remay
Champion Author
Houston
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Message Posted: Oct 16, 2012 7:37:00 AM
Yep, makes sense, drilling drops, prices go up...
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drpepperTX
Champion Author
Texas
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Message Posted: Oct 15, 2012 12:15:26 PM
nsdp, my question was "How do the these proponents of ditching coal feel about the cost of electricity from gas fired plants when NG is $8 per MCF?"
Now we have nat gas prices (currently at or near $3.50 per MCF) surging to increase 133% from the low of $1.50 per MCF.
As producers WILL continue to hedge their production several years forward, they will be locking in the Henry Hub prices likely well north of $4.00 per MCF, big export increases that likely will begin in 2015 have the probable impact of driving prices somewhat further depending on the storage capabilities in the US.
While I agree that a spike to $8 this winter are not likely, a spike to $8 is in no way out of the question within a couple of years, and that goes back to my original question posed.
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nsdp
Champion Author
San Antonio
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Message Posted: Oct 15, 2012 11:32:56 AM
DRPepperTx I would have expected a more knowledgeable response form someone in Texas of all places. Casing head gas from the development of the Bakken and Eagle Ford added 1,350 BCF of NG to production levels in 2012. That is in increase of 6% over the total NG produced nationwide in 2011. It will drop to 300BCF(1 1/4% of total demand) next year as Anadarko, KinderMorgan and others bring on NGL plants to strip ethane, propane, butane and natural gasoline out of the natural gas stream for chemical plants and new jobs here in the US. The focus on NG drilling is irrelevant in the US right now because of the large amount of drilling in the oil areas. Oil produces NG with it. 10% typically in the Eagle Ford and Bakken to as much as 30% in the Marcellus and Utica Shales. Since they are in Ohio, Pennsylvania, New York and West Virginia they use 80% less compressor fuel to get NG to market. That is like adding 12% to the NG supply from those fields. You might check EOG chairman Mark Pappa's comments on the continuing gas glut and how certain oil fields will exacerbate the problem. I imagine he has a lot more smarts about where prices are going that this desk jockey at Forbes who has a political addenda.
If we are going to hit $8 NG soon why are Cheniere and others trying to build LNG export terminals just in time to see US prices spike? That would really be stupid.
The author is really stupid to focus on gas rigs only and ignore the net change in oil and workover rigs give the fact that about 25% of the NG in the US comes from OIL Wells. It is like trying to take a picture of the world through a door peephole.
[Edited by: nsdp at 10/15/2012 12:41:56 PM EST]
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drpepperTX
Champion Author
Texas
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Message Posted: Oct 15, 2012 11:06:15 AM
And as the war on coal continues... How do the these proponents of ditching coal feel about the cost of electricity from gas fired plants when NG is $8 per MCF?
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orphancarguyPE
Champion Author
PEI
Posts:3,853
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Message Posted: Oct 15, 2012 8:26:32 AM
Forbes, and many others are seeing it in the right light, and it has very little to do with speculators, and everything to do with economics.
Natural gas whipsaws wildly in price more than oil ever has, because it is very hard to store when there is an oversupply, and it is impossible (at the pipeline network level) to accept an under-supply that would lower the pressure below a safe level. People with natural gas heating can likely remember prices within the last 15 years of spiking to $16-18 a M BTU, instead of today's all time low of somewhere in the range of $2.50
The recent history has been a US only oversupply that is not permanent, but only temporary. All time low prices have convinced people that CNG cars are the new sliced bread, especially if the GGE (gasoline gallon equivalent) is '$2.50 gallon' or as low as under one dollar a gallon if you are filling from home. Trouble is, that $1.90 to $2.80 per Million BTUs current delivered at home cost--that makes those prices noted above for fuel for vehicles so darn attractive right now when quoted in GGEs--- is going to fly away pretty soon. Also, that super attractive fill from your home supply price is dependent on you buying and having installed for $1500 to $5000 or so, a home filling station. And, these home filling stations are NOT fast--almost as slow as electric ie think overnight rather than under half an hour.
Gas companies know what conventional natural gas costs, and that is about $2.00 a M BTUs. For fracked gas, they knew it would be higher, but settled on a guesstimate of $4.00 per M BTUs. The real cost would require that fracked gas well would go through their ENTIRE life cycle--drilling and maintenance overhead costs, connection/delivery, cleaning up and sales over time which is calculated on total recovery at the price you can sell that total production, plus decommissioning of exhausted wells. Fracked gas was too new to have gone through the entire per well cycle--until very recently. Based on some very early wells in Texas, the true cost to break even is not $2 like conventional, or even $4 like the guesstimate, but more in the range of $6.50-$7.50 and this is for some of the BEST and most productive fields/areas for fracking. So, unfortunately, $8 as a possible target average price for all fields of varying qualities and quantities everywhere is looking more and more likely.
