Mereja

Author: Vincent Fernando

  • T. Boone Pickens Hates Natural Gas This Year

    tboonepickens tbi

    It’s always important to understand long-term vs. short-term bullishness.

    For T. Boone Pickens, natural gas will one day be a huge money maker, but not anytime soon.

    Reuters: “Exxon and XTO, I love the deal,” Pickens said. “I think you are going to see activity that is similar to Exxon-XTO.”

    …

    “All of them that are heavily endowed in the (gas) shale play are going to be looked at by the majors,” he said. The United States is estimated to have some 2,000 trillion cubic feet of technically recoverable natural gas reserves, or enough gas at current production rates to supply the country for more than 90 years. “I’m long natural gas, not in 2010, but out beyond 2010,” he said. “As economic recovery occurs, demand will go up for natural gas. It is going to happen, it is just going to take a little while to get there.”

    Read more here >

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  • Brazil Generates Commercial Amounts Of Electricity From Ethanol, Using Modified GE Jet Engines

    brazil

    Imagine entire cities powered by sugarcane. GE and Brazil's Petrobas will start to make it happen, since they have just celebrated the first commercial scale production of electricity from ethanol.

    Note we said commercial scale, this isn't just some small impractical research lab trick:

    Business Wire: Ethanol derived from sugarcane in Brazil is one of the most efficient biofuels in terms of energy balance and carbon emissions. The benefits of this alternative fuel are substantial: it is a renewable energy source and its combustion reduces atmospheric emissions, especially NOX.

    The Juiz de Fora Power Plant is a simple-cycle, natural gas plant with a total capacity of 87 megawatts, located in the south of Minas Gerais state, approximately 180 kilometers (110 miles) north of Rio de Janeiro. The plant has two GE LM6000 gas turbines, one of whose combustors has been modified by GE to enable the use of ethanol, making it dual-fuel (ethanol and natural gas). This enhances the plant’s energy security and reliability by providing a valuable alternative fuel source for the power plant that previously had only one available fuel.

    As the world’s second largest producer of ethanol and the world’s largest exporter, Brazil will benefit from incorporating ethanol into its thermal generation profile because of the abundant fuel supply. The country’s 35-year, large-scale experience in ethanol use is based on efficient agricultural technology for sugarcane cultivation, producing 26.9 billion liters (or about 7.3 billion U.S. gallons) in 2008, according to data provided by the Federal Government.

    Flexibility is a key characteristic of GE’s aeroderivative product portfolio. From supporting a wide variety of operating profiles to fast, easy, modular maintenance programs, GE’s aeroderivative gas turbines support the operating needs of its global customers. To better support a rising need for reduced environmental impact and improved plant economics, GE’s aeroderivative team is focused on developing alternative fuel solutions that will further augment the portfolio’s existing performance flexibility.

    “GE’s continued investment in research and development of aircraft engines and industrial gas turbines enables the LM aeroderivative gas turbines to lead in technology, performance and operational flexibility while providing value to the customer,” said Darryl L. Wilson, president and CEO—Aeroderivative Gas Turbines for GE Power & Water. “The LM series has the ability to operate with a variety of fuels and features advanced emission control technologies.”

    Read more here >

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  • Chavez Running Out Of Scapegoats As Huge Natural Gas Auction Ends Without A Single Company Bidding

    Chavez

    An auction for the rights to develop Venezuela's 14.7 trillion cubic foot Mariscal Sucre natural gas project ended Friday night without a single bidder, even after terms were improved.

    Perhaps it had something to do with all the recent expropriations of private companies' assets by the Chavez regime.

    Reuters: The government this month improved the conditions it was offering companies to help develop the project, but in the end nobody came forward, private sector sources close to the process said on Monday.

    State oil company PDVSA has yet to announce the results.

    Last year PDVSA invited a group of companies including Japan's Marubeni (8002.T), Mitsui, Mitsubishi and Itochu, Norway's Statoil (STL.OL), Russia's Gazprom and Italy's ENI (ENI.MI) to consider taking part in the project. Spain's Repsol (REP.MC) had also shown interest but did not make an offer.

