Source:  James R. Healy, USA Today

Date: 1/13/2010 8:00 AM

Look for full-size General Motors pickups — Chevrolet Silverado and GMC Sierra — to be powered by propane (LPG) or compressed natural gas (CNG) as soon as 2012, says Jeffrey Luke, chief engineer for GM’s full-size trucks worldwide, in a conversation with USA TODAY at the Detroit auto show.

LPG and CNG can be less expensive to use than gasoline. They burn so cleanly that the fuels are used on work vehicles indoors, such as forklifts inside warehouses.

Conventional gasoline internal-combustion engines can be modified to run on CNG or LPG relatively inexpensively. But those fuels contain less energy than gasoline, so a vehicle has to have a bigger fuel tank to go the same distance. Full-size trucks have enough room to tuck in a big tank, Luke says. “You lose a little payload,” but don’t ruin the truck’s usefulness, he says.

Some trucks are already CNG or LPG powered.

They are mostly heavy duties. And GM standard-duty (a.k.a. “light duty”) trucks can be converted by aftermarket companies. But a GM-backed LPG or CNG system could appeal to conservative buyers who want a big company to stand behind the vehicles.

Lukes says GM-built engines for LPG and CNG would have “hardened valve seals and so forth for long-term durability. You could have trouble at 70,000 – 80,000 miles if you don’t have the proper materials,” he says.

Lukes likes not only the lower cost and lower emissions of LPG and CNG, but also the fact it’s another fueling alternative: “These days, we need a diverse fuel portfolio.”

This article was first published by USAToday on January 12, 2010.

By Eric Foxx

January 12, 2010

Original Article

The exploration and production industry will continue its full court push to develop the Haynesville Shale in 2010, the fastest growing shale play in North America. Investors will also hear more about the Bossier shale, as the area will see more drilling to test the potential of this emerging shale, located above the Haynesville Shale in many areas.

Crowded Shales
Many exploration and production companies are crowding into the Haynesville Shale in 2010. GMX Resources(NYSE:GMXR) is one of those companies, and plans on spending $220 million in 2010 to drill 33 gross wells in 2010. This aggressive plan is based on adding a fourth operated rig in March 2010. GMX Resources estimates that the company will exit 2010 with a production rate of 84 million cubic feet equivalent of natural gas.

Goodrich Petroleum (NYSE:GDP) is also planning major development on its Haynesville Shale acreage in 2010. The company plans 44 gross (22 net) wells spread across various fields it has leased in East Texas and Louisiana.

Unit Corporation (NYSE:UNT) is a smaller company with Haynesville Shale acreage. The company has 20,000 net acres in East Texas, and plans several horizontal wells in the second half of 2010. During 2009, Unit Corporation focused on drilling vertical wells to hold acreage in the play. The company has well locations near successful horizontal wells drilled by other operators in Shelby County, Texas.

Attactive Features
One of the attractions of the Haynesville Shale in 2010 is that it has a decent rate of return at a low price for natural gas. Wells in the Haynesville Shale will generate a 10% rate of return at a natural gas price of $3.39, assuming a well cost of $7.5 million.

Plains Exploration and Production (NYSE:PXP) has 113,000 net acres in the Haynesville Shale, and estimates that its finding and development costs in 2010 will be $1.37 per mcfe. This is based on a well cost of $7.5 million and an estimated ultimate recovery of 6.5 Bcfe per well. Plains Exploration and Production is in a joint venture with Chesapeake Energy (NYSE:CHK) in the Haynesville Shale, and was operating 50 rigs in late 2009.

The Bossier Shale, which is located above the Haynesville Shale, will also attract capital in 2010. EnCana(NYSE:ECA) has 435,000 net acres under lease in the Haynesville Shale, with much of it prospective for the Bossier Shale. The company recently commented on the potential of the Bossier Shale, saying that recent Bossier Shale completions compare favorably to the Haynesville Shale.

The Bottom Line
The Haynesville Shale is a “sure thing” for the exploration and production industry, as operators are attracted to an area where there is little exploration risk, and abundant shale gas available for development. (For a primer on the oil and gas industry, refer to our Oil and Gas Industry Primer.)

January 13, 2010

By Jane Bokun

Original Article

For those who are wondering whatever happened to the Haynesville Shale, Chesapeake Energy Corp. announced its discovery of the large pocket of shale in March 2008 and has quickly accelerated its development, according to Public Relations Manager Katie McCullen.

She said Chesapeake is the largest leasehold owner, largest producer and most active driller of new wells in the Haynesville Shale and controls more than 620,000 net acres. Through the third quarter of 2009, Chesapeake has drilled and completed 137 horizontal wells in the Haynesville and was producing approximately 450 million cubic feet (mmcfe) per day gross operated in the Haynesville and anticipates exceeding approximately 670 mmcfe/day gross operated by year-end 2010.

