TREND: Gas Rebounds

After years of decline amid rising prices and fears of scarcity, natural gas as a power-generating fuel is on a rebound in the U.S., driven by new finds in Texas and the Mid-Atlantic states. These news stories highlight the trend.

• Baker Hughes of Houston reports that the U.S. gas rig count—the number of rigs drilling for gas—has grown in 14 of the past 16 weeks, after hitting bottom in mid-July 2009.

• Brazil’s state-owned energy company, Petrobras, said it has found significant natural gas at an exploration site in Peru’s Cusco Province. The find could contain up to five trillion cubic feet of gas, at a depth of 4,000 meters, with prospects of greater reserves at deeper levels of drilling. According to press reports, there is also considerable gas associated with major deep oil discoveries off the Brazilian coast.

• Houston-based EOG Resources has bought more land in Texas to exploit the Haynesville Shale depositions, after bringing in three successful wells in the tight-shale play. The company said three wells drilled in the shale in East Texas each produced more than 15 million cubic feet of natural gas per day.

• Under a bill signed by the Obama administration, and pushed by Rep. Maurice Hinchey, a New York Democrat, the U.S. Environmental Protection Agency will take another look at the impact of hydraulic fracturing (hydro-fracking) to increase natural gas yields from shale deposits on water quality. An earlier EPA study found no impact on water quality.

• Although natural gas prices are down 30% from a year ago, that hasn’t slowed production. As a result, gas storage is full and prices could continue to fall, representing good news for gas-fired power generators.

• Taxicabs using compressed natural gas to power their internal combustion engines now go to the head of the taxi queue at Dallas-Fort Worth International Airport. Airport regulators said the move will improve air quality at the airport, but many cabbies—mostly independent operators—protested the regulation, saying the costs of conversion to CNG for their cabs was confiscatory, aiding only the large, integrated Yellow Cab company.