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Hopes for Golden Age of Gas Evaporate

SINGAPORE—When the International Energy Agency published a report four years ago heralding a “golden age of gas” it seemed little could derail a bright future for the energy source. Now, with prices slumping and demand in key consuming countries like China looking shaky, the energy industry’s optimism about gas seems to have fizzled out. Particular concern hovers around the market for liquefied natural gas–that is, gas which is chilled into liquid form then loaded on ships for transport elsewhere. In recent years, oil and gas majors like Chevron and Royal Dutch Shell have invested billions of dollars into LNG projects in countries like Australia and Qatar, while further vast sums have been spent on plants that turn LNG back into gas in consuming countries, all in the belief the world’s need for the fuel would rise rapidly–especially as countries, particularly in Asia, sought to move away from more polluting […]

Posted On : Published By : Tom Whipple
Category:

Hopes for Golden Age of Gas Evaporate

SINGAPORE—When the International Energy Agency published a report four years ago heralding a “golden age of gas” it seemed little could derail a bright future for the energy source. Now, with prices slumping and demand in key consuming countries like China looking shaky, the energy industry’s optimism about gas seems to have fizzled out. Particular concern hovers around the market for liquefied natural gas–that is, gas which is chilled into liquid form then loaded on ships for transport elsewhere. In recent years, oil and gas majors like Chevron and Royal Dutch Shell have invested billions of dollars into LNG projects in countries like Australia and Qatar, while further vast sums have been spent on plants that turn LNG back into gas in consuming countries, all in the belief the world’s need for the fuel would rise rapidly–especially as countries, particularly in Asia, sought to move away from more polluting […]

Posted On : Published By : Tom Whipple
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Duke Energy to Buy Piedmont Natural Gas for $4.9 Billion

The Duke Energy Gallagher Station power plant in New Albany, Indiana. Duke and Piedmont are based in Charlotte, N.C. and deliver natural gas to homes and businesses in different regions. But Duke primarily owns electric utilities that serve customers in seven states in the Midwest and Southeast. Duke’s all-cash acquisition price of $60 a share for Piedmont amounts to a 40% premium to that stock’s closing price on Friday. Similarly, Southern’s $66-a-share buyout of AGL represents a 38% premium for that company. Duke and Southern are willing to pay high premiums for the regulated gas companies because they offer reliable returns and a way to capitalize on the glut of natural gas. U.S. utilities anticipate only modest growth in electricity sales in the next few years, but gas demand is expected to be robust. That demand will be particularly strong in eastern regions where new natural gas pipelines are […]

Posted On : Published By : Tom Whipple
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Fracking Wells Associated With Premature Birth

Expectant mothers who live near active natural gas wells operated by the fracking industry in Pennsylvania are at an increased risk of giving birth prematurely and for having high-risk pregnancies, new Johns Hopkins Bloomberg School of Public Health research suggests. The findings, published online last week in the journal Epidemiology, shed light on some of the possible adverse health outcomes associated with the fracking industry, which has been booming in the decade since the first wells were drilled. Health officials have been concerned about the effect of this type of drilling on air and water quality, as well as the stress of living near a well where just developing the site of the well can require 1,000 truck trips on once-quiet roads. “The growth in the fracking industry has gotten way out ahead of our ability to assess what the environmental and, just as importantly, public health impacts are,” […]

Posted On : Published By : Tom Whipple
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In the Heart of the Texas Oil Patch, It’s Gas That’s Taking Off

Photographer: Eddie Seal/Bloomberg The oiliest county in Texas has seen its new natural gas production capacity more than double as drillers home in on their most profitable acreage. The peak output rate from new gas wells in Karnes County has surged 134 percent since January, estimates from Drillinginfo show. The only other county in Texas’s Eagle Ford shale patch where new gas capacity’s gaining is Live Oak, about 50 miles southwest of Karnes, the Austin-based energy data provider said. Gas producers are focusing on the most prolific parts of their plays as they grapple with the worst price collapse since 2008, and Karnes County has long been a sweet spot in Texas’s Eagle Ford shale. The 20,000-square-mile shale formation supplies about one-sixth of the nation’s crude. Karnes County, southeast of San Antonio, is home to “top-tier acreage," Chris Smith, senior research analyst at Drillinginfo , said in a telephone […]

Posted On : Published By : Tom Whipple
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America’s Biggest Shale Gas Field Chokes on Its Own Supply

