Industry official pushes natural gas for cars
SILT — Promoting use of natural-gas-powered vehicles along Colorado’s major interstate corridors could clean the state’s air, save motorists money and help support the local energy economy, an industry official says.
Don McClure, a vice president of EnCana Oil & Gas (USA), told an audience in Silt Wednesday night it’s 30 percent cheaper to power vehicles with natural gas instead of gasoline. The lower emissions from natural gas make it a sensible fuel to promote for use along the Interstate 25 corridor on the Front Range, where ozone is a concern, he said.
Another benefit would be providing an increased market for natural gas produced in Colorado.
That gas, while plentiful, is more costly to produce than in other parts of the country, which has contributed to the local drilling slowdown at a time of low natural gas prices.
McClure said broad-scale efforts to install fueling stations and promote use of natural-gas-powered vehicles have occurred in Utah and California. But to do something such as getting the trucking industry in Colorado to buy into the conversion would take government mandates, subsidies, credits or other incentives, he said.
“Here in America we love our cars. We love our cars and we love our gasoline until it gets to $4 a gallon, and then we start to think about those things,” he said.
McClure said the natural gas industry currently faces economic and political “headwinds,” of which the political ones are probably the most extreme right now. He believes the real impact of Colorado’s new, stricter oil and gas regulatory structure will be felt once the economy and natural gas prices start to recover and companies begin to decide in what parts of the country to allocate capital investments.
“I think that’s where it’s going to be relevant and it’s going to matter,” he said.
Investment banks already think it typically requires natural gas prices of $7 to $8 per million British thermal units to get a modest return on investment in production in western Colorado’s Piceance Basin, McClure said. That amount could rise under the new rules, he said. By contrast, investments in some of the new natural gas plays in shale formations in other parts of the country provide reasonable returns at prices around $4, just above current prices, he said.
He said EnCana probably can get modest returns on Piceance Basin gas at about $5 per million Btu.