North America May See Natural Gas Prices Follow Global Ones – A Frightening Taste of The Agony Developing Countries Are Facing

From BOE REPORT 

Terry Etam

On a back table in my office is a small pile of colour-coded maps that I don’t talk about much because they make me look like a madman. They are maps of Pennsylvania, documenting a semi-pathological and dogged fascination with US shale gas production.

One pile shows all of Pennsylvania’s counties; the counties are colour-coded by either the number of producing gas wells or the cumulative gas produced since the start of the Appalachia shale revolution. The second, deeper level shows the townships within the counties, coded similarly.

Prior to this obsession, all I knew about Pennsylvania was that it was home to the Steelers and Penguins and Fallingwater and Trent Reznor, and that the place can’t be all that pastoral if Nine Inch Nails is a product.

These days, I know enough PA trivia to annoy any normal person a great deal. I know that Springville Township in Susquehanna County is 31 square miles and has produced 1.3 trillion cubic feet of natural gas. I also know that Colley Township in Sullivan County is 5 miles ESE of Springville, is 59 square miles, and has produced one-thirteenth that amount of natural gas.

I also know that Rush Township in Susquehanna County is about 3 miles NE of Springviille, is 39 square miles, and has produced 30 percent of the gas Springville has, despite being just a hoot an’ a holler away.

I know that 15 miles north of Springville Township in Silver Lake Township, Susquehanna County, there has been virtually zero natural gas production, and that a literal zero has been produced 15 miles south in Davidson Township, Sullivan County.

Three of Pennsylvania’s 67 counties account for 83 of the top 100 well pads.

The point of all these statistics isn’t just to annoy, although there is that. The point is that the Appalachia natural gas juggernaut is huge, but that it has incredible sweet spots, and those sweet spots are not massive. 

Consider that Susquehanna County is kind of the mothership of Appalachia production, having produced 13 TCF of gas. More than half of that gas has come from seven townships in the SW of the County. These seven townships cover an area of 240 square miles – roughly 24 miles by ten miles.

Still awake? Hope so, because here’s the interesting part: modern horizontal shale wells are often three miles long laterally.  How long does it take to chew up 240 square miles with 3 mile-lateral wells? Not very long, and these prolific areas have seen active drilling for a decade. On top of that, at current production rates, Appalachia produces 13 TCF per year. In other words, that potent sweet spot’s entire historical output needs to be replaced, every year. And there are few sweet spots.

Technically savvy people will point out correctly that the Marcellus formation still has a lot of gas outside these sweet spots, and that is true, and it is also true that the marginal areas become economic at $7+ gas. 

But barely. Furthermore, the Appalachia field cranks out about 36 bcf/d. It takes quite a few great wells to keep that production flat, and a huge amount of crappy ones.

Sweet spots are becoming exhausted, and a significant amount of drilling activity is now taking place in some pretty marginal areas (like, even, South Buffalo Township in Armstrong County – can you imagine? What are they thinking? What on earth is wrong with these people?) Initial production rates for these marginal areas are a small fraction of the prolific areas – and that is with modern, long-reach wells, each developing miles of reservoir.

Shale IR presentations of the big players speak of thousands of locations, yet when they are brave enough to show a map of said locations, the image is one of a well on every square foot of their owned land. It looks silly. They aren’t wrong necessarily, but an important parameter is missing: Some of those locations will be drilled at $3 gas, some at $5, and some will have to wait for $10+ gas. And they won’t add a lot to the production total.

That production total is massively important. Consider that the lower 48 US states produce about 95 bcf/d. Three fields – Appalachia, Permian, and Haynesville – account for 70 of those bcf’s, or 74 percent of lower 48 production (in case you’re wondering about the other two states, Alaska produces significant natural gas but re-injects most of it; Hawaii’s gaseous production consists of volcanic belches that would take some corralling to get into a pipeline).

Long reach horizontal wells often have significant decline rates, often exceeding 50 percent in the first year. But let’s assume that overall shale gas decline rates are 20 percent. That means that these three fields have to come up with 14 bcf/d of new production each year.

That is the equivalent of almost all of Canada’s entire production, that needs to be added every year. Or, put another way, a new Haynesville-sized field needs to be added every year. 