    Add my twitter: @vincefernando

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  • Gazprom’s Export Dreams Shattered As America Blows Past Russia To Become The Saudi Arabia Of Natural Gas

    Chart

    Due to rising U.S. natural gas production, and a giant 17% production plunge in Russia, America became the world's largest producer of the fuel in 2009. (Chart to the right via Carpe Diem)

    Keep in mind this is before the vast potential of shale gas has really kicked in.

    This sea-change took markets by surprise.

    Just back in June, Russia's Gazprom was planning to capture 10% of the American natural gas market with Liquefied Natural Gas (LNG) exports by 2020.

    Now vast gas oversupply in the U.S. appears to have shut down previously perceived LNG import opportunities, leading to a knock-on LNG oversupply in Europe.

    It's all thanks to fracking:

    Carpe Diem: What's getting all of the attention recently is hydraulic fracturing, a process that involves injecting a mixture of water, sand and chemicals under high pressure to break through shale formations to reach enormous deposits of natural gas several miles underground. New advances in seismic imaging are used to find the shale gas, and horizontal drilling enables companies to reach the gas and bring it to the surface. Largely through the use of these techniques, U.S. natural gas production has increased 40% in recent years, reversing what was once thought to be an irreversible decline in domestic drilling. Altogether there could be as much as 842 trillion cubic feet of natural gas in shales around the country, which is more energy than all of Saudi Arabia's oil.

    ...as long as regulations don't ban drilling of course. 

    The author owns shares in the natural gas company Chesapeake Energy.

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  • For Just $8.50 A Barrel, Exxon Made New American Oil Appear Out Of Thin Air

    Oil Well

    Yesterday our colleague Graham Winfrey reported that Exxon had just added 25 years of life and 40 million barrels of oil to what was thought to be a pretty dead Texas oil field.

    We'd like to add an additional angle to the analysis -- For this new project, Exxon plans to invest only $340 million. This means that for just $8.5 per barrel Exxon has discovered another 40 million barrels of recoverable oil in a 70-year old field right within its own backyard.

    More importantly, the latest project is an experiment, using some of the latest extraction technology. If it succeeds, it could be applied to other old U.S. oil fields. For just $8.5 per barrel. It's further evidence of how technology works wonders at solving energy problems, and that with the right technology there's far more oil out there than most of us can imagine, especially in a world where $50 oil is considered cheap.

    Statesman.com: The $340 million investment in East Texas is small for Exxon, which spent $26 billion on capital projects last year.

    However, the Hawkins plans are significant compared with the $700 million Exxon has spent in Texas during the past three years.

    Vinson & Elkins energy expert Steve Davis said the investment represents an experiment for Exxon.

    If it works, the company can potentially apply the technology to other fields.

    "This is $340 million. It's nothing to these guys," he said, but added: "Their investment criteria are so stringent, that I would think there's a high likelihood of success."

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  • T. Boone’s New Natural Gas Media Campaign Takes ‘Talking One’s Book’ To A Whole New Level

    tboonepickens tbi

    T. Boone Pickens is employing one of the less admirable forms of investment strategy — twist politics to benefit one’s investments.

    Nevertheless, natural gas investors can at least find solace in the fact that for the time being his efforts are on their side.

    He’s rolling out a huge pro-natural gas media campaign:

    NewsOK: A House bill co-authored by U.S. Reps. Dan Boren, D-Muskogee, and John Sullivan, R-Tulsa, now has 127 co-sponsors from both parties, Pickens said. That bill would give federal tax incentives for making and buying natural gas vehicles; tax breaks would also be available for service stations to add natural gas pumps. A similar bill is being sponsored in the Senate by Majority Leader Harry Reid, D-Nev.

    A new Pickens television commercial framing the nation’s oil imports as a national security threat and urging people to contact Congress in support of the bills will begin running nationwide on cable channels this week. Then the ad will run for about three weeks only in the Washington area.

    Millions spent

    Pickens on Wednesday declined to say what he was paying for the new media push, but said he had spent more than $60 million so far promoting the Pickens Plan, which was launched in 2008. He said he wants the focus of natural gas use for vehicles to be on the 8 million heavy-duty trucks and buses in the United States, saying conversion could be done quickly and have a huge effect on reducing foreign oil imports.

