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Guest Post: Natgas Down, Opportunity Up

Tyler Durden's picture





 

From Marin Katusa of Casey Research

Natgas Down, Opportunity Up

The energy market is a complex beast, its many parts interconnected through a multitude of linkages. When one part fails, the entire system reacts: certain linkages are burdened with extra stress, while other components sit idle. Only by studying the entire machine can one understand the rippling effects that stem from one change.

With the energy market, the system is made up of various sectors - oil, natural gas, uranium, coal, and alternative energies - and the countries that have each of those energy resources. The components are then linked through a long line of forces, including the geographic distributions of supply and demand, international allegiances and trade deals, global markets and commodity prices, and the ever-evolving field of international relations. A change in any country, sector, or linkage resonates through the entire system.

From this perspective, North America's shale gas revolution truly earns its accolade as a "game changer." As many people now understand, the boom in natural gas reserves and production in the United States and Canada is changing the way North America will power itself in the future.

What a lot of people do not understand is how to profit from this shift.

Natural gas prices are depressed and expected to remain so for the short to medium term, so investing in natural gas options or a natural gas exchange-traded fund is not likely to bring home the big bucks anytime soon. Domestic natural gas equities are an even riskier idea - most producers are scaling back production and selling assets as they hunker down in preparation for a tough few years.

In this case, the way to profit is by understanding how natural gas' changing role is impacting North America's energy machine as a whole. Cheap natural gas is prompting utilities to switch from coal to gas where possible. The confluence of cheap natural gas and a risky global economy has droves of investors turning their backs on green energy, the sector that was such a market darling only a few years ago. Farther down the road, North Americans are debating - and in places implementing - a range of strategies to take advantage of the continent's newfound abundance of natural gas, from natural-gas-powered transport trucks to exportation of liquefied natural gas (LNG).

Isaac Newton showed us that for every action there is an equal and opposite reaction. That is why every downside force in the energy sector creates upside opportunities elsewhere. The challenge is finding them. It takes an understanding of the entire global energy machine to figure out what areas are benefitting from the changing landscape.

For Every Down, There's an Up

Natural gas seems to know that it is heading for several years in the doldrums and, in fighting spirit, it is trying to take a couple of other energy sectors down with it.

With coal, it is succeeding, but there are still lots of coal opportunities outside of the United States. With uranium, the global supply-demand scenario and America's position within it is in such flux right now that cheap natural gas is doing little to reduce America's need for U3O8. Then there's the well-field services sector, where the successes born from horizontal drilling and fracturing created the gas supply glut that is forcing production cuts. Far from slowing down, however, well-field service companies are busier than ever as the oil industry adopts fracking to access shale oil, and the deepwater Gulf of Mexico continues to test the limits of drilling technology.

Coal

The sector feeling the worst impacts from gas' downturn is thermal coal. Demand for the coal burned to generate power in the US is plummeting as utilities take advantage of the cheapest natural gas in ten years. Consumption of coal to produce electricity is expected to fall 2% this year to its lowest level since 1992, while gas-fired consumption rises 5.6%. Making matters worse, winter heating demand is falling in the face of mild weather: through January, this has been the warmest winter since 2006 and the fourth-warmest on record. With natural gas and warm weather conspiring against it, coal demand is decidedly down - in the second week of February, coal consumption was 4.3% lower than it was a year ago.

Exports are not going to provide any help. Last year, Europe bought 50% of America's thermal coal exports, but demand from the EU is shrinking as the region struggles to stave off a recession. The economies of the EU shrank 0.3% in the fourth quarter of 2011 compared to the previous quarter, the first contraction since mid-2009.

In response, US thermal coal prices are deteriorating. Appalachian coal, the US thermal-coal benchmark, fell 15% in January alone to sit near US$60 per tonne and has moved little since (by comparison, Australian thermal coal is currently fetching almost US$120 per tonne). Mining costs to dig thermal coal out of the ground range from $60 to $75 per tonne for Central Appalachian producers, which means margins are already razor thin or nonexistent. Several major US thermal coal producers are reducing output and in some cases closing mines, including Arch Coal (NYSE.ACI), Patriot Coal (NYSE.PCX), and Alpha Natural Resources (NYSE.ANR).

Now for some good news. Thermal coal prices in the United States may be faltering, but that doesn't mean that coal is in the doldrums across the globe. In fact, quite the contrary: global thermal-coal demand is expected to increase by 50% from 2008 to 2035, with the vast majority of increased demand coming from the developing world. That equates to a demand increase of 1.5% each year, and production is not quite expected to keep up to that pace. Rising demand plus not-quite-enough supply equals investment opportunities - maybe not in the US, but elsewhere.

That's just thermal coal. There's another component to the coal world: metallurgical coal, the higher-carbon coal used to make steel. Supplies are even tighter with metallurgical coal, which is why our subscribers have exposure to "met coal" through either equities or a fund. More recommendations are on the horizon: the upcoming edition of the Casey Energy Report will be all about coal. We will provide the background, supply and demand projections, and the best ways to profit from the global coal sector.

Uranium

The abundance of cheap gas has utilities looking to build more gas-fired power plants. Some observers have suggested that this will be to the detriment of the nuclear sector in the US. But that perspective is pretty shortsighted.

It is true that some utilities have delayed plans for new nuclear plants by a few years, primarily in response to the Fukushima nuclear disaster in Japan and the ensuing public backlash against uranium. But that backlash is already fading; and those delays will have only a minimal impact on the nuclear sector in the US. Five new generators are on track for completion this decade, including two reactors approved just a few weeks ago (the first new reactor approvals in the US in over 30 years). Those will add to the 104 reactors that are already in operation around the country and already produce 20% of the nation's power.

Those reactors will eat up 19,724 tonnes of U3O8 this year, which represents 29% of global uranium demand. If that seems like a large amount, it is! The US produces more nuclear power than any other country on earth, which means it consumes more uranium that any other nation. However, decades of declining domestic production have left the US producing only 4% of the world's uranium.

With so little homegrown uranium, the United States has to import more than 80% of the uranium it needs to fuel its reactors. Thankfully, for 18 years a deal with Russia has filled that gap. The "Megatons to Megawatts" agreement, whereby Russia downblends highly enriched uranium from nuclear warheads to create reactor fuel, has provided the US with a steady, inexpensive source of uranium since 1993. The problem is that the program is coming to an end next year.

At present the world is producing just enough uranium to meet global demand, but this precarious balance is already tipping. There are dozens of new reactors under construction in China, India, South Korea, and Russia that will need fuel. Production increases from new mines and mine expansions are not expected to keep pace. The race to secure uranium resources is on, and for the first time the US has to compete.

The answer is domestic production. The rocks underneath the United States hold lots of uranium, enough to make a significant contribution to the country's uranium needs. The biggest impediment to mining this resource is public opposition to the nebulous dangers of uranium mining, but as the Megatons program ends Americans will start to see that the alternatives to domestic production are decidedly worse: competing against China, India, and the like for uranium is an expensive and unstable way to acquire a desperately needed energy resource. In fact, we have been vocal in predicting a demand-driven boom in US uranium production. We even expect to see "Made in America" uranium garnering a premium over imported yellowcake, in the same way that in-demand Brent crude oil earns a premium above oversupplied West Texas Intermediate crude.

We have already recommended a range of investments to our subscribers to gain exposure to the coming uranium resurgence and, as with coal, there is more to come: the next edition of the Casey Energy Opportunities newsletter will focus on uranium, with recommendations to boot.

