Chesapeake Energy Corp. CEO Aubrey McClendon didn’t mention Frito Lay by name Tuesday at the Oklahoma State University Energy Conference when he expressed optimism about the trucking industry’s future with natural gas.
Maybe he should have.
“The good news is that it’s a win-win for us, both in terms of our sustainability strategy and reducing our costs,” said Michael O’Connell, senior director of fleet capability at Frito-Lay. “The payback for the extra cost of the natural gas trucks is a year and a half, so it’s a little bit of a no-brainer. We retire approximately 125 tractors a year, and we plan to replace as many of them as we can with natural gas.”
He said it could take six to seven years to convert all of the company’s tractor-trailers.
Oklahoma native T. Boone Pickens has been a vocal advocate of converting the nation’s trucking fleet to run on CNG. It is a key component of his eponymous “Pickens Plan,” which he insists can help the U.S. reduce its dependence on foreign oil.
Clean Energy Fuels, a company founded by Pickens, is working to establish a natural gas highway across the U.S. to bolster efforts to get trucking companies to switch to natural gas over diesel. That effort got a boost last year with a $150 million investment by Chesapeake.
Chesapeake has committed to invest $1 billion in a venture capital fund to boost demand for natural gas in transportation.
Oklahoma City-based Chesapeake Energy Corp.’s stock hit a 52-week low on Monday after an analyst downgrade.
The stock dipped more than 4 percent to as low as $19.05 per share before rebounding slightly. The previous 52-week low was $19.19.
The price drop followed after City analyst Robert Morris downgraded the company to “Neutral” from “Buy” based on continued low natural gas prices. Morris lowered his price target to $22 per share, down from his previous target of $28 per share.
Morris said low natural gas prices will cut into Chesapeake’s revenues and make it tougher for the company to raise money to fund future projects.
The stock price recovered to $19.26 per share by 2 p.m. Monday, but was still down 69 cents, or nearly 3.5 percent, on the day.
Increasing oil and natural gas production is spurring pickup sales, according to a report from USA TODAY and the Detroit Free Press.
“Every time we add a number of wells, we add a lease operator — and that requires a truck,” said Pat Gibson, vice president of Michigan-based West Bay Exploration.
General Motors, Ford, Chrysler and Toyota reported truck sales were up at least 10 percent in March or the first quarter, according to the report.
Don Johnson, GM’s vice president for U.S. sales, said a lot of the increase in heavy-duty truck sales can be attributed to the oil and gas industry.
Oral arguments in a court case against the Environmental Protection Agency by several states, utilities and business groups are today in a District of Columbia federal appeals court.
The case, EME Homer City Generation LP v. U.S. Environmental Protection Agency (Case No. 11-1302), challenges the EPA’s right to enforce a rule that would limit pollution from power plants that crosses state lines. The EPA says it has the right to enforce the rule after years of noncompliance by states. The other parties, however, say that the federal Clean Air Act gives states the primary responsibility to enforce clean-air rules.
Among the parties disputing enforcement of the rule were the state of Oklahoma and Public Service Co. of Oklahoma, which has more than 500,000 electric customers in the state.
The U.S. Court of Appeals for the District of Columbia has stayed enforcement of the EPA rule as the case is pending.
The American Wind Energy Association released its annual market report today on wind projects. Oklahoma ranks No. 8 for the amount of megawatts under construction this year.
Here’s the Top 10, according to the report:
Top ten states for wind projects under construction in 2012:
1. Kansas: 1,189 MW
2. Texas: 857 MW
3. California: 847 MW
4. Oregon: 640 MW
5. Illinois: 615 MW
6. Pennsylvania: 520 MW
7. Iowa: 470 MW
8. Oklahoma: 393 MW
9. Michigan: 348 MW
10. Washington: 331 MW
As far as wind generation as a percentage of electricity, Oklahoma ranks 10th in the nation with 7.1 percent. Here’s the Top 10:
Top states for wind generation as a percentage of their portfolio
1. South Dakota: 22.3%
2. Iowa: 18.8%
3. North Dakota: 14.7%
4. Minnesota: 12.7%
5. Wyoming: 10.1%
6. Colorado: 9.2%
7. Kansas: 8.3%
8. Oregon: 8.2%
9. Idaho: 8.2%
10. Oklahoma: 7.1%
Of course, the projections for wind expansion in 2013 are uncertain right now. The industry is facing a big drop off in construction next year if a federal tax credit isn’t renewed by Dec. 31. A recent report for the industry by Navigant Consulting found an estimated 37,000 jobs are at risk if the credit isn’t renewed.
“In hard economic times we’re creating jobs and delivering clean, affordable electricity,” AWEA’s CEO Denise Bode said in a statement. “But we will lose all these consumer benefits and a brand new, growing manufacturing sector if Congress allows the Production Tax Credit to expire. Businesses need certainty. That is why it is urgent that Congress extend the PTC now, or risk losing a bright new manufacturing sector.”
