Replies to This Discussion

Permalink Reply by jim weyland on March 28, 2014 at 12:11

td,p,

i assume you're aware of what went down around san jose, ca about this time last year. if not, google 'san jose sub-station terrorist attack' or something like that. it's truly scary stuff.

i agree w/you the future of the power business is in what's called 'distributed generation'.

and, it has the power boys quaking in their boots. if for no other reason than a federal law passed under the enlightened and benevolent administration of j. carter. that law requires power companies to purchase power at their otherwise highest avoided cost of production.

with photoelectric panel costs coming down so much, in certain areas of the country they're now economic. and, this is in spades given the power company has to pay a 'most favored nations' sort of price in lieu of  the power that their owned plants would otherwise produce and likely at a lower cost to the consumers.

the navy has been operating small nukes w/o incidents for well over 50 years. the main outfit that builds those navy reactors, babcock and wilcox, has shown a design concept where their reactors could be scaled up to the size of a small conventional power plant and be buried, deeply underground at sites along the existing grid where most needed.

it goes w/o saying it'd be a whole lot easier to defend something that couldn't be taken out with a shoulder fired munition and where any attacking force would have to be packing a whole bunch of shovels.

note: their design reactors only need to be refueled very infrequently.

so, we might reasonably ask, why aren't we as a nation, pursuing this at, in navy speak, flank speed? why, imo, the opposition of the save the squid/scorpion sorts of people.

jim weyland

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Permalink Reply by Two Dogs, Pirate on March 28, 2014 at 14:52

Regarding the attempt on the CA sub-stations, I think that I read that if 9 select sub-stations out of 3,500 were taken out the whole country would go dark. As to the grid towers I would think that taking out 3 or 4 of them in a row would down the grid for many miles. These are four legged towers that started to be 500 KV but later bundled to handle what I would think to be twice the power. Many of the 240 KV towers later bundled to handle what I would think to twice the power are not bolted to the ground and are held down by guy wires. Bolt cutters can drop a tower with what I would think would be cutting one guy wire.If the grid or substations go down it makes no difference in what type fuel is generating the power.

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Permalink Reply by jim weyland on March 28, 2014 at 17:47

td,p,

your red wriggler has something like 5 or 9 hearts or however many i was taught they have.

so, if 'ol mr/mrs worm is cut in half, one or both subdivisions may likely live to soldier on.

and, that's the point of distributed generation. even if crucial nodes/parts of the grid are taken out, with 'smart' grid command and control systems, of which we're now sorely lacking, if there's enough properly distributed supply, the worm/grid will live on.

jim weyland

Permalink Reply by jim weyland on March 28, 2014 at 5:59

the contract went contango, recently inre: may '14 - jan '15. as of now the may - jan spread is $0.275. that's not yet enough to make that trade work using storage. but, imo, it beats being poked in the eye w/a stick.

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Permalink Reply by Steve P on March 29, 2014 at 18:03

The Department of Energy has designated "the grid" as a priority for research by its national laboratories for next year.  One would like to think that there is sufficient redundancy in the grid (there usually is) that it would not be vulnerable to simple attacks such as the one in San Jose last year.  However, 3 years ago a small single engine plane crashed after take-off about 20 miles N of San Jose, and in going down, took down one of the 2 primary N-S major lines traversing the Peninsula between San Francisco and San Jose.  the resulting power outage took out the city of Palo Alto for more than a day, and shut off power to Stanford Hospital until they could shift to emergency power.  One single engine 4 passenger plane created havoc.  The San Jose "vandalism" was, after many months, labeled a "terrorist attack" since it was mainly a test.  This is clearly a huge issue for the country.  Alas,  "flank speed" is something our government seems to be unable to achieve.  Unless you count the speed by which politicians can rush onto cable news for their latest pontification or protestation.  they can do that in warp speed.

The small nuclear plants are "Modular" plants, not merchant.  the notion is still kicking around, but, interestingly, the growth of NG production has put them on the back burner.  They still make sense.  Of course, Congress has to get past Harry Reid and create a long-term storage/repository for spent nuclear fuel.   Only one place makes sense, and it's in Harry's back yard.  We should not continue to build more nuclear plants until we figure out (politically) what to do with the waste. 

