story first appeared on usatoday.com
Political obstacles to oil and gas production are starting to fall away at the state and local levels as voters, elected officials and courts jump on the energy boom bandwagon.
Voters are rewarding local politicians who support production. Ballot measures are distributing potential tax windfalls broadly. And most state legislatures are focused on managing the economic and environmental consequences of hydraulic fracturing, or fracking, so the drilling boom can speed up rather than slow down.
The trend is crucial to the nation's energy future because oil and gas production is regulated and taxed almost entirely by state and local governments. The federal government's role is largely advisory, except on federal lands and on pipelines.
Most states were caught off guard when fracking turned Pennsylvania into a major natural gas producer in 2009. Fracking could produce oil or gas in as many as 36 states. Result: The USA will become the world's No. 1 producer of natural gas in 2015 and oil in 2017, overtaking Russia and Saudi Arabia, respectively, predicts the International Energy Agency.
Clearing the way:
Elections. Pro-drilling candidates are winning at the local level, including a sweep in southern New York. It is a hot issue, according to Broome County executive Debbie Preston, who won re-election Nov. 6. She's creating a department to help drillers. The state now has a moratorium on fracking.
Pipelines. The industry is winning approval to build pipelines. Williams Partners. the largest pipeline company, got a thumbs-up Nov. 7 to expand one pipeline and has applied to build another to move natural gas to Boston and New York City.
Even the controversial Keystone XL pipeline from Canada looks more likely. Pro-pipeline Democrat Heidi Heitkamp, winner in North Dakota's U.S. Senate race, predicts federal approval early next year.
Natural Resources Defense Council lawyer Kate Sinding says loopholes in federal law make it hard to stop fracking.
Showing posts with label Natural Gas. Show all posts
Showing posts with label Natural Gas. Show all posts
Wednesday, November 21, 2012
Tuesday, May 15, 2012
Ukraine Boosts Natural Gas Production
Story first appeared in The Wall Street Journal.
Ukraine will increase its natural gas production by as much as 25% in the next three years in order to wean itself off costly Russian supplies and wriggle free of Moscow's influence, the Prime Minister said in an interview. On the eve of talks in Brussels Tuesday, he also accused European leaders of blocking Ukraine's efforts to integrate into the European Union over the jailing of an ex-prime minister.
The comments reflect the increasingly difficult balancing act for Ukraine's leadership as it attempts to steer the former Soviet Republic of some 46 million between its two powerful neighbors.
The Ukrainian President's attempts to integrate his country with the European Union have faltered in recent months amid accusations of authoritarian behavior and attempts by Moscow to cajole its neighbor to form tighter economic ties in return for cheaper natural gas supplies.
Ukraine consumes around 60 billion cubic meters of gas per year, around two-thirds of which is imported from Russia. Two new drilling rigs, one of which arrives on Ukraine's Black Sea shelf this month, will help boost production by three to five billion cubic meters by 2015. Natural Gas Expert Witnesses are expected to be on site.
He hailed recent agreements with Royal Dutch Shell RDSA and Chevron Corp. to explore two large shale natural gas fields as critical steps to increase the country's energy independence. He said shale gas could hold the key to eventually covering all of Ukraine's needs. Officials say they expect to start producing from five to 15 billion cubic meters of shale gas per year by 2020, depending on the results of exploration.
The U.S. Energy Information Administration estimates Ukraine has the third-largest shale gas reserves in Europe at 1.2 trillion cubic meters. Officials said more tenders are planned. Representatives of Exxon Mobil Corp., an unsuccessful bidder on one of the fields won by Shell and Chevron, will meet with the prime minister this week.
The exploitation of shale gas deposits could weaken the influence Russia attempts to exert on Ukraine's economy and politics. Analysts say Russia has used its control over natural gas supplies to its neighbor to try to enforce its political will. Russia has turned off supplies to Ukraine twice in recent years amid disputes over pricing and payment.