Well-Field Services

The techniques used to unlock natural gas from shale reservoirs - horizontal drilling and well fracturing - worked so well that they created a supply glut that is altering the global energy scene. That supply glut is now prompting natural gas producers to cut back on output, which you might think would be bad news for the well-field service companies that complete those tasks.

Not to worry: North America is also in the midst of a crude-oil production boom, and the common theme linking most of the continent's new wells is highly technical drilling and production methods. The purveyors of those techniques are the continent's well-field service companies, and their services are very much in demand.

Well-field service companies have been able to compensate for lost gas fracking business by shifting to oil, as the oil industry has adopted fracking to unlock its shale deposits. If you've read about the oil production boom that is keeping North Dakota's economy hopping, you read about the Bakken shale formation. In the Bakken, wells are drilled horizontally to follow along the oil-bearing layer, and then high-pressure fluids are forced down the well to fracture the shale and release the oil.

Meanwhile, the challenges of producing oil in the deepwater Gulf of Mexico continue to test the limits of drilling technology. Pushing through kilometers of water before drilling through just as much rock and then extracting and transporting oil from a platform rocked by waves and threatened by hurricanes demands a wealth of specialized equipment and operators.

Most oil and gas companies do not own drill rigs, nor do they actually drill or fracture their own wells. They contract those jobs out to companies that drill and frac for a living, known as well-field service companies. And with wells in America's booming oil and gas fields requiring more complicated and more technical services with each passing year, the services these companies provide are essential to North America's oil and gas producers.

The Casey energy team is all over the well-field services sector. Subscribers to the Casey Energy Report newsletter and the Casey Energy Confidential alert service were alerted to our latest recommendation in the sector in mid-November. Three months later, our investment is already up roughly 50% and we suggested that subscribers take a "Casey Free Ride," which means selling enough shares to recoup one's initial investment and retaining the remaining "free" shares for continued, risk-free upside exposure.

The Take-Home

When a machine is as interconnected as the global energy trade, no part can change without impacting the rest. The dramatic debut of shale gas in North America has done far more than just depress domestic natural-gas prices - a shift of this magnitude has impacts that reach far beyond one commodity or one country. Some of those impacts are negative, but hidden in the doom and gloom lie opportunities to profit. The key is to open your horizons and embrace the complexity and interconnectedness of the global energy machine... either that, or find a good mechanic who can do the job for you.

 


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Sat, 03/03/2012 - 12:47 | Link to Comment Imminent Collapse
Imminent Collapse's picture

Bullish on bottled water. Especially after the fracking pollutes all our groundwater.

Sat, 03/03/2012 - 13:38 | Link to Comment Vint Slugs
Vint Slugs's picture

Fracking is done in formations 6,000 to 12,000 feet deep.   Ground water resources are within the first 1,000 feet.   Engineering the gas well and doing a proper job of cementing the casing is the standard way to prevent product (from the gas well) escaping near the surface.  The mile of rock between the fracked formation and the ground water is not compromised by the fracking. 

Sat, 03/03/2012 - 14:11 | Link to Comment Woodyg
Woodyg's picture

The are numerous examples that prove what you just posted is BS.

The only reason nat gas is Cheap is that the true costs are not considered in the pricing Of the product -

The same with nuke power - they never count the costs borne from here to eternity to take care of the spent fuel rods - only the cost in the actual production of the energy - no counting the startup costs, liability insurance etc

Both industries only exist by externalizing the costs onto the backs of the 'little people' and local communities.

But hey that's the American business model - get subsidies to build and start up - cook the books, siphon the profits out to the connected - dump any losses or other costs onto the backs of the public -

And when all else fails go to the guv for a bailout and then repeat the whole scam again.

Natural gas, coal, and oil are the largest welfare recipients known - except for the banks of course - who surprise of surprises own the controlling shares of the companies running these propped up industries.....

Frack You!

Sat, 03/03/2012 - 15:37 | Link to Comment disabledvet
disabledvet's picture

well the trillion dollar deficits and government checks to people probably like yourself aren't my...or capitalism's fault either. FRACK YOU TOO!

Sat, 03/03/2012 - 16:46 | Link to Comment Woodyg
Woodyg's picture

I know insults are funner but let's try using a few facts.

What you stated is how its supposed to happen On Paper when everything goes perfectly.....

There are hundreds of examples where things don't go perfectly and groundwater is contaminated - the companies Do Not Bear the costs foe their actions.

The companies pawn the losses off on others with the help of the guv -

The topic around here every single day -

And I find rich irony in someone named disabled vet telling me I'm on the guv dole

Sat, 03/03/2012 - 19:58 | Link to Comment smb12321
smb12321's picture

Woody - And your solution is???  Kindness, singing Kumbaya by a campfire? I mean, if US society is one big scam, if all business is rotten, the practices are immoral, the books are cooked and all known forms of viable mass energy are terrible, why stick around?

Ecuador has a great barter systme although it also has rampant malnutrition.  You could try Greece or Italy or even Cuba, maybe Chad or Nigeria or one of those Mideast outposts of liberty like SA, Iran, Syria or Egypt.  Maybe we could learn by their "success".

Sat, 03/03/2012 - 22:17 | Link to Comment Woodyg
Woodyg's picture

My solutions ar the same ones that have been used time and time again -

During the us revolution we tarred and feathered them -

The French invented This nifty little toy called the gullitine to use on them

The ruskies lined them up against a wall and shot them

The allied forces of ww2 hung them from the nearest lamp posts http://www.custermen.com/ItalyWW2/ILDUCE/Mussolini.htm

And FDR and Eisenhower taxed their income over 3 mil a year at 90+% -

And actually the choice is the oligarchs and their minions the kleptocrats.....

The question is Which one will they choose?

Sat, 03/03/2012 - 14:13 | Link to Comment prains
prains's picture

Just like BP and Haliburton did such a bang up job off the coast of Louisiana. Too many things go wrong when you put profit in front doing a "proper job". Once the groundwater is fucked WE ARE ALL FUCKED.

just takes one time.

Sat, 03/03/2012 - 15:20 | Link to Comment Woodyg
Woodyg's picture

We'll be screwed but I'm sure the same companies that polluted your groundwater - in turn polluting you topsoil -

Will be the same companies to sell you the clean drinking water you now suddenly can't do without.

And a question for you all here - isn't it hypocritical to bitch about the banks and crony capitalism and the fixing of markets and then jump wholeheartedly into natural gas processes that only exist because some crony kleptocrat in guv granted the companies a liability waiver? Or rewrote the laws so that when a homeowner turns on his tap water it ignites?

Nothing to see here - please move along!

Then it becomes you all are just upset because you're not on the side of the kleptocrats - not because of the crime itself.

Great ideals......

Sat, 03/03/2012 - 15:39 | Link to Comment chistletoe
chistletoe's picture

actually,

back several years ago, a couple of appalachian coal companies ran afoul of the EPA when they started drilling for coal gas methane .... because the wells typically burst trhough deep mountain ground water which came up with the gas ... the water tended to be exceptionally clear and clean, so the coal companies were sending it out to the local streams ... but the marvelous folks at EPA tested the water and found that (because it had come from so deep), it did not contain the "proper" amounts of oxygen, nitrogen and carbon dioxide dissolved in it the way "natural" water does ... so they judge the action to be polluting and they started to fine and harass the coal companies.

