European Carbon Trading Hits Another Record Low

For P. Walker, on the cost of nat gas: I believe you are right about Boone Pickens, in that he drilled so many dry gas wells. Still, he has to keep them producing in order to earn what he can from them. Remember that the ongoing cost of production is quite low once a well is drilled; the great majority of the expense of a project is front loaded, and once that money is spent, it’s spent.
There is another factor going on with the shale drillers right now that is driving gas prices lower, and that is that they are now drilling in areas that either have a lot of oil or a lot of “wet” gas, which is nat gas containing a high proportion of long chain hydrocarbons which condense into a very rich petroleum liquid which is more valuable than straight crude. (it’s already partially refined)
If you can produce 100 bbls of condensate a day, which is decent but not phenomenal for a shale well, at today’s prices you will be bringing in nearly $10,000 per day in condensate sales alone. Keep it up for just one year and that’s income of $3.65 million, and it doesn’t matter what price you sell the gas you produce at, since any money you get from the gas is just gravy. Given that the average shale gas well costs $4 – $5 million to drill today, one that produces a lot of condensate and/or oil with the gas can still hit payout in a couple of years, no matter what price you sell your gas at.
Drillers following this model are those who continue to drive the price of nat gas down, and I don’t see anything that will change this situation until demand for nat gas starts to pick up dramatically. That will probably only happen if the US authorizes nat gas exports, which isn’t decided yet.

I used to be in the LNG business as a cryogenic cargo (LNG) engineer on a 125,000 cubic meter LNG tanker. There is much more LNG around than most people realize. It’s used mostly for peak shaving in gas distribution systems. However, there is lots of experience/technology in handling the stuff.
Natural gas is a pretty good fuel for internal combustion engines. It has a really high auto-ignition temperature, so you can use it in very high compression engines, both Otto and Diesel cycle. It’s clean, except for the NOx created in a high compression (more efficient) engine. Of course, the specific gravity is only about 0.48, and the fuel is mostly hydrogen, so the miles-per-gallon would be much lower than diesel or gasoline. And, you have to keep it at -162 C at STP to keep it liquid.
As I recall, it takes some 30% of the energy in the gas to complete the process (liquification/transport/regasification). Still, if the gas field is “stranded” there is no other use for it.
My guess is that for automotive fuel, it will have limited use. Perhaps for urban automotive/truck fleets where CNG is not attractive for some reason. Or remote gas processing plants.
Regards,
Steamboat Jack
(Jon Jewett’s evil twin)