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Natural Gas 360 Oil & Gas Propaganda

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Check out page 28, where Elise Jones, now a county commissioner entrusted with regulating the oil & gas industry to ensure citizens' safety, is listed as a key ally by the Oil & gas Industry. Conflict of Interest???
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Advancing America’s Energy Solution This compendium features insight and intelligence from some of the world’s best and brightest natural gas energy experts, analysts, and players. Each profile presents the individual thoughts of these leaders in their own words.
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Page 1: Natural Gas 360 Oil & Gas Propaganda

Advancing America’sEnergy SolutionThis compendium features insight and intelligence from some of the world’s best and brightest natural gas energy experts, analysts, and players. Each profile presents the individual thoughts of these leaders in their own words.

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Natural Gas 360Advancing America’s Energy Solution

Introduction

2 Natural Gas 360 By Tisha Conoly Schuller

Part I: The Opportunity 4 The New Natural Gas Picture Gives Us Hope for Our Energy Future By James Hackett

6 Natural Gas is the Game-Changer—Here’s How It Can Win By Senator Timothy E. Wirth

10 Natural Gas—A Bipartisan Energy Solution By Tom Price, Jr.

Part II: Keeping It Clean 12 Natural Gas and Environmental Responsibility in the New World By Fred C. Julander

14 Moving from Renewable Standards to Clean Energy Standards By Reid Detchon

16 Natural Gas Can Keep Coal from Gaining Ground By Robert F. Kennedy, Jr.

18 Creating a Culture of Safety for Natural Gas By David Fleischaker

Part III: Public Matters 20 Public Policy—We Can Do Better By Scott Moore

22 Four Important Policy Changes to Speed Natural Gas Acceptance By Heidi Van Genderen and Saya Kitasei

24 Collaboration—Colorado’s Clean Air-Clean Jobs Act is a National Model

By Martha Rudolph

Part IV: New Partners and Possibilities 26 Natural Gas and Renewable Energy—An Untapped Opportunity

to Connect and Collaborate By Patty Limerick

28 Collaborating for a New Energy Future By Elise Jones

30 The Road is Ready for Natural Gas Vehicles By David Hill

Part V: The Way Forward 33 10 Critical Considerations for Natural Gas Producers’ Energy Future By Don McClure

Table of Contents

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Like a true 360-degree

circle, we must touch

each point and realize

that each point is

important, no matter

how uncomfortable.

Tisha Conoly Schuller is the President & CEO of the Colorado Oil & Gas Association, a nationally recognized trade association that promotes the expansion of Rocky Mountain natural gas markets, supply and transportation infrastructure through its growing and diverse membership. As COGA President & CEO, Ms. Schuller is responsible for leading the oil & gas industry in Colorado legislative, regulatory, and public relations matters and serving as an industry spokesperson.

We all love a challenge, and we have landed in the middle of one. Before our nation is the opportunity of a lifetime: A century’s

worth of a!ordable, clean fuel right here at home. But we may not be able to extract and use this great energy source if stakeholders are terrified by the oil and gas industry and its processes.

Whether or not the facts support the perceptions, there are many smart and reasonable people in this country who fear that hydraulic fracturing and other elements of drilling are unsafe to their communities and families. Unless we address this fear empathetically and comprehensively, we will not have a license to operate.

At the same time, we have been embraced like never before by unconventional allies in the conservation community who believe in the environmental benefits of natural gas. That said, they are concerned about the e!ects of development; so we must directly address their unease to reap the potential benefits of such support.

In my first year as the Colorado Oil & Gas Association President and CEO, folks outside of industry often refer to “the oil and gas industry,” as if we speak with one voice. We don’t.

In fact, the oil and gas industry represents an incredibly diverse group of businesses that includes major international companies, small operators of a dozen wells, and everything in between. Different personalities, interests, and business concerns drive each of our decisions and points of view.

As a diverse group, we have a tremendous opportunity before us. How do we come together, speak with one voice, and tap into this potential?

Natural Gas 360

By Tisha Conoly Schuller

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Right now, it’s quite tempting to talk about it amongst ourselves; we have no shortage of opinions, and there are plenty of options for us to consider.

I like internal dialogue and discussion. It’s constructive. It’s productive. But it’s not enough. Not if we want to complete the idea of Natural Gas 360.

Instead, like a true 360-degree circle, we must touch each point and realize that each point is important, no matter how uncomfortable. This is absolutely imperative if we’re going to take advantage of the opportunities before us.

In the last year, I’ve learned that di!erent groups both within and outside industry have different languages, personalities, assumptions, and styles of engagement. Some are more inclined to grab the baseball bat and talk later; others are willing to listen silently and gather information. Some are passionately engaged in seeking compromise solutions. But everyone believes their point of view is critically important.

Most of us are just as committed to providing a!ordable clean energy and protecting our State’s beautiful environment as we are to protecting our family’s health and our community’s well being. We are all interested in contributing positively to our overall social well-being and quality of life.

And that’s why we’ve brought together a full spectrum of opinions in this special compendium, which is designed to encourage civil, engaged, and respectful conversation.

Well, nearly a full spectrum—we’ve excluded the two extremes of ”drill-baby-drill” and “stop-all-drilling,” which only distorts the circle. This compelling collection of minds emphasizes the interesting wide range in between the extremes, providing a chance to reflect upon our opportunity and our challenge—from a myriad of perspectives.

I encourage you—no matter who you are or where your alliances and allegiances begin—to read these articles from the specific perspective of the author. Consider the authors’ assumptions, their language, and their prejudices.

You don’t have to agree with everything you read (I didn’t). But that doesn’t need to stop us from considering these points of view.

When we look at Natural Gas from 360 degrees, it can help us navigate a true path, despite the attempts to divert us down a track full of twists and turns. But if we are nimble and open, this path will get more natural gas to market, where it will create the economic and environmental solutions we can all agree are possible.

Natural Gas 360

We’ve brought together

a full spectrum of

opinions in this special

compendium, which is

designed to encourage

civil, engaged, and

respectful conversation.

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At some very basic level,

we know energy is

fundamental to physical

existence–as important as

clean air, water, and food…

…and that tells us energy

and the environment

are inseparable.

James Hackett is Chairman and CEO of Anadarko Petroleum, which is one of the largest independent oil and natural gas exploration and production companies in the world, with approximately 2.3 billion barrels of oil equivalent (BBOE) of proved reserves at year-end 2009.

Energy is something that touches every one of us, every day. But with the exception of those sub-zero nights when we really need

it, or when we see gasoline prices pierce $4 per gallon, most people don’t think about the complexity of energy—where it comes from, how it is generated, the elaborate choreography that takes place thousands of feet underground and above ground to find it, develop it, and produce it.

Still, at some very basic level, we know energy is fundamental to physical existence—as important as clean air, water, and food.

Two of these items directly relate to the environment—air and water; and that tells us energy and the environment are inseparable. Indeed, we understand production and preservation require a balancing act. This applies not just to oil and natural gas, but also to each of the renewable options in front of us. None is completely free of environmental impacts.

And speaking of the environment, natural gas is a great answer. It’s a fuel source that burns 20 to 30 percent cleaner than oil and twice as clean as coal in terms of carbon dioxide emissions. If you factor in other pollutants, natural gas is even cleaner in comparison. But Colorado currently burns coal for about 60 percent of its energy needs, so those new energy-e"cient light bulbs we’ve all been installing are improving e"ciency, but they’re still likely to be powered by coal.

Reducing human-made emissions is important, which is why I see a foundational role for natural gas. I also believe achieving a better energy future will require a significant expansion of nuclear energy (if the significant challenges it faces as a fuel source are met). In addition, I believe that alternatives such as wind, solar, advanced biofuels, and others need to be a bigger part of the energy mix. We need to continue

The New Natural Gas Picture Gives Us

Hope for Our Energy

FutureBy James Hackett

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The New Natural Gas Picture Gives Us Hope for Our Energy Future

pursuing and investing in these renewable forms of energy—yet we also need to be realistic about their near-term limitations.

When the wind isn’t blowing hard enough or the sun isn’t shining (which is about 2/3 of the time), we still need electricity for America. That’s why wind and solar need a reliable backup, and that dependable resource is natural gas.

