Documentary “Switch” takes balanced look at global energy needs
A new documentary on energy, “Switch,” is getting good reviews from both environmentalists and those in the energy industry.
I had the chance to see it last night at a screening in Oklahoma City. (It continues tonight and Thursday.)
I’ve seen the controversial fracking film “Gasland” and the energy industry’s response, “Truthland,” so my tolerance for talking points on both sides of the debate was fairly low. I was pleasantly surprised by the depth and measured tone of “Switch.”
The movie, which was made with the help of the American Geosciences Institute foundation, follows geologist and University of Texas professor Scott Tinker around the world as he explores where and how our energy is harvested. It includes some spectacular shots of massive coal mines in Wyoming, hydro projects in the fjords of Norway and wind farms in Texas.
“Switch” also features a short interview with Chesapeake Energy Corp. CEO Aubrey McClendon and follows a Chesapeake “fracking” crew out in the field. The documentary doesn’t shy away from discussing the public concerns about hydraulic fracturing and has interviews with environmentalists, policy makers and industry officials.
But “Switch” is more than just fracking. It takes a comprehensive look at the world’s energy needs, with a particular emphasis on the rapidly growing demand for energy in China, India and other developing countries. The takeaway? Those countries will be using coal and oil to meet their future energy needs, and there’s little the developing world can do about it.
It doesn’t take long for serious discussions about energy to get complicated, but “Switch” boils down all the talk of megawatts and BTUs to a simple unit: the amount of energy an average person uses in a year. (If you’re curious, Tinker defines it as about 20 million watt-hours of energy.) From an oil platform in the Gulf of Mexico to a concentrated solar plant in Spain, the movie defines the energy produced in terms of how many people it would power.
For all the technology improvements in energy, “Switch” makes it clear that it comes down to scale. A technology advancement or discovery might be great, but if you can’t scale it up to serve large numbers of people, then it will remain a niche solution. Through a combination of renewables and nuclear power, the film estimates the world will reach a “switch” point in 2064. That’s when the use of renewables and nuclear will match the use of “foundational” fuels coal and oil.
The last part of “Switch” focuses on energy efficiency and what individuals can do at home to save money–and energy. The efficiency side of the equation is often forgotten about in the political fights over energy policy, but the film makes it clear that the energy we waste is just as important as the energy we create use.
If you can’t make it to the remaining screenings in Oklahoma City, check out the “Switch” website, which has short videos and some highlights from the documentary.
Chesapeake selling $6.9B in assets
Chesapeake Energy Corp. moved closer to its 2012 fundraising goal on Wednesday as it announced asset sales totaling about $6.9 billion.
The Oklahoma City-based oil and natural gas company has been looking to shed some assets to help overcome a budget shortfall estimated to be as high as $22 billion.
CEO Aubrey McClendon said the deals announced Wednesday put Chesapeake close to its goal of raising $13 billion to $14 billion this year.
“These transactions are significant steps in the transformation of our company’s asset base to a more balanced portfolio among oil, natural gas liquids and natural gas resources and production by focusing on developing and harvesting the value embedded in the 10 core plays in which Chesapeake has built a No. 1 or No. 2 position,” he said in a news release.
Chesapeake will use a portion of the proceeds from the asset sales to pay off a $4 billion loan it took out in May.
Chesapeake is selling the bulk of its acreage in west Texas’ oil-rich Permian Basin for about $3.3 billion. The company also will generate an additional $3 billion by selling most of its midstream holdings in a series of transactions.
The sale of assets in Ohio’s Utica Shale and other noncore areas will bring in another $600 million.
The Permian Basin assets have been viewed as the prize of Chesapeake’s portfolio of holdings for sale.
A subsidiary of Royal Dutch Shell has agreed to buy Chesapeake’s holdings in the lower Delaware Basin, while Chevron USA Inc. is buying acreage in the northern part of the basin.
