Emerging Tech: Carbon Capture Storage takes center stage

I sat in on a webinar held by The Energy Collective this week. A climate change specialist with Shell spoke, as well as an energy analyst. Among other things, they stressed the importance of the energy community as a whole to develop a successful Carbon Capture Storage (CCS) program -- for power generation, as well as downstream initiatives.

CCS helps to reduce emissions of CO2 and greenhouse gases by trapping them and injecting them into the earth. An improved and functioning CCS technology will allow the US and other countries to meet their greenhouse gas emission targets -- while still producing enough energy to meet a growing demand.

US Energy Secretary Steven Chu this week described the success of clean energy in China and other countries a "Sputnik Moment" for the US.

"When it comes to innovation, Americans don't take a back seat to anyone - and we certainly won't start now," said Secretary Chu. "From wind power to nuclear reactors to high speed rail, China and other countries are moving aggressively to capture the lead. Given that challenge, and given the enormous economic opportunities in clean energy, it's time for America to do what we do best: innovate. As President Obama has said, we should not, cannot, and will not play for second place."

CCS Programs in North America

There are a number of CCS programs currently under way, and the industry's best and brightest are certainly on the case. Its truly becoming an energy industry-wide effort.

The US Department of Energy has committed $1 billion to support the FutureGen 2.0 CCS project, using the oxy-coal combustion technology developed by Babcok and Wilcox and Air Liquide. The project will test the CCS technology at a power plant in Illinois.

While many think of coal-fired power and its efforts to become clean coal through developing CCS, the petroleum industry is also involved.

Shell just filed for regulatory approval for its Quest Carbon Capture and Storage project in Alberta, Canada, to serve its Athabasca Oil Sands Project there. Quest will be the first application of CCS in the oil sands, and the technology will likely serve as a catalyst for future applications in the petroleum realm.

In the future, CCS will likely help to reduce emissions from all downstream efforts, including refineries, in addition to natural gas-fired power plants and clean coal power generation installations.

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Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.

US to export LNG to China: Cheniere seals a deal with ENN Energy for Sabine Pass LNG

It's official. The US is set to become an LNG exporter.

Cheniere Energy Partners (NYSE:CQP) reported a deal with Chinese energy firm ENN Energy for 1.5 million tonnes per annum of bi-directional LNG from the Sabine Pass LNG terminal in Louisiana. The MOU covers a 20-year agreement for the supply of LNG to ENN, should regulatory approvals proceed as planned.

Cheniere is working to jump regulatory hurdles to transform its Sabine Pass LNG recieving terminal into a liquefaction export terminal. The Sabine Pass project will incorporate up to four LNG trains with a capacity of 0.7 Bcf/d of natural gas and an average liquefaction processing capacity of 3.5 mtpa.

The company foresees LNG export as early as 2015. 

"We are excited to participate in supplying natural gas to China, and we believe that ENN is a successful model for developing diverse solutions to serve its fast growing energy markets," said Charif Souki, chairman and CEO of Cheniere Partners. "ENN Energy Trading is an ideal customer that is expanding its natural gas distribution network and seeking new sources of natural gas supply in order to increase its customer connections and increase its sales volumes."

I'm sure US natural gas producers are excited about the agreement, as well.


This means that the glut of natural gas in the North American market has someplace to go, and an increasing demand to meet -- China.


With the development of the vast shale plays across the US, the amount of natural gas in the market has skyrocketed, and the price of natural gas has dropped.
"We believe current market fundamentals have created an opportunity for the U.S. to offer natural gas to global markets at competitive prices. The U.S. is experiencing an increase in natural gas production, primarily driven by unconventional gas plays, while natural gas demand in the U.S. continues to lag behind market projections. Due to the depth of the markets in South Louisiana with an abundance of supply and existing pipeline infrastructure, we can provide an additional outlet for U.S. natural gas production while offering a low cost source of supply for global buyers seeking alternatives to oil-indexed contracts," said Souki.


What does this mean for the US? Should this deal (and others) go through, the US is poised to become a major exporter of LNG -- which should prove a strong catalyst for increasing prices.


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Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.

Is the Wolfberry the next Eagle Ford?

