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No doubt about that. From these levels here SIOR is the one which could be interesting. There is of course potential in SIOR and that's why I'm invested despite the fact that I basically stopped buying any real pinkies since it's just too much lottery for my taste. I made an exception on SIOR lately. We will see how that goes.
Two things. First, you sold SIOR a few weeks ago as you said on the board over there. What really changed that you come back now? The situation was the same back then. Second, people who are close to SIOR know the "supposed value" of any leases or acreages or whatever they got. How is it even possible to let the stock go down from 3 cents to 1 cents recently if you "know" that there is all this real value in the assets? Makes no real sense to me so I'm kinda cautious.
The Mississippian formation is the real deal and like I said SIOR has more acreage than OEDV and maybe locking up even more...
Lets compare OEDV and SIOR by market cap
OEDV $100 million
vs
SIOR at $4 million
Now which one would u invest in?
Oh yeah, didn't even look that far back. Wow, what a monster ride. Rarely seen something like this within such a short time frame. Geez.
I really haven't done any research on OEDV but the fact alone that they are fully reporting while SIOR is a 100% pinkie is telling me that it's difficult to compare them. Also SIOR is trading in the penny area while OEDV was at least half a buck before the rally happened. OEDV has about 50 million shares outstanding while SIOR has 200 million out there and 600 million in A/S. Hard to compare in my book.
After seeing what OEDV has done, I'm sold, SIOR its only a matter of time...
The good thing on SIOR so far is that they haven't diluted a single share after the A/S raise. So far so good.
SIOR is starting to get some attention again, word is they are building sizable position in Kansas... chart looks great, especially the weekly chart...
(FECOF)Philex Petroleum eyes Recto Bank development
THURSDAY, 26 APRIL 2012 21:14 PAUL ANTHONY A. ISLA / REPORTER
PHILEX Petroleum Corp. is willing to partner with any global oil-and-gas exploration firm in developing Recto Bank under Service Contract 72.
Manuel V. Pangilinan, Philex Mining chairman, told reporters in an interview.
Service Contract 72 covers 880,000 hectares and is located in the Recto Bank Basin, which is within the 200-nautical-mile EEZ based on Republic Act 9522, or the Philippine Archipelagic Baselines Law, signed on March 10, 2009. There had been numerous oil searches in the Reed Bank in the past under the Philippine contractual regime and Presidential Decree 87. The first petroleum contract in the area was awarded by the then-Ministry of Energy in 1975.
The development of Recto Bank, which is projected to have as much as 16.612 trillion cubic feet (TCF) of gas, could cost billions of dollars. A reputable and experienced oil-and-gas company would also be needed to develop it.
“The ideal partner should be someone with the expertise and marketing power to sell the gas [from the Recto Bank]. Because even if you have all the money in the world, to whom would you sell the gas? We’ve talked to a number of them already,” Pangilinan said.
He made it clear, however, that they have yet to finalize a deal with those they have talked with. “We haven’t gotten to that point yet, so it could be one company or more than one. But certainly we have to partner to with an international oil major or even a consortium,” he added.
Malacañang said the natural gas discovery on Recto Bank—which it stressed is Philippine territory—would be good for the country, since it would provide a new source of energy to fulfill domestic needs.
Presidential Spokesman Edwin Lacierda made the statement in a news briefing, responding to the survey results published by Weatherford Petroleum Consultants on behalf of Forum Energy Plc.
“Certainly it will be another source of energy for us and natural gas is cheaper than gas so it’s going to be good for us….It will definitely help us in our energy needs,” Lacierda said.
Barring any pressure from the Recto Bank’s other claimants, Pangilinan said they plan to stick to the work program they have submitted to the Department of Energy (DOE).
Pangilinan said this includes the drilling of appraisal and exploratory wells in the area. “And in the near future, we will be requesting for bids for oil rigs. I can’t be quite specific as to the timing, as it’s politically sensitive,” he added.