It’s also important to note that wind and solar do nothing to displace foreign oil as a transportation fuel. The truth is that wind and solar are only replacing other domestically produced fuels. They do very little, if anything, to enhance our energy security.

If we are truly serious about putting actions behind our words, and really doing something to reduce emissions and reduce America’s dependence on foreign oil—again, we’ve got a great answer in natural gas. It’s the cleanest alternative transportation fuel available today, according to the EPA.

And that’s why a large number of municipal transit authorities have moved to natural gas bus fleets. It’s also why AT&T announced, for example, that it would be replacing 8,000 service vans with natural gas vehicles. And why UPS deployed 300 new natural gas vehicles in 2009, adding to the 800 it already had in service.

The lack of natural gas refueling stations nationwide is a challenge and, because of that, I’m not necessarily advocating natural gas vehicles for residential use; but I do see its application for fleet vehicles, heavy-duty trucks, taxis, garbage trucks, school buses, and public transportation. As T. Boone Pickens said: If America’s 6.5 million 18-wheelers ran on natural gas engines instead of diesel, we could cut oil imports by 2.5 million barrels per day. That’s half of what the U.S. imports from OPEC.

And that’s natural gas—98 percent of which comes from North America—versus diesel, which is predominantly refined using imported oil.

In terms of the domestic supply of natural gas, the numbers say it all: The Energy Information Administration (EIA) estimates that even at today’s level of consumption, we have more than a 100-year supply of natural gas

that continues to grow with advancing technology.

An added—but critical—benefit here is that U.S. natural gas production creates jobs, revenue, and economic activity. It pumps money into—not out of—the American economy. The natural gas industry supports nearly 3 million U.S. jobs, and it employs more people than the renewables, coal, and nuclear industries combined.

Which brings us to price.

In early November 2010, NYMEX Natural Gas Futures for December delivery were trading at $3.87 for the first week of November and $3.94 for the second week. This is good news from a consumer’s point of view and, frankly, the indications are they won’t trade outside of a band of about $5 to $8 per dekatherm over the mid-term.

That’s the equivalent of $30 to $40 per barrel of oil, which means natural gas can be supplied at approximately a $2.50 per gallon equivalent for the foreseeable future.

I think most of us would agree, that’s pretty reasonable, considering the versatility of this fuel and all of the environmental, national security, and economic benefits that natural gas brings to the table.

We may have gotten o! to a late start in sharing the natural gas story and the benefits it o!ers, but the momentum is building around this important resource, and we must keep making the case in both public and private sector forums.

I find that the facts speak for themselves. Most of the people I meet with understand the clean attributes of natural gas, but they don’t realize just how much of it we have in the U.S.—more than all the oil reserves in Saudi Arabia. And the shale plays and other unconventional sources have truly changed the game in terms of unlocking new supplies of this domestic resource.

I believe this New Natural Gas picture gives us a new hope for our energy future. And, whether you call it a “bridge” or a “foundation,” it needs to play an important role in keeping our economy moving, cleaning up our environment, and enhancing our national security as the new decade unfolds.

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To be recognized as the

clean alternative in

power generation and

transportation, and to

reap the benefits of

public policies that would

reward such a fuel, the

industry must choose

the right path.

A former United States Senator from Colorado, Timothy E. Wirth has served as President of the United Nations Foundation since 1998. He was Under Secretary of State for Global A!airs during the Clinton Administration.

W e are at an energy crossroads today, and if the natural gas industry seizes the opportunities that are so clearly in front of it, it will

help determine our nation’s energy future for decades to come.

A year ago, shale gas was largely unknown outside of the industry. That is not the case today. Within energy policy circles, natural gas is no longer viewed as a dwindling domestic resource with inherently high prices. But the questions about the fuel have changed, and many answers remain unclear.

Is gas really a game-changer—abundant in supply, clean to burn, and the a!ordable domestic fuel of choice? Or is it a flash in the pan, overhyped, and a threat to our landscape and drinking water?

I believe gas can be a game-changer, nationally and globally—but in the United States the industry is poised on a knife-edge of public acceptance that could a!ect its license to operate for years to come. To be recognized as the clean alternative in power generation and transportation, and to reap the benefits of public policies that would reward such a fuel, the industry must choose the right path—one that is palpably in its own self-interest, in the interest of our national security, and in the interest of our environmental future.

The Game Plan Whether you make the economic case for gas, or the security case, or the climate case—or, as I do, all of the above—there are three themes that should run through a new game plan for natural gas:

1. Increase demand by expanding markets.2. Minimize the risk of environmental damage

and concern.

3. Make old enemies your new friends.

By Senator Timothy Wirth

Natural Gas is a Game Changer

Here’s How It Can Wın

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Natural Gas is a Game Changer—Here’s How It Can Win

1. Let’s look at demand first.Over the last couple of years natural gas prices have been searching for a new equilibrium. The combination of volatile prices and the economic recession curbed demand just as new sources of supply were coming onto the market. While the nation’s economic di"culties will pass, unless steps are taken, the overhang of excess new gas supply could be very long-lasting. That will continue to have a dampening e!ect on prices—unless a clear and predictable demand curve is developed to match the supply.

Let me suggest a menu of ideas for how this demand can be accomplished. Half of our electricity is generated by coal-fired power plants. Nearly a third of those plants were built before the Clean Air Act was passed in 1970—old, energy-wasting, pollution-spewing antiques—and Congress expected them to be retired long ago. We don’t even need to build new power plants to do it. Underutilized gas capacity is more than adequate to begin the transition.

Offsetting Coal Generation Combined-cycle gas plants run at only 42 percent of capacity, compared to 74 percent for coal. In the Southeast—from Maryland to Mississippi—the gas utilization rate in 2008 was less than 13 percent! The Congressional Research Service reported this year that increasing the use of combined-cycle gas plants could offset about a third of the nation’s coal generation—roughly the same amount produced by the oldest, dirtiest, least e"cient coal plants. That would increase gas demand by 4 trillion cubic feet a year.

Congress should provide incentives for replacing and repowering these coal clunkers. Obviously, that will not be easy, since these old plants are often cash cows for the owners. But a phase-out strategy can be designed—through legislation and regulation.

Fortunately, the facts on the ground can help bolster the case for natural gas. The shale deposits in coal states like Illinois, Indiana, West Virginia, Ohio, and Pennsylvania can change both the economies and politics of those key states—and therefore of Washington. After all, it’s not that the voters love coal—it’s that they love the jobs and the economic benefits that come with it—and natural gas can do better.

Creating Jobs and Boosting the Economy A Penn State study of the Marcellus shale concluded that gas development will pump $8 billion into Pennsylvania’s economy this year (already equal to coal)—and its contribution will grow to $18 billion a year by 2020, supporting more than 200,000 jobs and generating close to $2 billion a year in state and local tax revenues.

The natural gas industry needs to educate Congress and the administration about the size of these new gas supplies while making the case that the transition away from coal in electric power generation and from oil in transportation—imperative for our national security and environmental integrity—also makes good economic sense.

A few specific steps along these lines include:

1. Passing the Pickens Plan to shift heavy-duty trucks to natural gas.

2. Spurring the use of alternative fuels—including natural gas—in urban vehicle fleets to lower the public health threat of air pollution from gasoline and diesel.

3. As noted earlier, providing incentives for shutting down coal clunkers.

4. Sponsoring a hard-hitting public awareness campaign that compares the benefits of clean, domestic natural gas with the risks of oil and coal—in the case of oil, the spill in the Gulf and up to $1 billion a day for oil imports; and in the case of coal, health-damaging air pollution, mountaintop removal, ruined streams, and the proliferation of toxic metals in our environment.

Using Regulation to Benefit the Natural Gas IndustryIt’s also time to think a little more creatively about how regulation can work for the natural gas industry—how regulatory action can benefit natural gas. How can the industry take advantage of EPA and its legislative mandate? And, especially, how can the industry use the far-reaching authorities of the Clean Air Act?