    After bruising fights in Congress over health care and other issues, Pickens said, “members need a positive, nonpartisan, pro-America program” to support.

    Read more here >

    While a bit cynical towards T. Boone’s methods, the author does own shares in the natural gas company Chesapeake Energy.

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  • Study Finds Genetically Modified Corn Causing Organ Damage To Rats (MON)

    corn-ears.jpg

    A new study concludes that some varieties of genetically modified corn may cause organ damage.

    Regardless of which specific varieties of genemtic modification might be dangerous, if serious health risks were proven for any genetically modified type of food, it could hit all types since the level of regulatory scrutiny would likely increase ten-fold.

    It would most certainly be bad news for Monsanto (MON).

    Journal of Biological Sciences: We therefore conclude that our data strongly suggests that these GM maize varieties induce a state of hepatorenal toxicity. This can be due to the new pesticides (herbicide or insecticide) present specifically in each type of GM maize, although unintended metabolic effects due to the mutagenic properties of the GM transformation process cannot be excluded [42]. All three GM maize varieties contain a distinctly different pesticide residue associated with their particular GM event (glyphosate and AMPA in NK 603, modified Cry1Ab in MON 810, modified Cry3Bb1 in MON 863). These substances have never before been an integral part of the human or animal diet and therefore their health consequences for those who consume them, especially over long time periods are currently unknown.

    ...

    In conclusion, our data presented here strongly recommend that additional long-term (up to 2 years) animal feeding studies be performed in at least three species, preferably also multi-generational, to provide true scientifically valid data on the acute and chronic toxic effects of GM crops, feed and foods.

    Read more here >

    We'd be curious to see how this pans out, it seems to be far from a done deal given that they recommend doing further study in order to achieve 'true scientifically valid data'. It also seems that the problem may have had more to do with the pesticides involved rather than the actual act of modifying genes.

    As always, one needs to balance the benefits vs. the cost of any technology. We're reminded of how food preservatives came under fire as unhealthy additives, without regard to the fact that large amounts of people used to die on a regular basis from food poisoning before their broad usage. Still, if the danger is real, it should obviously be investigated. Hopefully, for the sake of agricultural productivity, there aren't any major health risks.

    (Via Huffington Post and Naked Capitalism)

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  • 1-in-3 Old Brits Live In Freezing ‘Fuel Poverty’ Hoping For Global Warming

    AP UK Winter

    You couldn’t blame British citizens for dreaming of global warming these days.

    A huge proportion of elderly British now find themselves in fuel poverty as a result of very cold winters and, undoubtedly, an insufficient supply of energy resources.

    Oil Fired Up: Andrew Harrop, Head of Policy at Age Concern and Help the Aged, said, ‘Icy roads and pavements are making many older people prisoners in their homes, frightened to venture out through fear of falling and leaving them feeling isolated and lonely. With older people being one of the groups most at risk during this cold snap, we are delighted Ministers made the time to call in on a group of pensioners in south London.

    ‘We are concerned that prolonged cold weather and high energy bills could create the perfect storm for hard-up older people this winter, causing hardship, illness and isolation. Following the huge spike in excess winter deaths among older people last winter, there is a risk the number of pensioners suffering from cold-related illnesses could increase further, contributing to a higher rate of excess winter deaths.

    ‘Many older people will be worried about paying even higher energy bills to heat their homes. With 1 in 3 pensioner households already in fuel poverty, a long and cold winter could push this figure even higher.

    …

    Mr. Weir, MP for Angus said, “This has not just been a cold snap, but a sustained period of freezing weather which seems set to continue and the UK government must take immediate action to help vulnerable households.

    Read more here >

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  • Natural Gas Bid Prices Double In Pennsylvania Auction

    Shale Gas Basins USA

    32,000 acres of Pennsylvania natural gas land was just leased for $4,020 an acre. That's almost twice what the land went for a year ago.

    The land in question was part of the massive Marcellus shale formation that stretches from New York to West Virginia. For natural gas bulls, it's comforting to see bidding wars heat up over shale assets. Big money is beginning to realize that shale will be a very competitive source of U.S. energy, including Exxon as shown by its recent XTO acquistion, and France's Total, as shown by their recent Chesapeake tie-up.