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Permalink Reply by tc on March 30, 2014 at 2:30

The problem isn't only with the government, its with the tax payers.  Does everyone who uses electricity want to see a monthly $50 service charge to upgrade the power distribution system.  Then there is the cost to move wire underground.

In Anaheim, California, the city is gradually burying its above-ground power lines, a project that dates back to the 1990s. The city added a 4% surcharge to electric bills to pay for the 50-year project, which costs more than $3 million a mile.

The people in the new South don't understand the cost of replacing old utility infrastructure, just wait 20-50 years, when like in Pittsburgh, all the sewer lines need to be replace and your water bill costs up 20% year after year.  Then if your sewer & storm water (gutter) lines are combined they now need to be separated and the home owner is responsible for the $30,000 cost.

http://pittsburgh.cbslocal.com/2013/12/18/kd-investigates-sewer-fix...

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Permalink Reply by jim weyland on March 30, 2014 at 3:58

and, if i remember correctly, in pittsburgh there can be up to three different companies' gas distribution lines running down your block.  it must have been like the wild west back in the day with the companies scrambling to get lines in place and customers signed/hooked up.

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Permalink Reply by Skip Peel - Mineral Consultant on March 30, 2014 at 4:11

jim,  is more gas sold based on the monthly settlement price?  Or on the Spot price?  What price is most likely to be closest to what a lessor sees on their royalty statement?

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Permalink Reply by jim weyland on March 30, 2014 at 4:37

most producers sell as much as they can at the monthly index price. they keep back enough daily priced gas to fill in for any anticipated shortfall such as scheduled maintenance or a tie-in. a prudent operator will also hold some(more) back for any unanticipated shortfalls in the monthly priced volumes.

accordingly, i'd expect the royalty statement price to conform more to applicable monthly index price than to the arithmatic average of the dailies.

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Permalink Reply by Skip Peel - Mineral Consultant on March 30, 2014 at 4:59

Thanks, jim.  I agree.  I'm occasionally concerned that members get confused when they see prices in our discussions and then fail to find that their royalty statements reflect those prices.  Do you have a feel for what hub is likely to be the best indicator for Haynesville Shale gas prices?  And an approximate discount, if any, from NYMEX monthly settlement prices that would be in the ballpark for that hub?

Link to NYMEX - Monthly Gas Contract Settlement Price History follows:

http://gsfi.net/common/NYMEXSettlementHistory.pdf

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Permalink Reply by jim weyland on March 30, 2014 at 7:15

the simplest, most direct way to market haynesville gas production would be to carry it to perryville. there it could be tendered into one or more takeaway pipes. i recall there are two 'dueling' perryville hubs; cegt operates one and gulf south pl, the other.

 at perryville, the two traditional premium takeaway pipes were tgt and cgt. now, gspl has built pipe that can get you to florida gas and to tgpl zn4. fgt's strong in the summer and tgpl would likely beat fgt in the winter

i don't have access to current basis information, but as a broad generalization, basis spreads have really collapsed across the country. but, if pressed and w/o current basis data, i'd guess at perryville you'd be w/in $-0.10 or less of henry. fwiw, there are guys/girls that all they do, all day and everyday, is to trade basis at their assigned locations.

note: there's a  screaming exception to my generalization and it applies to those poor folks w/gas in the marcellus. there, they get clocked to the tune of up to a dollar or more. its really ugly there. and, unfortunately for them pipelining there ain't easy. in other words, the cavalry won't be riding to their rescue any time soon, imo.

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Permalink Reply by Skip Peel - Mineral Consultant on March 30, 2014 at 7:46

Thanks, jim.  I was thinking about this yesterday when a member asked me to look at a well and give an opinion regarding whether it had paid out.

I've worked on one pipeline through the mountains in western PA and know exactly what you refer to in regard to not being easy.  As a Materials Inspector it was my job to collect data to produce an "as built"  print of the pipeline and file forms required by federal regs.  I was supposed to be there every time the pipeline crossed a foreign line, a driveway, a road, a utility easement, a stream, a river, etc.  Getting to all those locations in a timely manner on mountain roads was a challenge.  I did witness my first "white out" on top of one of those mountains.  Did I mention this was in the winter?!!  LOL!

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