To review the legal landscape very briefly, in 2007 the Supreme Court found that greenhouse gases, “Fit well within the Clean Air Act’s capacious definition of air

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Natural Gas is a Game Changer—Here’s How It Can Win

pollutant.” In response, EPA Administrator Lisa Jackson last year made an “endangerment finding”—that the current and projected concentrations of greenhouse gases in the atmosphere “threaten the public health and welfare of current and future generations.”

This has not gone unnoticed by the coal industry and its allies, who are doing everything in their power to persuade Congress to intervene and prevent EPA from regulating under the Clean Air Act as authorized by the Supreme Court’s decision. The dirty fuel alliance knows that the stakes are very high, and it is very well organized—lobbying heavily, building constituencies, and twisting arms to achieve its objectives.

Defending the EPA’s AuthorityBut just as the old interests have a huge amount to lose, the gas industry has a huge amount to gain. So, it is in the gas industry’s interest to defend EPA’s authority. This is a battle gas must win.

Nor is the importance of EPA’s authority limited to greenhouse gas emissions. EPA’s actions on conventional pollutants may be even more significant. Over the next three years, EPA will issue several new regulations under the Clean Air Act that will a!ect coal-fired power plants. The natural gas industry should:

Advocate for the strongest possible rules.

Defend those rules in court.

Preserve EPA’s authority from Congressional attack.

Ensure that the states apply those rules.

Why? Because these new rules—required by existing law—could well cause the shift of a substantial part of the country’s generating capacity to gas, amounting to trillions of cubic feet per year of increased demand.

Success in ColoradoThe gas industry’s success in Colorado can serve as a model for what needs to happen at the federal level. The Colorado Clean Air-Clean Jobs Act enacted last year, for example, used impending air quality standards for regional haze to persuade a newly willing partner, Xcel

Energy, to retire or retrofit 900 megawatts of coal-fired capacity. Xcel plans to replace or repower the plants with natural gas, renewables, and greater energy e"ciency.

Politically, what happened was that the gas industry, the utility, and the environmental community came together around a common agenda. They began to learn and understand each other’s positions and work together e!ectively to encourage the transition from coal to gas. This strategy could be replicated in other states, and I believe that a concerted e!ort should be made to identify other state targets.

2. Now, let’s shift from demand to the environment.

In this day and age, responsible regulation to protect health, safety, the environment, and the community is simply the price of doing business. The status quo is not good enough any more—not after the Gulf, not after

“Gasland,” not after blow-outs, and not after emerging research on endocrine disruptors.

Responsible RegulationResponsible regulation rewards the good performers and weeds out the bad—and that is a good thing for any industry. For the gas industry, which has spent tens of millions of dollars advertising natural gas as “clean,” responsible regulation is utterly essential. Without it, the industry might as well flare its advertising dollars—and more to the point, risk public reaction that can deny its right to operate.

For starters, here are four steps that should go into a work plan for responsible regulation:

1. Create a joint working group with regulators, public health o"cials, and environmental advocates to determine what regulatory measures make the most sense as national standards.

2. Consolidate the industry’s best management practices and agree on standards that would form the basis for good rulemaking by the states.

3. Dramatically shrink the footprint of gas exploration and production: Drill pads, roads, pipeline corridors, and all the rest. This is an opportunity to create

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Natural Gas is a Game Changer—Here’s How It Can Win

e"ciencies, reduce costs, and improve profits by applying best industry practices for pooling, and unitization.

4. Support adequate state funding, oversight, and enforcement of regulations.

Of course, good regulation has to be sensible, but that’s exactly why the gas industry has to engage in constructive dialogue with regulators, environmental and public health groups, as well as the public at large.

3. Finally, let’s look at my final theme: Building alliances.

Many players in the gas industry are independents—very independent—but we’ve all learned that in a large and complicated society like ours you can’t get anything done without building alliances.

That’s why the natural gas industry needs to align itself with people and groups that may have been viewed with suspicion in the past. We’ve already talked about three examples—regulators, environmental groups, and public health authorities. A fourth is the renewable energy industry.

Renewables symbolize the new energy economy. Wind and solar energy have very broad public support, and nearly every world leader is pointing to new energy technologies and the transition to a low-carbon future as the foundations of the 21st century economy.

Partnering With the Renewable Energy IndustryAs a general proposition, natural gas should be a prime partner of the renewable energy industry. Gas is uniquely equipped to balance out those resources when the sun doesn’t shine or the wind doesn’t blow. In the near term, though, this may be an awkward relationship. In many markets, depending on regulations, contracts, and the time of day, natural gas and renewables are competing for market share—on the margins of the much bigger energy pie that is being protected by the dirty, old incumbent suppliers. The long-term solution is to get natural gas and renewables working in tandem to increase the “clean” share of the pie.

The big opportunity is to advocate for a cleaner, more sustainable U.S. energy mix with more renewables, more efficiency, and more natural gas. And the best approach is to work together for more ambitious low-carbon energy standards that increase the market for gas and renewables alike.

As the future unfolds, it’s important to remember that shale gas is a tremendous opportunity for our economy, our national security, and the global environment. Working together, we can do well and do good. We can strengthen our country, and we can leave a better world for our children and their children.

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We’d be naive not to

do our very best to reach

out to, educate and seek

support from all elected

o!cials, regardless of

party a!liation.

Tom Price is a Senior Vice President at Chesapeake Energy, the second largest producer of natural gas, a top 20 producer of oil and natural gas liquids and the most active driller of new wells in the U.S. Headquartered in Oklahoma City, Chesapeake’s operations are focused on discovering and developing unconventional natural gas and oil fields onshore across the U.S.

One of the most positive and compelling things about natural gas is that it’s a bipartisan fuel. Natural gas production is supported

by both Democrats and Republicans because gas is a commonsense American energy solution that helps address a number of our nation’s current economic and environmental problems. As an industry, we’ve partnered with states as politically diverse as Colorado, Oklahoma, Texas, and West Virginia, and we have developed solid relationships on both sides of the aisle in Washington, D.C., as well.

America needs all fuels and energy sources in the mix today. There is no advantage to characterizing any fuel or energy source in a partisan manner. For our part, natural gas has the advantages of being both indigenous and located in many areas of the country (which means it creates jobs in both Red and Blue states); it burns cleanly and reduces emissions of health-impacting pollutants; and it reduces our reliance on foreign fuels, which protects Republican, Democrats, and Independents alike from adverse economic impacts and threats to our nation’s security. That means fewer “nonpartisan” American dollars are sent overseas and ultimately will mean fewer American servicemen and women being put in harm’s way to protect our way of life.

It’s a fact that across this country and in our specific plays and fields we have both Democrats and Republicans representing us. That’s certainly the case in Colorado.

We’d be naive not to do our very best to reach out to, educate, and seek support from all elected o"cials, regardless of party a"liation. Further, we need to cultivate supporters and proponents among all our stakeholder groups, regardless of their political a"liation, in every part of the country. Every sustainable business reaches out to and listens to its customers. It’s a good business practice, and it’s the only way we’ll create the sort of long-term solution-focused policies our industry needs to be successful.

Natural Gas

A Bipartisan Energy

SolutionBy Tom Price, Jr.

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Natural Gas–A Bipartisan Energy Solution

We also need to continue attempting to build bridges to key NGO groups such as the Natural Resources Defense Council (NRDC), Environmental Defense Fund (EDF), Sierra Club, Worldwatch Institute, River Keepers, and local leadership groups like Environment Colorado and the Western Resource Advocates. As an industry we have told these environmental organizations that we are willing to be transparent in terms of hydraulic fracturing—and we must be true to our word. This openness is in our mutual interest because we must encourage pragmatic and well-intentioned environmental groups to work with us, to believe in us, and to stand with us when those with ulterior motives would misrepresent and distort the truth about our drilling and completion practices.

We should reject the notion that there is a perpetual, unbridgeable divide between our industry and the environmental community.

This is particularly true for those environmental groups that realize and openly acknowledge that it will be impossible for us to stop using fossil fuels anytime during our lifetimes. All reasonable environmental groups know that intermittent renewable energy alternatives must be backed by base load natural gas generation. Furthermore, some energy sources are scalable for widespread use, and some are not. We should seek out environmental groups who understand that in order to make progress today, we have to increase the use of the cleanest scalable fuel we have—natural gas—rather than delay and wait for some perfect, a!ordable, renewable fuel source that does not exist.

