View Full Version : McClendon: OKC to soon be world's natural gas capital

04-15-2008, 08:27 AM
McClendon: OKC soon to be world’s natural gas capital

April 15, 2008

TULSA – Aubrey McClendon smiled as he sat down with reporters in the warm glow of a silent brick fireplace. “Ah, what I really love to see,” said the chairman and chief executive of Chesapeake Energy. “A natural gas fire.”

McClendon bubbled with enthusiasm over the future of natural gas in presenting the Inaugural Chesapeake Energy Lecture Monday at the University of Tulsa Allen Chapman Activity Center.

In the city that once laid claim to the oil capital of the world, McClendon said Oklahoma City could now argue its merit as the world’s natural gas capital. His growing Oklahoma City company – provider of a five-year, $500,000 scholarship and energy management training program at TU to encourage more energy industry careers – stands as the nation’s third-largest producer, with 10.9 trillion cubic feet of proven reserves. This year Chesapeake expects to take the top position, with Oklahoma City’s Devon Energy possibly ranked second. “I’ve been doing this for 27 years,” he said, “and never have I been more excited about the potentials that exist.”

His enthusiasm spins from a dynamic change in the economics of natural gas supplies over the last three to four years. McClendon said the discovery of how to effectively and efficiently free the fossil fuel from shale deposits could change our nation’s economic and energy strategies.

As the most active driller, with 92 percent of its wells targeting natural gas, Chesapeake has played a major role in developing natural gas supplies in the U.S. and Canada. Last month that potential surged as Chesapeake Energy estimated its new Louisiana natural gas discovery could rise to 20 trillion cubic feet equivalent of natural gas. “That could rival the Barnett Shale in size,” McClendon said of the Haynesville Shale area in northern Louisiana.

The Barnett Shale development in north Texas, where Chesapeake is heavily involved, now produces 5 percent of the nation’s natural gas. McClendon estimated it could hit 10 percent within a few years. That production should provide the city of Fort Worth about $1 billion over the next 20 years for development of parks, lakes and other improvements. Chesapeake now has interests in more than 200,000 acres in the Haynesville Shale, promising 7.5 tcfe. It hopes to raise that to more than 500,000 this year, promising reserves of 20 tcfe. That’s because their ability to “crack the code” in removing natural gas from shale also contains development costs, promising improved profitability.“I’m kind of excited about flat finding costs for years and years,” he said, projecting Chesapeake’s shale activity could rise to 80 percent of its drilling from 60 percent now.

McClendon said the nation can now count on a 5-percent annual supply increases for the immediate future. That would not only negate forecast needs for increasing liquid natural gas imports, but provide enough surplus to begin serious commercial applications for our nation’s transportation sector.

With that potential developed and harnessed, the natural gas industry advocate said those increased supplies would allow the nation to dramatically lower oil imports, and right a $600-billion trade imbalance caused by soaring oil costs, while averting rising protests by impoverished nations over diverting edible grains into fuel. “What do we do about the cost of food?” McClendon posed to the audience, pointing to rising prices spurred by ethanol requirements. Suggesting the amount of corn used in filling a gas tank could feed an overseas family of four for a year, he said, “We think natural gas is the answer.”Encouraging more use of natural gas fuels also would answer many environmentalist calls to reduce motorist pollution, McClendon said, and keep most of those fuel dollars at home, meeting our national security interests.

While he acknowledged the transportation industry lacked the infrastructure for natural gas fueling stations, he suggested most home and business owners could easily install systems to fill vehicle tanks from their existing NG supplies. Owners of hybrid vehicles also could tap NG to fuel home generators. McClendon said the larger problem comes from installing natural gas kits in existing vehicles while encouraging automakers to install NG fuel options.“We have talked to Detroit about this,” he said.

Seeking new blood
TULSA – The Chesapeake Scholars Program at the University of Tulsa was designed to encourage students to seek careers in the energy industry. Chesapeake Energy Chief Executive Aubrey McClendon told Monday’s inaugural Chesapeake Energy Lecture audience that many such jobs open frequently at his company. The Oklahoma City giant, which recorded $7.8 billion in revenue last year, has accumulated a work force of 6,500 – 4,000 of those in Oklahoma, 2,500 in Oklahoma City itself. McClendon said Chesapeake hires about 50 workers each month at its headquarters alone.

Youth comprise much of that new blood. McClendon said 60 percent of last year’s new hires were under 30 years old, while 40 percent of the new Oklahoma City workers were under 30. Such growth illustrates activity in the natural gas sector, with production in Oklahoma reaching historic levels. McClendon said the state stands as the nation’s third-highest producer, accounting for 7- to 8-percent of U.S. natural gas output. By volume, the state’s natural gas production equals six times that of crude oil, but due to soaring oil prices, its value only represents three times that of the crude produced. Even so, McClendon said the natural gas produced in Oklahoma represents from $35 million to $40 million of product per day. – Kirby Lee Davis

Aubrey McClendon, CEO of Chesapeake Energy, speaks at the inaugural Chesapeake Energy Lecture at the University of Tulsa on Monday. (Photo by Rip Stell)

04-15-2008, 11:07 AM
I've been wondering about whether we would see a push to use NG for transportation. Other countries have done it successfully, many using hybird gas/ng vehicles. A guy I work with is from Pakistan and he had a hybrid gas/ng Honda Civic back home.

