Natural Gas Prices -Fall Through the Floor?

[tbst]

Maybe no one cares.

What do you guys foresee about gas prices? Some are predicting that gas will fall to $1 in March.

Being that I am going to be working for a large independent in the Marcellus shale in May, interested to hear all of your opinions.

Personally, I see gas prices staying limp for the rest of the year, with a real focus on liquids. And then next winter, assuming it is colder and as more generation from NG comes on line, gas prices will go back up.

$1 would make me VERY nervous in terms of having a job.

 

[Dilong26]

i think natural gas is pretty abundant in the US.

 

[tbst]

Right.

Basic supply and demand.

However gas is traded as a commodity.

 

[tbst]

And they have. Broke through $2 in the last few days.

Not that anyone cares.

 

[JohnsD90]

I don't use the stuff, be nice if gasoline would drop like that.

 

[Huskey]

i think natural gas is pretty abundant in the US.

And yet you Americans import LNG like crazy when the international price is down, typically from Trinidad.

I work on the transport ships (Norwegian company) and honestly it sucks for us when the price is down because the charter who hires us sits us at sea while we wait for a better price to sell, or we get stuck at an off shore terminal discharging rediculously slowly to Brazil. I think I should apply to work for an American company, would be more busy in the "slower" times!

 

[BrianSD_42]

tbst,

Have you ever watched the movie "Enron: The Smartest Guys In The Room"

It is all about the former energy (mainly gas) company and the story of its rise & fall.

I think you would like it if you are into documentaries at all. It is very good.

:guitar3:

 

[tbst]

I don't use the stuff, be nice if gasoline would drop like that.

Not nice for me because then I wouldn't have a job at all. Increasing gas prices leads to increasing demand for NG.

But I get your point. And I agree.

And yet you Americans import LNG like crazy when the international price is down, typically from Trinidad.

I work on the transport ships (Norwegian company) and honestly it sucks for us when the price is down because the charter who hires us sits us at sea while we wait for a better price to sell, or we get stuck at an off shore terminal discharging rediculously slowly to Brazil. I think I should apply to work for an American company, would be more busy in the "slower" times!

Very interesting. How have you been busy with the recent glut of natural gas? Isn't the US trying to turn out import LNG locations into export locations?

How much gas can a tanker carry when it is compressed and what pressure and temperature is it compressed to?

Interested because NG is my field but not shipping.

tbst,

Have you ever watched the movie "Enron: The Smartest Guys In The Room"

It is all about the former energy (mainly gas) company and the story of its rise & fall.

I think you would like it if you are into documentaries at all. It is very good.

:guitar3:

Yeah, saw it. It is a good one. It is on CNBC all the time now. Obviously NG prices were artificially inflated because a year ago they were ~$5.

 

[Atlanta_man]

I recently went through some small towns south and west of Shreveport, LA where I grew up 50+ years ago.
You would not believe the crowded roads, big trucks, lots of drilling and compression, water reclamation, pipelines above ground running right along the roads...

Some of these little towns now have huge RV farms where the workers live, some have a half dozen new motels.

Anyway there's several odd things going on:
1/ natural gas wholesale price is now under $2.00 / unit ('thousand', decatherm, etc - it's now priced on energy content not mcf) yet your home gas LDC has not passed the savings to you

2/ the usual cost ratio of nat'l gas to crude on an energy basis is 6 to 1. However, the price of crude is so high, and gas so low, that the ratio is 20(crude energy content) to 1 (nat'l gas) today

It's interesting that this big gas bubble has people working the numbers to build plants to convert nat'l gas to fuel oil/diesel. Or LNG for export to Asia. Takes a lot of energy, but the nat'l gas is a mighty cheap source of it and should stay that way for 5 or 10 years

 

[tbst]

I actually worked down there is past summer for Halliburton. Went into about an hour south of Shreveport. A lot of times we couldn't even get a hotel room, we would end up sleeping in the trucks.

Driving to some of the locations, you could tell that a lot of the areas had been forgotten until the NG industry moved in. One thing that was disappointing is it seemed as if the landowners were benefiting a lot more than the locales themselves. I mean millions in royalties, roads are worse than ever.

And damn, was it hot down there. Especially being head to toe in fire re****ant clothing.

Yes, the ratios are way off. It doesn't make sense. Well it does, because everyone has a HUGE boner for the oil companies. Now maybe that will change since the oil companies (XTO owned by Exxon, Shell and EOG) are moving into the natural gas industry.

 

[HCurphy]

I'm currently living in shreveport. That all I have to contribute. I just so rarely hear anyone on this forum talk about louisiana. We have all been closer then we realized.

