One source for this post is Forbes Magazine article, ” U.S. Dependence on Foreign Oil Hits 30-Year Low”, by Mr. Mike Patton.  Other sources were obviously used.

The United States is at this point in time “energy independent”—for the most part.   Do you remember the ‘70s and how, at times, it was extremely difficult to buy gasoline?  If you were driving during the 1970s, you certainly must remember waiting in line for an hour or more just to put gas in the ol’ car? Thanks to the OPEC oil embargo, petroleum was in short supply. At that time, America’s need for crude oil was soaring while U.S. production was falling. As a result, the U.S. was becoming increasingly dependent on foreign suppliers. Things have changed a great deal since then. Beginning in the mid-2000s, America’s dependence on foreign oil began to decline.  One of the reasons for this decline is the abundance of natural gas or methane existent in the US.

“At the rate of U.S. dry natural gas consumption in 2015 of about 27.3 Tcf (trillion cubic feet) per year, the United States has enough natural gas to last about 86 years. The actual number of years will depend on the amount of natural gas consumed each year, natural gas imports and exports, and additions to natural gas reserves. Jul 25, 2017”

For most of the one hundred and fifty (150) years of U.S. oil and gas production, natural gas has played second fiddle to oil. That appeared to change in the mid-2000s, when natural gas became the star of the shale revolution, and eight of every 10 rigs were chasing gas targets.

But natural gas turned out to be a shooting star. Thanks to the industry’s incredible success in leveraging game-changing technology to commercialize ultralow-permeability reservoirs, the market was looking at a supply glut by 2010, with prices below producer break-even values in many dry gas shale plays.

Everyone knows what happened next. The shale revolution quickly transitioned to crude oil production, and eight of every ten (10) rigs suddenly were drilling liquids. What many in the industry did not realize initially, however, is that tight oil and natural gas liquids plays would yield substantial associated gas volumes. With ongoing, dramatic per-well productivity increases in shale plays, and associated dry gas flowing from liquids resource plays, the beat just keeps going with respect to growth in oil, NGL and natural gas supplies in the United States.

Today’s market conditions certainly are not what had once been envisioned for clean, affordable and reliable natural gas. But producers can rest assured that vision of a vibrant, growing and stable market will become a reality; it just will take more time to materialize. There is no doubt that significant demand growth is coming, driven by increased consumption in industrial plants and natural gas-fired power generation, as well as exports, including growing pipeline exports to Mexico and overseas shipments of liquefied natural gas.

Just over the horizon, the natural gas star is poised to again shine brightly. But in the interim, what happens to the supply/demand equation? This is a critically important question for natural gas producers, midstream companies and end-users alike.

Natural gas production in the lower-48 states has increased from less than fifty (50) billion cubic feet a day (Bcf/d) in 2005 to about 70 Bcf/d today. This is an increase of forty (40%) percent over nine years, or a compound annual growth rate of about four (4%) percent. There is no indication that this rate of increase is slowing. In fact, with continuing improvements in drilling efficiency and effectiveness, natural gas production is forecast to reach almost ninety (90) Bcf/d by 2020, representing another twenty-nine (29%) percent increase over 2014 output.

Most of this production growth is concentrated in a few extremely prolific producing regions. Four of these are in a fairway that runs from the Texas Gulf Coast to North Dakota through the middle section of the country, and encompasses the Eagle Ford, the Permian Basin, the Granite Wash, the SouthCentral Oklahoma Oil Play and other basins in Oklahoma, and the Williston Basin. The other major producing region is the Marcellus and Utica shales in the Northeast. Almost all the natural gas supply growth is coming from these regions.

We are at the point where this abundance can allow US companies to export LNG or liquified natural gas.   To move this cleaner-burning fuel across oceans, natural gas must be converted into liquefied natural gas (LNG), a process called liquefaction. LNG is natural gas that has been cooled to –260° F (–162° C), changing it from a gas into a liquid that is 1/600th of its original volume.  This would be the same requirement for Dayton.  The methane gas captured would need to be liquified and stored.  This is accomplished by transporting in a vessel similar to the one shown below:

As you might expect, a vessel such as this requires very specific designs relative to the containment area.  A cut-a-way is given below to indicate just how exacting that design must be to accomplish, without mishap, the transportation of LNG to other areas of the world.

Loading LNG from storage to the vessel is no easy manner either and requires another significant expenditure of capital.

For this reason, LNG facilities over the world are somewhat limited in number.  The map below will indicate their location.

A typical LNG station, both process and loading may be seen below.  This one is in Darwin.