Pangilinan said he does not discount the possibility of a delay because of the political concerns between Philippine and Chinese governments. “If Chinese gunboats appear in the horizon, then there could be delays as those rigs and survey ships are owned by other countries that would not want to get involved in any kind of regional conflicts,” he said.
Pangilinan said the need for additional security will depend on how the government views the situation.
For their part, according to Pangilinan, they submitted a work program to the DOE as well as the probable scheduling of any survey ships that could be around the area and certainly a drilling rig.
“I think the matter of security is up to the government, we just want to make sure that our schedules and work programs are coordinated with them, so any security arrangements they can procure. In the event of any delay, we would have to seek the DOE’s forbearance, since it is not our fault,” he added.
Philex Mining, through its interests in FEC Resources Inc. and Philex Petroleum, control 64.45 percent of the share capital of Forum Energy Plc. In terms of gross prospective resources, Weatherford Petroleum Consultants reported that the Recto Bank is estimated to have a low of 4.666 TCF, a high of 16.612 TCF and a best estimate of 8.799 TCF of gas. The report said the disputed territory could also have a low of 117 million barrels, a high of 416 million barrels and a best estimate of 220 million barrels of oil and what it called liquids in place.?
Prospective resources refer to quantities of oil and gas estimated on a given date to be potentially recoverable from undiscovered accumulations, which are technically and economically viable to recover.
While in terms of contingent resource, Weatherford added that the Recto Bank have a low of 1.474 TCF, a high of 2.603 TCF and a best estimate of 4.598 TCF of gas. The report added that the area could have a low of 37 million barrels, a high of 115 million barrels and a best estimate of 65 million barrels of oil and what it also called liquids in place.
?Robin Nicholson, Forum chairman, said the Weatherford report showed an improvement in the resources previously known and supports the case to proceed with a drilling program.
“We will continue discussions with our major shareholders, our joint venture partner and our advisors to determine how the SC 72 drilling program, which we anticipate will cost a total of $75 million, will be funded,” Nicholson said.
Lacierda was also asked if there were concerns that China may impede Philippine efforts to develop the new gas find, since China is claiming that Recto Bank is part of its territory under the nine-dash line theory it introduced in 2009.
(FECOF) Philex eyes partners for Recto Bank project
By Neil Jerome C. Morales, The Philippine Star
Posted at 04/27/2012 7:51 AM | Updated as of 04/27/2012 10:12 AM
MANILA, Philippines - Pangilinan-led Philex Petroleum Corp. is in talks with foreign oil industry giants for the development of the resource rich Recto Bank in Western Palawan, the company’s top official said.
The oil and petroleum exploration is even willing to partner with a Chinese firm that could ease an ongoing dispute with China.
“We are talking about billions of dollars (of investments). You will need an international major. They have the expertise and the marketing power to place the gas,” said Philex Petroleum chairman Manuel V. Pangilinan.
“We have talked to a number,” Pangilinan said.
Exploration of the Recto Bank or Service Contract (SC) 72, which is near the contested Spratlys, is being conducted by Forum Energy Plc., a UK-based oil and gas firm controlled by Philex Petroleum.
Asked if the company is willing to talk to Chinese firms, Pangilinan said: “That is a solution. I think we should be talking to Chinese companies.”
Forum Energy said it needs around $75 million to continue with its drilling program for the Recto Bank, which showed a potential of producing 16.6 trillion cubic feet of gas.
“You will have to go to a consortium...It could be one or more oil companies that could get involved,” Pangilinan said.
The estimated resources are way above the 3.4 trillion cubic feet of gas in the Malampaya natural gas project in Palawan.
Energy Secretary Jose Rene Almendras said yesterday that resources in the Recto Bank could last as much as 100 years.
The project covers some 8,800 square kilometers in offshore West Palawan.
The second phase of the SC 72 drilling will start before June despite a territorial dispute between the Philippines, China, Vietnam and Taiwan for the resource-rich Spratly Islands in the West Philippine Sea (South China Sea).
“We would like to stick to the work program and schedule. We would like to be able to build the resources as soon as possible,” Pangilinan said.
However, delays might occur amid political tensions between the Philippines and China.