None of us wants to see the environment harmed. That’s not a position held exclusively by environmentalists. We all live, work and play in our neighborhoods and communities, and keeping our environment safe while still producing the needed supplies of energy to power our nation is a tough balancing job that requires all of our good e!orts.

Passage of Colorado’s House Bill 1365, The Clean Air-Clean Jobs Act, is an excellent example of how our industry, the environmental community, and reasoned leaders of both political parties can work together to clean our air, support the local Colorado economy, lessen our dependence on

higher-polluting coal, and build a better tomorrow for future generations.

Looking forward, natural gas a!ords Americans and others around the world a number of exciting opportunities.

Natural gas can greatly reduce air pollutants from higher emission coal-burning plants in an e"cient and cost-e!ective way. Surprisingly, less than 25 percent of natural gas-fired combined-cycled plants are currently being used, so we could increase generation immediately without adding to the ratepayer base.

Natural gas also provides an opportunity to build out the transportation infrastructure, especially with long haul and fleet trucks that run on cleaner-burning and cheaper compressed and liquefied natural gas.

The biggest challenge for natural gas over the next decade is an internal one. We know our fuel is cleaner, more abundant, and with lower all-in cost. But it will be imperative to educate consumers about these benefits while countering the untruths now being spread about the alleged dangers of hydraulic fracturing. We simply must counter the junk science and misrepresentations used by our opponents with sound science and geologic reality.

I am especially encouraged by what has recently unfolded in Colorado. The decision by Xcel Energy to assume a leadership role by closing plants that were fully depreciated and not required to accommodate the state’s energy needs is well worth replicating. In addition, a host of additional steps were taken so that ratepayers, shareholders, and environmentalists all came out as winners.

This type of collaboration is what is needed across America rather than senseless vilification and vacuous demagoguery. When responsible parties come together in good faith and with the best of intentions, we can achieve creative and lasting solutions for communities everywhere. That is the American way, and Colorado has helped demonstrate a viable way to move forward for the rest of the country. Thank you Colorado.

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This is what responsible

environmentalism will

be about in the 21st

century—finding ways

to do what’s best when

it comes to achieving

sustainability without

sacrificing growth.

Fred C. Julander is President of Denver-based Julander Energy Company, an independent oil and natural gas development, exploration, and production company active in the Rocky Mountain region.

T he issues of climate change and air pollution are intensifying world wide. This relentless phenomenon is opening vast, heretofore

unheard of, opportunities for constructive cooperation between natural gas producers and environmentalists. While recognizing energy use will grow in scale and scope everywhere in the world in the coming decades, the only achievable solution is one which will solve the problem in an economically acceptable manner.

Only the prince of fossil fuels, natural gas, can draw this sword from the stone. Abundant, reasonably priced natural gas already has begun to do so in Colorado. Here, the Clean Air, Clean Jobs Act was recently drafted in relative harmony by utility Xcel Energy, the environmental community, natural gas producers, and an environmentally sensitive Governor’s o"ce. The net result will be less carbon and less pollution in the Rocky Mountain air as natural gas replaces coal for some electricity generation. Colorado’s decision demonstrates what can happen when there are open lines of communication to build trust. Here, unrelated communities of citizens holding diverse interests for di!erent reasons were eager and able to make progress on a critical issue of crucial societal importance.

This is what responsible environmentalism will be about in the 21st century—finding ways to do what’s best when it comes to achieving sustainability, without sacrificing growth. And, over the next decades, this definition will broaden its reach even further so that everywhere we can protect the world’s environmental interests, including those in emerging economies, we do so without stalling societal advancement.

The energy industry will be expanding its global importance and influence for the foreseeable future. By emphasizing responsibly-

Natural Gasand

Environmental Responsibility

in the New WorldBy Fred C. Julander

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Natural Gas and Environmental Responsibility in the New World

developed, abundant, reasonably-priced natural gas, increased renewables, and greater e"ciency, the energy industry will find ways to illuminate life for the billion and a half people on our planet who still live in darkness sans electricity, without compromising environmental stewardship. Solar and wind o!er reduced air pollution, and they can be reliable when combined with natural gas. Using creativity, energy entrepreneurs will recognize they now have adequate tools to e!ectively spread new energy and environmentally friendly economies across every continent.

A key concept for natural gas players to remember and employ, as they advance to achieve energy reliability and profits along with environmental responsibility the

world over, is that openness, humility, and transparency will be helpful new watchwords in this dramatic, vibrant, and highly interconnected emerging global marketplace. We will find it is di"cult to do business—much less succeed in business—if we don’t reach out and respect all of our stakeholders all the time. Inclusivity will join creativity, e"ciency, and responsibility as key and real profit-making values for us as we move forward.

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The new access to very

large shale gas supplies

in the U.S. means we can

move away quickly from

our dependence on the

dirtiest fuel–coal –with

predictable long-term cost.

Reid Detchon is Vice President for Energy and Climate at the United Nations Foundation. He is also the executive director of the Energy Future Coalition, a broad-based non-partisan public policy initiative. From 1989 to 1993, he served as the Principal Deputy Assistant Secretary for Conservation and Renewable Energy at the U.S. Department of Energy.

T here have been a variety of proposals to mandate a percentage of electricity from specified resources. But these proposals fail to fully

capitalize on all available opportunities for CO2 emission reduction by limiting, in their own respective ways, the menu of resources eligible to meet the specified target.

Redesigning the proposals to include a full menu of Low Carbon Resources (LCR) in a Low Carbon Energy Standard (LCES) will accelerate the achievement of carbon reductions and better take into consideration regional di!erences.

The basic idea here is to go beyond a renewable standard to an LCES, or Clean Energy Standard (CES). That means requiring a minimum level of renewable energy—to stimulate further innovation and drive down costs —and also requiring increasing levels of other kinds of clean energy (nuclear, gas, and eventually clean coal).

The new access to very large shale gas supplies in the U.S. means we can move away quickly from our dependence on the dirtiest fuel —coal —with predictable long-term cost.

Roughly one third of the nation’s coal plants are so old that they are only marginally economic and should have been retired many years ago. Another third face serious economic challenges meeting federal environmental standards and also could be replaced with gas. We could do this by simply doubling the utilization of our existing generation capacity in highly efficient natural gas combined-cycle turbines (from the current level of 42 percent to 85 percent).

The remaining third of the coal fleet —generating roughly half of the power we get from coal —is relatively modern and e"cient, and should only be phased out over a longer period of time.

Moving from Renewable

Standards to

Clean Energy Standards

By Reid Detchon

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Moving from Renewable Standards to Clean Energy Standards

One way to do that would be to require utilities to meet a gradually increasing Clean Energy Standard, on top of whatever Congress may require in the way of renewable energy and energy efficiency. Such a standard —which could be met by nuclear energy or carbon-captured coal, in addition to natural gas —would give utilities the certainty they need to make investment decisions today.

Under this proposal, utilities would have to increase their Low Carbon Resources (which would include clean energy, renewables, and energy e"ciency) from 11 percent of total retail electricity sales in 2015 to 44 percent between 2030 and 2050.

A Clean Energy Standard is designed to offer a wider choice of clean energy options and allow all parts of the electricity industry and all parts of the country to have an important role in the solution. Climate protection policies must be complemented with U.S. energy policies that result in diverse and adequate supplies from clean, domestic energy resources.

Roughly one third of the

nation’s coal plants are

so old that they are only

marginally economic and

should have been retired

many years ago. Another

third face serious economic

challenges meeting

federal environmental

standards and also could

be replaced with gas.

Page 15

Photo courtesy Whiting Petroleum

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It’s imperative that the

natural gas industry steps

up and speaks with a

strong, unified voice on

this issue because the coal

industry is currently winning

the battle on Capitol Hill.

Robert F. Kennedy, Jr. serves as Chief Prosecuting Attorney for the Hudson Riverkeeper and President of Waterkeeper Alliance. He is also a Clinical Professor and Supervising Attorney at Pace University School of Law’s Environmental Litigation Clinic, and is co-host of Ring of Fire on Air America Radio.

