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Jerome, you say that the gas is often flared when there is no infrastructure to deal with it, but there must be infrastructure to handle the petroleum.  At today's energy prices is building the necessary infrastructure to utilize the gas really still too expensive?

"My True Religion Is Kindness" -- The Dalai Lama
by JohnnyRook (johnnyrook1@gmail.com) on Fri Dec 28th, 2007 at 07:31:40 PM EST
[ Parent ]
The infrastructure for gas is completely different to that for oil, and needs to be invested into as a separate business decision, and that depends on how much gas there is. It's quite often the case that there is enough oil in a field to justify the exploitation and oil (with the requisite infrastructuree), but not enough gas to justify the parallel investment.

Oil infrastructure is generally simpler, and the contractual structure for oil a lot simpler than for gas. Plus, for a long time, there simply was no market for gas in many parts of the world. This is slowly changing.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (jeromeguillet@yahoo.fr) on Sat Dec 29th, 2007 at 05:50:49 AM EST
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For those reading Russian - here's a short article on problems with utilisation of gas in oil exploration. Easy enough, low internal gas prices is one of the reasons. As the gas prices are slated to increase, the burning is going to come down. Supply and demand in action.
by Sargon on Sat Dec 29th, 2007 at 09:33:54 AM EST
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Thanks for the link to the article. It was very interesting.

It is good that the domestic price of natural gas will rise. It appears from the article though that it's been a lack of coordination of supply and demand that has lead to 20% of Russian natural gas production being flared off. The author states that holding down the price for domestic consumption made it uneconomical to either process or transport the gas from its production site. Also, apparently there are accounting issues since the oil companies do not consider gas production costs as part of their already existing costs of production.

I wonder about the concluding paragraphs where the author states that the government has the authority to strip companies of their licenses if they fail to fully utilize the natural resources to which they have been granted access.  How likely a possibility do you consider that to be in reality?

Finally, I'd be interested in having your opinion on the following quote from a different article:

The Russian government has repeatedly pledged to reduce natural gas consumption in power generation and increase coal use, in order to maximize gas exports. Earlier this year, Russian President Vladimir Putin also suggested that coal be given a greater role. But this goal would require large-scale construction of coal-fired power generation facilities, totaling some 40 gigawatts by 2020.

Doesn't such a policy sacrifice the health of Russian citizens, given how polluting coal is, (or are there plans to install modern pollution control equipment as well?), and the health of the planet, due to increased CO2 output from replacing natural gas with coal, to the short term financial interests of the Russian state?

"My True Religion Is Kindness" -- The Dalai Lama

by JohnnyRook (johnnyrook1@gmail.com) on Sat Dec 29th, 2007 at 03:40:31 PM EST
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Have a look here. It doesn't seem that the forecast of huge additional coal generation is likely to happen.
by Sargon on Sat Dec 29th, 2007 at 06:02:03 PM EST
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Thanks.  I'll take a look at it.

"My True Religion Is Kindness" -- The Dalai Lama
by JohnnyRook (johnnyrook1@gmail.com) on Sat Dec 29th, 2007 at 08:33:00 PM EST
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