Tuesday, December 27, 2011

Updates on the Shale Revolution

1. Wall Street Journal -- "Shale-gas production is spurring construction of plants that make chemicals, plastics, fertilizer, steel and other products. A report issued earlier this month by PricewaterhouseCoopers LLC estimated that such investments could create a million U.S. manufacturing jobs over the next 15 years.

Even foreign manufacturers are joining in. Low U.S. electricity and natural gas costs were a factor in the decision by Brazil's Santana Textiles to build a $180 million denim plant now under construction in Edinburg, Texas. Santana initially considered putting the factory in Mexico but found that electricity costs would be 30% lower in Texas."

2. Oil jobs the new gold as thousands join N.D. rush -- "Williston, with a population of around 20,000, was a quiet North Dakota town, surrounded by oil fields that had been in decline for decades. Now, it is the heart of the Bakken, a new oil play that has abruptly woken one of the sleepiest states in the Union, transforming North Dakota into an energy heavyweight. It has also made Williston, whose surrounding county now has the lowest unemployment rate in the entire country, a new destination for America’s jobless, homeless and would-be rich."

3. Ohio sand turns to gold as drilling boom comes to Buckeye State -- "Rob Sidley is sitting on a gold mine, thanks to Mother Nature. His family-owned company produces the special sand needed for the drilling boom in Ohio’s deep layer of Utica shale. The sand is perfect for the hydraulic fracturing process — or fracking — which uses force to open cracks in the shale and free up natural gas, oil and other lucrative products.

 Nationally, the market for American fracking sands quad­rupled from 2000 to 2009." (HT: Energy Tomorrow)

4. Associated Press — "The United States has record supplies of natural gas and plenty of reasons to promote natural-gas powered cars, but so far consumers, manufacturers and fuel suppliers haven't shown much interest.

Now, a major natural gas developer's plans to vastly increase the number of truck stops that offer liquid natural gas could help boost its use in the vehicles that burn the most fuel, while promoting its availability to a wider market. Lots of natural gas is available, if U.S. drivers decide to use it. In just a few years, domestic natural gas supplies have increased by trillions of cubic feet through shale finds, boosting the supply to the point where plans are in place to export part of the overflow."

8 Comments:

At 12/27/2011 5:04 PM, Blogger Hydra said...

Liquid natural gas is cryogenic. I doubt they will be selling that. More likely they will sell compressed natural gas.

CNG is not a particularly good match for OTR trucks, because the energy density is low, compared to diesel, and necessitates more frequent refueling or really large tanks.

OTH, more frequent refueling could be a good thing, giving drivers more rest breaks.

With its heavier molecular weight, propane liquifies under pressure. Could be a market in converting methane and ethane into ethanol or propane, for easier handling.

 
At 12/27/2011 6:03 PM, Blogger VangelV said...

Note that the shale gas industry is still chewing through capital and needs financing to drill because it cannot make enough money on operations to self finance. In the real world cash flows matter.

 
At 12/28/2011 3:04 AM, Blogger Rufus II said...

A much more reasonable, and likely, scenario is moving a lot more freight to rail, and electrifying the rail. A hugely more efficient use of the resource.

Of course, Warren Buffet, after buying Burlington Northern, started buying Wind, and Solar Farms. That might tell you something.

 
At 12/29/2011 10:24 AM, Blogger VangelV said...

Of course, Warren Buffet, after buying Burlington Northern, started buying Wind, and Solar Farms. That might tell you something.

Yes it does. It tells me that Buffett is betting that the subsidies will continue.

 
At 12/29/2011 11:36 AM, Blogger Hydra said...

A much more reasonable, and likely, scenario is moving a lot more freight to rail, and electrifying the rail. A hugely more efficient use of the resource.

=================================

Rail is still not efficient for short trips, and it depends on a truck at both ends of the trip.

Nor is energy efficiency the only issue. Rail is slow compared to direct trucking, so if you have a high dollar cargo, rail is inefficient as far as the time value of your money goes.

 
At 12/29/2011 11:38 AM, Blogger Hydra said...

It tells me that Buffett is betting that the subsidies will continue.



And/or conventional energy prices will continue to climb.

 
At 12/29/2011 9:58 PM, Blogger Ron H. said...

This comment has been removed by the author.

 
At 12/29/2011 10:01 PM, Blogger Ron H. said...

"And/or conventional energy prices will continue to climb."

Gee, weren't we just reading about lower gas prices a few posts ago? And, coal is relatively stable.

Wind and solar will never be significant parts of the energy picture, in fact wind, at least, would drop dead without subsidies, so that's what Mr. Buffett is after. Say what you will about him, he is NOT stupid.

That, and access to other things provided by large areas of land required by solar & wind.

Remember T. Boone Pickens?

 

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