Ukraine has been trying for months to renegotiate a gas contract that will see it pay around $415 per thousand cubic meters this year, a price the Ukraine feels is unfair. But Russia has refused, demanding closer economic integration including joining a Moscow-led customs union. Many times the negotiations appeared complete, but every time some reasons were found to delay the matter on the Russian side.
The Ukranian president has so far rebuffed Russia's offers, instead taking steps to bring his country closer to the EU. But Europe has shelved a planned free-trade and political association deal over the jailing of the ex-Prime Minister, calling the prosecution politically motivated and demanding her release.
A Ukrainian court on Tuesday delayed the start of an appeal hearing on her conviction for abuse-of-office in connection with gas contracts signed with Russia when she was prime minister in 2009.
European leaders in recent weeks have intensified criticism of the president, whom they accuse of using the courts to sideline. The German Chancellor last week branded Ukraine a "dictatorship."
Several European leaders have threatened to boycott the European soccer championship, which Ukraine co-hosts with Poland next month, over the treatment of the ex-prime minister.
The current prime minister accused European leaders of using the case to slow down Ukraine's integration and called on them not to draw an "iron curtain" across Europe.
Ukraine will increase its natural gas production by as much as 25% in the next three years in order to wean itself off costly Russian supplies and wriggle free of Moscow's influence, the Prime Minister said in an interview. On the eve of talks in Brussels Tuesday, he also accused European leaders of blocking Ukraine's efforts to integrate into the European Union over the jailing of an ex-prime minister.
The comments reflect the increasingly difficult balancing act for Ukraine's leadership as it attempts to steer the former Soviet Republic of some 46 million between its two powerful neighbors.
The Ukrainian President's attempts to integrate his country with the European Union have faltered in recent months amid accusations of authoritarian behavior and attempts by Moscow to cajole its neighbor to form tighter economic ties in return for cheaper natural gas supplies.
Ukraine consumes around 60 billion cubic meters of gas per year, around two-thirds of which is imported from Russia. Two new drilling rigs, one of which arrives on Ukraine's Black Sea shelf this month, will help boost production by three to five billion cubic meters by 2015. Natural Gas Expert Witnesses are expected to be on site.
He hailed recent agreements with Royal Dutch Shell RDSA and Chevron Corp. to explore two large shale natural gas fields as critical steps to increase the country's energy independence. He said shale gas could hold the key to eventually covering all of Ukraine's needs. Officials say they expect to start producing from five to 15 billion cubic meters of shale gas per year by 2020, depending on the results of exploration.
The U.S. Energy Information Administration estimates Ukraine has the third-largest shale gas reserves in Europe at 1.2 trillion cubic meters. Officials said more tenders are planned. Representatives of Exxon Mobil Corp., an unsuccessful bidder on one of the fields won by Shell and Chevron, will meet with the prime minister this week.
The exploitation of shale gas deposits could weaken the influence Russia attempts to exert on Ukraine's economy and politics. Analysts say Russia has used its control over natural gas supplies to its neighbor to try to enforce its political will. Russia has turned off supplies to Ukraine twice in recent years amid disputes over pricing and payment.
Ukraine has been trying for months to renegotiate a gas contract that will see it pay around $415 per thousand cubic meters this year, a price the Ukraine feels is unfair. But Russia has refused, demanding closer economic integration including joining a Moscow-led customs union. Many times the negotiations appeared complete, but every time some reasons were found to delay the matter on the Russian side.
The Ukranian president has so far rebuffed Russia's offers, instead taking steps to bring his country closer to the EU. But Europe has shelved a planned free-trade and political association deal over the jailing of the ex-Prime Minister, calling the prosecution politically motivated and demanding her release.
A Ukrainian court on Tuesday delayed the start of an appeal hearing on her conviction for abuse-of-office in connection with gas contracts signed with Russia when she was prime minister in 2009.