Up until a year or so ago, North American producers reacted to price cycles as they should – prices go up, cash flow goes up, and producers drill more until the market finds equilibrium again. Prolific shale plays made that easy, in fact so easy that the market was flooded for a prolonged period.

This was an unusually sustained period of overproduction, for a number of reasons: improving productivity, longer laterals, plentiful capital, cheap debt, and management incentive structures built around production growth.

But recently most of those pillars have been wiped out. Productivity is not growing as it once was, and may be falling as sweet spots are exhausted. Debt and equity markets are not helpful, and the investment community is in the exact opposite mind-frame of injecting capital – they want capital to be coming out of producers. They want shareholder returns – more dividends, share buybacks, paying down of debt.

There is also a massive, dominant black cloud over the industry – the relentless hostility of policy makers and hydrocarbon opponents that see a moral imperative in damaging the supply base. Their efforts are working. There is a huge sense of exhaustion in the industry; everything is harder than it used to be, there are not enough workers, and public animosity takes a toll. That animosity is being indoctrinated into children, the elderly, and everyone in between that pays more attention to the news flow than energy reality.

US and Canadian shale plays have performed a North American miracle – we enjoy the benefits of natural gas at a price that is a fraction of what the rest of the world pays.  North America has been, up until recently and to a certain extent still, an isolated natural gas market. Massive production growth over the past decade has had nowhere to go, and has ballooned the continent and kept prices down.

That appears to be changing with the advent of massive US LNG export capabilities and growing exports to Mexico. These developments have allowed any surplus to exit the continent. But the North American gas market has still seen prices far lower than world averages, with the expectation hanging on relentlessly that huge numbers of rigs will return as soon as prices rise enough.

That’s not happening. US gas prices have hit levels not seen since 2008, and for a whole bunch of reasons as outlined above, production is not rising to the occasion. The market keeps adding fuel to the fire, but nothing.

Things took an ominous turn the other day, or at least speculation thereof. A report from a respected US investment firm speculated that never before has natural gas production been concentrated in so few fields, and that production growth in these fields is about to slow dramatically. They point to similar peaks and plateaus in the Barnett and Fayetteville Texas shale formations.

Regardless of whether the mighty Appalachia field is peaking geologically, we know it is peaking physically, due to the inability to build more pipe to get gas out of the region. The last big project on the books, the Mountain Valley Pipeline, is almost complete, yet activists have managed to halt completion for several years. Cost estimates have doubled, and there is serious doubt that the project will ever be completed at all. 

Activists even killed off a project to liquefy LNG and ship it by truck from Pennsylvania to New England. While all these export projects slow or die, the beat goes on, and the sweet spots get more and more drilled.

There is therefore a very real possibility that US gas prices could link to global ones, and you don’t even want to think about what that might mean. US and Canadian gas prices are now in the $7-8 USD/mmbtu range. Global gas prices are 4 times that, with LNG bidding wars happening on a global basis.

If you think things are tough now, they will be unimaginable if North American gas prices get to even half of global levels. At $15/mmbtu or GJ, businesses start to close. Heating costs become paralyzing. These fuel costs aren’t “optional” in the sense that if gasoline prices get too high, we don’t take a 6-hour road trip.

Consider the comment in the BOE Report the other day from the head of the Western Equipment Dealers Association trade group, stating that “last winter’s heating bills were unsustainable.” Yikes, who’s gonna tell him. Last winter Henry Hub prices averaged $4.56 US/mmbtu. Forward prices for next winter are $7.83. The cost squeeze is going to be unbearable for many businesses.

With natural gas, whether for industrial or residential purposes, scaling back has serious consequences, either in industrial output or in the temperature of your home.

Global fuel shortages don’t always show up explicitly in lines at gas stations. They can show up quietly and more deadly in the form of shuttered businesses, unliveable utility bills, and soaring inflation for anything that relies on natural gas as an input. The potential problems are jaw-dropping in North America, and simply unthinkable in the developing world.

The divest fossil fuels campaign is bearing ghastly fruit. There will be nowhere to hide.

Hang in there Ukrainians! Find out how the world got into such a calamitous energy state, and how to get out – pick up  “The End of Fossil Fuel Insanity” at Amazon.caIndigo.ca, or Amazon.com. Thanks for the support.

