Top energy business story of 2011-US NG price "free-fall"

[edatoakrun]

Have to say this is a positive development overall, as this should result in lower electricity prices and accelerate the switch away from much more expensive and (by most accounts) more polluting hydrocarbons, such as coal and ICEV fuels derived from oil.

I wonder what the political fallout will be, If “big Gas” moves to build large-scale export facilities, to deliver American natural gas to more lucrative foreign markets?

...Prices for the commodity have been under pressure over the last couple of years, as new drilling techniques unlocked vast new stores of natural gas from shale formations and other so-called unconventional reservoirs.

But in the last two months, the steady price decline has turned into a free-fall, as unusually mild temperatures across much of the U.S. have damped demand for gas to heat homes and offices.

Natural gas for February delivery settled Friday at $2.989 per million British thermal units, the lowest closing price for the commodity since September 2009. It closed below $3 in the winter for the first time in nearly a decade.

"The sub-$3 levels for gas prices in the winter really point to the incredible amount of nonconventional gas that has come onto the market the last two years," said Gene McGillian, analyst at Tradition Energy in Stamford, Conn. "Our production levels, our mild winter and the gas we have in storage have combined to crush natural gas prices this month."

Natural gas traded as high as $13 per million British thermal units in July 2008. But in recent years, domestic production boomed, with horizontal drilling techniques and hydraulic fracturing, or "fracking," helping producers unleash a flood of gas from shale formations in Pennsylvania, Arkansas and elsewhere.

Natural gas production in the lower 48 states hit a record 71.3 billion cubic feet a day in October, the U.S. Department of Energy said this week.

The bonanza has ushered in lower prices for many consumers and businesses. New Jersey's Public Service Electric and Gas Co., citing lower costs partly due to shale drilling, reduced residential gas rates on Dec. 1 by 4.6%, bringing to 35% the utility's total decrease since January 2009...

http://online.wsj.com/article/SB10001424052970204720204577130482684060876.html?mod=WSJ_hp_LEFTWhatsNewsCollection" onclick="window.open(this.href);return false;

 

[lkkms2]

Have to say this is a positive development overall......

I expect you are right that there will be some positive developments. My concern about the cheap natural gas is that it may be coming at a future cost of polluted aquifers - with all the bad things I have been hearing about "fracking". It is easier to ignore problems that you can not see underground and have to suffer the consequences later. I have been benefitting with lower cost for my hot water heating (by NG) and electric bill that is generated by a good portion of NG. So have been thinking more about what I can do as an individual by adding solar hot water heater and photo voltaic solar for electric.

And with cheaper natural it will take longer for investments in alternative energy to payback.

Lots off trade offs in the Energy industry!

However, I am encourage by all positive actions that people are taking that I read about on the MNL forum.

Look forward to continued progress in 2012. And Happy New Year to all!

 

[Herm]

"I wonder what the political fallout will be, If “big Gas” moves to build large-scale export facilities, to deliver American natural gas to more lucrative foreign markets?"

We should not prevent global competition, this will lull energy users to depend on cheap fuel.. and if profits for "Big Gas" are artificially restrained then it will result in less exploration and investment. Unfortunately there is no lack of politicians that will pander to these ideas.

I bet there are a lot of trucking companies looking at CNG conversions for their trucks.. and the Detroit 3 should offer CNG options on all their trucks also. This could bring back the 10mph SUV monsters.

 

[Stoaty]

While natural gas is cleaner in many ways, decreased carbon emissions isn't one of them:

http://thinkprogress.org/romm/2011/09/09/315845/natural-gas-switching-from-coal-to-gas-increases-warming-for-decades/" onclick="window.open(this.href);return false;

 

[Herm]

While natural gas is cleaner in many ways, decreased carbon emissions isn't one of them:

Thats a scary web site, it really doesn't matter that NG is cleaner than coal, once we run out of NG then we go back to coal until its all gone.. the rule of thumb is that the cheap stuff gets used first.

Fortunately we are a high tech civilization and have the means of mitigating GW, even AGW if it turns out to be significant.

Unfortunately both Japan and Germany are getting out of green nuclear power, and will replace the power with NG.