    Philly.com: With the new agreements, about 692,000 acres of the 2.1 million acres of state forest will be under lease - that includes about 290,000 acres on which the state does not own the mineral rights. About 750 wells are in production on conservation department lands, but only three of them tap into the Marcellus. State officials expect more than a thousand Marcellus wells could be developed in the next decade.

    Five companies yesterday were the apparent high bidders for the new leases located in the Elk, Moshannon, Sproul, Susquehannock, and Tioga State Forests in Cameron, Clearfield, Clinton, Potter and Tioga Counties.

    Seneca Resources was the winning bidder on two tracts. The other successful bidders are EXCO Resources Inc.; Anadarko Exploration & Production; Chesapeake Appalachia L.L.C.; and Penn Virginia Oil & Gas Co., based in Radnor.

    ...

    In 2008, in a single auction of new leases, the conservation department generated $166 million from 74,000 acres, surpassing the total generated in the previous 53 years. Those leases went for an average of $2,243 an acre.

    Read more here >

    The author owns shares in the natural gas company Chesapeake Energy (CHK).

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  • Warren Buffett’s Chinese Cars Will Start Killing The US Auto Industry As Soon As This Year

    byde6electriccar

    BYD, the upstart Chinese electric car maker Warren Buffett famously has an investment in, is planning enter the U.S. market as soon as the second half of this year.

    Considering the U.S. market entrance by multiple new auto players (from Chinese firms BYD and Geely, to India’s Tata and even U.S. upstart Tesla Motors) expect auto industry competition to get far more intense than it already is.

    BYD just showed off their latest e6 model and while BYD chairman Wang Chuanfu was short on details, he hinted that BYD first target could be both U.S. companies’ and the U.S. government’s vehicle fleets:

    WSJ: In China, where the e6 will first go on sale, BYD—which stands for Build Your Dreams—expects to sell vehicles for city use by the government, utility companies or fleets of taxis, according to Mr. Wang. BYD expects it could be used similarly in the U.S., while a later, plug-in hybrid vehicle may be more appropriate for individual American consumers.

    Previously, Mr. Wang had said the company planned to pick a specific region within the U.S. and initially market “a few hundred” e6s, priced at slightly more than $40,000, through a small number of dealers. He wouldn’t say on Monday if the pricing plans remained the same.

    Unlike some of its Chinese competitors, BYD doesn’t plan to buy brands from global auto makers, Mr. Wang said. Zhejiang Geely Holding Group Company Ltd., for example, is in the midst of buying Ford Motor Co.’s Sweden-based Volvo brand.

    Read more here >

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  • Giant Solar Play Emerges From The Ruins Of Corporate Japan (PC)

    Solar Leaf Japan

    Panasonic (PC) is getting green and mean post its acquisition of solar player Sanyo.

    They're gunning to be #1:

    The Street.com: Panasonic's outlook on green energy is as bold as it gets: the company said it plans to be the No. 1 green-energy company in the electronics space before its 100th anniversary in 2018. The big alternative energy dreams are part of a new yardstick being used by Panasonic management: it wants to have multiple key products that hold a top market share in the world, for a total of 10 trillion yen or more in sales and 10% percent or more in operating profit and return on equity

    Panasonic is trying to become the largest green energy player in the world. Check out their official long-term strategy release that just came out.

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  • Europe Held Hostage As Russia-Belarus Oil Pipeline Talks Collapse

    vladimirputin wink tbi

    Belarus negotiators have been left to scurry home without result after talks with Russia over pipeline import duties ended fruitless.

    Nobody would really care if it weren’t for the fact that 75% of the oil in question supplies Europe.

    Think the U.S. is held hostage by energy dependence?

    It’s nothing when to compared to the other side of the pond. No wonder they’re pushing alternative energy so hard.

    Business Week: Russia is asking Belarus to pay full import duties on crude oil it refines and transits to the West, abolishing a current 65 percent discount. Experts estimate that equates to a $5 billion increase in costs for the poor former Soviet satellite, which buys about 20 million metric tons of Russian crude annually. Belarus consumes about a quarter and ships the rest onward in a lucrative cargo worth more than a third of the country’s export revenues.

