Re: Research Topics

[K Davies <kdavies@igc.org>]

FMurrl@aol.com wrote:

<snip>
> 8f.1ac110ce.29f41322@aol.com">
>   
> Coal is widely available delivered to power plants in the US at prices less
> than $1.30/MMBtu, while gas comes in now at just over US$3.00/MMBtu with
> some additional cost for delivery. 12 months ago or so, gas was at $10/MMBtu.
> Four months ago, $2/MMBtu. 
>   
>  Natural gas can't be easily used in an existing coal-fired plant, so just
> switching to gas is not an answer in itself, even if you assumed that enough
> gas was available to fire coal-fired units -- a bad assumption, in the US,
> at least. 
  
Right, plentiful natural gas is a bad assumption.  There's increasing evidence
that North American gas production is about to "cliff."  This will be very
bad for the overall economy, but good for the coal and biomass industries.
 
  
See the story below from Oil & Gas Journal.  See also Jean Laherrere's
Figure 17 (page 18) at http://www.oilcrisis.com/laherrere/opec2001.pdf for
a graph of the "cliff" and the subsequent decline, which, according to Laherrere,
will be at about 12% per year.
  
**********
  
US natural gas production decline accelerating, analyst contends
  
By OGJ editors HOUSTON, Apr. 3 -- US natural gas production is on the decline,
and the decline is accelerating rapidly, according to preliminary results
of a Raymond James & Associates Inc. first quarter survey of 30 of the
largest US natural gas producers.
  
On a year-over-year basis, US gas production is projected to be down by 2.9%
in the first quarter of 2002, said Wayne Andrews, RJA analyst. The producers
surveyed represent 45% of US gas production.
  
"First quarter US natural gas production declined by 1.8% from the fourth
quarter of 2001. This is significantly higher than the 1.3% sequential decline
from the third to fourth quarter in 2001," Andrews said.
  
Supply is declining much faster than most analysts expected, Andrews said.
US gas production trends generally lag the rig count by 3-6 months, but last
year, US gas production began showing declines before drilling activity peaked
in July.
  
Producers were drilling wells that they could bring on production quickly
at high flow rates. With activity on these types of prospects now halted,
production from high-flow-projects likely will be down by 30-40% this year,
he projected.
  
"As a result, sequential production declines should continue to gain momentum
as the year progresses, and we continue to believe that US natural gas production
could be down by as much as 5-6% this summer on a year-over-year basis,"
Andrews said.
  
RJA has increased its 2002 Henry Hub natural gas price forecast from $3.25/MMbtu
to $3.45/MMbtu. The analyst raised its second quarter gas price forecast
from $2.80/MMbtu to $3.50/MMbtu and its third quarter gas price forecast
from $3.65/MMbtu to $3.75/MMbtu. 
  
Find this article at:
http://ogj.pennnet.com/articles/web_article_display.cfm?ARTICLE_CATEGORY=TOPST&ARTICLE_ID=140117
-- 
Karl Davies
42n20,72w39