European leaders in recent weeks have intensified criticism of the president, whom they accuse of using the courts to sideline. The German Chancellor last week branded Ukraine a "dictatorship."
Several European leaders have threatened to boycott the European soccer championship, which Ukraine co-hosts with Poland next month, over the treatment of the ex-prime minister.
The current prime minister accused European leaders of using the case to slow down Ukraine's integration and called on them not to draw an "iron curtain" across Europe.
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Wednesday, May 9, 2012
Reliance Ind. Cuts Gas Reserve Estimates
Story first appeared in The Wall Street Journal.
Reliance Industries Ltd. Wednesday cut its estimate of total proven natural gas reserves by 6.6% as it struggles with disappointing and declining output at its key D6 block in Krishna Godavari, which was intended to help it meet India's surging demand for the fuel.
Lower-than-expected output at D6 has hurt India's gas-based power plants and investment in the sector because banks have become cautious about lending due to the absence of committed fuel supplies. It has also hit the nation's steel, petrochemical and refining plants, which have been forced to import costlier gas.
Reliance, the country's largest private refiner by capacity, lowered its estimate of proven total natural gas reserves by 12.42 billion cubic meters to 103.958 billion cubic meters due to lower-than-projected output from D6.
The revision comes a day after the Oil Minister said production at the D6 block would tumble to 20 million standard cubic meters a day by March 2015, way below the 70 mmscm/d targeted for last financial year through March. Actual output for last year was 42 mmscm/d.
The Oil Ministry last week notified Reliance that it intended to prevent the company from recouping about $1 billion of its investment in D6 because it had failed to meet production targets included in the cost-recovery agreement.
In its annual report to shareholders, released late Tuesday, Reliance said the production decline at D6 has been steeper than anticipated because volume at existing wells was lower than expected and gas outside the main channel was too scarce to produce economically.
The company holds a 60% stake in D6. BP PLC owns 30% and Canada's Niko Resources 10%. Reliance also owns 30% of the Panna-Mukta-Tapti gas fields along India's west coast.
Reliance said in the annual report that it was conducting extensive reservoir studies in conjunction with BP to find a way to raise production at D6.
The company has formed an equal joint venture with BP -- India Gas Solutions Pvt -- to import and sell gas in India.
India's gas demand will rise 40% by March 2015 to 356.16 mmscm/d, but output will only grow 8.7% to 113 mmscm/d.
To tap gas resources overseas, Reliance entered into three shale-gas joint ventures in North America in 2010.
Reliance said shale-gas production would be challenging this financial year, in part because of historically low gas prices.
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Reliance Industries Ltd. Wednesday cut its estimate of total proven natural gas reserves by 6.6% as it struggles with disappointing and declining output at its key D6 block in Krishna Godavari, which was intended to help it meet India's surging demand for the fuel.
Lower-than-expected output at D6 has hurt India's gas-based power plants and investment in the sector because banks have become cautious about lending due to the absence of committed fuel supplies. It has also hit the nation's steel, petrochemical and refining plants, which have been forced to import costlier gas.
Reliance, the country's largest private refiner by capacity, lowered its estimate of proven total natural gas reserves by 12.42 billion cubic meters to 103.958 billion cubic meters due to lower-than-projected output from D6.
The revision comes a day after the Oil Minister said production at the D6 block would tumble to 20 million standard cubic meters a day by March 2015, way below the 70 mmscm/d targeted for last financial year through March. Actual output for last year was 42 mmscm/d.
The Oil Ministry last week notified Reliance that it intended to prevent the company from recouping about $1 billion of its investment in D6 because it had failed to meet production targets included in the cost-recovery agreement.
In its annual report to shareholders, released late Tuesday, Reliance said the production decline at D6 has been steeper than anticipated because volume at existing wells was lower than expected and gas outside the main channel was too scarce to produce economically.
The company holds a 60% stake in D6. BP PLC owns 30% and Canada's Niko Resources 10%. Reliance also owns 30% of the Panna-Mukta-Tapti gas fields along India's west coast.