CONCLUSIONS:

With natural gas being in great supply, there will follow increasing demand over the world for this precious commodity.  We already see automobiles using LNG instead of gasoline as primary fuel.  Also, the cost of LNG is significantly less than gasoline even with average prices over the US being around $2.00 +++ dollars per gallon.  According to AAA, the national average for regular, unleaded gasoline has fallen for thirty-five (35) out of thirty-six (36) days to $2.21 per gallon and sits at the lowest mark for this time of year since 2004. Gas prices continue to drop in most parts of the country due to abundant fuel supplies and declining crude oil costs. Average prices are about fifty-five (55) cents less than a year ago, which is motivating millions of Americans to take advantage of cheap gas by taking long road trips this summer.

I think the bottom line is: natural gas is here to stay.

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ORDORIFOUS REALITY

January 14, 2017


My company is working on a project involved with capturing methane from the decomposition of organic material in landfill sites.  Research preparatory to accepting the job reviled very interesting facts.  Let’s take a look.

NUMBERS:

The U.S. has 3,091 active landfills and over 10,000 old municipal landfills, according to the Environmental Protection Agency. However, in the “good old days,” every town (and many businesses and factories) had its own dump.  This is somewhat disturbing since these landfills were unregulated.  Upregulation without standards can create situations where effluent can creep into groundwater possibly polluting wells and other sources of potable water.  That has now changed for the better.  The two digital maps below will indicate location and concentration of approved landfill sites.  You certainly can notice the greatest concentration is from the Mississippi River east where population densities are greatest.  This is certainly to be expected.

landfill-map2

landfill-map

Municipal solid waste (MSW) – more commonly known as trash or garbage – consists of everyday items people use and then throw away, such as product packaging, grass clippings, furniture, clothing, bottles, food scraps and papers. In 2010, individuals in the United States generated about 250 million short tons (230 Mt) of trash.   In the United Stateslandfills are regulated by the Environmental Protection Agency (EPA) and the states’ environmental agencies. Municipal solid waste landfills (MSWLF) are required to be designed to protect the environment from contaminants that may be present in the solid waste stream

Some materials may be banned from disposal in municipal solid waste landfills including common household items such as paints, cleaners/chemicalsmotor oilbatteriespesticides, and electronics. These products, if mishandled, can be dangerous to health and the environment.  Safe management of solid waste through guidance, technical assistance, regulations, permitting, environmental monitoring, compliance evaluation and enforcement is the goal of the EPA and state environmental agencies.

A typical landfill site looks pretty much as follows:

landfill-storage

You are correct—a big, very big mess.

CODES AND REGULATIONS:

Title 40 of the Code of Federal Regulations (CFR) part 258 addresses seven major aspects of MSWLFs, which include the following:

  • Location restrictions—ensure that landfills are built in suitable geological areas away from faults, wetlands, flood plains or other restricted areas.
  • Composite liners requirements—include a flexible membrane (i.e., geo-membrane) overlaying two feet of compacted clay soil lining the bottom and sides of the landfill. They are used to protect groundwater and the underlying soil from leachate releases.
  • Leachate collection and removal systems—sit on top of the composite liner and removes leachate from the landfill for treatment and disposal.
  • Operating practices—include compacting and covering waste frequently with several inches of soil. These practices help reduce odor, control litter, insects, and rodent, and protect public health.
  • Groundwater monitoring requirements—requires testing groundwater wells to determine whether waste materials have escaped from the landfill.
  • Closure and post-closure care requirements—include covering landfills and providing long-term care of closed landfills.
  • Corrective action provisions—control and clean up landfill releases and achieves groundwater protection standards.
  • Financial assurance—provides funding for environmental protection during and after landfill closure (i.e., closure and post-closure care).

TIME LINE FOR METHANE PRODUCTION FROM LANDFILL:

Collection of methane does not occur the first day garbage is dumped into a landfill.  The chart below will indicate the constituents and a typical timeline for production CH (4).

time-line

We are after the methane so as you can see, after two years, approximately, we have roughly twenty percent (20%) of the effluent available for reclama.

