A proposal to convert six Washington state ferries to liquefied natural gas could save nearly $10 million a year, consultants have told top Washington legislators.
The conversions of the Issaquah-class ferries would cost $65 million, but consultant Cedar River Group said the money would be paid back in seven years through fuel savings.
The six ferries have a life expectancy of 30 more years…
If the state were to convert the six Issaquah-class ferries built in the 1980s — the Cathlamet, Chelan, Issaquah, Kitsap, Kittitas and Sealth — they would be the first ferries fueled by liquefied natural gas in the nation.
China National Petroleum Corp (CNPC), the country’s biggest energy company by production, said on Thursday that its overseas expansion will continue to focus on the upstream division with Canada and Australia as the major targets.
CNPC’s overseas oil and gas output is expected to reach 100 million tons of oil equivalent this year, of which equity-based production will account for 50 percent, according to Jiang Jiemin, the company’s general manager.
In 2010, the energy conglomerate’s overseas oil and gas output stood at 86.73 million tons.
“Our company’s foreign sales and profits will both hit a record high this year,” Jiang said. He added that CNPC plans to continue to rapidly and consistently expand overseas and that it regards Canadian and Australian assets as its top priorities because of the two countries’ abundant natural resources and steady investment environment.
The Associated Press says the deal is worth $20.7 billion, Bloomberg says it is worth $21.1 billion.
Kinder Morgan already operates a pipeline from Alberta through British Columbia to the port of Vancouver and there are plans to expand that pipeline.
Kinder Morgan’s move comes after Enbridge also said it was interested in moving into the natural gas pipeline business. Both companies are moving to take advantage of the natural gas found in shale deposits and the growing demand for natural gas in both North America and Asia. Bloomberg says:
The takeover is the largest ever proposed of a pipeline company, surpassing the 2007 leveraged buyout of Kinder Morgan itself by a group including Richard Kinder and Goldman Sachs Group Inc. The combined company would have 67,000 miles (107,000 kilometers) of gas lines and eclipse Enterprise Products Partners LP as the biggest U.S. pipeline operator.
“This once in a lifetime transaction is a win-win opportunity for both companies,” Kinder, who will be chairman and chief executive officer of the combined company, said in the statement. He said the deal, once closed, would create immediate shareholder value because of its cash flow.
Kinder Morgan will more than double the size of its pipeline network by purchasing El Paso. The new pipeline system would stretch 80,000 miles — long enough to wind around the globe three times. Kinder Morgan’s pipelines in the Rocky Mountains, the Midwest and Texas will be woven together with El Paso’s expansive network that spreads east from the Gulf Coast to New England, and to the west through New Mexico, Arizona, Nevada and California.
“We believe that natural gas is going to play an increasingly integral role in North America,” said Richard Kinder, Kinder Morgan Inc.’s chief executive, said on Sunday when the deal was announced.
Robert McFadden, a Houston-based natural gas pipeline consultant, said the expanded network will make it easier to move natural gas from new fields that have mushroomed across the U.S. in the past few years.
The take over deal came on the same weekend that the “Occupy” movement was demonstrating around the world against the greed of financial institutions.
The investment banks advising on Kinder Morgan Inc’s $21 billion purchase of El Paso Corp are set to rake in a total of $100 million to $145 million in M&A fees, according to Freeman & Co on Sunday.
Evercore Partners and Barclays Capital , which are advising Kinder Morgan on the deal, would earn $45 million to $65 million in fees, Freeman estimates show.
Morgan Stanley and Goldman Sachs , which are on El Paso’s side, would split another $55 million to $80 million in fees, depending on the role they played, the estimates show.
As lawyers from Vancouver Island to Calgary and on to Ottawa sit down for Thanksgiving dinner on Monday, they will be counting their blessings and adding up their billable hours thanks to the surprise announcement by Enbridge that the company is getting into the west coast LNG rush.
On Thursday, Enbridge CEO Pat Daniel told Reuters that Enbridge is interested in joining one of the two proposed Canadian LNG projects to ship natural gas to Asia. Reuters reported that “‘Enbridge plans to build a natural gas pipeline along the route of the proposed Gateway oil line, which would transport natural gas from Horn River and other natural gas fields to the coast by 2016,’ Daniel said.”
Thursday was also the deadline for public to register for the Joint Review Panel to make oral statements about the Northern Gateway bitumen pipeline.