 

To make a long story short ... many americans now pay extra for clear, pure bottled water instead of drinking "natural" water .....

Sat, 03/03/2012 - 16:51 | Link to Comment Woodyg
Woodyg's picture

The water coming up was so clean it was beyond pure!

Another exception to the rule - multiple times more streams are polluted with massive amounts of heavy metals.....

For example in kellog and wallace idaho the streams are so badly polluted - that there are fences around them and its been named a superfund site.....

The water is clear though.

Sat, 03/03/2012 - 12:49 | Link to Comment CvlDobd
CvlDobd's picture

I have my home for sale and many other assets for sale, just to get out of finance/investment industry at any cost. Once out, I have an airstream to renovate and put on a friends property. Then I intend to start a natural gas business with all my money there. That should help increase demand in my area. And that is why low prices solve low prices. Something these stupid fucking central banks don't understand. I have been watching natgas for sometime for the right time to start going long in various ways. In researching some of the storage and roll costs I just said "fuck futures, I'll start a business that uses the low price asset."

 

A friend of mine has been in the business of buying gold from pawn shops and selling to the mints. We have been talking about this opportunity because he is looking to diversify from gold while the price is high and into another area with low prices and we agree on the natgas idea. That is why free markets are beautiful and this cluterfuck of a situation CBs have instigated in capital markets is not.

 

It may be a stupid idea but it can't be any more stupid than attempting to use my technical and fundamental research abilities to make decisions in the modern day stock and bond "markets".

 

Sat, 03/03/2012 - 12:53 | Link to Comment digalert
digalert's picture

Have you ever heard the story about the hare and the tortoise?

"droves of investors turning their backs on green energy"

BrightSource has spent $56 million so far to protect and relocate the tortoises, but even at that price, the work has met with unforeseen calamity

state and federal agencies had spent nearly $200 million since 1990 toward the care and feeding of the desert tortoise.

This truly could kill the project

http://www.latimes.com/news/local/la-me-solar-tortoise-20120304,0,614548...

Hah, the green energy crowd battles earth first crowd, and they haven't even gotten to trading carbon credits [cap n trade]

Sat, 03/03/2012 - 20:10 | Link to Comment smb12321
smb12321's picture

But investors are not anti-green. They're simply anti-failure.  Believe me, when alternatives arrive at an increasing pace (and it is happening as we speak) the area will find investors.   After all, no one invested in the car or plane industry until the idea had percolated a while and the public showed an appetites.

I don't care where we get energy but if global warming is real then the ONLY method that does not add heat is photosynthesis, the most efficient conversion of energy.  Artificial photosynthesis (nearing a breakthrough) would revolutionize society since a bottle of water could run a house.  But don't tell the ZH posters - they revel in their gloom and doom (lol). Several good web articles on artificial photosynthesis can be found.  Good luck.

Sat, 03/03/2012 - 12:57 | Link to Comment scatterbrains
scatterbrains's picture

I've been watching natgas as well and want to ease into it but I keep thinking the CB's are going to initiate a take down across the commodities basket with natgas getting hit in the climatic selling pressure.. which is where I'd luv to stick my toe in.  Is there a better commodity play than UNG tied to natgas ?  I don't want to get involved in stawks of any kind for the moment.

Sat, 03/03/2012 - 13:10 | Link to Comment Desert Irish
Desert Irish's picture

UNG is probably the worst play out there....and the last thing I would be doing is going long on NG it's going to take years to work off this glut.

Here's a few ETF plays

Inverse and leveraged funds:
ProShares Ultra DJ-UBS Natural Gas ETF (NYSEArca: BOIL)
ProShares UltraShort DJ-UBS Natural Gas ETF (NYSEArca: KOLD
Direxion Daily Natural Gas Related Bull 3x Shares ETF (NYSEArca: GASL)
Direxion Daily Natural Gas Related Bear 3x ETF (NYSEArca: GASX)

Horizon Bull 2X leverage T.HNU

Horizon Bear 2X leverage T.HND

Sat, 03/03/2012 - 13:17 | Link to Comment CvlDobd
CvlDobd's picture

UNL has 12 months of contracts opposed to one.

Sat, 03/03/2012 - 13:41 | Link to Comment scatterbrains
scatterbrains's picture

and there it is..  UNL  that's what I'm talking about! Thanks CvlDobd.  I'll be watching it.

Sat, 03/03/2012 - 13:38 | Link to Comment cosmictrainwreck
cosmictrainwreck's picture

agreed...lost a litlle on UNG back in the day, till I figured out $gas nowhere but down. Interesting concept on short ETF's... but am I a little late to the party? = how low can $gas go?

Sat, 03/03/2012 - 22:25 | Link to Comment Sakka
Sakka's picture

SJT has been more stable than UNG and UNL, it has been paying a good dividend while we wait for prices to recover.

 

Gas is going up, if not because of the middle east than surely because of the dollar!

 

How much will you pay to heat your house if they let you pay with monopoly money, how much will you pay for tacos (little Magambo for you)?

Sat, 03/03/2012 - 13:33 | Link to Comment GoinFawr
GoinFawr's picture

Once the US fracs the shit right out of the 'red belt' cutting from North to South through the country the subterranea should become so porous and unstable that the whole landmass of the US will eventually collapse through it and disappear into the centre of the earth.  Not that it will really matter as every USean will have died or fled the country long before that happens due to the poisonous water/air.

 

Sun, 03/04/2012 - 19:04 | Link to Comment bahaar
bahaar's picture

Run where?

Mon, 03/05/2012 - 00:11 | Link to Comment GoinFawr
GoinFawr's picture

Canuckistan?

Sat, 03/03/2012 - 13:17 | Link to Comment Offtheradar
Offtheradar's picture

We need to start fracking asses.  "Here's a hole that emits methane!  Lots pump sand, water, and chemicals in it at high pressure and see if we can get more!"

Sat, 03/03/2012 - 13:21 | Link to Comment LowProfile
LowProfile's picture

+1 for Assfrack!

Sat, 03/03/2012 - 13:21 | Link to Comment kaiserhoff
kaiserhoff's picture

Waste Management just announced that 80% of their truck purchases this year will be nat gas powered.

Fed Ex and UPS are already converting.

We don't need to convert the 200 million vehicles in the US to have a massive impact.  As soon as the 10-15 % highest use vehicles are running on nat gas, peak energy will be history.

Sat, 03/03/2012 - 13:23 | Link to Comment LowProfile
LowProfile's picture

Works for trucks, but passenger vehicles will prove difficult.

We need thorium power.  The US has 1000 years of proven reserves. 

We could then use the surplus electricity to convert coal to synthetic fuel at a low enough cost to sell it back to the Saudis cheaper than they can pump it.

Sat, 03/03/2012 - 13:35 | Link to Comment Seer
Seer's picture

"As soon as the 10-15 % highest use vehicles are running on nat gas, peak energy will be history."

Could you expand on what you mean by this, by "peak energy will be history?"

Sat, 03/03/2012 - 14:13 | Link to Comment kaiserhoff
kaiserhoff's picture

This has always been more about politics than supply.  With nat gas alone, we have:

100 year supply in the Carolina seeps

200 year supply on the Alaska North Slope

Probably 200 year supply in the various shales

Essentially infinite supply of methyl hydrate on continental shelf and ocean bottoms.