Typical characteristics and quantities from decomposition of an established landfill are as follows:

typical-characteristics-and-quantities

HOW WE DO IT:

The JPEG below will indicate a very rough schematic of a landfill site with wells “sunk” to receive mechane and basic piping necessary for the accumulation of mechane.  Well systems consist of a series of vertical LFG extraction wells (perforated or slotted collection pipes) that penetrate to near the bottom of the refuse or to near the depth of saturated waste. Well systems are often recommended for landfills or portions of landfills that exceed 12 m (40 ft.) in depth. The design of a well-system requires an estimate of the rate of LFG production and the radius of influence of the wells. A well- system, either active or passive, is useful for layered landfills where vertical LFG migration is impeded. Because of the variability of landfill refuse, design procedures are difficult to apply to LFG collection systems. Vertical LFG collection wells are typically installed once filling operations have been completed, and are commonly spaced at a frequency of one per acre and are constructed using an auger type drill rig. As a general rule, where LFG collection efficiency is important, it is generally advisable to develop a tighter grid of extraction points with smaller spacings operated at a lower vacuum. It has been found that a vacuum of 10 to 25 inches of water column (in wc) represents a reasonable balance between maximizing zones of influence and minimizing air intrusion into the site. Operating at higher vacuum levels tends to extend the zone of capture beyond the limits of the waste burial and increase the potential for atmospheric air intrusion that could create a landfill fire/explosion hazard. The radius of the capture zone for a vertical extraction well may range from around 50 feet to 200 feet and is strongly dependent on localized landfill conditions. LFG recovery rates from an individual extraction well may range from approximately 10 to 50 cubic feet per minute (cfm).

A depiction of a typical well is shown as follows:

well

Each well must meet EPA standards and have the ability to capture all affluent so contamination of ground water does not occur.  Well extraction piping and well placement patterns may look as follows:

well-extraction-piping

A cross-section of a typical site indicates multiple wells with the landfill area.  The digital below will give you some idea as to schematic piping and flow.

methane-collection

As you can see, after accumulation, the affluent must be cleaned to remove methane.  Constituents possible within the “mix” are as follows:

organic-contaminants

Some of these contaminants are cancer-causing so they must be dealt with prior to collection.

You will notice in our example above; the collected and scrubbed methane is used to fire generators used to produce electricity.  This electricity may be sold back to the grid or used for industry and/or homes.

Examples of LFG Energy Projects:

Projects can vary significantly depending on the size of the landfill, the energy end-user, and other factors. Currently operational projects include:

  • Apex (50 million tons of waste) Las Vegas, NV – CC Landfill Energy LLC is building a plant that will produce 11 megawatts (MW) of electricity for NV Energy, a utility that serves approximately 2.4 million customers.
  • Puente Hills (123 M tons) Whittier, CA – The largest LFG-to-electricity program currently in production, Puente Hills produces 50 megawatts, enough to power roughly 50,000 homes. Additionally, some of Puente Hills’ gas is used to fuel garbage trucks.
  • Rumpke Sanitary (36 M tons) Colerain Township, OH – This landfill site hosts the largest landfill-to-gas facility in the world, recovering approximately 15 million standard cubic feet of LFG per day, which is then distributed by Duke Energy Corporation.
  • Newton County Landfill Partnership (19 M tons) Brook, IN – More than 1.1 million standard cubic feet of gas is captured from Newton County Landfill per day. The energy is used by a nearby factory to make egg cartons.
  • Atlantic Waste (15 M tons) Waverly, VA – This site has in place a 20-mile pipeline to Honeywell’s Hopewell plant. The landfill provides 20 percent of the energy used at the plant.

CONCLUSIONS:

Methane extraction is not only possible but is being accomplished across the United States.  The very short list above indicates those states and cities in which technology is being applied to provide usable energy from old-fashioned garbage.


I want us to consider a “what-if” scenario.  You are thirty-two years old, out of school, and have finally landed a job you really enjoy AND you are actually making money at that job. You have your expenses covered with “traveling money” left over for a little fun.  You recently discovered the possibility that Social Security (SS), when you are ready to retire, will be greatly reduced if not completely eliminated. You MUST start saving for retirement and consider SS to be the icing on the cake if available at all.  QUESTION: Where do you start?  As you investigate the stock markets you find stocks seem to be the best possibility for future income.  Stocks, bonds, “T” bills, etc. all are possibilities but stocks are at the top of the list.

People pay plenty of money for consulting giants to help them figure out which technology trends are fads and which will stick. You could go that route, or get the same thing from the McKinsey Global Institute’s in-house think-tank for the cost of a new book. No Ordinary Disruption: The Four Global Forces Breaking All the Trends, was written by McKinsey directors Richard Dobbs, James Manyika, and Jonathan Woetzel, and offers insight into which developments will have the greatest impact on the business world in coming decades. If you chose stocks, you definitely want to look at technology sectors AND consider companies contributing products to those sectors.  The following list from that book may help.  Let’s take a look.

