Story first appeared on Fox Business News -
The United States is enjoying an energy bonanza thanks to shale gas, making it a magnet for industry, reducing import dependence and challenging Europe as it battles to dig itself out of recession, energy officials say.
Panelists at a weekend security conference in Munich warned Europe must develop a strategy on how to tap its own resources in order to keep energy costs competitive, or risk seeing power-intensive industries locate elsewhere.
"The shale gas and oil boom is already underway. As Europe continues to debate it, North America is reaping the advantages," said Jorma Ollila, Chairman of Royal Dutch Shell .
Just a week ago Shell signed a $10 billion shale gas deal with Ukraine - the biggest contract yet in Europe - which could help Ukraine ease its reliance on Russian gas imports.
Ukraine is said to have Europe's third-largest shale gas reserves at 42 trillion cubic feet (1.2 trillion cubic meters), according to the U.S. Energy Information Administration.
Its reserves are dwarfed by those of France however, estimated to be Europe's largest at 180 trillion cubic feet.
France has banned the procedure, known as fracking which is used to extract shale gas and which involves pumping vast quantities of water and chemicals at high pressure through drill holes to prop open shale rocks.
Environmentalists fear it could increase seismic risks and pollute drinking water. U.S. officials question this and say that thanks to the higher proportion of gas use the United States has had its lowest carbon dioxide emissions in 20 years.
"Observing this from across the Atlantic it is really quite remarkable that there should be a ban or a go-slow on this development in Europe, really without any facts," said Daniel Yergin, Vice-Chairman of IHS Cambridge Energy Research.
Fracking is used to produce a third of U.S. natural gas he said, showing the environmental impact can be managed.
SHALE SCRAMBLE
World energy market flows already reflect North America's scramble to exploit shale oil and gas and highlight the potential prize Europe is ignoring.
"The U.S. internal energy revolution and the radical increases in production of oil and gas have boosted gas production by 25 percent and seen oil import dependence drop from 60 percent to 40 percent, and expected to decline further to 30 percent," said Carlos Pascual, the U.S. special envoy for energy affairs.
While Europe retains deep environmental concerns it also acknowledges that with the price of gas in the United States just a third of that in Germany, its industry is already suffering the effects.
German Economy Minister Philipp Roesler said: "Many German firms have opted for (relocation to) the United States, saying energy prices were the decisive factor...We are already seeing that we are suffering with our higher energy prices it affects our own competiveness."
Addressing the panel in Munich European Union Commissioner Guenther Oettinger said Europe should be in a position to produce enough shale gas to replace its depleting conventional gas reserves, so as not to become more dependent on imports.
RUSSIA UNAFRAID
A greater abundance of gas could threaten the dominance of Russia's gas exports and pressure prices. The United States seized Russia's spot as the world's largest gas producer in 2012, and is due to produce significantly more from 2015.
"I believe that the shale revolution is something positive, a chance for all of us to launch technologies, intensify competitiveness, make our countries more energy secure, and reduce costs," said Russian Energy Minister Alexander Novak.
Russia is focusing on boosting exports to energy-hungry Asia and developing infrastructure to transport gas eastwards.
A recent confidential study by the German intelligence agency (BND) suggested the United States could turn from being the world's greatest energy importer into an oil and gas exporter by 2020, reducing its dependence on the Middle East and thereby giving it much more freedom in policy making.
China by contrast would become much more dependent on Middle East oil to fuel its rapid expansion.
Illustrating just how rapidly the shale revolution has taken hold, shale gas accounted for just 1 percent of gas production in 2005, whereas today it is a third, and by 2040 it will be 50 percent, U.S. special envoy Pascual said.
"Developing a greater capacity to reduce import dependence does not diminish our commitment to stability," he stressed.
"It will not affect our engagement for global security, peace and security in the Middle East."
Showing posts with label energy. Show all posts
Showing posts with label energy. Show all posts
Friday, February 8, 2013
Monday, January 7, 2013
Exports of U.S. Gas May Fall Short of High Hopes
originally appeared in The New York Times:
Only five years ago, several giant natural gas import terminals were built to satisfy the energy needs of a country hungry for fuels. But the billion-dollar terminals were obsolete even before the concrete was dry as an unexpected drilling boom in new shale fields from Pennsylvania to Texas produced a glut of cheap domestic natural gas.
Now, the same companies that had such high hopes for imports are proposing to salvage those white elephants by spending billions more to convert them into terminals to export some of the nation’s extra gas to Asia and Europe, where gas is roughly triple the American price.
Just like last time, some of the costly ventures could turn out to be poor investments.
Countries around the world are importing drilling expertise and equipment in hopes of cracking open their own gas reserves through the same techniques of hydraulic fracturing and horizontal drilling that unleashed shale gas production in the United States. Demand for American gas — which would be shipped in a condensed form called liquefied natural gas, or L.N.G. — could easily taper off by the time the new export terminals really get going, some energy specialists say.
It will be easier to export the technology for extracting shale gas than exporting actual gas, according to the former administrator of the Energy Department’s Energy Information Administration. I know the pitch about our price differentials will justify the high costs of L.N.G. We will see. Gas by pipeline is a good deal. L.N.G.? Not so clear.
Even the terminal operators acknowledge that probably only a lucky few companies will export gas because it can cost $7 billion or more to build a terminal, and then only after a rigorous federal regulatory permitting process. The exploratory process to find a suitable site for a new terminal alone can take a year and cost $100 million, operators say, and financing can be secured only once long-term purchase agreements — 20 years or more — are reached with foreign buyers.
It’s a monumental effort to put a deal together like this, and you need well-heeled partners, according to the president of Sempra Energy, which is based in San Diego and is applying for permits to turn around a Hackberry, La., import terminal for export. There are only a handful of people who can do this kind of thing.
At least 15 proposed terminal projects have filed regulatory applications to export gas, and if all were approved, they could export more than 25 billion cubic feet a day, equivalent to more than a third of domestically consumed natural gas.
Environmental advocates say that kind of surge in demand would produce a frenzy of shale drilling dependent on hydraulic fracturing of hard rocks, an industrial method they say endangers local water supplies and pollutes the air. Dow Chemical, a big user of natural gas, and some other manufacturers express concerns that an export boom could threaten to raise natural gas prices for factories and consumers and, ultimately, kill jobs.
Opponents are already lobbying the Obama administration to reject most of the planned terminals, and protests have already occurred. Sempra, Exxon Mobil, Cheniere Energy and others have already built import terminals on the Gulf of Mexico. With docking facilities and giant gas tanks already built on land they had acquired and received permits for, they have a huge advantage over companies that have not yet built terminals. Cheniere, the only company to secure an export license, already has entered long-term purchase agreements for its L.N.G., and several other companies are only a few steps behind.
Dominion Power, which operates a nearly idle import terminal near Cove Point on Chesapeake Bay in Maryland, is also expected to proceed with a conversion to exports, since it is strategically located near the mid-Atlantic gas fields of the Marcellus Shale.
You have got to be able to change, adapt as changes take place in the world, according to the manager of the Cove Point plant.
The companies with import terminals now wanting to export won a victory in December when an Energy Department report said exports of L.N.G. could produce $30 billion a year in export earnings without driving up domestic gas prices significantly.
Many energy specialists expect the Obama administration to approve several export license applications in the next couple of years, and exports could begin as soon as 2015.
The plans for a gas export boom are based on the theory that cheap American gas will remain cheap for decades while Asian and European gas supplies remain tight and expensive. Global demand for natural gas is expected to expand for decades as nations seek a replacement for coal, nuclear energy and increasingly expensive oil, energy specialists say.
If the American terminals could be built tomorrow, they would have a perfect market opportunity. The production glut in the United States has reduced natural gas prices in this country by more than two-thirds since 2008.
Gas prices in most other places around the world are much higher because they are linked to oil, which has remained comparatively expensive. Gas prices in the United States are around $3.30 per thousand cubic feet, compared with $10 to $11 in Europe and over $15 in Asia.
But analysts say that the price spread could quickly shrink as a host of factors converge. Gas prices in the United States will face upward pressure as exports rise, electric utilities switch to gas-fired plants from coal, and companies use more natural gas in manufacturing and for fleet vehicles.
With rising U.S. gas prices, U.S. L.N.G. could be priced out of the market, according to the head of global gas research at the consultancy Wood Mackenzie. Even without L.N.G. exports, the price of gas will go up.
The indexing of Asian and European gas to oil prices is beginning to erode. At the same time, huge natural gas pipelines are being built around Asia to supply China, while new gas finds around Australia, East Africa and the eastern Mediterranean are likely to flood the markets with more L.N.G. Russia, a major global gas producer, is also moving aggressively to protect its markets.
And the cost of shipping and processing liquefied gas will cut into American suppliers’ competitiveness.
A gas analyst at PFC Energy, said if the current gas price of slightly less than $3.30 per thousand cubic feet rose to $6, by the time it gets to Asia, it’s double that price and that means there is no arbitrage. The biggest threat, over the long term, is the spread of the American shale boom overseas. The United States has a big lead; shale drilling has been slow to get started in Europe, South Africa and South America because of environmental concerns, water shortages and political obstacles.
But China, which potentially has more shale resources than the United States, is poised for development. And Poland, Britain and Argentina are moving forward with more shale drilling.
Resistance from environmental groups like the Sierra Club could help stop some export projects, especially outside the Gulf of Mexico region, which has long been comfortable with the oil and gas industry. And manufacturers like Dow Chemical are campaigning against unfettered exports to keep their costs down.
Over all, these factors will make it challenging for export projects to raise enough financing. L.N.G. terminal developers note that more than 20 import terminals proposed a decade ago were never built because of local opposition or lack of government permits and financing.
Can all these projects get financed? That’s a good question, according to the president of Shell Oil Company, which is looking at various possible L.N.G. terminal sites to invest in. The outcome of this is not likely to be unlimited L.N.G. exports.
Cheniere’s chief executive, predicted that by 2018, the country would manage to export only one billion to two billion cubic feet of gas a day, or roughly 2 percent of current domestic consumption. In 10 years, after two to four projects have received permits and have been built, he said he expected exports to grow to three billion to five billion cubic feet a day. The total global production of L.N.G. is about 40 billion cubic feet a day, and growing rapidly.
Dow Chemical’s vice president for energy and climate change, said that exports that come near other projections that would ease Dow’s concerns. That is a range that I think will maintain a competitive advantage for the United States, he said.
Only five years ago, several giant natural gas import terminals were built to satisfy the energy needs of a country hungry for fuels. But the billion-dollar terminals were obsolete even before the concrete was dry as an unexpected drilling boom in new shale fields from Pennsylvania to Texas produced a glut of cheap domestic natural gas.
Now, the same companies that had such high hopes for imports are proposing to salvage those white elephants by spending billions more to convert them into terminals to export some of the nation’s extra gas to Asia and Europe, where gas is roughly triple the American price.
Just like last time, some of the costly ventures could turn out to be poor investments.
Countries around the world are importing drilling expertise and equipment in hopes of cracking open their own gas reserves through the same techniques of hydraulic fracturing and horizontal drilling that unleashed shale gas production in the United States. Demand for American gas — which would be shipped in a condensed form called liquefied natural gas, or L.N.G. — could easily taper off by the time the new export terminals really get going, some energy specialists say.
It will be easier to export the technology for extracting shale gas than exporting actual gas, according to the former administrator of the Energy Department’s Energy Information Administration. I know the pitch about our price differentials will justify the high costs of L.N.G. We will see. Gas by pipeline is a good deal. L.N.G.? Not so clear.
Even the terminal operators acknowledge that probably only a lucky few companies will export gas because it can cost $7 billion or more to build a terminal, and then only after a rigorous federal regulatory permitting process. The exploratory process to find a suitable site for a new terminal alone can take a year and cost $100 million, operators say, and financing can be secured only once long-term purchase agreements — 20 years or more — are reached with foreign buyers.
It’s a monumental effort to put a deal together like this, and you need well-heeled partners, according to the president of Sempra Energy, which is based in San Diego and is applying for permits to turn around a Hackberry, La., import terminal for export. There are only a handful of people who can do this kind of thing.
At least 15 proposed terminal projects have filed regulatory applications to export gas, and if all were approved, they could export more than 25 billion cubic feet a day, equivalent to more than a third of domestically consumed natural gas.
Environmental advocates say that kind of surge in demand would produce a frenzy of shale drilling dependent on hydraulic fracturing of hard rocks, an industrial method they say endangers local water supplies and pollutes the air. Dow Chemical, a big user of natural gas, and some other manufacturers express concerns that an export boom could threaten to raise natural gas prices for factories and consumers and, ultimately, kill jobs.
Opponents are already lobbying the Obama administration to reject most of the planned terminals, and protests have already occurred. Sempra, Exxon Mobil, Cheniere Energy and others have already built import terminals on the Gulf of Mexico. With docking facilities and giant gas tanks already built on land they had acquired and received permits for, they have a huge advantage over companies that have not yet built terminals. Cheniere, the only company to secure an export license, already has entered long-term purchase agreements for its L.N.G., and several other companies are only a few steps behind.
Dominion Power, which operates a nearly idle import terminal near Cove Point on Chesapeake Bay in Maryland, is also expected to proceed with a conversion to exports, since it is strategically located near the mid-Atlantic gas fields of the Marcellus Shale.
You have got to be able to change, adapt as changes take place in the world, according to the manager of the Cove Point plant.
The companies with import terminals now wanting to export won a victory in December when an Energy Department report said exports of L.N.G. could produce $30 billion a year in export earnings without driving up domestic gas prices significantly.
Many energy specialists expect the Obama administration to approve several export license applications in the next couple of years, and exports could begin as soon as 2015.
The plans for a gas export boom are based on the theory that cheap American gas will remain cheap for decades while Asian and European gas supplies remain tight and expensive. Global demand for natural gas is expected to expand for decades as nations seek a replacement for coal, nuclear energy and increasingly expensive oil, energy specialists say.
If the American terminals could be built tomorrow, they would have a perfect market opportunity. The production glut in the United States has reduced natural gas prices in this country by more than two-thirds since 2008.
Gas prices in most other places around the world are much higher because they are linked to oil, which has remained comparatively expensive. Gas prices in the United States are around $3.30 per thousand cubic feet, compared with $10 to $11 in Europe and over $15 in Asia.
But analysts say that the price spread could quickly shrink as a host of factors converge. Gas prices in the United States will face upward pressure as exports rise, electric utilities switch to gas-fired plants from coal, and companies use more natural gas in manufacturing and for fleet vehicles.
With rising U.S. gas prices, U.S. L.N.G. could be priced out of the market, according to the head of global gas research at the consultancy Wood Mackenzie. Even without L.N.G. exports, the price of gas will go up.
The indexing of Asian and European gas to oil prices is beginning to erode. At the same time, huge natural gas pipelines are being built around Asia to supply China, while new gas finds around Australia, East Africa and the eastern Mediterranean are likely to flood the markets with more L.N.G. Russia, a major global gas producer, is also moving aggressively to protect its markets.
And the cost of shipping and processing liquefied gas will cut into American suppliers’ competitiveness.
A gas analyst at PFC Energy, said if the current gas price of slightly less than $3.30 per thousand cubic feet rose to $6, by the time it gets to Asia, it’s double that price and that means there is no arbitrage. The biggest threat, over the long term, is the spread of the American shale boom overseas. The United States has a big lead; shale drilling has been slow to get started in Europe, South Africa and South America because of environmental concerns, water shortages and political obstacles.
But China, which potentially has more shale resources than the United States, is poised for development. And Poland, Britain and Argentina are moving forward with more shale drilling.
Resistance from environmental groups like the Sierra Club could help stop some export projects, especially outside the Gulf of Mexico region, which has long been comfortable with the oil and gas industry. And manufacturers like Dow Chemical are campaigning against unfettered exports to keep their costs down.
Over all, these factors will make it challenging for export projects to raise enough financing. L.N.G. terminal developers note that more than 20 import terminals proposed a decade ago were never built because of local opposition or lack of government permits and financing.
Can all these projects get financed? That’s a good question, according to the president of Shell Oil Company, which is looking at various possible L.N.G. terminal sites to invest in. The outcome of this is not likely to be unlimited L.N.G. exports.
Cheniere’s chief executive, predicted that by 2018, the country would manage to export only one billion to two billion cubic feet of gas a day, or roughly 2 percent of current domestic consumption. In 10 years, after two to four projects have received permits and have been built, he said he expected exports to grow to three billion to five billion cubic feet a day. The total global production of L.N.G. is about 40 billion cubic feet a day, and growing rapidly.
Dow Chemical’s vice president for energy and climate change, said that exports that come near other projections that would ease Dow’s concerns. That is a range that I think will maintain a competitive advantage for the United States, he said.
Wednesday, December 19, 2012
Fall of oil exec Roger Parker marked by risky bets gone bad
originally appeared in The Denver Post:
Roger Parker appeared to have it all in 2007. He lived in a historic, $9 million mansion in Cherry Hills Village amid Denver's business and sporting elite. He golfed with John Elway. He traveled by private jet to gamble in Las Vegas and golf in Palm Springs.
Also that year, Parker completed the deal of his career. The chief executive of Denver-based Delta Petroleum sold a $684 million, one-third stake in the growing company to Tracinda Corp., owned by billionaire investor Kirk Kerkorian.
The transaction would be Parker's undoing, marking the start of a remarkable downfall. It played out, friends say, as a close business associate discovered that Parker, then married, was having an affair with his wife.
Parker and Delta struggled with risky bets gone bad. Tracinda forced Parker out after about a year and eventually took Delta into bankruptcy. It pursued Parker for more than $7 million from an unpaid loan but recently found just $46 in his retirement account and $10,000 in his brokerage account.
On Nov. 27, the U.S. Securities and Exchange Commission accused Parker of tipping off his close friend and another, as-yet-unidentified friend ahead of the Tracinda deal, allowing them to reap hundreds of thousands of dollars in ill-gotten gains. Some of his gains were used to finance use of a private charter jet company for business and personal use.
Two Cherry Hills homes — one Parker bought in 2004 for $9 million and the one it replaced, recently signed over to his ex-wife — are for sale.
An attorney for Parker did not respond to requests for comment for this story. He has not yet responded to the SEC's claims.
Interviews with friends, associates and businessmen, as well as scores of public documents, paint a picture of Parker, 51, as ambitious and aggressive, someone who set out early on a path toward multimillion-dollar success and social prominence.
He achieved both — with the help of a network of well-placed friends — but he took big risks along the way, spent lavishly and seldom settled for second-best.
Roger was a guy who thinks it all works out in spades, according to Delta's former chief operating officer. At one point, he speculated aloud he would be worth $200 million someday.
Fast success
Parker was a standout student at the University of Colorado business-school program in mineral land management. It trained students to be the property-acquisition brains behind the geologic science that identified potentially drillable resources.
But the 1980s, with the petroleum industry tanking, wasn't the best time to aspire to be an oilman.
There were no jobs, recruiting was down 80 percent, and the only ones likely to find a job after the collapse were those with experience, or new grads, according to an associate who graduated with Parker in 1983. But Roger got involved from the start. While we were all in school, he was getting a feel for the business, getting connections and experience. Parker found fast success from hard work.
Only a couple years out of school, he had the big house, all the trappings of success, according to one source.
That happened at Ampet Inc., a small oil-and-gas company formed by Parker mentor and a family friend, a Breckenridge attorney, and his lawyer father, Parker's parents were investors in the business.
The younger Parker and the junior partner would remain business associates for years, beginning with Parker's seat as executive vice president of Ampet while still a student at CU, records show.
While Parker worked at Ampet, his business partner and an associate formed Delta Petroleum in 1984. Parker was first listed on Delta documents as secretary in 1987.
Golf friendships
Two months later, Parker's father, was nominated to the U.S. District Court bench in New Mexico by President Ronald Reagan.
The elder Parker eventually served as federal chief judge in New Mexico until 2003. Along the way, he invested in oil and gas — including Delta — and as of 2010 was drawing royalties on several Colorado wells, some in the range of $500,000 to $1 million, according to financial-disclosure records required of all federal judges.
Roger Parker's relationships reach deep into Denver's business community and stretch across years.
Boisterous in laughter and quick with a joke, Parker was often found hanging with pals at Elway's, in part because of a friendship with the former Broncos quarterback. Both exceptional golfers, Elway and Parker sometimes partnered in charity events, friends said.
Efforts to reach Elway through the Denver Broncos were unsuccessful.
One of Parker's closest friends is a CU graduate in mineral land management with Parker.
The two are avid golfers — with memberships at Cherry Hills and Castle Pines, among others — and big boosters of CU's athletic program, forming the elite Buff Club Cabinet with others including Van Gilder.
The CU graduate has found a level of success that eluded his friend. He recently sold his Cordillera Energy Partners III for $2.8 billion to the company where he started, Apache Corp. Efforts to reach the college friend for comment were unsuccessful.
Drive for status
Parker, twice divorced, enjoyed living large, primarily through houses, golf-club memberships and jets, friends say.
His drive for status was evident in a years-long pursuit of a home at the very pinnacle of Denver society.
Parker sold his first Cherry Hills house and moved into a two-story Tudor he built in 2001 next to the Cherry Hills Country Club. He borrowed $1.6 million to build it and borrowed another $9 million on it over the years. But friends said he was disappointed with the outcome.
In 2004, Parker bought a $9 million mansion from old-money oilman's family along the exclusive Cherry Hills Park Drive. Next door lived the Broncos head coach, and across the street was their legendary money manager.
But Parker was unable to sell the Tudor home, and it remains on the market. The mansion he bought from the oil family — one of the oldest in that area — also is for sale.
Parker acquired a quarter interest in use of a Citation 10 jet, and he sold half of that to Delta.
On a golf trip to Palm Springs, Parker and friends stopped in Las Vegas — the Bellagio and Venetian were among his favorite haunts — to play the tables. Parker believed he could break the house in blackjack, one associate said.
Parker isn't flashy, most comfortable wearing shorts and tennis shoes, driving an SUV, listening to Aerosmith and drinking rum and Coke, friends said.
Parker often does business with friends. One of those is Denver power broker and Parker's personal and business attorney. Earlier this year, Parker pledged 100,000 shares in Prospect Global Energy as collateral to his attorney's law firm for personal legal help, state corporation filings show. At the time, the shares were worth $1 million. Today, they're valued at $167,000.
His attorney who is not representing Parker in the SEC's insider-trading case, would not comment for this story.
One of the attoney's sons, is vice chairman and co-founder of the Denver company, which mines potash.
A Prospect investor who founded Hexagon Investments in 1992, also is a friend of Parker's. He would eventually loan $24.7 million into Parker's latest venture, Recovery Energy, according to financial filings. Efforts to reach the investor for comment were unsuccessful.
Lucrative introduction
Parker was introduced to Kerkorian by a former chauffeur who entered the oil-and-gas business after marrying the former Denver Post owner. The chauffeur, now a Las Vegas resident, had done business with Delta as far back as 2003.
For the introduction — and the resulting sale of a 35 percent ownership share of the Denver company — Davis landed about $5 million worth of Delta shares. Kerkorian would allege later in a settled lawsuit that Parker had secretly arranged contracts and business arrangements for Davis as part of the deal.
Tracinda bought in at $19 a share — Parker had pushed off an initial $17 bid and pressed for more — on New Year's Eve 2007. The $684 million purchase pushed the company stock up 19 percent in one day. It would eventually hit $24.78 from $15.51, when the Tracinda deal was announced.
The SEC alleges in its civil suit that in the months and days before the Tracinda investment was firm and made public, he sent dozens of text messages about it to his business associate. Insiders said Parker didn't even tell some of his closest board members and company executives about the impending deal.
In a related case, his business associate was indicted on criminal insider-trading charges that he allegedly made about $86,000 on the information. He has pleaded not guilty. The SEC alleges that another unnamed individual who is friends with him and Parker racked up a $730,000 payday on Delta stock.
The government has not accused Parker of profiting from the information.
Delta and Parker had encountered the SEC before. In 2006 and 2007 — prior to the Tracinda deal — the government investigated alleged backdating of stock options that were awarded to Parker and other executives. The SEC later dropped its inquiry, and a pair of shareholder suits alleging the practice were settled.
Margin call
Following the merger, it didn't take long before Parker's business plan — a no-hedge, keep-drilling approach — would weigh on Delta's books and, eventually, its stock price.
Several company insiders say Parker's steadfast refusal to hedge some of the company's natural-gas and oil assets against a potential price drop was its most critical undoing. Typically, energy companies hedge by agreeing to sell a portion of their future production at a set price or range.
Delta's former COO and chief geologist, said Delta could have hedged through 2015 but didn't. We'd still be around today if it had.
When shares in Delta dropped below $4 in November 2008, it triggered a margin call on Parker's brokerage account because he had pledged shares as collateral for loans.
Tracinda loaned Parker $7.5 million to cover the shortfall. It said in legal filings it wanted Parker to pay attention to Delta instead of his failing personal finances.
By January 2009, the situation was, in one insider's viewpoint, desperate. He was the eternal optimist of gas prices coming right back, the insider said. They didn't.
By May 2009, Kerkorian had had enough. Three board members asked Parker to resign as chairman and CEO. Parker couldn't get along with new co-chairman Daniel Taylor, a Kerkorian board appointee.
Parker left with a severance payday of about $7 million.
New venture
Parker wasn't unemployed for long.
With the help of friends, he staged a comeback through a new venture, Recovery Energy.
While Reiman was the money lender, the oil-and-gas properties that made up Recovery's inventory came from Davis. Van Gilder provided the office space.
Parker paid for much of it with shares in the new company, a tactic he had used before.
Filings show the company's production and revenues followed a downward trend. Revenues in 2010 were $9.76 million but only $8.36 million in 2011. Oil and gas production in the second quarter of 2012 was down 24 percent from 2011.
Interest expenses in 2011 almost equaled the value of the oil and gas the company produced.
Parker engaged in an unusual practice with his Recovery shares that may have been intended to land a bigger payday or ward off a creditor such as Tracinda.
Normally, executives try to obtain the shares they are granted as quickly as possible, a process known as vesting. Parker, however, amended his employment agreement 14 times over more than two years to push back the date when his Recovery shares would vest and come into his possession.
Tracinda in late August won a judgment for the $7.5 million loan — now $7.7 million — against Parker, who argued he'd been shorted about $5 million in an effort to sell the last of his Delta stock in 2009.
Tracinda has been following Parker with garnishment orders to collect — first on his pension account and then his securities account. Total garnered: $10,745.
It followed with a garnishment order at Recovery for Parker's salary, roughly $21,000 a month, and is making a grab at about 1.3 million of Parker's Recovery shares.
Parker resigned from Recovery on Nov. 14, just ahead of another garnishment effort by Tracinda. SEC notices show his business partner began selling Recovery stock heavily just after.
Two weeks later, the SEC named Parker a co-defendant in its insider-trading lawsuit against another associate.
Friends said he left town on a trip when the case was about to be made public.
Roger Parker appeared to have it all in 2007. He lived in a historic, $9 million mansion in Cherry Hills Village amid Denver's business and sporting elite. He golfed with John Elway. He traveled by private jet to gamble in Las Vegas and golf in Palm Springs.
Also that year, Parker completed the deal of his career. The chief executive of Denver-based Delta Petroleum sold a $684 million, one-third stake in the growing company to Tracinda Corp., owned by billionaire investor Kirk Kerkorian.
The transaction would be Parker's undoing, marking the start of a remarkable downfall. It played out, friends say, as a close business associate discovered that Parker, then married, was having an affair with his wife.
Parker and Delta struggled with risky bets gone bad. Tracinda forced Parker out after about a year and eventually took Delta into bankruptcy. It pursued Parker for more than $7 million from an unpaid loan but recently found just $46 in his retirement account and $10,000 in his brokerage account.
On Nov. 27, the U.S. Securities and Exchange Commission accused Parker of tipping off his close friend and another, as-yet-unidentified friend ahead of the Tracinda deal, allowing them to reap hundreds of thousands of dollars in ill-gotten gains. Some of his gains were used to finance use of a private charter jet company for business and personal use.
Two Cherry Hills homes — one Parker bought in 2004 for $9 million and the one it replaced, recently signed over to his ex-wife — are for sale.
An attorney for Parker did not respond to requests for comment for this story. He has not yet responded to the SEC's claims.
Interviews with friends, associates and businessmen, as well as scores of public documents, paint a picture of Parker, 51, as ambitious and aggressive, someone who set out early on a path toward multimillion-dollar success and social prominence.
He achieved both — with the help of a network of well-placed friends — but he took big risks along the way, spent lavishly and seldom settled for second-best.
Roger was a guy who thinks it all works out in spades, according to Delta's former chief operating officer. At one point, he speculated aloud he would be worth $200 million someday.
Fast success
Parker was a standout student at the University of Colorado business-school program in mineral land management. It trained students to be the property-acquisition brains behind the geologic science that identified potentially drillable resources.
But the 1980s, with the petroleum industry tanking, wasn't the best time to aspire to be an oilman.
There were no jobs, recruiting was down 80 percent, and the only ones likely to find a job after the collapse were those with experience, or new grads, according to an associate who graduated with Parker in 1983. But Roger got involved from the start. While we were all in school, he was getting a feel for the business, getting connections and experience. Parker found fast success from hard work.
Only a couple years out of school, he had the big house, all the trappings of success, according to one source.
That happened at Ampet Inc., a small oil-and-gas company formed by Parker mentor and a family friend, a Breckenridge attorney, and his lawyer father, Parker's parents were investors in the business.
The younger Parker and the junior partner would remain business associates for years, beginning with Parker's seat as executive vice president of Ampet while still a student at CU, records show.
While Parker worked at Ampet, his business partner and an associate formed Delta Petroleum in 1984. Parker was first listed on Delta documents as secretary in 1987.
Golf friendships
Two months later, Parker's father, was nominated to the U.S. District Court bench in New Mexico by President Ronald Reagan.
The elder Parker eventually served as federal chief judge in New Mexico until 2003. Along the way, he invested in oil and gas — including Delta — and as of 2010 was drawing royalties on several Colorado wells, some in the range of $500,000 to $1 million, according to financial-disclosure records required of all federal judges.
Roger Parker's relationships reach deep into Denver's business community and stretch across years.
Boisterous in laughter and quick with a joke, Parker was often found hanging with pals at Elway's, in part because of a friendship with the former Broncos quarterback. Both exceptional golfers, Elway and Parker sometimes partnered in charity events, friends said.
Efforts to reach Elway through the Denver Broncos were unsuccessful.
One of Parker's closest friends is a CU graduate in mineral land management with Parker.
The two are avid golfers — with memberships at Cherry Hills and Castle Pines, among others — and big boosters of CU's athletic program, forming the elite Buff Club Cabinet with others including Van Gilder.
The CU graduate has found a level of success that eluded his friend. He recently sold his Cordillera Energy Partners III for $2.8 billion to the company where he started, Apache Corp. Efforts to reach the college friend for comment were unsuccessful.
Drive for status
Parker, twice divorced, enjoyed living large, primarily through houses, golf-club memberships and jets, friends say.
His drive for status was evident in a years-long pursuit of a home at the very pinnacle of Denver society.
Parker sold his first Cherry Hills house and moved into a two-story Tudor he built in 2001 next to the Cherry Hills Country Club. He borrowed $1.6 million to build it and borrowed another $9 million on it over the years. But friends said he was disappointed with the outcome.
In 2004, Parker bought a $9 million mansion from old-money oilman's family along the exclusive Cherry Hills Park Drive. Next door lived the Broncos head coach, and across the street was their legendary money manager.
But Parker was unable to sell the Tudor home, and it remains on the market. The mansion he bought from the oil family — one of the oldest in that area — also is for sale.
Parker acquired a quarter interest in use of a Citation 10 jet, and he sold half of that to Delta.
On a golf trip to Palm Springs, Parker and friends stopped in Las Vegas — the Bellagio and Venetian were among his favorite haunts — to play the tables. Parker believed he could break the house in blackjack, one associate said.
Parker isn't flashy, most comfortable wearing shorts and tennis shoes, driving an SUV, listening to Aerosmith and drinking rum and Coke, friends said.
Parker often does business with friends. One of those is Denver power broker and Parker's personal and business attorney. Earlier this year, Parker pledged 100,000 shares in Prospect Global Energy as collateral to his attorney's law firm for personal legal help, state corporation filings show. At the time, the shares were worth $1 million. Today, they're valued at $167,000.
His attorney who is not representing Parker in the SEC's insider-trading case, would not comment for this story.
One of the attoney's sons, is vice chairman and co-founder of the Denver company, which mines potash.
A Prospect investor who founded Hexagon Investments in 1992, also is a friend of Parker's. He would eventually loan $24.7 million into Parker's latest venture, Recovery Energy, according to financial filings. Efforts to reach the investor for comment were unsuccessful.
Lucrative introduction
Parker was introduced to Kerkorian by a former chauffeur who entered the oil-and-gas business after marrying the former Denver Post owner. The chauffeur, now a Las Vegas resident, had done business with Delta as far back as 2003.
For the introduction — and the resulting sale of a 35 percent ownership share of the Denver company — Davis landed about $5 million worth of Delta shares. Kerkorian would allege later in a settled lawsuit that Parker had secretly arranged contracts and business arrangements for Davis as part of the deal.
