What follows is a discussion in which I will post/share industry related articles that I believe to be of general interest to some  who frequent this site.

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RE: "Since this is a government-produced document"

The charts (and projection) were created by BMO Capital, using current and historical data as compiled by the D.O.E..

BMO's "brute force" projection for the maximum 2011/2012 storage is based on looking backwards to past trends. Their (qualified) projection would place maximum storage for this fall season at 4 TCF.

I do not have the exact figure, but I do recall that the D.O.E. recently announced that the country's capacity to store Natural Gas had increased to a bit in excess of 4.2 TCF. BMO's projected storage (if correct) would not result in full storage.

More significant than what the maximum storage might be (in my opinion) is the slope of the decline in storage subsequent to that peak. Should the trend continue for less than historical supply-to-demand, the decline in storage felt this winter may (depending upon weather) surprise many.

I am particularly imagining the situation that might exist at the end of this withdrawl season, as winter ends around April of next year. I suspect that (dependant upon the number of heating degree days this winter) we might end the withdrawl season with a lower amount remaining in storage than many would predict - we will have burned off the current storage excess. If lower than historic injections continue during the next injection season, that will be positive for natural gas pricing - and might signal increased drilling in the dry gas areas.

The trend is our friend - we may soon turn the corner.

 

All IMHO,

                  JS

 

 

I concur with your last two paragraphs and closing comment.  To your assertions, I would add that we are dealing with a classic O&G supply/demand cycle. (in this case more pronounced than past cycles) The result of ~$11/MCF NG in 2008 was a massive increase in drilling, exacerbated by the emergence of technology to produce NG from previously-unavailable shale plays. The net result was a predictable over-supply of NG resulting in an elevator-like drop in pricing to <$2/MCF. A price rebound is in process, and will be supported by our joint belief of lower storage numbers by spring. Lots of electric generation capacity switching to NG, likely increasing demand.

  So, in my humble opinion, the stage is being set for the next boom-bust cycle which will be confirmed when prices increase the greed factor to the point drill rigs return to the dry gas regions. It is all predictable!

BluFlame

 

Baker Hughes Rotary Rig Count Charts

Charts created by: BMO Capital Markets

http://www.investorvillage.com/uploads/13230/files/RigCountCharts21...

 

Scroll down for Pennsylvania Rotary Rig Count.

 

JS

 

J.S.,

  Gas rig count still trending down as of July according to Baker Hughes....can't imagine things have changed in the past few months.

BluFlame

Off Topic, but worth considering:

The Green Thing

Checking out at the store, the young cashier suggested to
the older woman, that she should bring her own grocery bags because plastic bags
weren't good for the environment.

The woman apologized and explained, "We
didn't have this green thing back in my earlier days."

The clerk
responded, "That's our problem today. Your generation did not care enough to
save our environment for future generations."

She was right -- our
generation didn't have the green thing in its day.

Back then, we returned
milk bottles, soda bottles and beer bottles to the store. The store sent them
back to the plant to be washed and sterilized and refilled, so it could use the
same bottles over and over. So they really were recycled. But we didn't have the
green thing back in our day.

We walked up stairs, because we didn't have
an escalator in every store and office building. We walked to the grocery store
and didn't climb into a 300-horsepower machine every time we had to go two
blocks. But she was right. We didn't have the green thing in our
day.

Back then, we washed the baby's diapers because we didn't have the
throw-away kind. We dried clothes on a line, not in an energy gobbling machine
burning up 220 volts -- wind and solar power really did dry our clothes back in
our early days. Kids got hand-me-down clothes from their brothers or sisters,
not always brand-new clothing. But that young lady is right; we didn't have the
green thing back in our day.

Back then, we had one TV, or radio, in the
house -- not a TV in every room. And the TV had a small screen the size of a
handkerchief (remember them?), not a screen the size of the state of Montana .
In the kitchen, we blended and stirred by hand because we didn't have electric
machines to do everything for us. When we packaged a fragile item to send in the
mail, we used wadded up old newspapers to cushion it, not Styrofoam or plastic
bubble wrap. Back then, we didn't fire up an engine and burn gasoline just to
cut the lawn. We used a push mower that ran on human power. We exercised by
working so we didn't need to go to a health club to run on treadmills that
operate on electricity. But she's right; we didn't have the green thing back
then.

We drank from a fountain when we were thirsty instead of using a
cup or a plastic bottle every time we had a drink of water. We refilled writing
pens with ink instead of buying a new pen, and we replaced the razor blades in a
razor instead of throwing away the whole razor just because the blade got dull.
But we didn't have the green thing back then.

Back then, people took the
streetcar or a bus and kids rode their bikes to school or walked instead of
turning their moms into a 24-hour taxi service. We had one electrical outlet in
a room, not an entire bank of sockets to power a dozen appliances. And we didn't
need a computerized gadget to receive a signal beamed from satellites 2,000
miles out in space in order to find the nearest pizza joint.

But isn't it
sad the current generation laments how wasteful we old folks were just because
we didn't have the green thing back then? How on earth did we all
survive?

Please forward this on to another selfish old person who needs a
lesson in conservation from a smartass young person.

Remember: Don't make
old people mad.

We don't like being old in the first place, so it doesn't
take much to piss us off.

Source: http://nwoupdate.blogspot.com/2011/11/going-green-con.html?spref=tw

 

 

Thanks for the great post.  By far my best laugh of the day.