Houston-based EnerVest is acquiring Chesapeake assets in the Midland Basin in a previously announced deal.
Those holdings produced about 21,000 barrels of liquids and 90 million cubic feet of natural gas per day during the 2012 second quarter. That accouned for only 5.7 percent of Chesapeake’s production during the quarter.
Chesapeake is retaining about 470,000 acres in Midland Basin for future sale or development.
Aubrey McClendon touts Chesapeake, natural gas
Chesapeake Energy Corp. CEO Aubrey McClendon spoke publicly for the first time in months at the Barclays CEO Energy and Power Conference on Thursday morning in New York.
McClendon reiterated that the Oklahoma City oil and natural gas company plans to sell $17 billion to $19 billion in assets — about one and a half times Chesapeake’s equity market capitalization — by the end of 2013 while continuing to increase its total production.
McClendon said Chesapeake is now the country’s No. 11 liquids producer and is still the No. 2 natural gas producer even though it has shifted its focus away from dry gas.
While 85 percent of Chesapeake’s 2012 drilling budget is dedicated to oil and natural gas liquids-rich areas, McClendon said he expects natural gas prices to soon rise. He said he disagrees with models that show natural gas production continuing to rise over the next few months.
Given that Chesapeake produces 10 percent of the natural gas in the U.S. and has been responsible for 35 percent of the gas production growth over the past few years, we find it hard to model natural gas production growth when we’re going to decline 7 percent,” McClendon said.
Chesapeake and other natural gas producers have stopped production as quickly as they ramped it up, McClendon said.
The buildup was unprecedented, and the runoff was equally unprecedented,” McClendon said.
If the country experiences a normal winter, natural gas prices will soon climb, he said.
At that point, many natural gas producers will rush back into the market, but Chesapeake will not, McClendon said.
The question isn’t: Can you make money drilling a gas well in the Barnett or Haynesville at $4?” he said. “The question is: What else can you do with that money? I think we can make more with oil.”
While the oil and natural gas liquids market likely will remain Chesapeake’s focus, McClendon said natural gas is still a valuable commodity.
I think the days of $2 to $3 gas are going to be over. I don’t think the days of $7 or $8 gas are quick to return. But there is a lot of money to be made in the middle,” McClendon said.
Internal investigation clears Encana of collusion allegations with Chesapeake
Canadian natural gas giant Encana Corp. has concluded company officials did not collude with rival Chesapeake Energy Corp. to lower the cost of land acquisitions in Michigan in 2010, Reuters reports.
The news agency reported in June that the companies plotted to keep land prices under control in the Collingwood Shale, a promising oil and natural gas play. That raised the specter of antitrust violations that have sparked investigations by the U.S. Department of Justice and authorities in Michigan.
A subsequent report cited emails indicating Chesapeake CEO Aubrey McClendon directed company officials to renegotiate or delay closing on deals with major Michigan lease holders after learning Encana was paring back its leasing efforts there.
A Chesapeake spokesman declined to comment Wednesday on the latest Reuters report.
The company has denied any wrongdoing in Michigan, where officials said it had considered a possible joint venture with Encana that was never consumated.
Encana’s board of directors, which led the investigation launched on June 25 with the assistance of outside attorneys, did not provide Reuters with a report on the scope of the inquiry, nor explain how it reached its conclusion.
“We can’t offer more detail than what we’ve released as the issue is still under investigation by the Antitrust Division of the Department of Justice and the Michigan Attorney General,” Encana spokesman Jay Averill said in an email to Reuters.
Chesapeake also is facing inquiries from the IRS and U.S. Securities and Exchange Commission, as well as an internal review by its board of McClendon’s personal finances.
McClendon is scheduled to speak Thursday morning at an industry conference in New York, his first such appearance since April.
Southeastern Asset Management, Chesapeake’s largest shareholder, has advised McClendon to focus on running the company rather than acting as an industry advocate.
