...or fracking. Today, it’s one of the most incendiary environmental topics going. Natural gas is found underground, and is produced when trapped gas is released above ground. Hydraulic fracturing is a process that extracts natural gas from the ground. In order to try to break our country’s dependence on foreign oil supplies, we have begun to dip into our own natural gas supply. As harmless as the billion dollar producing oil companies would want us to believe, environmental groups, scientists, and average citizens have raised concerns about the negative impact of hydraulic fracking on the environment and surrounding communities. From an ethical perspective we might look at the harms and benefits of fracking. Is U.S. energy independence more important than the potential for harm to those affected by fracking procedures? Hydraulic fracturing poses the greatest current threat for communities because its potential for environmental and human damage is vast and its management is fairly unregulated. Modern day hydraulic fracturing results from the marriage of two technologies: hydraulic fracturing and horizontal drilling. Although these technologies are not new, it was not until 2002 or 2003 that they were first combined. In a typical fracking operation, pressurized water, sand and chemicals are injected into shale rock formations to release trapped natural gas (Edwards and Oliver). Since natural gas is trapped and then subsequently released from shale rock, thus the name has been...
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...collect the natural gas held in shale formations. Shale gas has become an increasingly important energy resource in the U.S. As for Europe it is being use primarily in central Europe going eastward and on up. In South America it is primarily in central part. 2- Natural gas is already a critical part of America’s energy portfolio and consequently a critical part of the country’s economic growth. Not only does natural gas provide over 25 percent of electricity generation, natural gas, and other gases extracted from natural gas provide a feedstock for fertilizers, chemicals and pharmaceuticals, waste treatment, food processing, fueling industrial boilers, and much more. Although natural gas prices in the United States have historically been volatile, the abundance of shale gas brings the possibility of low, stable prices. North America has approximately 4.2 quadrillion (4,244 trillion) cubic feet of recoverable natural gas that would supply 175 years worth of natural gas at current consumption rates. Further, the National Petroleum Council estimates that fracking will allow 60 percent to 80 percent of all domestically drilled wells during the next 10 years to remain viable. The abundance of natural gas makes the United States an attractive place to do business, especially for energy-intensive industries. In what could be a growing trend, Royal Dutch Shell recently announced plans to build a petrochemical plant in western Pennsylvania and cited the proximity to natural gas production...
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...FRACKING: GOOD THING Natural gas is rapidly emerging as a major fuel of the world economy, meeting the rising requirements of natural gas is hard to achieve. Fracking is one of the most important technologies for natural gas production. Fracking has been used widely in oil and gas industry for decades; it is a technique used to get gas and oil from shale rock. The process of fracking is injecting the mixture of water, sand and chemicals into the rock at a high pressure to release gas (BBC, 2013). Fracking technology experiences long time of development. In 1947, Stanolind Oil conducted the first experimental fracturing to stimulate natural gas; in 1949 Halliburton conducted the first commercial fracturing to extract natural gas (Montgomery and Smith, 2010). Until 2003 fracking was used widely, energy companies actively expand natural gas exploration in Texas and Pennsylvania (Eecworld, 2010). fracking played an important role in America's natural gas resources for many years and countries such as Canada, England and China are actively pursuing implementation of fracking. Nationally, fracking can boost energy industry and promote economic grow in countries. However, like any advanced technology, it can also raise environmental concerns, cause water and air pollution. Therefore, whether the advantages of fracking worth the disadvantages? Yes, it worth. fracking is good, so it should be used on a massive scale to contribute to the increasing demands of energy. There are three economy...