I share experience with both of you guys' observations(regarding the area--I don't know much about LNG) as well. It's becoming more and more common all across the state.

 

[RunninInGA]

It would seem that with the discovery of the Haynes shale and all of the exploration in Louisiana and other states that the price would drop significantly due to economical forces of supply and demand. That said, my observations in the area are very similar to yours in that the land owner or lessor profits more than the towns and local businesses themselves. Same as with the rapage of the land in east Texas decades ago and deforestation / lumber harvesting - there are winners and losers.

That said, I'm not knowledgeable enough on the LNG market to know exactly how it works and the forces behind it.

How does government and EPA regs affect pricing?

 

[BrianSD_42]

well there is still not very much competition in this market, correct?

Everyone should at least watch the 2011 HBO documentary Gasland.

 

[HCurphy]

well there is still not very much competition in this market, correct?

Everyone should at least watch the 2011 HBO documentary Gasland.

Seen it. "Enjoyed" it. But I also suggest that everyone who does watch it research the controversy surrounding it. ( I pretty much recommend that for all aspects of life)

 

[theizzardking]

this thread makes me happy, my new house runs completely off a 1500 gallon natural gas tank. cheap gas is going to rock, i just hope the price stays low so i can deplete the tank enough to require a refill before winter. only electrics in the house really is the lights and fridge, pretty awesome for when the power goes out!

sorry tbst, just like anything with life, when one person is loosing money someone else makes a profit off it....you seem like a good enough a guy and a hard worker, hope this doesn't effect your lively-hood, for me on the other hand it's slightly increasing my ability to pay my bills....gotta rob peter to pay Paul right?

 

[-JD-]

Coincidence that the prices are so low at a time when there is growing opposition to 'fracking' ?

 

[tbst]

Seen it. "Enjoyed" it. But I also suggest that everyone who does watch it research the controversy surrounding it. ( I pretty much recommend that for all aspects of life)

I typed out a response last night but apparently forgot to finish it.

I have seen the movie. Actually I am going to be working for the company that is the center of attention in the movie in NE PA.

I think overall it is a good movie, however it has extreme bias. I understand that the peoples water may have been polluted, however none of it was tested, if I recall correctly. Also, the movie fails to mention safe ways to frac, like using casing that isn't garbage.

That just leaves the water issue. I was jobs this summer where we used 5.8 million gallons for one well.

this thread makes me happy, my new house runs completely off a 1500 gallon natural gas tank. cheap gas is going to rock, i just hope the price stays low so i can deplete the tank enough to require a refill before winter. only electrics in the house really is the lights and fridge, pretty awesome for when the power goes out!

sorry tbst, just like anything with life, when one person is loosing money someone else makes a profit off it....you seem like a good enough a guy and a hard worker, hope this doesn't effect your lively-hood, for me on the other hand it's slightly increasing my ability to pay my bills....gotta rob peter to pay Paul right?

Natural gas tank? I don't know if I have heard of that before. What kind of pressure is that thing at for the 1500 gallons? Is that something you looked for when house shopping or just stumbled upon it? What is the actual cost of gas ($/Mcf) to fill it?

Seems interesting.

Believe it or not, I am not all that worried about the price of gas screwing me. Just a little. Like you said, I can find something else if it does, I hope.

Coincidence that the prices are so low at a time when there is growing opposition to 'fracking' ?

Wouldn't a growing opposition to fracking make the price of gas higher? I am confused and don't want to make assumptions about what you meant. The off-topic section and assumptions are a no no.

The consensus in the industry is that gas being as low as it is pushes renewables off the chart because they are no longer close at all to being feasible, economically. Not a good thing, but something I think everyone should think about.

 

[Huskey]

Very interesting. How have you been busy with the recent glut of natural gas? Isn't the US trying to turn out import LNG locations into export locations?

How much gas can a tanker carry when it is compressed and what pressure and temperature is it compressed to?

Interested because NG is my field but not shipping.

Super busy with work, the company I work for does alot of work all over the world... There is no "glut" so to speak. Nigeria, middle east, austrailia, Indonesia, Bolivia and Trinidad are just some of the worlds biggest providers. As for the US import/export deal... well you pretty much buy when its cheap and sell when its not. Just like the company we I work for, only we are stuck out at sea for months waiting for the market to change.

