TPT May 2014

Global Marketplace

However, according to a surprising new report published 14 February in the journal Science , a switchover from diesel to natural gas is not an advance but quite the opposite. The drilling and production methods associated with natural gas cause leaks of methane, a gas some 30 times more potent than carbon dioxide, nullifying any ecological advantages from the use of natural gas as a transportation fuel. As reported by Coral Davenport in the New York Times , the study was conducted by scientists at Stanford University, the Massachusetts Institute of Technology, and the Department of Energy’s National Renewable Energy Laboratory. It concludes that there is already about 50 per cent more methane in the atmosphere than previously estimated by the US Environmental Protection Agency – a signal that more methane is leaking from the natural gas production chain than previously thought. (“Study Finds Methane Leaks Negate Climate Benefits of Natural Gas,” 13 February) “Switching from diesel to natural gas, that’s not a good policy from a climate perspective,” said the study’s lead author, Adam R Brandt, an assistant professor in the Department of Energy Resources at Stanford (Palo Alto, California). Ms Davenport noted that the report adds weight to efforts by New York and other Northeastern states to push Washington to regulate methane emissions. Currently, there are no federal regulations on methane emissions from oil and gas production, although some states are considering implementing such rules. She wrote, “The finding on trucks and buses is a blow to years of public policy efforts to switch vehicles from diesel to natural gas, an effort aimed at decreasing pollution as well as America’s dependence on foreign oil.” › In his last two State of the Union addresses, President Obama extolled natural gas-powered electricity as a more climate-friendly option than coal. He also has asserted that natural gas production creates jobs. But American environmentalists say that natural gas drilling and production come with the risk of methane leaks from wellheads, valves and pipelines. Now, it seems, their views have corroboration from an impressive independent source. A ‘bold move’ by Mexico into US and global energy markets injects urgency into Canada’s pipeline-building ambitions In December 2013 Mexican president Enrique Peña Nieto signed into law a sweeping energy reform bill that ended the 75-year monopoly on oil and gas production held by the state- owned oil company Pemex. The reforms, which will open Mexico’s energy industry to foreign companies, could attract investment leading to higher exports of oil and gas to the US, to the potential displacement of some Canadian imports. Oil output has been rising in the United States and Canada, but in Mexico production has fallen 25 per cent since 2004

that brought in a new chief executive. JP Morgan analyst Michael F Gambardella told the WSJ that, because Korea’s importing activities will likely increase this year, the finding by Commerce is “sufficient to pressure US Steel’s tubular margins.” Evidence of this pressure was not long in coming. On 20 February, shares of US Steel and AK Steel (West Chester, Ohio) dropped. Shares of Luxembourg-based Tenaris SA, a major US Steel competitor, also fell. The final Commerce Department determination is set for 8 July, with injury determinations to be made in August, the department said. A ntidumping suits vs cost - cutting Industry observer John Tumazos of Tumazos Very Independent Research (Holmdel, New Jersey) is markedly dubious about the usefulness of antidumping suits. In an interview with business writer John D Oravecz of the Pittsburgh Tribune-Review , he bluntly declared trade cases – costing several million dollars each – an expensive waste of time. (“South Korea Escapes Pipe-Dumping Duties,” 18 February) “They distract management and send a bad message to the rank and file, who don’t feel they have to reduce costs,” Mr Tumazos said. “They are as significant as the kicking game in football to the overall outcome.” In the instant case, Mr Tumazos said, the curbs on the eight countries found guilty of dumping might mean that US Steel ships 100,000 more tons of tubing and gets $25-$50 more per ton sold. In an overall market for oil and gas tubing of between 3 million and 4 million tons per year, he considers those results trifling. New domestic manufacturing capacity is a concern. Tube mills under way include Vallourec’s, in Youngstown, Ohio; and plants being built by Borusan Mannesmann (in Baytown, Texas), Tenaris (in Bay City, Texas), and Benteler (in Caddo, Louisiana). According to Mr Tumazos there are three to five more tube mills in the US than are needed. He warned, “It’s going to be competitive unless demand brings natural gas prices back to $7 per mcf (1,000 cubic feet) on a sustained basis.” › “It’s better to spend time on cutting costs than in pursuing antidumping suits,” said Mr Tumazos, who produced the name of an executive who is doing just that: CEO Mario Longhi – of US Steel Corporation. Oil and gas Study: Switching buses and trucks over from traditional diesel fuel to natural gas could in fact worsen air pollution “This bus runs on clean burning natural gas.” The sign is a common sight along city bus routes in the United States, delivering a virtuous message rooted in good science: burning natural gas produces 30 per cent less carbon dioxide than burning diesel, to the benefit of a warming planet.

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M ay 2014