The Fort Worth Chamberletter

Dr. Ray Perryman

Without the Barnett Shale play, today’s regional economy would look far different.

M. Ray Perryman, founder and president of The Perryman Group, an economic and financial analysis firm based in Waco, will examine that what-if scenario, keynoting the State of Energy Luncheon March 11 during the third annual Barnett Shale EXPO at the Fort Worth Convention Center. (See details in Calendar of Events.)

The presentation will add vital context to results of Perryman’s Economy Impact Study that will provide luncheon attendees with analyses of how Barnett Shale activity has affected local economies.

With his report in its final stages, Perryman shared the following preliminary overviews that he will discuss in detail:

– Energy markets are inherently volatile, and unanticipated price fluctuations are the norm. Exploration, drilling, and production will go down when prices are low, but that in no way diminishes the long-term viability of the Barnett Shale.

Natural gas is a “clean” fuel that will be in high demand over time, and an upward trend in prices is anticipated.

– The economy of Fort Worth and the entire region is fundamentally stronger and more diverse as a result of the Barnett Shale.

Simulations of business activity with and without the Barnett Shale reveal that billions of dollars in output and tens of thousands of jobs have been added.

– The regional economy is much better positioned to withstand fluctuations in other sectors and other aspects of the national economic slowdown as a result of the Barnett Shale.

– The fiscal resources provided to local governments as a result of the Barnett Shale continue to provide a valuable source of competitive advantage.

– The energy resources of the Barnett Shale are a valuable national asset that will be a source of stimulus for decades to come. Among the many benefits, they have enabled the Fort Worth area to develop a notable corporate and infrastructure presence in an important industrial segment.

At last year’s Barnett Shale EXPO, Perryman’s report noted that, based on year-end 2007 levels, benefits for the area were growing faster than expected.

“In fact,” his study said in March 2008, “based on year-end 2007 levels, the area was experiencing gains of $8.2 billion in annual output (8.1% of total output) and 83,823 jobs (8.9% of total jobs), up from $5.2 billion in annual output and 55,385 permanent jobs last year. The performance represents a net gain of more than 50 percent in a single year.”

Even though the national economy encountered severe difficulties in the months that followed, Perryman’s outlook held true: “The Barnett Shale is a catalyst for ongoing economic vitality. Recent growth has exceeded expectations, and the resulting business and investment activity will help insulate the regional economy from the national slowdown.”

That was the case, as Perryman’s 2009 report will show.

More links:

• The Perryman Group
• Perryman’s 2008 Barnett Shale assessment
• Barnett Shale Energy Education Council
• Railroad Commission of Texas Natural Gas Trends 2009

Honda’s Civic GX is the only natural gas-powered auto commercially available in the United States.

With the Barnett Shale and other plays tapping vast domestic sources of natural gas, speculation about future uses for natural gas envisions many applications – from more efficient home appliances to less energy-intensive manufacturing systems and power plants.

The third annual Barnett Shale EXPO, themed Natural Gas: Moving Us Forward, will explore what’s ahead as industry representatives and the public gather March 11 at the Fort Worth Convention Center. The EXPO floor will be open to the public 1-6 p.m. Breakout sessions will run 1:30-5:30 p.m.

One part of the future has arrived – a gradually expanding worldwide adoption of natural gas-powered vehicles (NGVs).

“It’s getting legs,” Ed Ireland, executive director of the Barnett Shale Energy Education Council, said.

Momentum’s gathering in efforts to turn from dependence on oil to cleaner-burning, less expensive natural gas and reduced greenhouse emissions.

Research underscores the array of positive results awaiting expanded use of natural gas as a transportation fuel, “especially for heavy-duty transportation,” said Ken Nicholson, Dallas-based Southwest Region general manager of Clean Energy, the largest provider of vehicular natural gas in North America.

From powering regional trucking operations to other diesel-burning vehicles such as cities’ and school districts’ fleets of buses, refuse trucks and airport shuttles, natural gas will cut dependence on foreign oil with cost-saving, environmentally friendly impact, Nicholson said.

Statistics from the United States Department of Energy and NGV associations sketch the movement:

• More than 8.7 million NGVs are in use worldwide and more than 120,000 NGVs on U.S. roads, including 11,000 buses, 3,000 school buses and 2,000 refuse trucks. Home-fueling systems already are offered by Phill, billed as the world’s first appliance that makes it possible for NGV owners to tap into their house’s natural gas line and refuel their vehicle at home.
• In the U.S., NGV consumption has increased from more than 500 million cubic feet in 1997 to around 2.5 billion cubic feet through the end of last year. Gasoline-powered vehicles may be converted to use natural gas. The Honda Civic GX is the only NGV auto commercially available in the U.S.
• Latin America has nearly half of the global fleet of NGVs and huge natural gas reserves in Bolivia and Peru. Nearly 3 million NGVs are in Argentina and Brazil alone.
• Russian, Ukraine and Armenian NGV markets project 1,000,000 vehicles and 1,000 fueling stations by 2020 while use of NGVs already is growing steadily in China, India, Pakistan, Iran, and Germany.

Among the forces propelling the move toward NGVs in the U.S. is North Texas billionaire oilman T. Boone Pickens, a strident advocate of natural gas as America’s choice for transportation fuel, the key to a cleaner environment and less dependence on foreign oil.

Pickens owns Seal Beach, Calif.-based Clean Energy (Nasdaq: CLNE) and FuelMaker, maker of natural gas refueling appliances, including Phill.

Clean Energy’s customers already range from trucking companies to Dallas/Fort Worth International Airport, the Fort Worth Transportation Authority (”The T”) and Waste Management, Inc., North America’s leading provider of waste and environmental services.

Natural gas is a cornerstone of the Pickens Plan unveiled last July. As part of that plan, he is calling on President Barack Obama’s administration to earmark as much as $28 billion in economic stimulus incentives to help trucking operations switch more than 300,000 heavy-duty trucks from diesel fuel to natural gas and to build 2,000 filling stations for NGVs.

Pickens pressed that stance in November when he addressed a sold-out Fort Worth Chamber of Commerce luncheon at the Ashton Depot in celebration of The T’s 25th anniversary and its pioneering use of CNG-powered buses.

Ron Anderson, FWTA director of maintenance, said The T operates 170 CNG buses and several staff vehicles after beginning the shift to CNG in 1989 and building its first CNG station in 1990. “Over the years, we have accumulated in excess of 50 million miles on compressed natural gas.”

High-profile support for CNG includes state and federal incentives to encourage public entities to convert their fleets to natural gas.

In Texas, the General Land Office offers an array of grants to help facilitate that move. More stringent emissions standards at the state and federal levels compel the U.S. auto industry to devote more resources to the development of NGVs for domestic markets in addition to the NGV models they already export for foreign consumers.

In turn, more thought is addressing the need for a natural gas refueling infrastructure. Currently, there is one local refueling station that’s open to the public – Clean Energy-Fort Worth at 4600 Mark IV Parkway.

Soon, there may be many more.

That’s the plan even in the oil-rich United Arab Emirates where a national network of NGV fuel stations is planned. The Abu Dhabi National Oil Company should have 16 stations completed by year’s end with plans to handle 10,000 cars daily.

Plans also call for NGV conversion of UAE military, police and other vehicles.

The word is out: Get ready for NGVs.

More links:

• State and federal NGV incentives
• International energy outlook
• All about natural gas
• All about Natural Gas Vehicles (NGVs)
• The Pickens Plan
• The Phill home-fueling system
• Barnett Shale Energy Education Council