Read more insightful analysis from Terry Etam here, or email Terry here. PS: Dear email correspondents, the email flow is welcome, but am having trouble keeping up. Apologies if comments/questions go unanswered; they are not ignored.

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Tom Halla
May 19, 2022 6:10 am

Dealing with the foul legacy of Andrew Cuomo, and doing gas drilling and fracking in New York (and reopening Indian Point!) would help in the Northeast energy situation. Why the crazed green granny killer is not fully disowned is beyond my understanding.

BobM
Reply to  Tom Halla
May 19, 2022 10:22 am

He is also the single most responsible person for the sub-prime mortgage crisis, having forced Fannie Mae and Freddie Mac, during his time as head of HUD, to ensure that up to 55% of the mortgages they purchased were sub-prime (“garbage mortgages”) where the purchasers didn’t have the income to afford them. Balloon mortgages were the vehicle to shoe-horn such owners into houses they couldn’t afford, with negative amortizations in some cases, hoping for lower interest rates in 3 or 5 years. When that didn’t happen, mortgage delinquency doubled, and the housing market crashed. Cuomo should have served time, let alone go on to be NY’s Attorney General and then Governor. Shows how bad his judgment was, and it certainly didn’t change one bit when he went on to become a climate warrior, too.

Old Man Winter
Reply to  BobM
May 19, 2022 2:53 pm

The ’97 change from a once-in-a-lifetime capital gains exemption from $125k to $250k (per
person) every 2 yrs was the “extra” gas that guaranteed the sub-prime market would form a
bubble. (Bubbles are caused by simultaneous fear & greed- people being afraid they’ll miss
out on a chance to be greedy.)

Streetcred
Reply to  Old Man Winter
May 19, 2022 3:43 pm

… shows how incredibly gullible NY voters are.

Paul Johnson
Reply to  Tom Halla
May 19, 2022 9:23 pm

It’s actually quite simple. Development of the Marcellus Shale in New York has been stymied because it would bring jobs and prosperity to largely Republican areas of Central and Western New York, i.e., the “wrong” people.

Editor
May 19, 2022 6:13 am

Near the end, the post reads, “There is therefore a very real possibility that US gas prices could link to global ones, and you don’t even want to think about what that might mean. US and Canadian gas prices are now in the $7-8 USD/mmbtu range. Global gas prices are 4 times that, with LNG bidding wars happening on a global basis.”

And that would help to make renewables more economical for believers who can afford them. But the little people will be bankrupted just trying to stay warm.

Regards,
Bob

jeffery p
Reply to  Bob Tisdale
May 19, 2022 7:07 am

Bob,

The model is to make energy unaffordable then subsidize it. This is a feature (by design). The poor will become more dependent upon the government and will vote for more government for fear of not being able to keep the lights on. Nobody is supposed to notice that the government created the problem in the first place.

Old Man Winter
Reply to  jeffery p
May 19, 2022 12:36 pm

Klaus Schwab said it best:

KSchwab.jpg
StephenP
Reply to  Old Man Winter
May 20, 2022 2:10 am
Streetcred
Reply to  jeffery p
May 19, 2022 3:49 pm

… and on top of that we read now that the Biden administration has acknowledged that a mathematical error is delaying the federal offshore oil and gas program.

NOAA has acknowledged the National Marine Fisheries Service (NMFS) — the subagency tasked with analysing the impact of offshore drilling projects on wildlife — has used faulty modelling on such impacts and, as a result, overestimated wildlife effects, delaying permitting on existing leases.

Biden Admin Quietly Admits Math Error Is Causing Massive Oil, Gas Permitting Delays | The Daily Caller

Gary Pearse
Reply to  Bob Tisdale
May 19, 2022 8:38 am

In Canada, we are also facing an increasing “global warming” tax on NG and gasoline/diesel. We’ll be paying more than in Europe by the time the “plan” is fully realized in concert with the gov crippling of the O, G and pipeline industry. Add to that the Canadian cold winters and I’ll be searching for another country to live in. Actually, people with money are exiting the country because of the stated “make the rich pay more” policy.

Gary Pearse
Reply to  Gary Pearse
May 19, 2022 8:43 am

If hapless Republicans (large RINO set) can’t prevent another stealing of the election, then look to Canada as model of what is in store for the US.

