the lower 48 U.S. states.
* Together with other "unconventional" natural gas sources such as tight sands and coalbed methane, shale gas accounts for 60 percent of technically recoverable U.S. onshore reserves, according to the U.S. Department of Energy. At least half of new reserves growth is expected to come from shale gas by 2011. In all, shale reserves are estimated to contain enough gas to meet total U.S. demand for 30 years.
* The U.S. Energy Information Administration calculated proven natural gas reserves at 244 trillion cubic feet (6.9 trillion cu meters), or about 11 years' supply, up from the agency's 2006 estimate of 211 trillion cubic feet (6.0 trillion cu meters).
* A separate estimate from the Potential Gas Committee, an industry group whose biennial estimates are seen as a benchmark, concluded in June 2009 that the U.S. has 1,836 trillion cubic feet (52 trillion cu meters) of technically recoverable natural gas reserves, up sharply from 1,321 tcf in 2007. Of the new total, 33 percent is shale gas.
* Combined with the U.S. Department of Energy's latest estimate of 244.7 tcf in proven reserves at the end of 2008, the PGC's data gives the U.S. total available future supply of 2,081 tcf, an increase of 549 tcf from the committee's previous survey in 2007. The U.S. consumption rate of about 23 tcf a year. The latest estimate represents some 90 years' supply.
* One trillion cubic feet of gas is enough to heat 15 million homes for a year or to fuel 12 million natural gas-powered vehicles for a year, according to DOE figures.
* The abundance of shale and other forms of natural gas may allow the U.S. to reduce its dependence on overseas energy sources while reducing greenhouse gas emissions. Natural gas produces about half of the carbon dioxide emitted by coal, and about a third less than oil, and so is seen as a "bridge" fuel between petroleum and renewable fuels such as wind and solar. Natural gas also emits lower levels of other pollutants such as sulfur dioxide and nitrous oxide.
* A recent boom in shale gas development in states including Texas, Wyoming and Pennsylvania has been driven by advances in hydraulic fracturing in which a mixture of water, sand and chemicals are forced underground at pressures sufficiently high to open gas-bearing fissures in the shale, releasing the fuel.
* Exploitation of shale "plays" has also been aided by horizontal drilling, enabling much wider coverage of shale formations than with traditional vertical drilling, and with less surface disturbance.
* The "big four" U.S. shale plays are the Barnett in Texas, currently the most productive, with about 50 percent of total U.S. shale gas output; the Haynesville in Louisiana/Texas; the Fayetteville in Arkansas; and the Marcellus in Pennsylvania and surrounding states.
* The Marcellus is likely to become the biggest producer of shale gas, according to Chesapeake Energy Corp., the second-largest U.S. producer of natural gas overall.
* The Marcellus could contain as much as 489 trillion cubic feet of gas, according to Terry Engelder, a Penn State University geoscientist. Its value is enhanced by the high quality of its gas and the fact that it is close to the major U.S. Northeast market, keeping transmission costs relatively low. More than 800 Marcellus wells have been drilled in Pennsylvania since 2005, most of them in 2009.
* Energy companies are expected to apply for 5,200 Pennsylvania drilling permits in 2010, about triple the number in 2009.
(Reporting by Jon Hurdle in Philadelphia; Editing by Lisa Shumaker)
[Green Business]
Bruce Nichols - Analysis
HOUSTON
Thu Mar 18, 2010 12:23pm EDT
Consol deal shows coal sector eyeing natgas
(Reuters) - Consol Energy's $3.5 billion purchase of shale gas assets from Dominion Resources this week could be a precursor to other coal companies diversifying toward cleaner energy sources.
U.S. coal companies, which a few years ago enjoyed a boom in coal-fired power plant development, must diversify as concern about climate change grows.
Utilities are shutting old coal plants and replacing them with generators fueled by natural gas, which when burned emits 50 percent less greenhouse gas than coal.
Other coal companies could follow Consol's lead. Massey Energy has expressed interest in gas production. Alpha Natural Resources has formed a joint venture to produce gas. And Walter Energy for years has used wells to remove potentially explosive gas from its mines.
On the supply side, environmental advocates and the government are pushing to limit the practice of leveling mountains to recover thinning seams in the U.S. coal heartland, Appalachia.
Analysts are uncertain, however, how many coal companies actually will get into the gas business, even though a lot of natural gas is found near coal seams and a number of companies already drill wells to de-gas mines.
"You may see some smaller investments like this, but Consol is in a somewhat unique situation as the company already had a decent size and growing position in natural gas," said analyst Jim Rollyson of Raymond James & Associates Inc.
Traditionally, there have been barriers to coal companies investing heavily in natural gas exploration and production.
Finding and producing gas requires a different skill set. The gas business is capital-intensive, and until recently coal companies lacked the heft. Adding a different business makes it harder for Wall Street to value a company, which in turn makes it harder to raise money by selling stock.
