Chesapeake venture aiming toward gas, away from OPEC

Paula Dittrick
OGJ Senior Staff Writer

HOUSTON, July 12 -- Chesapeake Energy Corp. has formed Chesapeake NG Ventures Corp. (CNGV) to invest in technology promoting the use of compressed natural gas, LNG, and gas-to-liquids fuels in the US.

CNGV’s investments are intended to help offset US demand of gasoline and diesel derived primarily from oil provided by members of the Organization of Petroleum Exporting Countries.

Chesapeake outlined plans on July 11 to redirect 1-2%/year of its forecasted drilling budget toward projects that will stimulate gas demand.

CNGV plans to invest at least $1 billion during 10 years, starting with investments of $150 million to Clean Energy Fuels Corp. and $155 million to Sundrop Fuels Inc. during 3 years.

Clean Energy Fuels, Seal Beach, Calif., is working to provide an LNG fueling network for trucks along US interstates. CNGV’s investment will underwrite 150 LNG truck-fueling stations, increasing by more than tenfold the number of US publicly accessible LNG fueling stations, Chesapeake said.

Sundrop Fuels, Louisville, Colo., is a privately held cellulosic biofuels company in which CNGV plans to acquire a 50% stake.

Aubrey K. McClendon, Chesapeake’s chief executive officer, said the company analyzed the US transportation system for 4 years to figure out how to stimulate widespread adoption of CNG, LNG, and GTL fuels.

He said the goal was “to create the best pathway to move our country away from dependence on OPEC oil and the resulting yearly transfer of more than $400 billion of American wealth to foreign countries, many of them often unfriendly to US interests.”

He outlined a three-pronged plan aimed at promoting greater US energy independence and enhanced national security during the next 10 years:

• Increase US onshore oil and NGL production of 8 million b/d by 3-4 million b/d by accelerated horizontal drilling and hydraulic fracturing to develop unconventional oil and NGL resources.

• Invest in publicly accessible CNG and LNG fueling stations so that vehicle manufacturers become confident to increase production of CNG and LNG vehicles. The investments also are intended to provide US businesses and consumers with a cheaper fuel option than current gasoline and diesel offerings.

• Deploy scalable GTL processes to convert gas into a room temperature, tank-ready, liquid fuel that can be blended with gasoline and diesel or used as a stand-alone replacement product.

McClendon said Chesapeake plans to accelerate converting all its 4,500 light-duty vehicles and 400 of its heavy-duty vehicles to run on CNG. He estimates a savings of $15-20 million/year.

Chesapeake also plans to convert at least 100 of its drilling rigs and all of its planned hydraulic fracturing equipment to run on LNG. By doing so, McClendon said, Chesapeake will cut its diesel fuel consumption by 350,000 gpd and save $230 million/year.

Contact Paula Dittrick at paulad@ogjonline.com.

Related Articles

Woodside gets NEB approval for British Columbia LNG exports

02/02/2015 Woodside Energy Holdings Pty. Ltd. has received approval from Canada’s National Energy Board on its application for a 25-year natural gas export li...

E&Y: Oil-price collapse to boost global M&A activity in 2015

02/02/2015 The oil-price collapse will facilitate increased global transaction activity in 2015 as companies revise and implement new strategies, according to...

Shell cancels Arrow LNG project

01/30/2015

Royal Dutch Shell PLC has abandoned its plans for what would have been a fourth coal seam gas-LNG project at Gladstone in Queensland.

DOE could meet 45-day LNG export decision deadline, Senate panel told

01/29/2015 The US Department of Energy would have no trouble meeting a 45-day deadline to reach a national interest determination for proposed LNG export faci...

Douglas Channel LNG moves toward 2018 startup

01/29/2015 Exmar NV, EDF Trading, and AIJVLP, a joint venture of AltaGas Ltd. and Idemitsu Kosan Co. Ltd., have taken full ownership of the 550,000 tonne/year...

Mitsui charters two more LNG ships for Cameron export project

01/29/2015 Mitsui & Co., Ltd., Tokyo, reports contracts for chartering two new ships to transport LNG to Japan from the Cameron LNG export project in Loui...

US House approves bill aimed at increasing LNG exports

01/28/2015 The US House of Representatives passed a bill aimed at increasing US LNG exports by requiring the Department of Energy to determine whether a proje...

Americans warm up to gas

01/26/2015 As you pick up the latest edition of OGJ after another volatile day in oil and gas, collapse into your favorite chair that's stationed next to your...

Gazprom’s Baltic LNG project to be built in Ust-Luga

01/23/2015 OAO Gazprom has determined that its 10-million-ton Baltic LNG plant will be built near the seaport of Ust-Luga, Leningrad Oblast, Russia. The proje...
White Papers

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by

The impact of aging infrastructure in process manufacturing industries

Process manufacturing companies in the oil and gas, utilities, chemicals and natural resource industri...
Sponsored by

What is System Level Thermo-Fluid Analysis?

This paper will explain some of the fundamentals of System Level Thermo-Fluid Analysis and demonstrate...
Available Webcasts


The Alternative Fuel Movement: Four Need-to-Know Excise Tax Complexities

When Thu, Jun 4, 2015

Discussion on how to approach, and ultimately embrace, the alternative fuel market by pulling back the veil on excise tax complexities. Taxes may be an aggravating part of daily operations, but their accuracy is crucial in your path towards business success.

register:WEBCAST



On Demand

Prevention, Detection and Mitigation of pipeline leaks in the modern world

Thu, Apr 30, 2015

Preventing, detecting and mitigating leaks or commodity releases from pipelines are a top priority for all pipeline companies. This presentation will look at various aspects related to preventing, detecting and mitigating pipeline commodity releases from a generic and conceptual point of view, while at the same time look at the variety of offerings available from Schneider Electric to meet some of the requirements associated with pipeline integrity management. 

register:WEBCAST


Global LNG: Adjusting to New Realities

Fri, Mar 20, 2015

Oil & Gas Journal’s March 20, 2015, webcast will look at how global LNG trade will be affected over the next 12-24 months by falling crude oil prices and changing patterns and pressures of demand. Will US LNG production play a role in balancing markets? Or will it add to a growing global oversupply of LNG for markets remote from easier natural gas supply? Will new buyers with marginal credit, smaller requirements, or great need for flexibility begin to look attractive to suppliers? How will high-cost, mega-projects in Australia respond to new construction cost trends?

register:WEBCAST


US Midstream at a Crossroads

Fri, Mar 6, 2015

Oil & Gas Journal’s Mar. 6, 2015, webcast will focus on US midstream companies at an inflection point in their development in response to more than 6 years shale oil and gas production growth. Major infrastructure—gas plants, gathering systems, and takeaway pipelines—have been built. Major fractionation hubs have expanded. Given the radically changed pricing environment since mid-2014, where do processors go from here? What is the fate of large projects caught in mid-development? How to producers and processors cooperate to ensure a sustainable and profitable future? This event will serve to set the discussion table for the annual GPA Convention in San Antonio, Apr. 13-16, 2015.

This event is sponsored by Leidos Engineering.

register:WEBCAST


Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected