On February 2, 2015 4:34 pm
By: Kristie Kubovic, Director of Communications, Shale Media Group
Edited By: Mindy Gattner, Editor, Shale Media Group
Images Provided By: Shale Media Group
With plummeting prices at the pump, many consumers are rejoicing, while those in the shale oil and gas industry are concerned. OPEC’s (Organization of the Petroleum Exporting Countries) refusal to cut its output and change its production strategy, has led to a freefall in gasoline and diesel prices and the lowest prices in years. Consumers may be saving money when it comes to filling up their tank, but odds are they’re losing money in their 401Ks and worse yet, may be getting laid off or losing their jobs all together.
Looking at the headlines in the past few weeks of Shale Energy Business Briefing alone, headlines, such as “Crude Oil Falls Below $45/Bbl as OPEC Continues Playing Hardball” have led to other headlines, such as:
• “$2 Trillion in Oil Projects at Risk Due to Plunging Prices”
• “Baker Hughes Cutting Thousands of Jobs in Response to Slumping Crude Prices”
• “Exploration and Production Spending in North America Could Fall 30% or More in 2015”
• “Working Rig Count Suffers Biggest Drop in Nearly Quarter Century”
As gasoline prices drop, the US shale oil and gas industry is slowing down due to lack of demand. Companies are cutting back on working rigs, which leads to lost jobs and affects the overall economy. However, the results don’t look to be the same nationwide. Bob Beatty, President, “O”Ring CNG Fuel Systems explained, “Looking at the bigger picture, an area like the Marcellus Shale play will fare better than the Bakken Shale play due to the product. The Marcellus Shale is comprised of gas, whereas the Bakken Shale is composed of oil. It is easier to move a gas molecule than an oil molecule. For every dollar spent on hydraulic fracturing, there are infinitely more Btu’s recovered from a gas well than an oil well. Plus, depletion of an average oil well is about four to five years—rapidly diminishing production each year. In comparison, gas well production depletes at a much slower rate, which yields a return of almost double by comparison.”
With the domestic abundance and growth of the shale oil and gas industry in the United States, the alternative fuels industry (compressed natural gas (CNG) and propane in particular) started to pick up speed in terms of garnering more attention and popularity. CNG is cleaner than petroleum-based fuel and helps reduce emissions from greenhouse gases. Plus, CNG is safe, quiet, powerful, efficient, and offers America energy security, since its source comes from areas like the Marcellus and Utica Shale plays, a region right under the feet of millions of Americans.
These are some of the reasons that we’ve seen locally-based, national companies move towards CNG. For example, Beemac Trucking, a flat-bed trucking company headquartered in Ambridge, PA, with offices nationwide, purchased 20 Volvo tractors that are original equipment manufacturer (OEM) CNG and built a public CNG station in Ambridge to fuel those trucks. Additionally, one of the largest flatbed carriers in the country, PGT Trucking Inc., unveiled five new CNG trucks at their Monaca, PA headquarters in January.
In addition, CNG is affordable and provides price stability, consistently sitting around $2.00/GGE (gas gallon equivalent), while its counterparts, gasoline and diesel, often vary dramatically and are very dependent upon international affairs, particularly in the Middle East. It’s likely a safe bet that the price of gasoline and diesel won’t remain this low forever, while the price of CNG looks to remain stable due to this nation’s abundant shale oil and gas reserves found throughout the country’s various shale formations.
However, the CNG and propane industries are beginning to hit a roadblock due to the decrease in gasoline prices. “When the price of gasoline does go back up, the US won’t be able to react as quickly, [since many of this country’s shale oil and gas producers are cutting back due to the lower gas prices]. This opportunity [our current situation] reinforces how unstable the world is. OPEC came out and admitted to playing with the market. While this is a well-calculated move on their part, it is economic war, and we’re losing. If we don’t respond properly, we could be doomed to repeat history once again,” expressed Beatty.
Ironically, the US is playing “catch up” to the rest of the world in terms of CNG infrastructure. In fact, the US is far behind other countries that began utilizing CNG for transportation decades ago. Third world countries, such as Pakistan and India, have 2.8 and 1.5 million natural gas vehicles, respectively, in use. Beatty explained, “CNG is the fuel of choice for these oil-poor countries, mainly because they don’t have the luxury of paying for ‘expensive’ gasoline.”
Beatty also noted the number of CNG vehicles in this country is growing daily, but pointed out, “The rest of the world uses CNG. Iran, which is the size of New Jersey, has 3.5 million CNG vehicles. The U.S. has in excess of 300,000 CNG vehicles. Natural gas is our opportunity. It offers energy independence and it is green.”
