Deciphering the US Natural Gas Market

Posted on Oct. 16, 2009

By Allen Brooks

 

In the last six weeks natural gas futures prices have jumped from a modern day low to nearly $5 per thousand cubic foot (Mcf) as commodity traders and investors started to cover their short positions in this fuel as the days moved closer to the beginning of the winter heating season. The jump in the gas price ends what has been an extended price slide that started back in summer of 2008 when prices were in excess of $13 per Mcf and early signs of the developing global recession emerged.

The traders and investors who have been covering their negative bets on natural gas prices have been motivated by signs the nascent U.S. economic recovery is gathering strength, especially among sectors such as automobiles and home construction that are large consumers of natural gas and its components as feedstocks for petrochemical materials. Additionally, there was the realization that the ratio of crude oil to natural gas prices, which at one point this summer stood at 27:1 (27.08) in contrast to the inherent energy- value ratio of 6:1, was way out of line historically and certainly unsustainable.

At the start of 2009, the oil-to-gas price ratio stood at slightly under 8:1 (7.94). It subsequently dropped in early January to the low so far for the year of 7:1 (6.79). Since that point the ratio has climbed steadily, reaching its peak on September 3rd. After falling to a recent low of 13.67, the ratio has bounced around due to volatility in both crude oil and natural gas prices, but it seems to be locked into a range of 14 to 15:1. The big question is with winter energy demand about to arrive will cold temperatures drive natural gas prices higher while at the same time crude oil prices remain stable, or possibly weaken further, given the continuing sluggish economic recovery?

Natural Gas Is Historically Cheap Even After Recovery; sources: EIA, PPHB

 When we look at the ratio of crude oil to natural gas prices for the past 15 years, it is interesting to note how the ratio has become more volatile and higher in recent years following almost a dozen years of a relatively stable relationship fluctuating around a 7:1 ratio as shown by the dark blue line from 1994 up until 2006 on the accompanying chart. The most recent years have demonstrated considerably greater price volatility between the two energy fuels. It appears the ratio averaged closer to 11:1 from 2006 through 2008. Volatility in the ratio has exploded in 2009. We have marked the low, high and current ratios with small red lines. It was this volatility and the extreme undervalued nature of natural gas that enticed more and more investors and traders into the commodity trade of the decade, which was to buy natural gas futures while at the same time selling crude oil futures. For significant parts of this year that trade didn’t work, but in recent weeks it has. Part of the success of the trade has been the calendar working against commodity traders who earlier in the year had sold natural gas futures with the expectation that gas prices would continue to fall. If they sold them early enough in the year, then they had profits locked in when natural gas prices started to climb. As time passes, bringing the start of the winter heating demand season closer, the impetus for higher natural gas prices strengthens. As a result, these commodity traders are now covering their short positions by buying near-month natural gas futures adding upward pressure to the gas price.

 If one looks at the current prices for physical deliveries of natural gas, there is almost a $1 spread between them and the current November futures price. If we average all the physical gas price points as of October 8th, contained in the Enerfax Daily schedule, it comes to $3.98 per Mcf. This is when the November natural gas futures price traded for $4.96, or a spread of $0.98. This spread is truly reflective of the near-term oversupply situation for natural gas and the optimistic demand outlook associated with the futures price.

 The nearly 100 percent increase in natural gas prices since the beginning of September seems counter-intuitive given the industry’s fundamentals. Natural gas storage facilities and pipelines are nearly all at full capacity forcing gas producers to involuntarily shut-in some of their current production. In other words, near-term industry fundamentals suggest the market should be experiencing weaker natural gas prices, which is consistent with the physical gas prices. On the other hand, the intermediate and longer term outlooks for natural gas demand point to higher prices in the future.

 The brighter over-the-horizon outlook reflects a universal belief that industrial demand for natural gas will recover with the economy and the recent growth in gas production volumes will slow and eventually reverse as the impact of the significant cutback in gas-focused drilling takes its toll on output.

 

Rigs Drilling For Gas Have Been Cut In Half; sources: Baker Hughes, PPHB

 From the peak in natural gas drilling activity, the gas-oriented rig count has been cut by more than half. In recent weeks the number of rigs drilling for natural gas has begun to rise. It is this rig count increase in the face of an essentially stable natural gas production level that has investors, commodity traders and industry people puzzled. While a simple graph of onshore natural gas production is showing a decline since late last year, overall gas production has remained relatively flat for the past nine months as production from the Gulf of Mexico has risen to offset the decline in onshore gas production.

 After dropping due to Hurricane Ike last September, Gulf of Mexico natural gas production has recovered and is now above the declining trend line that extends back to the start of 2005. In fact, current gas production is back to where it was at the start of the summer of 2008. The recovery and subsequent production growth of offshore natural gas helps explain why total U.S gas production has remained healthy in the face of weak prices for most of this year.