So, willing to pay more for that Honda or Dodge Ram running on CNG if the refill cost at a commercial station is $1.50-$3.00? Sure you are, especially if you can sometimes refill at home overnight for 75 cents- $1.50 (just for the natural gas itself--the electricity for the compressor pumps is extra)
Now, what happens if the price firms up to say only $7.50 from say an average of about $2.50 per M BTUs? That means its three times the current cost, so $2.25 to $4.50 for an overnight home fill and $4.50-$9.00 at a service station (maybe a LOT less if lots of competition develops with lots of volume, so lets pretend in a perfect world its $2.75-$5.00 a GGE at a service station.) Creating and storing and delivering a highly compressed gas requires a huge amount of electricity compared to a liquid fuel like gasoline or diesel where a simple pump, so its going to have to have a higher margin than gasoline and diesel.
Are you willing to pay for a more expensive vehicle, even with offsetting government credits, that will make you dependent on a fuel that peaks and crashes much more so, and much quicker than gasoline or diesel ever have?? Would you still like that pickup if instead of costing you $1 GGE with a home fill now, will cost in the $6.00-$10.00 a GGE in a years or so, at a service station? Willing to live with a vehicle with a very limited range (at an 'affordable' price)? Sounds like the CNG vehicle of tomorrow could very easily turn as sour as the worst of electric vehicles today.
[Edited by: orphancarguyPE at 10/15/2012 9:27:35 AM EST]
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Dr Gas
Champion Author
Twin Cities
Posts:3,270
Points:358,505
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Message Posted: Oct 15, 2012 8:02:56 AM
Yep here it is again.
There was low prices, but as the weather gets colder yet again it's prodicted that the price will go and go up high for the heating season. IT HAPPENS EVERY YEAR! It 's not news anymore!
Screw you natural gas producers!
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ss70
Champion Author
Detroit
Posts:9,669
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Message Posted: Oct 15, 2012 7:46:48 AM
These financial papers from wall st want prices to go up all time for the profits but they want Cheap illegal and legal labor with out any restrictions.
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scu227
Champion Author
New Haven
Posts:4,157
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Message Posted: Oct 15, 2012 7:09:36 AM
Keep the speculators out of it !!!!!!!!!!!!!
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amerk73
Champion Author
Dallas
Posts:7,055
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Message Posted: Oct 15, 2012 6:59:58 AM
what next
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investmentdr
Champion Author
Cleveland
Posts:4,034
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Message Posted: Oct 15, 2012 6:46:12 AM
nat gas prices have been even higher than $8
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bar1035
Champion Author
Charlotte
Posts:9,167
Points:1,299,195
Joined:Aug 2006
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Message Posted: Oct 15, 2012 6:39:08 AM
From the contributer network... a no no from the news aspect that gas buddy insists on. Wonder if PD will notice?
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58salty
Champion Author
Jacksonville
Posts:6,645
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Message Posted: Oct 15, 2012 6:33:07 AM
$8 only going to go higher
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BBopp
Champion Author
Dayton
Posts:6,844
Points:1,939,430
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Message Posted: Oct 15, 2012 6:20:30 AM
This is insane! No one will be able to cook, heat their home or water.
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GasPriceHelp4u
Champion Author
Dayton
Posts:2,692
Points:569,775
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Message Posted: Oct 15, 2012 5:23:03 AM
Great news for consumers for the winter months!!!
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greshams
Champion Author
Cincinnati
Posts:2,014
Points:376,625
Joined:Nov 2011
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Message Posted: Oct 15, 2012 5:06:37 AM
boy these people are beating us to death with these prices something has to be done, and no president will do anything about it.
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subnuke
Champion Author
Atlanta
Posts:7,503
Points:1,509,140
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Message Posted: Oct 15, 2012 4:51:04 AM
more doom and gloom - don't think so.
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BigDogOH
Champion Author
Cincinnati
Posts:8,508
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Message Posted: Oct 15, 2012 4:44:56 AM
obamanomics, obummer dose not wan US to have cheep energy of any kind
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LostToo
Champion Author
Illinois
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Message Posted: Oct 15, 2012 4:44:34 AM
Numbers????
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Z06KY
Champion Author
Louisville
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Message Posted: Oct 15, 2012 4:44:30 AM
Gas will go up more also.
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BIGOILEATURCRUD
Champion Author
North Carolina
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Message Posted: Oct 15, 2012 4:43:32 AM
soon
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zippy452
Champion Author
Cincinnati
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Message Posted: Oct 15, 2012 4:43:16 AM
Current cash price is $3.35
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neptune2008
Champion Author
Michigan
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Message Posted: Oct 15, 2012 4:42:51 AM
surprise!
