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by Jerome a Paris
Okay, natural gas prices are waaay down from their highs, so all's fine, right? It doesn't matter than these prices are still double the highest power plant developers expected only a couple years back, they are down. Alert over.
Hah! Let me show you just one new graph below the fold.
 This is a simple compilation of the prognoses made each year by the US government, through the Energy Information Agency of the DoE, for expected future production in North America. The top line was the prediction made in 2002 for future years. The next line the prediction made in 2003, etc... Notice something? The predictions have been going down every single year... and so has production, in recent years. As I posted a while ago, the problem is that more and more wells are being drilled, but they run out quicker and quicker.
This graph shows the rates of decline depending on the year the field was put in production: the slopes are getting steeper and steeper, i.e. new production is declining really quickly, and thus total production is going down.
This prediction, made in 2003 by the National Petroleum Council (pdf - see p.11), shows where the gas was expected to come from back in 2003: a good chunk of it is expected to come from Alaska or Artic Canada, and lower 48s was supposed to remain stable. This seems increasingly unlikely. The ONLY solution will be to bring in more LNG, but guess what: - all the expected import terminals are expected to be built right on Hurricane Lane:
If there's any problem with import terminals, or any other supply problem of any kind, you get a tight supply-demand balance and what happens is what we saw in the UK last week when a cold snap happened at the same time as an accident on a storage facility: prices quadrupling overnight...
What the first graph above means is that the decline in production is much faster than was expected only a few years ago, which means that, like in the UK, the facilities that have been planned to replace that production will be available too late and, in the meantime, the system will be highly vulnerable to any incident.
Earlier "Countdown Diaries": |
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Countdown to $100 oil (23) - Running out of natural gas in North America | 9 comments (9 topical, 0 editorial, 0 hidden)
Countdown to $100 oil (23) - Running out of natural gas in North America | 9 comments (9 topical, 0 editorial, 0 hidden)
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