The rigs and survey ships are owned by other countries, which prefer not to be involved in any regional dispute, Pangilinan said.
Pangilinan said it takes six to 10 years to develop the area.
Last year, Philex Petroleum posted record-high earnings of P537.5 million on the back of petroleum sales and one-time gains.
The latest data showed that Philex Petroleum turned around to being profitable from incurring a comprehensive net loss of P111.69 million in the previous year.
Philex Petroleum, which listed in the local bourse by way of introduction in September, is the subsidiary of Philippines’ largest miner Philex Mining Corp.
"We are thrilled to launch our new website and will continue to make upgrades and additions to its current content in response to feedback received from our investors," stated Worthington CEO Anthony J. (Tony) Mason. "We expect to communicate continued acquisitions and revenue growth throughout the upcoming year and believe our new website will enable us to keep the public apprised of all of our achievements."
http://wenergyinc.com.
One of these days...
Still in default on Nevada site, but looks like it's going to get some action soon?
Ahhh I noticed a little volume yesterday and was curious...
AVOE(D) finally getting R/S, name change.
12:31 3/30/2012 AVOE Avro Energy, Inc. Common Stock AVOED Rango Energy Inc. (NEW) Common Stock 1-50 R/S **
NOTE: Still in Default status on Nevada Corp site.
Yep i set up a Google alert for Rango, with only a 50 million O/S, even if they do the R/S it might get interesting...
SHHHH though, some pumpers ran her a few weeks ago, I don't think they have a clue as to the potential...
No Avro Energy listed with Nevada Corp, but Rango Energy is. Currently in Default. Donny Fitzgerald listed as CEO of both.
Interestinf ain't she...
Always have played the longshots...
whether they were stocks or horses. Avro R/S filing in April and no news since? Definitely deserves a spot near the top of my watch list.
Here is a few I've been watching
SIOR has leases in the Missippian Lime in Oklahoma, except the company won't release an update or PR if any kind...
a huge longshot is AVOE, who is doing a ridiculous 1/50 R/S and name change unfortunately but they have wells in Smackover, Arkansas which has quietly become a big hotspot with some large names grabbing land...
Also kind of like OTTEF, Aussie company in the Phillipines, they have a lot of claims in the disputed South China Sea which has been getting a lot of attention of late...
http://finance.yahoo.com/q?s=OEL.AX&ql=0
Here's a little more NTRO DD.
News last week, accompanied by a restatement to active on the Nevada Corp site, and continuation of filing back financials (including another 10K promised by March 14th.)
"We are planning to post Nitro's year-end financials (January 31, 2012) on or before March 14, 2012."
SHARE STRUCTURE
O/S 207,424,156
R/S 77,957,933
Float of 131,466,223
From PR:
Quinlan #1: 15-20 bopd
Quinlan #2: 18-20 bopd
Quinlan #3: 30-45 bopd
Total 63-85 bopd Avg. Est.
@ $105 = 205k-276k per month
Quite an elaborate menu of charts here, MWM.
Any you're particularly fond of at the moment? Always looking...
You always were an accumulator! Good to see ya!
Wow, another old buddy heard from!
Been slowly accumulating since .0070.
What about QSGI why are you no longer dare I say PROMOTING QSGI I am holding onto a whole lot of "hammer time" with that stock so I guess you have a new hammer now...
HUSA has had a large short interest for a while. I don't think their claims are that exciting and they are not really making any money just yet...
http://www.houstonamericanenergy.com/Areas_domestic.html
FECOF
U.K. Firm Continues South China Sea Exploration .
By CRIS LARANO
MANILA—A U.K.-based energy company will continue to explore for oil in waters contested by both China and the Philippines, a move that could exacerbate tensions over control of the potentially energy-rich South China Sea.
Forum Energy PLC will continue exploring for oil in the Reed Bank in the South China Sea, said Manuel Pangilinan, chairman and chief executive of Philex Mining Corp., whose petroleum unit owns about 64% of the company. He said Wednesday that the work program it had agreed to with the Philippines' Department of Energy requires the U.K.-based company to conduct a wider seismic survey and drill up to two wells by June 2013.