 

[edatoakrun]

While natural gas is cleaner in many ways, decreased carbon emissions isn't one of them:

http://thinkprogress.org/romm/2011/09/09/315845/natural-gas-switching-from-coal-to-gas-increases-warming-for-decades/" onclick="window.open(this.href);return false;

IMO, a more accurate summary of the study referenced, and a short discussion of some of the adverse environmental effects of Coal and NG:

...The study by Tom Wigley, who is a senior research associate at the National Center for Atmospheric Research (NCAR), underscores the complex and sometimes conflicting ways in which fossil fuel burning affects Earth’s climate. While coal use causes warming through emission of heat-trapping carbon dioxide, it also releases comparatively large amounts of sulfates and other particles that, although detrimental to the environment, cool the planet by blocking incoming sunlight

http://www2.ucar.edu/news/5292/switching-coal-natural-gas-would-do-little-global-climate-study-indicates" onclick="window.open(this.href);return false;

 

[Nekota]

While natural gas is cleaner in many ways, decreased carbon emissions isn't one of them:

Thats a scary web site, it really doesn't matter that NG is cleaner than coal, once we run out of NG then we go back to coal until its all gone.. the rule of thumb is that the cheap stuff gets used first.

Fortunately we are a high tech civilization and have the means of mitigating GW, even AGW if it turns out to be significant.

Unfortunately both Japan and Germany are getting out of green nuclear power, and will replace the power with NG.

After watching the film 'Prohibition' by Ken Burns our ability to legislate and govern to the correct solution seems unlikely. However with the climate, I'm not sure we get multiple times to get it right. But we can watch and learn from the French and Germans energy choices.

 

[Smidge204]

While natural gas is cleaner in many ways, decreased carbon emissions isn't one of them:

Methane has a heating value of just over twice that of coal, so pound-for-pound you get more energy when you burn it... which means less carbon emissions from methane than from coal for any given amount of energy produced.

Meanwhile, the pollutants that coal produces are a far bigger problem in the near term, so even if there's little or nothing to be gained long-term by going to natural gas, in terms of climate impact, there is still a clear environmental benefit.

The trick is, of course, to transition to renewable methane sources rather than fossil sources. Then you'll have a workable contribution to The Solution(tm)

(The Solution(tm) being a heady mix of conservation/demand reduction and alternative/renewable sources appropriate for the location and needs on a case by case basis)
=Smidge=

 

[dgpcolorado]

While natural gas is cleaner in many ways, decreased carbon emissions isn't one of them:

Methane has a heating value of just over twice that of coal, so pound-for-pound you get more energy when you burn it... which means less carbon emissions from methane than from coal for any given amount of energy produced.

Meanwhile, the pollutants that coal produces are a far bigger problem in the near term, so even if there's little or nothing to be gained long-term by going to natural gas, in terms of climate impact, there is still a clear environmental benefit.

The trick is, of course, to transition to renewable methane sources rather than fossil sources. Then you'll have a workable contribution to The Solution(tm)

(The Solution(tm) being a heady mix of conservation/demand reduction and alternative/renewable sources appropriate for the location and needs on a case by case basis)
=Smidge=

The problem with natural gas, besides the destructive practice of fracking, is that methane is a much more potent greenhouse gas than carbon dioxide. The numbers are soft, but considerable unburned methane escapes during drilling, production, and transportation of natural gas. Depending on what fraction escapes, relying on natural gas for electricity generation could be as bad or worse as burning coal from a GW perspective.

 

[Smidge204]

The problem with natural gas, besides the destructive practice of fracking, is that methane is a much more potent greenhouse gas than carbon dioxide. The numbers are soft, but considerable unburned methane escapes during drilling, production, and transportation of natural gas. Depending on what fraction escapes, relying on natural gas for electricity generation could be as bad or worse as burning coal from a GW perspective.

The obvious solution is to be more careful about not releasing it. Right now there is essentially zero economic or legal incentive to make any real effort to contain the gas throughout the entire process.

