In Honor of Heroes

As a Vietnam veteran, I recall my return home to the US after my service overseas.  For those of you old enough to remember, this was a very unpopular war.  Soldiers coming home, all with the same problems that our fighting men have now with PTSD (not a term then) and other issues, were treated unceremoniously at the very best and with scorn at the worst.  I say this not as a “poor me” moment since this was 40 years ago and is now a very distant memory, but rather as a thank you to all the troops who have been fighting for this country over the past decades.  Memorial Day (or as I called it when I was young, Decoration Day) has just passed and I see the patriotism in this country so much more noticeable in 2012.   

For those of you interested, John Huston (with his father, Walter narrating), directed a film, “Let There be Light”, after WWII that documented the travails of returning soldiers.  The army did not want it shown so it sat gathering dust until a couple of years ago when it was brought out again.  An hour long, it is well worth viewing.  Here is a link to the site: Let There be Light 

I have told my loyal reader(s) (thanks Mom) that I have been traveling a great deal for the past several months.  June offers no respite, alas.  Because of this, I beg your indulgence in granting me an extra couple of weeks before my next posting (late June). 

There is much going on in the world of energy.  Natural gas prices continue to be low (with little change in sight), followed by a decline in oil prices (gas prices in Tulsa as of today are some of the lowest in the country at $3.14/gallon while just a few months ago hovered above $3.69/gallon.  In California earlier this month, I paid $4.39/gallon).  Coal continues to be the bad boy of energy with rather dim outlooks. 

There’s a recent article of interest that I read in the USA Today regarding what was once considered an old shibboleth, “energy independence”.  So what is the real story today?  Is it a dream or a distinct possibility? Energy Independence? 

Once upon a time, E-Tech had considered working with companies involved in carbon capture as there were energy savings opportunities possible.  Fortunately, as reported in a New York Times article, I didn’t put this into my sales forecast! Carbon Capture Disappointment

Finally, and somewhat analogous to the previous article, coal is finding major difficulties, even in the middle of coal country.  Read this detailed report from the NY Times. Coal in trouble?

And, finishing where I left off, here’s a wonderful saying regarding our marvelous fighting men and women.  

“And they who for their country die shall fill an honored grave, for glory lights the soldier's tomb, and beauty weeps the brave.  Joseph Rodman Drake” (1795-1820)

So, as I mentioned in my last blog (a long time ago, it seems), I have been on the road quite a bit including a trip to the Monterrey Peninsula to play in the Nationwide Boiler Charity Golf Tournament.  The picture of me standing on the 18th tee box doesn't quite depict the big smile on my face.  For those of you who play golf, this is a bucket list item for sure.

So what's new in the world that's interesting?  Aside from the politics, I mean.

Several of my blogs of late have discussed natural gas in particular and energy resources in the US in general.  We have gone from a country that was importing a great amount of our oil from overseas to one that seems to be at the edge of a boom.  And in natural gas - well don't get me started.  There are many stories regarding the Environmental Protection Agency (EPA).  For me it's hard to envision too much criticism of this group as it has, at its heart, our environment and health as its main interest.  But there are those who have suggested doing away with it (you know who you are you dastardly cads!).  But the EPA has taken an interesting view on a difficult issue - fracking.  Is it harmless, dangerous or somewhere in-between.  One would expect the EPA to be rather circumspect on this problem but, as reported by one of my favorite columnists, Ezra Klein, they are taking a longer view.  See the article if you'd like to know more. Ezra Klein article

Another article of particular interest to me, although still on a natural gas theme LNG), is the following one from Politico.  In it is discussed the Cheniere Energy Partners’ Sabine Pass project.  What's so fascinating about this story is that the plant in question was originally conceived as an operation to import liquefied natural gas (LNG) but now is being converted to export it.  How's that for a turn of events?  The question raised in this story is whether or not we should do it?  Take a look and see for yourself. Sabine Pass Terminal

I hope this has proved interesting to you and look forward to writing more next month.

In closing, here's a California theme (how can I not after spending last week in that beautiful state). 

"Helsinki may not be as cold as you make it out to be, but California is still a lot nicer. I don't remember the last time I couldn't walk around in shorts all day." - Linus Torvalds (born 1969)

So what's the big deal with natural gas?

So what’s so good about low gas prices?

The most recent prices I have for natural gas are under $2.00 and the spot price for NG, bought without a long-term contract traded at $1.87.  By the time you read this, it could be even lower!  So I ask the question, is this good or is it bad?  But before I answer it, let me take you on a little journey into this world with some facts and figures.

Prices and Costs

·         Current U.S. futures price: $1.98/1,000 cu. Ft.

·         All-time low: $1.32 (Jan. 1995)

·         All-time high: $15.38 (Dec. 2005)

·         10-year average: $5.96

·         Current price in Asia: $15.90

·         Current price in Europe: $9.37

Producers

·         Top Producers of NG in U.S.: ExxonMobil, Chesapeake Energy, Anadarko Petroleum, Devon Energy, Encana.