Tracinda bought in at $19 a share — Parker had pushed off an initial $17 bid and pressed for more — on New Year's Eve 2007. The $684 million purchase pushed the company stock up 19 percent in one day. It would eventually hit $24.78 from $15.51, when the Tracinda deal was announced.
The SEC alleges in its civil suit that in the months and days before the Tracinda investment was firm and made public, he sent dozens of text messages about it to his business associate. Insiders said Parker didn't even tell some of his closest board members and company executives about the impending deal.
In a related case, his business associate was indicted on criminal insider-trading charges that he allegedly made about $86,000 on the information. He has pleaded not guilty. The SEC alleges that another unnamed individual who is friends with him and Parker racked up a $730,000 payday on Delta stock.
The government has not accused Parker of profiting from the information.
Delta and Parker had encountered the SEC before. In 2006 and 2007 — prior to the Tracinda deal — the government investigated alleged backdating of stock options that were awarded to Parker and other executives. The SEC later dropped its inquiry, and a pair of shareholder suits alleging the practice were settled.
Margin call
Following the merger, it didn't take long before Parker's business plan — a no-hedge, keep-drilling approach — would weigh on Delta's books and, eventually, its stock price.
Several company insiders say Parker's steadfast refusal to hedge some of the company's natural-gas and oil assets against a potential price drop was its most critical undoing. Typically, energy companies hedge by agreeing to sell a portion of their future production at a set price or range.
Delta's former COO and chief geologist, said Delta could have hedged through 2015 but didn't. We'd still be around today if it had.
When shares in Delta dropped below $4 in November 2008, it triggered a margin call on Parker's brokerage account because he had pledged shares as collateral for loans.
Tracinda loaned Parker $7.5 million to cover the shortfall. It said in legal filings it wanted Parker to pay attention to Delta instead of his failing personal finances.
By January 2009, the situation was, in one insider's viewpoint, desperate. He was the eternal optimist of gas prices coming right back, the insider said. They didn't.
By May 2009, Kerkorian had had enough. Three board members asked Parker to resign as chairman and CEO. Parker couldn't get along with new co-chairman Daniel Taylor, a Kerkorian board appointee.
Parker left with a severance payday of about $7 million.
New venture
Parker wasn't unemployed for long.
With the help of friends, he staged a comeback through a new venture, Recovery Energy.
While Reiman was the money lender, the oil-and-gas properties that made up Recovery's inventory came from Davis. Van Gilder provided the office space.
Parker paid for much of it with shares in the new company, a tactic he had used before.
Filings show the company's production and revenues followed a downward trend. Revenues in 2010 were $9.76 million but only $8.36 million in 2011. Oil and gas production in the second quarter of 2012 was down 24 percent from 2011.
Interest expenses in 2011 almost equaled the value of the oil and gas the company produced.
Parker engaged in an unusual practice with his Recovery shares that may have been intended to land a bigger payday or ward off a creditor such as Tracinda.
Normally, executives try to obtain the shares they are granted as quickly as possible, a process known as vesting. Parker, however, amended his employment agreement 14 times over more than two years to push back the date when his Recovery shares would vest and come into his possession.
Tracinda in late August won a judgment for the $7.5 million loan — now $7.7 million — against Parker, who argued he'd been shorted about $5 million in an effort to sell the last of his Delta stock in 2009.
Tracinda has been following Parker with garnishment orders to collect — first on his pension account and then his securities account. Total garnered: $10,745.
It followed with a garnishment order at Recovery for Parker's salary, roughly $21,000 a month, and is making a grab at about 1.3 million of Parker's Recovery shares.
Parker resigned from Recovery on Nov. 14, just ahead of another garnishment effort by Tracinda. SEC notices show his business partner began selling Recovery stock heavily just after.
Two weeks later, the SEC named Parker a co-defendant in its insider-trading lawsuit against another associate.
Friends said he left town on a trip when the case was about to be made public.
Tuesday, June 26, 2012
Russia & Israel Cooperate in Energy/Space Endevors
Story first appeared in Haaretz.com
Natural gas, aerospace, oil shale and tourism are among the areas of economic cooperation that Russian President Vladimir Putin is offering Israel during his visit this week, sources told TheMarker.
The most important item raised between Putin and Israeli Prime Minister Benjamin Netanyahu on Monday was an offer by Russia's state-owned energy company Gazprom to join in developing Israel's offshore gas reserves. The largest extractor of natural gas in the world and Russia's biggest company, Gazprom wants to open a local subsidiary that will engage in drilling and offshore and onshore pipeline operations.
On the Israeli side, no one has rejected the Gazprom offer out of hand and officials are willing to explore the proposals, the sources said. Future international tenders in the Israeli gas sector will be open to Gazprom.
In fact, Gazprom executives have been to Israel in the past to explore cooperation in gas and won a tender to produce gasoline from oil shale in Israel's south, for which it expects to begin operations soon, the Russian delegation said. They also expressed interest in developing alternative energy projects, mainly in solar and to a lesser extent in wind.
The two countries did about $660 million of bilateral trade in the first four months of this year, with Israeli exports to Russia reaching $384 million and imports from Russia at $277 million, according to the Israel Export Institute.
Another area of interest to the Russians is nanotechnology, where the two countries have signed cooperation agreements. The sources said the Russian state-owned nanotechnology company Rusnano, which has been funded by Moscow to the tune of billions of dollars, has recently opened an Israeli unit whose task will be to identify Israeli companies for acquisition and cooperation.
Rusnano's chairman is part of the delegation accompanying Putin to Israel. The delegation also includes the incoming chairman of the Russian Space Agency Roscosmos, signaling the country's interest in cooperation in aerospace as well.
Israeli and Russian capabilities in aerospace complement one another, including Russia's expertise in launching satellites, and Israel is regarded a world leader in miniature satellites and other technologies.
In agriculture, the two sides are exploring joint ventures in irrigation, hothouses and the development of seeds for increasing farm yields.
Israel expressed interest in developing tourism. Russia is the biggest source of visitors to Israel after the United States, with about half a million tourists arriving every year. They create about 20,000 jobs and bring in revenues to Israel of $1 billion annually.
The two sides also began talks about establishing a free trade area agreement, which would ease two-way trade. They also plan to sign a financial protocol that will provide guarantees on exports to Russia via the government trade insurance agency.
Natural gas, aerospace, oil shale and tourism are among the areas of economic cooperation that Russian President Vladimir Putin is offering Israel during his visit this week, sources told TheMarker.
The most important item raised between Putin and Israeli Prime Minister Benjamin Netanyahu on Monday was an offer by Russia's state-owned energy company Gazprom to join in developing Israel's offshore gas reserves. The largest extractor of natural gas in the world and Russia's biggest company, Gazprom wants to open a local subsidiary that will engage in drilling and offshore and onshore pipeline operations.
