shale natural gas Archive
Are U.S. Nuclear Power Plants Going the Way of Coal Plants?
by David Fessler, Investment U Senior Analyst
Tuesday, January 29, 2013: Issue #1958
Last October, Dominion Resources, Inc. (NYSE: D) announced it would be closing its Kewaunee nuclear power plant. Located in Wisconsin, this small, 566-megawatt (MW) unit is the first nuclear plant to succumb to cheap natural gas.
The boom in U.S. shale gas production has natural gas prices at 10-year lows. It’s thrown an interesting curve at the domestic power market. Many utilities are retiring old coal plants in favor of natural gas. Are nuclear plants right behind?
We’ll analyze where the industry is today and where it’s going. First, let’s take a look at coal plants versus natural gas-fired ones.
Many coal-fired power plants in the United States are being retired, in some cases long before the end of their useful lives. How many of the 1,169 currently operating in the United States are on the hit list?
A report from the Union of Concerned Scientists entitled “Ripe for Retirement” identifies 353 of them. Check out the map below.
These plants total 59 gigawatts (GW) of generating capacity. That’s about 18% of the total coal-fired plants in the United States, and 6% of the nation’s total power generation capacity. Most of the plants on the list are older, less efficient and no longer economically viable.
The real problem is that these plants are big polluters. They’d be too expensive to upgrade to meet the latest Environmental Protection Agency’s (EPA) emissions guidelines.
To continue reading, please click here...How to Play America’s Fourth Biggest Oil Producing State
by David Fessler, Investment U Senior Analyst
Monday, November 7, 2011
When the Barnett Sale gas play in Texas was first drilled, drilling started out slow, but then ramped up rapidly once the size and scope of the play was fully understood. The same thing is happening in the Bakken formation.
The Bakken is an oil- and natural gas-rich formation covering a 200,000 square mile area encompassing parts of Montana, North Dakota and Saskatchewan. According to an April 2008 survey by the USGS, it’s estimated to contain as much as 4.3 billion barrels of recoverable reserves.
While initial drilling activity was slow and drill rigs were sparse, it eventually picked up. Rapid growth ensued starting in 2006, and continues to the present day.
The reason production saw such a rapid rise was the introduction of horizontal drilling and fracking, similar to what’s fueled the meteoric rise of other oil and natural gas shale plays.
Take a look at the first graphic below, courtesy of the EIA. The larger the circle diameter, the bigger the well flow. Green circles represent wells where the majority of the output is oil, yellow is a mix, and red is mostly gas.
In 2005, nearly all of the oil drilling was taking place in Montana, on the western side of the play, while most of the gas wells were being drilled in the southern part of the Bakken known as Billings Nose.
Now take a look at a snapshot of Bakken drilling activity as it existed at the end of 2010. What a difference a few years makes.
The Parshall Field was discovered in 2006. It’s located in the eastern-most part of the Bakken. It initiated a huge shift towards drilling in the oil-rich part of the Bakken field. As a result, the eastern side of the play is where a lot of the action is.
To continue reading, please click here...BHP Billiton Moves Into Shale Gas Market
by Tony D'Altorio, Investment U Research
Wednesday, March 16, 2011
Investors usually think of BHP Billiton ADR (NYSE: BHP) as a metals and mining company. It does, after all, have leading positions in coal, iron ore, copper and other metals.
But it also has a rather large oil and natural gas business. And recently, it made a move to bulk up in the energy sector.
BHP made its debut in the U.S. shale gas market by taking $4.5 billion out of its cash pile. That went to buy the Arkansas-based gas business of Chesapeake Energy (NYSE: CHK), including 487,000 acres of leasehold gas properties in the Fayetteville shale.
Those assets currently produce about 400 million cubic feet of natural gas per day.
That will increase BHP’s oil and gas production from about 430 million daily barrels of oil equivalent to about 500 million. It will also increase its oil and gas reserves by about 45%, from 3.7 billion barrels of oil equivalent to 5.4 billion.