AndyHce
Reply to  Gary Pearse
May 19, 2022 11:43 am

Aren’t they (large RINO set) helping the steal? Isn’t that why they they have been put in place?

Retired_Engineer_Jim
Reply to  Gary Pearse
May 19, 2022 12:49 pm

It won’t be stolen, Bob. The Republican Party, Federal and State, si doing it’s bst to give away the election. And it isn’t the RINOs that are upsetting the MSM.

Old Man Winter
Reply to  Retired_Engineer_Jim
May 19, 2022 1:41 pm

Food for thought:

When we were young kids, older kids could “yank our chains” cuz we didn’t
know all that they had in their “bag of dirty tricks”. We weren’t prepared
for the unexpected. Likewise, they may not need to steal an election if
there isn’t one to steal! 😮

Last edited 1 month ago by Old Man Winter
rhs
Reply to  Bob Tisdale
May 19, 2022 11:30 am

To a point I agree. However, renewables don’t power the factories which build them. At some point, their costs have go up as well to cover the higher manufacturing costs which originate from higher electricity costs.

Simonsays
Reply to  Bob Tisdale
May 19, 2022 2:13 pm

As Lenin said to the “the worse, the better”. If you want a revolution you make the people lives miserable. We seem to be well on our way.

TonyG
Reply to  Simonsays
May 20, 2022 7:52 am

“If you want a revolution you make the people lives miserable.”

Couple of guys named Cloward and Piven had some ideas about that.

jeffery p
May 19, 2022 6:14 am

We’ve had over a century of imminent peak oil. Now we’re on the cusp of peak gas and this time, it’s different. The only thing that will save us is green power.

Yeah, right.

Scissor
Reply to  jeffery p
May 19, 2022 6:22 am

Long coal.

jeffery p
Reply to  Scissor
May 19, 2022 7:02 am

Oh, we have lots of resources. Coal, gas, oil, etc.

We can burn coal pretty cleanly. I’m not sure we can mine it cleanly and economically, though.

MarkW
Reply to  jeffery p
May 19, 2022 9:12 am

We’ve been mining it cleanly and economically for decades.

Oldseadog
Reply to  jeffery p
May 19, 2022 9:22 am

We don’t have to mine it, we can turn it into usable gas in the coal seam undeground.

AndyHce
Reply to  Oldseadog
May 19, 2022 11:45 am

At considerably higher cost and considerably lower net production of energy?

vboring
May 19, 2022 6:28 am

There’s no need to speculate about potential impacts. The US has been through high gas prices before.

It became a violation of Federal Law to build gas-fired power plants, and excessive regulations for nuclear plants made them effectively illegal. This is why the US built the last big wave of coal plants in the 1970s.

Like it or love it, coal is the only proven technology available today – if you take gas and nuclear off the table, and if you insist on 24/365 reliability.

jeffery p
Reply to  vboring
May 19, 2022 7:01 am

There you go again with your logic. Logic, reason, facts. Blah, blah, blah.

/sarc

James F. Evans
May 19, 2022 7:00 am

Any limit at present is not physical, but political.

Natural gas is like coal in the United States:

We just have to go get it.

Drill baby, drill.

jeffery p
Reply to  James F. Evans
May 19, 2022 8:21 am

This dramatic price increase is necessary to force the green agenda upon us. Few thinking people want to replace reliable, inexpensive electricity from natural gas with expensive, unreliable green energy. But when conventional energy is prohibitively expensive green power looks better.

Market distortions are by design. Bureaucrats and regulators create artificial barriers to make conventional energy prohibitively expensive while subsidizing green power to make it appear affordable.

None of us mooks are supposed to notice the chicanery involved. Certainly, the manipulations will be ignored by the media.

Dean
Reply to  James F. Evans
May 19, 2022 6:45 pm

The limit is always economic. Have a look at any commodity’s cost curve and see. That is effectively what the whole article is about.

ResourceGuy
May 19, 2022 7:03 am

Yes, now that the utility company hedges are running out.