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...as well as the Black-Scholes Model for Real Options. Questions to be addressed in the study are: 1. Evaluate Amoco’s and Apache’s corporate objectives and strategies. Is it reasonable to expect that the MW properties are more valuable to Apache than to Amoco? What sources of value most plausibly account for the difference between buyer and seller? 2. Structure and execute a DCF valuation of all the MW reserves. How much are the reserves worth? Is your estimate more likely to be biased high or low? What are the sources of bias? 3. How would you structure an analysis of MW as a portfolio of assets in place and options? Specifically, which parts of the business should be regarded as assets in place and which as options? What kinds of options are present? Should this approach yield a higher or lower value that the DCF approach? 4. Execute the analysis you structured in Question 3, beginning with assets in place. How risky are the assets that underlie the options; i.e. how would you estimate SD for each? How much is the whole portfolio worth? 5. Assuming a sale goes through, how does Apache exercise each of the various options? When should it do so? BACKGROUND In a case prepared by Barbara Wall at the Harvard Business School, entitled MW Petroleum...
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...part it plays in our nation’s ambitions for a clean and sustainable energy future. Due to recent technological advances in horizontal drilling techniques, the vast natural gas reserves found within the shale formations underground in the United States have become easily accessible. Responsible development of these resources is believed to be key to a sustainable financial, and environmentally prosperous future for America. However, recent environmental and health concerns beg to differ, and question whether these new developments pose more of a threat to americans than they are worth. Nature sustains life on our planet. Humans have developed an organization of society that runs on machines. What does it take to run the machines that power our world? Our society also runs on money. So anything that plays into the running of our society must must invariably be tied to how it profits the people in charge of running things. How does it benefit us as a whole? This question is larger than the debate which this paper addresses, yet it is valid in that it is an overarching theme that drives the situation behind the issues within. A big part of what our economy has deemed is important in order to sustain the current level of comfort that we have been sold is largely based on non-renewable energy sources such as oil, coal, and gas. It is a very competitive world. Our level of comfort is key to maintaining an edge over our competitors on the global financial stage. Deep within the earth,...
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...Fall 13 Fall 13 Natural Gas vs. Electricity vs. Geothermal – Heating & Cooling Natural Gas vs. Electricity vs. Geothermal – Heating & Cooling 08 Fall 08 Fall Executive Summary When deciding upon a heating and cooling source for a new home, people often ask, “what is the best bang for my buck”? The cost of energy continuously increases as the years go bye due to inflation and the cost of non-renewable resources. Since more than half of additional costs in owning a home comes from heating and cooling, people have begun to look into alternative methods. As a typical consumer there are a few different avenues to choose from in this decision that fit within their needs. With technologies advancing and efficiency increasing constantly, making a decision between natural gas, grid-based electricity, or geothermal heating and cooling may be difficult. Many vendors claim that their products run on minimal energy and that long-term monetary savings with the reduction of the energy bills will justify initial costs. How does one choose between these three options? The variables that affect this decision depend greatly on location. Natural gas is becoming abundantly available everywhere in urban communities of all major cities and towns. However, for rural communities this resource may not be an option. Grid-based electricity can be found just about everywhere in the United States. Other than the increase in prices every year, many have concerns...
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...Hydraulic Fracturing: Is the Risk Worth the Reward? Are they willing to risk their health for wealth? That is the question on everyone’s mind in North Dakota right now. North Dakota residents are scratching their heads and asking, “is the money that oil and gas development is providing to our state important enough that we are willing to risk the health of our families”? Why is there a risk? Because the oil companies are not satisfied with reaching oil only a few hundred feet below the surface. Oil and gas companies are interested in retrieving the oil and gas from a layer of shale and dense rocks at depths of 10,000 feet. The oil companies are retrieving the oil and gas from the shale and rock using a method known as hydraulic fracturing (fracking). This method was developed over 60 years ago. The process of fracking injects water, sand, and chemicals through a cement casing or tubing into shale and dense rocks, cracking the shale and rocks to open the pores, allowing the oil and gas to flow more freely to the surface (Svoboda). Even though the oil companies are using less invasive chemicals, leaving behind fewer toxins, they are still using chemicals with health risks attached such as ethylene glycol. The other health concern today is the dumping of wastewater that comes from the fracking process. There were more than 1,000 reported spills or illegal dumps of wastewater and other drilling fluids in 2011, just in the state of North Dakota. This contaminated water has to go...