T he natural gas industry, employing the most sensitive extraction practices, offers a solid and sustainable bridge between the

environment and the new energy economy, and it must be supported in order to keep coal and its toxic societal impact at bay .

Virtually all the key numbers tell us this can be done right now.

Indeed, there are 450 gigawatts of natural gas generation capacity in the United States, versus 336 gigawatts of coal burning capacity; yet coal plants are used 90 to 95% of the time to generate energy because irrational rules, favoring coal, govern the marketplace, while high-e"ciency natural gas plants sit idle and are only used 36 to 38% of the time.

If we switched things around, so that natural gas was dispatched when coal is, we’d be able to shut down the worst coal-burning plants in America—antiquated plants, with grandfathered exemptions from the Clean Air Act, often, most cruelly, in heavily populated areas. These plants generate about half of the nation’s carbon and are the most ine"cient of all our coal facilities.

We’ve already seen that this transfer is possible in Colorado, with the passage of the Clean Air-Clean Jobs Act of 2010, which may serve as a model for other states seeking cleaner air. And, hopefully, this approach will be adapted when the legislative “dialogue” in Washington turns to reauthorization of the Clean Air Act.

It’s imperative the natural gas industry steps up and speaks with a strong, unified voice on this issue because the coal industry is currently winning the battle on Capitol Hill.

And our nation simply can’t a!ord to have coal come out on top.

By Robert F. Kennedy, Jr.

Natural Gas Can

Keep Coal from Gaining

Ground

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Natural Gas Can Keep Coal from Gaining Ground

In an apples to apples comparison, even including generation,the clean energy industry employs six or more times the number of people as the coal industry. This industry should have more influence in Washington.

A Harvard School of Public Health study vividly shows the deaths and casualties attributable to ozone and particulates from coal plants. Coal ash in our groundwater is poisoning Americans. And modern coal mining technology dispenses with the need for human labor, impoverishes communities, and leaves barren landscapes behind.

All of this is unacceptable—and it doesn’t have to be if the natural gas industry would simply take it to coal.

A similar fight is currently unfolding in England, where Parliament recently debated a cap-and-trade energy bill. During the legislative back-and-forth, one of the speakers referenced the struggle to abolish the slave trade in the early 19th century. Public sentiment was against slavery, but it was a major source of energy. Eventually, though, slavery was abolished and the industrial economy exploded as mechanical energy replaced the free labor of Africans in shackles.

We don’t have to abolish oil to learn the same lesson and achieve the same economic results.

No, we can begin the transition away from the dirtiest fossil fuels if the natural gas industry stands up and is truly counted in the big policy debates that are about to be fought at both the state and federal levels.

Natural gas can win these debates because it is cleaner, cheaper, and in abundant supply right here in our own country. And natural gas, extracted responsibly, deserves to win these debates because it will help increase economic, environmental, and national security for citizens and communities from coast to coast.

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The truth is, our search

for hydrocarbons is a risky

business. We harness

technology to overcome

nature’s challenges, which

are humbling.

David Fleischaker served as the Oklahoma Secretary of Energy from 2003 to 2008. He has also been President and CEO of Jolen Operating Company, a privately-held independent oil and gas exploration and production company, since 1982.

Like it or not, everything our industry does today is refracted through the lens of the Deepwater Horizon disaster. Our activities are subject

to increased scrutiny, both at the federal and state levels. Our critics have polished their case with a, “See, we told you so,” refrain. Our credibility with the American public is at an all-time low.

Our critics also argue that we are pushing technology too far and that future disasters are inevitable. History lends support to their argument. It provides ample examples of technological innovation gone awry: The Hindenburg, the Titanic, thalidomide, and splitting the atom (both nuclear proliferation and Chernobyl).

The truth is, our search for hydrocarbons is a risky business. We harness technology to overcome nature’s challenges, which are humbling. We drill deeper, subject our tools to pressures and temperatures that are o! scale, and bring to bear massive forces to fracture the rock and coax the hydrocarbons to the surface.

Consider the story of Icarus, a character in Greek legend, who fell to his death after ignoring his father’s warnings not to fly too close to the sun on a pair of wax wings. Icarus had succumbed to “hubris,” the Greek word connoting arrogance, usually exhibited in some action challenging the laws of the gods and resulting in the gods punishing the o!ender.

If there was a fatal flaw in the Deepwater Horizon operations, it was one of judgment—call it “arrogance”—not technological failure. With 42 years under our belt without a serious o!shore accident—the last mishap was the blowout in the Santa Barbara channel in 1969—we took for granted our ability to control forces that were rapidly becoming uncontrollable.

Creating a Culture of Safety

for Natural Gas

By David Fleischaker

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Creating a Culture of Safety for Natural Gas

Some critics call for shrinking the development of our hydrocarbon resource. But there are serious consequences in adopting that policy. It means:

A lower standard of living, perhaps for a generation. Those at the bottom of the pyramid—the urban and rural poor—will su!er the most.

A dirtier environment, because we will depend on coal generation to a much greater degree.

A call to radically expand other energy sources, like nuclear power, which bring their own unique and significant threats.

A greater dependence on foreign sources of oil and natural gas, which would put us firmly in the box we have been trying to escape, namely our dependence on foreign and often hostile sources of oil.

If we are to continue to develop these resources, we have to develop a culture within the industry where safety comes first. It is the best safeguard against our own arrogance.

Admiral Hyman Rickover, the father of America’s nuclear Navy, got it right. From the beginning of his work, he bred into the Navy’s nuclear program a disciplined devotion to safety and quality assurance that bordered on religion. The result was a program remarkably free of accidents.

How do we do that? Lacking the strict chain of command, working with a much larger “employee” population than the Navy program has, and pressed by bottom-line financial concerns, it will not be easy. Here, however, are a few ideas:

Government alone can’t do it. Good regulation establishes guiderails—and only that. Even good regulation can’t assure a good outcome. Industry must develop a culture that makes the safety of our environment its highest priority. Leadership is the key, because the leader sets the tone for the company and its practices.

We should establish a self-regulating authority focused on one thing—protecting our environment. It should be well-funded and should support research and development for drilling technologies, the establishment of a code of best practices, and active support for state and federal regulation that would impose sti! financial penalties for those violating these best practices (including the prohibition of operating in jurisdictions where repeated or aggravated violations occur).

None of this will guarantee an absolutely safe future. It will, however, reduce the risks of another Deepwater Horizon and assure that if there is a next time, we will be better prepared to mitigate the damage.

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Public-sector o!cials are

– perhaps inadvertently–

fostering an environment

that positions natural gas

and renewable energy

against each other.

Scott Moore is Vice President of Marketing for Anadarko Petroleum Corporation. Anadarko is among the largest independent oil and natural gas exploration and production companies in the world. It had approximately 2.3 billion barrels of oil equivalent (BBOE) of proved reserves at year-end 2009.

I respect energy policymakers and regulators; they have a tough job, and they do the best they can, even if I don’t always agree

with them. But, when it comes to natural gas, I honestly believe we can do better.

Natural gas is the cleanest burning hydrocarbon; it’s cheap, abundant, and domestically produced. It’s also a reliable and much-needed partner for renewable energy.

Despite these advantages, however, public-sector officials are—perhaps inadvertently—fostering an environment that positions natural gas and renewable energy against each other. And, in the end, instead of working together, natural gas is being displaced by wind power—a tremendous missed opportunity, at least from my perspective.

Renewable energy is popular politically today, but the sun doesn’t always shine, and the wind doesn’t always blow. So, natural gas is the logical, critical, and reliable fill-in for these intermittent energy sources.

Yet the way things are shaping up now, utilities are too often knocking natural gas out of their energy portfolios in favor of renewables. This is unfortunate, because it reinforces the rivalry between gas and renewable energy, and because it doesn’t help us take the required steps toward cleaning up the environment.

We don’t need a rivalry between renewable energy and natural gas—and we already have a model in place in Colorado that shows us how to end this unconstructive and unproductive jostling for position.