As BHP Petroleum’s CEO, Mike Yeager, says, the deal will instantly make the company “a major North American shale gas producer.”
BHP’s Ambitious Long-Term Oil and Natural Gas Strategy
BHP’s decision to pay that large sum shows its ambition in expanding its oil and natural gas business. It is set on diversifying away from metals to other commodities, including uranium and potash.
To continue reading, please click here...General Electric Moves Into The Oil Services Industry
by Tony D'Altorio, Investment U Research
Tuesday, February 22, 2011
General Electric (NYSE: GE)’s $228 billion market cap makes it the largest U.S. manufacturer, as measured by market capitalization.
After its problems during the financial crisis, the conglomerate had to reshuffle its portfolio. GE sold off many of its entertainment assets, reduced its dependence on its financial arm and strengthened its position in industrial markets.
Now GE is trying to strengthen its manufacturing operations by broadening its energy business.
In the past, that particular arm was heavily dependent on U.S. turbine sales. But the company is now on a spending spree in the oil services.
GE’s M&A of The Wood Group
The products made by The Wood Group are used for squeezing hydrocarbons out of mature fields. And they also help in the removal of natural gas from “unconventional” fields, such as shale.
It seems fair to question whether GE paid too much to acquire the Wood Group business.
The company can afford it, of course; it did have $19 billion spare cash at the end of 2010. It just needs to demonstrate that its oil drilling and production support business will justify the capital commitment.
To continue reading, please click here...The New Oil Boom in Texas
by David Fessler, Investment U Senior Analyst
Friday, February 4, 2011
It was 1894 when a crew of workers in Corsicana, Texas were drilling for water… only to strike oil instead.
The rest, as they say, is history – and Texas’ relationship with black gold since then is legendary.
And today, there’s a brand new oil boom in Texas.
Located just outside Dallas, Texas, the massive Eagle Ford oil and gas shale formation is roughly 20,000 square miles in size. It stretches some 400 miles long and 50 miles wide, from the Mexican border through San Antonio and up into East Texas. It’s believed to hold one of the largest oil and gas deposits in America, with a depth between 4,000 feet and 12,000 feet.
And you’d better believe that America’s heavyweight oil and gas companies are all over this. Here’s how you can claim your share of the action, too…
The Big Boys Are on Board
“I expect the Eagle Ford [will] probably be the hottest single area in all the lower 48 states in 2011.”
So says Mark Papa, Chairman and CEO of EOG Resources, Inc. (NYSE: EOG), one of the biggest leaseholders in the Eagle Ford area.
To continue reading, please click here...The Future’s So Bright, Chesapeake Energy’s Gotta Wear Shades…
by Tony D'Altorio, Investment U Research
Monday, May 24, 2010
Chesapeake Energy (NYSE: CHK) has a lot going for it. The second largest natural gas producer in the United States, it is a leader in natural gas production from shale rock.
Recently, it’s made a number of deals with foreign investors, mostly European energy companies. But it did just come to terms with two of Asia’s most active investment funds. They intend to spend $1 billion for a stake in Chesapeake.
Temasek, a Singapore sovereign investment fund, has apparently agreed to buy $600 million of convertible preferred stock. And Beijing-based Hopu Investment Management has signed on for another $100 million.
In addition, Temasek has a 30-day option to acquire another $500 million worth of shares. Chances are that it will, along with other Asian businesses such as Seatown, Temasek’s sister fund.
If so, that $1.1 billion would translate into a near 7% equity holding in Chesapeake in the future.
Despite natural gas trading at less than a third of oil prices, the Asian funds see nothing but upside. They believe that natural gas has hit a cyclical low point.
They also believe demand will climb on environmental concerns, which does make some sense. Natural gas is about 30% less carbon intensive than oil. And it trumps coal by 50%.
Chesapeake Energy’s Debt & Negotiating Deals
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