Replies to This Discussion

Permalink Reply by P.G. on January 27, 2011 at 13:29

So unless coal is outlawed, NG prices will be competing with coal prices? How can that be good news..

Besides, it will do nothing to reduce our dependence on foreign produced oil...

 

Imagine the outcry from the public when electric bills start exceeding the price of mortgage payments..

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Permalink Reply by sesport on January 27, 2011 at 13:48

PG - Try reading first, then thinking, then thinking some more, then think awhile longer, and then maybe, MAYBE, responding/posting. 

 

And thanks for the (inflammatory) thoughts,  80)

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Permalink Reply by P.G. on January 27, 2011 at 14:38

Thanks for your inflammatory reply....

 

The shift to natural gas is being driven by new drilling technology that allows companies to tap huge reserves of natural gas. And Exxon expects that clean air and climate change regulations around the world will make coal more expensive."

 

Isn't that the "gist" of the article?

There's no free lunch. Getting rid of the cheap energy (coal) or driving it's price up through regulation will drive electric bills through the roof unless NG prices stay low.

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Permalink Reply by sesport on January 27, 2011 at 15:34

"Imagine the outcry from the public when electric bills start exceeding the price of mortgage payments..."

 

I guess you consider that last part a sensibly reasoned comment, huh?

 

Upon further reading you might discover that Exxon expects NG to replace coal ONLY as being second to oil.  No mention is made of getting rid of the cheap energy (coal).

 

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Permalink Reply by w.r. frank on January 27, 2011 at 15:57

Why don't you quit using statements like "through the roof" without any data to back it up. Coal to gas switching has been going on for the last year. NG could go to $7 or $8 and electricity would not "go through the roof." There are many studies (most done in connection with proposed cap and trade legislation that indicate relative modest electricity increases as a result of putting a price on carbon--which is dead politically!

You haven't seen drilling in the Haynesviile or Marcellus like you would see with $7 NG.

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Permalink Reply by Joe Aldridge on January 28, 2011 at 15:06

First, Exxon is not saying that NG will replace coal. They are saying that NG will move up and become second in energy production to oil. Coal will still remain a major supplier of energy throughout the world and be third on the list.

Exxon has people on staff that do nothing but analyze markets and trends. They don't sub that out. Its all done in house by staff people and they are very deliberate. If Exxon makes a move in an area, you can take it to the bank that the trend and market is going in that direction. This publication by them and the buy up of XTO at the price they paid supports that. It means that Exxon believes that NG  will be plentiful and the market will go more to gas rather than coal in the long term primarily because of Gov. Regulation of coal and the abundance of NG. They don't deal in products or markets that are quick to spike and then fade. Again, what they are saying and doing has nothing to do with the price going through the ceiling. I don't think they see that happening and I don't understand how the thought or the logic of that got started in this thread. Personally, I think we see a 100+ (probably much longer) year supply of gas on a world wide basis and the price should remain fairly steady for a long period. That will be good for the economy in general. What we see in current discoveries of shale gas is only the tip of the iceberg so to speak.  There will be other discoveries in other shales in other parts of the country and the world that will make the current discoveries in our area seem small. This is still a developing technology that is in its infancy as for as discovering, developing and producing gas from shale on a world wide basis and if you read the publication closely Exxon looks like it plans to be a long term player on a global rather than a local scale as far as NG is concerned. 

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Permalink Reply by sesport on January 28, 2011 at 18:04

Thank you, Joe and w. r., for the thoughts.  That NG will replace coal as being second to coal is clearly stated in the second sentence that I copied & pasted.

 

"Natural gas is expected to displace coal as the second most important worldwide fuel by 2020."

 

And I would agree with you that Exxon doesn't play around when it comes to developing resources and investing.  I don't take it lightly that they are favorable about NG, whether here or across any big ponds.  At the very least, this puts the US coal industry on notice to play nicely in the sandbox and share, IMO.  Perhaps as it should be. 

 

The increase in demand for fuels for energy and industries should mean there is enough "pie" to go around for everyone.  And if coal states/industry decide to start making a shift in their economies to reduce our need for that resource (cough, cough, hack, hack) than perhaps that too is all the better. 