    Read more here >

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  • Ken Salazar Threatens To Dropkick The Natural Gas Revolution

    Ken Salazar

    It might just be tough talk, but Interior Secretary Ken Salazar has warned the energy industry that expansion could be much harder than under the Bush administration.

    Americans should be amply rewarded when companies win exploration and production rights, but let’s hope this doesn’t mean that new exploration will be significantly restricted.

    Especially when it comes to natural gas, which could provide the U.S. with an enormous source of relatively cheap energy.

    It would seem ridiculous that government, rather than actual exploration companies, would decide where the best resources are:

    Reuters: “The difference is in the prior administration the oil and gas industry essentially were the kings of the world,” Salazar said in telephone briefing with reporters. “Whatever they wanted to happen essentially happened and the department essentially was the handmaiden of the oil and gas industry.”

    Under the reforms, the department’s Bureau of Land Management, which oversees onshore drilling activities, would take a more active role in deciding which parcels of federal lands should be leased instead of relying on energy companies to nominate the areas they want to explore.

    Salazar charged that in the past, the public lands were a “candy store” for the oil and gas industry, where they could “walk in and take whatever they wanted.”

    Can’t companies decide where the best resources are and then submit bids? The government could then still reject them if it decided that certain areas should be off limits.

    The author owns shares in Chesapeake Energy (CHK), a natural gas related company.

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  • Peak Oil Enthusiast Admits Iraq’s A Massive Game Changer That ‘Could’ Delay Peak Oil, Again

    chart222

    We actually enjoy The Oil Drum greatly, it’s an excellent site.

    We just don’t always agree with some of the things they have to say.

    Yet on this we agree — Iraq could be a massive game changer for the oil industry.

    We’ve never believed in peak oil as a even a likely long-term energy disaster for humanity.

    Every time oil prices spike, future oil demand is reduced, as consumers and governments panic, then shift towards other sources of energy.

    Technology also has the ability to work wonders. The earth is bombarded by massive amounts of solar energy every day, which gets sucked up by plants and then deposited throughout the world in different ways. One day we’ll figure out better ways to access this daily barrage of power in a smarter way than tapping sunlight residues stuck in millenia-old muck (oil). Perhaps it will be via cheap solar technology, or perhaps biotech plants will do the leg work; but we’ll do it. Already alternative sources are getting pretty cost-competitive and they will continue to do so.

    In any case, Stuart Staniford has a guest post at the Oil Drum where he admits that Iraq’s massive potential production ramp-up, whereby the nation could jump from 2.5 million barrels a day to 12 million (rivalling Saudi Arabia and Iran), could set back his peak oil view by ten years. Note that Iraq just finalized $100 billion of foreign investment agreements to get new projects running.

    The Oil Drum: I think it’s important to note that a potential game-changer has developed recently that could render that point of view obsolete (which is a kinder, gentler way of saying “wrong” :-). A couple of years ago, Iraqi oil production was declining and it didn’t seem too likely the country would stabilize any time soon to allow that to change. However, the post-surge stabilization of Iraq has now allowed Iraqi oil production to start creeping up, and in 2009 the Iraqi oil ministry has announced large numbers of contracts with major oil companies to bring production up from the current 2.5mbd or so to 12 mbd over the course of the next 6-7 years. It is also announcing a series of projects to increase the physical export capacity of the country in line with these oil production projects.

    It seems to me that the possibility that Iraq may actually succeed in doing this should be taken seriously. If it did succeed, that would act to delay the final plateau of oil production by a decade (ballpark), make that plateau be at a higher level (95-100mbd ballpark), and significantly moderate oil prices in the meantime, with even some possibility of causing a serious breakdown of OPEC discipline and a period of significantly lower prices akin to the 1980s-1990s lull (though probably not as long or as deep a lull as that). If that were to occur, it would likely have profound consequences for alternative energy projects, biofuel companies, and automobile fuel efficiency. A period of lower oil prices will put adaptation projects on hold for the duration.

    Read the full article here.