Also, this becomes less a problem with biomethane since such a system is more easily sealed.
=Smidge=

 

[dgpcolorado]

The obvious solution is to be more careful about not releasing it. Right now there is essentially zero economic or legal incentive to make any real effort to contain the gas throughout the entire process.

Also, this becomes less a problem with biomethane since such a system is more easily sealed.
=Smidge=

I agree completely.

 

[SanDust]

The numbers are soft, but considerable unburned methane escapes during drilling, production, and transportation of natural gas. Depending on what fraction escapes, relying on natural gas for electricity generation could be as bad or worse as burning coal from a GW perspective.

Burning coal or mining it? Coal deposits trap methane which is released during mining operations. Essentially this is coal seam gas or coal bed gas which is just methane aka natural gas.

Hard to imagine anything worse than coal on just about any measure.

 

[DaveinOlyWA]

collecting natural gas during the mining of coal or the drilling of oil would be like...making the companies socially and environmentally responsible. the very basis of their business rejects that possibility

 

[Herm]

Underground Coal Gasification

http://en.wikipedia.org/wiki/Underground_coal_gasification" onclick="window.open(this.href);return false;

 

[edatoakrun]

In this AM news:

Debate is brewing over whether to keep the nation's glut of natural gas at home for cheap energy or export it at five times the price, possibly creating jobs and boosting the domestic economy.

Businesses that purchase natural gas for industrial and residential use have rallied against proposals to liquefy and export the fossil fuel to Asian and European nations willing to pay much higher prices.

Nine companies have sought federal approval to export about 10 billion cubic feet of liquefied natural gas per day, which would boost prices for U.S. customers...

Natural gas futures closed at $2.67 per million British thermal units in trading Friday on the New York Mercantile Exchange. The price was more than $15 in 2005...

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/01/17/BUAL1MQ3TD.DTL" onclick="window.open(this.href);return false;

The current US wholesale cost per BTU is now almost 10 times higher, for gasoline (about 115k BTU/Gallon) than for natural gas.

Somethings gotta give...

 

[planet4ever]

Perhaps my view is overly simplistic, but here it is:

• Carbon in the atmosphere causes global warming, whether as soot, CO2, or methane.
• We currently have large amounts of carbon stored underground, as coal, oil, and gas.
• All mining operations for fossil fuels ultimately result in carbon being moved from underground to overhead.
• Future generations are going to be cursing us as they spend trillions of dollars trying to get that carbon out of the atmosphere and back into the ground.
• We are idiots to be spending money now getting it out of the ground.

Ray

 

[AndyH]

And in other NG news... Welcome to the NG Highway:

http://www.aacog.com/civicalerts.aspx?AID=150

ANGH is a network of liquid natural gas (LNG) fueling stations being built by Clean Energy along main trucking corridors in the United States. Clean Energy currently has 98 stations identified and anticipates having 70 stations open by the end of 2012 in 33 states.

http://eon.businesswire.com/news/eo...ck-fueling/America's-Natural-Gas-Highway/ANGH


Map Source:
http://mms.businesswire.com/bwapps/mediaserver/ViewMedia?mgid=307388&vid=5

PS: Anyone surprised to see Boone Pickens on the board?
http://investors.cleanenergyfuels.com/directors.cfm

 

[edatoakrun]

WSJ today reports on how quickly the US is shifting away from coal and to N G for electricity generation.

...Low-price gas encourages electricity generators to use gas-fired plants more and their coal-fired plants less. In the 12 months through November, 24.4% of U.S. electricity came from gas, against 42.8% from coal. In 2008, the figures were 21.4% and 48.2%. A decade ago, they were 17.9% and 49.8%...

http://online.wsj.com/article/SB10001424052970203315804577206860331660388.html" onclick="window.open(this.href);return false;

 

[DaveinOlyWA]

While sacrificing our fresh water supplies i'm many of the areas the gas is coming from.

Was that mentioned as well?

 

[Electric4Me]

I have been benefitting with lower cost for my hot water heating (by NG) and electric bill that is generated by a good portion of NG. So have been thinking more about what I can do as an individual by adding solar hot water heater and photo voltaic solar for electric.

gascant's company is combining solar hot water & PV...
I forget the name of it but I'm sure he'll speak up.