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LOGA VP Gifford Briggs speaks to the Louisiana Association of Chamber of Commerce Executives about the Haynesville Shale and the fuel of the future, Natural Gas

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LACCE

  1. 1. The Haynesville Shale & Compressed Natural Gas The Fuel of the Future
  2. 2. Why Natural Gas – Why Now <ul><li>US Sources of Energy </li></ul><ul><li>Oil 39% </li></ul><ul><li>Natural Gas 23% </li></ul><ul><li>Coal 22% </li></ul><ul><li>Nuclear 8% </li></ul><ul><li>Renewables 7% </li></ul>Fossil Fuels
  3. 3. 7% of Americas Energy Infrastructure Made up of Renewable Energy
  4. 4. 70% of US Oil Consumption in Transportation 96% of Transportation Fuel comes from OIL
  5. 7. Natural Gas
  6. 8. OIL GAS
  7. 9. <ul><li>Conventional Play </li></ul><ul><li>Risk Level High – as much as 50 – 90% </li></ul><ul><li>Find Zone </li></ul><ul><li>Reservoir Quality Characteristics </li></ul><ul><li>Trapping Mechanism </li></ul><ul><li>Source for Oil and Gas to Migrate into the Trap </li></ul><ul><li>If just one of these characteristics is missing, you have just drilled a dry hole. </li></ul>
  8. 10. <ul><li>Non-Conventional “Resource Play” </li></ul><ul><li>Technology Driven </li></ul><ul><li>Continuous-type deposit </li></ul><ul><li>low to no risk </li></ul><ul><li>Long life reserves </li></ul><ul><li>Assembly-line operations </li></ul>
  9. 11. <ul><li>Gas is set to play a key role in meeting the world’s energy needs </li></ul><ul><li>Gas glut will peak soon, but may dissipate only very slowly </li></ul><ul><li>Lower prices could lead to stronger demands for gas, backing out renewables & coal in power generation </li></ul>Source IEA
  10. 13. Number One Producing Natural Gas Field in the U.S. - 5.5 Billion Cubic Feet Per Day
  11. 14. Projected Economic Impact Haynesville Shale 2010 - 14 Year Business Sales Household Earnings Jobs 2010 $17 Billion $4 Billion 111,329 2011 $12 Billion $3 Billion 76,339 2012 $11 Billion $3 Billion 69,424 2013 $11 Billion $3 Billion 62,883 2014 $11 Billion $3 Billion 60,637
  12. 16. Basin by Basin Natural Gas NYMEX Breakeven Prices for 15% ATAX ROR Source: Company Data, Credit Suisse estimates
  13. 17. Comparison of A Typical Well Taxes Paid Arkansas, Louisiana, Oklahoma, Texas Taxes, Regulations, and Investment Incentives Make a Difference in the Competitive Race
  14. 18. Source - Credit Suisse Estimates
  15. 19. The Economic Impact of the horizontal well severance tax Incentive What is the payoff to the state for every dollar of investment given up? State Gaines to Treasury Exemption Given Up $2.94 $ 1.00 ($367.7 Million Divided by $125.3 Million)
  16. 20. What is CNG? <ul><li>Compressed Natural Gas is it same gas that scrambles your eggs each morning or heats your water in the winter </li></ul><ul><li>Natural gas is compressed under high pressure at the filling location and then is dispensed into the vehicle </li></ul><ul><li>It is stored under high pressure in cylinders until the fuel is released to power the car or truck </li></ul>
  17. 21. Filling Stations <ul><li>There are different “types” of filling stations </li></ul><ul><li>For commercial applications there are 2 main filling station formats </li></ul><ul><ul><li>Slow fill – this station requires much smaller generators and compressors and generally fill vehicles at a much slower rate </li></ul></ul><ul><ul><li>Fast fill – this resembles typical gasoline station and requires large compressors, generators and storage cylinders – fill rate is equivalent to gasoline fill rate </li></ul></ul><ul><li>Home fueling – this is the smallest and least expensive. Is mounted to the garage and fills very slowly – approximately 1gge/hour – generally an overnight process </li></ul>
  18. 22. Vehicles <ul><li>There are 2 types of CNG vehicles – Dedicated and Bi-fuel </li></ul><ul><ul><li>Dedicated – These vehicles have been designed for CNG use and can only be powered by CNG. They are ordered from the OEM (Original Equipment Manufacturer). They are less flexible than a bi-fuel vehicle but have benefits of intentional design. Eligible for Federal and State Incentives </li></ul></ul><ul><ul><li>Bi-Fuel – These vehicles have the ability to switch from gasoline to CNG and back as needed. These vehicles are light-medium duty fleet and consumer vehicles that have been “Converted” post-plant. Eligible for State Incentives only </li></ul></ul>