Seattle company to frack a volcano for geothermal energy
Susan Petty and her Seattle-based AltaRock Energy Inc. are planning to use a technique similar to hydraulic fracturing, or fracking, on a volcano to produce geothermal energy, according to a report by Environment and Energy Daily.
Petty calls her process “hydro-shearing” and said there are major differences between the two techniques.
Petty said she is trying to do for geothermal what hydraulic fracturing has done for oil and gas. This fall, she plans to pump 24 million gallons of water underground near an Oregon volcano.
Petty’s plan is to heat the water enough to spin turbines and generate electricity.
She said there is no real risk of water contamination, earthquakes or volcanic activity. The volcano has not erupted in 1,300 years, but it fuels hot springs in the area.
It’s just like shale gas. Everybody used to say, ‘We know there’s gas in shale, but we can’t get it out and there’s just no way to use it,’” she told Environment and Energy Daily “With geothermal, people were saying, ‘We know the rock is hot, but there’s just no way to get that heat out of there.’ In the early days with shale, people really felt frustrated, but a number of projects persisted.”
Reuters: Emails show Encana advised Chesapeake of Michigan land plans
Chesapeake Energy Corp. got some inside information from a rival producer in 2010 that prompted the company to alter its approach in at least 10 Michigan land deals, Reuters reported Wednesday.
CEO Aubrey McClendon directed Chesapeake officials to renegotiate or delay closing on deals with major Michigan lease holders after learning Encana Corp. was paring back its leasing efforts there, according to emails reviewed by the news agency.
The information could provide additional evidence to state and federal officials investigating whether Chesapeake and Encana broke the law by discussing how to suppress land prices in Michigan’s Collingwood Shale.
Reuters first reported last month on possible collusion between Chesapeake and Encana after the companies had been competing for leasehold in Michigan.
One antitrust expert told Reuters the exchanges between McClendon and Encana counterpart Jeff Wojahn, president of the Canadian company’s U.S. operations, were “highly suspect,” while another said they may have simply been an attempt to gather market intelligence.
McClendon has been under fire since Reuters reported in April that he had secured up to $1.1 billion in loans against his personal stake in Chesapeake’s wells.
The controversial perk that allowed him to invest in every well drilled by the company he co-founded is being discontinued, while McClendon has been replaced as Chesapeake chairman by former Conoco executive Archie Dunham.
Icahn on Chesapeake: ‘I would not sell it at all right now’
Activist investor Carl Icahn said he is pleased with the new board at Chesapeake and that he is not interested in selling out just yet.
In an interview on CNBC Monday, he seemed to embrace a long-term view of the Oklahoma City energy company.
I think natural gas prices are going to go quite a bit higher and Chesapeake will be there to take advantage of it. I think — I hope you’re going to see a much higher price on Chesapeake. I would not sell it at all now,” Icahn said.
The billionaire investor repeated his view on the company and CEO Aubrey McClendon.
Chesapeake is in my mind a very undervalued asset,” Icahn said. “I think that Aubrey is a very bright guy. He’s put a lot of great assets together. The problem is they couldn’t afford to buy some of them. They gambled too much in buying them, and therefore you have this cash gap. You have to cut expenses drastically there. I think you can.”
Icahn began the interview by criticizing biotech company Forest Laboratories CEO Howard Soloman over the timing of his stock sales.
The discussion of Chesapeake begins at 7:38.
Report: Justice Department investigating Chesapeake for collusion
The U.S. Justice Department is investigating whether Chesapeake Energy Corp. and Encaca Corp. conspired to to drive down lease costs in Michigan, Reuters reported Monday.
The investigation follows Reuters report last week that executives for the two companies — including Chesapeake CEO Aubrey McClendon — repeatedly sent emails to each other in 2010, discussing how to avoid bidding against each other in public land auctions and in negotiations with private land owners in Michigan.
Spokesmen for the Justice Department and Chesapeake declined comment.