Shale is hot. People are interested; production and drilling are up. I attended the Unconventional Gas show in Fort Worth a couple of weeks ago, and people are certainly interested -- in US shale, as well as shale potential in Europe and China and beyond.

The first to really take off were Haynesville and Marcellus. Then more dry-gas shales came on the scene. Now, liquids-rich or oil-laden formations, such as Eagle Ford and Bakken, are garnering all the attention of both investors and producers. 

Billions of dollars have been spent on acquiring acreage and interest, as well as forming JVs. The number of land rigs has picked up across the nation, spurred by -- you guessed it -- shale exploration and developments. Additionally, pipeline, refinery and gas processing facility construction is on the rise.

Not just oil and natural gas are flowing, money is too.

Enter the Wolfberry and Wolfcamp plays.

Now, as an oil and gas writer, my ears perk when any shale or unconventional play is mentioned. In addition, this particular play is located in my father's home county -- I can't help but notice that.

I first read about it when El Paso Corp. revealed in late September that it was adding more than 120,000 acres in West Texas to its leasehold. I know Crockett County, and it is natural gas country, but this release stated that it was in the emerging Wolfcamp oil shale play.

What? How had I never heard about this? I did a little back-digging on the PennEnergy site, and lo and behold: there have been a couple of smaller stories about the Wolfcamp -- and it's supposed to be liquids- and/or oil-rich.

Then, I noticed a couple more stories about the Wolfberry trend. LINN Energy spent $352.2 million acquiring natural gas acreage in the Wolfberry trend, with notes of oil.

My curiosity is piqued, and I've been asking everyone who will listen in the oil patch whether or not they know anything about it. What's the word?

Enter a very nice oil patch pal I fortuitously sat next to on the plane from Tulsa to Houston. He was investigating the Wolfberry, as well. Imagine that! He had a meeting the next week with someone in West Texas, and he'd share his insight.

Here it is:

Presently, there are about 260 rigs working the Wolfberry formation in West Texas. Not quite shale, Wolfberry is a tight formation that's being drilled vertically. "The same fracturing techniques apply; therefore this formation previously unproductive to drill becomes viable, considering each well produces 200 - 800 BPD Oil and 0.2 to 1.0 MMSCFD rich natural gas, making it very attractive."

Is the Wolfberry the next Eagle Ford? What's the difference between the Wolfberry and the Wolfcamp? I'm searching, asking, begging. Do you know? Please share.

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Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.

Confidence Vote: Chevron sanctions ultra-deepwater Jack-St. Malo development in the US GOM

Despite the drilling moratorium, despite the permitting delays, despite all the problems that we're experiencing in getting our offshore oil and gas professionals back to work -- Chevron delivered a major vote of confidence for offshore oil and gas in the US Gulf of Mexico.

Today, US super-major Chevron (NYSE:CVX) sanctioned the $7.5 billion development of its Jack-St. Malo ultra-deepwater fields in the Lower Tertiary. A major project moving forward for the US GOM, the integrated development will include three subsea centers tied to a massive semisubmersible production hub with the capacity to production 170,000 barrels of oil and 42.5 million cubic feet of natural gas a day.

Already, Mustang has been contracted to provide FEED and then detailed design of the topsides for the development. Also, Cameron won a $230 million contract to provide subsea equipment for the development.

There are billions of dollars of contracts yet to be awarded.

The oil and gas community is confident that it can move forward with deepwater offshore operations safely. Thank you, Chevron -- and partners. Thank you for believing in the US Gulf of Mexico, and thank you for bringing sorely needed jobs back to the Gulf Coast.

Hopefully, this development will help to encourage others to commit to the US GOM and move forward with more drilling, developments and contracts.

International players grab more shale acreage, as US fails to see its natural gas potential

The race is on. The first shale formations to really take off were the Marcellus and Haynesville, as well as the Fayetteville and Barnett. Now, liquids-rich shale and unconventional reservoirs are all the rage, with billions going to joint ventures, acreage acquisitions and drill carries in the Eagle Ford and Bakken. Niobrara is also popular, and others are gaining steam.

Just this week, Chinese major CNOOC agreed to pay US producer Chesapeake $1.1 billion to gain interest in its Eagle Ford shale acreage in South Texas, as well as an additional $1.1 billion in a drilling carry. Additionally, Norwegian company Statoil and Canadian major Talisman joined forces in another billion-dollar Eagle Ford shale acquisition.