Now everything has apparently changed.
That brings to mind the quote from Abraham Lincoln who told an audience in the 1864 presidential campaign, “An old Dutch farmer… remarked to a companion once that it was not best to swap horses when crossing streams.”
That has now been generally shortened to “Don’t change horses in midstream.”
Which is sort of ironic, since Enbridge just bought what the energy industry calls a “midstream” natural gas plant in northeastern British Columbia as part of its plans to get into the LNG “play.”
So what happens now, that it appears that one way or another the LNG and Northern Gateway pipeline projects could be combined?
How does this affect the Joint Review Panel on the bitumen pipeline and the hearings that begin in January?
Is is fair that registration for public comment participation is closed now that suddenly the pipeline situation is changing almost daily?
The National Energy
Board hearings on an export licence on the KM LNG project have concluded. If Enbridge buys into the KM LNG project and Kitimat LNG is now connected, one way or another, with the
Northern Gateway, how does that affect the pending National Energy Board decision?
As the hearings here in Kitimat showed, National Energy Board hearings are often mystifying to the public and the rules of procedure narrower than the kind you would find in a full public inquiry.
Environmental activists are determined to stop the bitumen pipeline. First Nations are saying they haven’t been consulted properly on the bitumen pipeline. There are whole new questions arising: if there is a twinned natural gas and bitumen pipeline along the Northern Gateway route, how does that change the environmental and safety studies by government, Enbridge and the environmental groups?
In the lawyers’ homes on Monday as the lawyers say “pass the turkey,” they will be contemplating two words: “Court challenge.”
On Thursday, Enbridge CEO Patrick Daniel told Reuters that the company “would prefer to supply natural gas to the Kitimat liquefied natural gas plant in British Columbia over any other export project in western Canada.”
That immediately raised a question in the northwest is Enbridge thinking of replacing the Northern Gateway bitumen pipeline with a natural gas pipeline? Or is it planning two pipelines?
So far Enbridge has not responded to a request from Northwest Coast Energy news for clarification.
No word yet on whether Tim Wall, the CEO of Apache Canada Ltd., is keen to take on another partner for the massive development. (The Reuters report has Enbridge building a natural gas line in conjunction with its proposed Northern Gateway line, which is to be twinned with a pipe for importing bitumen-thinning condensate from the coast; there’s no mention of sending natural gas west on the Gateway website).
But the question still remains. The Reuters report actually isn’t that clear on whether it will be a bitumen pipeline twinned with a natural gas pipeline or a natural gas pipeline substituted for the bitumen pipeline.
Enbridge plans to build a natural gas pipeline along the route of the proposed Gateway oil line, which would transport natural gas from Horn River and other natural gas fields to the coast by 2016, Daniel said.
There is already speculation and rumour in Kitimat about the Enbridge announcement. Environmental activists have long feared that there would be a twinning of the two projects, while many people sitting on the fence were willing to accept liquified natural gas but not bitumen.
If there is any truth to the rumours circulating in Kitimat, there may be more corporate announcements after the Thanksgiving holiday weekend that will make the situation a little clearer.
Encana Corp. has sold its stake in the Cabin gas plant in B.C. to Enbridge Inc…
Enbridge …will buy Encana’s 52 per cent interest in the plant, plus additional holdings from other partners for a total 57.6 per cent stake….
“Northeast B.C. is going to be a very important source of growth long-term for natural gas out of Western Canada, so it makes a lot of sense for us to build a position there,” Al Monaco, who is in charge of Enbridge’s natural gas business, said in an interview…
“We believe there is going to be the need for LNG exports off the West Coast, and that’s simply because the value of world gas prices, especially in Asia, far exceeds North American prices,” Monaco said.
Enbridge CEO Pat Daniel has told Reuters in New York that the company would prefer to supply natural gas through Kitimat to Asia “over any other export project” and that Enbridge plans to build a natural gas pipeline along the route of the
proposed Northern Gateway bitumen pipeline.
Pat Daniel was interviewed by Reuters reporter Edward McAllister. In a story with a New York place line the agency reports:
Pipeline operator Enbridge Inc
would prefer to supply natural gas to the Kitimat liquefied natural gas
plant in British Columbia over any other export project in western
Canada, the company’s chief executive told Reuters on Thursday.
