Replies to This Discussion

Permalink Reply by sesport on February 4, 2010 at 0:31

Thanks, Les. I've just started to look in this area of consumption.

http://www.ceere.org/iac/iac_combined.html

"WHAT IS CHP?

In Combined Heat and Power (CHP) systems the fuel source can be natural gas, propane, fuel oil, coal, wood chips, biogas, other biomass materials or any combination. "

I also ran across one project that is utilizing bovine digestive output. lol Happy cows!!!

have a good day - 80)

Permalink Reply by Mattie on February 4, 2010 at 3:31

Les,

I am very much aware that there is a lot of gas-fired generation in the US that does not run - primarily, because of price disparity versus coal. However, your allusion that there is sufficient gas-fired generation plants already available to replace a reasonable portion of the coal-fired generation to meet future power needs is incorrect. Many new plants would need to be built. And, to think that Obama and Company is going to let go of its support of coal in any meaningful way is silly - these guys talk out of both sides of their mouths when it comes to reasonable thinking in initiating a true "green economy" that won't totally bankrupt the country. I cannot, for the life of me, think of any scenario where 100% runtime of existing NG-fired "peaking plants" would sufficiently close the gap on what could become a real "gas bubble" in the next 12-36 months. Certainly, it would help, but IMO the critical growth vehicle (no pun intended) needs to come from CNG auto conversions and a government incentive to invest in the required supporting infrastructure - especially if we want to look beyond a 2-3 year timeframe into 2020 when these shale plays are more mature and the new pipeline infrastructure is in place to deliver the product.

Permalink Reply by Les Bamburg on February 4, 2010 at 4:14

Mattie, my original statement is not "incorrect" or "silly". Tomorrow we could increase natural gas consumption by ~ 15 to 20 Bcfd or almost 30% of our current consumption level given more favorable policies toward natural gas. That is more than enough to deal with any potential over-supply situation.

By the way, the current projected natural gas price "band" is more than sufficient to keep most producers in business and continue to develop all the major gas shale plays.

A movement to increased natural gas usage is a benefit to the country in general as it improves the environment, reduces consumer costs and reduces imports. The use of electric plug-in hybrid cars is probably an easier sale to the public and will increase natural gas consumption. CNG/LNG is a better fit for heavy duty vehicles (trucks & buses).

Permalink Reply by Max on February 4, 2010 at 1:56

http://www.beaumontenterprise.com/community-news/jnb/local/72649697...

65 million for wood chips and hydro in our backyard.

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on February 4, 2010 at 5:17

* FEBRUARY 4, 2010, 9:36 A.M. ET

US GAS: Futures Waver Ahead Of Storage Data - WSJ


By Christine Buurma
Of DOW JONES NEWSWIRES


NEW YORK (Dow Jones)--Natural gas futures fluctuated Thursday ahead of government data expected to show a modest draw from U.S. gas inventories last week.

Natural gas for March delivery on the New York Mercantile Exchange was trading 1.8 cents higher, or 0.33%, at $5.437 a million British thermal units after opening floor trade less than a penny higher at $5.421/MMBtu.

Traders were weighing cold weather against tepid gas demand Thursday. Unusually cold temperatures were expected to envelop most of the continental U.S. through Feb. 18, boosting the demand for natural gas for heating. MDA EarthSat, a Rockville, Md. private forecaster, was predicting below-normal temperatures across the eastern two-thirds of the U.S. from Feb. 9 to Feb. 18.

Two major snowstorms are poised to hit the Plains and Northeast within the next week, said Joe Bastardi, a meteorologist with AccuWeather.com, in a note to clients Thursday.

"Major winter storms will start Thursday in the Plains then blast the Northeast Friday night and Saturday," Bastardi wrote. "Second major storm will follow Monday through Tuesday from southern Plains to East Coast."

But U.S. Energy Information Administration data scheduled for release Thursday was expected to show a smaller-than-average draw from U.S. gas storage for the week ended Jan. 29 because of mild weather last week. The EIA is likely to report that 122 billion cubic feet of gas were withdrawn from storage during the week, according to the average prediction of 18 analysts and traders in a Dow Jones Newswires survey.

The storage estimate is less than last year's 194 bcf pull from storage and the five-year average draw, which was 178 bcf. If the storage estimate is correct, inventories as of Jan. 29 will total 2.399 trillion cubic feet, 6.3% above the five-year average and 8.7% above last year's level.

Weak demand for natural gas from industrial users also continued to weigh on prices. Analysts and traders have been tracking economic data for signs of a recovery that would boost energy demand, but the Labor Department reported Thursday that new claims for unemployment insurance rose unexpectedly last week.

"We don't have any clear-cut reason to buy natural gas right now," said Mike Rose, a trader with Angus Jackson Inc. "When the demand for home heating is over, you need industrial demand for prices to go higher. We don't have that."