Reliance said in the annual report that it was conducting extensive reservoir studies in conjunction with BP to find a way to raise production at D6.
The company has formed an equal joint venture with BP -- India Gas Solutions Pvt -- to import and sell gas in India.
India's gas demand will rise 40% by March 2015 to 356.16 mmscm/d, but output will only grow 8.7% to 113 mmscm/d.
To tap gas resources overseas, Reliance entered into three shale-gas joint ventures in North America in 2010.
Reliance said shale-gas production would be challenging this financial year, in part because of historically low gas prices.
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Tuesday, May 8, 2012
Utah Natural Gas Well Proposal Looking Good
Story first appeared in The Wall Street Journal.
U.S. officials are expected Tuesday to approve a plan by Anadarko Petroleum Corp. to drill 3,700 natural-gas wells in eastern Utah, capping a year long review of a project that will be one of the largest in the region.
Approval for the Greater Natural Buttes project in the Uintah Basin comes as the Obama administration is supporting natural-gas production as a way to create jobs with a cleaner-burning fuel than coal or oil.
As Gas Prices Fall, a Sigh of Relief
Once Anadarko's wells are up and running, they would be expected to produce about one billion cubic feet of natural gas a day, according to Anadarko, enough to heat or cool about 5.5 million homes.
The Greater Natural Buttes project is the uncommon case in which an energy company won the support of environmental groups, which are often vocal critics of oil and natural-gas development. Anadarko agreed to pull previous proposals to expand drilling to new areas, including parts of a proposed red-rock wilderness area, said Heidi McIntosh of the Southern Utah Wilderness Alliance, an environmental group.
Instead, Anadarko said in its environmental-impact statement, its wells would be drilled from existing wellpads, using technology that allows the well to curve away from a straight-down path and tap new deposits. Natural Gas Expert Witnesses say that this method is a much more environmentally friendly drilling option.
Environmental groups have also raised concerns about air quality in the Uintah Basin, caused in part by oil and natural-gas production. Anadarko says it has responded to those concerns with technology that reduces emissions.
Energy policy is likely to be a top issue in the presidential campaign, with the Republican contender accusing the Obama administration of crimping the industry's growth by rejecting the proposed Keystone XL pipeline to carry oil from Canada through the U.S. Midwest. In recent speeches, the President has stressed his support for oil and gas drilling, provided it can be done safely.
Utahans have gotten used to the Obama administration closing off federal lands to domestic energy production, so this announcement is a long time coming. The 160,000-acre Greater Natural Buttes project was first proposed in 2006 by Anadarko subsidiary Kerr-McGee Oil & Gas Onshore.
Recently, several energy companies have cut back on drilling for natural gas in the U.S., following a production boom that has brought prices near $2 per million British thermal units, their lowest level in a decade. The natural-gas deposits being targeted in the Uintah Basin, however, carry higher-value liquids such as ethane, propane and butane. Also, prices for natural gas may recover over the 10-year period in which Anadarko plans to drill its new wells.
Before Anadarko starts to drill wells in the Uintah Basin, it needs to obtain individual permits for each well.
Utah officials say benefits of the deal would ripple statewide, since the number of producing wells in the state would jump more than 50% from the present level of about 6,000 and the industry has operations in other cities.
They said they expect another drilling approval to be announced in a few weeks on federal lands.
Unemployment in Uintah County, which hit 10.3% at one point, is down to 3.8%. With Anadarko estimating it will create 2,900 new jobs for the 3,700 new wells over a 10-year period, the economy in the county of 32,000 people should expand further.
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U.S. officials are expected Tuesday to approve a plan by Anadarko Petroleum Corp. to drill 3,700 natural-gas wells in eastern Utah, capping a year long review of a project that will be one of the largest in the region.
Approval for the Greater Natural Buttes project in the Uintah Basin comes as the Obama administration is supporting natural-gas production as a way to create jobs with a cleaner-burning fuel than coal or oil.