(Bloomberg) — For the first time since America’s shale boom began, the flow of natural gas from the nation’s biggest reservoir is close to dropping below year-ago levels. Output from the Marcellus basin in Pennsylvania and West Virginia is faltering as pipeline capacity fails to keep up with the surge in production. While space on Appalachian pipelines has more than doubled this year, it hasn’t been enough to keep the flow moving freely, according to Bloomberg New Energy Finance. That has some producers “choking back” the output from wells in the play, said Charles Blanchard, an analyst at BNEF in New York. “They’re saying it’s not even worth it day to day to keep my wells online because I’m losing money on every molecule that I sell.” Marcellus production has surged more than 14-fold in the past eight years. Now drillers are waiting on seven new Appalachian pipeline projects […]

Posted On : Published By : Tom Whipple
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Natural Gas Sinks on Unexpectedly Large Storage Addition

Natural gas suffered its biggest losses and had its most volatile trading in more than two weeks after a larger-than-expected stockpile addition dashed a weather-related rally. The U.S. Energy Information Administration said producers added 100 billion cubic feet of natural gas to storage in the week ended Oct. 9. That is 6 bcf more than the average forecast of 18 analysts and traders surveyed by The Wall Street Journal. Prices for the front-month November contract settled down 6.5 cents, or 2.6%, at $2.453 a million British thermal units on the New York Mercantile Exchange. It was the largest losses in one day since Oct. 1 and puts gas back to within 1% of the three-year low it closed at to start the month. The losses came from a high starting point as the market had been up more than 2% in trading before the EIA’s storage update. It is […]

Posted On : Published By : Tom Whipple
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Natural gas pipelines under construction will move gas from Azerbaijan to southern Europe

Source: U.S. Energy Information Administration and IHS EDIN Construction or preliminary work has begun on three new pipelines designed to flow new supplies of natural gas from Azerbaijan to consumers in Turkey, Bulgaria, Greece, and Italy. For more than a decade, companies have been announcing proposals to build new natural gas pipelines to connect natural gas resources in Russia, Central Asia, and the Middle East with consumers in southern Europe. In contrast to the three new pipelines considered in this article, most of these projects have failed to advance. These three new or expanded pipelines would reach from Azerbaijan’s eastern edge on the Caspian Sea to Italy’s southeastern shore. The South Caucasus Pipeline Expansion (SCPX), from Azerbaijan to the Georgia-Turkey border, began construction in Azerbaijan at the end of June. The Trans-Anatolian Natural Gas Pipeline (TANAP), from the Georgia-Turkey border to the Turkey-Greece border, officially started construction in March […]

Posted On : Published By : Tom Whipple
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In New England, Shale Gas Is Hard to Get

Natural gas is so abundant and cheap in much of the U.S. that producers want to export it overseas. Except in New England, where gas is so hard to get that companies are importing it from as far away as Yemen. The U.S. shale boom that has produced a glut of gas—and helped lower many Americans’ home heating bills—has largely bypassed the energy-starved New England. Few pipelines are available to ferry gas from Pennsylvania and Ohio to Connecticut and Maine, and new lines proposed in the region won’t go into service until 2018, or later. Gas plants currently supply 44% of New England’s electricity, up from just 18% in 2000. Consumers and businesses are also swapping their old furnaces that burn heating oil for newer models that run on gas. So as the weather cools, problems loom. When brutal cold hits this winter, energy prices will soar. In Massachusetts, […]

Posted On : Published By : Tom Whipple
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Natural gas prices in Asia mainly linked to crude oil, but use of spot indexes increases

graph of global crude oil, LNG, and natural gas prices, as explained in the article text Source: U.S. Energy Information Administration, Petroleum Association of Japan, Japan Ministry of Finance International Trade Statistics, Japan Ministry of Economy, Trade and Industry, Bloomberg LP Note: Values for North Sea Brent and Japanese customs-cleared (JCC) crude oil prices converted to $/MMBtu on an energy-equivalent basis. The official reporting of Japan spot LNG price statistics began in March 2014, so no prior data exist. Unlike the natural gas market in the United States, natural gas prices in Asian markets typically reflect contracts that are indexed to crude oil or petroleum product prices. The declines in crude oil prices between August 2014 and January 2015 had a significant effect on Asian natural gas prices and markets. However, Asian countries are developing regional trading hubs so that natural gas prices better reflect natural gas market dynamics. […]

Posted On : Published By : Tom Whipple