Chesapeake Energy 2011 Annual Report Download - page 13

COMMITTED TO
AMERICAN ENERGY INDEPENDENCE
The time is now to begin breaking OPEC’s 40-year stranglehold
on the U.S. economy and to lower energy costs to American con-
sumers. The time is now to enhance national security, stimulate eco-
nomic growth, create millions of high-paying jobs and improve the
environment. The time is now for America to embrace natural gas as
its fuel of the future. Currently priced significantly less than diesel or
gasoline, American natural gas produces up to 30% lower greenhouse
gas emissions in light-duty vehicles and up to 20% lower emissions
in medium- to heavy-duty vehicles. The U.S. is the largest producer
of natural gas in the world and we believe it has more recoverable
resources of natural gas than Saudi Arabia has oil reserves — we need
to take full advantage of this buried American treasure of natural
gas. To help accomplish this, Chesapeake has created Chesapeake
NG Ventures Corporation to invest at least $1.0 billion in a variety of
initiatives designed to increase natural gas demand in the U.S.
CHESAPEAKE INITIATIVES
We are collaborating with GE to develop
infrastructure solutions that will help accel-
erate the adoption of natural gas as a trans-
portation fuel. GE has committed to provide more than 250
“CNG In A Box™” modular and standardized CNG compres-
sion stations for natural gas vehicle (NGV) infrastructure
which will provide the core infrastructure to enable expanded
access to CNG at fueling stations and other designated in-
stallations. The collaboration will also focus on modular LNG
fueling plants to support expanded use of LNG as a substi-
tute for diesel or gasoline.
We are collaborating with 3M in designing, man-
ufacturing and marketing a broad portfolio of
larger, lighter and more aordable CNG tanks that we believe
will enable greater market adoption of CNG as an alternative
automotive fuel source.
We are helping create America’s Natural Gas High-
way System through our $160 million partnership with
Clean Energy Fuels Corp., which will provide heavy-
duty trucks ready access to natural gas along major interstate high-
ways. We believe it will transform the trucking industry by lowering
its costs and reducing emissions and will help America achieve inde-
pendence from OPEC.
We have committed $155 million to acquire 50%
ownership of Sundrop Fuels, Inc. which has devel-
oped an aordable natural gas-based green gasoline
that is fully compatible with today’s engines and fueling infrastruc-
ture. The result is a shelf-stable, ready-replacement fuel for the
costly gasoline and diesel derived from foreign oil.
2011 Annual Report | 11
We are also collaborating with GE and Whirl-
pool Corporation (NYSE:WHR) on their individual
eorts to market a new, lower cost natural gas
home refueling appliance (HRA). Approximately 65
million American homes already have natural gas
piped to them. Oering an inexpensive HRA option
directly to the homeowner or indirectly through a
leasing program with their local gas distribution
company will be a complete game changer for how
Americans fuel their cars and trucks.
As American gasoline and diesel prices now
exceed $4 per gallon in many areas, imagine the
positive impact on the country’s economy and
the budgets of millions of American families if
these fuel prices could be lowered by 50 to 75%.
This would be yet another way natural gas could
transform the American economy for the better.
Finally, Chesapeake NG Ventures’ engineering
department has invented a revolutionary “Diesel
Natural Gas” (DNG) kit. We intend to begin sell-
ing this kit for approximately $35–40,000 into
the diesel engine market later this year, which
will enable diesel engines to be converted to a
blend of diesel and natural gas, with natural gas
constituting up to 70% of the blend. The average
large American truck consumes 15–20,000 gal-
lons of diesel per year, and with a minimum of
$2 per gallon savings from using our device, the
payout should occur within one year and provide
multiple years of future returns of $30–40,000 in
Other important ongoing Chesapeake initiatives:
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Diesel Natural Gas technology, which permits diesel engines
to be retrofitted to run on a blend of natural gas and diesel.
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a CNG home-refueling appliance, targeting a cost of $1,500,
instead of $5,000 today, giving 65 million American homeowners
and more than five million commercial facilities the opportunity
to take advantage of the current 75% discount to gasoline prices.
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Country Stores and OnCue Express to enable more than 35 new
CNG stations to be built in Oklahoma and we have committed
to invest another $50 million with other convenience store and
travel center operators to add CNG refueling pumps to at least
200 existing stations throughout the country.