As Gas Prices Fall, a Sigh of Relief
Once Anadarko's wells are up and running, they would be expected to produce about one billion cubic feet of natural gas a day, according to Anadarko, enough to heat or cool about 5.5 million homes.
The Greater Natural Buttes project is the uncommon case in which an energy company won the support of environmental groups, which are often vocal critics of oil and natural-gas development. Anadarko agreed to pull previous proposals to expand drilling to new areas, including parts of a proposed red-rock wilderness area, said Heidi McIntosh of the Southern Utah Wilderness Alliance, an environmental group.
Instead, Anadarko said in its environmental-impact statement, its wells would be drilled from existing wellpads, using technology that allows the well to curve away from a straight-down path and tap new deposits. Natural Gas Expert Witnesses say that this method is a much more environmentally friendly drilling option.
Environmental groups have also raised concerns about air quality in the Uintah Basin, caused in part by oil and natural-gas production. Anadarko says it has responded to those concerns with technology that reduces emissions.
Energy policy is likely to be a top issue in the presidential campaign, with the Republican contender accusing the Obama administration of crimping the industry's growth by rejecting the proposed Keystone XL pipeline to carry oil from Canada through the U.S. Midwest. In recent speeches, the President has stressed his support for oil and gas drilling, provided it can be done safely.
Utahans have gotten used to the Obama administration closing off federal lands to domestic energy production, so this announcement is a long time coming. The 160,000-acre Greater Natural Buttes project was first proposed in 2006 by Anadarko subsidiary Kerr-McGee Oil & Gas Onshore.
Recently, several energy companies have cut back on drilling for natural gas in the U.S., following a production boom that has brought prices near $2 per million British thermal units, their lowest level in a decade. The natural-gas deposits being targeted in the Uintah Basin, however, carry higher-value liquids such as ethane, propane and butane. Also, prices for natural gas may recover over the 10-year period in which Anadarko plans to drill its new wells.
Before Anadarko starts to drill wells in the Uintah Basin, it needs to obtain individual permits for each well.
Utah officials say benefits of the deal would ripple statewide, since the number of producing wells in the state would jump more than 50% from the present level of about 6,000 and the industry has operations in other cities.
They said they expect another drilling approval to be announced in a few weeks on federal lands.
Unemployment in Uintah County, which hit 10.3% at one point, is down to 3.8%. With Anadarko estimating it will create 2,900 new jobs for the 3,700 new wells over a 10-year period, the economy in the county of 32,000 people should expand further.
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Old Natural Gas Pipelines Pose A Danger
Story first appeared in The Washington Post.
Energy companies will need to start keeping up-to-date records to prove they are running the nation’s aging pipelines at safe pressures under a new set of guidelines the federal government announced Monday in response to a deadly natural gas explosion in a San Francisco suburb.
If the operators aren't able to ensure that their oil and gas lines are running at safe pressures by next year, the Pipeline and Hazardous Materials Safety Administration underscored they could face penalties or some other type of sanction.
The advisory bulletin the administration issued Monday mentioned the September 2010 gas pipeline explosion in San Bruno that killed eight people, injured many more and left 38 homes in smoking ruins.
The National Transportation Safety Board blamed the accident on multiple failures by one of the nation’s largest natural gas companies, Pacific Gas & Electric Co., including shoddy records based on incomplete and inaccurate pipeline information.
A PG&E spokesman said Monday that the company has undertaken a vigorous records review and verified that its transmission lines in urban areas are running at the right pressures. Oil and Gas Expert Witnesses have been brought in to review the proceedings also.
Federal and state officials will be responsible for enforcing the new guidelines. All companies will be required to keep traceable, verifiable and complete records about pipelines that ferry hazardous fuels through the nation’s most populated areas. In a later phase, PHMSA also will direct energy companies on what to do if they can’t find records for all their pipelines.