On the Israeli side, no one has rejected the Gazprom offer out of hand and officials are willing to explore the proposals, the sources said. Future international tenders in the Israeli gas sector will be open to Gazprom.
In fact, Gazprom executives have been to Israel in the past to explore cooperation in gas and won a tender to produce gasoline from oil shale in Israel's south, for which it expects to begin operations soon, the Russian delegation said. They also expressed interest in developing alternative energy projects, mainly in solar and to a lesser extent in wind.
The two countries did about $660 million of bilateral trade in the first four months of this year, with Israeli exports to Russia reaching $384 million and imports from Russia at $277 million, according to the Israel Export Institute.
Another area of interest to the Russians is nanotechnology, where the two countries have signed cooperation agreements. The sources said the Russian state-owned nanotechnology company Rusnano, which has been funded by Moscow to the tune of billions of dollars, has recently opened an Israeli unit whose task will be to identify Israeli companies for acquisition and cooperation.
Rusnano's chairman is part of the delegation accompanying Putin to Israel. The delegation also includes the incoming chairman of the Russian Space Agency Roscosmos, signaling the country's interest in cooperation in aerospace as well.
Israeli and Russian capabilities in aerospace complement one another, including Russia's expertise in launching satellites, and Israel is regarded a world leader in miniature satellites and other technologies.
In agriculture, the two sides are exploring joint ventures in irrigation, hothouses and the development of seeds for increasing farm yields.
Israel expressed interest in developing tourism. Russia is the biggest source of visitors to Israel after the United States, with about half a million tourists arriving every year. They create about 20,000 jobs and bring in revenues to Israel of $1 billion annually.
The two sides also began talks about establishing a free trade area agreement, which would ease two-way trade. They also plan to sign a financial protocol that will provide guarantees on exports to Russia via the government trade insurance agency.
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Tuesday, June 19, 2012
Japan Close to Restarting Reactors
Story first appeared in Bloomberg Businessweek.
Japan moved closer Thursday to restarting nuclear reactors for the first time since last year's earthquake and tsunami led to a nationwide shutdown after a mayor gave his support to a plan to bring two of them back online.
All 50 of Japan's workable reactors are offline because of safety concerns or for maintenance since the March 11 disaster touched off a crisis at the Fukushima Dai-ichi plant. Public opposition to nuclear power remains high, even though the government has been pressing for the restart of reactors because it says nuclear energy is crucial to Japan's economy.
Power companies have warned of shortages in the months ahead, as demand reaches its summer peak.
Work to restart two reactors in the western town of Ohi, which are the first ready to resume generating power, could begin as soon as this weekend now that the mayor signed off on the plan. Once the work begins, it takes about three weeks to get a reactor operating at full capacity.
The governor of Fukui, the prefecture (state) in which Ohi is located, now has to meet with Prime Minister to inform him that the local governments are willing to accept the restart plan. The prime minister has to give final approval, which Japanese media reports said will likely happen Saturday.
They want to move ahead as quickly as possible once the approval is received. If work is begun soon the plant could be up and running in time to meet the summer crunch, which is expected in mid-July or August.
The Ohi Mayor said he approved the plan because he is concerned about possible power shortages and the impact on the local economy of keeping the plant closed.
Local consent is not legally required for restarting the reactors, but the government wants the support because of the sensitivity of the issue. The public has shown great concern that government failures, such as not sharing radiation leak data, worsened the crisis at Fukushima and may recur.
Last year's massive earthquake and tsunami caused explosions and meltdowns at the Fukushima plant, which is north of Tokyo. Tens of thousands of residents were evacuated because of the radiation leaks. Although the plant's operator says it has restored some stability, it could take years to decontaminate the area and decades to safely close down Fukushima's reactors.
With the high-demand summer months looming, it was announced last week that the mayor wants to restart Ohi's reactors as soon as possible. He also said he wants to move forward with the restart of other plants as soon as their safety is confirmed.
Before last year's crisis, Japan depended on nuclear for about one-third of its electricity and was planning to expand that further. The government is now carrying out a sweeping review of that plan.
The government has taken ample measures to ensure the two reactors in Fukui prefecture would not leak radiation if an earthquake or tsunami as severe as last year's should strike them.
Japan moved closer Thursday to restarting nuclear reactors for the first time since last year's earthquake and tsunami led to a nationwide shutdown after a mayor gave his support to a plan to bring two of them back online.
All 50 of Japan's workable reactors are offline because of safety concerns or for maintenance since the March 11 disaster touched off a crisis at the Fukushima Dai-ichi plant. Public opposition to nuclear power remains high, even though the government has been pressing for the restart of reactors because it says nuclear energy is crucial to Japan's economy.
Power companies have warned of shortages in the months ahead, as demand reaches its summer peak.
Work to restart two reactors in the western town of Ohi, which are the first ready to resume generating power, could begin as soon as this weekend now that the mayor signed off on the plan. Once the work begins, it takes about three weeks to get a reactor operating at full capacity.
The governor of Fukui, the prefecture (state) in which Ohi is located, now has to meet with Prime Minister to inform him that the local governments are willing to accept the restart plan. The prime minister has to give final approval, which Japanese media reports said will likely happen Saturday.
They want to move ahead as quickly as possible once the approval is received. If work is begun soon the plant could be up and running in time to meet the summer crunch, which is expected in mid-July or August.
The Ohi Mayor said he approved the plan because he is concerned about possible power shortages and the impact on the local economy of keeping the plant closed.
Local consent is not legally required for restarting the reactors, but the government wants the support because of the sensitivity of the issue. The public has shown great concern that government failures, such as not sharing radiation leak data, worsened the crisis at Fukushima and may recur.
Last year's massive earthquake and tsunami caused explosions and meltdowns at the Fukushima plant, which is north of Tokyo. Tens of thousands of residents were evacuated because of the radiation leaks. Although the plant's operator says it has restored some stability, it could take years to decontaminate the area and decades to safely close down Fukushima's reactors.
With the high-demand summer months looming, it was announced last week that the mayor wants to restart Ohi's reactors as soon as possible. He also said he wants to move forward with the restart of other plants as soon as their safety is confirmed.
Before last year's crisis, Japan depended on nuclear for about one-third of its electricity and was planning to expand that further. The government is now carrying out a sweeping review of that plan.
The government has taken ample measures to ensure the two reactors in Fukui prefecture would not leak radiation if an earthquake or tsunami as severe as last year's should strike them.
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Tuesday, May 29, 2012
Shale Gas Boom at Risk
Story first appeared in The Wall Street Journal.
Global exploitation of shale gas reserves could transform the world's energy supply by lowering prices, improving security and curbing carbon dioxide emissions, but the industry might be stopped in its tracks if it doesn't work harder to resolve environmental concerns, the International Energy Agency said Tuesday.
The IEA's report shows how the shale gas industry, which has already dramatically altered the energy landscape in the U.S., stands at a tipping point.