The conversion will take time, but it's easy to make electricity from nat gas. Transport will follow.

More specific to your question (sorry about that) high use vehicles consititute about half the demand.  Once they are converted, oil will be regarded as old, dirty, and obsolete.

Sat, 03/03/2012 - 14:33 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

You need to research the various levels of "reserves."  Some of your estimates are in the unproven category. 

Moreover, natural gas well production rates on average have been declining steeply for decades.  The high-flow Gulf offshore and LA/TX onshore stuff has been milked pretty heavily, and the deepwater plays like Mensa are starting to show their age in terms of production rates.  Shale plays require exponentially more wells than traditional extraction because the flow profile is a long, slow dribble. 

Just because there are a lot of hydrocarbons in the ground doesn't make them easily gotten at.

BTW, there's an enormous lode (pun) of coal potential in the U.S. - possibly more than nat gas - but it's simply politically untenable to tap it all.

Sat, 03/03/2012 - 15:16 | Link to Comment LowProfile
LowProfile's picture

The thorium in that coal is more valuable than the coal...

Sat, 03/03/2012 - 19:01 | Link to Comment Flakmeister
Flakmeister's picture

Hey Kaiserhoff.... quit blowing smoke up peoples asses...

Please provide credible references for your claims....

Sun, 03/04/2012 - 11:23 | Link to Comment kaiserhoff
kaiserhoff's picture

Obnoxious little Puke.

Do your own fucking home work, and tell Mommy you need a diaper change.

Sun, 03/04/2012 - 12:50 | Link to Comment Flakmeister
Flakmeister's picture

The way the game is played, the above is an admission of defeat...

Thanks for playing...

PS Actually, I do my own homework... that is why I know you are full of shit...

Sat, 03/03/2012 - 13:44 | Link to Comment GoinFawr
GoinFawr's picture

Actually, you could be correct, but for the wrong reasons. The same advances in drilling tech over the last decade that have been focused on hydrocarbon extraction also have promising implications for geothermal technologies, or so I've been told.

Ever look at a cross section of the planet?

Sat, 03/03/2012 - 23:36 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

You're just racking up a whole cartful of not knowin' what you're talkin' about today, GF.

Sun, 03/04/2012 - 16:43 | Link to Comment GoinFawr
GoinFawr's picture

If that's what you think ZH downticks indicate, I've some ironic news for ya.

Did you just drop by to blurt out your usual addle minded disparagement, or did you actually have something to say to the content of my comment?

I drew the conclusion above from those who are developing the drilling techniques, so you'll have to pardon me if I take their word over some anonymous Zh'er who simply claims to know it all.

Sun, 03/04/2012 - 21:53 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

I've put the substance of my thoughts on this below (which have perplexed you thoroughly as I can tell).  Have at it.

Your reference to the "drilling techniques" in your original post is followed by the tag line, "or so I'm told."  Let me help you out:  "or so I'm told" is code for "I lack the confidence to sponsor my own affirmative statement so I'm going to give myself an out."  Typical weasel-tactic.

BUT...since you brought it up - tell us all about your knowledge of drilling techniques, or so you're told.  Tell us what you've learned, or so you're told.  I'm sure you have high-level geologist contacts at Anadarko or XOM just spewing trade secrets to little ol' you.  What can you share with us about enhanced 3D seismology?  Or the latest on horizontal drilling or stabilization for deepwater rigs?  Tell us what they've been able to transfer from tar sands extraction to shale fracking?

I think you probably have a whole book inside you on this stuff just itching to get out, or so you're told.  I'd like to pre-order a couple dozen...

Sat, 03/03/2012 - 14:25 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

You're forgetting the most important impediment to large-scale natgas vehicles - the distribution infrastructure doesn't exist and is prohibitively costly to develop.  Fleets can do it because the develop central refueling stations, but you cannot replace the cross-country network of filling stations with natural gas ones.  The network of transmission-grade pipes doesn't exist in enough places to make it work.

Sat, 03/03/2012 - 15:39 | Link to Comment the grateful un...
the grateful unemployed's picture

what about those huge propane tanks? you can research natural gas filling stations, and you will be suprised how many there are, but most of them are not public. there are natural gas compressors available, in all sizes including one for home use. i did quite a bit of research, and it leads me to guess that NatGas will be public within a year. Conversion kits for almost any gasoline engine are available. the size of the tank is one issue, you may have to fill up more often, but is this better or worse than electric? with electric you have to stop and charge.

at the moment Natgas is about half the cost of gasoline to drive your car. Honda makes one by the way. and not sure if LNG will ultimately prove the solution to the tank size issue, but for now CNG is doable. the main obstacle to natgas is POTUS, who gets his technology ideas from old Buck Rogers magazines, but he is probably saving this for the election year surprise. remember when Bush got high on switchgrass?

Sat, 03/03/2012 - 15:59 | Link to Comment GoinFawr
GoinFawr's picture

I think that you have a much better handle on this natty thing than mayhem k

JMO

Sat, 03/03/2012 - 23:29 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

You sir, have no idea what you are saying, but simply parachuting in to something to try to throw an uninformed dart in my direction (perhaps still stung from the last time I scorched you).

I expect there is not a person on ZH who is more informed on natgas vehicles than I am.  I've been in the industry for 20+ years, and in fact helped commission a half-dozen of the pioneer natgas stations in a certain region of the U.S. back in the early 1990s.

The thought that research shows natgas vehicles are "about a year away" is misinformed.  There is no technology advancement needed to produce - or even mass-produce - the vehicles.  They can be assembly-line designed or retrofitted.  What's more, the station technology has existed for decades, including fast fill and overnight/slow fill.

None of those are the real impediments to the propagation of natgas vehicles.  As folks INFORMED about the industry know, you cannot simply drop a high-volume filling station anywhere.  A compressor running off of a 60 psi line is only sufficient for a single vehicle refill...and the economics of such are prohibitive for that to become mainstream (people are not going to invest $5 to $10k in a service line upgrade, regulator, compressor and car conversion kit so that they can ONLY refuel their vehicle at their own home).

To get natgas vehicles mainstream, you need to be able to supplant the filling capacity that exists with gasoline stations, both in terms of refill speed and concentration of stations (i.e., distance between).  That takes sufficient, high-pressure infrastructure across the entire network of drive-able radii.  Such infrastructure does not exist, and building such would destroy any economics. 

Tell me how you would get from Chicago to Denver when there are no viable nat gas filling stations in between once you get out of the greater metro areas?  (Sure, there are 36" diameter, 1200 psi transmission lines coming in from Alberta, but you can't step them down to the correct fill-station pressure for under $6 million - and that's for one station.  How many 5,000 gallon underground gasoline tanks can you bury for $6 million?)

Go climb back in your grandstanding hole and let people of substance have a real conversation, moron.  If you want to talk smack on the subject of nat gas, I'll be more than happy to overwhelm you with facts and logic.

Sun, 03/04/2012 - 14:52 | Link to Comment GoinFawr
GoinFawr's picture

"(perhaps still stung from the last time I scorched you)" in your own fat head, maybe.

Excepting your arrogant alleged informed opinion peppered with delusions of omniscience, I see nothing overwhelming in your "Mexican't" facts that would be an insurmountable impediment to installing the systems necessary for natty to be used as an alternative to gasoline.

