Wednesday, November 28, 2012

Natural Gas Price Tanks/ Glut, Glut, and more Glut(UPDATED)

 Updated(Sept 15th/2012).....This article I wrote early April, funny eh, all those economists and their wisdom, and after you read the story, check out what was written at the bottom of this post, it appears not even one member of the media clued in...?????

Natural gas prices have fallen to 10 year lows, the current price is a staggering low...

$2.02......At those prices BC makes zero dollars, all that water, the toxins, destroying pure clean drinking water, and for what? for provincial losses..

Bad news for the BC Government, production is ramping down throughout North America as storage facilities are near capacity..

Natural Gas Surplus Threatens to Slow Drilling Boom

 So much natural gas is being produced that soon there may be nowhere left to put the country's swelling surplus. After years of explosive growth, natural gas producers are retrenching.

The underground salt caverns, depleted oil fields and aquifers that store natural gas are rapidly filling up after a balmy winter depressed demand for home heating.
The glut has benefited businesses and homeowners that use natural gas. But with natural gas prices at a 10-year low — and falling — companies that produce the fuel are becoming victims of their drilling successes. Their stock prices are falling in anticipation of declining profits and scaled-back growth plans. 

We have a world wide glut, storage facilities are maxed out, not just in North America but globally, Russia is ramping up production, Qatar,, Australia, America, at the same time everyone is feverishly ramping up for speculative Asian demand China`s appetite and demand for resources has been falling, the Asian market is cold, Asian exports of finished products have more than flat-lined, their tumbling, ...

The BC Provincial pipe-dream of .."The Shy`s the limit" in pricing to supply Asia, that premise is false, when has China ever been trapped by corporate elites, China not only has the largest proven reserves of natural gas in the world..( enough to supply their domestic needs for 200 years) ...

China is not only buying complete operations they are recruiting the best drillers and technical frackers for development of domestic supplies, how long will it take before China has the world by the balls on natural gas pricing, they will not be held hostage by western corporations, the dream of $14 to $20 dollars for natural gas is fantasy, fantasy that the BC Taxpayer will ultimately pay for..

BC`s proposed LNG terminals require vast amounts of cheap electricity, electric power that has to be subsidized by ratepayers, but with China calling the shots the BC public will be forced into royalty relief and power subsidies, in other words another phony crony capitalism ponzi scheme..

And it`s not just natural gas reserves, it`s coal, China has enormous coal reserves, these coal reserves too can be turned into natural gas..

Coal may be the most loathed energy source among sustainability advocates, but it isn't going anywhere, especially now that governments are investing billions in carbon capture and sequestration projects for coal plants. Any country with significant coal reserves and a government that pays little attention to safety and environmental hazards stands to profit handsomely. Enter China.
In the grand scheme of things, China doesn't have much coal--the country gobbles up 47% of all coal produced globally but has only 14% of the world's reserves. According to some estimates, China has enough domestic supply for 30 years of consumption at 3.6 billion ton per years (the level at which it plans to cap production).
But Fred Palmer, chairman of the World Coal Association and an executive at Peabody Energy, the largest privately owned coal company in the world, thinks that China will be a major player in coal production. In an interview with the U.K. Guardian, he elaborates:
There's obviously not unlimited metallurgical coal and there's not unlimited high-quality thermal coal, but when you get to the lower ranked coal such as lignite you just [need to] put gas fires on them. You can either generate electricity there, or turn it into pipeline quality natural gas or liquid fuel. The Dakotas, Mississippi, Alabama, Louisiana, Texas all have large, large amounts of lignite. Or in western China and Mongolia you have lower-ranked coals...I think Xinjiang province in the west of China where they say there's a trillion tonnes of resources will be the new Middle East.
 China Trying to Harness 2 Trillion Tons of Coal Reserves for Global Energy Dominance | Fast Company


Although he's hardly alone in that, there are also less bullish voices. Royal Dutch Shell has found shale gas in China, prompting fears that the country could develop enough domestic supply to limit imports of liquefied natural gas.
Another thing to keep in mind is that LNG imports are twice as expensive as domestically produced gas, and the domestic price is capped. That sort of rigs the market in favor of cheaper domestic producers. So how realistic are those fears of the Australians?