It doesn't add up...
May 19, 2022 7:08 am

Got to keep production capacity plus redelivery from storage above demand including from LNG liquefaction to avoid the linkage to global prices. Local prices will then be set by marginal production costs. No escaping those, though clearly permitting new areas may help avoid dependence on high cost areas.

jeffery p
May 19, 2022 7:13 am

Has anyone ever noticed that the greens

  1. believe in some magical, undiscovered technology that will appear out of the blue and solve all the unsolvable problems associated with green energy
  2. but they don’t believe technology to produce conventional energy will ever advance?
May 19, 2022 7:13 am

“… kept prices down.
That appears to be changing with the advent of massive US LNG export capabilities and growing exports to Mexico.”
Yes, of course. The people who own the gas sell to the highest bidder. If they can export, they will sell at world prices. And if US consumers want gas, they have to compete with that, and so pay world prices.

It happened to us in Australia.

Quelgeek
Reply to  Nick Stokes
May 19, 2022 7:42 am

You can’t make the water stay at one end of the bath.

Frank from NoVA
Reply to  Nick Stokes
May 19, 2022 8:01 am

And world prices are always set at the marginal cost of world production. Which is why it’s important to have domestic and foreign policies that don’t arbitrarily curtail production.

It doesn't add up...
Reply to  Nick Stokes
May 19, 2022 10:37 am

Thing is NW Shelf LNG is already on a ship with a voyage to get to Sydney or Melbourne. Not the same as landlocked production, where the first thing is to build a pipeline to demand, and only if you have a large production surplus do you consider building an LNG export plant.

Dean
Reply to  Nick Stokes
May 19, 2022 6:56 pm

Just need to be possible to export to force domestic prices up.

Bob boder
May 19, 2022 7:24 am

Ok, I am sure the article is excellent, however to not mention the Eagles is criminal and you are now dead to me.

TonyL
Reply to  Bob boder
May 19, 2022 9:23 am

Ah yes, The Beagles. At first I thought, that really bad “Soft Rock” or “Chick Rock” music group from the 1970s. They were awful. I realized that the music group had no connection to PA so it likely was a spots team. Sure enough.
About Spots, and Pro Spots in particular:
All Spots can be classified as “Swingy Stick” or “Bouncy Ball”. The Pro Spot that the Beagles play could be described as “Kicky Ball” as well. At first I thought that “Eagles” might be a good name, as it makes them eligible to be fed into those giant windmill things they have these days.
But what are Pro Spots?? Simply put, it is grown adults working hard to master a children’s game.
But Beagles is actually a better name.
A note on Beagles:
They are a wonderful breed. They are especially good around children, without an aggressive bone in their bodies. But they are *dumb*. How one of God’s creatures can be so dumb and still remember to stay alive is a mystery. But they are here.
So Beagle sums up Kicky Ball teams nicely.

BobM
Reply to  Bob boder
May 19, 2022 10:27 am

And the Phillies?

observa
May 19, 2022 7:55 am

Same deal in Oz with big power bill rises coming in June-
Australian domestic weekly gas prices exceed $30 per GJ for the first time – WattClarity
If you follow Wattclarity you can see the increasing volatility in wholesale power prices and ultimately the retailers will build that risk in.

The NEM usually peaks in summer heatwaves with aircon use so it’s not looking good with that volatility in winter. There’s significant coal plant failures due to maintenance/replacement rundown under closure threat and that’s put the heat on unreliables and expensive gas backup. Even allowing emergency diesel to get an earn.

The polls show we’ll have a new Labor Govt this Saturday and with inflation taking off and rising mortgage interest rates they’re about to inherit the power problem big time as they’re spruiking all the net zero nonsense. Their celebrations will be short lived as will their core promises.

BobM
Reply to  observa
May 19, 2022 10:31 am

Just asking from here in the States… wasn’t there a party that took a stand against the net-zero nonsense? What happened to them?

Editor
Reply to  BobM
May 19, 2022 1:42 pm

The Nationals are the junior partner in the ruling coalition. Their leader Barnaby Joyce was anti net-zero, got rolled by the party, got back into the leadership, got rolled on net-zero by the senior coalition party in an act of suicidal bastardry, managed to resurrected his anti net-zero stance, but all too late it seems for Saturday’s election. Pauline Hanson’s One Nation party is also very strongly anti net-zero, but electorally they are small fry. Barring a miracle, Australia is headed firmly down the net-zero gurgler.