As for propane, many of the vehicles going that route aren’t personal vehicles, but rather fleet vehicles, such as school buses, shuttles, and police vehicles. ProGas, Inc. is a propane distributor in western Pennsylvania, West Virginia, and Ohio, that services residential and commercial accounts along with propane motor fuel, known as AutoGas.
Ronald Schramm, President, ProGas, shares his thoughts, “The fabric of this country is being tested again by the Middle East. They play on our short term mentality. We’ve become a people that want instant gratification. Now we have lower gasoline and diesel prices, so let’s go out and buy the big SUV’s, RV’s, and so on. Are our memories that short? We forgot the oil embargo, long lines at the pumps, price increases that created economic problems for this country, and the many lives lost by American soldiers to keep oil flowing. We need to wake up and get off the merry-go-round.”
“We as a people and a country have to think beyond today. We have to act and think like our industrial leaders before us. You don’t build a business or nation on short term goals. They must be long term goals. We cannot allow falling oil prices to stop the progress we’ve made in the alternative fuels market. To secure our energy independence, we need to keep moving forward and continue drilling and developing more natural gas and natural gas liquid products (propane). We need to develop the infrastructure and make it available to the consumers and fleet operators,” continued Schramm.
Schramm then added, “CNG and propane AutoGas are leading the growth in the alternative fuels market. Even with falling gasoline and diesel prices, propane AutoGas continues to offer cost advantages over conventional fuels. Price is a key factor, but not the only factor. Fleet managers look at overall performance, efficiency, and productivity. Propane provides all of that and more. With the Marcellus Shale and all the shale plays throughout our country we need to stay the course.”
Energy from U.S. 1 L.P. is a CNG and propane refueling station currently being built in Bentleyville, PA, which will be one of a handful across southwestern Pennsylvania. Currently the Alternative Fuels Data Center places about 800 CNG refueling stations across this country. Tejas Gosai, CEO, Energy from U.S. 1, explained, “This country needs to strategize. The momentum is going now for CNG vehicles and stations in this country. We’re going to have to make this switch one day. Now is the right time. We can’t let this temporary drop in gasoline prices pause or cease our momentum.”
This is why events such as the upcoming Tri-State Alternative Fueling Expo & Conference are important to the shale oil and gas industry, the transportation industry, and America in general. The event is scheduled for February 24-26, 2015 and will be held at the Monroeville Convention Center in Monroeville, PA.
Themed “Success Stories,” the event in its second year ties together two vital industries: the shale oil and gas industry with the growing alternative fuels trade and showcases exhibitors from not only the CNG and propane realms of the industry, but includes all types of alternative fuels and energy companies. The event showcases alternative fuel trucks, new technology, various equipment, a transportable CNG fueling station, and propane and liquefied petroleum gas (LPG) dispensing stations.
The conference will include keynote speakers Toby Fauver, Deputy Secretary for Multimodal Transportation, Pennsylvania Department of Transportation, and Rich Fitzgerald, Allegheny County Chief Executive. Additional sessions will include presentations from representatives from Giant Eagle, Waste Management, “O”Ring CNG Fueling Systems, and Pittsburgh Region Clean Cities, among others.
At last year’s event, Rick Price, Executive Director, Pittsburgh Region Clean Cities, remarked, “There are a lot of misnomers about alternative fuel and technology. I like to give the facts and background. The event in itself brought so many different varieties of vendors to one area for the purpose of alternative fuels.” Dan Weaver, Director of Public Outreach, Pennsylvania Independent Oil and Gas Association (PIOGA), added, “It is important to see what is going on in the industry, especially on the end user side. There needs to be places or outlets for the product to go. It is fantastic to see new markets opening up at events like this.”
Only time will tell what exact effects this temporary drop in gasoline prices will have on America’s shale oil and gas industry, transportation industry, and the country in general. For more on the second annual Tri-State Alternative Fueling Expo & Conference, click here.
Shale Media Group (SMG) is the news, information, and education resource dedicated to the shale oil and gas industries by messaging across video, Internet, publications, events, and radio. For more, check out ShaleMediaGroup.com to access all platforms, including SMG’s latest news delivery system–Shale Energy Business Briefing (SEBB), an ad-free subscription based service, where subscribers receive a real-time, daily email, featuring concise, hard hitting shale news 7 days/week, 365 days/year. To sign up, go to sebb.us. In addition, join us on February 26th for our next Elite Energy Event in at the Holiday Inn in Monroeville, PA from 5-8pm. Kristie Kubovic is the Director of Communications at Shale Media Group. Contact her at Kristie@ShaleMediaGroup.com.