"You need a more sophisticated investor who understands both," said analyst Dave Khani of FBR Capital Markets. "It's a narrow community. Wider than it was eight, 10 years ago, but narrower than if you're just coal or just gas."
INVESTORS IN COAL, OIL-GAS INCREASINGLY OVERLAP
Unlike many major coal producers, Consol has been in the natural gas business for years and in 2005 formed a unit, CNX Gas, to explore for and produce the stuff. CNX Gas trades publicly as CXG on the New York Stock Exchange.
And the energy sector is changing.
Analyst Kevin Book of ClearView Energy argued that Consol's move adds value by broadening the company's footing away from a fuel considered "dirty" and into one widely seen as "clean."
Book compared it to oil refiner Valero Energy Corp buying bankrupt ethanol producer VeraSun Energy Corp, adding renewable fuel to Valero's fossil-based portfolio.
"It reflects economic fundamentals but also includes carbon optionality as an upside," Book said.
In a venture similar to but smaller than the model followed by Consol, Alpha acquired Marcellus shale gas acreage in its 2009 merger with Foundation Coal and is moving to develop it in a joint venture with Pennsylvania-based Rice Energy LLC.
Alpha and Rice, as Alpha Shale Resources LP, plan to drill four wells this year and as many as 100 eventually, depending on demand, pipeline availability and drilling results, Alpha spokesman Ted Pile said.
"It's not a huge undertaking at this point," Pile said. He did not offer a detailed development timeline.
Production from the four Alpha wells in 2010 is projected at no more than 1.3 billion cubic feet per year compared with 92 billion cubic feet CNX produced in 2009. And Consol's output is a fraction of traditional oil and gas producers' flow.
Massey Chairman Don Blankenship said in a conference call Wednesday that his company has been looking at gas properties and remains interested even after spending nearly $1 billion to buy miner Cumberland Resources this week.
"We are still looking at gas, but we haven't found anything," Blankenship told analysts.
(Additional reporting by Eileen O'Grady in Houston and Steve James in New York; Editing by David Gregorio)
[Green Business]
Thu Mar 18, 2010 12:04pm EDT
Factbox: Shale gas stirs energy hopes, health concerns
(Reuters) - The boom in shale natural gas drilling has raised hopes that the United States will be able to rely on the cleaner-burning fuel to meet future energy needs, but concerns about its impact on water quality could slow the industry's ability to tap this resource.
The U.S. Environmental Protection Agency said on Thursday it will begin to take a closer look at the environmental and human health impact of shale gas drilling, which could mean new regulations on a booming sector of the energy market.
Following are some shale gas facts.
* Shale gas is natural gas -- largely methane -- produced and stored in shale formations a mile or more underground in many of the lower 48 U.S. states.
* Together with other "unconventional" natural gas sources such as tight sands and coalbed methane, shale gas accounts for 60 percent of technically recoverable U.S. onshore reserves, according to the U.S. Department of Energy. At least half of new reserves growth is expected to come from shale gas by 2011. In all, shale reserves are estimated to contain enough gas to meet total U.S. demand for 30 years.
* The U.S. Energy Information Administration calculated proven natural gas reserves at 244 trillion cubic feet (6.9 trillion cu meters), or about 11 years' supply, up from the agency's 2006 estimate of 211 trillion cubic feet (6.0 trillion cu meters).
* A separate estimate from the Potential Gas Committee, an industry group whose biennial estimates are seen as a benchmark, concluded in June 2009 that the U.S. has 1,836 trillion cubic feet (52 trillion cu meters) of technically recoverable natural gas reserves, up sharply from 1,321 tcf in 2007. Of the new total, 33 percent is shale gas.
* Combined with the U.S. Department of Energy's latest estimate of 244.7 tcf in proven reserves at the end of 2008, the PGC's data gives the U.S. total available future supply of 2,081 tcf, an increase of 549 tcf from the committee's previous survey in 2007. The U.S. consumption rate of about 23 tcf a year. The latest estimate represents some 90 years' supply.
* One trillion cubic feet of gas is enough to heat 15 million homes for a year or to fuel 12 million natural gas-powered vehicles for a year, according to DOE figures.
* The abundance of shale and other forms of natural gas may allow the U.S. to reduce its dependence on overseas energy sources while reducing greenhouse gas emissions. Natural gas produces about half of the carbon dioxide emitted by coal, and about a third less than oil, and so is seen as a "bridge" fuel between petroleum and renewable fuels such as wind and solar. Natural gas also emits lower levels of other pollutants such as sulfur dioxide and nitrous oxide.
* A recent boom in shale gas development in states including Texas, Wyoming and Pennsylvania has been driven by advances in hydraulic fracturing in which a mixture of water, sand and chemicals are forced underground at pressures sufficiently high to open gas-bearing fissures in the shale, releasing the fuel.