Many people are totally p’d off with PM Scott Morrison because he was elected to stop this garbage and did the opposite. If you look carefully at his net-zero policy, it’s the net-zero policy you have when you don’t have a net-zero policy, but no-one sees that. They just see a net-zero policy, just like the opposite lot. IMHO he only had to say that there would be no net-zero target and no carbon tax, and he would win in a landslide. The opposition and probably next government, incidentally, has a carbon tax in their policies, dressed up as a not-a-carbon-tax. If they are elected and implement their policy, Australia will likely erupt. But all too little too late.

There is a carbon-free party standing a lot of candidates, dressed up as not-a-party, and the election regulator does nothing. When Australia goes completely down the gurgler, I don’t know of any sane country that I could move to. At least I have a granddaughter who speaks Mandarin and maybe could be my interpreter.

observa
Reply to  BobM
May 19, 2022 6:51 pm

Mark my words after Labor get in Matt Canavan will be leading the charge to change the Coalition’s fence sitting on the net zero nonsense-
Matt Canavan declares net zero by 2050 is ‘all over bar the shouting’ after PM tries to quell divisions | Australian election 2022 | The Guardian

Here’s the latest report on power prices from The Australian (19th May 2022)-

Thousands of households have been slugged with a doubling of power prices after retailers passed on surging costs, sparking fears some operators may collapse under the weight of volatile market conditions.
Queensland’s LPE, with over 20,000 customers, said it was strongly encouraging customers to find alternative suppliers following its decision to increase charges by over 100 per cent on June 1.
“Within the next 24 hours, we strongly encourage you to seek an alternative supplier,” LPE chief executive Damien Glanville said in a letter to customers seen by The Australian, telling them to switch to either of the big players in Ergon or Energex.
“We understand the financial pressures families are current facing and we did not want to have to materially increase our prices which would have added to this stress.”
The Sydney-based Discover Energy, co-founded by young Rich Lister Anson Zhang, also said it would have to nearly double rates for some customers due to an “unprecedented increase” in the cost of wholesale electricity.
The huge price jumps among the second-tier retailers will stoke broader concerns that smaller Australian electricity operators could follow the fate of UK retailers where nearly 30 energy companies have collapsed after failing to hedge against rising wholesale costs.

Sound familiar?

Olen
May 19, 2022 8:34 am

Want to know how to wreck a prosperous country, OBSERVE. The result is equality of misery but only among the not wealthy.

Matthew Schilling
May 19, 2022 9:29 am

This sounds a little too pessimistic to me. It sounds like a nat gas version of “peak oil”, which has been about to happen for half a century. There is still a stupendous amount of gas (and oil) in the ground. Ingenious engineering – an American strength – will pump it up and out.

Also, the political winds are shifting back from crazy toward normal. Thankfully, America has a deep well (puns always intended) of patriots and realists. The same people who were shocked into action watching their kids at school on Zoom and then at school board meetings are being further shocked into action by crazy energy prices. It’s looking more and more like the criminally insane Leftists will be completely routed and repudiated in six months. Their outsized influence in America is about to be aborted.

Therefore, watch out for pandemic fear porn and another stab at brazen voting fraud! But even that won’t be enough to save the moldy, emptied-out hulk of the late, great Democrat party. Six years ago, the Japanese trusted in a wall they thought tall enough to protect the Fukushima nuke plant from a wrathful sea. But a huge earthquake and tsunami overwhelmed their defenses and destroyed the plant. The political equivalent is about to happen here in America.

It’s been a long time since a major American political party has imploded. Make room on the ash heap, Whigs! The Dems are about to join you.

AndyHce
Reply to  Matthew Schilling
May 19, 2022 11:58 am

Thwarting earthquakes and tsunamis is beyond current technology. Current technology makes controlling elections so much easier.

Matthew Schilling
Reply to  AndyHce
May 19, 2022 1:21 pm

But the huge support for Trump in November 2020 nearly overwhelmed the liars, cheats, and frauds who stole the election. The supposedly independent counting in several states went tilt at the same time late on election night. This November, Trump won’t be on the ballots, so, there will be a lot less political meth (TDS) flowing. I also doubt Zuck Bucks will be flowing like they did in Nov ’20.

Still, we need to conduct our elections more like France – with a lot less room and opportunity for fraudsters to operate.

pigs_in_space
Reply to  Matthew Schilling
May 25, 2022 12:41 pm

Better not!
France is the poster child for a voting system with massive abstentionism = meaning we don’t actually want either candidate by a majority but are clueless how to organise any other legitimate option system!