 What continues to be absent from the dynamics of the natural gas market is a sustained pickup in industrial gas demand. Increased heating-related gas demand is inevitable as winter arrives. The issue will be the amount of heating demand increase if other economically-sensitive gas demand remains dormant. A recent forecast by Matt Rogers of Commodity Weather Group suggests that the U.S. Northeast may experience its coldest winter in a decade due to the development of a weak El Niño in the southern Pacific Ocean region. Mr. Rogers point is that 75 percent of the time a weak El Niño develops, colder than normal temperatures are felt in this region of the country. Of course, there is a 25 percent chance that it won’t develop.

 When an El Niño develops, which it does periodically, the path of the upper atmosphere’s jet stream across North America is altered. Typically the alteration involves the jet stream dipping lower on the continent, i.e., shifting from Canada down into the United States, which allows Arctic cold weather to move further south than normally and into the Midwest and Northeast regions of the country. The challenge with predicting this jet stream shift is whether it becomes a more permanent shift during the winter months or only shifts occasionally.

 Even the Farmers’ Almanac is calling for a colder winter than in recent years for at least two-thirds of the nation. Importantly, that means more periods of bitter cold weather for two of the major populous regions of the U.S. That should boost natural gas demand. The one naysayer seems to be the Energy Information Administration (EIA) that is calling for heating bills this winter to be about 8 percent lower than last winter due to both milder temperatures and lower oil and gas prices. The EIA says it expects winter temperatures to average 1 percent warmer than last year – a sharp contrast to the independent weather forecasters. Maybe their forecast is tied to their view about the role of global warming. The real problem for the natural gas industry is that it really needs a recovery in industrial gas demand to help smooth out the industry’s supply/demand trends, and the latest government economic statistics suggest a mixed bag in that regard.

 So far this year, natural gas prices have fallen from $6 per Mcf at the start to a recent low of $2.50 before rallying back to $5 in recent days. These prices are a far cry from the $13-$14 per Mcf prices achieved in the halcyon days of the summer of 2008. The extended price decline, while partially explained by the fall in industrial gas demand, has largely been attributed to continued over-production of natural gas from the industry’s highly successful gas-shale drilling efforts that are spreading across the country. The growth in the past several years of natural gas production associated with these successful gas-shale developments reversed an eroding production profile for the industry that had existed for decades. The questions facing the industry now are whether gas-shale production will eventually overwhelm traditional natural gas drilling and production efforts and whether it is possible that the U.S. becomes a net gas exporter at some date in the future.

 To help arrest the growth in natural gas production and boost gas prices, producers have cut back their drilling activity by roughly 50 percent since last fall, but because gas-shale wells are so prolific compared to conventional gas wells, the drilling reduction appears to be having limited impact in slowing production growth. In the latest monthly data from the EIA’s industry survey, gas production does appear to be falling, at least on land. The challenge, however, is to try to decipher whether this production decline is real or involuntary.

 Natural gas storage as of September 25th was at 3,589 billion cubic feet (Bcf) out of an estimated industry-wide capacity of 4,000 Bcf. The problem is that natural gas storage facilities are spread around the country in the eastern and western consuming regions and in the gas producing areas. Additionally, there are limitations on the amount of natural gas that can be transported via pipelines from the producing regions to the consuming markets. As a result of these infrastructure limitations, the overall storage capacity ratio may not accurately reflect the true impact that high storage volumes are having on gas production.

 When we look only at industry-wide storage volumes plotted against total natural gas production, the surge in storage appears to be coinciding with a flattening, and now declining gas production.

 The level of gas storage volumes and the amount of injections shows even more clearly how the nearly full storage levels are impacting gas production.

 As total gas in storage has climbed to a record high, even after a roughly 100 Bcf of new storage capacity added, injection rates have fallen to low levels as there is little appetite or room for more gas. Some portion of the fall in current natural gas production has to be associated with involuntary production curtailments. The challenge is to determine how much of a fall-off is due to curtailments and how much is a fall in well productivity.

 To begin to look at this issue, we were provided data for monthly natural gas production in Texas. At this point we cannot vouch for its correctness, but we plotted it against the initial daily production by month for the state coming from the EIA’s Form 914 survey of gas producers. Lastly, we went to the Texas Railroad Commission web site and took only the 2009 monthly natural gas production data currently available, converted it to daily production figures, and plotted that data. The point of the exercise is to show that all these Texas natural gas production data sources are consistent in their pattern – steadily down. The interesting thing is to look at the shapes of the curves for 2009. The production data provided to us shows flat production for several months and then a steep decline. The EIA’s data shows a decline but at a more modest pace for all of 2009. The Texas Railroad Commission data shows a steady decline, but at a much faster rate than the EIA data. Unfortunately, these curves don’t answer the question: Is the decline due to falling natural gas well productive capacity, or is it a function of low prices, or is it due to involuntary cutbacks due to rapidly filling storage capacity?