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...financial aspect of the business which the ratio measures: Profitability, Asset Utilization, Capital Structure on a specific tab, Financial Ratios. Financial analysis allows for comparisons between companies, between industries and also between a single company and its industry average or peer group average. My work concentrates on financial and physical result of the company for a decade. They have been analyze to review its performance over the years and to find the areas in which it is lacking in comparison to other major players in same field. Gail (India) Ltd. Is best positioned to benefit from the activities in gas sector, and is likely to grow symbiotically over next 3-5 years Gail (India) Ltd. Planning to spend Rs. 300 billions to double its gas transportation capacity by adding five new approved pipelines. Gail’s Major revenue comes from Natural Gas transmission of which revenues HVJ pipelines form a major chunk. As per new regulation there would be...
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...Industry Structure: ..................................................................................................................... 8 Potential Pitfalls: ..................................................................................................................................... 9 References:............................................................................................................................................ 11 Oil and Gas Industry The oil and gas industry or the petroleum industry has become an important part of every man’s day to day routine. Let it be cooking, driving or lighting oil and gas has become a necessity. Naturally discovered under the crust of earth crude oil was earlier thought to be available in abundant. But in recent years we have found that there is shortage of the most necessary part of our life. In this report we will discuss the history, current leaders, demographics, structure, financial statistics and potential pitfalls of one of the most profitable industry i.e. oil and gas industry in the present market. History: The processes of exploration, extraction, refining, transportation and marketing of petroleum products around the globe forms the petroleum industry....
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...The Cost-Benefit Analysis of Alberta’s Tar Sands Student Name: Nas Abubaker Instructor Name: Brenda Lang Course and Section: GNED 1304-009 Date: March 22, 2011 Abstract Alberta is one of the most ecologically rich provinces in Canada, with boreal forests covering most of the northern and eastern parts of the province. The exploration of the Alberta tar sands has a great impact on the environment and the community. The devastation effects can destroy ancient forests, while contaminating food and water, which disrupts local wildlife, leading to greenhouse gas emissions, as well as serious health problems. As the production of oil through tar sands creates intensive challenges, immediate strategies that control the amount of devastation are greatly needed. The Cost-Benefit Analysis of Alberta’s Tar Sands As the world is racing to discover new ways to find replacements for the rapidly diminishing stores of fossil fuels, many have gone into the avenue of looking for the solution via the route of renewable energy. However, the discovery of Canada's greatest buried treasure in Alberta has drawn attention from a multitude of countries around the world, all of them eager to sign contracts with Canadian petroleum suppliers. In a report released by the government in the late 1800's, a report dealing with the region's tar sands called them as the “most extensive petroleum field in America, and even went to the extent that the fields will...
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...half over the next two decades. The charts below shows the trends of worldwide energy consumption and the energy consumption of three big giants, USA, China and India till 2040. At present, we rely on coal, oil and gas (the fossil fuels) for over 80% of our current energy needs – a situation which shows little sign of changing over the medium-term without drastic policy changes. The problems associated with an over reliance of non-renewable energy sources is the fear that our energy resources are starting to run out, with devastating consequences for the global economy and global quality of life. At the same time, the tremendous risk of climate change associated with the use of fossil fuels makes supplying this energy increasingly difficult. While the potential for a crisis if we run out of energy is very real, but there is still time before that occurs. In the past two decades proven gas reserves have increased by 70% and proven oil reserves by 40%. At expected rates of demand growth we have enough for thirty years supply. Moreover, better technology means that new oil and gas fields are being discovered all the time while enhanced recovery techniques are opening up a potentially huge array of unconventional sources, including tar sands, shale gas and ultra-deep water. While in the long term, the use of renewable sources of energy like harnessing wind and solar energy is inevitable, at present the costs associated are high and the efficiency of the power generated is...