  19. 23. Louisiana CNG Incentives <ul><li>Alternative fueled vehicles state tax credit </li></ul><ul><ul><li>50% of the incremental cost of new CNG vehicles** </li></ul></ul><ul><ul><ul><li>Must be billed for incremental cost on additional invoice or else is limited to $3000 or 10% of vehicle cost </li></ul></ul></ul><ul><ul><li>50% of the incremental cost of a conversion </li></ul></ul><ul><li>Alternative fueling station state tax credit </li></ul><ul><ul><li>50% of the cost of the fueling equipment </li></ul></ul><ul><li>Transportation Efficiency & Alternative Fuels Program </li></ul><ul><ul><li>50% of differential cost of dedicated or converted mass transit or school buses – $50,000 max each </li></ul></ul><ul><ul><li>50% of differential cost of dedicated or converted fleet vehicles – $25,000 max each </li></ul></ul><ul><ul><li>Up to 50% of the cost of 4 quick fill CNG fueling stations up to a maximum of $1.25 million. </li></ul></ul>
  20. 24. DNR Alternative Fuels Revolving Loan Program <ul><li>Act No. 118 of the 2010 Regular Session </li></ul><ul><li>Funded by grants, donations, or money appropriated by the legislature </li></ul><ul><li>Loans to political subdivisions for the conversion of fleets to alternative fuels </li></ul><ul><li>Interest rate at or below market rate </li></ul><ul><li>Repayment period of up to 10 years </li></ul>
  21. 25. Federal CNG Incentives expired <ul><li>Dedicated alternative fueled vehicles </li></ul><ul><ul><li>Light-duty vehicles up to 8,500 lbs – $4,000 </li></ul></ul><ul><ul><li>Medium-duty vehicles up to 14,000 lbs – $8,000 </li></ul></ul><ul><ul><li>Medium-heavy-duty vehicles up to 26,000 lbs – $20,000 </li></ul></ul><ul><ul><li>Heavy-duty vehicles over 26,000 lbs – $32,000 </li></ul></ul><ul><ul><li>Note: seller of vehicle can take credit if buyer is tax exempt </li></ul></ul><ul><li>Alternative Fueling Station Credit </li></ul><ul><ul><li>50% of refueling equipment with a maximum of $50,000 </li></ul></ul><ul><li>Federal Motor Fuels Excise Tax Credit </li></ul><ul><ul><li>$0.50/GGE payable to the seller or station owner </li></ul></ul><ul><ul><li>Tax exempt entities are eligible for refund </li></ul></ul>
  22. 26. Potential Federal CNG Incentives <ul><li>American Natural Gas Act – Bi-Partisan and President Support </li></ul><ul><li>Long-term extensions of the incentives </li></ul><ul><li>Dedicated alternative fueled vehicles – up to 80% of the incremental cost </li></ul><ul><ul><li>Light-duty vehicles up to 8,500 lbs – $8,000 </li></ul></ul><ul><ul><li>Medium-duty vehicles up to 14,000 lbs – $10,000 - $20,000 </li></ul></ul><ul><ul><li>Medium-heavy-duty vehicles up to 26,000 lbs – $25,000 - $50,000 </li></ul></ul><ul><ul><li>Heavy-duty vehicles over 26,000 lbs – $40,000 - $80,000 </li></ul></ul><ul><ul><li>Note: seller of vehicle can take credit if buyer is tax exempt </li></ul></ul><ul><li>Bi-fuel alternative fueled vehicles – up to 50% of the incremental cost </li></ul><ul><li>Alternative Fueling Station Credit </li></ul><ul><ul><li>50% of refueling equipment with a maximum of $100,000 </li></ul></ul><ul><li>Federal Motor Fuels Excise Tax Credit </li></ul><ul><ul><li>$0.50/GGE payable to the seller or station owner </li></ul></ul><ul><ul><li>Tax exempt entities are eligible for refund </li></ul></ul>
  23. 27. Nuts & Bolts <ul><li>How much is it going to cost for my new fleet vehicles? </li></ul><ul><li>What is the expected gas mileage? </li></ul><ul><li>Where am I going to fill up? </li></ul><ul><li>How much does CNG cost? </li></ul><ul><li>What about the maintenance and service? </li></ul><ul><li>Where and how and I going to buy my vehicle and what vehicles can I purchase? </li></ul>
  24. 28. The Nuts & Bolts <ul><li>The most common concern everyone has about switching to CNG is $$$$$$ - so here it is… </li></ul><ul><li>Ford F-150 Conversion $10,000 </li></ul><ul><li>Louisiana Tax Incentive $5,000 </li></ul><ul><li>Net Cost $5,000 </li></ul><ul><li>Payback 3 years </li></ul><ul><li>Addtl Savings through 5 years $2,500 </li></ul><ul><li>Based on 1,000 gallons/year and </li></ul><ul><li>average price of gasoline at $3.50 </li></ul>
  25. 29. Overview of CNG in LA
  26. 30. CNG Infrastructure in LA <ul><li>Private fleets/no public access </li></ul><ul><ul><li>Entergy </li></ul></ul><ul><ul><li>Baton Rouge Water Co. </li></ul></ul><ul><ul><li>Encana, EXCO, Chesapeake </li></ul></ul><ul><ul><li>Others </li></ul></ul><ul><li>Public access </li></ul><ul><ul><li>Existing – 4 in Baton Rouge </li></ul></ul><ul><ul><li>EmPower Louisiana funded – 8 </li></ul></ul><ul><li>Vehicle conversions </li></ul><ul><ul><li>Steelweld Equipment </li></ul></ul>
  27. 31. City of Bossier City <ul><li>2 fast-fill, 24-hr. public access CNG refueling stations </li></ul><ul><li>E. Texas Ave., Bossier City </li></ul><ul><li>Barksdale Blvd., Bossier City </li></ul><ul><li>2 dispensers each station </li></ul><ul><li>E85 also available at each station </li></ul><ul><li>$4,091,774 total project cost </li></ul><ul><li>$1,095,913 from EmPower Louisiana </li></ul>
  28. 32. Bossier City – E. Texas Ave.
