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Guest Post: Great Divide Developing In U.S. Natural Gas
Submitted by www.oilprice.com
Great Divide Developing in U.S. Natural Gas, by Dave Forest of www.piercepoints.com
Bentek Energy managing director Rusty Braziel sees a great divide developing in U.S. natural gas.
Bentek are one of the leaders in tracking and analyzing American gas pipeline flows. Where gas is flowing, who's using it, and at what price.
Speaking at the LDC Gas Forum Northeast in Boston this week, Braziel told industry professionals that America may have made some mistakes in designing its gas pipeline network over the past several years.
He notes that the boom in shale gas has created a price disparity between east and west. Shale gas plays are located mostly in the east, and carry lower breakeven prices. Between $3.10 and $4.00 per mcf, according to Bentek estimates.
By contrast, conventional gas plays are more concentrated in the west. And come with higher price tags, beginning in the $4.50 per mcf range.
Cheaper gas in the east, expensive in the west. And yet, over the past years pipeline companies have been busy building new pipe like the Rockies Express to take gas from western producing areas to markets in the northeast. As Braziel summed up, "About $15 billion has been spent on taking gas from where it's more expensive to where it is cheap. It was a mistake."
That's a pricey mistake. And one that's not easy to fix. Several pipeline companies are now looking at reversing directions on pipelines initially intended to run west-to-east. This "backhaul shipping" may become more prominent as shale gas development continues in the east.
Yet another sign of the severe dislocation shale gas has caused in U.S. (and global) gas markets. Dislocations create mis-pricing, and mis-pricing creates investment opportunities.
Here's to the beast in the east.
Source: http://oilprice.com/Energy/Natural-Gas/Great-Divide-Developing-in-U.S.-Natural-Gas.html
By Dave Forest for Oilprice.com who offer detailed analysis on Oil, alternative Energy, Commodities, Economics and Geopolitics. They also provide free Geopolitical intelligence to help investors gain a greater understanding of world events and the impact they have on certain regions and sectors. Visit: http://www.oilprice.com
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I declare an East/West civil war! We're coming for your shale gas!
pretty sure you westerners would get your butts kicked.
But go ahead, give it a shot.
Not if you consider the setup you'd
need to do a total conversion to
foreign LNG and the distribution
system you'd need. Those local gas
producers need to pay attention.
The pipelines play the game bc they got you by the balls. You would be amazed at buying price discrepancies among the players....known in the business as the Texas Two Step.
Cramer is wondering why they keep drilling shale gas when gas is so cheap....The answer is, shale gas contracts were three year deals. If you don't drill, you have to renew your lease....I got paid once on my lease, can't wait for them to renew cuz I don't see any drilling going on around my place.
OT: Nice to see the 3PM-close ramp job working its magic to close-out this fine week.
Flow rates on newly-frac'd wells are awesome. Depletion rates are just as awesome.
Flow rates on newly-frac'd wells are awesome. Depletion rates are just as awesome.
Oops, sorry, can't do that: Guys at McJunkin-Redman specified one-way pipe!
it's really funny, pipline works only one way! What a bullshit!
Like your water pump in a car , pumps one direction only . Not BS , just the way pumps and compressors are built . They need paralell systems to reverse flow . NG equip providers should do well if lines are made to run east/west, west/ east . Instead of a "One Way" highway across the USA
Go ahead: keep frac'ing -- and keep poisoning your drinking water.
http://www.youtube.com/watch?v=qYJj-1jNOxE
Buying support continues ...
DOW updated charts:
http://stockmarket618.wordpress.com
http://www.zerohedge.com/forum/latest-market-outlook-1
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