Currently I think that there is only one state that doesn't have any natty filling stations. Average tank getting at  ~200+ miles it looks like you'll be able to make it past 'your front door'. Also, the fact that it is conceivable that you could fill up before you left the house is a clear example of how natty infrastructure is widespread, not desperately limited as you've claimed in your alleged all knowingness. Of course more will be necessary, but aside from your 'expert' opinion, which we are all apparently supposed to accept as the word of the Natty Ghod, I see not one single shred of evidence that proves such upgrades would be cost prohibitive. Especially if demand skyrockets.

5-10k to refit your car is a price that will come down when more people make the switch. Even at that price, when natty is so cheap, such a conversion should pay for itself well before the death of the vehicle.

But do go on, please.

 

Sun, 03/04/2012 - 14:55 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

You don't have to accept my opinion - I didn't give one.  I just pointed to the facts.  You can believe them or not - up to you.

Interesting that you post that you "think there is only one state that doesn't have any natty filling stations" FIVE HOURS AFTER I POST THE LINK THAT SHOWS WHERE ONE COULD FIND SUCH INFO.  (Yes, we're sure you "knew" that off the top of your head [chuckle]).

Interesting that you are weak-minded enough to think that the payback of a single-home nat gas filling station relates to the vehicle.  Normal people would look at return on the investment in the infrastructure, which is most of the cost.  But you wouldn't know that, now would you?

You can go on pretending what you think I don't know.  Bothers me not. 

All I would suggest you do is get yourself a nat gas car and filling station and log your own info.  We'd love to read about it.

 

Sun, 03/04/2012 - 15:12 | Link to Comment GoinFawr
GoinFawr's picture

which came first MK, the chicken or the egg?

Any normal person knows that returns on investments aren't static but are directly linked with things like changing supply and demand.

Sun, 03/04/2012 - 21:42 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

When did I say that ROI is static?  You made that misdirection up in your mind. 

All I was doing was correcting you that the investment is not confined to just a vehicle.  Most of the investment in a slow-fill, home station is in the incremental piping, regulation, and compression equipment, which would by necessity have to outlive any single car.  This is the critical point that you seem to think does not exist.  Somehow, in your linear-thinking mind, you must believe that CNG stations can be grown from seed and a little magic dust from the Lorax.

Or maybe ROI is too simple a concept for your advanced quantitative finance skills...or perhaps you need to be uglied up on that topic, too.  Let me know.

Mon, 03/05/2012 - 02:17 | Link to Comment GoinFawr
GoinFawr's picture

No, you've been up and down this thread asserting that there is no way that ROI in nat gas powered vehicles can net coin, based on the assumption of current demand/supply. I corrected you.

Sat, 03/03/2012 - 23:48 | Link to Comment mayhem_korner
mayhem_korner's picture

what about those huge propane tanks? you can research natural gas filling stations, and you will be suprised how many there are, but most of them are not public. there are natural gas compressors available, in all sizes including one for home use. i did quite a bit of research, and it leads me to guess that NatGas will be public within a year. Conversion kits for almost any gasoline engine are available. the size of the tank is one issue, you may have to fill up more often, but is this better or worse than electric? with electric you have to stop and charge.

at the moment Natgas is about half the cost of gasoline to drive your car. Honda makes one by the way. and not sure if LNG will ultimately prove the solution to the tank size issue, but for now CNG is doable. the main obstacle to natgas is POTUS, who gets his technology ideas from old Buck Rogers magazines, but he is probably saving this for the election year surprise. remember when Bush got high on switchgrass?

 

1) Propane and natural gas are completely different in terms of their distributive properties (you can't run anything with natural gas designed to run with propane without a conversion apparatus, and vice-versa).

2) Even if propane worked, it's not about the "size of the tank"...it's about pressure - MMBtu's per minute of fill.  A commercial-fleet-grade "fast fill" natural gas pump takes at least 20 minutes to fill an empty tank for a light-duty vehicle.  A "slow fill" station takes 4 to 8 hours.  So don't mistake the volume of the fuel as an indicator of its eligibility for widespread use in vehicles - you need pressure.  (Propane, which is stored at pressure, is decompressed when it is delivered, which is the opposite of what needs to be done to fill a compressed-natural-gas tank).

3) LNG as a solution in a vehicle is a ridiculous notion.  Unlike propane, which liquifies at outside air temperature under modest pressure, natural gas is cryogenic and doesn't liquefy until it gets to about minus-160 degrees farenheit.  The technology does not allow LNG in vehicle tanks.  They use compressed natural gas (CNG), which is still in gaseous form, simply stored at several atmospheres, which the tanks are well designed to handle.

4) I would not be surprised at how many filling stations there are in the U.S.: I've used several of them and have driven a nat gas Honda and ridden in a nat gas bus many times.  Here is a link that gives folks a sense of how many stations there actually are:

http://www.afdc.energy.gov/afdc/fuels/natural_gas_locations.html

And in the 2 states that have over 100 filling stations (CA and NY), how many of those do you think are within driving distance of say, Saranac Lake (NY) or Truckee (CA)?  The answer is none.  99.9% of filling stations are in industrial complexes with major fleets (like FedEx or UPS) in densely populated areas, like Los Angeles and Westchester County.  There are huge, huge stretches of driveable real-estate where there are NO filling stations.  So how you gonna go mainstream without the network?

Read further on my post above.  Whatever you might wish ought to be, it's not as simple as you might think to do this.

Sun, 03/04/2012 - 01:03 | Link to Comment the grateful un...
the grateful unemployed's picture

blah blah blah and the electric grid system we currently use loses half its energy on the way to the major metro systems. (no one thought that building all those high power lines was TOO EXPENSIVE). the point is not really the expense, and all this chatter about psi means nothing because volume matters more, and we apparently have that, according to the futures market. the point is that we can become energy self reliant in a matter of a YEAR. ( if heavy industry somehow finds ENOUGH NG to fill and the TIME to do it, then consumers should have enough as well) its a very CLEAN secret that schools, trash companies, and rapid transit has all gone on NG, what was the reason they can't do it, tell me again? it's happening, and that is always the litmus test. the government ( which takes large amounts of camp contribs from big oil) doesn't want to do it.

the electric car is a bigger fraud than ten Bernie Madoffs. i can hear them all saying in the 1920's how will you get across Kansas, they're no filling stations? please a national effort to address the matters you mention, which are all valid, could be solved easily enough, in order for the US to achieve energy self reliance, and kick the big oil companies down a notch. and i think you know it too.

Sun, 03/04/2012 - 08:33 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

OK - I hadn't realized that you, like GoinFawr, are a statist moron (regrets for the redundancy).

A national effort to address the matter?  How has addressing economic issues through central planning worked thus far, Jethro?  You have already reached a (wrong) conclusion and obviously have no idea of the scale economics of energy infrastructure, so there is little use confusing you with facts or logic.

Sun, 03/04/2012 - 14:41 | Link to Comment GoinFawr
GoinFawr's picture

LoL, here's your 'argument':

MK's conjecture=fact

Well, that's me convinced.

 

Sun, 03/04/2012 - 14:56 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

Show me the err of my info, or return to your ignorance and spare us your grandstanding.  Good luck.

Sun, 03/04/2012 - 16:44 | Link to Comment GoinFawr
GoinFawr's picture

It's not the verifiable info you've introduced that I am questioning,  just the shitty conjecture and worthless conclusions you've somehow managed to draw from it.