Editor
Reply to  Matthew Schilling
May 19, 2022 1:46 pm

Gas replaced coal because it became cheaper. If gas prices go up a lot, then coal can come back in. But the resource in shortest supply is sanity.

Matthew Schilling
Reply to  Mike Jonas
May 20, 2022 5:33 am

How much damage has been done to dormant coal-powered plants? I would think the enemies of coal would try to not only shut down a coal plant but also render it unable of starting back up. Hopefully that has happened!

Matthew Schilling
Reply to  Matthew Schilling
May 20, 2022 8:39 am

Yikes! I meant for my last sentence to read, “hopefully that [harm to dormant coal-fired power plants] has NOT happened.”

John Garrett
May 19, 2022 11:31 am

There are some aspects of the most recent EIA Drilling Productivity Report that suggest a leveling off of the astounding growth in Marcellus well productivity that has occurred in the last decade.

Was the investment firm mentioned by Terry Etam Goehring & Rozencwajg Associates, LLC?

Rapid production declines in Marcellus shale wells are nothing new. A typical well will see a 60+% decline from the initial production rate after 24 months.

Last edited 1 month ago by John Garrett
Kit P
May 19, 2022 12:04 pm

This not a new issue. Many years ago I was reading a resource management plan for an Oregon utility that said replacing the coal plant with gas would subject Oregon to fuel cost of LNG on the international market.

The free market does not work for making electricity. I say BS to anyone who thinks they can predict the price of fuel for the 75 year of a steam power plant.

Currently, gas is the cheapest source for 30% of the US supply from steam plants. However, without the 30% from coal, 20% from nuclear, and the whatever from wind; there just not enough natural gas at any price.

Then there is reliability. Washington State and Oregon have closed the coal plants. What will happen in a very cold winter?

The point is that the issue is more complicated than just the cost of fuel.

WBrowning
May 19, 2022 12:23 pm

If we could just convince people that Electricity should be generated primarily (eventually almost exclusively) by Nuclear Plants and use Hydrocarbons for other purposes, it would be freed up to do so.

Kit P
Reply to  WBrowning
May 19, 2022 2:58 pm

That is an odd statement. It is like people in California trying to convince people in Indiana they should go surfing rather than play basketball.

The best reason to use fission as heat source to make electricity is you have to import coal. France, Japan, and South Korea for example. That is why China is now building nukes.

Another reason is so you can sell the natural gas you do not use to others. That may be why UAE just built 4 large nukes.

Dean
Reply to  Kit P
May 19, 2022 7:35 pm

You’re joking right?

China imports a tiny amount of its coal. And it has the reserves to increase production if they wanted to.

China is not building nuclear plants to avoid importing coal.

Kit P
Reply to  Dean
May 20, 2022 8:02 pm

No joke Dean and I wonder what pixie dust planet you live on.

That ‘tiny’ amount of coal is a daily mile long coal train for a medium size coal plant.

The nuke plants I worked at in China were built to reduce the amount of coal imported. Just down the road was 5000 MWe of coal generation supplied by ships.

I started out as a US Navy nuke officer. It is US navy nuke aircraft carriers that allow coal to be imported.

Bob
May 19, 2022 3:56 pm

This article is sounding suspiciously like peak oil talk. Peak gas is the same as peak oil, in other words, political. Politics, administrators and bureaucrats can and do cause shortages/peaks at will. Articles like this need to clearly differentiate between political shortages and real physical shortages. Both are real but if we get rid of bad politicians we can end political shortages. When we face real physical shortages we need to move on to nuclear which is what we should be doing for energy production anyway.

Last edited 1 month ago by Bob
Tom Abbott
May 20, 2022 2:12 am

The only solution to these problems is to put Donald Trump back in the White House.

Coach Springer
May 20, 2022 5:04 am

What, you mean we’re not already there? My gas company has made some eye opening price adjustments to my bill already.

JonasM
Reply to  Coach Springer
May 20, 2022 9:04 am

Makes me glad I signed a 3-year fixed-price contract with my gas company last November.

May 23, 2022 3:46 am

Europe plans to be independent of Russian gas, oil and coal. They plan to import a part of it from the USA. This will drive up the world price even higher…

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