Indeed, the Clean Air-Clean Jobs Act was created by a broad-based coalition lead by Governor Ritter that included Xcel Energy, the environmental community, state regulators, and natural gas producers.

Natural Gas and Public Policy

We Can Do Better

By Scott Moore

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Natural Gasand Public Policy–We Can Do Better

It’s also important to embrace an integrated and inclusive approach as we contemplate our energy future, and only natural gas can step up, and in, to fill the void and economically meet our energy requirements.

Policymakers need to understand this, and they must work assiduously to find room for both renewable energy and natural gas as they craft rules, regulations, and legislation over the next decade.

Looking ahead, compromises will have to be made as we work together to reduce emissions from power generation. If we are truly committed to removing pollutants from the air, lowering greenhouse gas emissions, and improving the quality of life for communities everywhere, then we must deploy natural gas.

The way things are shaping

up now, utilities are too

often knocking natural

gas out of their energy

portfolios in favor of

renewables. This is

unfortunate, because

it reinforces the rivalry

between gas and

renewable energy, and

because it doesn’t help

us take the required

steps toward cleaning

up the environment.

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Unfortunately, what could

be a logical alliance between

natural gas and the clean

energy community has

been slow to emerge.

For decades, natural gas has had an uneven role in the U.S. energy portfolio.

Indeed, in policy deliberations, natural gas has been linked to oil and coal, even though it burns more cleanly than its fellow fossil fuels. And, until the relatively recent discoveries of new gas reserves, global supplies of natural gas were thought to be rapidly diminishing, doomed to share the price volatility and energy security challenges that plague oil.

In recent years, however, new availability of natural gas from unconventional reservoirs and liquefied natural gas in a rapidly globalizing market have changed this picture. And these new supplies now open a pathway for natural gas to play an important role in forging a lower carbon 21st century energy economy.

Together with renewable energy and energy efficiency, natural gas could help transform the energy economy over the next few decades, drastically reducing climate pollution; and, if applied to a strategic portion of the transportation fleet, natural gas could also help lower dependence on imported oil. In addition, natural gas lends itself to a range of high-efficiency applications, and it can provide the flexible backup power that will allow high levels of reliance on wind and solar power before economical storage technologies are developed.

Unfortunately, what could be a logical alliance between natural gas and the clean energy community has been slow to emerge. But if the opportunity for this alliance is better recognized and acted upon, energy efficiency, renewables and natural gas can be better positioned to achieve a low-carbon environment.

Four Important Policy Changes to Speed

Natural Gas Acceptance

By Heidi Van Genderen and Saya Kitasei

Heidi Van Genderen is a Senior Energy Advisor at the Worldwatch Institute and the Director of National and Regional Outreach at the American Council on Renewable Energy (ACORE).

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Four Important Policy Changes to Speed Natural Gas Acceptance

Building new policy frameworks will be essential to this energy transformation. And for that to occur, an innovative and strategic partnership between the gas, renewables, and e"ciency industries—as well as the environmental community—could be most helpful.

For environmentalists, gas can broaden the range of tools available to reduce carbon emissions and bring a strong industry to the alliance that supports climate legislation. And for the gas industry, allying itself with those who are working to build a low-carbon economy will facilitate a policy environment in which gas plays a growing role.

Four important policy changes will be needed to achieve these goals:

Putting an Effective Price on Carbon

By attaching a cost to carbon dioxide emissions, a cap-and-trade system or a carbon tax will tend to favor natural gas at the expense of coal and oil—if the adopted approach levels the playing field and auctions all emission allowances, rather than giving any for free to traditional coal plants.

Advancing Clean Air Standards

In general, fuel-neutral emissions standards that do not allow indefinite grandfathering of older coal plants are likely to have the biggest impact on emission trends—in part because they will motivate fuel switching from coal to gas.

Reforming Electric Utility Dispatch Rules

Shifting dispatch requirements so that environmental performance is a consideration in these decisions—with

resulting costs passed through to consumers—could have a substantial environmental benefit, even beyond the impact of putting a price on carbon.

Strengthening Environmental Controls and Transparency in the Gas Industry

The natural gas industry has so far resisted efforts to regulate hydraulic fracturing at the federal level, creating concern among local stakeholders and environmental groups about the process’s lack of transparency and oversight. Gas companies should take a more cooperative approach to these issues, both at the state and federal levels. More transparency and tighter regulations are needed if unconventional natural gas is to play a constructive, sustainable role in a low-carbon energy future.

Saya Kitasei is a MAP Sustainable Energy Fellow at the Worldwatch Institute.

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The backdrop to this

legislation was the

recognition that coal-fired

utilities have been heavily

regulated and will continue

to face increasingly more

stringent emission control

requirements for a variety

of di"erent pollutants.

Martha Rudolph is Director of Environmental Programs for Colorado Department of Public Health and Environment.

V oters across the country have repeatedly asked their elected o"cials to reach across the aisle, and into the private sector, in

order to develop and enact constructive public policies that serve communities everywhere.

But this has proven more di"cult than many of us would like.

And that’s why I point with pride to Colorado’s recently passed Clean Air-Clean Jobs Act.

The backdrop to this legislation was the recognition that coal-fired utilities have been heavily regulated and will continue to face increasingly more stringent emission control requirements for a variety of di!erent pollutants under the federal Clean Air Act and state air quality laws.

The goal was to look at these regulatory requirements in a holistic manner, to minimize the piecemeal approach of responding sequentially to each new air quality requirement, and, instead, to develop an approach that would identify foreseeable requirements and create a plan today that would e!ectively address these requirements in one single phase.

Ultimately, it was all about minimizing costs to consumers, eliminating as much as possible the likely churning of new controls, and maximizing the clean air benefits.

The significant and noteworthy process behind the Clean Air-Clean Jobs Act recognized that there were a number of di!erent players, and each player had a specific interest that had to be aligned and blended into a collaborative and beneficial solution. Participants included: Governor Ritter’s administration, regulatory agencies, the

Collaboration–Colorado’s Clean Air-Clean Jobs

Act is a

National Model

By Martha Rudolph

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Collaboration– Colorado’s Clean Air-Clean Jobs Act is a National Model

owners of the coal-fired utilities, natural gas companies, and environmental activists.

The work often focused on the technical concerns. The early questions that came up were: “What could this accomplish?” “Will it be enough?” “Who would be interested?”

Then it came down to teamwork, and the give and take that comes from mutual respect, substantive conversations, and open communications.

The discussion and listening phase was critical—and it had to take place in full form and fashion before any policymaker put pen to paper. People were asking each other: “Is this a goal we agree on?” “Is there a route to get to that goal?” “What compromises will be needed to achieve the goal?”

The legislature played a crucial role here, and bipartisan back and forth was the rule, not the exception.

The collaborative process that helped enact the Clean Air-Clean Jobs Act brought together the public and private sectors in a profound, productive, and unique way.

And I think this state-level legislative case study provides a tremendous lesson and o!ers a great model for other collaborative work that could be done at not only the state, but at the local and federal levels.

I believe we should use this pragmatic approach as we move forward and seek to address other big issues that have societal impact and a!ect our quality of life.

As the passage of the Clean Air-Clean Jobs Act demonstrates, when you work to develop relationships based upon respect and trust, and you seek to understand each other’s objectives, you are better equipped to identify a common goal that, by working together, can be achieved.

It came down to teamwork,

and the give and take

that comes from mutual

respect, substantive

conversations, and open

communications…

…The discussion and

listening phase was

critical—and it had to take

place in full form and fashion

before any policymaker put

pen to paper.

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An alliance between

natural gas and renewable

energy in electrical

generation would

carry enormous, even

breathtaking, promise.

Patty Limerick is the Faculty Director and Chair of the Board of the Center of the American West at the University of Colorado, where she is also a Professor of History.

Years of observation have convinced me that an alliance between natural gas and renewable energy in electrical generation

would carry enormous, even breathtaking, promise as we make a transition from old-line fossil fuels. But that promise hasn’t been fulfilled yet—and we don’t know when, and if, it will ever be realized. This failure to communicate and connect is sad—and illogical, because natural gas and renewables belong together on the same side of the new energy equation.

