Fuel Freedom co-founder and chairman Yossie Hollander and board of directors member John Hofmeister appeared on Sean Hannity’s radio show on Wednesday, April 18, to promote domestically produced natural gas as a way to reduce our dependence on foreign oil.
Just in time for the Fourth of July weekend: Our very own John Hofmeister speaking words of wisdom about the need for the United States to wean itself off oil as its dominant transportation fuel.
“It’s incumbent upon the United States of America to become more oil independent,” Hofmeister said at a security conference in Israel in June. “Because it still relies on nearly 7 million barrels a day of imports, and in a nation that uses 18 and a half to 19 million barrels of oil per day, the loss or the risk of 7 million barrels a day of imports puts that nation at about two-thirds of independence, and that’s not enough for the world’s largest economy.
“So there remains an interdependence, until the U.S. can find independence, and it has every right and every responsibility to pursue independence. As does every other nation.”
Watch Hofmeister’s full talk at the Herzliya Conference in Tel Aviv:
Hofmeister knows of what he speaks: He was the president of Shell Oil Co., the American subsidiary of oil giant Royal Dutch Shell, from 2005 to 2008. The author of “Why We Hate the Oil Companies” now travels the world talking about the need for alternatives to oil. He’s not only on the board of directors and advisors at Fuel Freedom, he founded a nonprofit called Citizens for Affordable Energy.
U.S. crude prices closed at $56.96 a barrel Wednesday, down $2.51 or 4 percent, the biggest one-day drop since April 8. Compare that to last summer, when the price was above $100. But the market remains volatile, and Hofmeister said having oil at an affordable price long-term is necessary for national security.
“If you’re not taking care of yourself, no one else will,” Hofmeister said. “And so nations should look to their security — not just to their defense forces, but to their energy supplies — which in the United States, is why I’m almost entirely focused now on transitioning natural gas to transportation fuels, as well as biofuels, as well as electricity for transportation. Because the future of oil is simply limited. We’re not running out. It won’t disappear. But it simply won’t be available at this price for an indefinite future.”
Hofmeister expanded on another of his major themes: that natural gas, which is cheap and plentiful in the United States, could help the U.S. and other nations reduce oil consumption. Natural gas is used as a fuel in its gaseous, compressed form — as CNG and LNG — and it can also be processed into liquid alcohol fuel, ethanol or methanol.
“Over the next decade, nations like the United States, or like Israel, or like much of Europe if not the whole of Europe, that are not transitioning at least a third of their oil demand away from oil and toward natural gas will only look back in regret.”
(Photo credit: Poet Biorefining plant in Macon, Missouri. From FarmProgress.com)
We’re headed to the L-NGV2015 conference in San Diego, where natural gas will be in the spotlight.
Natural gas has been getting a lot of attention lately, because the United States is producing so much of it. As Jude Clemente wrote in Forbes earlier this month:
U.S. proven natural gas reserves continue to soar to record highs. We now have some 360 Tcf [trillion cubic feet] of proven gas in the ground, recoverable under current market conditions, experiencing increases of 5-8% per year. Driven by the Marcellus shale play in the Appalachian Basin, Pennsylvania and West Virginia have registered the largest gains, with both state reserve totals more than quadrupling since 2010. In fact, Pennsylvania and West Virginia have accounted for about 60% of new U.S. gas reserves since 2008, although mighty Texas continues to plug along, upping its reserves by 20% since then.
The surge has occurred despite a steady decline in prices. Henry Hub spot prices are about $2.80 per million British Thermal Units, down from an average of $8.86 per MMBtu in 2008, as Clemente notes.
NG is running about 70 percent lower in price than the equivalent amount of oil, even with oil’s precipitous drop from last summer. That’s what makes natural gas an attractive alternative for transportation fuel.
Much of the discussion at L-NGV2015 will center on compressed natural gas (CNG) and liquefied natural gas (LNG), which is being used in municipal fleets (official vehicles and transit buses) and industrial trucking (delivery, garbage-hauling) around the country. These fuels not only cost less than gasoline and diesel, they burn much cleaner, which is better for air quality and the environment.
Natural gas can also be converted into alcohol fuels to run in the cars, trucks and SUVs driven by the rest of us.