·         Top five producing states: Texas, Alaska, Louisiana, Wyoming, and Oklahoma (yeah for the home team).

·         Top five producing countries: U.S. Russia, Iran, Algeria, Canada

How Natural gas is used in the U.S.

·         34% is used for generating electricity

·         30% is used by industry to heat boilers or make chemicals, fertilizers, etc.

·         21% is used to heat homes, cook, dry clothes and heat water

·         14% is used to heat buildings, restaurants and shops

·         0.1% is used to power trucks, cars, buses and other vehicles.

How it might be used to benefit from US growing supply

·         Expand the production of plastics, fertilizers, etc., that use NG as a feedstock

·         Liquefy it for export to Asia and Europe where prices are far higher

·         Build more NG fueling stations

·         Turn it into diesel or ethanol.

Sources: Oil Price Information Service, Platts, Energy Information Administration, Natural Gas Supply Administration, World Publishing Company

So back to the question.  Is this good news or bad?

For many in our industry, it is simply awful.  At E-Tech we sell energy recovery.  Just a few years ago when natural gas soared to $15.38, paybacks on our equipment were measured in mere months.  Installed!  But those halcyon days have passed.  In a return on investment calculation, the energy effect is linear so that if NG is priced at $2.00, it takes seven to eight times as long for an investment to pay for itself as it does at $12.00.  So it’s bad, right? Ouch and yikes!

No, it’s good tidings.  Just ask those in the ethanol business.  Their issue of course is that the primary source of stock is corn.  With corn prices sitting above $6.00 bushel, this is becoming an expensive business, correct?  Well, not exactly.  Low NG prices allow those producing ethanol to continue moving forward profitably which is good, right? Ooh and aah!

Well no, it’s bad news.  Check out the natural gas producers who have based their exploration on predicted NG pricing that not so long ago was several times higher than it is today.  There’s so much gas being produced that we are running out of places to store it thereby exacerbating the price issue further.  This is bad, right?

Not really, it’s good.  Just look at places like Japan that pay about $16 for LNG (liquefied natural gas) and other countries paying similarly high prices.  Exporters in the US are looking at shipping LNG at high margins, something we all love.  Consider also Compressed Natural Gas (CNG) that is becoming more and more available in our country at a price of about $1.15 per gge (gasoline gallon equivalent).  This will likely lead to higher natural gas prices. Which is good, right?

Well I could go on and on here.  The point I’m really making is that we are most fortunate in this country to have resources such as this that offer wonderful opportunities including reduced dependence on unstable energy sources around the world while at the same time lowering harmful emissions.

To end, I could say “the grass is always greener…” but, this is better.

“Start where you are. Distant fields always look greener, but opportunity lies right where you are. Take advantage of every opportunity of service.” ~ Robert Collier, American Motivational Speaker (1885-1950).

PS – Once again I beg your indulgence.  Because of upcoming travel schedules, the next edition of this blog will be posted in mid-May.

The Last Word on Boiler MACT?

The never-ending saga of the Boiler MACT issue may finally be coming to an end – or, if you prefer, a new beginning.  Last week the Senate voted on amendments (30 of them!) to the Highway Bill (S. 1813).  The 30 amendments had been reduced from a higher number based on the leaders of both parties agreeing to limit eliminate those issues that had nothing to do with transportation.  Imagine that!

By a vote of 52-46 – with 60 votes needed for passage – the EPA Regulatory Relief Act (AKA the Collins Amendment to the Highway Bill of 2012) was defeated in the US Senate.  With this defeat, the current EPA rulemaking on the ICI-BMACT will finally be issued this spring.

As any of you who have read this blog know, E-Tech, as a part of the ABMA, worked against the EPA Regulatory Relief Act in its varied incarnations be it as a stand-alone bill (HR 2250 & S-1392), an amendment to the Payroll Tax Holiday and now again with the Highway Bill.

However, the reality of this moment is the issue may yet appear again in another guise prior to the finalization of the rules by the USEPA at some time in the future.  All that would yield is to step back a year or so in order to lead back to the exact point where we are today.  That this is a waste of time for everyone involved is an obvious conclusion but that is not soon to stop Congress.

Keep in touch for further developments.

To end, here are two thoughts on politics.

"The Liberals are the flying saucers of politics. No one can make head nor tail of them and they never are seen twice in the same place." ~ John G. Diefenbaker, Canadian Prime Minister (1895 - 1979)

"Conservatives are not necessarily stupid, but most stupid people are conservatives." ~ John Stuart Mill, English Philosopher (1806 - 1873)

PS – Because of upcoming travel schedules, the next edition of this blog will be posted in mid-April.

Can we all agree that politics stink?

I stated in my original statement that I was not going to be political in this blog.  Yet here it is, the end of February, and I am already sick of the electioneering.  So, if I am able to parse my original language, rather than be political, I’m going to discuss politics.  In several of my recent blogs, I have discussed the vagaries of MACT and the support the American Boiler Manufacturers Association (ABMA) gives to the passage of this EPA legislation.  Just to clarify one point, the ABMA, as a group, is ideologically right of center.  I know this anecdotally having attended conferences over the years and listened to many political conversations.  The majority, I am positive, vote Republican.