 Since a lot of Texas natural gas tends to have higher finding and developing costs we suspect that some of the fall in gas production has been due to the weak gas prices. Producers must have been looking at their costs versus market prices and deciding to shut-in gas production. But some of the fall off in production has to be associated with older, less productive wells. Our guess is, however, that between these two explanations, the former is more important than the latter, but we cannot prove this conclusively.

 So while we wrestle to understand the current falling gas production figures, we are drawn back to looking at what the industry is doing with its drilling effort. The sharp fall-off in gas-oriented drilling rigs will eventually take a toll on production, but for the time being one has to be concerned about the recent uptick in the gas-oriented rig count before we know why production has fallen.

 At the same time, when we look at gas production compared to the number of rigs drilling horizontal wells, although we know not all rigs drilling horizontally are seeking natural gas, the strong upturn there could be a precursor of future gas supply challenges since the gas- shale wells, drilled horizontally, are so much more productive than conventionally drilled gas wells.

 The chart of gas production versus the total number of rigs drilling either directionally or horizontally shows a potentially less ominous supply challenge for the natural gas industry.

 The recovery in natural gas prices back to the $5 per Mcf level is certainly a positive for the industry. The latest production figures suggest that gas supplies are shrinking, but the weekly gas injection figures continue to reflect the impact of nearly full storage capacity. We can safely assume that gas production volumes are being reduced due to involuntary well shut-ins. What we don’t know is whether the industry is Wiley Coyote having run off the mountain road and is now suspended in air waiting to fall.

 Is natural gas production about to drop like a rock? Or is it possible we just need to get rid of some of the gas storage volumes with cold weather allowing producers to ramp back up their shut-in wells? That last scenario will come with current or higher winter gas prices. The former scenario suggests a natural gas price that rockets straight up. Unfortunately an exploding gas price will bring with it the seeds of the next price collapse.

 We reiterate our view that without a healthy economy the natural gas market will struggle to regain solid economic footings.

Our Perspective:

The market has presented great opportunites for companies to lock in their natural gas and electric prices in the deregulated market. Many of our clients have found unexpected savings.

Although the market has ticked up in the last couple of days, lack of demand have still kept the market price competitive from what you spent over the last 12 months.

If you have not looked into these opportunities, it still is not too late. Prices are dynamic and timing is everything.

Take the first step and ask the question, ” How much can we save?”

You might be surprised by the answer.

If you would like to know more about growing your bottom line from savings in the natural gas and electric market, feel free to contact us?

You may email george@hbsadvantage.com or leave a comment and we will contact you.

There are no upfront fees and all the savings fall to your bottom line!

 Allen Brooks is a managing director at Parks Paton Hoepfl & Brown, a Houston-based energy-focused investment banking firm. This article previously appeared in the October 13 issue of Musings From the Oil Patch.

2009 Electricity Prices Plummet

 

By REBECCA SMITH  as reported in Wall Street Journal

Slack demand for electricity across the U.S. is leading to some of the sharpest reductions in power prices in recent years, offering a break for consumers and businesses who just a year ago were getting crunched by massive electricity bills.

On Friday, the nation’s largest wholesale power market serving parts of 13 states east of the Rockies is expected to report that electricity demand fell 4.4% in the first half of the year. That helped to push down spot market prices by 40% during the first half of this year.

Wholesale electricity — power furnished to utilities and other big energy users — cost an average of $40 a megawatt hour in the region, down from $66.40 a year earlier. The price declines in this market, which extends from Delaware to Michigan, come on top of a 2.7% drop in energy use in 2008 over 2007.

The falloff in demand represents a reversal of what has been one of the steadiest trends in business. For decades, the utility sector could rely on a gradual increase in electricity demand. In 45 of the past 58 years, year-over-year growth exceeded 2%. In fact, there only have been five years since 1950 in which electricity demand has dropped in absolute terms.

But this year is shaping up to have the sharpest falloff in more than half a century, and coming on top of declines in 2008, could be the first period of consecutive annual declines since at least 1950.

Dramatic price reductions don’t immediately mean lower power bills for all consumers. That’s because many customers pay prices based on long-term contracts. But lower prices will have a softening effect over time.

In California and Texas, a combination of cheap natural gas and lower industrial demand is putting pressure on prices.