Enbridge is interested in joining one of two proposed Canadian LNG
projects to ship natural gas to Asia, it said this week, as ample North
American supply pushes gas prices far below global levels.
But the location of Kitimat has attracted Enbridge more than Royal Dutch Shell’s potential project in Prince Rupert, also in British Columbia, company head Patrick Daniel said in an interview.
“Kitimat is the preferred project. Pipelining into Kitimat is
relatively straight forward compared to Prince Rupert, which is the
other proposed port,” Daniel said, though talks continue with both
projects…..
Enbridge plans to build a natural gas pipeline along the route of the
proposed Gateway oil line, which would transport natural gas from Horn
River and other natural gas fields to the coast by 2016, Daniel said.
The energy industry monitor Argus Media speculated Tuesday that propane could be added to Kitimat’s energy scene, as an ingredient to upgrade the natural gas that will be exported to Asia.
Many Asian countries that buy LNG –
including Japan – have higher Btu standards for their gas, which can be
achieved by adding propane to create so-called “hot” LNG.
Propane can be added to the LNG either at the import facility to
enrich supply to the country’s Btu standard or at the export facility
before the LNG goes to market.
Depending on supply contracts and pricing, it could make sense to add
propane to LNG produced at Kitimat, and such a move might impact the
long-term NGL market in western Canada, traders said.
Natural gas–often touted as an abundant, comparatively clean source of domestic energy–has come under intensifying public scrutiny in recent months, with U.S. federal regulators and reporters challenging some of the industry’s rosy business projections.
Natural gas production has grown steadily in the United States since 2006, reaching new highs this year. But who are the leaders in this burgeoning field?
More than 14,000 oil-and-gas companies, many of them small businesses, were active in the United States in 2009, according to the Energy Information Administration. But multinational giants like Exxon Mobil and BP now produce much of the nation’s gas. The 10 biggest drillers account for one-third of all production, data from the Natural Gas Supply Association and the EIA show. The 40 largest producers pump more than half of all domestic natural gas.
We’ve compiled a list of the top 10 drillers in the country, ranked by their daily natural gas production, and pulled together some key facts about their operations. Though there are other ways to measure these companies–revenue, market capitalization, reserves–industry experts say production numbers give the best snapshot of today’s landscape and also separate drillers’ gas operations from oil.
The list features both “integrated” oil-and-gas giants, such as Exxon Mobil, which refines and sells gasoline around the world, and “independents,” such as Chesapeake Energy, which are primarily in oil and gas exploration and production. Though industry P.R. initiatives often emphasize independent mom-and-pop drillers [4], most of the companies on our list are Fortune 500 corporations.
Much of the growth in gas production has come from drilling into shale formations, which provided 23 percent of the nation’s gas in 2010, according to the EIA. Our list shows how integrated behemoths have expanded into this area as production has become proven, sometimes by swallowing up independents that led the way. Last year, Exxon (No. 8 in 2009) bought XTO (No. 2 in 2009) [5] to catapult to the top of the list. Also last year, Chevron (No. 9) bought Atlas Energy [6] (No. 50 in 2009 and an early entrant into Pennsylvania’s Marcellus Shale).
1. Exxon Mobil
The biggest natural gas producer is also the country’s biggest oil company and one of the most profitable corporations in the world. Exxon has operations in every continent but Antarctica. Its oil and gas operations range across several states, from Pennsylvania to Colorado, and it also has wells in the Gulf of Mexico and off the California coast.
With the purchase of XTO, Exxon produces nearly 50 percent more gas than its closest competitor. Earlier this year, Exxon began running ads touting natural gas as a safe [7], clean source of domestic energy. About two-thirds of the company’s domestic reserves are now in natural gas, with the rest in oil.
Average Daily Natural Gas Production: 3.9 billion cubic feet.
Revenue, 2010: $370 billion.
Reserves, 2010: 8.9 billion barrels of oil (2.3 billion in the U.S.), 2.1 billion barrels of bitumen (none in the U.S.), 681 million barrels of synthetic crude (none in the U.S.), 78.8 trillion cubic feet of natural gas (26.1 trillion in the U.S.).
Executive Compensation, 2010: Rex Tillerson, Exxon’s chairman and CEO since 2006, received almost $29 million in total compensation.