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  • Peak Oil Believers Wonder Why Every Government Ignores Them, Conclude It’s Due To A Giant Cover Up

    AP Sinking Oil Tanker

    The Oil Drum hosts a research piece that wonders why peak oil isn’t even discussed or worried about by energy experts in governments all around the world.

    We’d add that peak oil isn’t really discussed by most energy companies around the world either when they host analyst calls or talk about their strategy.

    At least nowhere near the degree that peak oil disaster scenario believers do.

    Yet, interestingly, rather than confront their own assumption that peak oil is the global disaster they make it to be, this article at The Oil Drum ignores this and concludes that non-believers around the world are either A) suffering from psychological ‘cognitive biases’ or B) in it together in a giant global cover up (combining many enemy governments at odds with each other, plus competing corporations we might add).

    It seems the peak oil disaster boat is sinking. You be the judge, emphasis added:

    The Oil Drum: Anyone aware of peak oil has had to wonder (at least briefly) why the world’s governments seem to be ignoring the issue.

    …

    “The growing popular debate on ‘peak oil’ has had relatively little influence on conventional policy discourse. For example, the UK government rarely mentions the issue in official publications and …..’does not feel the need to hold contingency plans specifically for the eventuality of crude oil supplies peaking between now and 2020′.”3 The report notes that “the UK is one of many countries that are failing to give serious consideration to this risk.”

    …

    Nate Hagens has argued here “that despite facts, we exhibit certain cognitive biases that prevent us from acting on complex or frightening subjects outside of our day to day realities.”9 This category would include the notion of “cognitive dissonance” and other psychological factors that save us the trouble of facing difficult facts or “truths”, including that of our own mortality. The sheer difficulty of believing, or grasping, as consequential a figure as Hubbert’s Peak, is well supported by anecdotal evidence among peak oilers who commonly report a “glazed-over” response to their efforts

    …

    What if the silence on peak oil is not a betrayal of national interests, but a policy choice informed by national interests? What if, with Mike Ruppert, we accept that there are “conspiracy facts”, and that the silence on peak oil is one of them?

    “Most people have… a serious misconception: That misconception is a belief that there is an urgent need to somehow make key decision makers and leaders of American and global life aware of the immediate problems of Peak Oil and Natural Gas. Nothing could be more off base. The world’s key decision makers have been aware of and planning for this crisis for years.”

    Read the full article at the Oil Drum and tell us if we’re wrong >>

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  • You Know Natural Gas Has Gone Big Time When Cramer is All Over It

    The profile of natural gas keeps rising. Cramer is all over the U.S. shale gas revolution in this latest video below. In particular, he interviews the CEO of Anadarko Petroleum (APC).

    Starting at 2:55:

    • Anadarko is an interesting play given that it offers both U.S. and international exposure, especially in Africa, both in oil and gas.
    • Long-term share price performance has been strong vs. the S&P500.
    • APC intelligently used its natural gas cash cow to get into oil big time.

    At 5:10:

    • ‘Sometimes it’s scarier to drill in America than Ghana’

    The author owns shares in Chesapeake Energy (CHK), mentioned in this video.

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  • Energy Giant Total Drops $800 Million On Chesapeake’s American Shale Revolution (CHK)

    France's Total is diving into U.S. shale gas via a new joint venture with Chesapeake Energy (CHK). It's yet another vote of confidence in the future of U.S. natural gas, as if Exxon's XTO acquisition wasn't enough.

    Chesapeake press release: Chesapeake Energy Corporation (NYSE:CHK) today announced the execution of an agreement for a $2.25 billion joint venture with Total E&P USA, Inc., a wholly-owned subsidiary of Total S.A. (NYSE:TOT, FP:FP) ("Total"), whereby Total will acquire a 25% interest in Chesapeake's upstream Barnett Shale assets. Total will pay $800 million in cash at closing and will pay an additional $1.45 billion by funding 60% of Chesapeake's share of drilling and completion expenditures until the $1.45 billion obligation has been funded, which Chesapeake expects to occur by year-end 2012. Closing of the transaction, which is subject to regulatory approval, is anticipated by the end of January 2010.

    For investors, Chesapeake Energy provides an interesting way to go long U.S. natural gas for the long-term given they claim to have some of the lowest production costs around and are levered to the shale gas revolution. The shares also remain well below the $66 peak they hit in 2008.