Journal Community

• discuss

“ Good timing for the U.S. to move away from its carbon obesity era. ”

—Barrie Harrop

In the Houston pricing zone, which has many power-gobbling refineries and chemical plants, the spot market price was $61.82 in June, versus $129.48 a megawatt hour a year earlier. Power demand in Texas is down 3.2% so far this year due to business contraction and reductions in employment which are causing many households to economize.

Just a year ago, many businesses and residential customers were reeling from electricity prices on the spot market that had spiked to historic highs, driven by high fuel prices and hot summer weather. Some businesses curtailed their operations because electricity and natural gas were too pricey.

But the flagging economy has resulted in a slump in demand that has jolted some energy markets. American Electric Power Co. and Southern Co., for example, both reported double-digit drops in industrial electricity use for the past quarter.

Meanwhile, natural gas, which strongly influences electricity prices, has fallen below $4 per million BTUs, or British thermal units. That’s down from $12 at last year’s peak.

For many businesses, the cost of electricity represents one of the few bright spots in a dismal economy. Andy Morgan, president of Pickard China Inc. in Antioch, Ill., which makes fine china, figures his electricity cost is down 30% to 40%.

Last year, when everything was spiking, he looked at different options — including negotiating a fixed-price contract for energy with a supplier. He says he held off and now he’s happy he did.

“We’ve definitely reaped savings,” says Mr. Morgan, adding that “especially in a down economy, you’ll take whatever you can get. That’s one of the few blessings during this storm.”

Slowdowns at major industrial companies such as Alcoa Inc. help account for the decline in electricity usage this year. The recession and drop in consumer demand for products that contain aluminum has caused the company to idle 20% of its smelting capacity world-wide this year.

In the U.S. the company has cut production at smelters, which are traditionally big energy users, in New York, Tennessee and Texas. Kevin Lowery, a company spokesman, said he did not believe that Alcoa has saved much money thus far because the company primarily purchases electricity through 25- to 35-year contracts.

Steel Dynamics Inc. is benefiting from lower pricing. The company operates five steel mills, with four purchasing electricity at spot market prices in Indiana, Virginia and West Virginia. The benefit, though, is smaller than it might be because the steelmaker is producing less steel this year.

“We’re producing fewer tons, but every ton we produce we seek to minimize the costs and electricity is one of those,” said Fred Warner, a company spokesman. Its mills are running at 50% capacity this year, down from 85% capacity last year.

Some wonder whether the deregulated markets of the Eastern U.S., Midwest, Texas and California will be especially hard hit if demand comes roaring back. That’s because utilities in these markets no longer are required to build new resources. It’s left up to the power generators to determine when the market conditions are ripe.

“There’s more supply than demand and prices are really low so it doesn’t make sense to build anything,” says John Shelk, president of the Electric Power Supply Association in Washington, D.C., a group that represents power generators.

Many electricity markets throughout the country have implemented demand reduction programs that give consumers a further incentive to reduce power use. The 13-state PJM Interconnection market has been one of the most aggressive — and has seen one of the steepest price drops.

A new report from the region’s official market monitor found a strong correlation between falling prices and an increase in demand-reduction programs. In the PJM market, energy users can collect money through an auction process for pledging to cut energy use in future periods.

In May, PJM conducted an auction to ensure it will have the resources it believes it will need in 2012-13. About 6% of the winning bids came from those who pledged to cut energy use by a total of 8,000 megawatts in that future period.

Our Perspective:

For those companies faced ith rising utility prices over the past 4 years, there is finally relief in the deregulated market. Prices have fallen due to the decrease in demand.

If you look at you electric bill over the past 12 months you will see that your price to compare for electric supply was most likely over .12 cents per kWh. Current market rates will allow you to lock you supply price in the dregulated market somewhere in the .10+ cent per kWh area. This could provide a 11/2 to 2 cents per kwh savings over the next year or two.

Our clients are finding substantial savings which fall to the bottomline.

Would you like to know more? Give us a call 856-857-1230 or email george@hbsadvantage.com . Contact us for a free evaluation You will be surprised by the savings it will provide.

—Timothy Aeppel, Sharon Terlep and Kris Maher contributed to this article.

Deregulated Savings in NJ

In 1998, The Department of Energy implemented deregulation of utilities to encourage competition.  It has proven to be an avenue for increased earning for many of our clients.

By analyzing data and shopping your account, we can provide significant savings.  Many of our clients have enjoyed a 10% to 40% savings in both the gas and electric market. 

You may be a candidate for increased profitability, too!

 Gas / Electric

Gas and electric are traded commodities and their prices are very sensitive. Hutchinson Business Solutions (HBS) will take the necessary steps to position your company properly to take advantage of this opportunity. 