As for transport... we keep it in a natural boiloff state, which keeps it cold. Just like if you open the top of a butane lighter and let the latent heat out of the liquid as it flashes off and your left with a really cold empty lighter. Except we are dealing with a slightly larger scale. NG (methane) exapands at 600X liquid to gas, and burns at 15% in air. We have 4 tanks that hold 138,000 m3 liquid, always boiling at -160 celcius. Maximum pressure is only 250 millibar before there is damage to the tanks. We burn the boiloff in our massive boilers - essentially burning anywhere between 2000 to 4000 kg/hr. That all depends on many things like ambient temperatures (air and sea), atomospheric pressure and sea conditions (rolling of the ship - shake your lighter for a bigger flame), as well as operational stuff like loading (liquid only), discharging (gas or liquid). The steam is used drives a 90,000Hp turbine for propulsions as well as turbo generators and a bunch of other auxiliary equipment.

Its an interesting life, and the danger pay on these things is the only reason any of us work out here.

 

[LittleCaesar]

I doubt we will see "low" prices of any type of gas for the near future (a decade). Developed countries other than the US still have lots of money to spend on energy and probably won't slow down too much for a considerable time to come. Developing countries still will want to provide it.

One would think that if the oil market was not perverted by speculators, the upper company echelon, and others in power management, the price of oil (gas) would have dropped some due to a quasi belief that Iran was not going to block the Persian Gulf and go to war with Israel. If the price of oil was not denominated in dollars, things would be different. To what degree though, I do not know. I do believe that NG will be the choice of fuel in the future.

 

[tbst]

It would seem that with the discovery of the Haynes shale and all of the exploration in Louisiana and other states that the price would drop significantly due to economical forces of supply and demand. That said, my observations in the area are very similar to yours in that the land owner or lessor profits more than the towns and local businesses themselves. Same as with the rapage of the land in east Texas decades ago and deforestation / lumber harvesting - there are winners and losers.

That said, I'm not knowledgeable enough on the LNG market to know exactly how it works and the forces behind it.

How does government and EPA regs affect pricing?

I missed this somehow.

I think that the government has very little regulation at this point for the shale plays which goes on to little regulation for gas prices. One of the reasons for this is that property rights are involved, people can choose if they want their land drilled. It is hard to regulate what people do on their own property, which is a good thing.

Super busy with work, the company I work for does alot of work all over the world... There is no "glut" so to speak. Nigeria, middle east, austrailia, Indonesia, Bolivia and Trinidad are just some of the worlds biggest providers. As for the US import/export deal... well you pretty much buy when its cheap and sell when its not. Just like the company we I work for, only we are stuck out at sea for months waiting for the market to change.

As for transport... we keep it in a natural boiloff state, which keeps it cold. Just like if you open the top of a butane lighter and let the latent heat out of the liquid as it flashes off and your left with a really cold empty lighter. Except we are dealing with a slightly larger scale. NG (methane) exapands at 600X liquid to gas, and burns at 15% in air. We have 4 tanks that hold 138,000 m3 liquid, always boiling at -160 celcius. Maximum pressure is only 250 millibar before there is damage to the tanks. We burn the boiloff in our massive boilers - essentially burning anywhere between 2000 to 4000 kg/hr. That all depends on many things like ambient temperatures (air and sea), atomospheric pressure and sea conditions (rolling of the ship - shake your lighter for a bigger flame), as well as operational stuff like loading (liquid only), discharging (gas or liquid). The steam is used drives a 90,000Hp turbine for propulsions as well as turbo generators and a bunch of other auxiliary equipment.

Its an interesting life, and the danger pay on these things is the only reason any of us work out here.

Interesting information. Petroleum engineer here and we never went over any LNG stuff to any extent.

It is crazy the price they are paying in Japan and parts of EU for NG!

I doubt we will see "low" prices of any type of gas for the near future (a decade). Developed countries other than the US still have lots of money to spend on energy and probably won't slow down too much for a considerable time to come. Developing countries still will want to provide it.

One would think that if the oil market was not perverted by speculators, the upper company echelon, and others in power management, the price of oil (gas) would have dropped some due to a quasi belief that Iran was not going to block the Persian Gulf and go to war with Israel. If the price of oil was not denominated in dollars, things would be different. To what degree though, I do not know. I do believe that NG will be the choice of fuel in the future.

Yes, speculators don't help anyone. That is a major problem with NG and all energy. It has turned into a trading game. You should be allowed to trade natural gas, as that is only fair to make decisions for the future. However, a trader shouldn't be allowed to trade natural gas for fun. In other words, IMO, you should only be allowed to trade the amount of NG that is in the market and that can physically taken off the market. This would end a lot of speculation with the longs and shorts.

Oil should be way cheaper than it is right now. Going to war with Iran would be absolutely insane.