 Is China Entering A Shale Gas Boom? - Seeking Alpha

I wrote this article several months ago....I reiterated these exact concerns

China has no regulatory hurdles domestically, human rights, the environment, look at who produces near everything worldwide, housewares, food products, electronics, company after company has lost to China, we can`t compete because of wages alone let alone environment and regulation, China is building many nuclear plants, a coal-fired electrical plant is being built every month, how long before China has a roaring domestic natural gas industry...

British Columbia Government, Christy Clark talks about nothing but China, well, when are we going to wake up, China is playing all sides against the middle, let everyone build LNG plants, let everyone subsidize electrical power for these plants, crony capitalism on steroids...And then China will dictate the price, countries one by one will blink and LNG will be just another corporate welfare industry...

And perhaps Terasan gas or the BC Government can explain recent natural gas price increases when prices have fallen dramatically, by 50% over the last two years alone..

It`s time for Canada to think about a domestic economy, the race to the bottom, Aveos, Caterpillar, imported cheap labour while Canadians drown in debt, wages are flat for 3 decades, prices are up a 1000 % over that time or more....

I don`t have all the answers but one thing I know for sure..

Corporations don`t care about anything but the bottom line$$$..

Christy Clark is off to Asia again in 2 weeks, perhaps it`s time she visited some of the hundreds of BC food banks.. 

 UPDATED HERE_________________

Natural Gas Prices Crack $2, Head for New Lows

Natural gas futures broke the psychologically significant $2 level for the first time since January 2002, and lower prices are coming.

“I think we just keep grinding lower,” said Addison Armstrong of Tradition Energy. Natural gas settled at $1.984 on the Nymex, and traded even lower in electronic trading. 

Traders expect to see another build in storage in the weekly Energy Information Administration report, released at 10:30 a.m. Thursday. John Kilduff of Again Capital said he expects to see an injection of 28 billion cubic feet into storage last week. 

“The monthly EIA report yesterday just pointed to more production coming on line, a record amount,” he said. 


Maybe some inquisitive reporter might want to ask what this means for Provincial coffers. And maybe ask why rates haven`t been lowered for BC`s domestic market...You know..

"Families First"....Or is that corporate families first....


The Straight Goods

Cheers Eyes Wide Open


Bill said...

Hi Grant and thanks for all the recent posts. You are really on a roll.

Connecting the dots can't get much simpler. The only thing complicating the truths - political, economic and environmental is a complicite at best, totally bought off and corrupt at worst MSM. The lies and liers need to be exposed and your work along with other bloggers is getting out the truth to a growing number of citizens. The tide will turn.

Christopher said...

Greed driven economy , corporate stooges for politicians . The whole fucking thing is a shit storm and Canada is a rudderless ship with morons at the helm . We really need to look out for our national future interests before we concern about foreign corporate profits . Mow your own damn lawn before we complain about the neighbour . The older I get the more interested in politics I become ,the more interested in politics I become the more frustrated I become....Cheers always enjoy your blog.

Anonymous said...

Canadian company's were only too happy to move their industries over to China. They wanted to exploit the cheap Chinese labor, and the even more cheap child laborers, who only earn pennies a day.

Harper promised China, he would protect their company's in Canada. China is to protect Canadian company's in China. Seems those company's in China, are having a problem of being ripped off, by Chinese corruption. I have no sympathy for them, they are getting what they deserve, for turning their backs on Canadian workers.

Perhaps Christy's LNG tanks in Kitimat, will sit unused...Since China has their own vast gas fields. Harper in his stupidity, has permitted China, to take over most of the tar sands. Campbell had already given BC to China..our mills, raw logs and BC mines.

Not only does China own the resources, they also own the jobs.

Harper and Campbell should be tried for High Treason, for what they have done to our province, and our country. Their disgusting greed, is killing this country.

Hugh said...

Natural gas is now below $2.00:

Mid C electricity spot price (US)is at $14.74/MWh.

So why is BC Hydro paying $100+/MWh for power from new IPPs?

BC residents buy electricity from BC Hydro for $66 to $96/MWh.

The BC industrial rate is ~$45/MWh?

BC Hydro buys high and sells low.