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Page added on May 2, 2015
A Global Financial Forecast for Natural Gas
With an abundant supply of natural gas in North America—far more than we ever imagined thanks to natural gas shale resources—there are three distinct and important factors shaping our industry’s financial future today.
On a global level, as the U.S. gets set to export its first liquefied natural gas early next year1, how these large projects structure their prices could potentially be a game changer for natural gas and the broader energy industry. In North America, how the industry produces natural gas more economically and efficiently going forward will determine how effectively and to what extent it can carve out a global market share. And most importantly, as the clearly preferred fuel source compared with coal, how natural gas will continue to reduce our carbon footprint in industries such as the electricity sector (by up to 50 percent according to most counts) will impact climate change and global warming significantly.
Market Changes for LNG Exports
The LNG export industry will clearly connect North America to the global market, bringing several matters into play.
Europe welcomes our exports. They are in a tough situation with limited gas buy options in the region, leaving them much too dependent on natural gas supplies from Russia for their own good and increasingly reliant upon coal. Now it’s just a matter of what the cost will be for delivery of LNG from North America to the European market, but there is every indication that many view this as the more natural and viable option for North American LNG exports over the long run.
Stay tuned, however, because it’s a changing global landscape. Population numbers and recent strong economic growth, especially in China and other Asian countries, dictate an insatiable need for additional energy—particularly natural gas—to help it get the electric generation section off coal and supply more total energy to meet increasing demand. Due to the natural disaster in Fukushima 2½ years ago, Japan has decided not to use nuclear energy. Instead, it is looking increasingly at LNG as a solution for increasing its energy demand requirements, leading some LNG exporters in North America to target the Japanese market for LNG supply.
Producing More With Less
Secondly, here at home, increasing global competition with abundant natural gas around the world is putting pressure on the producing industry to “do more with less.” The industry must continue to strive for operational excellence, reducing costs of pipeline building and production in the field while doing everything possible to be the lowest-cost provider of natural gas and potentially LNG in the global market. This can happen through best practices and other enhancements that can deliver natural gas to customers at lower costs.
To use gas shale development as a poster child, productivity improvements in the field over the last few years have included substantially lowering the time it takes to drill wells, vastly increasing the numbers of wells drilled per year per rig and developing techniques to drill multiple wells with longer laterals from a single pad, all of which reduce costs and the environmental footprint.
Clean and Abundant Natural Gas
Thirdly—and the other two factors pale in comparison—the importance of natural gas in the climate change debate is by far the most significant element in this industry’s potential to make a difference in the global community going forward. Consider the fact that in 2012, for the first time in 20 years, the U.S. reduced carbon emissions over the course of the year; the key aspect of this monumental achievement was the increased role of abundant natural gas.
Natural gas is a practical alternative to coal, especially but not only in the electric generation sector. Compared with coal, which is one of the largest contributors to global warming, natural gas’ abundance and clean properties make it the right choice for informed leaders and end users. It is imperative that the global market starts to recognize and include natural gas in its policy decisions and plans for the future, both in developed nations and even more importantly in developing countries around the world.
This all suggests that this is a wonderful time for all sectors of the natural gas market—supply and demand, producers, gas utilities, end users and those in between—to become reacquainted with one another and, as the International Energy Agency recently suggested, for natural gas to emerge as the “first fuel.” It’s a time to bring a fresh perspective and open mind to the new natural gas market, which is very different today thanks to shale gas—and apt to be increasingly different as time goes on.
Thanks to an emerging global energy market structure that is being driven to a great extent by North America, abundant, clean and low-priced natural gas has enormous potential to serve as a key building block of domestic and foreign energy policy and to assure vibrant economies exist and develop in an increasingly cleaner global environment for future generations.
16 Comments on "A Global Financial Forecast for Natural Gas"
Davy on Sat, 2nd May 2015 9:27 am
Have at the two latest jokes of articles folks. It is spring and I am so busy I do not have the time today to give you the redundant Davy doom salad rant in response to the numb nut MSM distorted hopium spew. I will say this the economy is setting up globally to make a dent in the corn porn message of happiness and progress.
Until the reality of limits and diminishing returns are addressed we will continue to get denials with resulting distorted messages. The corn agenda will continue to use selective facts to broadcast a message. Legalized corruption will continue supporting the agenda of maintenance of the top of the ladder. Manipulation of markets, news, and legal system will continue to support the agenda. The latest addition to the mix is police militarization, surveillance, and renewed militarism globally.
A crisis is in the vicinity. It will revolve around liquid fuel shortages, food insecurity, and increasing social fabric tearing. The financial system manipulation in the form of corruption and repression of normal price discovery that supports the corn agenda of the top ladder will fracture. Confidence is the key to liquidity. Liquidity is the key to economic activity. Economic activity is the key to oil supply. It will be a snowball effect once confidence is shaken.