"We intend to comply with that work program," Mr. Pangilinan said after releasing Philex's 2011 results.
The Reed Bank is adjacent to the Spratly Islands, a group of small islands in the southern part of the South China Sea that are also claimed in all or part by Vietnam, Malaysia, Brunei and Taiwan.
Early last year, a survey ship hired by Forum Energy reported that two Chinese vessels in the area had threatened to ram it.
"It would be unfortunate if, because of the sovereignty issue, we can't develop the resources there. I do hope the sovereignty issue can be resolved," Mr. Pangilinan said.
On Monday, Philippine Energy Secretary Jose Almendras said the government expects to complete soon its review of offers to undertake exploration in the 15 petroleum blocks in the southern region, including those in areas being disputed by China. Mr. Almendras said he is hopeful that contracts will be awarded to bidders "within the next few months … definitely before the end of the year."
The government estimated investments of as much as $7.5 billion will be generated if it gets offers on all the 15 oil and gas exploration areas offered.
Forum Energy's plan as well as those of the government could put the Philippines and China on a collision course, as the Chinese government has made it clear that any unauthorized oil or gas exploration in the area would "complicate and magnify" the territorial dispute.
"China has indisputable sovereignty over the Nansha Islands and their adjacent waters," Chinese foreign ministry spokesman Hong Li said Tuesday, using the Chinese name for the islands.
"Without the Chinese government's permission, any country and any company's oil and gas activity in the waters under China's jurisdiction are illegal."
Forum Energy plans to spend $80 million to gather more seismic data in the coming months to upgrade existing leads and drill an exploratory well and an appraisal well.
Mr. Pangilinan didn't disclose an exact work schedule but said the Philippines' government has been informed.
Forum Energy has a contract to explore and develop oil and gas deposits in the Reed Bank, which the Philippines now refers to as Recto Bank to strengthen its territorial claim.
A 2006 seismic survey indicated a mean volume of 3.4 trillion cubic feet of gas-in-place and 440 million barrels of oil in the area.
—Carlos Tejada in Beijing contributed to this article.
AVOE acreage in a new hot spot...
50 to 1 Reverse Split hanging over their head however...
On May 24, 2011 the Company entered into a Farm-Out Agreement with First Pacific Oil and Gas Ltd. ("First Pacific"). Under this Agreement First Pacific has acquired the right to earn 50% of the Company's working interest in its existing 12 hydrocarbon wells located in Southern Arkansas. Under this Agreement First Pacific paid the Company $50,000 within 21 days of the Agreement date; will pay $200,000 within 45 days of the Agreement date; and will pay $800,000 on or before 6 months of the Agreement date. As of September 30, 2011 the Company has collected $250,500 and recorded as gain on sale of working interest under other income.
ARKANSAS LEASE
On October 24, 2009 Avro Energy, Inc. signed a letter agreement to acquire eleven producible deep oil wells north of Hosston, Louisiana, and in Southern Arkansas. Seven of these wells are in production. The deepest of these wells produce from the Smackover formation at 7800 feet. Four other wells are capable of production after work over operation has been completed. Also included with the agreement are three disposal wells.
The terms of this agreement allowed the Company to pay $385,000, over a seven month period, with the first payment of $50,000 paid on November 24, 2009. The terms of the agreement allow Avro to receive production starting from November 1, 2009. On September 30, 2010 the last payment to complete the purchase for this property was made.
I notice you don't have GRPR chart in Ibox some very intresting events taking place you may want to take notice
Interesting!
WRES === As the price of oil continues this co. pps will trend on upward to the $6.00 area.
Oil is getting hot again...
Gotta keep an eye open on these little guys...
W G In @ $4.57 have any thoughts on this play.
I hope you were able to take advantage, MWM...?
GL Today!