2. Chesapeake Energy
Chesapeake calls itself the most active driller in the country, with operations in 15 states, from the Rockies to Texas to Pennsylvania. The company is a good example of how “independent” doesn’t necessarily mean small. As of last year, the company owned an interest in 45,800 wells, of which 38,900 were primarily gas wells.
Chesapeake has built itself as a gas company, but it is increasingly looking for “liquids-rich plays,” according to its annual report. Gas wells generally produce oil and other hydrocarbon liquids as well in varying amounts, depending on the geologic formation. With oil prices high and gas prices low, many companies are seeking more wells that are oil- and liquids-rich, particularly in North Dakota, southern Texas and Pennsylvania.
Average Daily Natural Gas Production: 2.6 billion cubic feet.
Revenue, 2010: $9.4 billion.
Reserves, 2010: 14.3 trillion cubic feet of gas equivalent (10 percent of that is oil or other liquids, converted to the equivalent volume in gas).
Executive Compensation, 2010: Aubrey McClendon, the chairman and CEO, is also the company’s founder. He has the unusual option of purchasing a small stake in every well the company drills [8]. He received $21 million in total compensation.
3. Anadarko
Anadarko is one of the biggest independent oil and gas producers in the country, with exploration or production work in all major domestic drilling areas as well as in South America, Africa, Asia and New Zealand. The company was a minority owner in BP’s Macondo well, which exploded last year, killing 11 people and spilling more than 200 million gallons of oil into the Gulf of Mexico [9].
Worldwide, natural gas makes up just over half of Anadarko’s reserves, but 87 percent of the new wells it drilled in the United States last year were gas wells. Like many other companies, Anadarko is increasingly looking for oil- and liquids-rich production this year.
Average Daily Natural Gas Production: 2.4 billion cubic feet.
Revenue, 2010: $11 billion.
Reserves, 2010: 749 million barrels of oil and condensate (458 million in the U.S.), 320 million barrels of natural gas liquids (307 million in the U.S.), 8.1 trillion cubic feet of gas, all in the United States.
Executive Compensation, 2010: James Hackett, the chairman and CEO, received $24 million in total compensation.
4. Devon Energy
Devon is an independent driller primarily active in the United States and Canada. The company is in the process of divesting operations in Angola and Brazil, its only holdings outside of North America.
More than 90 percent of Devon’s U.S. reserves are in natural gas, with most of that lying in Texas’ Barnett Shale. Like its peers, however, Devon says that this year it will focus on drilling in areas rich with oil and other liquids.
Average Daily Natural Gas Production: 2 billion cubic feet.
Revenue, 2010: $9.9 billion.
Reserves, 2010: 681 million barrels of oil (148 million in the U.S.), 479 million barrels of natural gas liquids (449 million in the U.S.), 10.3 trillion cubic feet of gas (9 trillion in the U.S.).
Executive Compensation, 2010: J. Larry Nichols, the chairman, received almost $19 million in total compensation. John Richels, president and CEO, received almost $18 million.
5. BP
Fortune lists BP as the fourth-largest corporation in the world. The company drills in 29 countries and sells its products in 70. While BP is headquartered in London, 42 percent of the company’s assets are in the United States. BP reported a $3.7 billion loss last year after spending nearly $41 billion on cleaning up the Gulf oil spill and compensating those who were affected.
The company remains primarily an oil producer, with about 40 percent of its reserves in natural gas.
Average Daily Natural Gas Production: 1.9 billion cubic feet.
Revenue, 2010: $297 billion.
Reserves, 2010: 10.7 billion barrels of oil (2.9 billion in the U.S.), 42.7 trillion cubic feet of gas (13.7 trillion in the U.S.).
Executive Compensation, 2010: Chief Executive Robert Dudley received $1.7 million in total compensation.
6. Encana
Encana is one of the largest independent gas companies in the world, with operations mostly in the western United States and Canada, where it is based. The company has focused almost exclusively on gas.
Average Daily Natural Gas Production: 1.8 billion cubic feet.
Revenue, 2010: $8.9 billion.
Reserves, 2010: 93.3 million barrels of liquids (38.5 million in the U.S.), 13.8 trillion cubic feet of gas (7.5 trillion in the U.S.).
Executive Compensation, 2010: Randy Eresman, president and CEO, received $10 million in total compensation.