Below, we’re recapping their list of the “Disruptive Dozen”—the technologies the group believes have the greatest potential to remake today’s business landscape.

Batteries

energy-storage

The book’s authors predict that the price of lithium-ion battery packs could fall by a third in the next 10 years, which will have a big impact on not only electric cars, but renewable energy storage. There will be major repercussions for the transportation, power generation, and the oil and gas industries as batteries grow cheaper and more efficient.  Battery technology will remain with us and will contribute to ever-increasing product offerings as time goes by.  Companies supplying this market sector will only increase in importance.

Genomics

genomics

As super computers make the enormously complicated process of genetic analysis much simpler, the authors foresee a world in which “genomic-based diagnoses and treatments will extend patients’ lives by between six months and two years in 2025.” Sequencing systems could eventually become so commonplace that doctors will have them on their desktops.  This is a rapidly growing field and one that has and will save lives.

Material Science

advanced-materials

The ability to manipulate existing materials on a molecular level has already enabled advances in products like sunglasses, bike frames, and medical equipment. Scientists have greater control than ever over nanomaterials in a variety of substances, and their understanding is growing. Health concerns recently prompted Dunkin’ Donuts to remove nanomaterials from their food. But certain advanced nanomaterials show promise for improving health, and even treating cancer. Coming soon: materials that are self-healing, self-cleaning, and that remember their original shape even if they’re bent.

Self-Driving or Autonomous Automobiles

self-driving-vehicles

Autonomous cars are coming, and fast. By 2025, the “driverless revolution” could already be “well underway,” the authors write. All the more so if laws and regulations in the U.S. can adapt to keep up. Case in point: Some BMW cars already park themselves. You will not catch me in a self-driving automobile unless the FED and the auto maker can assure me they are safe.  Continuous effort is being expended to do just that.  These driverless automobiles are coming and we all may just as well get used to it.

Alternate Energy Solutions

reneuable-energy

Wind and solar have never really been competitive with fossil fuels, but McKinsey predicts that status quo will change thanks to technology that enables wider use and better energy storage. In the last decade, the cost of solar energy has already fallen by a factor of 10, and the International Energy Agency predicts that the sun could surpass fossil fuels to become the world’s largest source of electricity by 2050.  I might include with wind and solar, methane recovery from landfills, biodiesel, compressed natural gas, and other environmentally friendly alternatives.

Robotic Systems

advanced-robotics

The robots are coming! “Sales of industrial robots grew by 170% in just two years between 2009 and 2011,” the authors write, adding that the industry’s annual revenues are expected to exceed $40 billion by 2020. As robots get cheaper, more dexterous, and safer to use, they’ll continue to grow as an appealing substitute for human labor in fields like manufacturing, maintenance, cleaning, and surgery.

3-D Printing

3-d-printing

Much-hyped additive manufacturing has yet to replace traditional manufacturing technologies, but that could change as systems get cheaper and smarter. “In the future, 3D printing could redefine the sale and distribution of physical goods,” the authors say. Think buying an electric blueprint of a shoe, then going home and printing it out. The book notes that “the manufacturing process will ‘democratize’ as consumers and entrepreneurs start to print their own products.”

Mobile Devices

mobile-internet

The explosion of mobile apps has dramatically changed our personal experiences (goodbye hookup bars, hello Tinder), as well as our professional lives. More than two thirds of people on earth have access to a mobile phone, and another two or three billion people are likely to gain access over the coming decade. The result: internet-related expenditures outpace even agriculture and energy, and will only continue to grow.

Artificial Intelligence

automation-of-knowledge

It’s not just manufacturing jobs that will be largely replaced by robots and 3D printers. Dobbs, Manyika, and Woetzel report that by 2025, computers could do the work of 140 million knowledge workers. If Watson can win at “Jeopardy!” there’s nothing stopping computers from excelling at other knowledge work, ranging from legal discovery to sports coverage.

 

The Internet of Things (IoT)

iot

Right now, 99% of physical objects are unconnected to the “internet of things.” It won’t last. Going forward, more products and tools will be controlled via the internet, the McKinsey directors say, and all kinds of data will be generated as a result. Expect sensors to collect information on the health of machinery, the structural integrity of bridges, and even the temperatures in ovens.

Cloud Technology

cloud-technology

The growth of cloud technology will change just how much small businesses and startups can accomplish. Small companies will get “IT capabilities and back-office services that were previously available only to larger firms—and cheaply, too,” the authors write. “Indeed, large companies in almost every field are vulnerable, as start-ups become better equipped, more competitive, and able to reach customers and users everywhere.”

