Stand up for natural gas industry

I realize I'm preaching to the choir here, but I still don't see why America isn't making better use of its abundant natural gas resources. North America has significant gas reserves, but we currently have an oversupply due to reduced demand. Low prices have forced some E&P companies to reduce drilling and others to shut-in production.

As of Oct. 23, the US gas rig count stood at 725, down 52.6% from a year ago, while the 312 oil rigs in use represents only a 26.2% decline from the same period.

Congress and the White House should develop an energy policy that will help us exploit these vast natural gas reserves because it will provide the country with a cheap, clean-burning fuel for power generation and commercial and industrial uses and will create many thousands of good-paying jobs in the process.

Oil is a different matter. Although the oil shales in the Rocky Mountain region and the Canadian oil sands hold vast quantities of petroleum, it is not economical to extract unless crude oil prices reach a certain level. Just what this level is isn't certain because it will vary somewhat from play to play and even from well to well. Suffice it to say it's likely to be on the high side of $80/bbl, maybe more.

Meanwhile the country will need to continue to import most of its oil, which is mostly refined into gasoline and diesel fuels and used for transportation purposes. There is no real alternative to oil for transportation purposes, and this isn't likely to change in the foreseeable future even with the development of hybrid cars and more fuel-efficient vehicles.

China, which is often touted as an economic powerhouse that is emerging from the recession faster than most of the globe, is not as fortunate as the United States with respect to energy resources. China has an abundant supply of coal, but has to import oil and natural gas to meet its domestic needs. In October, Russia agreed to sell China about 2.5 trillion cubic feet of natural gas a year – almost as much as Russia sells to all of Europe.

During the global recession, China has taken advantage of low prices to snap up energy resources around the world to help ensure future economic growth. So far this year, China has purchased an estimated $15 billion in oil and gas supplies worldwide, about double last year's figure.

The US is blessed with ample supplies of natural gas, and 97% of domestic gas consumption comes from North America (Canada and the US). However, the percentage of natural gas used for power generation – roughly 35% – is essentially unchanged from 10 years ago. We aren't using compressed natural gas (CNG) for transportation except for a few commercial fleets and in municipal and school buses.

So why aren't we consuming more gas?

This is a question the petroleum industry and a lot of other people want answered. To that end, the Independent Petroleum Association of America has been working closely with lawmakers from energy-producing states across the country.

Recently, the House of Representatives formed a Natural Gas Caucus, a bipartisan group that now includes 45 members of Congress and is chaired by Congressmen Dan Boren (D-Okla.) and Tim Murphy (R-Pa.). The mission of the group is to "champion the use of clean, plentiful, domestic natural gas" on Capital Hill. The IPAA vows to continue to work with the Caucus members and the House and Senate leadership to support energy legislation as an economic driver during the current recession.

Unfortunately, there is sentiment in Congress and the current administration in Washington to undermine all hydrocarbon development, which would be contrary to America's best interests. It is critical to educate Congress and the public quickly to the fact that all hydrocarbons aren't the same. Natural gas is a clean-burning, environmentally-friendly fuel.

According to America's Natural Gas Alliance (ANGA), natural gas is 50% cleaner than coal and supports nearly three million US jobs at present – and potentially many more.

ANGA President Rod Lowman said, "Significant advancements in technology are making it easier to safely extract newfound natural gas discoveries, and the Colorado School of Mines recently reported that America has enough natural gas to power us into the next century and beyond. Climate and energy legislation, which aims to reduce America's carbon footprint and enhance our energy security, must encourage the use of abundant, clean, American natural gas."

So write your congressman, your senators, and your local newspaper. Tell them you want to encourage natural gas development – and that you vote.

Have an opinion about this? Visit www.ogfj.com to comment.

More Oil & Gas Finacial Journal Current Issue Articles
More Oil & Gas Financial Journal Archives Issue Articles