In the wake of the San Bruno explosion, California regulators ordered PG&E and other state utilities to drop the pressure on their pipelines and produce any records of pressure tests done to ensure pipelines did not threaten surrounding communities.
PG&E’s computer records originally showed that the decades-old, high-pressure transmission line that blew was seamless. But company officials later acknowledged problems when the old paper records were incorporated into the utility’s computer system.
PG&E ultimately rented a hulking concert venue where dozens of employees sorted through more than 1.25 million individual gas transmission records hauled out from branch offices and storage facilities to find the required records.
The California Public Utilities Commission is currently weighing whether the record-keeping lapses violated state and federal laws and contributed to the pipeline rupture.
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Energy companies will need to start keeping up-to-date records to prove they are running the nation’s aging pipelines at safe pressures under a new set of guidelines the federal government announced Monday in response to a deadly natural gas explosion in a San Francisco suburb.
If the operators aren't able to ensure that their oil and gas lines are running at safe pressures by next year, the Pipeline and Hazardous Materials Safety Administration underscored they could face penalties or some other type of sanction.
The advisory bulletin the administration issued Monday mentioned the September 2010 gas pipeline explosion in San Bruno that killed eight people, injured many more and left 38 homes in smoking ruins.
The National Transportation Safety Board blamed the accident on multiple failures by one of the nation’s largest natural gas companies, Pacific Gas & Electric Co., including shoddy records based on incomplete and inaccurate pipeline information.
A PG&E spokesman said Monday that the company has undertaken a vigorous records review and verified that its transmission lines in urban areas are running at the right pressures. Oil and Gas Expert Witnesses have been brought in to review the proceedings also.
Federal and state officials will be responsible for enforcing the new guidelines. All companies will be required to keep traceable, verifiable and complete records about pipelines that ferry hazardous fuels through the nation’s most populated areas. In a later phase, PHMSA also will direct energy companies on what to do if they can’t find records for all their pipelines.
In the wake of the San Bruno explosion, California regulators ordered PG&E and other state utilities to drop the pressure on their pipelines and produce any records of pressure tests done to ensure pipelines did not threaten surrounding communities.
PG&E’s computer records originally showed that the decades-old, high-pressure transmission line that blew was seamless. But company officials later acknowledged problems when the old paper records were incorporated into the utility’s computer system.
PG&E ultimately rented a hulking concert venue where dozens of employees sorted through more than 1.25 million individual gas transmission records hauled out from branch offices and storage facilities to find the required records.
The California Public Utilities Commission is currently weighing whether the record-keeping lapses violated state and federal laws and contributed to the pipeline rupture.
For more national and worldwide related business news, visit the Peak News Room blog.
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Thursday, May 3, 2012
Compressed Natural Gas Vehicles and Kits
Story first appeared in ExxonMobil Perspectives.
With U.S. natural gas production booming, and the price of natural gas right now lower than the price of gasoline or diesel fuel, some are asking: Why don’t more of our cars run on natural gas?
Compressed natural gas (CNG) vehicles – the most common type of natural gas vehicle – have been around for decades. Today, natural gas accounts for about 2 percent of U.S. demand for transportation fuel, with most of that demand coming from fleet vehicles like buses and taxis.
Looking forward, we do see opportunities for natural gas to make an increasingly important contribution to U.S. transportation when it comes to certain fleet uses. But for average consumers, there are a number of challenges that limit the widespread adoption of natural gas vehicles. These include:
Vehicle cost. CNG vehicles are nearly 25 percent more expensive than conventional gasoline or diesel vehicles and nearly 10 percent more expensive than hybrids, based on equivalent models. For example, a CNG-powered passenger car available in the United States costs about $5,600 more than a similarly equipped conventional model, and a CNG-powered 18- wheeler costs an additional $60,000. Even with today’s low natural gas prices, it would take years for motorists to recoup these extra costs.