There are four main reasons they belong together:

1. Natural gas is the essential fuel for filling in when wind power is sporadic.

2. The combustion of natural gas produces far less in carbon and other troubling emissions than the combustion of conventional fossil fuels.

3. Natural gas is the essential bridge to the renewable future.

4. Both natural gas production and renewable energy generation involve landscape disruption that frequently makes some local groups angry. The producers of the two forms of energy may as well be comparing notes and helping each other define and refine strategies for dealing with this issue.

Every time environmentalists, scientists, or public o"cials express concern about global warming, they are stepping in and conducting the marketing and even the lobbying for natural gas and renewable energy players.

I’m not exactly certain why this alliance isn’t evident and com-pelling to all parties. Or, if it is, why is there such reluctance and

Natural Gas and Renewable

EnergyAn Untapped

Opportunity to Connect and Collaborate

By Patty Limerick

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Natural Gas and Renewable Energy— An Untapped Opportunity to Connect and Collaborate

resistance to a multi-faceted collaboration between both energy entities?

Let me offer four guesses as to forces discouraging détente between the sectors of natural gas and renewable energy.

First, the historical hypothesis.

Over the last three or four decades, the people who work in natural gas and the people who work in renewable energy have been in direct conflict and opposition, and it is hard to set that competitive attitude aside.

Second, a cultural hypothesis.

Natural gas advocates and renewable energy exponents have differing value systems, and even ways of life, that have made them uncomfortable in each other’s company.

Third, an economic hypothesis.

These are two pretty di!erent kinds of businesses, and there is no instant meeting of the minds between the two groups when it comes to financing, business plans, marketing, duration of operations, work force training, and other core commercial variables.

Fourth, the political hypothesis.

It is tempting, although I also think it is misleading, to imagine that Democrats by definition support renewable energy, and Republicans by definition support natural gas production. Making that assumption will only lead to increased partisan squabbling—and, as I mentioned, it might not be accurate at the end of the day.

I do believe, however, that a solid and sustainable partnership between natural gas and renewable energy

could truly benefit every American today—as well as the generations that will follow us into the future.

If we put just 10 percent of the e!ort and ingenuity that go into energy production into this potential alliance, if we re-engineer and re-orient a relationship that clearly carries a heavy burden of remembered opposition in the past, we can do a great deal to benefit the citizens and communities of our country.

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We have seen industry

and conservation groups

partner successfully

in Colorado.

Elise Jones is Executive Director of the Colorado Environmental Coalition (CEC). Prior to joining the CEC, she was the Regional Director for the League of Conservation Voters Education Fund’s Rocky Mountain O!ce. She has also served as the Senior Environmental Legislative Aide for Representative Elizabeth Furse (D-OR) and worked for the National Wildlife Federation.

There is an unprecedented opportunity on the table right now for better collaboration between industry groups and environmentalists

across the country. Climate change is the most urgent issue of our time. Natural gas, if produced responsibly and in the right places, can play a critical, near-term role in helping decrease greenhouse gas emissions and transition our energy-hungry nation away from coal. Natural gas can also serve as a valued partner with renewable energy by backing up wind and solar power as we develop more lasting battery technology and move toward greater carbon freedom. But if this collaboration is to be successful, the natural gas industry must be committed to reducing its impacts—to the land, water, communities, and the global climate.

We have seen industry and conservation groups partner success-fully in Colorado, where the historic Clean Air-Clean Jobs Act was signed into law several months ago. This landmark and bipartisan measure—which will force coal to take a back seat—enjoyed a di-versity of supporters, including: Governor Ritter, Xcel (the affected utility and Colorado’s largest), climate-concerned legislators, state regulators, and many conservation groups, who, while concerned about the impacts of natural gas production, felt bold action was needed to lower Colorado’s growing air pollution and greenhouse gas emissions. They were joined by rural lawmakers and natural gas companies who liked that much of the immediate replacement energy from coal plants is probably going to come from natural gas, in addition to renewables and energy efficiency.

One of the key factors behind the success of the Clean Air-Clean Jobs legislation was setting aside politics and past di!erences to have a frank conversation about where our interests converge. Everyone involved kept talking, working, and debating—sometimes heatedly—to find common ground.

Collaborating for a

New Energy Future

By Elise Jones

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Collaborating for a New Energy Future

Another important factor was the hard work done in Colorado to reduce the footprint of natural gas production. Indeed, I believe there wouldn’t be a Clean Air-Clean Jobs law today if the state had not updated its rules guiding oil and gas drilling. Among other things, these measures direct new drilling away from municipal water supplies, mandate extra care in important wildlife areas, and direct companies to disclose the chemicals they use in the drilling process in case accidents or spills occur.

In looking back, I also believe Colorado’s rules legislation was enacted, and the subsequent rules were adopted and implemented, because most of the people involved in the process agreed that environmental responsibility means leaving the environment in the same or better shape as we found it. Participants understood we simply can’t saddle future generations with a damaged environmental legacy. And they concurred that our environmental stewardship must increase as the industry grows; in essence, the more we drill, the safer and better we should do it.

Because this is the grand trade-off.

To that end, there are additional opportunities for natural gas companies as they expand and seek approval from communities, regulators, and elected officials in the decades to come. With the evolution of better management practices and new technologies, like directional drilling and methane capture, the gas industry

has the ability to lighten its footprint on the land and ease its impact on local communities, air quality, and water supplies. If I were an advisor to the natural gas industry, here’s what I would suggest we do together:

Be transparent.

Fully commit to reducing impacts.

Take responsibility for mistakes and do the clean up.

Empathize with people’s concerns about their communities and health.

Collaborate for responsible regulation to ensure protections are efficient, fair and effective.

To fully take advantage of the opportunities before it, the natural gas industry across the country must follow the Colorado example and embrace the Colorado compromise embodied in the Clean Air-Clean Jobs legislation and updated oil and gas rules. This means joining new—and perhaps uncomfortable—alliances and becoming an e!ective problem-solver for the sake of our society. This is the challenge. But, from my perspective, together we can and must meet it.

Page 29

Photo

cour

tesy W

hiting

Petro

leum

Page 32: Natural Gas 360 Oil & Gas Propaganda

The use of NGVs has been

gaining momentum in

North America over the past

few years as a variety of

economic, energy security,

and environmental factors

have come together to

increase the awareness and

viability for natural gas in

the transportation sector.

David Hill is a Vice President at Encana Natural Gas Inc. He joined Encana in 2002, and is the Colorado Natural Gas Vehicle Drive Project champion at the company. He has over 25 years of diversified experience in the oil and gas industry.

T here are approximately 120,000 Natural Gas Vehicles (NGVs) on the road in the United States today and, while small relative to

the total number of registered vehicles, this number will grow as we look for viable solutions to air quality concerns, reliance on foreign oil, and rising fuel prices. Indeed, it’s my belief that natural gas vehicles—a technology that is readily available now—stand out as a more practical and immediate solution to other alternative fuel technologies.

The use of NGVs has been gaining momentum in North America over the past few years as a variety of economic, energy security, and environmental factors have come together to increase the awareness and viability for natural gas in the transportation sector.

Economics

NGVs are an economically practical option for the consumer. Prices are historically 1/3–1/2 lower than that of conventional transportation fuels and are expected to remain stable as development of the extensive natural gas shale plays continues. These fuel savings, combined with lower maintenance costs and tax incentives at both the federal and state levels, provide significant cost savings over the life of an NGV.

Energy Security

Because natural gas is an abundant and domestic resource, NGVs help reduce our dependence on foreign oil. Ninety-eight percent of natural gas consumed in North America is produced domestically and, even with potential increases in demand to meet growing power generation and transportation needs, we have more than a 70-year supply of natural gas.

The Environment

Recent legislation calls for stringent reductions in emissions by 2020. NGVs can help drastically reduce environmentally harmful emissions.

The Road is Ready for

Natural Gas Vehicles

By David Hill

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The Road is Ready for Natural Gas Vehicles

The combustion of natural gas results in 25 percent less CO# emissions and nearly 100 percent less emissions of NOx, SOx, and particulate matter when compared to conventional gasoline or diesel-powered vehicles.