Bakken-Area Oil Prices Tumble On Pipeline Shortage
By ALAN R. ELLIOTT, INVESTOR'S BUSINESS DAILY Posted 02/08/2012 06:36 PM ET
Oil producers in the Bakken shale hit the wall this month as production outstripped pipeline capacity and prices toppled.
Bakken crude priced at Minnesota's Clearbrook terminal dropped 33% year to date to close near $71 a barrel Wednesday. Canadian heavy crude from tar sands staged a similar fall.
Both rebounded Tuesday, after Canadian Natural Resources (CNQ) halted its Horizon oil sands operation. The 110,000-barrel-a-day facility could be offline two to three weeks, offering mild relief to the region's supply glut.
The Bakken shale, centered mainly under North Dakota and Canada's tar sands, has helped curb a long-term decline in North American oil production. The Bakken has also fueled optimism that the deluge of natural gas production from shale plays, which has forced gas prices to decade lows, might translate to a similar surfeit in oil.
Bakken producers like Continental Resources (CLR), EOG Resources (EOG) and Northern Gas & Oil (NOG) have helped boost the region's production from 2,000 barrels per day a decade ago to more than 600,000 barrels today.
Bakken crude prices began to fall in January, says Adam Bedard, senior director with Bentek Energy, just as regional pipeline and rail capacity fell behind production.
Canadian tar sands oil has fed a glut in Cushing, Okla., for more than a year. That surplus has held down the West Texas Intermediate price, the main U.S. benchmark, priced at the Cushing terminal.
Canadian and Bakken oil prices have fallen in concert, because the two compete for much of the same pipeline capacity.
Simmons International & Co. on Tuesday forecast some relief for the Bakken congestion in May, when Enbridge (ENB) and Enterprise Products Partners (EPD) will store 2 million to 3 million barrels in a pipeline in preparation for its start-up.
Hess plans to open a 54,000 barrel-per-day rail facility at the end of the month. But Bedard said that addition provides only a short-term fix. "That will fill up pretty quickly," he said, "(The Bakken's) production ramps up fairly quickly to fill any capacity."
Americans Gaining Energy Independence With U.S. Emerging as No. 1 Producer
By Rich Miller, Asjylyn Loder and Jim Polson
Feb 6, 2012 9:00 PM ET
The U.S. is the closest it has been in almost 20 years to achieving energy self-sufficiency, a goal the nation has been pursuing since the 1973 Arab oil embargo triggered a recession and led to lines at gasoline stations.
Domestic oil output is the highest in eight years. The U.S. is producing so much natural gas that, where the government warned four years ago of a critical need to boost imports, it now may approve an export terminal. Methanex Corp., the world’s biggest methanol maker, said it will dismantle a factory in Chile and reassemble it in Louisiana to take advantage of low natural gas prices. And higher mileage standards and federally mandated ethanol use, along with slow economic growth, have curbed demand.
The result: The U.S. has reversed a two-decade-long decline in energy independence, increasing the proportion of demand met from domestic sources over the last six years to an estimated 81 percent through the first 10 months of 2011, according to data compiled by Bloomberg from the U.S. Department of Energy. That would be the highest level since 1992.
“For 40 years, only politicians and the occasional author in Popular Mechanics magazine talked about achieving energy independence,” said Adam Sieminski, who has been nominated by President Barack Obama to head the U.S. Energy Information Administration. “Now it doesn’t seem such an outlandish idea.”
The transformation, which could see the country become the world’s top energy producer by 2020, has implications for the economy and national security -- boosting household incomes, jobs and government revenue; cutting the trade deficit; enhancing manufacturers’ competitiveness; and allowing greater flexibility in dealing with unrest in the Middle East.
Output Rising
U.S. energy self-sufficiency has been steadily rising since 2005, when it hit a low of 70 percent, the data compiled by Bloomberg show. Domestic crude oil production rose 3.6 percent last year to an average 5.7 million barrels a day, the highest since 2003, according to the Energy Department. Natural gas output climbed to 22.4 trillion cubic feet in 2010 from 20.2 trillion in 2007, when the Federal Energy Regulatory Commission warned of the need for more imports. Prices have fallen more than 80 percent since 2008.