A panel discussion on Energy Transitions at Oklahoma City University on Tuesday evening featured the CEOs of electric generation company American Electric Power and the American Clean Skies Foundation.
My brief recap of the panel is here.
Here’s also a couple of short interviews with Nick Akins, president and CEO of AEP, and Gregory Staple, CEO of American Clean Skies Foundation. They talk about the fuel mix needed for electric utilities and efforts for energy efficiency.
The average price of gasoline varies by as much as 24 cents throughout Oklahoma, according to numbers released by AAA Oklahoma on Tuesday.
Consumers in Tulsa have the least expensive average price of almost $3.62 per gallon, while Guymon has the highest price at nearly $3.86.
Even though Tulsa has the lowest price today, it saw the biggest price increase over the past week, up 5.6 cents. The price in Bartlesville slipped 6.2 cents over the same time period.
|City||Today’s Price||Price / Change from Last Week||Price / Change from Last Month||Last Year’s Price|
|Ardmore||$3.800||$3.805 / -0.5 cents||$3.593 / +20.7 cents||$3.697|
|Bartlesville||$3.606||$3.668 / -6.2 cents||$3.558 / +4.8 cents||$3.575|
|Guymon||$3.859||$3.810 / +4.9 cents||$3.695 / +16.4 cents||$3.725|
|Lawton||$3.760||$3.763 / -0.3 cents||$3.596 / +16.4 cents||$3.669|
|Oklahoma City||$3.712||$3.734 / -2.2 cents||$3.607 / +10.5 cents||$3.638|
|Stillwater||$3.721||$3.753 / -3.2 cents||$3.615 / +10.6 cents||$3.701|
|Tulsa||$3.618||$3.566 / +5.6 cents||$3.535 / +8.3 cents||$3.538|
|Statewide||$3.725||$3.720 / +0.5 cents||$3.604 / +12.1 cents||$3.640|
Prices and patriotism seem to be the biggest factors when it comes to consumer and voter attitudes on energy, according to a poll released today by the University of Texas at Austin.
The online poll, which surveyed more than 2,300 people in March, found 81 percent of respondents thought gasoline prices were “very high.” That compared to 69 percent who thought so in the first edition of the survey back in September.
Meanwhile, 61 percent said they’d be more likely to back a presidential candidate who favored increased domestic energy production. Support for more natural gas development; incentives for renewable energy; increased energy research funding; and requirements for utilities to offer renewable power options all topped 50 percent, the survey found.
“We see a significant trend of increased pricing concerns and more support for domestic energy production across the board in this survey,” Wayne Hoyer, co-director of the survey and professor and marketing department chair at UT’s McCombs School of Business, said in a statement. “While most respondents expect prices to continue rising, they’re also more optimistic about our energy future, perhaps because of the abundance of natural gas and other domestic energy resources. These trends will be interesting to watch as we head into this fall’s elections.”
The poll asked several questions about hydraulic fracturing, with 62 percent saying they were unfamiliar or haven’t heard of the sometimes controversial practice to extract oil and gas. Among those who had heard about the process:
- 38 percent favor more regulation.
- 22 percent think existing regulations are sufficient but need better enforcement.
- 16 percent believe existing regulation and enforcement are sufficient.
- 14 percent say the technology is already over-regulated.
Respondents also said they favored growing the economy over environmental concerns. Asked to balance the two, 42 percent said the economy should be given priority, while 30 percent said the environment should be the top concern.
The Department of Energy released a report this month saying its grant program for wind and solar projects saved or created an estimated 52,000 to 75,000 jobs from 2009 to 2011.
The 2009 federal stimulus bill included $9 billion in grants for wind, solar and other renewable power projects. Known as the Section 1603 program, the grants went to more than 23,000 wind and solar projects across the country. The program was designed to replace tax-equity financing that dried up during the banking crisis in 2008. Developers took the grants instead of existing tax credits for wind or solar.
Oklahoma projects received more than $246.8 million (less than 3 percent), according to the Treasury Department, which administered the program. Here’s a list of the grantees:
The preliminary report said the grant program spurred about $30 billion in total investment from private, state and local sources for renewable energy projects.
Although the primary intent of the §1603 program was to minimize the impact of the weakened tax equity market on renewable project development, by providing project developers with an alternative way to recoup the value of the tax incentives, it ensured that development of renewable energy projects, and the jobs and economic benefits associated with those projects, were not hindered by weak tax equity markets.
Of course, like any economic report that attempts to measure jobs, the report includes some important caveats:
Some projects supported by §1603 awards may still have been implemented without the availability of the award, while others may have progressed only as a direct result of the program.
CNBC promised to check in several times throughout the day.