NG is “very, very cheap, and we need to take advantage of that,” Fuel Freedom co-founder and chairman Yossie Hollander said recently during a discussion about energy in Israel. “The greatest opportunity is a transportation one. Using a natural-gas product, whether compressed natural gas, liquid natural gas, ethanol from natural gas – you can make ethanol from natural gas, and another fuel called methanol – if we use all of them in transportation to replace oil, this will replace a $3 trillion industry around the world.”
We’ll be presenting more about this topic at L-NGV2015. Check out our Twitter feed (@fuelfreedomnow) for regular updates.
The natural-gas industry and people who promote gas as a cleaner fuel alternative need to “manage” environmental concerns about fracking, a key economist said at the fourth annual Governor’s Utah Energy Development Summit.
Dan North, chief economist for the credit-insurance company Euler Hermes North America, said Wednesday that despite the abundance and cheapness of natural gas compared with oil, only 3 percent of natural gas is used in transportation.
He said there are 17 million passenger vehicles around the world that run on natural gas (primarily CNG and LNG), but only 100,000 such vehicles in the United States. “This is an enormous opportunity going forward,” North said. “It’s terrific that we have this cheap natural gas.”
But, he added, “WE do have to manage one thing, which is the environmental concerns about fracking.” After listing all the countries, states and municipalities that have banned the oil-and-gas drilling technique also known as hydraulic fracturing, North said: “Environmental concerns have not been addressed well enough.”
President Obama’s latest effort to mitigate the effects of climate change will be to crack down on methane leakage from oil and gas wells, The New York Times reported.
The EPA will announce new regulations this week aimed at reducing methane emissions by 45 percent by 2025, compared with 2012 levels. Final rules will be set by 2016, the newspaper reported, citing anonymous sources.
Obama, stymied by Republican opposition that stands to become more solidified now that the party controls the Senate as well as the House, has increasingly turned to executive action, skirting Congress, to deal with climate change. The administration says the Clean Air Act gives it the green light to issue such mandates.
Methane, the primary component of natural gas, sometimes escapes from oil and gas wells, in addition to pipelines. Although the gas accounts for only 9 percent of overall greenhouse-gas emissions, it’s 20 times more potent than carbon dioxide, another GHG that accounts for the majority of emissions.
The Natural Resources Defense Council applauded the proposed regulations, but the oil and gas industry said they’re unnecessary, since they’re already motivated to capture methane instead of allowing it to escape into the atmosphere. If it’s captured, it can be burned in power plants to generate electricity, making it a cleaner alternative to coal. Methane can also be used to fuel cars and trucks, as compressed (CNG) or liquefied (LNG) natural gas. It can also be converted into two types of inexpensive liquid alcohol fuels, ethanol or methanol.
Howard Feldman, director of regulatory affairs for the American Petroleum Institute, said:
“We don’t need regulation to capture it, because we are incentivized to do it. We want to bring it to market.”
That market would grow if the infrastructure for transportation fuels were expanded, creating more of an incentive to capture methane. The price of natural gas stood at $12.68 per million metric British Thermal Units (MmBTU) in June 2008, only to crash to $1.95 by April 2012. Last month the average was $3.43 at the Henry Hub terminal in Louisiana. Profit margins are still so low that oil drillers flare off much of it.
A new report released by the Canadian Pembina Institute and the Pacific Institute for Climate Solutions looks at British Columbia’s (B.C.) liquefied natural gas (LNG) strategy to serve the lucrative Asian gas market through the prism of global climate change in a carbon-constrained world. “Natural gas is often described as a bridge fuel. The question is, how long should that bridge be?” says Josha MacNab, B.C. Regional Director for the Pembina Institute.
Read more at: Breaking Energy
The U.S. House and Senate have bills that would raise federal truck weight limits for natural gas vehicles. Heavier fuel tanks and equipment on natural gas trucks can add as much as 2,000 pounds more than diesel trucks, putting these trucks at a competitive disadvantage. “Legislation such as this will help accelerate the growth of the Natural Gas vehicle market and provide [the U.S.] with the environmental benefits and greater energy independence that comes with using clean domestic natural gas as a vehicle fuel,” said Rich Kolodziej, president of NGVAmerica.