 

This is also a long-range forecast and should be treated as such.  By that I mean that even with all their money, Exxon isn't omnipotent.  No telling what can happen with science and research & development.

thanks again,  80)

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Permalink Reply by Joe Aldridge on January 28, 2011 at 23:42

Its hard to get past a headline that is so short that its not correct and then see comments that don't make sense in a thread. I'm glad you posted the link to the article. I found it interesting and very enlightening. Thanks again.

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Permalink Reply by sesport on January 29, 2011 at 3:50

Your most welcome.

 

lol, Yes, journalists employ that technique to grab attention all the time.  It's what sells.  Not that I'm a journalist.  And I wouldn't say that it's NOT correct as abbreviating the text doesn't necessarily make it erroneous.  I usually post the link(s) to the material I'm reading because I prefer to put it all out on the table, to get other opinions.

 

Glad you looked into it and found it thought provoking & helpful.  I find these kinds of things helpful as it gets me out of our little HS "fishbowl" and examining the bigger energy picture.  Then I'm better able to put the pieces of the puzzle together as to what this all means to our little backwater (but not backwards by any means) communities.

 

By virtue of its acquisition(s), Exxon has declared itself a stakeholder in this play.  No telling what went "undeclared" previously.  IMO, they brought some much needed muscle to the game as other interests seemed to have the advantage.

 

Now a long-range increase of 5% in NG use may not sound like much, but I'm sure if someone were to do the math as applied to their own production (simply for entertainment as that would be prognostication) we could at least grin thinking about the revenues that could be generated and the opportunities that might be created. 

 

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Permalink Reply by w.r. frank on January 29, 2011 at 8:23

Sea,

For a thoughtful in depth analysis of the energy industry, I recommend the Deutsche Bank study released November 17, 2010, including the backup reports. DB, like Exxon Mobile, predicts a growing share to NG, though coal continues to grow at a much lesser rate. In fact, DB predicts the NG will ultimately reach 40%+ market share over a longer period of time than EOM. Interestingly, there is a section on electricity generation and distribution and, even assuming cap and trade legislation, electricity prices don't get "near the roof", much less go" through" it. One of the clear advantages of NG is the capacity in place now as "peakers" which get converted to "baseload" with very small additional capital cost.

http://www.dbcca.com/dbcca/EN/investment-research/investment_resear...

Remember, though, EOM is not infallible. EOM has a LNG import terminal sitting practically unused. It is one of the best run major corporation in the world. Interestingly, the CEO of EOM actually favors a direct carbon tax rather than cap and trade. It is rare, but I completely agree. Why would we trust Wall Street to trade and police the trading of pollution permits--the same wonderful folks who gave us 100X leverage, AIG, Lehman Bros. and every flavor of derivatives and swaps. Please!

 

Thanks for your thoughtful posts.The planet is going to need every source of energy-oil, NG, coal, nuclear, hydro, bio, etc. to accommodate growth, particularly from the developing world. DB's projections clearly indicate that. Hopefully, it will get done in a way that preserves the planet for future generations.

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Permalink Reply by sesport on January 30, 2011 at 6:23

Most welcome, w.r., and thanks for expanding on yours.

 

It seems Chevron is now looking to extract itself from coal, too.  They indicate that they don't have the time to wait for technologies to develop.  In addition, Alpha Resources has agreed to buy Massey, but it seems they're more interested in producing & exporting the coal used to manufacture steel. 

 

http://hosted.ap.org/dynamic/stories/U/US_CHEVRON_COAL?SITE=ILMOL&a...

 

The decision came after the company determined that new coal technologies were developing too slowly to make staying in the industry a good strategy, Chevron Mining Inc. spokeswoman Margaret Lejuste said.

One of the technologies is known as coal-to-liquids, in which coal is processed into diesel, gasoline or other fuels.

"Those technologies are so far into the future, 10 to 15 years in the future, they made the strategic decision to focus on other operations other than mining," she said of the company.

 

Most interesting that Chevron is/was interested in liquid coal.

 

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