GAS GLUT

More "good news"

As many as seven massive natural gas export terminals are expected to start up overseas this year, expanding worldwide capacity by 20 percent and flooding markets with new supplies of the key power plant and heating fuel. Dozens of new tankers capable of carrying natural gas in a liquefied form are slated to hit the seas.

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Permalink Reply by Dee on July 5, 2009 at 7:49am
It is coming. There will be a pushback from the public when this gas hits the market. It is liquefied at cryogenic temperatures and needs to be vaporized to be put into the pipelines. The cryogenic process 'drys' out the gas. This ends up being a problem when the 'dry' gas is routed through the distribution system. If the gaskets and seals are not specifically specified for this situation you end up with many leaks that the gas company ends up chasing their tails in circles addressing. This happened to a company I worked for several years ago after they purchased a LNG facility and was increasing it's utilization. Once the leaks start to occur and homes burn down the public will be outraged. The other problem with these facilities and the tankers that deliver the liquefied natural gas is that one explosion will stop the industry in it's tracks. The devastation will be incredible.
Permalink Reply by roy jones on July 8, 2009 at 12:45pm
.... what? A pushback from the public? David, what does that mean and how is this specifically related to the Marcellus Shale?
Permalink Reply by Dee on July 10, 2009 at 11:22am
When there are fires and explosions caused by gas leaks due to the LNG gas causing the seals and gaskets to fail in the pipeline system, the public will not want the product. This is already occurring with some of the distribution systems, but it is not being made public. The result should be that domestic gas supplies would then command a higher well head price.
Permalink Reply by roy jones on July 12, 2009 at 9:06am
I dont understand your reasoning. If the public doesnt want the product why would the wellhead price be higher? Less demand = lower price. You've obviously had one experience with a leak or break in pipe and for some reason you think it's always like this. Still though, your explanations about supply and demand just dont make sense.
Permalink Reply by Dee on July 12, 2009 at 12:50pm
When the LNG hits the market in greater supply and will drive the price of wellhead gas down. When the distribution systems start having seal and gasket issues like we had at one of my previous employers, and fires and explosions start to occur the public will not want it anymore and then wellhead gas prices should go up.

Even if we do not have the leaks we should see an increase in NG when T Boone Pickens plan for using NG to power vehicles kicks in. It will not take long for the gallon of gas equivalent equation to drive up wellhead gas. The GGE is approximately 112 scf NG = 1 gallon of gasoline. So approximately 8 times the price of a gallon of gasoline for NG prices.

Power companies are going to have to rely on NG for fuel as an interim until permitting for power plants and distribution systems get figured out. I am bullish on domestic gas prices.
Permalink Reply by roy jones on July 14, 2009 at 10:41am
so.... you think LNG will ultimately cause gas prices to go up??? Or return back to prices as if they did not exist. Im sure exxon wouldnt spend 5 billion dollars if gasket and seal problems were going to make them unusable - which by your comments it seems you believe. Your views on this are so biased by personal experienced its clouding your reasoning.
Permalink Reply by Dee on July 14, 2009 at 11:47am
Roy, you can find the leak information at this webpage: http://www.timrileylaw.com/LNG_PIPELINES.htm

My personal experience is only one factor that I use in determining opinions. I know how to identify problems, determine courses of action in solving them and making them stay away. I have worked a long time in several industries and have been rewarded well for my abilities. I have an opinion that is evidently different from yours. Supply and demand will drive the price. More supply the price goes down. Less with the same demand and the price goes up. I believe that the pipeline companies have not addressed the issues associated with transporting LNG through the pipelines that they have been using for wellhead gas. They haven't spend the money or taken the outages. There is a reason that the LNG facilities are being placed where they are, when one of them goes up in an explosion or one of the tankers goes up; there will be a public outcry and a desire not to use LNG. That's my opinion, you can chose to believe it or not. My experience in industry is that if it can go wrong, it will someday occur somewhere. People make mistakes.
Permalink Reply by Brian Day on July 15, 2009 at 1:47pm
All of that compressing, cooling, and shipping of LNG sounds expensive. Wouldn,t such a product be as expensive or even more xpensive than domestic natural gas?
Permalink Reply by roy jones on July 15, 2009 at 3:37pm
Well debates aren't based on opinions. This isn't a "I like hot dogs more than hamburgers" debate which is based on opinion. You may have an opinion, and that's fine, but your opinion can't be correct. If it was correct it would be your fact. The fact here in this debate of ours is that these billion dollar facilities aren't going to be shut down because of mishaps. If mishaps like the ones you experienced were severe enough to shut down the project, they wouldnt have started it in the first place. And that my friend, is a fact.
Permalink Reply by Mmmarkkk on July 16, 2009 at 1:29am
David: I've worked for years and years in the natural gas industry and specificially with LNG for the last 10. Your "issues" and "concerns" are completely overblown!

LNG, once re-gassed, is no different than any other gas in terms of its reactions with gas distribution system equipment, seals, etc. That is completely and utterly bogus! Don't know where you're fishing this up, but its wrong. LNG is the primary gas source for many major countries in Europe and the Far East and has been imported into the U.S. for many many years. And there hasn't been a problem.

The ultimate in "dry gas" is Coalbed methane, which contains almost all methane, the most "dry" component of natural gas. And this has been produced, distributed and used in the U.S. for many many years.

I think your warnings are way over-hyped and not based on good fundamental engineering. Sorry.
Permalink Reply by roy jones on July 16, 2009 at 5:45am
THANK YOU MARK. My god.
Permalink Reply by Dee on July 18, 2009 at 1:07am
If you go back to the original post, there seems to be concern that NG prices will suffer from the LNG supply increase. My post was in response to that thought. It is my opinion and is clearly written as such. Nobody can predict with 100% certainty the markets. There was a time when I supported LNG as a hedge to electrical prices and advised my company to purchase a large LNG facility. They didn't and they ended up loosing so much margin that the company was gobbled up by a larger competitor. Right now I could give two wits about LNG in the market. I think the socioeconomic results of developing the Marcellus Shale will alone be enough to cause customers to want domestic supplies at their meters. The post was intended to address fear of low NG prices. The power industry needs NG priced in a certain range to make money with Simple Cycle and CCGT power plants and I expect the price to settle at that point. Those of us in industry are paid to ensure that accidents do not happen, but with an increase in usage of high energy systems we can expect an increase in the possibility of human error, an act of God, or a terrorist attack causing a major event. If one of these facilities in the US has a major event we can probably expect the public to react as they did when Three Mile Island had it's event. We still have not recovered from the TMI accident with regard to nuclear energy production's acceptance by society. With regard to that web page I referred to, I think it is hilarious. I have been face to face with many of those celebrities when they were protesting an industrial facility I worked at. They are using the same tactics out of the same playbook they used nearly 20 years ago. The media will probably sensationalize any LNG accident far beyond what they did with TMI and the public will probably react in accordance. Again - my opinion. A properly engineered, constructed, operated and maintained LNG distribution system will function safely. But like I said I could care two wits about LNG, in my opinion we are looking at $4 to $5 gas for a while. If cap and trade is implemented there will be a move upward in the price. And if the T. Boone Pickens plan is adopted I expect an eventual GGE balance. I don't see the price getting back to $10 - $12 for a long time. Again - opinions. I have read many posts on this site and see many many opinions. I am more concerned that the Rocky Mountain Express will suppress Marcellus and Trenton Black River exploration than LNG supplies will in the near term.

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