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EIA: U.S. Dry Gas Production Growth Levels Off Following Decline in Gas Prices

The U.S. Energy Information Administration (EIA) said in a report that the U.S. dry natural gas production has increased since late 2005 due mainly to rapid growth in production from shale gas resources. However, there have been two notable instances (see red ovals in the chart) in the last seven years when natural gas production leveled off during a period of falling spot natural gas prices.

The first was during the recent economic recession and the latest began in the fourth quarter of 2011 and continued through the first quarter of 2012.

Weather events (see green ovals) have also affected U.S. natural gas production.

The major events over the past seven years that have caused dry gas output to level off or even decline include:

  • Hurricanes Katrina and Rita (Sep-Oct 2005) – Disrupted up to 12.2 billion cubic feet per day (Bcf/d) in offshore natural gas production.
  • Hurricanes Gustav and Ike (Sep 2008) – Disrupted up to 9.5 Bcf/d in offshore natural gas production.
  • Economic recession and falling prices (Oct 2008- Sep 2009) – Reduced industrial and manufacturing activity, and lower electricity use eased demand for natural gas as a feedstock and a power generation fuel. Natural gas prices fell sharply as a result.
  • Winter well freeze-offs (Feb 2011) – Disrupted up to 7.5 Bcf/d in natural gas production from Texas to Arizona, when water froze inside wellheads during extremely cold weather and blocked gas flows.
  • Supply overhang and falling natural gas prices (Oct 2011-Mar 2012) – A warm winter that reduced heating fuel demand and record high gas inventories resulted in a nearly 50% drop in gas prices, causing some energy companies to postpone new drilling and cut back on some existing operations.

Natural gas production was relatively flat between October 2011 and March 2012, when Henry Hub spot gas prices declined from just above $3.50 to around $2.00 per million British thermal units in March. Preliminary EIA data indicate a slight drop in production during March, according to the Natural Gas Monthly report released on May 31.

Of the five large gas-producing states tracked monthly by EIA—Texas, Louisiana, New Mexico, Oklahoma, and Wyoming—New Mexico had the highest percentage decline in its March gross natural gas production, down 2.2 percent from the previous month, while Texas had the largest volumetric drop, down 150 million cubic feet per day. States that EIA does not presently track on a monthly basis, such as Pennsylvania, may have seen their gas output increase during March.

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Beneath Growth, a Sea of Poison

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Mike Brownfield
January 6, 2012 at 10:40 am

Today’s jobs report from the Department of Labor was encouraging news for the U.S. economy. It shows that 200,000 jobs were created and the unemployment rate ticked down from 8.7 percent to 8.5 percent. Jobs were created in every sector of the economy save one — government! This report is consistent with other economic indicators and shows that the economy is finally coming out of its malaise. But like any reports, they must be put into context. The creation of 200,000 new jobs is solid growth and above the 130,000 to 150,000 new jobs that must be created to keep up with population growth.  However, this doesn’t mean happy times  are here again.

There are not enough Americans working or looking for work. In fact participation in the labor force is at its lowest point in 30 years as many potential workers are not yet even attempting to find jobs. Moreover, at this stage in a recovery, new jobs should be surging instead of averaging less than 140,000 for the last three months. So all is not well and President Obama should not check the “mission accomplished” box. In fact, Obama’s painful economic policies will only serve to further hamstring America’s economic engine, thereby preventing a truly strong, vibrant economy that the country is capable of having.

The President single-handedly unleashed another poison pill on Wednesday with the White House’s announcement that he will exact another illegal, unconstitutional end-run around Congress with the appointment of three new members to the National Labor Relations Board (NLRB) without Senate approval, all of whom are union officials. Here’s why that matters.

The NLRB is a five-member board that is responsible for investigating unfair labor practices, creating labor-related rules, and conducting elections for labor union representation. Last year the NLRB enacted measures shortening union elections to as little as 14 days, limiting employees’ ability to hear from both sides before they vote, allowing unions to cherry-pick which workers in a company can vote on unionizing, and preventing workers from insisting on a secret ballot in union drives, as Heritage’s James Sherk explains. These measures will make it much easier for unions to organize workers — but at the expense of workers’ rights. If workers want to join a union they have that right — management gets the union it deserves — but the government should not limit their rights in order to press workers into unionizing.