7. ConocoPhillips
ConocoPhillips is currently an integrated oil corporation, but it recently announced plans to split into two companies, one focused on refining, the other on production [10]. The company has listed acquiring more shale reserves in North America among its top strategic goals over the past couple of years and drills in several western states, as well as in Louisiana and Arkansas. It is exploring for shale gas in Poland and has operations in six continents.
Average Daily Natural Gas Production: 1.6 billion cubic feet.
Revenue, 2010: $198.7 billion
Reserves, 2010: 3.4 billion barrels of oil and natural gas liquids (1.9 billion in the U.S.), 1.2 billion barrels of bitumen (none in the U.S.), 21.7 trillion cubic feet of gas (10.5 trillion in the U.S.).
Executive Compensation, 2010: James Mulva, chairman and CEO, received almost $18 million in total compensation. John Carrig, who retired as president in March, received more than $14 million.
8. Southwestern Energy Co.
Southwestern is another independent driller that focuses exclusively on natural gas. The company has operations in Arkansas, Texas, Oklahoma and Pennsylvania, with most of its production coming from the Fayetteville Shale formation underlying parts of Arkansas.
Average Daily Natural Gas Production: 1.3 billion cubic feet.
Revenue, 2010: $2.6 billion.
Reserves, 2010: 1 million barrels of oil, 4.9 trillion cubic feet of gas.
Executive Compensation, 2010: Steven Mueller, president and CEO, received $5.7 million in total compensation.
9. Chevron
Chevron is the second-largest oil company in the country, and the third-biggest company overall in terms of revenue. It has been building its gas reserves recently, most notably with the purchase of Atlas Energy, an active shale gas driller. Still, more than 60 percent of the company’s worldwide reserves are in oil.
The majority of Chevron’s oil and gas production comes overseas. Domestically, Chevron operates in seven states, including Pennsylvania, Texas and California, and in the Gulf of Mexico.
Average Daily Natural Gas Production: 1.3 billion cubic feet.
Revenue, 2010: $198.2 billion.
Reserves, 2010: 6.5 billion barrels of oil and other liquids (1.3 billion in the U.S.), 24.3 trillion cubic feet of gas (2.5 trillion in the U.S.).
Executive Compensation, 2010: John Watson, chairman and CEO, received $16 million in total compensation.
10. Williams Energy
Williams is an independent producer focused largely on natural gas. It owns 13,900 miles of pipelines, which it says deliver 12 percent of the natural gas consumed in the United States. The company recently announced plans to separate its exploration and production activities from its other operations.
Williams has holdings in many of the major shale basins across the country, from Pennsylvania to North Dakota to Texas. The company also owns interests in several international companies.
Average Daily Natural Gas Production: 1.2 billion cubic feet.
Revenue, 2010: $9.6 billion.
Reserves, 2010: 4.3 trillion cubic feet equivalent (3 percent of that is oil or other liquids, converted to the equivalent volume in gas).
Executive Compensation, 2010: Alan Armstrong, president and CEO, received $2 million in total compensation.
Sources: The production numbers are from the Natural Gas Supply Association and reflect the average for the first half of 2011. Revenue figures are from the companies’ 2010 annual reports and reflect total revenue from all sources, not just gas production. Revenue may include sales and other income and may not be adjusted for taxes. Reserves numbers are from the companies’ annual reports. Bitumen and synthetic crude represent oil from Canadian tar sands or other unconventional reserves. The compensation information is from Forbes and Bloomberg Business Week.
Editor’s Note: Encana, company number six in Pro Publica’s list, is a partner in the Kitimat LNG (KM LNG) project.
The English-language website of one the world’s major Arab-language satellite television networks Al Arabiya, has turned its eye on Kitimat, the Northern Gateway pipeline and the repeated claim by the Conservative government that Canada is an “energy super power.”
The article: Canada: Energy Superpower? is an analysis by Mary E. Stonaker, described as “an independent scholar, most recently with the Middle East Institute, National University of Singapore.” Stonaker puts Canada’s energy policy, including the pipelines to Kitimat, in a world wide perspective, summing up the story for Saudi-owned Al Arabiya‘s main audience in the oil-rich Middle East. It doesn’t just look at oil and gas energy, but hydro, solar and wind.
“Northern Gateway” has yet to be fully hatched though it is encouraging to see Canada expand its partnerships beyond its southern neighbor especially during the recent economic downturn. Relying too heavily on one consumer, no matter who that consumer may be, is setting up an extremely weak energy security strategy.