Looking ahead to 2010, Gov. Jindal has signed legislation, supported by Chesapeake, authored by state Rep. Jane Smith, R-Bossier City, and led by Sen. Nick Gautreaux, D-Abbeville, in the Senate, which will increase economic development and investment in Louisiana by encouraging companies to use a fuel source.

January 11, 2010

Ellis Goodwin
The Express-Star

Original Article

It’s invisible, tasteless and odorless. It has the power to drive your automobile and your television, and can be used to make thousands of products.

It is highly abundant and new technologies make it more obtainable.

This is not the mythical element unobtanium, it’s natural gas.

It rests below your feet, and could bolster the U.S. economy for the next 90 years or more.

Skeptics say that it is not as clean as renewable sources, or it is too hard to store, but natural gas’s positives vastly outweigh the negatives. For Grady County residents, natural gas could be the driving force to a stable future.

Between 2006 and 2008 the county experienced a “mini boom”, said County Clerk Sharon Shoemake.

For a few years Gross Production Taxes on natural gas and oil production rose steadily. In January 2008 the county received $360 thousand in gross production taxes. That number steadily rose for 10 months, peaking at $713 thousand in October 2008.

Howevery, by February of 2009 the market price of natural gas and oil fell through the floor, taking Grady County’s tax revenue with it.

Decreased demand, due the economic downturn, caused underground storage tanks to fill to the brim. By July of 2009 Grady County gross production taxes hit a three year low at less than $150 thousand.

Natural gas was being traded at more than $10 per 1,000 cubic feet,but the price plummeted to $2.40 in the Summer of 2009. Simple economics proves that abundance creates lower prices, but gas has begun its crawl back to the top.

Increased environmental pressures, new legislation and the desire to secure energy independence are driving the price of natural gas back up, which will help businesses and counties, but the daily consumer will take a hit.

The question is; Are Americans willing to pay increased prices for cleaner more sustainable energy?

President Barack Obama touts renewable resources like wind, solar and bio-fuels as the direction U.S. energy producers should take. Whilethis is the cleanest option and a goal, many believe that natural gascould be used as a transition fuel from fossils to renewables.

Gas emits half the amount of carbon, compared to coal, when burned to create the same amount of electricity.

Without any major legislation energy producers have pushed forward with gas. Today natural gas produces a quarter of the U.S. energy supply.

Sen. James Inhofe believes that Americans are ready for the transition, and legislation he has proposed in Washington could benefit Oklahoma and the multitude of states that own a plethora of gas stores. Besides Oklahoma, Texas, Louisiana, Arkansas, Pennsylvania and New York are hot spots for gas.

He supports the controversial process known as hydraulic fracturing or “fracking” to loosen the encased gas pockets.

Thanks to Fracking, many trillions of cubic feet of gas that was deemed inaccessible just a few years ago have been reached, increasing gas availability from 50 years to more than 90 years at current usage rate of 23 billion cubic feet per year. Between 2004 and 2008 gas reserves jumped 58 percent.

Fracking works by forcing water and other chemicals into wells causing horizontal fractures in underground rock formations. Drillers can then capture the gas that is forced out of the formations and into pockets.

“Without hydraulic fracturing we cannot capture that gas. There is no other option” Inhofe said. “The problem we’re having is a beuracratic one.”

There has been much debated on Capital Hill whether or not fracking is safe for the watershed below well sites.

Experts say fracking has been used for more than 40 years with zeroinstances of drinking water pollution. There have been some reports of natural gas causing fish deaths in lakes and streams, but further investigations proved that a coal fired power plant was the culprit.

Inhofe said that as the demand for natural gas rises so too will demand for nuclear energy.

“The only other source of energy that is viable is nuclear,” he said.

Energy giant Exxon-Mobil made a big splash in the energy industry last month when it purchased Fort-Worth based natural gas producer XTO for $31 billion. The conglomerates foray into natural gas could be a sign of a future swing in the energy markets.

XTO is a pioneer in drilling technologies that allow a single well to descend more than 9,000 feet under the surface and bore more than 1 mile horizontally.

XTO was limited financially in its operations, but the purchase by Exxon-Mobil will shatter the costly technology barriers they faced.

This will open the flood gates even farther and make even more gasobtainable. In the U.S. we still only capture one quarter of the gas locked in shale formations, but new technologies could double thatrecovery rate in coming years.

For Grady County this could mean a rebound in gross production taxes, and that money could bolster the local economy for some time, said Andy Stegman, production superintendent for Continental Resources.

Shoemake said Grady County has been fortunate in recent years. She said that drilling has tapered off in recent months, but expects it to pick up as market prices stabilize. Currently western Oklahoma is seeing the brunt of new natural gas production, but Stegman and

Shoemake agree that Grady County has plenty of natural gas to sustainproduction for numerous years.