Infrastructure cost. For American motorists to fuel up on CNG as easily as they do today on gasoline and diesel, the U.S. would need to build an entirely new network of pipelines and service stations to accommodate high-pressure fueling. In a 2010 study, IHS-CERA estimated it would cost between $8 and $12 billion to have CNG facilities installed in just 10 percent of existing U.S. fueling stations. A single CNG station costs anywhere from $300,000 to $3 million more than a regular gas station.
Obviously, these two challenges are economic, and you’ve likely heard some supporters of CNG vehicles advocate for taxpayer subsidies and government support to overcome them. But other challenges to CNG as at transportation fuel are performance-related. For example:
Energy density. Just as foods like nuts and granola bars are popular with hikers because they pack a lot of calories into a small, light package, gasoline and diesel are popular with drivers because they are the fuels with the highest energy density. CNG has relatively low energy density; it contains nearly 70 percent less energy per gallon equivalent than gasoline or diesel. As a result, CNG vehicles pack less horsepower.
Frequency and duration of fill-ups. The lower energy density of CNG also means that drivers will have to fill their tanks more frequently to go the same distance. For example, you would have to fill a CNG-fueled passenger car about 1.7 times to go the same distance as its gasoline-powered equivalent. Refueling a CNG vehicle also takes longer – about twice as long as a standard passenger vehicle.
Cargo space. Because of CNG’s lower energy density – and its need to be kept under very high pressure – CNG vehicles are equipped with large, heavy fuel tanks (200 pounds versus 10 pounds for gasoline). These tanks reduce a car’s fuel economy and its cargo capacity. CNG-powered passenger vehicles currently have about half the cargo space of their conventional equivalents.
Given all these factors, where might natural gas-powered vehicles play a role? One important application for CNG vehicles is for commercial and municipal fleets with limited driving distances. For these vehicles, CNG can make economic sense because they can benefit from shared refueling locations and infrastructure costs. According to the Natural Gas Vehicle Coalition, buses account for more than 60 percent of all natural gas vehicles in the world.
We also are beginning to see expanded interest in the use of liquefied natural gas (LNG) as a vehicle fuel for commercial trucks in the United States. LNG, which is natural gas super-cooled to its liquid form, has a much higher energy density than CNG.
Demand for fuel for trucks, buses and other heavy-duty vehicles exerts a strong influence on U.S. transportation trends. Today, these vehicles — which are generally tied to commercial activity — account for about 20 percent of total U.S. demand for transportation fuels; by 2040, they will account for about 30 percent.
ExxonMobil supports the market-driven use of natural gas as a vehicle fuel. But a government push to subsidize or mandate the expanded use of natural gas in the transportation sector is a wrong turn.
National energy goals in the transportation sector – such as reducing Americans’ transportation costs and strengthening U.S. energy security – are better (and more economically) met through other methods, such as the expanded use of hybrid vehicles or improved fuel efficiency in conventional vehicles. This is, in fact, what we expect to happen. ExxonMobil’s Outlook for Energy projects that the average new car on U.S. roads in 2040 in will get 45 miles per gallon, compared to 22 MPG today, with hybrids and efficiency accounting for most of that improvement.
Like any fuel or technology, natural gas should compete with other transportation fuels on a level playing field – not one distorted by governments trying to pick which fuels and technologies will ultimately be the most successful. In this way, the nation’s energy needs are met at the lowest possible cost to consumers and taxpayers.
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With U.S. natural gas production booming, and the price of natural gas right now lower than the price of gasoline or diesel fuel, some are asking: Why don’t more of our cars run on natural gas?
Compressed natural gas (CNG) vehicles – the most common type of natural gas vehicle – have been around for decades. Today, natural gas accounts for about 2 percent of U.S. demand for transportation fuel, with most of that demand coming from fleet vehicles like buses and taxis.