We currently have a repressed panic at all levels. It is kept repressed by a tight grip by industry and politics in the equivalent of a fascist control of societies understanding of current events. It is more than that it is the establishment itself that believes in this message. It is a message of BAU. BAU’s message is progress, growth, and innovation through technology and development. There is no other message at all level in society. This is what we have grown up with and this is all we know.
Society to a certain extent accepts the wealth transfer, cannibalization of the public for the private, and the corruption because this is part of that progress. The tops message contains these abuses just well enough to keep people believing justice is still present. Technology it is said will solve climate change and ecological destruction. The tops message of denial of ecological destruction and climate is gaining strength. People like the thought of something dangerous and bad being not true or at least discounted. The militarization of the police, surveillance, and foreign militarism is OK because everyone wants stability and security.
When a whole species is in denial or incapably of knowing the difference between reality and fantasy you have what we have today. It will only be in crisis that this meme of BAU will be destroyed. Then the new meme will be survival. Never before has modern humans pushed the envelope of sustainability and resilience as today. We are so far into bottleneck range as to be a walking time bomb of collapse. This is global with nowhere to go. The social understanding of this situation is zero. There is only the cognitive dissonance that something not right.
As long as the lights go on and the stores have goods people will buy into the message. The specialists, academics, and think tanks will preach dangers ahead but far ahead. They say there is plenty of time for technology, innovation, and development to solve these dangerous issues.
All I can say folks is this will end. It will end badly. It will be a strange experience for those of us here who discuss this daily because even we doomers really can’t fathom the extent of these changes. Imagination is not experience. I look around surreally at events and my world. I must live in BAU yet know BAU is a walking dead man. The strangeness of all this is beyond words.
The best way for me to deal with this is connect to nature. Nature is real. There is nothing but nature and nature allows nature. Man is part of nature but in denial of our total connection to nature without exceptionalism over nature. That denial will end once BAU is dead.
So much for telling you I will not rant today. OH, well, heading to the garden.
Bob Owens on Sat, 2nd May 2015 7:35 pm
I rarely make predictions but I am making an exception today. We will never be exporting LNG to anyone. The peak in gas has arrived and we don’t have 100 years of supply. Our low gas prices will not last. Financing for future drilling is over. Also note that 1/3 of the BTUs in gas is wasted when you liquify and re-gasify it. Not very efficient.
apneaman on Sat, 2nd May 2015 7:45 pm
Davy – don’t hate me because I’m beautiful
https://www.youtube.com/watch?v=hz8ul-gmLyA
Nony on Sat, 2nd May 2015 7:56 pm
Bob:
1. The Sabine Pass LNG facility is very far along in construction.
http://www.lngglobal.com/latest/sabine-pass-liquefaction-project-progress-report-for-march-2015.html
2. We already export LNG now (from Alaska).
apneaman on Sat, 2nd May 2015 9:04 pm
Nony, looks like they will really need those export plants up and running soon, since customers at home are falling off the map.
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Store Closings Index 2015 of Largest US Brick-and-Mortar Retail Chains
Gap, Coach, JCPenney, Kmart, All 2015 Store Closings Sorted by Company
http://retailindustry.about.com/od/USRetailStoreClosingInfoFAQs/fl/All-2015-Store-Closings-Stores-Closed-by-US-Retail-Industry-Chains_4.htm
Davy on Sat, 2nd May 2015 9:35 pm
Ape Man friendships
https://m.youtube.com/watch?v=SzH80RiDxzI
Nony on Sat, 2nd May 2015 9:51 pm
Apnea: Gas market is growing. After all consumption is up 50% in last 6 years or so.
Nony on Sat, 2nd May 2015 9:53 pm
Sorry, it’s up 20%. (Production is up a lot more.)
apneaman on Sat, 2nd May 2015 10:04 pm
How much is simply replacing coal? For electrical generation so we can run more server farms (Cloud, ha ha) to store more porn and cat videos for the ever growing unemployed basement dwellers. Free wifi in boomer mom&dad’s basement. I think there will be many shocked people after the funeral when they find out that inheritance they were expecting is gone cause the folks went for the reverse mortgage to keep up the consumption/appearances. Debt-consumption-waste, that’s what we have become Nony. It’s almost over buddy.
Nony on Sat, 2nd May 2015 10:34 pm
Big deal. So the new generation has to work. Good for them. Life goes on big guy. It seems like every new generation thinks they invented sex and every old generation thinks the world will go to hell after them. Guess what? Both wrong.
apneaman on Sat, 2nd May 2015 11:25 pm
What work is that Nony? People doing hard time have more job opportunities than citizens. Private prisons are one of the few growth investments left in the US. Pretty hard for a young guy to get a woman if he does not have income. This under 35 generations are more coddled and spoiled, but most of them will work if there were jobs. You phony indifference is tiring Nony. You don’t have to follow the numbers to see the changes. In my last two years in Atlanta, 08-09 I saw the numbers of intersection beggars jump big time. I have seen the same indicators here in Canada in the last couple of years. In fact, I never saw a cardboard sign holding intersection beggar in Canada until last year. Tent cities springing up under over passes and parkland too. Your excuses are infinite and so is your certainty. One last thing Nony, that reduction in site traffic to doomer sites your always on about is not because doomers became unconvinced, it’s because your many corny friends got tired of looking like fools trying to defend the indefensible. They use to make up a big portion of commenters. Your a real trooper Nony – last of a dieing breed.