Oil Production

advanced-oil-technology

The International Energy Agency predicts the U.S. will be the world’s largest producer of oil by 2020, thanks to advances in fracking and other technologies, which improved to the point where removing oil from hard-to-reach spots finally made economic sense. McKinsey directors expect increasing ease of fuel extraction to further shift global markets.  This was a real surprise to me but our country has abundant oil supplies and we are already fairly self-sufficient.

Big Data

big-data

There is an ever-increasing accumulation of data from all sources.  At no time in our global history has there been a greater thirst for information.  We count and measure everything now days with the recent election being one example of that very fact.  Those who can control and manage big data are definitely ahead of the game.

CONCLUSION:  It’s a brave new world and a world that accommodates educated individuals.  STAY IN SCHOOL.  Get ready for what’s coming.  The world as we know it will continue to change with greater opportunities as time advances.  Be there.  Also, I would recommend investing in those technology sectors that feed the changes.  I personally don’t think a young investor will go wrong.

PAYCHECK 2016

August 28, 2016


The following post is taken from information furnished by Mr. Rob Spiegel of Design News Daily.

We all are interested in how we stack up pay-wise relative to our peers.  Most companies have policies prohibiting discussions about individual pay because every paycheck is somewhat different due to deductible amounts.   The number of dependents, health care options, saving options all play a role in representations of the bottom line—take-home pay.  That’s the reason it is very important to have a representative baseline for average working salaries for professional disciplines.  That is what this post is about.  Just how much should an engineering graduate expect upon graduation in the year 2016?  Let’s take a very quick look.

The average salaries for engineering grads entering the job market range from $62,000 to $64,000 — except for one notable standout. According to the 2016 Salary Survey from The National Association of Colleges and Employers, petroleum engineering majors are expected to enter their field making around $98,000/year. Clearly, petroleum engineering majors are projected to earn the top salaries among engineering graduates this year.

Petroleum Engineers

Actually, I can understand this high salary for Petroleum engineers.  Petroleum is a non-renewable resource with diminishing availability.  Apparently, the “easy” deposits have been discovered—the tough ones, not so much.  The locations for undiscovered petroleum deposits represent some of the most difficult conditions on Earth.  They deserve the pay they get.

Chemical Engineering

Dupont at one time had the slogan, “Better living through chemistry.”  That fact remains true to this day.  Chemical engineers provide value-added products from medical to material.  From the drugs we take to the materials we use, chemistry plays a vital role in kicking the can down the road.

Electrical Engineering

When I was a graduate, back in the dark ages, electrical engineers garnered the highest paying salaries.   Transistors, relays, optical devices were new and gaining acceptance in diverse markets.  Electrical engineers were on the cutting edge of this revolution.  I still remember changing tubes in radios and even TV sets when their useful life was over.  Transistor technology was absolutely earth-shattering and EEs were riding the crest of that technology wave.

Computer Engineering

Computer and software engineering are here to stay because computers have changed our lives in a remarkably dramatic fashion.  We will NEVER go back to performing even the least tedious task with pencil and paper.  We often talk about disruptive technology—game changers.  Computer science is just that

Mechanical Engineering

I am a mechanical engineer and have enjoyed the benefits of ME technology since graduation fifty years ago.  Now, we see a great combination of mechanical and electrical with the advent of mechatronics.  This is a very specialized field providing the best of both worlds.

Software Engineering

Materials Engineering

Material engineering is a fascinating field for a rising freshman and should be considered as a future path.  Composite materials and additive manufacturing have broadened this field in a remarkable fashion.  If I had to do it over again, I would certainly consider materials engineering.

Systems Engineering

Systems engineering involves putting it all together.  A critical task considering “big data”, the cloud, internet exchanges, broadband developments, etc.  Someone has to make sense of it all and that’s the job of the systems engineer.

Hope you enjoyed this one. I look forward to your comments.


The references for this post are derived from the publication NGV America (Natural Gas Vehicles), “Oil Price Volatility and the Continuing Case for Natural Gas as a Transportation Fuel”; 400 North Capitol St. NW, ۰ Washington, D.C. 20001 ۰ phone (202) 824-7360 ۰ fax (202) 824-9160 ۰http://www.ngvamerica.org.

If you have read my posts you realize that I am a staunch supporter of alternate fuels for transportation, specifically the use of LNG (liquefied natural gas) and CNG (compressed natural gas).  We all know that oil is a non-renewable resource—a precious resource and one that should be conserved if at all possible.  With that said, there has been a significant drop in gasoline prices over the past few weeks which may lull us into thinking the need to continue seeking conservations measures relative to oil-based fuels is no longer necessary.  Let’s take a look at several facts, and then we will strive to draw conclusions.