    Chart

    Everyone should complete their own due diligence on any company. The author has exposure to Chesapeake Energy through a fund. UPDATE 9:48 AM -- The author has purchased Chesapeake (CHK) shares.

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  • Even Without Cash For Clunkers, Americans Keep Bingeing On Cars

    Even without cash for clunkers, American auto sales have remained remarkably strong. While automakers’ December sales data comes out on Tuesday, it already looks like it was a great month.

    WSJ: “We are seeing an increase across the board,” said Michelle Krebs, a senior analyst at Edmunds.com, a car-buying Web site. She cited higher-than-expected gains at BMW AG, Ford Motor Co., Honda Motor Co., Toyota Motor Co.’s Lexus, and General Motor Co.’s soon-to-be-shuttered Saturn and Pontiac brands.

    …

    Many industry analysts now expect the seasonally adjusted annualized selling rate in December to be more than 11 million cars and trucks. Such a figure would mark the second-best month of 2009 after August, which received a major jolt from the “cash for clunkers” government rebate program.

    Sls

    Read more at the WSJ — >

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  • Natural Gas Companies Fleeing Back To Oil After Exxon Dives Into Their Turf

    AP Gas Crisis

    Even while Exxon (XOM) makes a major shift towards natural gas in the U.S., via it’s recently announced acquisition of XTO Energy (XTO), smaller natural gas-focused companies are heading in the opposite direction. They see better returns on oil in the near-term, so are expanding their oil activities instead of gas.

    Why the apparent disconnect in natural gas outlook between these players and Exxon? Many smaller companies believe natural gas will deliver lower returns on their investment than oil for quite some time yet. They can’t sit around waiting for a long-term pay back in the same way that Exxon, with its vast size, can. Perhaps they’re even a bit terrified about the fact that Exxon is making a major push into their space as well.

    WSJ: But it isn’t as easy for smaller companies like EOG Resources Inc., one of the largest independent drillers. At EOG, gas accounts for about two-thirds of its North American production. Oil accounts for a third. Chief Executive Mark Papa said he expects a 50-50 split by 2011.

    “The concept is that we are evolving EOG from a heavily weighted gas company into a more balanced company,” he said. “We are bullish on oil short term and long term.” In 2010, the Houston company expects to allocate 60% of its capital expenditure to oil-focused projects.

    Questar Corp., which was exclusively focused on producing gas, is now putting 20% of its development capital into oil-rich projects, said Charles Stanley, chief operating officer of the Salt Lake City firm. The exploration would “enable us to receive oil prices and significantly enhance returns,” he said.

    Read more here.

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  • How To Game Cap And Trade, Destroy Jobs, Make Money, And Provide No Environmental Benefit

    Shell Game

    Conceptually, carbon credits are fine and could have potential, but their current application is horribly flawed.

    Metal Miner highlights how Cap & Trade can be gamed whereby it destroys developed nation jobs and doesn’t protect the environment either.

    The example of Corus’ Redcar plant is a case in point. The plant was closed because key clients reneged on long term contracts and the 3m ton facility was left without enough sales to cover its costs. European steel producers receive about 2 tons of carbon credits for every ton of steel produced. Closure of Redcar will mean Corus will reduce its carbon emission by the equivalent of 6m tons of carbon emissions.

    But Tata, Corus’s owners, are rapidly expanding steel production in India where it could receive hundreds of millions of dollars annually from the Clean Development Fund by building new plants that are less polluting than existing Indian plants (not less polluting than Redcar you understand, just less polluting than older plants in India).

    As we have written recently elsewhere, the Indian steel industry is set to more than double production to some 124 million tons a year by 2011-2012. Even environmentalists must see this is a disaster for the reduction of carbon emissions. It merely transfers production from western steel mills where steel is produced in a carbon constrained environment to a non constrained market

    Thus carbon credits can be gamed so that they pay for companies to shut down factories in developed nations and simply rebuild them in developing ones. Even if the new factory isn’t more efficient than the one shut down back in the developed nation. It apparently just has to be more efficient than older local plants in the developing country.

    Read the full article at Metal Miner

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