Sun, 03/04/2012 - 21:35 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

Which conjecture and worthless conclusion have I drawn, GF?  That propagation of natural gas vehicle filling stations is more difficult/costly than you are led to believe?  Since the technology has been around for decades, help me understand how misinformed my conjecture is when it hasn't happened yet?  What is the world missing that these stations haven't infiltrated like IPads?  Tell us...illuminate us with your wisdom.  Please

You know what I love about ZH?  It's that when someone informed brings some insight to something I'm unfamiliar with, or debunks an assumption that I wouldn't know was fallacy.  I appreciate the expertise that others can bring to issues for which I'm not knowledgable.

And on those occasions where folks have introduced fallacy, there is typically a quick response by any number of informed folks offering correction and/or facts.  You don't see 'em lining up to debunk what I've written, do you? 

You are out of information, so you simply "state" that I don't know my stuff.  You are projecting your own deficiencies on the issue GF.  Most reasonable folks know when to chalk up the "L" and go home.

 

Mon, 03/05/2012 - 02:22 | Link to Comment GoinFawr
GoinFawr's picture

"since the technology has been around for decades, help me understand how misinformed my conjecture is when it hasn't happened yet? "

 until 2009 natty prices were relatively sky high?

Mon, 03/05/2012 - 09:48 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

Really?  Feb 1992 spot prices were under $1.00/MMBtu.  Natgas prices were high in the mid-1980s and then fell through the 1990s until 2000, when they jumped from the $2s to much higher levels (peaked at $9.91 settle in Jan 2001), but have since roller-coastered between $3s and $8s until they started to collapse in July 2008.

Your welcome for the facts, putz.

Tue, 03/06/2012 - 13:15 | Link to Comment GoinFawr
GoinFawr's picture

You just keep inadvertently shot-gunning your own argument in the face; it's priceless.

Sat, 03/03/2012 - 15:46 | Link to Comment chistletoe
chistletoe's picture

and why is that a problem?  do you need a list of home builders looking for work these days?

 

Right now, calorie for calorie, natural gas is priced at about 1/5 wholesale gasoline.

 

How many people do you know who might buy a car that got 150 miles per gallon equivalent, even if there were not too many filling stations?

 

But there are other issues ... one reason that there is a surplus of natural gas is that we have much less uses for it ... the total supply is a small fraction of the total supply of oil ... and this article fails to mention the primary use of natural gas, which is to manufacture nitrogen fertilizer ... rather important, and probably not a good idea to threaten ....

Sun, 03/04/2012 - 08:38 | Link to Comment mayhem_korner
mayhem_korner's picture

and this article fails to mention the primary use of natural gas, which is to manufacture nitrogen fertilizer ... rather important, and probably not a good idea to threaten ....

 

From where do you get your (mis)information?  The greatest use of natural gas is power generation ; industrial use is second, but that includes everything from steel to resins to aluminum smelting to fertilizers.  But don't believe me, here's a link:

http://www.naturalgas.org/business/demand.asp

You'll note at the bottom it provides a blurb about how natural gas as a vehicle fuel is insignificant.

Sun, 03/04/2012 - 16:38 | Link to Comment GoinFawr
GoinFawr's picture

No, you'll note at the bottom is a blurb about now natural gas as a vehicle fuel is "is still in its infancy", kind of like Mayhem Korner, with "demand...expected to increase."

Sun, 03/04/2012 - 22:44 | Link to Comment mayhem_korner
Mon, 03/05/2012 - 01:14 | Link to Comment GoinFawr
GoinFawr's picture

So great for city fleets! Also, 60% of  the propane produced, which makes a great autogas, comes from refining natty! Say, if I drive a car that runs on propane derived from natty....

Mon, 03/05/2012 - 09:50 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

You're lost beyond remediation.  You have no idea what you are saying.  None. 

Tue, 03/06/2012 - 13:27 | Link to Comment GoinFawr
GoinFawr's picture

Comment composed of info taken directly from your link. I can see how that would be frustrating for you.

Sat, 03/03/2012 - 15:38 | Link to Comment disabledvet
disabledvet's picture

we are?

Mon, 03/05/2012 - 11:25 | Link to Comment the grateful un...
the grateful unemployed's picture

yeah and if takes all day just to fill one truck why your trash will never get picked up and there will be garbage in the streets. Mayhem is a Natgas (player) hater.he has all the facts and figures, but none of it interfaces with the reality on the ground. like to see him go to work on the cost of gasoline, cafe standards, ME wars, shipping costs halfway around the world, and pollution. when i saw how expensive a home CNG compressor was i thought the same thing, then i thought, what if my neighbors went together and bought one?  of course if takes all day to fill one vehicle. i'll just buy a chevy volt (it fills up immediately!!) and shut up, which is what some of these (politician) guys want i guess.

Mon, 03/05/2012 - 11:29 | Link to Comment Flakmeister
Flakmeister's picture

Fill your boots.... go out and get a compressor...no one is stopping you....

Don't be surprised when the BTU arbitrage vanishes in a few years and you find that your CAPEX will not pay for itself....

Sat, 03/03/2012 - 13:21 | Link to Comment devo
devo's picture

Say my time horizon is 10 years, what would be the best (long) NG play? I agree it might go down short term, but timing that is iffy. It's going to go way up at some point.

Sat, 03/03/2012 - 17:31 | Link to Comment css1971
css1971's picture

On the basis that we're hitting bottom and NG does improve, I came up with the following a while back.:

Not commodity funds or ETCs, potentially several years of dubious performance paying fund fees. Not futures, you could be rolling them for a while.

Build your own portfolio

  • Which means stocks, preferably those which'll pay a dividend in the meantime.
    • NG producers which survive the current slump should do well. Top 6: (APC, BP, CHK, DVN, XOM, XTO)
    • Utilities (no idea in the US)
      • If home filling takes off, ng supplying utilities will do especially well.
        • Filling device producers.
        • Even if not, who else has the infrastructure already in place to pipe gas to filling stations?
      • Electricitiy utilities which have CCGT power stations, their input costs dropped.
    • Auto conversion services.
      • Kit / high pressure tank producers.
    • Biogas producers; waste water treatment utilities.
    • LNG shipping.
    • Infrastructure; liquifaction/gassification terminals, pipes
Sun, 03/04/2012 - 08:47 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

Helpful - not.

You list a bunch of supply chain functions, but no companies that actually engage in those functions.  If you cannot name a utility within the U.S., what are you doing offering advice?  And, BTW, utility returns are regulated, so they are constrained from "breaking out" due to the cost-plus regulatory paradigm that exists in all 50 U.S. states.

Electric utilities that have CCGT (for those that don't speak power, that's "combined cycle gas turbines")?  Natural gas generators are on the margin 90% of the time, so when their input cost goes down, the clearing price of power goes down proportionately, so there is no increase in margin gained.  Look up RTO bidding rules and lambda.

 

Lot of folks on this topic spewing conjecture with no substance; reader beware...

Sun, 03/04/2012 - 15:41 | Link to Comment GoinFawr
GoinFawr's picture

which came first MK, chicken or egg?

Sun, 03/04/2012 - 22:04 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

I love that ZH time-stamps posts.  Tells me that it took you almost 7 hours to think up 7 words to reply with a weak attempt at misdirection (in a conversation you weren't involved in).  The stench of your desperation is emanating through pixillated cyber-space.