At the same time, the efficiency of the average U.S. passenger vehicle has helped limit demand. It increased to 29.6 miles per gallon in 2011 from 19.9 mpg in 1978, according to the National Highway Traffic Safety Administration.
The last time the U.S. achieved energy independence was in 1952. While it still imported some petroleum, the country’s exports, including of coal, more than offset its imports.
Environmental Concern
The expansion in oil and natural gas production isn’t without a downside. Environmentalists say hydraulic fracturing, or fracking -- in which a mixture of water, sand and chemicals is shot underground to blast apart rock and free fossil fuels -- is tainting drinking water.
The drop in natural gas prices is also making the use of alternative energy sources such as solar, wind and nuclear power less attractive, threatening to link the U.S.’s future even more to hydrocarbons to run the world’s largest economy.
Still, those concerns probably won’t be enough to outweigh the benefits of greater energy independence.
Stepped-up oil output and restrained consumption will lessen demand for imports, cutting the nation’s trade deficit and buttressing the dollar, said Sieminski, who is currently chief energy economist at Deutsche Bank AG in Washington.
Cutting Trade Deficit
With the price of a barrel of oil at about $100, a drop of 4 million barrels a day in oil imports -- which he said could happen by 2020, if not before -- would shave $145 billion off the deficit. Through the first 11 months of last year, the trade gap was $513 billion, according to the Commerce Department. Crude for March delivery settled at $96.91 a barrel yesterday on the New York Mercantile Exchange.
The impact on national security also could be significant as the U.S. relies less on oil from the Mideast. Persian Gulf countries accounted for 15 percent of U.S. imports of crude oil and petroleum products in 2010, down from 23 percent in 1999.
“The past image of the United States as helplessly dependent on imported oil and gas from politically unstable and unfriendly regions of the world no longer holds,” former Central Intelligence Agency Director John Deutch told an energy conference last month.
Arab Oil Embargo
That dependence was underscored in October 1973, when Arab oil producers declared an embargo in retaliation for U.S. help for Israel in the Yom Kippur war. The U.S. economy contracted at an annualized 3.5 percent rate in the first quarter of the next year. Stock prices plunged, with the Standard & Poor’s 500 Index dropping more than 40 percent in the year following the embargo.
Car owners were forced to line up at gasoline stations to buy fuel. President Richard Nixon announced in December that because of the energy crisis the lights on the national Christmas tree wouldn’t be turned on.
Today, signs of what former North Dakota Senator Byron Dorgan says could be a “new normal” in energy are proliferating. The U.S. likely became a net exporter of refined oil products last year for the first time since 1949. And it will probably become a net exporter of natural gas early in the next decade, said Howard Gruenspecht, the acting administrator of the EIA, the statistical arm of the Energy Department.
Cheniere Energy Partners LP may receive a construction and operating permit as early as this month from the Federal Energy Regulatory Commission for the first new plant capable of exporting natural gas by ship to be built since 1969 in the U.S. Houston-based Cheniere said it expects the $6 billion plant to export as much as 2.6 billion cubic feet of gas per day.
Mitchell the Pioneer
The shale-gas technology that’s boosting U.S. natural gas production was spawned in the Barnett Shale around Dallas and Fort Worth by George P. Mitchell, who was chairman and chief executive officer of Mitchell Energy & Development Corp.
Helped by a provision inserted in the 1980 windfall oil profits tax bill to encourage drilling for unconventional natural gas, the Houston-based oil man pursued a trial-and-error approach for years before succeeding in the late-1990s. The fracking method he devised cracked the rock deep underground, propping open small seams that allowed natural gas trapped in tiny pores to flow into the well and up to the surface.
Recognizing that Mitchell was on to something, Devon Energy Corp. bought his company in 2002 for about $3.3 billion and combined it with its own expertise in directional drilling, a method derived from offshore exploration.