Davy on Sun, 3rd May 2015 5:50 am
NOo, your idea of a manifest destiny of our human exceptionalism with progress from technology and complexity is no sure thing. There are no laws that guarantee increasing species complexity in nature. On the contraire species tend to rise and fall with the greater ecosystem. We too are bound to a greater ecosystem we are destroying.
Within our little human hive we are destroying the stability and resilience of our complexity. Our systematic arrangements have developed a foundational non-renewable resources oil as our primary support. Other resources that support and are vital to oil production and consumption are non-renewable. Most if not all of these resources have been heavily exploited and the quantity quality is in decline. The waist stream from the production of these resources have created further damage and costs.
The other foundation of our human hive is the financial system that allows liquidity from a global arrangement of confidence. This confidence has allowed comparative advantage and economies of scale in hyper energy intensive and resource efficient just-in-time production. Distribution of these numerous vital products along with distribution of vast monocultures of bulk food and manufactured food products has allow local to be de localized. It has allowed delocalized locals to spread across the globe in all matter of locations many unsustainable and without normal resilience ex fossil fuels
A significant amount of these locales are unsupportable without this modern global arrangement. This is true per consumption dependence on the global allowing huge population densities that otherwise would not be possible. This is true per locals that are in climatically inhospitable areas per water, food, and or energy. This combination of population density abilities and broad based geographic habitation abilities has allow the population to treble if not quadruple the population per a sustainable population ex fossil fuels. Now even this sustainable population pre fossil fuels is in doubt because of global ecosystem destruction, climate instability, and dispersed man made poisons.
We are likely in a position of a quarter a pre fossil fuel population sustainability in what was a historically optimal climate for agriculture. We currently in the vicinity of our foundational commodity oil in decline with quantity quality. This convects into a global human system that is ever more complex and energy intensive. The lower quantity quality of oil is cooling growth creating turbulence because of affordability issues. Small affordability issues have a huge impact on growth at this level. Entropic decay is showing up everywhere as population grows, ecosystems decline, and resources deplete.
The all-important financial system that supports our global network supporting all our delocalized locals is under pressure. Its ability to grow has hit broad based limits and diminishing returns. We have used the last tools possible in our system to grow and that is debt. The human system is now a zero sum gain since the global foot print is mining not creating complexity. This debt is now nothing more than extending and pretending that the global human system and natural ecosystem has increasing physical wealth available to the human system. The reality is population is steadily growing as real physical wealth is declining.
The remaining tools for our financial system are being employed now and they are wealth transfer and cannibalization of public wealth for private gain. This includes the destruction of the global commons by over exploitation for a few. These commons contain many of the remaining vital resources to support a growing population.
We have a stealth descent in progress with quantity quality oil and a hypothermic financial system shrinking to support the core. This descent will introduce those aspect of natural chaos into the human system. We will start seeing increasingly dysfunctional networks, irrational control policies, irrational economic abandonment, and social fabric destruction. IOW systematic entropic decay.
NOo, that was a doom salad rant slap. Get a grip son, your world view of basic progress has no basis of divine manifest destiny. On the contraire it is showing every indication of normal systematic bifurcation to a new and lower level of consumption and population level.
What is more disturbing is fossil fuels allowed an extended threshold of normal systematic change. IOW we are in a state of extended disequilibrium where a small forcing can cause a huge response. This will not be granddaddies depression this will be a historic bottleneck that will rebalance population and consumption and very well could be the end of the Anthropocene if not our human species.
Nony on Sun, 3rd May 2015 7:35 am
The world will go on and the next generation will do fine. Even if there is a bunch of banking failures or Social Security goes bust. That just affects people with cash. The new working generation will do fine.
You people get so wrapped into your doom that you don’t realize life goes on. You will all be dead some day and me too. And the next generation will just move on. Deal with it.
Davy on Sun, 3rd May 2015 7:54 am
Life may or may not go on but who says it has to go on the NOo way? You are just a cocky wonder boy that “is way too certain and emphatic based on limited data/understanding.” Dealt with
Nony on Sun, 3rd May 2015 8:47 pm
“Citing different reference cases, Sieminski [head of the EIA] said the nation will likely become a net exporter of natural gas by 2017, both in the form of liquefied natural gas and pipeline exports to Mexico.”
http://peakoil.com/consumption/a-global-financial-forecast-for-natural-gas
Nony on Sun, 3rd May 2015 8:48 pm
link correction:
http://missoulian.com/news/local/u-s-to-become-net-exporter-of-energy-experts-tell/article_b78cde14-ea08-50cd-9ad6-ff146331c2c1.html