Vehicles Envisioned Running on Natural Gas
Pittsburgh Tribune-Review
25 May 2011
By Timothy Puko
More cars, trucks and power plants will need to run on natural gas to
create enough demand to keep shale drillers profitable in the United
States, executives from some of the continent's biggest shale drillers
said in Pittsburgh on Tuesday.
Natural gas resources such as the Marcellus shale under Pennsylvania
and other states have become so bountiful and drillers are so efficient
at extracting gas that new ways to sell it must be created to sustain
the industry's growth, according to executives from companies including
Range Resources Corp. and EQT Corp. who spoke at the Shale Play
Tubulars Conference in Downtown.
They were part of a panel discussion about how to overcome low prices
for the commodity.
Natural gas futures on the New York Mercantile Exchange have fallen to
$4.20 per million Btus for delivery in June, down from 18 months ago
when they were $5.69, according to the Energy Information
Administration. They've fallen nearly 30 cents since January when
companies announced plans to cut back on land leases, exploration and
drilling.
"There's lots of supply coming on," said Rob Broen, president of the
U.S. unit of Talisman Energy Inc. "We need the demand to grow."
The best two ways to do that are by pushing for more natural gas-fueled
vehicles and power plants, the executives said. Natural gas costs just
above half of the price of gasoline, but the nation has just 150,000
cars of the 8 million worldwide powered by natural gas, said Dave
Spigelmyer, vice president for government relations at Chesapeake
Energy Corp., the most active driller in the state.
Natural gas-fueled power plants are running at just 35 to 42 percent of
capacity, said Spigelmyer and Steven Schlotterbeck, president of
exploration and production at EQT.
Along with gas exports, those are the most promising opportunities,
said Kent Moors, director of Duquesne University's Energy Policy
Research Group, in a telephone interview. Oil is only going to get more
expensive and the federal government is pushing for cleaner-burning
power plants that make coal less of an option, so the move could
benefit consumers, he said.
Every plant in the planning stages nationally will use natural gas or
renewable sources such as solar and wind, he said. Nearly half will use
natural gas, compared with only 23 percent that do now, said
Schlotterbeck and Dan Dinges, chief executive officer at Cabot Oil
& Gas Corp.
To spur the car market, drillers have been negotiating with automakers
to build new vehicles for company fleets, especially trucks, fueled by
natural gas, said Spigelmyer. They've had some success increasing the
number of heavy-duty trucks and buses on the market and are hoping for
more mainstream production by 2013, he added.
Automakers want to see more demand before they invest in new lines of
natural gas-fueled cars, said Gloria Bergquist, spokeswoman for the
Alliance of Automobile Manufacturers. Diesel is more efficient than
gasoline, but clean-diesel cars make up only 1 percent of all sales in
the United States even though the fuel is already available at half of
gas stations, she said.
Also at the conference, the state's top environmental official said
financial penalties for violations need to be big enough to prevent gas
drillers from profiting despite shortcuts and lawbreaking.
"I believe that cheaters cheat the market," Department of Environmental
Protection Secretary Michael Krancer said.
"And as a free market economist, I don't approve of that."
Krancer threatened to call out "cheaters and slackers" in the industry
a week after his agency fined Chesapeake Energy nearly $1.1 million for
contamination and a fire in two separate incidents this year. He also
said Chesapeake has promised to have a local emergency response
specialist available to cap wells more quickly after it had to bring
help from out-of-state in one of those incidents.
He said natural gas is becoming the fuel of the 21st century and that
studies warning of broad environmental problems from natural gas are
driven by biased supporters of wind and solar power, undermining the
science behind the research.
Timothy Puko can be reached at tpuko@tribweb.com or 412-320-7991.