Currently, your local provider buys gas and electric on the open market wholesale and then sells it to you retail. We are able to put you in the wholesale position! 

 We will complete a full analysis, outlining your current rates. We will provide you with a timely proposal that offers significant savings only available by locking-in your utility supply cost. 

The savings falls to the bottom line!

Let us add your name to our success story!

 Email george@hbsadvantage.com or call 856-857-1230

Natural Gas and Electric Savings in New Jersey

Do you feel you are being held captive each month when you pay your natural gas and electric bill? 

Have you looked at the current savings opportunity in the New Jersey Commercial and Industrial deregulated market?

Our clients are saving from 10% upto 40%, depending on the size of the account.

Just last week we signed a contract to save a local commercial real estate manager over $300,000 on their electric supply cost over the next year.

Needless to say, they were very excited.

Last month we signed gas and electric contracts with a local restaurant chain. Combined saving will be over $100,000.

 How many meals would you have to sell to add that to the bottom line?

Also last month, we signed gas and electric  contract with a multi location non profit school for the disabled. Annual saving was over $90,000.

So I ask again, Do you feel you are being held captive?

 The opportunity to save is now available.

Let us add your company to the list of success stories.

Would you like to know more? email george@hbsadvantage.com or call 856-857-1230

Exxon Makes 1st Big Investment in Biofuels

Written by John Porretto  July 14, 2009  AP

HOUSTON — Exxon Mobil Corp. said Tuesday it will make its first major investment in greenhouse-gas reducing biofuels in a $600 million partnership with biotech company Synthetic Genomics Inc. to develop transportation fuels from algae.

Despite record-breaking profits in recent years, the oil and gas giant has been criticized by environmental groups, members of Congress and even shareholders for not spending enough to explore alternative energy options.

One of the company’s requirements was finding a biofuel source that could be produced on a large scale. It says photosynthetic algae appears to be a viable, long-term candidate. If the alliance is successful, pumping algae-based gasoline at Exxon service stations is still several years away and will mean additional, multibillion-dollar investments for mass production.

“This is not going to be easy, and there are no guarantees of success,” Emil Jacobs, a vice president at Exxon Mobil Research and Engineering Co., said in an interview with The Associated Press. “But we’re combining Exxon Mobil’s technical and financial strength with a leader in bioscientific genomics.”

Jacobs said the project involves three critical steps: identifying algae strains that can produce suitable types of oil quickly and at low costs, determining the best way to grow the algae and developing systems to harvest enough for commercial purposes.

Besides the potential for large-scale production, algae has other benefits, Jacobs said. It can be grown using land and water unsuitable for other crop and food production; it consumes carbon dioxide, the greenhouse gas blamed for climate change; and it can produce an oil with molecular structures similar to the petroleum products _ gasoline, diesel, jet fuel _ Exxon already makes.

That means the Irving, Texas-based company will be able to convert the bio-oil into fuels at its own refineries and use existing pipelines and tanker trucks to get it to consumers.

The $600 million price tag includes $300 million for Exxon’s internal costs and $300 million or more to La Jolla, Calif.-based Synthetic Genomics _ if research and development milestones are successfully met.

“Even though this is a multiyear program, we both still consider it a very aggressive timetable, and it involves a lot of basic research,” said J. Craig Venter, founder and CEO of the privately held company. “As a result, you don’t know the answers until you’ve done these tests and experiments.”

Algae is considered a sustainable source for second-generation biofuels, which go beyond corn-based ethanol into nonfood sources such as switchgrass and wood chips.

Royal Dutch Shell PLC said earlier this year it would scale back large investments in wind and solar in favor of next-generation biofuels. The European oil giant is working with Canadian company Iogen Corp. on a method to produce ethanol from wheat straw, and partnering with Germany-based Choren Industries to develop a synthetic biofuel from wood residue.

Another oil major, BP PLC, plans to team up with Verenium Corp. to build a $300 million cellulosic ethanol plant in Highlands County, Fla.

For Exxon Mobil, the world’s largest publicly traded oil company, the biofuels investment is tiny compared with its spending to find new supplies of crude and natural gas.

CEO Rex Tillerson said earlier this year Exxon’s 2009 spending on capital and exploration projects is expected to reach $29 billion, up from the $26.1 billion it spent in 2008. The company said those levels are likely to remain in the $25 billion to $30 billion range through 2013.

Exxon Mobil shares rose 25 cents to $65.95 in trading Tuesday. They’ve traded in a range of $56.51 to $86.47 in the past year.