That's fun Jack, thanks...

Jack;  you are now an official curmudgeon.

Jack, 

 I remember all that, which reveals my age. But I also remember that things began to change rapidly about the mid-1960's. Arguably, our generation (maybe not yours!) deserves blame for establishing trends that resulted in todays environmental debacles. 

  Before anyone sets off on a series of venomous postings, let me state I am not a tree-hugging environmentalist. Still, we must assign blame where it belongs and I accept some of the responsibility.

BluFlame

Source:http://green.blogs.nytimes.com/2012/09/26/adapting-gas-fired-power-...

Adapting Gas-Fired Power to a Greener Grid

Rendering of a combined cycle gas plant that can adjust quickly to compensate for the less reliable flow of renewable energy to the grid.General ElectricRendering of a combined cycle gas plant that can adjust quickly to compensate for the less reliable flow of renewable energy to the grid.
Green: Business

Making electricity from natural gas is cleaner than making it from coal or oil, but as gas gains a bigger market share in the business in the United States and elsewhere, the idea of what constitutes a good generator is shifting. General Electric announced a line of new models on Wednesday, with two interesting environmental twists.

One is efficiency. New natural gas plants burn the fuel in something that resembles a jet engine that is chained to the ground and turning a generator. Over the years, as the technology of such models has improved, they have been converted a given quantity of gas to larger and larger amounts of electricity.

Modern plants are often “combined cycle” generators, meaning that the exhaust of one engine is used as the heat source for another. The hot exhaust from the jet is used to boil water into steam, and the steam is used to turn a second turbine; if the jet engine extracts 40 percent of the energy in the gas and the steam turbine extracts 40 percent of the remainder, the combination is about 60 percent efficient.

In 2000, G.E. introduced a new model that reached that 60 percent level.  At the time, the Energy Department likened that milestone to running a four-minute mile. The new models it is introducing now are a little over 61 percent efficient.

Boosting efficiency in a jet engine is tricky. The amount of work that the machine can get out of a fossil fuel depends on the temperature of combustion, but if the designer pushes the temperature too high,  the metal components could melt. The solution is to hollow out the blades that extract energy from the passing hot gas and to circulate cool air inside them. “Cool” is relative here; G.E. is using air at 1,000 degrees to cool blades whose exterior is heated to 2,800 degrees. The metal blades are coated with a ceramic that acts as an insulator, helping keep the metal temperature down.

A key trick in raising efficiency, said Paul F. Browning, the president of the company’s thermal products division, is using technology borrowed from G.E.’s aircraft engine business to prevent the 1,000-degree air from leaking into the 2,800-degree gas path, which would cool and it thus reduce efficiency.

But in the years since G.E. introduced the 2000 model, new players have entered the grid: wind and solar plants that produce energy with a much smaller environmental footprint yet are highly variable in their output. A system that can integrate a large amount of renewable energy can far more significantly reduce the average amount of carbon dioxide produced per kilowatt-hour than one that relies on natural gas alone.

Still, relying on renewable energy requires other generators on the grid to rapidly adjust their production, up and down, to compensate. Some grid operators will therefore pay the owners of generators not only for how much energy they produce but for how quickly they can change their output to help balance the supply as demand shifts.

So G.E. has introduced a product line called FlexEfficiency that allows operators to adjust quickly as renewable energy comes on on and off the grid, including a 750-megawatt combined-cycle plant that can vary its output by 100 megawatts in one minute. The model introduced in 2000 could only change its output by 50 megawatts in one minute.

The company says it has $1.2 billion advance orders, including one from the Japanese utility Chubu Electric Power, which, as Mr. Browning delicately put it, would help the company “respond to events of March 11.’’ He was referring to last year’s quake and tsunami in Japan, which caused a meltdown at the Fukushima Daiichi nuclear plant and led to the shutdown of all of the country’s nuclear reactors.

The combined-cycle gas plants are likely to replace the output of some G.E.-designed nuclear reactors.

A Saudi electric company also placed a big order to replace generators that run on oil so it could use the oil for export, G.E. said. And Xcel Energy has ordered one to replace a coal-burning power plant in Denver, the company added.

Good news,

Not that the Flex Combined Cycle plant is new.  It is new to North America.  They have been building the Flex  50 Combined Cycle plant in poor African nations already.  (50 cycles not MW even though they are 50 MWs)  The Flex 60's are built off of the Flex 50 platform in tandem to get the 100 MWs.  The sad thing is once again America is not near the front of the line getting this technology.  Even sader the main reason the US is now interested in this new and clean plant is they are the piece of the puzzle that can make unreliable wind turbine power generation work by quickly ramping up when winds die down and the effecient "low idle" speeds when it is windy. 

Still these new plants have lots of advantages over coal.  Less carbon, mercury and radiation emitted,  no billion tons of coal ash sitting around to polute the water,  they don't have to be built on the rivers so no raising the tempature of the rivers depleting the amount of O2 in the water, no massive infrastuture of rail and truck bringing fuel and hauling off waste ash and they are modular and can be run as a single cycle power generation plant with the waste heat sent directly to manufacturing or other use.  They can be built right next to consumers so grid loss can be cut also increasing overall grid effeciency.

 

The GE Flex 60 truck tour will be in Columbus, OH on November 16th.  I wonder if the truck burns CNG?

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