If the social and environmental impacts aren't addressed properly, there is a very real possibility that public opposition will halt the unconventional gas revolution in its tracks, according to Natural Gas Expert Witnesses.
The industry can win public support if it follows a set of "golden rules," including the careful choice of drilling sites to avoid earth tremors, using the highest standards of well design to avoid groundwater contamination, properly disposing of waste water and eliminating emissions of polluting gases from the well head, the IEA said.
For companies involved in the industry, this is an immediate issue that could have global implications. Adopting the rules would only add around 7% to operating costs.
Shale gas has only recently become a major energy source as a process called hydraulic fracturing, which releases gas from impermeable rock, has become more widespread. It has produced a natural gas boom in the U.S., driving prices to 10-year lows, but is only beginning to spread elsewhere.
But opposition is significant, particularly in Europe, from groups concerned about the risks of water contamination, earth tremors or the release of greenhouse gases. Hydraulic fracturing has been banned in France and Bulgaria and temporarily halted in the U.K.
Environmental group Greenpeace, which opposes all exploitation of unconventional gas reserves, criticized the IEA for failing to propose specific procedures for preventing many of the environmental hazards.
But the head of sustainability at the £142 billion ($222.7 billion) asset manager Scottish Widows Investment Partnership and a past critic of the shale gas industry, said the IEA's recommendations would make a big difference if widely adopted.
If its blueprint is followed, the IEA said that between 2010 and 2035 natural gas could be by far the fastest growing fuel, with consumption increasing by 50% to overtake coal as the second largest source of energy.
Countries that were net importers of natural gas in 2010 are likely to be the biggest winners as they increase domestic energy production, while natural gas prices would be around 30% lower in most major markets, the IEA said.
However, if lack of public acceptance stifles the industry at an early stage, global emissions of carbon dioxide would actually be 1.3% higher as coal would make up a greater share of global energy supplies, it said.
The IEA doesn't have any powers to enforce its recommendations on shale gas drilling, and it will be up to the governments of each country to determine how to regulate the industry, said Ms. Van der Hoeven.
Leaders of the Group of Eight leading nations agreed earlier this month to review the IEA's recommendations.
Global exploitation of shale gas reserves could transform the world's energy supply by lowering prices, improving security and curbing carbon dioxide emissions, but the industry might be stopped in its tracks if it doesn't work harder to resolve environmental concerns, the International Energy Agency said Tuesday.
The IEA's report shows how the shale gas industry, which has already dramatically altered the energy landscape in the U.S., stands at a tipping point.
If the social and environmental impacts aren't addressed properly, there is a very real possibility that public opposition will halt the unconventional gas revolution in its tracks, according to Natural Gas Expert Witnesses.
The industry can win public support if it follows a set of "golden rules," including the careful choice of drilling sites to avoid earth tremors, using the highest standards of well design to avoid groundwater contamination, properly disposing of waste water and eliminating emissions of polluting gases from the well head, the IEA said.
For companies involved in the industry, this is an immediate issue that could have global implications. Adopting the rules would only add around 7% to operating costs.
Shale gas has only recently become a major energy source as a process called hydraulic fracturing, which releases gas from impermeable rock, has become more widespread. It has produced a natural gas boom in the U.S., driving prices to 10-year lows, but is only beginning to spread elsewhere.
But opposition is significant, particularly in Europe, from groups concerned about the risks of water contamination, earth tremors or the release of greenhouse gases. Hydraulic fracturing has been banned in France and Bulgaria and temporarily halted in the U.K.
Environmental group Greenpeace, which opposes all exploitation of unconventional gas reserves, criticized the IEA for failing to propose specific procedures for preventing many of the environmental hazards.
But the head of sustainability at the £142 billion ($222.7 billion) asset manager Scottish Widows Investment Partnership and a past critic of the shale gas industry, said the IEA's recommendations would make a big difference if widely adopted.
If its blueprint is followed, the IEA said that between 2010 and 2035 natural gas could be by far the fastest growing fuel, with consumption increasing by 50% to overtake coal as the second largest source of energy.
Countries that were net importers of natural gas in 2010 are likely to be the biggest winners as they increase domestic energy production, while natural gas prices would be around 30% lower in most major markets, the IEA said.
However, if lack of public acceptance stifles the industry at an early stage, global emissions of carbon dioxide would actually be 1.3% higher as coal would make up a greater share of global energy supplies, it said.
The IEA doesn't have any powers to enforce its recommendations on shale gas drilling, and it will be up to the governments of each country to determine how to regulate the industry, said Ms. Van der Hoeven.
Leaders of the Group of Eight leading nations agreed earlier this month to review the IEA's recommendations.
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Wednesday, May 16, 2012
Small PA Town on the Map for Natural Gas Reserves
Story first appeared in USA Today.
Williamsport, Pa., used to be celebrated for its past — as the 1938 birthplace of Little League Baseball, which still plays its annual World Series nearby. Then natural gas was found.
Now this once-sleepy chunk of north-central Pennsylvania is a star on the map of an emerging national energy rush. Six hotels are new or being built, and about 100 companies have moved to town, sometimes so fast that the head of the local Chamber of Commerce has told executives wanting guided tours to wait.
Much of Wall Street and Washington is seized by the hope that the U.S.'s energy future will be as bright as Williamsport's. As Americans heave a sigh of relief at gasoline prices falling back from near $4 a gallon, big new discoveries of domestic oil and natural gas hold the promise of more substantial benefits for the U.S. economy for decades to come — even the possibility of energy independence.
There are however, the environmental risks that come with the new natural gas boom.
Williamsport, Pa., used to be celebrated for its past — as the 1938 birthplace of Little League Baseball, which still plays its annual World Series nearby. Then natural gas was found.
Now this once-sleepy chunk of north-central Pennsylvania is a star on the map of an emerging national energy rush. Six hotels are new or being built, and about 100 companies have moved to town, sometimes so fast that the head of the local Chamber of Commerce has told executives wanting guided tours to wait.
Much of Wall Street and Washington is seized by the hope that the U.S.'s energy future will be as bright as Williamsport's. As Americans heave a sigh of relief at gasoline prices falling back from near $4 a gallon, big new discoveries of domestic oil and natural gas hold the promise of more substantial benefits for the U.S. economy for decades to come — even the possibility of energy independence.
There are however, the environmental risks that come with the new natural gas boom.
For more Environmental News,
visit the Environmental Responsibility News blog.
For more national and worldwide Business News, visit the Peak News
Room blog.
For more local and state of Michigan Business News, visit
the Michigan Business News blog.
For more Health News, visit the
Healthcare and Medical News blog.
For more Electronics
News, visit the Electronics America blog.
For more Real Estate News,
visit the Commercial and Residential Real Estate blog.
For more Law News,
visit the Nation of Law blog.
For more Advertising
News, visit the Advertising, Marketing and Media blog.
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