ABS, a leading provider of global marine classification services, has been chosen to class the world’s first compressed natural gas (CNG) carrier ordered by Pelayaran Bahtera Adhiguna, a subsidiary of Indonesia’s state-owned power company Perusahaan Listrik Negara (PT PLN). The award for the precedent-setting ship is the latest example of ABS’ leadership in the gas ship sector, where the largest share of LNG ships is presently being built to its classification standards.
Chinese shipyards are seeking to take about $10 billion in orders for new liquefied natural gas tankers over the rest of the decade, part of a plan to restructure the country’s ailing shipbuilding sector and secure China’s energy supply chain.
Wall Street was abuzz last week as Clean Energy Fuels, the leading supplier of natural gas for use in delivery and heavy-duty trucks, jumped 11 percent in one day after a long slump in which investors were questioning its business model.
“We’re at the very beginning of a major shift to natural gas for trucking – a shift that could take a decade before the growth slows – and Clean Energy Fuels is the leader in the market,” added Jason Hall of Motley Fool, who had been skeptical of the company in the past but is now turning enthusiastic.
“Natural gas vehicles are here to stay,” added James E. Brumley on SmallCap Network, in one of the many enthusiastic endorsements the company received last week. “So Clean Energy Fuels is very much a right-time, right-place idea. It’s not just that the company is the biggest and the best at what it does. There’s a market of scale for what it has to offer.”
It hasn’t been easy. The company, the brainchild of legendary oilman T. Boone Pickens, seemed poised for growth last year but suddenly hit a sudden downdraft in January. Skepticism grew over whether compressed natural gas (CNG) or liquid natural gas (LNG) would be the best substitute for diesel in heavy-duty trucks. The debate is really inconsequential since the two are interchangeable – LNG for large-scale storage and transport with some use in the biggest rigs and CNG for fueling smaller commercial vehicles. Nevertheless, the controversy drove down CEF’s stock price 25 percent since the first of the year.
“Much of the conversation in the investor community over the past six months has been dominated by the false idea that CNG and LNG were competing fuels,” wrote Hall in a recent evaluation. “But while we’ve been arguing, Clean Energy Fuels has been opening stations for trucks across the country. And the company is a leader in both.”
Once again, it seems to have been a case of investors becoming absorbed in short-term focus while ignoring the long-term prospects of the company. True, Clean Energy Fuels has not yet delivered a profit but its progress in building infrastructure to enable us to use significant portions of our natural gas resources as a substitute for diesel fuel has been significant. Here’s what the company has accomplished so far:
As you can see, this is no fly-by-night operation. Whether the company is profitable or not right now, Pickens is obviously in it for the long haul.
Clean Energy Fuels’ long-term goal is a “CNG superhighway” that will offer fueling stations to long-haul trucks along all the major interstates that crisscross the country. But its major success to date has been in servicing fleet vehicles for delivery companies and municipalities.
Analysts believe that refuse and delivery fleets, especially those that are garaged overnight and can be refueled at a central CNG station, will become one of the company’s major markets.
CEO Andrew Littlefield just announced a loss in revenues for the first quarter of 2014 but said this was because of the expiration of the federal volumetric excise tax credit (VETC), which had provided $26 million in 2013. Overall, the trend is definitely upward:
Sean Turner, COO for Gladstein, Neandross & Assoc., a leading consulting firm for the development of alternative fuels, notes that the NGV market in the United States is actually larger than in countries such as Argentina and Pakistan, which have been at it for a longer time. “While North America might lag behind in the adoption curve of other countries, natural gas usage per vehicle is actually near the top worldwide,” he said. “This is because other countries have tended to employ NGVs for passenger cars, whereas the U.S is now concentrating on medium-sized and heavy-duty trucks.” And as T. Boone Pickens likes to point out, natural gas will be unrivaled in this marketplace since electric vehicles cannot produce the torque needed to power those long-haul vehicles.
Whether all this makes Clean Energy Fuels a hot stock again is something Wall Street will have to decide. But in terms of moving America toward greater reliance on homegrown natural gas, the news is all favorable.