These driving forces are increasing interest and demand for NGVs in North America; and this has brought about additional infrastructure construction, conversion systems used to retrofit gasoline powered vehicles, and production of additional Original Equipment Manufacturer (OEM) natural gas powered vehicles.

In fact, GM has just recently made available the 2011 Express and Savanna vans with a dedicated NGV option; and more than 900 natural gas refueling stations and new fueling stations are coming online monthly across the country. In addition, there are at least five new Compressed Natural Gas (CNG) stations planned in the next two years in Colorado along the I-70 and I-25 corridors.

All this suggests that NGVs are not just another passing idea in our search for alternative fuel solutions, and it indicates that the future for natural gas vehicles is ready now.

The opportunity to increase natural gas demand in the transportation sector is significant, and can be an economically feasible prospect for fleet conversion, infrastructure development, and even the individual considering the purchase of, or conversion to, a natural gas vehicle. Initial investment costs vary greatly within each of these areas, however.

Running the Numbers

The price di!erential for purchasing a dedicated NGV over a gasoline-powered vehicle, such as the Honda Civic, is approximately $7,000, while aftermarket CNG conversions on passenger vehicles and light-to-medium-duty pick-up trucks and vans average between $10,000 and $15,000. Conversion to natural gas on heavier duty work and utility trucks can cost up to $50,000, and a $70,000 investment is required for a class 8 tractor-trailer truck.

Depending on the size of a natural gas station, initial investments range from less than $5,000 for a home refueling appliance, to as much as $3 million for a CNG

station capable of refueling a large fleet of transit buses. An average public access CNG station costs between $1 million and $1.5 million to build, excluding land acquisition.

The lower fuel cost at the pump —in conjunction with federal and state tax incentives on conversions, infrastructure, and the fuel itself —help ensure a return on investment more quickly than one might assume. Depending on miles traveled, state tax incentives, and fuel costs by region, fleets can often achieve a payback between one and three years. Paybacks on fueling infrastructure can take a longer period of time —between five and 10 years, depending on a variety of factors, such as fuel prices and station usage. This payback time may be accelerated with the passing of additional legislation to reduce emissions.

It’s di"cult to pinpoint exact figures regarding market share for natural gas vehicles because this will be a!ected by a variety of drivers such as government legislation, emissions policies, commodity pricing, infrastructure investment, and price di!erentials between gasoline/diesel powered vehicles and NGVs.

Significant Growth Ahead

Still, the best estimates by NGV America predict that natural gas usage will grow from 300 million gasoline gallon equivalents (GGE) in 2009 to 10 billion GGE in 2020. This represents the displacement of about 20 percent of the petroleum expected to be consumed in the United States at that time.

The greatest potential for increased natural gas demand will be in the heavy-duty truck market. A recent study by the EIA examined the future sales of new heavy- duty natural gas vehicles and underscored the potential of natural gas demand growth. The study indicated that natural gas demand could reach 1.6 Tcf in 2035, about 7 percent of current marketed U.S. natural gas production, with the right mix of economic incentives through policy. To achieve this growth in demand for natural gas, NGV heavy-duty trucks would have to capture approximately 23 percent of the heavy-duty truck market.

Other transportation sectors will also continue to grow their natural gas presence as the economy recovers. And light-duty vehicles will keep increasing their natural

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gas usage as OEMs re-enter the market and refueling infrastructure expands. Currently, the two largest sectors for natural gas use are the refuse and transit markets. NGVs already have an 18 percent share of the market in the transit sector.

Until su"cient infrastructure is established within North America, and along heavily traveled interstate corridors, target market areas for NGVs will continue to be fleets.

This makes sense for several reasons.

Many fleets operate a multitude of vehicles that can be fueled at a central home-base location, which eliminates the concern for identifying accessible station locations. Additionally, fleets can take advantage of federal and state tax incentives (up to $350,000 in Colorado) to build a fueling station. Also, with the extensive miles traveled each day, fleets can reap the cost savings over gasoline and diesel relatively quickly, therefore receiving a return on investment in a much shorter period of time than the average personal use driver.

The Trucking Industry’s Role

The reality is that the North American trucking industry could help boost natural gas the most. With the amount of diesel fuel consumed each year, diesel displacement by Liquefied Natural Gas (LNG) could significantly curb U.S. dependence on foreign oil, reduce harmful emissions, and create more jobs domestically as natural gas production increases.

Today all the pieces are in place for natural gas to play a major role in America’s transportation future. This is a real revolution in the making and we all need to be participants.

The Road is Ready for Natural Gas Vehicles

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Here are 10 essential

considerations every

natural gas producer must

keep in mind as the new

marketplace takes shape

in the coming years.

Don McClure is Vice President Finance and Business Services of EnCana Oil and Gas (USA) Inc. and the 2009 and 2010 Chairman of the Board for the Colorado Oil & Gas Association.

T he recent signing of Colorado’s Clean Air-Clean Jobs Act helps prove that natural gas has a very viable future in the emerging 21st

century economy. And, when you combine wise public policy, new exploration and production technologies, and a supply that could last 100 years, it’s abundantly clear that any serious energy conversation going forward must now absolutely include natural gas.

In the end, though, the news may be better for end users than producers. So, moving this critical caveat to center stage, here are 10 essential considerations every natural gas producer must keep in mind as the new marketplace takes shape in the coming years:

First, producers must recognize the long-term price horizon. Over time, prices will compress as a result of natural gas supply dynamics. Right now, gas is selling for less than $4, a very low price point, especially in comparison to the volatile $13–$14 of a year ago. The ten-year NYMEX natural gas forward curve recently was quoted under $6/Mmbtu. Armed with this knowledge, producers must think about long-term hedging.

Second, producers must focus on demand. The industry has done a good job when it comes to supply; but now we have to look at the downstream market and how we can position natural gas as a meaningful opportunity for America. Fortunately, we have the options to do this.

Third, producers must tightly manage their supply costs. With price compression likely a long-term reality, cost management and margin maximization will become even more important. Drilling and completion costs, in particular, must be reduced, where possible.

10 Critical Considerations for

Natural Gas Producers’

Energy FutureBy Don McClure

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10 Critical Considerations for Natural Gas Producers’ Energy Future

Fourth, the industry must get more comfortable with the potential application of long-term contracts. In the past, producers have relied on spot (short-term) contracts; but gas customers, especially utilities, are looking for price stability

Fifth, producers must embrace legislation like the Clean Air-Clean Jobs Act. The key thing to remember is that public-sector regulators increasingly see the benefits of natural gas in relation to reducing pollutant emissions like Nox and Sox, not just greenhouse gas emissions. Increasing regulator and legislative awareness of the abundance, a!ordability, and clean-burning virtues, not to mention it’s domestic resource needs to continue.

Sixth, producers must consider any and all ways to partner with utilities. This is key because real partnership means finding creative ways of sharing, managing, and pooling marketplace risk.

Seventh, producers must establish active risk-manage-ment programs. Any time companies enter into long-term contracts, and commodity markets are changing almost hourly, this becomes truly essential—whether you’re a large or small producer.

Eighth, producers must be aware of credit exposure. With long-term price contracts, you’re immediately entering into commitments that have to be backed by credit facilities. This requires a new kind of thinking, especially in terms of cash flow.

Ninth, producers must continue educating stakeholders and utilities about the direction of gas prices. End users and utilities will focus on what they know and what they

have experienced—volatility—unless a conversation about the emerging future is established and sustained.

And tenth, producers must execute with excellence. Reliability and environmental responsibility become even more important as natural gas raises its profile, and producers should also expect increased scrutiny going forward.

Indeed, the benefits of gas are finally being recognized, and more and more people realize this energy source represents a great transition fuel as we make our way toward a renewable future. So questions like, “What’s the community impact?” or, “What’s the environmental risk?” are going to be asked.

Given this heightened interest and the rapidly evolving natural gas market, producers should view the 10 recommendations above as considerations—not commandments. And, hopefully, this handful of suggestions will provide a thoughtful and useful framework for analysis and assessment as natural gas takes hold and becomes a crucial part of our nation’s energy mix in the next decade.

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