Looking forward, we do see opportunities for natural gas to make an increasingly important contribution to U.S. transportation when it comes to certain fleet uses. But for average consumers, there are a number of challenges that limit the widespread adoption of natural gas vehicles. These include:
Vehicle cost. CNG vehicles are nearly 25 percent more expensive than conventional gasoline or diesel vehicles and nearly 10 percent more expensive than hybrids, based on equivalent models. For example, a CNG-powered passenger car available in the United States costs about $5,600 more than a similarly equipped conventional model, and a CNG-powered 18- wheeler costs an additional $60,000. Even with today’s low natural gas prices, it would take years for motorists to recoup these extra costs.
Infrastructure cost. For American motorists to fuel up on CNG as easily as they do today on gasoline and diesel, the U.S. would need to build an entirely new network of pipelines and service stations to accommodate high-pressure fueling. In a 2010 study, IHS-CERA estimated it would cost between $8 and $12 billion to have CNG facilities installed in just 10 percent of existing U.S. fueling stations. A single CNG station costs anywhere from $300,000 to $3 million more than a regular gas station.
Obviously, these two challenges are economic, and you’ve likely heard some supporters of CNG vehicles advocate for taxpayer subsidies and government support to overcome them. But other challenges to CNG as at transportation fuel are performance-related. For example:
Energy density. Just as foods like nuts and granola bars are popular with hikers because they pack a lot of calories into a small, light package, gasoline and diesel are popular with drivers because they are the fuels with the highest energy density. CNG has relatively low energy density; it contains nearly 70 percent less energy per gallon equivalent than gasoline or diesel. As a result, CNG vehicles pack less horsepower.
Frequency and duration of fill-ups. The lower energy density of CNG also means that drivers will have to fill their tanks more frequently to go the same distance. For example, you would have to fill a CNG-fueled passenger car about 1.7 times to go the same distance as its gasoline-powered equivalent. Refueling a CNG vehicle also takes longer – about twice as long as a standard passenger vehicle.
Cargo space. Because of CNG’s lower energy density – and its need to be kept under very high pressure – CNG vehicles are equipped with large, heavy fuel tanks (200 pounds versus 10 pounds for gasoline). These tanks reduce a car’s fuel economy and its cargo capacity. CNG-powered passenger vehicles currently have about half the cargo space of their conventional equivalents.
Given all these factors, where might natural gas-powered vehicles play a role? One important application for CNG vehicles is for commercial and municipal fleets with limited driving distances. For these vehicles, CNG can make economic sense because they can benefit from shared refueling locations and infrastructure costs. According to the Natural Gas Vehicle Coalition, buses account for more than 60 percent of all natural gas vehicles in the world.
We also are beginning to see expanded interest in the use of liquefied natural gas (LNG) as a vehicle fuel for commercial trucks in the United States. LNG, which is natural gas super-cooled to its liquid form, has a much higher energy density than CNG.
Demand for fuel for trucks, buses and other heavy-duty vehicles exerts a strong influence on U.S. transportation trends. Today, these vehicles — which are generally tied to commercial activity — account for about 20 percent of total U.S. demand for transportation fuels; by 2040, they will account for about 30 percent.
ExxonMobil supports the market-driven use of natural gas as a vehicle fuel. But a government push to subsidize or mandate the expanded use of natural gas in the transportation sector is a wrong turn.
National energy goals in the transportation sector – such as reducing Americans’ transportation costs and strengthening U.S. energy security – are better (and more economically) met through other methods, such as the expanded use of hybrid vehicles or improved fuel efficiency in conventional vehicles. This is, in fact, what we expect to happen. ExxonMobil’s Outlook for Energy projects that the average new car on U.S. roads in 2040 in will get 45 miles per gallon, compared to 22 MPG today, with hybrids and efficiency accounting for most of that improvement.
Like any fuel or technology, natural gas should compete with other transportation fuels on a level playing field – not one distorted by governments trying to pick which fuels and technologies will ultimately be the most successful. In this way, the nation’s energy needs are met at the lowest possible cost to consumers and taxpayers.
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