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HPIn Brief

06.01.2011  |  Thinnes, Billy,  Hydrocarbon Processing Staff, Houston, TX

Keywords: [natural gas] [demand] [taxes] [GTL] [gas-to-liquids] [lithium] [safety] [awards] [economy]

Natural gas demand

According to the US Energy Infor-mation Administration, the total of more than 22.1 trillion cubic feet of natural gas demand in 2010 was the highest-ever level in the US, exceeding the previous high point established in 2000 by more than 10%.

With 2010 setting new records for natural gas demand, Gas Technology Institute (GTI)—an independent, not-for-profit R&D organization serving the natural gas industry—sees the coming decade as a period of continued robust growth.

“The economic and clean-energy benefits of natural gas are helping to drive market demand,” said David Carroll, president and CEO of GTI. “The outlook for natural gas demand remains robust, thanks to the remarkable expansion of natural gas supplies in recent years and very attractive end-user prices. We believe that gas demand will likely reach 24–26 trillion cubic feet by 2020, while also helping to reduce US carbon emissions.”

Future growth in demand will be led by the power-generation sector, where natural gas is poised to help offset an expected wave of older coal-fired power-plant retirements. Power-generation demand in 2010 was at an all-time high, 40% higher than demand in 2000.

The natural gas industry is also experiencing growth in residential and commercial market sectors. In 2010, residential natural gas demand was the highest since 2003, while commercial customers used more gas than at any time since 1997. While muted by appliance and building energy-efficiency improvements, natural gas is well positioned to continue to efficiently meet building energy needs as an environmentally friendly energy source.

Another area in which GTI anticipates major growth in demand is in the transportation sector, where fleet owners are increasingly turning their attention to natural gas vehicles (NGVs) for their economic benefits. Current prices of compressed natural gas for vehicle use are about $1.95/gallon.

ConocoPhillips CEO Jim Mulva appeared at a Senate Finance Committee hearing in Washington, DC, where he outlined the negative effects of proposed tax policy legislation targeting major energy companies. Other companies with CEOs testifying were BP, Shell, Chevron, ConocoPhillips and ExxonMobil. The bill, proposed by several Democratic US Senate members, would repeal tax breaks for the five largest oil companies, saving US taxpayers approximately $2 billion a year.

“Our industry already has the highest effective tax rate in the US,” said Mr. Mulva. “Increasing these taxes would cost jobs and raise gasoline and other consumer prices, while actually unintentionally reducing the government’s tax revenue by discouraging investment by the industry’s largest and most financially capable companies.”

According to Mr. Mulva, proposals to repeal the Section 199 domestic manufacturing deduction for the five largest oil companies would discriminatorily deny them a tax deduction available to every other manufacturing industry.

Statoil will withdraw from ownership and management roles with gas-to-liquids venture company GTL.F1. The Norwegian oil and gas major said it had played a key role in developing GTL.F1’s technology, but, being primarily a user of technology in its own operations, Statoil does not see licensing of GTL technology as part of its core business. As a result, Statoil’s further partnership is no longer essential for continuing success, the venture firm said. Statoil will have access to the GTL.F1 technology on a preferential commercial basis.

Albemarle has developed a proprietary technology for lithium extraction from brine. This newly developed technology will allow the company to recover lithium that is present in the brines at its Magnolia, Arkansas, bromine facility and to utilize it to produce lithium carbonate. The market for lithium chemicals is expected to grow rapidly, reaching $1.2 billion globally by 2015, primarily from increased demand for batteries in electrical vehicles. Using this new technology and brine from its bromine production facility, Albemarle has produced lithium carbonate in a lab setting and is currently operating a pilot plant to optimize the process. Commercial production could begin as early as 2013.

For the third consecutive year, Air Products received a Pinnacle Award for chemical transportation safety from Union Pacific Railroad. The award was recently presented to company representatives at an event held in Houston, Texas. The Pinnacle Award annually recognizes companies that have implemented successful prevention and corrective plans and have achieved a rate of zero non-accident releases for shipments of regulated hazardous material. Air Products previously won this award six times between 1996 and 2006. The Union Pacific award program, which began in 1996, is open to all Union Pacific chemical and petrochemical customers. Criteria include safe loading techniques, security level of shipments and zero non-accident releases.

Unrest in North Africa and the Middle East, coupled with the disaster in Japan, threatens the sustainability of the global economic recovery, but the momentum of growth is thought to be strong enough in most regions to absorb the shocks, according to a quarterly analysis report from Ernst & Young. However, global economic growth projections are being reduced, dropping to around 4% for 2011. Despite the fact that short-term oil and gas supply and demand remains relatively balanced, oil prices have gone up in anticipation of supply shocks, the report says.

“We are dealing with a new kind of ‘oil shock’,” said Marcela Donadio, Americas oil and gas leader for Ernst & Young. “Driven by angst over broad geopolitical concerns, markets are proactively reacting to a potential supply problem.” HP

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