Energy Bill Advances In Senate: Offshore Drilling, Renewables Nearer

Written by H. Josef Hebert   AP 6/17/09

WASHINGTON — Legislation that would require greater use of renewable energy, make it easier to build power lines and allow oil and gas drilling near the Florida coastline advanced Wednesday in the Senate.

The Energy and Natural Resources Committee approved the bill by a 15-8 bipartisan vote. But both Democrats and Republicans expressed concerns about the bill and hoped to make major changes when it reaches the Senate floor, probably in the fall.

The measure’s primary thrust is to expand the use of renewable sources of energy such as wind, solar and geothermal sources as well as deal with growing worries about the inadequacies of the nation’s high-voltage power grid.

But the bill also would remove the last congressional barrier to offshore oil and gas development, lifting a ban on drilling across a vast area in the eastern Gulf of Mexico that Congress put off limits three years ago. Drilling would be allowed within 45 miles of most of Florida’s coast and as close as 10 miles off the state’s Panhandle area.

The Senate bill for the first time would establish a national requirement for utilities to produce 15 percent of their electricity from renewable sources, a contentious issue that is likely to attract heated debate.

Twenty-eight states currently have some renewable energy requirement for utilities, but supporters of the measure argue a national mandate is needed to spur such energy development.

The legislation also would give much wider authority to federal regulators over the nation’s electricity grid.

The Federal Energy Regulatory Commission would be given authority to approve the siting of high voltage power lines if states fail to act and would be given additional powers over cyber security on the grid.

Senate Majority Leader Harry Reid, D-Nev., has said he hopes to take up energy legislation after the August recess, although it’s uncertain whether it will be merged with separate legislation addressing climate change. The House is working on a climate bill that includes many of the same energy issues addressed by the Senate bill.

While the bill was approved by a safe margin in the committee its prospects in the full Senate are anything but certain. Several senators called it too weak in its support of renewable energy development, while others said it ignored nuclear energy and greater domestic oil and gas production.

“None of us got all we wanted,” said Sen. Jeff Bingaman, D-N.M., the committee’s chairman, who was forced to agree to a variety of compromises to give the bill a chance of advancing. Nevertheless, he said the bill would help shift to cleaner, more secure sources of energy.

Bingaman and many of the panel’s other Democrats had wanted at least a 20 percent renewable energy requirement. The bill requires 15 percent renewable use by 2021, but also would allow utilities to avoid a fourth of that mandate by showing improvements in efficiency. Renewable energy use could be cut further for utilities that increase their use of nuclear energy either from a new reactor or increased reactor output.

“This is an extraordinary weak bill,” said Sen. Bernie Sanders, I-Vt.

But Sanders voted to advance the bill, as did Sen. Bob Corker, R-Tenn. Both senators said they hoped the bill will be strengthened.

“I suspect their definition of strengthening might be somewhat different,” quipped Sen. Evan Bayh, D-Ind., whose own support of the bill came despite strong opposition to the federal renewable energy requirements on utilities.

Sanders wants the renewable energy requirement to be much higher, at 25 percent. Corker said the bill needs more to promote nuclear energy and domestic oil and gas production.

“We simply must do more to increase our domestic (oil and gas) production and use of nuclear energy,” said Sen. Lisa Murkowski of Alaska, the committee’s ranking Republican. Still, she voted for the bill which includes a commitment to increase loan guarantees for a natural gas pipeline in her state from $18 billion to $30 billion.

The bill also calls for establishing a new office to steer grants and loan guarantees to clean energy projects, including nuclear and those using technology to capture carbon dioxide; creating an oil products reserve to be used if there are supply problems; and creating federal standards for efficiency standards for new building.

The Chamber of Commerce said the bill shows progress toward crafting a comprehensive energy policy, but some environmentalists said it falls short of shifting the country away from fossil fuels. With its new offshore drilling, support for coal and nuclear energy “this bill fails to live up to the vision of a clean energy future,” complained Brent Blackwelder, president of Friends of the Earth.

Come to think of it

Has the recent turndown in the economy had an effect on your business?

What steps have you taken to tighten the belt?

Did you reduce the workforce? 

Did you reduce or drop employee benefits? 

In difficult times you may find you have to think outside the box. Reducing the workforce and employee benefits are obvious choices. 

There are diamonds in the rough out there! 

Where you ask? If you only knew!

 Most companies budget for expenses and never really drill down to see if there are opportunities for savings.

 Deregulated Energy: Natural Gas and Electric

 Is your company paying more than $5000 a month on natural gas or electric for your building! 

The deregulated Gas and electric market is the lowest it has been in the last 3 to 4 years. 

Our clients are saving from 15% to 30% on natural gas. 

 

Just in the last week, we saved a client over $45,000 by locking in their Natural gas for the next 12 months.