Hunting for Oil
Traditional vertical drilling bores straight down, like a straw stuck straight in the earth. Directional drilling bends the straw, boring horizontally sometimes a mile or more through the richest layer of rock, allowing more of the trapped fuel to make it into the well. This slice of rock is like the kitchen, where ancient plants and creatures came under so much pressure that they cooked into natural gas and oil.
The oil boom a century ago tapped reservoirs of fuel that rose out of those layers and got trapped in large pockets closer to the earth’s surface, or used vertical wells that could get out only a portion of the fuel stored in the rock. The new technology has Devon and its competitors hunting beneath decades-old oil plays long thought depleted.
About an hour’s drive north from where Devon’s soon-to-be- completed new glass headquarters towers 50 stories above downtown Oklahoma City, the company is exploring for oil in the Mississippian and other formations, where oil majors once made their fortunes. It’s racing companies such as Chesapeake Energy Corp. and SandRidge Energy Inc. to buy leases and drill wells.
North Dakota Booming
Crude production in the U.S. is already increasing. Within three years, domestic output could reach 7 million barrels a day, the highest in 20 years, said Andy Lipow, president of Lipow Oil Associates in Houston, a consulting firm. The U.S. produced 5.9 million barrels of crude oil a day in December, while consuming 18.5 million barrels of petroleum products, according to the Energy Department.
North Dakota -- the center of the so-called tight-oil transformation -- is now the fourth largest oil-producing state, behind Texas, Alaska and California.
The growth in oil and gas output means the U.S. will overtake Russia as the world’s largest energy producer in the next eight years, said Jamie Webster, senior manager for the markets and country strategy group at PFC Energy, a Washington- based consultant.
While U.S. consumers would still be susceptible to surges in global oil prices, “we’d end up sending some of that cash to North Dakota” rather than to Saudi Arabia, said Richard Schmalensee, a professor of economics and management at the Massachusetts Institute of Technology in Cambridge.
1.6 Million Jobs
The shale gas expansion is already benefiting the economy. In 2010, the industry supported more than 600,000 jobs, according to a report that consultants IHS Global Insight prepared for America’s Natural Gas Alliance, a group that represents companies such as Devon Energy and Chesapeake Energy.
More than half were in the companies directly involved and their suppliers, with the balance coming at restaurants, hotels and other firms. By 2035, the number of jobs supported by the industry will rise to more than 1.6 million, IHS said. Some 360,000 will be directly employed in the shale gas industry.
The oil boom is also pushing up payrolls. Unemployment in North Dakota was 3.3 percent in December, the lowest of any state. Hiring is so frantic that the McDonald’s Corp. restaurant in Dickinson is offering $300 signing bonuses.
State governments are reaping benefits, too. Ohio is considering a new impact fee on drillers and increasing the tax charged on natural gas and other natural resources extracted, Governor John Kasich has said.
In Texas, DeWitt County Judge Daryl Fowler has negotiated an $8,000-per-well fee from drilling companies to pay for roads in the district, southeast of San Antonio.
Lot of Traffic
“It takes 270 loads of gravel just to build a pad used for drilling a well, which means a lot of truck traffic on a lot of roads that nobody except Grandpa Schultz and some deer hunters may have used in the past,” said Fowler, whose non-judicial post gives him administrative control over the county.
The federal government will see tax payments from shale gas rise to $14.5 billion in 2015 from $9.6 billion in 2010, according to IHS. Over the period 2010 to 2035, revenue will total $464.9 billion, it said.
Manufacturing companies, particularly chemical makers, also stand to win as the shale bonanza keeps natural gas cheaper in the U.S. than in Asia or Europe.
Dow Chemical Co., which spent a decade moving production to the Middle East and Asia, is leading the biggest expansion ever in the U.S. The chemical industry is one of the top consumers of natural gas, using it both as a fuel and feedstock to produce the compounds it sells.
First Since 2001
Midland, Michigan-based Dow is among companies planning to build crackers, industrial plants typically costing $1.5 billion that process hydrocarbons into ethylene, a plastics ingredient.
The new crackers will be the first in the U.S. since 2001, said John Stekla, a director at Chemical Market Associates Inc., a Houston-based consultant.