Besides the federal inquiry, the antitrust division of the Michigan Attorney Generals office and the Michigan Department of Natural Resources also opened investigations following last week’s article, Reuters said Monday, citing “three sources familiar with the matter.”
In the email exchange published by Reuters, McClendon told a Chesapeake vice president that it was time “to smoke a peace pipe” with Encana “if we are bidding each other up.”
The vice president replied, saying he had contacted Encana “to discuss how they want to handle the entities we are both working to avoid us bidding each other up in the interim.”
The Sherman Antitrust Act prohibits companies from discussion price-fixing and other noncompetitive actions. Companies can be fined up to $100 million and individuals up to $1 million for each offense. Victims of such discussions also can seek triple the amount of damages.
Ex-EPA official who promised to ‘crucify’ oil companies joins Sierra Club
The former U.S. Environmental Protection Agency administrator who made headlines for promising to “crucify” a few oil and natural gas companies has joined the Sierra Club’s fight against coal, the environmental group announced Friday.
Al Armendariz resigned in April as administrator for the EPA region that includes Oklahoma and Texas after his comments at a 2010 public hearing were brought to light by U.S. Sen. Jim Inhofe, R-Tulsa.
Armendariz told a questioner that the EPA would “crucify” a couple of oil and gas companies as an example of how the agency’s environmental regulations would be enforced. He apologized for those remarks before he resigned.
Sierra Club officials welcomed Armendariz to their fight against coal.
“This is an exciting day for clean energy and public health supporters in Texas,” said Bruce Niles, a top Sierra Club official. “Al has worked closely with the Sierra Club for many years, as an environmental scientist and professor. He understands the critical importance of developing clean energy to create jobs, protect people and protect air and water.”
Armendariz spent eight years as a professor in civil and environmental engineering at Southern Methodist University in Dallas before joining the EPA.
“As a third generation Texan, I’m proud to be taking on this new role to help protect Texas,” Armendariz said. “As a father and a scientist, I know how important it is to transition to cleaner sources of energy that don’t pollute the air that our children breathe, and I’m proud to be working on a campaign with a proven track record for success.”
Starting next month, Armendariz will be senior campaign representative for the Sierra Club’s Beyond Coal campaign. He will be based in Austin.
Scientists criticize gas industry’s report on methane emissions
A group that promises to bring transparency to the discussion of unconventional natural gas development is dismissing a recent study commissioned by the American Petroleum Institute and America’s Natural Gas Alliance.
The study, released June 4, concluded the industry is responsible for half of the methane emissions attributed to it by the U.S. Environmental Protection Agency. The agency in April issued new rules to limit emissions from hydraulic fracturing, a technique used in most oil and natural gas operations.
The nonprofit Physicians Scientists and Engineers for Healthy Energy on Tuesday called the industry’s study “fatally flawed.” The group issued a statement from Cornell University professors Anthony Ingraffea and Robert Howarth and research technician Renee Santoro.
“The study relies on a critically flawed survey design, completely ignores many other recent studies, and would not have passed peer-review in a scientific journal.”
The scientists contend the industry groups’ study is based on a biased survey, highly selective information and an uncertain approach.
The group praised a recent study by researchers at the National Oceanic and Atmospheric Administration and the University of Colorado, which they said measured the actual flux of methane from an unconventional gas field. It showed emissions were higher than the EPA’s estimates.
“More such studies are needed, evaluating emissions from both conventional and unconventional gas fields, and the downstream emissions from pipelines and urban distribution systems.”
The group concludes “the best available science” indicates that natural gas has a larger greenhouse gas footprint than any other fossil fuel, so it should not be regarded as a bridge fuel to cleaner alternatives.
Industry advocates have dismissed the group for its ties to the Park Foundation, which helped fund the anti-gas documentary “Gasland” and other attacks on gas development. Ingraffea and Howarth also have been criticized for inaccurate work.
