At the Western Energy Alliance annual meeting and summer conference in Snowmass, Colorado, a variety of concerns for Rockies producers—including strident opposition to oil and gas operations from some communities along the Front Range—drew the spotlight. Suburban communities and towns like Longmont, where drilling activity can be as close as a next-door neighbor, have put to a vote and passed some strong anti-drilling measures, much to the oil and gas industry's chagrin.
To combat negative public perception, the alliance has assembled an Environmental Stewardship public relations campaign. It includes videos to increase public awareness of the benefits of the oil and gas industry and to tackle allegations about fracing, groundwater contamination from drilling and other issues raised by opponents.
But aside from public image, an ever-present issue for Rockies producers—particularly for those that remain natural-gas-focused—is the development of markets for the shale revolution's gas-production bounty. Speaking on this topic was Dan Genovese, manager of market development for Chesapeake Energy Corp.
Chesapeake is the second-largest US natural gas producer (net) and, accordingly, has been active in natural gas transportation, infrastructure and vehicle market development, advocacy and education. “Compressed natural gas is the 'here and now' solution for 100% of consumers and fleets and every type of vehicle—on and off road,” Genovese said.
Global energy demand is on the march, driven in no small measure by the potential for China and India's growth in vehicle ownership per capita, according to
the Energy Information Administration. China's current ownership is where US car ownership stood in 1924. From 2009 to 2015, estimated energy use for China is expected to rise from 2.2 barrels per person to 10.1 barrels per person; for India, the figure could rise from a current 0.9 barrels per person to 5.4 barrels.
Genovese called the market potential for compressed natural gas (CNG) and liquefied natural gas (LNG) “dynamic,” with the largest opportunity represented by light-duty vehicles (42.4 billion cubic feet per day). The heavy-duty vehicle market is the most commercially ready, and represents 10.8 billion cubic feet per day, according to the EIA.
Underpinning the opportunity is the abundance and affordability of natural gas, Genovese said. He presented these numbers: If Nymex is $4 per thousand cubic feet (Mcf), CNG is $1.50 per gallon of gas equivalent and LNG, $2. If Nymex is $8 per Mcf, CNG will be $2 and LNG, $2.50; and if Nymex is $12, CNG will be $2.50 and LNG, $3.
Natural gas is clean, safe, powerful and quiet, he said, and “CNG vehicles are coming.”
The governors of 22 states have a memorandum of understanding to use more CNG vehicles in their fleets; there is a Corporate Average Fuel Economy (CAFE) credit for CNG vehicles; and technology is under way to add smaller, steel tanks to existing passenger vehicle platforms. These smaller tanks are easier to fit into existing vehicle platform designs, “dramatically” reducing costs, he said. Other innovations are under way, as well.
As for dual-fuel, gas/diesel technology, it is “game-changing,” he said.
In terms of the high-horsepower market, Genovese said the opportunities for LNG use were “incredible” for the mining, rail and marine industries.
Infrastructure development has been a stumbling block for CNG and LNG use, and Genovese recommended a “Goldilocks” strategy: “right-sized, smaller, more affordable, plug and play.” He advocated building onto existing retail locations in neighborhoods instead of in remote industrial parks.
“Leverage the existing federal, state and local motor fuels inspection, excise tax collection and remittance model,” he said.
Until then, he encouraged the audience members to wait to replace vehicles until a CNG model is available.
—Susan Klann
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