 

Our electric clients are saving from 6% to 15%

 

Just last week, a client saved over $94,000 by locking in their electric for the next 12 months.

 

How much do you think your company may qualify to save?

The local provider buys gas and electric in the wholesale marker and sells it to you retail.

We put our clients in the wholesale position.

 The savings is yours and falls to the bottom line!

 Voice and Data:

Here is the real sleeper. Many companies feel they wear a safety blanket for they have Verizon or ATT as their provider.

You are paying a premium for that blanket!

Deregulation allows third party providers to use the Verizon / ATT platform and deliver voice to their clients at a discount.

 Our clients are saving from 15% to 40% on their monthly Voice and Data Billing. 

What is 25% of your bill?

 Come to think of it, we haven’t looked at these costs recently?

 Call Hutchinson Business Solutions 856-857-1230. There is no fee for our services!

 Or you can email george@hbsadvantage.com

 

Let the savings begin!!!!!

Biodiesel: All you need to know

The following is a guest post by Chelsea Green’s Makenna Goodman:

I remember a time when defenseless kids with hippie moms got made fun of for using wax sandwich bags (ehem). I remember a time when it was considered uncool to be packing carrot sticks in your tote bag. When yoga was what the weird naked guys did at the hot springs in Ouray, Colorado; you know downward-facing dogs splayed out by the pool. I remember a time, in other words, when trendy things used to be not-trendy. Like BIODIESEL. The wave of the future.

You’ve seen it station wagons clanking around town with a sign on the back window that says, “This Vehicle Runs on Veggie Oil I’m Awesome.” You probably drive by and think: Damn. Those hippies are self-important, but I’m repressing the fact that I want to be just like them. What is wrong with me? But here’s the first thing you should know about biodiesel: It’s not just white people with dreads who use vegetable oil to run their cars. It’s a movement. Dude, my boss does it.

Know this:
*Biodiesel can be made from virtually any vegetable oil
*It can be used in any modern diesel engine
*It’s America’s fastest growing alternative fuel

But really, biodiesel is a tricky thing to understand, which is why many people just plain don’t. Consider it worth your while to get versed on biodiesel, from the experts. And everything you need to know, Greg Pahl will tell you. He’s the author of Biodiesel: Growing a New Energy Economy and The Citizen-Powered Energy Handbook: Community Solutions to a Global Crisis and knows the deal.

The following is an excerpt from The Citizen-Powered Energy Handbook: Community Solutions to a Global Crisis by Greg Pahl. It has been adapted for the Web.

Biodiesel 101

Biodiesel, a diverse group of diesel-like fuels, can be easily made through a simple chemical process known as transesterification from virtually any vegetable oil, including (but not limited to) soy, corn, rapeseed (canola), cottonseed, peanut, sunflower, mustard seed, and hemp. But biodiesel can also be made from recycled cooking oil (referred to as “yellow grease” in the rendering industry) or animal fats. One Vietnamese catfish processor is even using fish fat as a biofuel feedstock.³⁰ There have even been some promising experiments with the use of algae as a biodiesel feedstock. As long as the resulting fuel meets the American Society for Testing and Materials (ASTM) biodiesel standard (D-6751), it’s considered biodiesel in the United States, regardless of the feedstock used in its manufacture (in Europe, the standard is EN 14214). And the process is so simple that biodiesel can be made by virtually anyone, although the chemicals required (usually lye and methanol) are hazardous, and need to be handled with extreme caution.

Simply stated, here is how biodiesel is made. The transesterification process is initiated by adding carefully measured amounts of alcohol (methanol) mixed with a catalyst (sodium hydroxide lye the same chemical used to unclog kitchen or bathroom drains) to the vegetable oil. The mixture is stirred or agitated (and sometimes heated) for a specific length of time. If used cooking oil is the feedstock, the process requires a bit more testing, lye, and filtration, but is otherwise essentially the same. During the mixing, the oil molecules are split or “cracked” and the methyl esters (biodiesel) rise to the top of the settling/mixing tank, while the glycerin and catalyst settle to the bottom. After about eight hours, the glycerin and catalyst are drawn off the bottom, leaving biodiesel in the tank. The whole idea of the process is to remove the thick, sticky glycerin from the vegetable oil, so the remaining biodiesel will flow easily and combust properly in a modern diesel engine without leaving damaging deposits inside the engine.