The chart below will indicate the ebb and flow of crude oil vs. natural gas in BTU equivalence.  Please remember that BTU is British Thermal Unit.  A BTU is the measure of the energy required to raise one pound of water one degree Fahrenheit.  As you can see, the price of natural gas per barrel, energy equivalent, has remained fairly stable since 2008 relative to the price of crude per barrel.  Natural gas, either LNG or CNG is considerably more “affordable” than crude oil.

Crude Oil vs Natural Gas

There are several reasons for the price of oil per barrel dropping over the past few months.  These are as follows:

  • World supply is currently outpacing world demand. Supply has reached historic levels.
  • Significant increase in US production due to hydraulic fracturing or fracking.
  • There is to some degree, economic stagnation in Western Europe thereby lessening the demand for crude and crude oil products.
  • The economy in China, India and other countries is slowing.
  • Geopolitical factors tend to affect crude oil inventories.

Over the longterm, oil demand is likely to increase as economic growth returns to more normal levels and economic activity picks up. As has been the case in recent years, the developing countries led by China and India will likely lead the way in driving oil demand. The developed countries, including the U.S., are not expected to experience much growth in overall levels of petroleum use.

According to the International Energy Agency (IEA) and the U.S. Energy Information Administration (EIA), oil markets may turn the corner sometime in late 2015, as that is when these agencies are predicting that oil demand and supply will cross back over. These agencies also are forecasting 2015 prices in the mid- to high-$50 per barrel range. The most recent Short-Term Outlook from EIA (January 2015 SEO) pegs the price of Brent oil at an average of $58 a barrel in 2015. That level reflects averages as low as $49 a barrel and a high of $67 a barrel in the latter part of the year. The WTI price of oil is expected to average $3 less than Brent for a 2015 average of $55 a barrel. For 2016, EIA’s January SEO forecasts average prices of $75 per barrel for Brent oil and $71 for WTI oil.

Another important issue is the current number of U.S. refineries.  In the U.S., virtually no new refineries have been built for several years and the number of operable refineries has dropped from 150 to 142 between 2009 and 2014.  One question—will diesel prices continue to fall?  Will the transportation sector of our economy continue to benefit from lower prices?   We must remember also that refineries have several potential markets for diesel fuel other than transportation uses, since it can be used for home heating, industrial purposes and as boiler fuel. The lead up to winter has increased home heating fuel demand, particularly in the northeast, which has likely also contributed to a slower decline in diesel prices.

What is the long-term projection for transportation-grade fuels?  The graphic below will indicate the use of natural gas will continue being the lowest cost fuel relative to gasoline and diesel grade petroleum.

Projected Price Differentials

This is also supported by the following chart.  As you can see, natural gas prices have remained steady over the past few years.

Average Retail Fuel Prices in USA

Another key factor in assessing the long-term stability of transportation fuel prices is the cost of the commodity as a portion of its price at the pump. Market volatility and commodity price increases have a much larger impact on the economics of gasoline and diesel fuel prices than they do for natural gas. As shown below, as much as 70 percent of the cost of gasoline and 60 percent of diesel fuel is directly attributable to the commodity cost of oil, while only 20 percent of the cost of CNG is part of the commodity cost of natural gas. This is a key in understanding the volatile price swings of petroleum-based fuels compared to the stability of natural gas.

Price at the Pump

Proven, abundant and growing domestic reserves of natural gas are another influence on the long-term stability of natural gas prices. The recent estimates provided by the independent and non-partisan Colorado School of Mines’ Potential Gas Committee have included substantial increases to domestic reserves. The U.S. is now the number one producer of natural gas in the world.

Even with today’s lower oil prices, natural gas as a commodity is one-third (3:1) the cost of oil per million Btu of energy supplied. More recently, the price of oil has exceeded natural gas by a factor of 4:1 and as much as 8:1 when oil was $140 a barrel and natural gas was trading at $3 per million Btu. Perhaps most relevant is that the fluctuations in these comparisons have been almost totally based on the volatility of oil prices. As the earlier tables clearly demonstrate, natural gas pricing has been relatively consistent and stable and is projected to be for decades to come.

As you can see from the following chart, the abundance of natural gas is definitely THE key factor relative to insuring the continuation of crude resources for generations to come.