Since you have nothing to offer on the subject of natural gas filling stations, I'm going to assume that you are an expert in things like metaphysics, philosophy, and evolutionary biology and know the answer to your question.  So why don't you go first, 'cause I only have an opinion on the chicken/egg thing.

Mon, 03/05/2012 - 01:34 | Link to Comment GoinFawr
GoinFawr's picture

"Tells me that it took you almost 7 hours to think up 7 words to reply"

Well, you certainly have a high opinion of yourself if you think that you've been on my mind for the last seven hours.

Sat, 03/03/2012 - 13:33 | Link to Comment Hedgetard55
Hedgetard55's picture

Well, FWIW I just dipped a toe into Hugoton, HGT, at $14.75, yielding about 7%, and down from $24. Can it go to 9 or 10? Yes, but long term it's lots of income and will eventually go higher. Or not.

Sat, 03/03/2012 - 14:18 | Link to Comment earleflorida
earleflorida's picture

sell calls, or buy long-term puts

Sat, 03/03/2012 - 13:36 | Link to Comment dcb
dcb's picture

Yup, I read in the ft ntural gas was at a 10 year low, looked like a bottom formation. I think it was up about 50% in three says. one day was 22% up on it's own.

Sat, 03/03/2012 - 13:51 | Link to Comment earleflorida
earleflorida's picture

Thorium fueled nuclear reactors have a fail-safe melt-down.

Thorium is abundant in the U.S., along with all the "Rare-Earth-Elements".

America's 'Met-Coal', largest customer is China,... which by the way has increased its demand just recently.

Natural Gas [Blue-Gold] fracking and processing should immediately be put on "Fast-Track-Legislation" to enhance our entire fueling transportation depots. 

Every petro fill-station in the U.S. should have "Nat-Gas" fuel.

Every manufacturer/ design of storage facilities should be working overtime to bring this "Nat'l Security Issue" to reality regarding foreign dependence [pure unadulterated blackmail] to an end.

Every auto/truck/18 wheeler/etc./etc., that comes off american /foreign assembly lines should be modified with nat-gas fuel storage tanks, and carburetor's   

The private sector is doing their darn`est to overcome bureaucratic bullshit by this fascist gov't. run by big-oil and cameco,... which in turn are controlled by the Saudi's! Yes, the same saudi's that flew into the World Trade Center on 9/11!

jmo 

Sat, 03/03/2012 - 15:41 | Link to Comment disabledvet
disabledvet's picture

what the author failed to mention is the fact that the US is the only nuclear power that does not reprocess its Uranium as well. The facilities exist to that as well..and "that's a lot of uranium that can have that happen" btw.

Sat, 03/03/2012 - 14:07 | Link to Comment Elvis is Alive
Elvis is Alive's picture

"Works for trucks, but passenger vehicles will prove difficult."

I have read that two or three times here. That isn't true. Conversion kits have been sold and installed for around $1000 in Mexico and Brazil. The issue with the U.S. is the red tape. If you follow EPA regs, cost is closer to $10,000. This article says $5000 but that is not what I have found.

http://riotimesonline.com/brazil-news/rio-business/natural-gas-flex-cars...

 

Sat, 03/03/2012 - 14:31 | Link to Comment earleflorida
earleflorida's picture

emerging markets leading the way into the future via  pre-historic developed nations,... morassed in the past.  funny?

But what does Gov't Motors do - but build a ~ $60k chevy [officially shit-canned as of today] volt, when GM has for years been manufacturing flex-fuel vehicles in Brazil for a decade.

thanks for link   :-))

Sat, 03/03/2012 - 15:26 | Link to Comment LowProfile
LowProfile's picture

That link was very interesting (thanks), as I learned nat gas used to maintain cruising speed. 

Government is naturally the biggest hurdle, but you will be stuck refueling at home for the next 10 years (at a minimum) if you convert now.  Not an issue if you stick close to home.

Also, gasoline is relatively inexpensive here compared to Brazil (AFAIKT), so after you figure in the energy costs of compressing the gas into the tank (which are significant), along with the cost of a dual fuel conversion (assuming that price gets down to $1k), it still may not be cost effective.

Fleet vehicles make the most sense at present.

Long term, thorium makes the most sense.

Sat, 03/03/2012 - 17:09 | Link to Comment alex_g
alex_g's picture

Elvis, i think it's Argentina, not Mexico, that leads in CNG cars.

Also, you don't need to use the EPA certified shops at $8-10k, you can buy the non-EPA approved kit and install it.  You just don't get the tax credit.

Sat, 03/03/2012 - 18:03 | Link to Comment malek
malek's picture

Does that include the compressor station to turn low pressure pipelined nat gas into liquified gas, or do you assume those stations magically pop up?

Sat, 03/03/2012 - 14:10 | Link to Comment JohnKozac
JohnKozac's picture

I added some UNG and KOL last week on the dip for long term hold. Seems too cheap given the other commodities prices. In the long term these prices return to the mean.

Sat, 03/03/2012 - 14:19 | Link to Comment Elvis is Alive
Elvis is Alive's picture

There is a guy on here trolling the boards with questions about NG facts. Is the U.S. producing more or less natural gas than 30 years ago?

His point was we are producing less natural gas than 30 years. That is no longer true though. We have now exceeded 1973 production.

http://205.254.135.7/dnav/ng/hist/n9050us2m.htm

If you see the graph, such a statement clearly misses the trend.

The other comment concerned how much natural gas the U.S. imports. Natural gas isn't like oil. Sure, the U.S. imports natural gas from Canada and Mexico via pipeline, but it is not like Canada and Mexico can sell it to someone else.

Besides, the trend is clear: exports of NG are up and imports down: http://205.254.135.7/naturalgas/review/print_version.cfm

A couple of things here: the same academics who could quote you the law of supply and demand are insisting that it does not apply to oil and NG. Oil supply has peaked, and demand is "inelastic". What utter horseshit!!

U.S. gasoline demand is now at ten year lows and oil production is at seven year highs.

If you want to know why oil is so high in price, it is time to quit pointing fingers at oil companies and start pointing them at the Fed, ECB, and CFTC.

The CFTC is the rare government agency that has made FEMA, the TSA, and SEC look competent by comparison.

Sat, 03/03/2012 - 14:22 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

This is a weak article with only a superficial understanding of the interplay between natural gas and the rest of the energy complex.  State and local RPS and environmental regulations are having more impact on coal prices and the shutting down of old coal generation than are natural gas prices.  Just look to the decisions in So. California for evidence of that.  And nuke (uranium) demand is, with very few exceptions, not affected by natural gas prices. 

Sat, 03/03/2012 - 14:38 | Link to Comment earleflorida
earleflorida's picture

yep,... keep building thems' thar uraniums' on the coast of fault-lines. brilliant!

Sat, 03/03/2012 - 14:44 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

You normally respond in a way that has nothing to do with the prior post, Jethro?

Sat, 03/03/2012 - 15:26 | Link to Comment Stuck on Zero
Stuck on Zero's picture

There is an enormous opportunity in natural gas.  That is in building "totem engines."  Totem engines are cogeneration units  sit in your basement, burn natural gas and generate electricity and hot water.  Thermal efficiency in converting chemical energy to useful product exceeds 85%.  A good totem engines could reduce carbon emissions in the U.S. by 30% and reduce power bills for consumers by 50%.  The key is to build a small cogeneration unit that lasts a long time.  Larger systems, such as found in schools, factories, and apartment complexes exist everywhere.  Small units could be turbines, fuel cell, or ICEs.  Fiat, Mercedes and others have tried the internal combustion engines approach.  If you want to make money invest in companies building fuel cell approaches that use nano-catalysts.  Opportunities abound.