In most cases the biodiesel needs to be washed with water to remove any remaining traces of alcohol, catalyst, and glycerin. In this procedure, water is mixed with the biodiesel, allowed to settle out for several days, and then removed. The wash process can be repeated if needed, but it is time-consuming. Not everyone agrees on whether the water wash is necessary. A few smaller producers who are making biodiesel for themselves skip the process, while commercial producers usually must do it to meet industry standards. In the case of some larger, more sophisticated manufacturing facilities, the transesterification process itself is so carefully controlled and refined that the water wash is not needed. There are, of course, quite a few technical variations on this entire process for large-scale industrial operations, but the general transesterification procedure is similar.³¹

As the amount of biodiesel being produced grows exponentially, the quantities of glycerin by-product grows apace. Glycerin has always been a niche market that is highly sensitive to oversupply, and the recent exponential growth of this commodity as a result of biodiesel production has caused the world glycerin market to collapse. As a result, traditional glycerin manufacturing plants around the world have been closing, while new ones that use glycerin as feedstocks for epoxy resins, propylene glycol, and other products have been opening. Recently, glycerin has even been used by one California company, InnovaTek Inc., as a source for the production of hydrogen.³² Trying to develop new uses for glycerin has been keeping a lot of people awake at night.

Our perspective:

Biofuels is the wave of the future. The federal and many state governments have provides great incentives to help start this process.  Biodiesel adds the needed lubrication to low sulpher diesel, that extends the life of the engine and help it to run more efficiently.

let us know your toughts? You may leave a comment or email george@hbsadvantage.com with any questions you may have.

Natural Gas Market

Apr 30, 2009 –

As was the case with other industries that have been deregulated, natural gas deregulation has resulted in competition which helps lower the cost of natural gas and increase customer choices.

Deregulation is the process of lessening the amount of government restrictions an oversight applied to private companies. The natural gas industry has been gradually deregulated over the past ten years.

Before deregulation, utilities charged their customers for all the necessary steps to get the natural gas from the gas well to the customer’s home or business. This included purchasing the natural gas, delivering it to the customer, measuring the customer’s use,providing emergency service, and billing the customer.

One effect of deregulation has been that customers may now choose to purchase only part of the full line of services that are offered by the utility. This ability to choose is called
unbundling. The complete package of services has been unbundled so that a customer can choose to separate the gas purchasing transaction from the delivery — or transport — transaction.

Our Perspective:

Natural Gas prices are the lowest they have been in 3 to 4 years. For companies spending more than $3000 a month we are finding 20% to 30% saving over what they have paid over the past year.

One of our new clients signed up today and will see more that $42,000 savings over the next year.

Like to know more? Feel free to contact us. There are no additional fees, your savings fall to the bottom line.

Email george@hbsadvantage.com  or call 856-857-1230

EPA: Recession Won’t Stop Clean Energy Revolution

ANGELA CHARLTON | May 28, 2009 05:01 PM EST |

PARIS — The top U.S. environment official says it’s time for the United States to shed its energy-wasting image and lead the world race for cleaner power sources instead.

After several years with a relatively low profile under President George W. Bush, the U.S. Environmental Protection Agency “is back on the job,” EPA Administrator Lisa Jackson told The Associated Press on Thursday during a trip to Paris.

What the EPA does domestically this year will be watched closely overseas. Nations worldwide are working toward a major meeting in Copenhagen in December aimed at producing a new global climate pact. The U.S. position on curbing its own pollution and helping poor countries adapt to global warming is seen as key to any new pact.

Jackson was in Paris for international talks on how rich governments can include global climate concerns in overall development aid.

She dismissed worries that economic downturn was cutting into aid commitments or investment in new energy resources. She said the United States should take the lead on clean energy technology, recession or no.

“We have to get in the race now _ and win it,” she said. “I don’t expect a moving backwards because of recession.”

At climate talks in Paris earlier this week, European environment ministers welcomed greater U.S. commitment to environmental issues under the Obama administration _ but said it still wasn’t aiming high enough in its targets for cutting U.S. emissions.

Jackson said a shift in the American mindset is only beginning.

Talking about energy efficiency and saying companies should pay to pollute _ “that’s a revolutionary message for our country,” she said.

For a long time, she said, “People didn’t even expect the EPA to show up” at events, much less set policies that could be seen as examples for the rest of the world.

“Now it seems like every day we’re rolling back or reconsidering a Bush era policy on clean air,” she said.

She said it was time for the United States to take a more active role in limiting chemical pollutants, after falling behind Europe in that domain.

The U.S. also has lessons to learn from countries such as the Netherlands, she said, after visiting its low-lying, flood-prone lands to study ways cities like her native New Orleans can better manage water.

Our Perspective:

It is good to hear the administration making positive comments about our energy’s future. Alternative energy is a growth business and the correct path for insuring our future energy indepenence.

Let us know your thoughts? You may leave a comment or email george@hbsadvantage.com

Would you like to know more about the financial opportunities that drive this investment. Feel free to contct us.