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...process will be introduced with results presented. Finally, a discussion of findings will conclude, supplying answers to the following questions: (1) What should the acquisition price for XTO shares have been? (2) Which comparable firm is the best comparison firm for XTO Energy? (3) Why did ExxonMobil want to acquire XTO? (4) Based on the analysis, did ExxonMobil overpay for XTO or get a Bargain? (5) What additional information could help with this analysis? INTRODUCTION Economic Considerations and Pertinent Features of the Energy Industry The timing of this acquisition corresponds with an economic downturn in the energy industry. This downturn is represented in Figure 1 which depicts the performance of the Dow Jones U.S. Oil & Gas Index (DJUSEN). ExxonMobil’s...
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...investment project succeeds (II) The option to wait (and learn) before investing (III) The option to shrink or abandon a project (IV) The option to vary the mix of output or the firm’s production methods A) I only B) I and II only C) I, II, and III only D) I, II, III, and IV only 2. The opportunity to invest in a project can be thought of as a three-year real option on an asset which is worth $500 million (PV of the cash flows from the project) with an exercise price of $800 million (investment needed). Calculate the value of the option given that, N(d1) = 0.3 and N(d2) = 0.15. Assume that the interest rate is 6% per year. A) $150 million B) $49 million C) $30 million D) None of the above. 3. The DCF approach must be: A) Augmented by added analysis if there are no embedded options. B) Augmented by added analysis if a decision has significant embedded options. C) Jettisoned if there are any embedded options. D) Computed carefully to identify the options. 4. The following are examples of expansion options: (I) A mining company may acquire rights to an ore body that is not worth developing today but could be profitable if product prices increase (II) A film producing company acquiring the rights to a novel to produce a film based on the novel in the future (III) A real estate developer may acquire a parcel of land that could be turned into a shopping mall (IV) A pharmaceutical company may acquire a patent to market a new drug A) I only B) I and II only C) I...
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...Based in Houston, Texas an American energy, commodities, and services company named ENRON CORPORATION was Ranked number 7 on the fortune 500 list in 2000, it was one of the most famous and largest integrated natural gas and electricity companies in the world. The company went bankruptcy on December 2, 2001. But before that it marketed natural gas liquids around the world and was working as one of the biggest natural gas transmission systems in the world, with transmissions over a massive area of 36,000 miles. Serving both upcoming and the industrial market, It was one of the largest autonomous developers and creators of electricity. Enron also supplied of solar and wind renewable energy in many parts of the world, it was one of the largest suppliers in this form of energy as well. ,,,,,,,,,,,,,,,,,,, It managed the largest portfolio of natural gas-related risk management contracts in the world, and was one of the world's biggest independent oil and gas exploration companies. In North America, Enron was the largest wholesale marketer of natural gas and electricity. Enron pioneered innovative trading products, such as gas futures and weather futures, significantly modernizing the utilities industry. After a surge of growth in the early 1990s, the company ran into difficulties. The magnitude of Enron's losses was hidden from stockholders. The company folded after a failed merger deal with Dynegy Inc. in 2001 brought to light massive...
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...opposition against this controversial topic of retrieving natural gas. Fracking is defined as the process of drilling down into the earth before a high-pressure water mixture is directed at the rock to release the gas inside. This process seems very dangerous at first sight since the process of drilling deep into the ground and releasing natural gas from rocks in the ground does not sound environmentally safe and may harm our local water supply and poison us. Fracking works by huge horizontal pipes or “veins” being placed inside large vertical wells full of rocks filled with natural gas, after this the horizontal pipe is then filled with water and is forced into the well at high speeds and pressures forcing the rocks to be cracked or broken apart which thus releases the gas inside them into the tiny cracks created. Furthermore, the gas and oil is then collected and placed in large storage tanks for distribution and use. The chemicals used in fracking are a large amount (up to 600), however the main chemicals used by fracking companies are; water, sand, salt, citric acid, and benzene or lead. These chemicals are noted to be particularly hazardous and dangerous if not used completely correctly which makes us question the complete safety of fracking fluid. The methane (natural gas) used in fracking is known as an alkane, which are...
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