Vancouver-based Methanex said last month it plans to take apart the idled Chilean factory and ship it to Louisiana to capitalize on natural gas prices.
The shift to increased energy independence is also the result of government policies to depress oil demand.
“Vehicles are getting more efficient, and people who travel won’t be driving more miles,” said Daniel Yergin, chairman of IHS Cambridge Energy Research Associates.
Automakers have agreed to raise the fuel economy of the vehicles they sell in the U.S. to a fleetwide average of 54.5 miles per gallon by 2025 under an agreement last year with the Obama administration.
No ‘Silver Bullet’
The 2008-09 recession helped lower oil demand, and consumption has lagged even as the economy has recovered, said Judith Dwarkin, director of energy research for ITG Investment Research in Calgary. Coupled with higher domestic output, “this has translated into an import requirement of some 15.4 barrels per person per year -- about on par with the mid-1990s.”
She cautioned against thinking that rising oil and gas production is a “silver bullet” for solving U.S. economic woes.
Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York, agreed, saying in a Jan. 20 note to clients that oil and gas output accounts for just 1 percent of gross domestic production and isn’t likely on its own to be able to pull the economy into above-trend growth.
Cooling on Wind
Some companies are hurting from the shale gas glut. With abundant supplies making it the cheapest option for new power generation, Exelon Corp. scrapped plans to expand capacity at two nuclear plants, while Michigan utility CMS Energy Corp. canceled a $2 billion coal plant after deciding it wasn’t financially viable. NextEra Energy Inc., the largest U.S. wind energy producer, shelved plans for new U.S. wind projects next year.
Investors also are cooling on wind investment, partly because of falling power prices. T. Boone Pickens, one of wind power’s biggest boosters, decided to focus on promoting natural gas-fueled trucking fleets after dropping plans for a Texas wind farm in 2010.
“Wind on its own without incentives is far from economic unless gas is north of $6.50,” said Travis Miller, a Chicago- based utility analyst at Morningstar Inc. Natural gas for March delivery settled at $2.55 per million British thermal units on New York Mercantile Exchange yesterday.
When Obama lauded increased energy production in his State of the Union speech on Jan. 24, he drew criticism from some environmentalists opposed to fracking.
Waning Confidence
“We’re disappointed in his enthusiasm for shale gas,” said Iris Marie Bloom, director of Protecting Our Waters in Philadelphia. Obama “spoke about gas as if it’s better for the environment, which it’s not.”
Deutch, who headed an advisory panel on fracking for the Energy Department, voiced concern that public confidence in the technology will wane if action isn’t taken to address environmental concerns. The potential positive impact of increased North American production are “enormous,” he said.
Higher U.S. output lessens the ability of countries like Iran and Russia to use “energy diplomacy” as a means of strengthening their influence, Amy Myers Jaffe, director of the Baker Institute Energy Forum at Rice University, and her colleagues wrote in a report last year.
While the U.S. will still have to pay attention to issues such as Israel’s security and Islamic fundamentalism in the Mideast, which could affect oil prices, it won’t have to be as worried about its supplies.
Positive ‘Shock’
Carlos Pascual, special envoy and coordinator for international energy affairs at the State Department, suggested at a Council on Foreign Relations conference in December that the increased production in the U.S. and elsewhere gives Washington more “maneuverability” in using sanctions to deal with Iran and its nuclear aspirations.
The increased U.S. production of oil and natural gas is a “positive supply shock” for the economy and for national security, said Philip Verleger, a former director of the office of energy policy at the Treasury Department and founder of PKVerleger LLC, a consulting firm in Aspen, Colorado.
“We aren’t there yet, but it looks like we’re blundering into a solution for the energy problem,” he said.
To contact the reporters on this story: Rich Miller in Washington at rmiller28@bloomberg.net; Asjylyn Loder in New York at aloder@bloomberg.net; Jim Polson in New York at jpolson@bloomberg.net
http://www.bloomberg.com/news/2012-02-07/americans-gaining-energy-independence-with-u-s-as-top-producer.html
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