US Natural Gas Future Supplies

Conclusion

  • History shows that the recent decline in world crude oil prices and related gasoline and diesel prices are likely to be short-lived. Oil prices will increase as the world economy rebounds.
  • Diesel fuel is influenced by a variety of other factors that will likely keep upward pressure on prices over the long run.
  • On a Btu basis, natural gas still has a 3:1 price advantage over oil. At the pump, average CNG prices are currently $0.75 to $1 lower than diesel.
  • The long-term stability and low prices for natural gas relative to oil are likely to remain for many years – perhaps even decades – based on well-documented economic models.
  • The long-term nature of fleet asset management suggests that it is prudent to continue to invest in transportation fuel portfolio diversification by transitioning more vehicles to natural gas. Fleets that have already made the investment in vehicles and infrastructure will continue to benefit from the stability of natural gas prices and their continuing economic advantage.
  • State and federal policymakers are likely to continue to promote fuel diversity and policies that encourage use of natural gas as a transportation fuel on the road to energy security.

As always, I welcome your comments.


INTRODUCTION:

The use of natural gas in the form of CNG (compressed natural gas) is becoming an accepted alternative to petroleum; i.e. gasoline.   In 2011, the use of natural gas as a fuel for automobiles and trucks rose 7.1 % per year with a remarkable increase of thirty-eight percent (38%) since 2006.  That use has more than doubled in the past ten years to almost thirty-nine (38.85) million cubic feet in 2011.  It is estimated that by 2017, approximately eight percent (8%) of new North American Class 6-8 commercial vehicles will be natural-gas powered and annual sales will exceed 29,500 units.  This estimate was made by Frost & Sullivan.   Let’s get a better idea as to the various truck classifications.  The chart below will provide information relative to the classifications as defined by the Department of Transportation (DOT).

Truck Classifications

As you can see, the classifications basically revolve around the gross weight of the vehicle.  Both classifications indicate heavy-duty vehicles.

KEY BENEFITS:

Proven and Reliable – More than 11 million NGVs are in use worldwide, with about 110,000 in the U.S. Some tune-ups for NGVs have been extended by up to 50,000 miles. Some oil changes have been extended by up to 25,000 miles. Pipes and mufflers have lasted longer in NGVs because the natural gas does not react with the metals.

Economical – CNG fleet vehicles realize an overall cost savings of as much as 50% over gasoline, particularly after factoring in available alternative tax credits.  If we look at the relative cost and compare fuel types we see the following:

Mach Fuel Comparison

In my home town, Chattanooga, Tennessee, we see an average gasoline price of $2.57 per gallon with a national average of $ 2.64 per gallon.   For CNG, the gasoline gallon equivalent or GGE is $1.55 per gallon.  Defining GGE, we find the following:

Gasoline gallon equivalent (GGE) or gasoline-equivalent gallon (GEG) is the amount of alternative fuel it takes to equal the energy content of one liquid gallon of gasoline. GGE allows consumers to compare the energy content of competing fuels against a commonly known fuel—gasoline. GGE also compares gasoline to fuels sold as a gas (Natural Gas, Propane, and Hydrogen) and electricity.

Domestic Fuel – Natural gas supplies are abundant domestically, reducing our dependence on foreign oil and the impact of weather-related shortages.

Eco-Conscious – CNG vehicles are much cleaner than traditional vehicles, producing up to 90% lower emissions than gasoline or diesel. Natural gas is the cleanest burning fossil fuel today.  CNG vehicles produce the fewest emissions of all vehicle fuel types and emissions contain significantly less pollutants than gasoline.  Dedicated CNG vehicles release little or no emissions during fueling.

State Incentives– Some states offer tax credits for each vehicle converted to run on natural gas. Some states offer tax credits for purchasing a vehicles running on CNG. Other states offer car pool lanes if the vehicle runs on CNG.  In order for a “Clean Fuel” vehicle to travel in the Express Lanes it must display a “Clean Fuel” sticker/decal which costs $10.  Also, in several states CNG vehicles qualify for high occupancy vehicle (HOV) lane access, where applicable.

NEWS RELEASES

The following news release was issued by the Atlanta Journal and Constitution in July of 2013.

Atlanta Gas Light teams up with The Langdale Company

ATLANTA – July 23, 2013 – The first compressed natural gas (CNG) fueling station developed under the Atlanta Gas Light (AGL) CNG Program is now open in Valdosta, GA. Approved by the Georgia Public Service Commission (PSC) in 2012, the program is designed to expand public access to the CNG fueling infrastructure throughout the state and enhance Georgia’s role in the emerging CNG market in the southeastern U.S.  The Langdale Fuel Company of Valdosta was chosen as the recipient of funding from Atlanta Gas Light for the installation.