* Exploitation of shale "plays" has also been aided by horizontal drilling, enabling much wider coverage of shale formations than with traditional vertical drilling, and with less surface disturbance.
* The "big four" U.S. shale plays are the Barnett in Texas, currently the most productive, with about 50 percent of total U.S. shale gas output; the Haynesville in Louisiana/Texas; the Fayetteville in Arkansas; and the Marcellus in Pennsylvania and surrounding states.
* The Marcellus is likely to become the biggest producer of shale gas, according to Chesapeake Energy Corp., the second-largest U.S. producer of natural gas overall.
* The Marcellus could contain as much as 489 trillion cubic feet of gas, according to Terry Engelder, a Penn State University geoscientist. Its value is enhanced by the high quality of its gas and the fact that it is close to the major U.S. Northeast market, keeping transmission costs relatively low. More than 800 Marcellus wells have been drilled in Pennsylvania since 2005, most of them in 2009.
* Energy companies are expected to apply for 5,200 Pennsylvania drilling permits in 2010, about triple the number in 2009.
(Reporting by Jon Hurdle in Philadelphia; Editing by Lisa Shumaker)
[Green Business]
Bruce Nichols - Analysis
HOUSTON
Thu Mar 18, 2010 12:23pm EDT
Consol deal shows coal sector eyeing natgas
(Reuters) - Consol Energy's $3.5 billion purchase of shale gas assets from Dominion Resources this week could be a precursor to other coal companies diversifying toward cleaner energy sources.
U.S. coal companies, which a few years ago enjoyed a boom in coal-fired power plant development, must diversify as concern about climate change grows.
Utilities are shutting old coal plants and replacing them with generators fueled by natural gas, which when burned emits 50 percent less greenhouse gas than coal.
Other coal companies could follow Consol's lead. Massey Energy has expressed interest in gas production. Alpha Natural Resources has formed a joint venture to produce gas. And Walter Energy for years has used wells to remove potentially explosive gas from its mines.
On the supply side, environmental advocates and the government are pushing to limit the practice of leveling mountains to recover thinning seams in the U.S. coal heartland, Appalachia.
Analysts are uncertain, however, how many coal companies actually will get into the gas business, even though a lot of natural gas is found near coal seams and a number of companies already drill wells to de-gas mines.
"You may see some smaller investments like this, but Consol is in a somewhat unique situation as the company already had a decent size and growing position in natural gas," said analyst Jim Rollyson of Raymond James & Associates Inc.
Traditionally, there have been barriers to coal companies investing heavily in natural gas exploration and production.
Finding and producing gas requires a different skill set. The gas business is capital-intensive, and until recently coal companies lacked the heft. Adding a different business makes it harder for Wall Street to value a company, which in turn makes it harder to raise money by selling stock.
"You need a more sophisticated investor who understands both," said analyst Dave Khani of FBR Capital Markets. "It's a narrow community. Wider than it was eight, 10 years ago, but narrower than if you're just coal or just gas."
INVESTORS IN COAL, OIL-GAS INCREASINGLY OVERLAP
Unlike many major coal producers, Consol has been in the natural gas business for years and in 2005 formed a unit, CNX Gas, to explore for and produce the stuff. CNX Gas trades publicly as CXG on the New York Stock Exchange.
And the energy sector is changing.
Analyst Kevin Book of ClearView Energy argued that Consol's move adds value by broadening the company's footing away from a fuel considered "dirty" and into one widely seen as "clean."
Book compared it to oil refiner Valero Energy Corp buying bankrupt ethanol producer VeraSun Energy Corp, adding renewable fuel to Valero's fossil-based portfolio.
"It reflects economic fundamentals but also includes carbon optionality as an upside," Book said.
In a venture similar to but smaller than the model followed by Consol, Alpha acquired Marcellus shale gas acreage in its 2009 merger with Foundation Coal and is moving to develop it in a joint venture with Pennsylvania-based Rice Energy LLC.
Alpha and Rice, as Alpha Shale Resources LP, plan to drill four wells this year and as many as 100 eventually, depending on demand, pipeline availability and drilling results, Alpha spokesman Ted Pile said.
"It's not a huge undertaking at this point," Pile said. He did not offer a detailed development timeline.
Production from the four Alpha wells in 2010 is projected at no more than 1.3 billion cubic feet per year compared with 92 billion cubic feet CNX produced in 2009. And Consol's output is a fraction of traditional oil and gas producers' flow.
Massey Chairman Don Blankenship said in a conference call Wednesday that his company has been looking at gas properties and remains interested even after spending nearly $1 billion to buy miner Cumberland Resources this week.
"We are still looking at gas, but we haven't found anything," Blankenship told analysts.
(Additional reporting by Eileen O'Grady in Houston and Steve James in New York; Editing by David Gregorio)
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