Prior to the President’s appointments, the NLRB had only three sitting members, with the one member’s term ending at the end of 2012. Were the NLRB to go down to two members, it wouldn’t have a quorum to conduct its business, meaning that the President’s Big Labor agenda couldn’t be enacted. Now, though, the President has appointed three new members who will undoubtedly carry out his agenda without any checks or balances.

And that agenda is to bolster America’s unions — a key constituency and political force standing behind the President. Unfortunately, their goal is not primarily to protect workers. The trouble is that the Big Labor agenda is fundamentally at odds with the pro-growth agenda that America is so thirsty for. Sherk explains:

Unions make businesses less competitive and discourage investment. This reduces job growth. Studies show that jobs fall by 5-10 percent at newly organized firms. Going forward, employment grows by three to four percentage points more slowly at unionized businesses than at otherwise identical non-union companies.

In short, America is witnessing President Obama put his Big Labor allies before workers, all in the guise of taking action on behalf of the American people. America’s job creators are sitting on the sidelines, as well, watching as this President takes actions that serve only to inject more poisonous uncertainty into the economy.

Apart from the economic ramifications of the President’s actions, the American people should also remember that his NLRB appointments are a blatantly unconstitutional, tyrannical abuse of power. The U.S. Constitution requires that the President receive the advice and consent of the Senate when making appointments — a requirement that President Obama entirely set aside in order to advance his agenda.

Today, the President may say he is finding success in fighting for the American worker, but in truth he is fighting for his political allies. Beneath the surface of his populist rhetoric, his policies are poisoning strong economic growth. And for the President, the Constitution is collateral damage.

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NGVA Europe: Steady NGV Growth in Europe

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NGVA Europe published a new statistical update for the NGV (Natural Gas Vehicle) development in Europe and worldwide, showing a strong market development in the world of 12% compared with mid 2010, only 5% for total Europe, but 9% for the EU & EFTA countries.

There are now 1,4 million methane powered vehicles pan-European, thereof more than 1 million in the EU & EFTA countries and 13.5 million units worldwide. The pan-European NGV development since 2003 is shown on the picture.

There are three main reasons why the NGV market in Europe so far has been growing comparatively slower than in Asia or Latin America:

1. In Europe (or at least the EU/EFTA countries) NGV market growth is based on sales of new OEM vehicles. Only some 6-7% of the total volume of vehicles will be replaced by new vehicles. Outside Europe the growth is to a very large extent still based on conversions of existing vehicle fleets.

2. In Europe there are considerably smaller fuel cost advantages than outside Europe. NGV’s, regardless of vehicle category mainly compete with diesel vehicles. Outside Europe the competition is mainly petrol powered vehicles.

3. EU/EFTA like North America is a mature market with no large growth in the total fleet of vehicles. On the other hand, there is a dramatic growth of vehicle numbers in various fast developing economies, particularly in Asia which will quickly add numbers for all types of vehicles, regardless of the fuel used.

It is however to be expected that Europe will become a major market for CNG in light, medium and heavy duty vehicles (cars, vans, urban buses and trucks) and LNG medium and heavy duty trucks (as well as ships) using a mix of natural gas and bomethane up the road to 2020 and beyond. Main drivers will be more stringend emission policies set by the EU and also the availibility of brand new OEM (Original Equipment Manufacturer) CNG and LNG offers. European manufacturers have to meet the Euro VI standard in January 2014 and cars registered in the EU by 2012 shall not exceed 120 g/km. Several new OEM offers of e.g. CNG LDVs (Light Duty Vehicles), able to meet these targets, have been introduced or announced at the recent Frankfurt motorshow IAA, including the Volkswagen Up! (2012), Opel Zafira Tourer, Opel Combo (2012), Fiat Panda, Mercedes-Benz B-class (2012) or the Audi A3 (2013).

In Europe, some 70.000 NGV units (cars, vans, buses and trucks) have been sold since mid 2010 and NGVA Europe, the Natural & bio Gas Vehicle Association estimates that the European marketplace has a huge growth potential where the market share of methane (CNG, LNG and biomethane) powerded vehicles will grow from 0,4%, where it stands today, to 5% in 2020, 9% in 2030 and 16% -20% by 2050.

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