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Better yet than methanol, convert natural gas to gasoline,diesel, and jet fuel by Synfuels' International Inc.. Gas to Liquids process. Here is a link. http://www.technologyreview.co...
IF there are [still] 624 rigs operating for nat gas, that's about 500 too many. Leases that were obtained when gas prices were [expected to be] $5/mcf or higher ARE NOT WORTH KEEPING. Maybe some really choice prospects are worth keeping, but it's kind of like a dog chasing its tail -- adding to supply just drives prices further down. It may get so bad that new gas will have NO PLACE TO BE STORED. It's true that many $Bs were place 3+ years ago to drill for gas and operators may feel 'they've got money to drill, so they're gonna drill.' But really what this is is "money to burn." They should be giving this money back to the original investors.
I'm in the business and we're completely out of nat gas -- totally into oil. In 1 or 2 years (there's no rush) many who have chosen to stay in nat gas [exclusively] will be in such pain that we feel we can pick up some choice assets for peanuts at that time.
Synfuels has just updated their website , www.synfuels.com check it out.They are working on getting a GTL plant built very soon and also are talking with large national oil companies to build GTL plants worldwide.
By 2025 the USA will be the largest energy producer on earth.
Building factories with easy quick access to energy saves an incredible amount in operational costs.
Forget about tankers and pirates.
This is the future. Learn it and embrace it.
My monthly gas bill last year says otherwise.... I would love to buy some of this notoriously cheap natural gas they claim exists.
Just keep doing things the same way, and expect different results. NG too cheap to drill, and dollars cheap enough to wipe your backside with. Idiots!
Hey Standman,
Do you have any knowledge on how business works? The problem IS price!!! Everything is run by numbers and logistics. If you produce a good or a service and your net profit < Cost then you are going to lose money, and you will wait until the price rises to the point where you can at least break even!! Common Sense.
Cheap Nat Gas in US is one way the government use to subsidize US industry and farmers. The energy parity of a barrel of crude to an mmbtu is around 1:7. The price of crude vs nat gas is currently at 1: 53. The government will do whatever they can legally to keep it this way. China is doing the same to help their industry with the controlled Yuan, Japan is doing it with 0% interest. Everybody is looking after their own back. Moms and pops, average investors like me that got bought into the story got burned.
richardk70 Great idea, but when was the last time the US did anything quickly?
At the end of the day this is just supply and demand. Huge increase in supply via fracking, demand stays the same/decreases, lower prices, less profit, less competition.
You would have to imagine that those that got into this industry understood the risks when they built their rigs. Hope that you get big enough and have enough capital to weather a drop in prices, and if not, too bad.
The flip side to this is that if prices stay low enough long enough, demand will pick up, and as has been said in earlier comments, natural gas will at some point be one of the primary fuels we use in the world, and the US will be on the forefront of that revolution.
However, it may take some time, and some pain, before that comes to fruition.
Thanks again for the great post!
standman, its a commodity market. you get paid what you get, the american farmer has been getting that deal for years. The other problem is O & G have been running with the same mentality today as they did in the 70's.
In reply to John:
Synfuels is a beached whale. The most recent company news posted on their website is from January, 2008!!! With Americans' like that, who needs OPEC!
Synfuels needs to get off its "private" butt, go public and build-out its own refineries to process the country's abundant natural gas. They're acting like "Gentlemen Farmers" in selling their technology; in essence, collecting royalties. I know Texans, and Synfuels ain't one.
This is half of the story - the EIA announced in it's latest "Natural Gas Monthly" that production for March 2012 is at an all-time high. True, the number of rigs has decreased, but the production has increased because those rigs operating have become more efficient and productive, thanks to advances in drilling technology. I think most companies are long nat gas, particularly for export opportunity to countries where prices are significantly higher. Plus, if
That said, I think we need to use this opportunity of rock-bottom nat gas prices to provide the necessary price support for renewables.
After all, the cheapest fuel is free.
In the longer run, somewhere around 2015 when the LNG export terminal will start to go online, the price will go up. In the meantime, utility producer will not remain idle while the price of oil steadily rise while the price of natural gas remains low. Maybe I am preaching for my own parish, but I think some people appear to forget that the energy crisis isn't going anywhere anytime soon. Just look at the relative price of oil and natural gas in Europe and in the North America and you will understand that we simply under invested in export infrastructures/power plant capacity.
Why isn't the natural gas in this country being converted to methanol, as a gasoline substitute? Can anyone explain why this is not happening? http://www.technologyreview.co...
The author misses a key point. Wet shales yield gas *and* oil (and also natural gas liquids, whose wholesale prices are closely linked to oil prices). So wet shale drillers can make their money off the "wet" part and give the dry gas away for free.
The drillers in the Bakken have been doing that - they've been flaring a large proportion of their gas off simply because they infrastructure wasn't there. This is changing - the amount of marketed gas out of the Bakken is going to climb as the needed infastructure comes on-line.
Expensive oil is like the hand that wrings the sponge - sucking the energy out of the wet shales as fast as can be. While the American consumer might be paying a steep price for his commute, the American factory and the American refinery are enjoying dirt cheap natty gas. (And for Joe Six Pack, heating and air conditioning will remain cheap).
Can anyone speculate how this situation will affect the cities (Houston, Denver) that have ridden on the back of the natural gas wave in recent years?
David Russell, thanks for the overview. Obviously, new technology invalidated assumptions that were critical for success of the old business model. Looks like the USA needs approval ASAP of terminals to export liquified nat gas (LNG) to Asia and Europe.
What? We can't just add up the cost to drill and deliver then mark it up a bit to create a profit? The problem isn't too cheap to drill it's too stupid to figure it out.
If there was ever an industry that's shot itself in the foot like the gas industry has, I 'd like to know about it. What a combo, unfriendly weather and fracking.