  29. 33. Bossier City – E. Texas Ave.
  30. 34. Bossier City – E. Texas Ave.
  31. 35. Clean Energy <ul><li>Fast-fill, 24 hr. public access CNG refueling station </li></ul><ul><li>Park-N-Fly shuttle station, Airline Dr., Kenner </li></ul><ul><li>2 dispensers </li></ul><ul><li>$1,146,471 total project cost </li></ul><ul><li>$573,235 from EmPower Louisiana </li></ul>
  32. 36. Grant Parish Police Jury <ul><li>Fast-fill, 24 hr. public access CNG refueling station </li></ul><ul><li>Landfill Rd., Dry Prong </li></ul><ul><li>2 dispensers </li></ul><ul><li>$637,180 total project cost </li></ul><ul><li>$345,050 from EmPower Louisiana </li></ul>
  33. 37. Lafayette Consolidated Government <ul><li>Fast-fill, 24 hr. public access CNG refueling station </li></ul><ul><li>E. University Ave., Lafayette </li></ul><ul><li>2 dispensers </li></ul><ul><li>$1,459,323 total project cost </li></ul><ul><li>$749,006 from EmPower Louisiana </li></ul>
  34. 38. Lott Oil Company <ul><li>Fast-fill, 24 hr. public access CNG refueling station </li></ul><ul><li>I-49 exit 90, Alexandria </li></ul><ul><li>Existing Chevron station </li></ul><ul><li>1 dispenser </li></ul><ul><li>$542,860 total project cost </li></ul><ul><li>$239,093 from EmPower Louisiana </li></ul>
  35. 39. Relay Stations, LLC <ul><li>Fast-fill, 24 hr. public access CNG refueling station </li></ul><ul><li>I-49, Frierson </li></ul><ul><li>Existing Relay Stations truck stop </li></ul><ul><li>2 dispensers </li></ul><ul><li>$1,570,769 total project cost </li></ul><ul><li>$510,135 from EmPower Louisiana </li></ul>
  36. 40. City of Shreveport <ul><li>Fast-fill and time-fill, 24 hr. public access CNG refueling station </li></ul><ul><li>Kings Hwy., Shreveport </li></ul><ul><li>1 public fast-fill dispenser </li></ul><ul><li>15 fleet use time-fill dispensers </li></ul><ul><li>$2,186,873 total project cost </li></ul><ul><li>$615,740 from EmPower Louisiana </li></ul>
  37. 41. LA CNG Refueling Stations
  38. 42. Caddo Parish <ul><li>15 light-duty truck conversion kits for parish fleet vehicles </li></ul><ul><li>$449,240 total project cost </li></ul><ul><li>$238,260 from EmPower Louisiana </li></ul>
  39. 43. Caddo Parish Sherriff's Office <ul><li>8 light-duty and 9 medium-duty conversion kits for sheriff’s office vehicles </li></ul><ul><li>$274,380 total project cost </li></ul><ul><li>$248,572 from EmPower Louisiana </li></ul>
  40. 44. Lafayette Consolidated Government <ul><li>40 light-duty conversion kits for LCG fleet vehicles </li></ul><ul><li>$385,000 total project cost </li></ul><ul><li>$345,000 from EmPower Louisiana </li></ul>
  41. 45. Park-N-Fly, Inc. <ul><li>13 CNG shuttle busses </li></ul><ul><li>$972,270 total project cost </li></ul><ul><li>$170,284 from EmPower Louisiana </li></ul>
  42. 46. City of Shreveport <ul><li>10 CNG refuse trucks </li></ul><ul><li>$2,551,377 total project cost </li></ul><ul><li>$478,366 from EmPower Louisiana </li></ul>

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