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momster1
Veteran Author
Wisconsin
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Message Posted: Oct 15, 2012 4:39:00 AM
Ok
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gabisgram
Champion Author
Michigan
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Message Posted: Oct 15, 2012 4:38:12 AM
Dollar is getting more and more worthless, so prices have to go up.
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pbear316
Champion Author
Akron
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Message Posted: Oct 15, 2012 4:37:42 AM
Ok
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Petrock
Champion Author
Lexington
Posts:9,128
Points:2,558,735
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Message Posted: Oct 15, 2012 4:37:36 AM
QUICK !! Start committing your life to natural gas so they can screw you again and you can whine and wish you could put $6.00 a gallon gasoline in your car!
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Dailyrun
Champion Author
Kentucky
Posts:1,987
Points:389,815
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Message Posted: Oct 15, 2012 4:37:06 AM
Demand drives prices.
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4bobux
Champion Author
Peoria
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Message Posted: Oct 15, 2012 4:35:49 AM
ok
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Boo1989
Champion Author
Atlanta
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Message Posted: Oct 15, 2012 4:35:00 AM
"Somehow we have to figure out how to boost the price of gasoline to the levels in Europe." steven chu, obama's energy secretary.
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Foxt
Champion Author
Minnesota
Posts:5,265
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Message Posted: Oct 15, 2012 4:28:52 AM
Eiter way the cost of fuel is going up. Why go further in debt on a whim.
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evohnave
Champion Author
Virginia
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Message Posted: Oct 15, 2012 4:28:40 AM
46,820
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hawkman1950
Champion Author
Michigan
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Message Posted: Oct 15, 2012 4:26:49 AM
Time will tell.
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chevellefan
Champion Author
Georgia
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Message Posted: Oct 15, 2012 4:23:48 AM
we will see
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djgunrunner
Champion Author
Salt Lake City
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Message Posted: Oct 15, 2012 4:23:41 AM
If we start using Natural Gas in vehicles their sale would be much higher. It would behoove them to get more wells on line. Without the support of the government at this time Natural Gas is slow in coming on. I live in Utah and in the Salt Lake area we are seeing more and more Natural Gas stickers on license plates. We have the infrastructure and the use is increasing. If the after market conversion sales would quit robbing people for a conversion I would have one on the car I have now but at the time I cannot afford it as I am not going to have this car for another year.
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WES03
Champion Author
Maryland
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Message Posted: Oct 15, 2012 4:23:08 AM
If you think this is true, invest now.
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D4444J
Champion Author
Albuquerque
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Message Posted: Oct 15, 2012 4:23:00 AM
Sounds like a good move
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Brucevanf
Champion Author
New Brunswick
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Message Posted: Oct 15, 2012 4:21:36 AM
It is all controlled by the same people.
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SUPERSTEVIEO
Champion Author
Quebec
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Message Posted: Oct 15, 2012 4:19:57 AM
good... now to get cars converted.
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Bonanza
Champion Author
Boston
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Message Posted: Oct 15, 2012 4:19:49 AM
This is the fuel of the future
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Tru2psu2
Champion Author
Winston-Salem
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Message Posted: Oct 15, 2012 4:19:33 AM
ouch!
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Ziggy1962
Champion Author
New Jersey
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Message Posted: Oct 15, 2012 4:16:37 AM
Interesting.
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OTISFL
Champion Author
Pensacola
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Message Posted: Oct 15, 2012 4:16:01 AM
As expected.
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gassy4u
Champion Author
Mobile
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Message Posted: Oct 15, 2012 4:15:57 AM
And gas goes up.
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barber7796
Veteran Author
Oklahoma
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Message Posted: Oct 15, 2012 4:13:45 AM
Just like gasoline; peak season prices go up
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kirzon484
Champion Author
Atlanta
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Message Posted: Oct 15, 2012 4:09:23 AM
k
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wulf2000
Champion Author
Miami
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Message Posted: Oct 15, 2012 4:09:13 AM
Interesting article.
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joko0
Champion Author
New Jersey
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Message Posted: Oct 15, 2012 4:08:44 AM
It figures.
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AvantiMick
Champion Author
Indiana
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Message Posted: Oct 15, 2012 4:07:19 AM
So, Chrysler idea maybe not so good!
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twobroke61
Champion Author
Michigan
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Message Posted: Oct 15, 2012 4:04:59 AM
tomok said it right
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bobzilla11
Champion Author
Indiana
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Message Posted: Oct 15, 2012 4:02:53 AM
profit margins rule
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