Sat, 03/03/2012 - 16:37 | Link to Comment css1971
css1971's picture

British Gas are offering a cogeneration unit. The Baxi is the one mentioned on their site.

http://www.baxi.co.uk/products/2137.htm

A Stirling engine no less.

Sun, 03/04/2012 - 08:53 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

Single-home sized cogen hasn't caught on in three decades.  It's not a new concept.  It is prohibitively expensive to do, however.  And, moreover, no engine runs 24x7x365, so you cannot go "off-grid" unless you have a backup.  Even in mid-sized industrial sites (like a hospital), the notion of buying 2 times the needed capacity - sized for peak kw demand - makes it uneconomic.

Sun, 03/04/2012 - 14:58 | Link to Comment GoinFawr
GoinFawr's picture

"It is prohibitively expensive to do, however"

There's that bs assertion again. Please provide evidence.

Sun, 03/04/2012 - 22:42 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

Here's a nice study on cogeneration showing payback times of up to 159 years for light industrial:

http://nycppf.org/html/dcp/pdf/env_review/domino_sugar/appendix_i_feis.pdf

 

And here's a nice tome from a "greenie" who basically transferred disposable income to a micro-generation manufacturer (spent $24K to save $500 and is not 'off grid'):

http://green.blogs.nytimes.com/2009/04/29/a-winters-tale-my-first-season...

 

From the below sources, the following points on natural gas refueling stations:

- natural gas vehicles have been around since the 1930s

- cost of a home compressor = $4,000, not including any piping or metering

- incremental cost of a CNG Honda Civic = $7K, but more likely $12K - $18K

- cost of a SLOW-FILL station in CA = $472,000 (fill rate = 1 gallon per hour)

- cost of a fast-fill station in OK = $1.3 million

- 10 gasoline stations can be constructed for every 1 CNG station (assuming underground NG distribution exists)

- as of 2008, 25% of the 130,000 total NG vehicles in the U.S. were non-fleet residential

 

http://autogasforamerica.org/pdf/Alternative%20Fuel%20Fact%20Brief-%20Na...

http://www.greencar.com/articles/5-things-need-natural-gas-stations.php

http://cleanfuelconnectionnews.com/compressed-natural-gas/fast-fill-stat...

http://cleanfuelconnectionnews.com/compressed-natural-gas/fast-fill-stat...

http://southpasadena.patch.com/articles/fast-fill-cng-station-coming-to-...

http://www.mcall.com/news/local/warrior/mc-road-warrior-e85-20120129,0,7...

 

Let me know when you're done poring through this and have come to a different conclusion, a**wipe:

Mon, 03/05/2012 - 02:24 | Link to Comment GoinFawr
GoinFawr's picture

nope, still looks feasible should demand swell, thanks for all the swell links!

Mon, 03/05/2012 - 09:53 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

Finally!  I was wondering when you were going to pen words of utter defeat.  I'll see you on another post, but I'll do my best to take it easy on you. 

Ciao.

Tue, 03/06/2012 - 13:29 | Link to Comment GoinFawr
GoinFawr's picture

Unfortunately Mr. Costanza just because you believe it it doesn't actually make it true.

You've 'penned' yourself into a corner and declared 'Victory is mine!'. I'll just go ahead and expect that from you from now on as it seems to be your MO.

Seriously, what's your angle here? Do you honestly expect me to believe that out of a sense of the purest snowy white altruism you're trying to rescue the world from making what you see as an expensive mistake, despite all the evidence that you yourself have provided to the contrary?

Pull the other one.

 

Sat, 03/03/2012 - 15:50 | Link to Comment Atomizer
Atomizer's picture

Under UN Agenda 21 guidelines, banning all internal combustion engines by replacing them with Natural gas fuel source will create another Keynesian bubble. T Boone Pickens’ hedge will have finally paid off. If you can’t make cultural changes happen, mandate & fine peasants under the illusion of Democracy.

Sat, 03/03/2012 - 16:31 | Link to Comment max2205
max2205's picture

Demand?!
Miles driven is way down but gas prices are way up.

I am sure it's different this time

Sat, 03/03/2012 - 16:57 | Link to Comment Flakmeister
Flakmeister's picture

Ahh the standard cornucopian nonsense....

There is no commerically demonstrated Thorium reactor yet and our transportation infrastructure is not electric...

You are looking at a 50 year time frame, minimum...

To all you NG people out there...

1) Does the US currently import or export NG on a net basis?

2) Current daily US NG production is how many barrels of oil equivalent (BTU basis)?

3) What happens if 5% of oil usage is displaced by NG usage?

4) If there is indeed a 100 year supply of NG in the US, how long does it last if you increase production by a) 3% p.a. b) 5% p.a..

 

Sat, 03/03/2012 - 17:14 | Link to Comment Spartan
Spartan's picture

US natural gas is about 1/3 as cheap as European natural gas, even if you account for the costs of exporting it as LNG...let's see what happens when Sabine and others begin operations in 2015.....

Sat, 03/03/2012 - 18:43 | Link to Comment Atomizer
Atomizer's picture

 

 

The TV pundits and radical Nat Gas pushers don't realize they are terrorist working against the Federal Reserve cartel. LOL

I don’t make up this chaos propaganda, just observe.

Recycling Petrodollars

http://www.newyorkfed.org/research/current_issues/ci12-9/ci12-9.html

 

Why do we plan to invade Iran again? South Pars/Oil and Central Banking domination.

http://www.offshore-technology.com/projects/southpars/

Sat, 03/03/2012 - 19:04 | Link to Comment Yen Cross
Yen Cross's picture

Pee' U!

Sat, 03/03/2012 - 23:53 | Link to Comment IQ 101
IQ 101's picture

What a giant pile of horse-cock that you enjoy !

Fucking Iran has oily bit's, no, really ?

If you desire to use NOT Science for your Geology and NOT Science for your Climate data you will be a happy little maggot.

Give me a fucking break ! can any of you fuckers punch A- biotic oil into the Googly ?

Read a fucking book aqnd getba little bit of real ?

Grab a drill, drill beneath your house, hit the right depth, you will hit oil, period, fuck, please!

A million Dinosaurs stand in a circle so you can have a 5 minute oil well ?

Pleeeeez. WTF get a BOOK, We live on planet fraudo, 

Giant bags of monkey bollocks , what gay uninformed Egyptian shit do you desire ?

Give me a break.

Look up much ? Chemterails are imaginary, you have Google and a neck, no?

We have snow that looks like polystirene packing foam here in W.A.

but that is just Psycho stuff, right?

Do any of you coupon worshippers ever look up?

Do not go to U Tube and look up Chemtrails or "What on Earth are they spraying on us"

Do not look up!.

Pro- Biotic oil, global warming, Barry and Hillary,

fat fucking Egyptians and German Lesmeisters,

French dwarves and Greek Goldman Saxons,

the Germans and Greeks folding?

 

Sun, 03/04/2012 - 07:42 | Link to Comment Bolweevil
Bolweevil's picture

Drugs

Sun, 03/04/2012 - 19:43 | Link to Comment covert
covert's picture

gotta buy coal now!

http://expose2.wordpress.com

Do NOT follow this link or you will be banned from the site!