So why is it that this right-leaning group stands so strongly behind their positions regarding passage of the MACT?  It is because their beliefs transcend political ideology to realize that not only are the ideas espoused in MACT are good ones but they are also eminently achievable with technology readily available and at a cost that is worth the price.  Yet, this bill has been mired recently in two different attempts to tamp it down: the first was when it was attached to the extension of the payroll tax deduction extension; the second is right now, when it has become part of the transportation bill.  I, along with several members of the ABMA individually as well as the organization as an entity, wrote letters to our Senators and Representatives urging them to back this legislation.  In my state of Oklahoma, I know this effort is in vain.  One of the US Senators, James M. Inhofe, has just published a book called “The Greatest Hoax” that states that global warming is a conspiracy that threatens our future.  Now I will not to pretend to be a scientist and my own personal beliefs on this issue don’t matter but I’m hardly going to subscribe to a Senator’s viewpoint who calls global warming (or climate change as some prefer) a hoax despite a great deal of evidence to the contrary.

Wow, did that feel good to say!  Our country sits here, eight months from a general election, and there is already a poisoned atmosphere.  And this is just on the Republican side of the page.  Obama, although clearly mentioned, is not yet the favored target; it’s other Republicans.  So when they finally choose their candidate, Romney or Santorum, I assume, we’ll then get ready for the main event.  I for one am quite sick of politics and eagerly await the end of this process in November.  Perhaps, depending upon the results of the election, they might actually sit down as elected officials and find some middle point to correct the ills of our country.

To finish, here’s a little blurb on politics.

“Under democracy one party always devotes its chief energies to trying to prove that the other party is unfit to rule - and both commonly succeed, and are right.”  ~H.L. Mencken, (1880-1956)

How much fuel can I save?

One of the first questions I am asked about heat recovery is whether or not the payback will warrant the installed cost of an economizer.  I'd like to say the answer is always an unqualified "yes", but things are never quite so simple.  Conditions such as hours of operation, average firing rates, government subsidies and utility cost-sharing all have an impact.  And then there's the cost of fuel.  While low energy costs - particularly those of natural gas - are a tremendous boost to our greater economy, they deflate the ROI of heat recovery products.  Even though natural gas prices are already depressed, the current trend line suggests they're going to be even lower in 2012. 

Yet despite all of the "bad" news, there is a relatively simple way to figure out how much fuel will be saved by adding certain types of heat recovery equipment.  With a boiler economizer, fuel savings range from 3-8%.  So by determining fuel costs for a boiler, you easily can calculate fuel savings.  The hotter the flue gas temperature, the higher the fuel savings is typically a good rule of thumb.

Finally, my thought for the day has to do with conserving energy.:

"We waste our lights in vain, like lamps by day" - William Shakespeare

Boiler MACT and other oddities

Finally, the holidays are over and the shows and meetings that for me occupy a good deal of time during December and January are done.  Now I can get back to a normal regimen for my blog.  In reviewing my earlier blog from January I went out on a very thin limb by making various predictions for 2012.  Under the “Sports” section, I guessed LSU over Alabama and Green Bay to win it all.  As all of you know from reading my blogs, these were obviously typos. 

I just returned from the annual ABMA meeting in Palm Springs, California.  For those of you living in a cold climate, I will not tell you how wonderful the weather was out there; stay away in the summer though!  At the conference was an economist who forecast a decent 2012 and 2013 so plan accordingly.  After a few sidesteps in 2014, we can expect growth during the period 2015-2017 with some slowing in 2018 and another steep recession in 2019.  I’ll leave each of you to mull over the merits of these ideas and plan accordingly.  I will say that the economist has a good record on these matters.

As I have discussed in previous newsletters and blogs, the U.S. Environmental Protection Agency’s March 2011 ICI-BMACT rules continue to evolve and gel.  In the end of December these rules were published in the Federal Register.  Sorting out all the meandering paths taken by this legislation, the obstructions in Congress along with court challenges and rulings takes someone much more attuned to these nuanced efforts than a simple, non-political guy like me.  Suffice it to say that it appears things are moving forward.  There are two measures going through our dysfunctional government:  HR 2250 (http://www.gpo.gov/fdsys/pkg/BILLS-112hr2250rh/pdf/BILLS-112hr2250rh.pdf),  a house bill designed to allow more time for review of the EPA proposal (it’s been going on for 10 years now so the extra time being requested fails the smell test here);

and S1392 (http://eenews.net/bills/111/Senate/180811105617.pdf, the Senate equivalent of the same odious bill. 

 The ABMA position on this is clear and forceful: it strongly opposes both of these bills and urges all the stakeholders in the process to get moving on getting the final rules codified and the relevant EPA rules moving forward. 

More on this as it develops.

Finally, after my “brilliance” in showing my prognosticating skills, here’s my quote for the day.

“Prediction is very difficult, especially if it's about the future.” ~Niels Bohr, Danish Physicist, 1885-1962.