-By Christine Buurma, Dow Jones Newswires; 212-416-2143; christine.buurma@dowjones.com

• ▶ Reply

Permalink Reply by Mattie on February 4, 2010 at 6:39

Les,

I am on your side here - I apologize if I insulted you by questioning your math. I am not a proponent of other fuels to meet our energy needs - I am a "gas guy". But, what is behind your numbers of the 30 Bcf/day increase? Does it not include a huge conversion from coal to NG?? If so, my point is that it is unlikely that this will happen due to politics. And, while I'm an O&G proponent, I don't believe in the "global warming" scare to the point of advocating removing coal completely from the power grid - even with conversion to NG, which is cheaper than all the alternative fuels by far, we would see a considerable price increase to the consumer, which is not good for the economy. I am not an advocate of "doing nothing", either. Therefore, given the politics of the day, we'll be lucky to be able to fight off multi-billion dollar "coal gasification" projects, and other high cost alternatives. Advocating that no new coal plants be built (and instead be replaced with gas-fired generation when coal plants are decommissioned and consolidated with higher-efficient coal plants) is probably the best we can expect. Realistically, over the next 2-5 years, we might be talking about 5-7 bcf/day of conversions from coal to NG, which equates to at least 20-25 major coal plant closures - I don't see a political push for anything greater than that with this administration in power. So, it's going to take more than this to close the gap on a 15-30 bcf differential - I agree with you that with today's technology and lack of overall infrastructure, commercial vehicle CNG usage is most probable. But, if we're going to "dream big" and buy in to the "green economy" mantra, then government incentives to a broader use for autos is the next best "new market" - either that, or conversion to electric cars, which will then require more electric generation infrastructure. It's certainly a lot better idea than the other supposed "great alternatives" such as solar and wind power.

• ▶ Reply

Permalink Reply by Les Bamburg on February 4, 2010 at 8:18

Mattie, no apology necessary. I do not disagree with your observations concerning the political reality. That was the reason I focused on the straight math rather that the policy issues. I will say the cost gap between natural gas and coal power is narrowing as older coal plants are being retired and replaced with new plants equipped with scrubbers, etc to lower the pollutant emission levels. This means the "sticker shock" of transitioning to more gas fired power may not be as dramatic as it would have been in the past. Some major power companies and utilities are already taking the first steps.

Just a small clarification - I said ~ 15-20 Bcfd increase in natural gas consumption. Also, any decrease in our current imports of 8 Bcfd will provide additional demand for US gas production.

• ▶ Reply

Permalink Reply by Mattie on February 4, 2010 at 10:06

Les,

Okay, yes - I misread your estimate on increase as being 30 bcf, but my point being that closure of ~ 25 large plants will still be a big hurdle with Obama's support of the coal states and unions. I agree with you that anything that closes that gap significantly will help - on the LNG side, I think we'll have a hard time seeing this gas disappear unless our market prices stay depressed - what's already built in the way of LNG infrastructure is "sunk cost", and the delivered price I'm hearing for this gas is waaay to cheap to simply go away altogether. I'd be happy if it stayed at 8 bcfd. We'll see.

I enjoy the exchange of ideas - we all have our "market view" - I grew up on the independent producer side of the business, then spent the past 20 years trading NG and power for large utilities (both physical and financial), and the past 5 in the midstream sector - I've enjoyed a few good years of a "bullish" gas price environment, but it seems that the drillbit is always too smart for its own good in meeting market demand to keep prices up for long - so, I've become quite "bearish" in my older age - maybe a protection mechanism to keep from getting too optimistic. When our business gets burned, it usually is a hard, steep fall.

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on February 4, 2010 at 17:52

Energy Prices Swoon on Bleak Jobs Data, Stocks
Oil settles near $73 on disappointing jobs data, stock market slide
By DEBORAH JIAN
The Associated Press

NEW YORK

Energy prices dropped Thursday as dismal job news, a sinking stock market and a lower-than-expected draw on natural gas supplies dimmed hopes for stronger energy demand.

Benchmark oil for March delivery fell $3.84 to settle at $73.14 a barrel on the New York Mercantile Exchange. It was the biggest one-day drop in four months.

In London, Brent crude for March delivery shed $3.79 to settle at $72.13 a barrel on the ICE Futures exchange.

Natural gas prices lost 0.3 cent to settle at $5.416 per 1,000 cubic feet, after the Energy Information Administration said that the country's glut of natural gas only dropped by 115 billion cubic feet. Analysts expected it to shrink much more.

The recession slowed demand for natural gas to heat homes, and to run power plants and factories. As a result, the nation is sitting on a massive supply of gas. The government said stocks are brimming at 2.41 trillion cubic feet, well above the five-year average for this season.

• ▶ Reply

Permalink Reply by sesport on February 4, 2010 at 18:14

Here's EIA's Annual Outlook 2010 (early release)

http://www.eia.doe.gov/oiaf/aeo/aeoref_tab.html

BTW, re. US LNG imports, I'm reading that it's EXPECTED that this will decrease in time. If I'm not mistaken, our prices are tied to Henry Hub and are more volatile, whereas other markets are more favorable. Although there is an increase in short term contracts rather than long term.

And of course, I can expect to stand corrected. 80)

• ▶ Reply

• ‹ Previous
• 1
• 2
• Next ›
• Page