All the while, T. Boone Pickens and others like the American Gas Association are pushing for a shift to using the cleaner-burning fuel for everything from power generation to natural gas-fueled truck fleets.

According to a report from Pickens, the US imported 60 percent of its oil, or 346 million barrels, in September 2010, spending some $26 billion on the crude imports.

Switching from foreign oil to other energy sources isn't as easy as fueling our cars with something other than gasoline. Our dependence on foreign oil largely is built on our dependence on refined products and petrochemicals, but we can start to make a shift -- to at least using domestic crude and that from our friendly neighbor Canada, which is swimming in oil sands.

While wind and solar and geothermal energy sources continue to grow, unconventional natural gas and shale is abundant in the US -- and the opportunities for change and energy independence are right in front of us.

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Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.

Integrated Energy: Retail electricity provider Direct Energy buys Canadian natural gas field

As the editor of PennEnergy, a complete energy news, information, jobs and research portal, it's always nice to see a story that spans the petroleum/power industries, and this is a great example of an energy company integrating operations to save on costs.

Earlier this month, retail electricity provider Direct Energy closed a $367.5 million purchase of a producing natural gas field in Canada. Previously owned and operated by Suncor, the Wildcat Hills natural gas field consists of 97 producing wells, as well as 42,000 acres of undeveloped land.

With current production at 80 MMcf/d and reserves estimated at 241 Bcf of gas equivalent, the Wildcat Hills field along with earlier upstream assets will supply 35 percent of Direct Energy's load required by its North American retail natural gas customers.

Rather than pay another company, Direct Energy is going to produce, process and transport its own natural gas to supply to its customers.

Additionally, the company is on the search for more natural gas fields to acquire.

"Direct Energy intends to continue investigating opportunities for upstream investments in natural gas, including shale, and power generation assets in North America," said Badar Kan, president of Direct Energy Upstream & Trading. "In today's low natural gas price environment, well-capitalized companies, like ours, are in a strong position to acquire value-producing assets which is consistent with our strategy for greater integration and growth."

 Direct Energy Upstream & Trading oversees natural gas production, power generation, wind power purchase agreements, midstream gas storage and transportation, commodity procurement and proprietary trading. The company currently owns and operate 4,550 natural gas wells in Alberta and three gas-fired power plants.

A subsidiary of Centrica, Direct Energy (LON:CNA) provides energy to more than 6 million customers.

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Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.

US shale may save us all

US shale resources are exciting. My friends and colleagues can attest, I get overly excited about the potential of US shale.

Marcellus, Haynesville, Barnett, Fayetteville, Woodford, Utica, Eagle Ford, Bakken -- they are on the tip of my tongue and the forefront of my mind (and those of investors).

US shale gas resources are huge! Trillions and trillions of cubic feet of natural gas -- right under our feet. That means energy independence. That means jobs right here in the US, lots and lots of jobs related to drilling, producing, transporting, processing and exporting domestic natural gas. That means billions of dollars to help our economy and bolster local, state and federal government. That mean gas-generated power plants galore.

While prices for natural gas aren't the best on the Henry Hub today, companies are still investing in US shale and in natural gas in general. (Think of the billions of dollars being invested in Western Australia's massive LNG projects, like Gorgon, Wheatstone, Bonaparte, Ichthys and Gladstone.) To me, that says, they know something laymen don't. (After all, they've got analysts and economists and mathematicians and industry experts ... who study these things for a living.)

In fact, Wood Mackenzie just reported that in the first half of 2010 alone US shale gas M&A expenditures reached $21 billion. That's a lot of money to change hands, and they predict that the mergers and acquisitions market will continue its hot streak.

Translation: Natural gas is going to pay off, and prices are going to climb.

Ol' T. Boone Pickens is on to something, and natural gas-fueled cars may be just around the corner if he has anything to do with it.

In fact the US may very well become the largest exporter of clean energy because of our natural gas resources. Three LNG import terminals have started the ball rolling on switching to being export terminals, and pipelines have begun the process of both building and becoming bi-directional.

Natural gas is clean-burning. It's domestic, and it's plentiful. Jump on the natural gas/shale bandwagon with me. It's taking off around the corner!

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Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.