I wouldn't want to do it at the expense of ethanol/biofuels, but I can definitely see a shift away from food-based ethanol as a positive step. It's going to take a little of every technology, at least at first, to wean us off the OPEC tit.

Maps 3 should include a complete overhaul of our mass transit system to NG based, complete with huge bold banners about us being the "natural gas capitol," or something. Maybe our industry leaders would chip in, possibly for naming rights.

04-15-2008, 01:22 PM
Maps 3 should include a complete overhaul of our mass transit system to NG based, complete with huge bold banners about us being the "natural gas capitol," or something. Maybe our industry leaders would chip in, possibly for naming rights.

Fantastic idea!

04-15-2008, 02:50 PM
My husband says that in Canada the taxis all use natural gas, which causes a problem only with trunk space. I guess they have to put most luggage on the roof.

I like the idea of NG based mass transit as well, especially if there's more of it.

sgt. pepper
04-15-2008, 02:57 PM
I never understood why NG never became popular as an alternitive fuel?? It's been around for years. I understand Tulsa public school buses run on NG. It just makes sense to me.

04-15-2008, 03:10 PM
City buses, school buses, light rail, everything. Let's be the model.

04-15-2008, 03:24 PM
Count another point for oklahoma.

sgt. pepper
04-15-2008, 03:50 PM
City buses, school buses, light rail, everything. Let's be the model.Sounds great, but who's going to flip the bill?

04-15-2008, 04:01 PM
If we purchase light rail, there has to be an NG option out there, so that will be taken care of with sales tax money(Maps III).

As for the bus systems, perhaps a portion can come from Maps III or a separate bond issue, other monies could come from corporate sponsorships of the city transit buses. Finally, perhaps our local NG bohemoths would be willing to provide the city with NG at reduced cost for a period of several years in order to get the model off the ground. After all, it would be in their best interest.

04-15-2008, 05:26 PM
If I remember right, doesn't UPS uses NG on all their trucks.

04-15-2008, 05:44 PM
Fedex and UPS as wells the Postal service have some NG powered vehicles but not all.

04-15-2008, 10:16 PM
I don't see how natural gas is much better than oil, other than burning cleaner. Natural gas reserves will eventually run low like oil is doing and then we are in the same spot. I guess I don't get the hype of NG.

My preference would be for OKC to run electric buses charged with another (and completely renewable) product of Oklahoma...wind.

And I don't know why we would run light rail on NG. Light rail is electric.

04-15-2008, 10:26 PM
If I remember right, doesn't UPS uses NG on all their trucks.

No, not all, not even close. They have a NG pilot program in a few markets, the closest one is Dallas and I belive they have 8 NG trucks in their fleet. There was an article last week on it.

04-16-2008, 10:17 AM
I never understood why NG never became popular as an alternitive fuel?? It's been around for years. I understand Tulsa public school buses run on NG. It just makes sense to me.Or even better, why did the government buy (and shelve) the patents to "Super-Gas"?
OU discovers improved natural gas transportation fuel (

A new process developed at the University of Oklahoma could dramatically increase the use of natural gas as a transportation fuel.
Until now, natural gas has enjoyed only marginal success as an alternative to gasoline. Both compressed and liquefied natural gas are saddled with inherent problems that greatly limit their use.
The large fuel tanks required for compressed natural gas restrict its use mainly to trucks and vans. And the extreme low temperatures required for making and storing liquefied natural gas hamper its use as a transportation fuel. However, researchers from the Institute for Gas Utilization Technologies, a unit of OU's Sarkeys Energy Center, have overcome the storage problem by developing a fuel that is a liquid at normal temperatures and has considerably more energy per unit of tankage than CNG.
Their process involves mixing the methane from natural gas with heavier hydrocarbons, such as butane and propane. Methane alone, no matter how high the pressure, cannot be made into a liquid. But with the right mix, it can be liquefied at much lower pressure than required for conventional CNG.
The OU-developed fuel gas has about three times more energy than the same volume of CNG, says Richard Mallinson, chemical engineering professor and institute director.
And it has approximately 70 percent of the energy as the same volume of gasoline, which means that, instead of a 15-gallon tank, a car powered with the new fuel would need a 20-gallon tank to achieve the same range as a similar gasoline-powered car -- an increase that certainly is an achievable design modification for cars in the size range driven by most Americans.

04-16-2008, 10:29 AM
"And there's more good news about this next-generation natural gas fuel, which Mallinson has dubbed "super gas."

"It's inexpensive, and when an engine is designed for the mixture, it will burn quite a bit cleaner than gasoline," Mallinson says, adding that the environmental benefits of such a fuel are undeniable.

Increased use of a natural gas fuel also would have undeniable economic benefits for Oklahoma and other major gas producing states.

The lack of fueling sites has been a major hindrance to market growth for natural gas fuels. But Mallinson believes the liquid state and lower pressure requirement of the OU-developed fuel will make it easier to supply to motorists than other natural gas fuels. He envisions the day that they can pump super gas at their local service station.

The development phase of the OU research has been funded by the U.S. Department of Energy, but Mallinson and co-researchers Jeffery Harwell and Kenneth Starling are ready to test the fuel on actual vehicles. For this phase, they are looking for industrial partners.

"We're very excited," Mallinson says. "We believe our fuel will be in industrial practice in a short time frame."

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04-23-2008, 12:30 AM
Has anyone read Edwin Black's "Internal Combustion"? I think it had some good arguments against ethanol, don't recall if they were similar to the ones McClendon is making...saw him on book tv awhile back while on vacation in Truk.