That company has worked with MARTA to outfit selected buses with CNG.  A graphic of one of those buses given below:

MARTA BUT WITH CNG

The station itself looks very much like a “standard” filling station we are use to in dispensing gasoline.

Compressed Gas Filling

 

You drive up, put the hose in the filler, then start pumping.

Filling

The complexities of receiving and compressing natural gas are demonstrated by the graphic below.  As you can see, there is significant technology involved with a typical compression “event”.

CNG Storage and Piping

 

SUMMARY:

CNG is definitely a viable alternative fuel for consideration AND there are several companies in the mark place today that can retrofit an automobile engine with the necessary equipment successfully run CNG as a primary fuel.  As always, I welcome your comments.


Fact Sheet — Office of the Spokesperson; Washington, DC, May 2, 2013

Most times we really don’t know and/or understand what our government is doing.  They simply don’t tell us in a fashion that makes the news exciting, glamorous, entertaining, etc.    This is really what it takes (regrettably) to get our attention.  Let’s face it, if it bleeds it leads.  Blood, sex, betrayal, scandal will always get the attention of the media and that’s what they choose to let us look at night after night.  The following post is NOT sexy, not entertaining nor is it glamorous but, it is news and could very well mean a great deal “down the road” especially if you are thinking about working with a company in Mexico or locating a manufacturing site in Mexico.  Also, Mexico is a great customer of the United States so any agreement affects us as suppliers.   Take a look and make your own judgment.

In 2012, the United States and Mexico signed an agreement concerning the development of oil and gas reservoirs that cross the international maritime boundary between the two countries in the Gulf of Mexico. The Agreement is designed to enhance energy security in North America and support our shared interest to exercise responsible stewardship of the Gulf of Mexico. It is built on a commitment to the safe, efficient, and equitable development of trans-boundary reservoirs with the highest degree of safety and environmental standards.

  •  Mexico is consistently one of the top three exporters of petroleum to the United States.
  • The United States is Mexico’s largest supplier of refined oil products, mostly coming from U.S. Gulf Coast refineries.
  • Former Secretary Clinton and then Mexican Foreign Secretary Espinosa signed the Agreement in Los Cabos in February, 2012. Mexico ratified the agreement in April 2012
  • The Agreement establishes a framework that promotes unitization of maritime trans-boundary reservoirs. Upon entry into force, the current moratorium on oil exploration and production along the boundary in the Western Gap portion of the Gulf of Mexico will end.
  • Mexican law currently prohibits Petroleos   Mexicanos (PEMEX) from jointly developing resources with leaseholders on the U.S. side of the boundary. Mexico opened the door to such cooperation in a 2008 energy reform law, but only if the cooperation takes place pursuant to an international agreement governing trans-boundary reservoirs. The Agreement takes advantage of this opportunity.
  • The Agreement facilitates the formation of voluntary arrangements – unitization agreements – between U.S. leaseholders and Pemex for the joint exploration and development of trans-boundary reservoirs. It also provides appropriate incentives to encourage the formation of such arrangements if a reservoir is proven to be trans-boundary and a unitization agreement is not formed. Ultimately, the Agreement provides that development may proceed in an equitable manner that protects each nation’s interests.
  • The Agreement provides for ongoing cooperation between the two governments related to safety and the environment, and also provides for joint inspection teams to ensure compliance with applicable laws and regulations. Both governments will review and approve all unitization agreements governing the exploration and development of trans-boundary reservoirs under the Agreement, providing for approval of all safety and environmental measures.
  • Both the U.S. House of Representatives and the Senate have introduced bills that would approve the Trans-boundary Agreement and give the Secretary of the Interior the necessary authorization to implement the agreement. The Administration looks forward to speedy passage of the authorizing legislation.

Effect of the Agreement

  • The Agreement will enable U.S. companies to explore new business opportunities and carry out collaborative projects with the Mexican national oil company PEMEX.
  • It is expected the Agreement will unlock areas for exploration and exploitation along the boundary within U.S. jurisdiction by providing the legal certainty companies need to invest, potentially providing increased revenues and energy security benefits that would result from increases in production.
  • This agreement will make nearly 1.5 million acres of the Outer Continental Shelf more attractive to U.S. operators. The Department of the Interior’s Bureau of Ocean Energy Management (BOEM) estimates that this area contains as much as 172 million barrels of oil and 304 billion cubic feet of natural gas.
  • The Trans-boundary Agreement will also help mitigate the safety and environmental risks that would result from unilateral exploration and exploitation along the boundary.

 

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