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Baggins

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Natural gas glut means drilling boom must slow
« on: April 08, 2012, 06:47:33 PM »

NEW YORK (AP) - The U.S. natural gas market is bursting at the seams. So much natural gas is being produced that soon there may be nowhere left to put the country's swelling surplus. After years of explosive growth, natural gas producers are retrenching. The underground salt caverns, depleted oil fields and aquifers that store natural gas are rapidly filling up after a balmy winter depressed demand for home heating. The glut has benefited businesses and homeowners that use natural gas. But with natural gas prices at a 10-year low - and falling - companies that produce the fuel are becoming victims of their drilling successes. Their stock prices are falling in anticipation of declining profits and scaled-back growth plans. Some of the nation's biggest natural gas producers including Chesapeake Energy, ConocoPhillips ( COP) and Encana Corp. ( ECA), have announced plans to slow down "They've gotten way ahead of themselves, and winter got way ahead of them too," says Jen Snyder, head of North American gas for the research firm Wood Mackenzie. "There hasn't been enough demand to use up all the supply being pushed into the market."

So far, efforts to limit production have barely made a dent. Unless the pace of production declines sharply or demand picks up significantly this summer analysts say the nation's storage facilities could reach their limits by fall. That would cause the price of natural gas, which has been halved over the past year, to nosedive. Citigroup commodities analyst Anthony Yuen says the price of natural gas - now $2.08 per 1,000 cubic feet - could briefly fall below $1. "There would be no floor," he says. Since October, the number of drilling rigs exploring for natural gas has fallen by 30 percent to 658, according to the energy services company Baker Hughes. Some of the sharpest drop-offs have been in the Haynesville Shale in Northwestern Louisiana and East Texas and the Fayetteville Shale in Central Arkansas. But natural gas production is still growing the result of a five-year drilling boom that has peppered the country with wells. The workers and rigs aren't just being sent home. They are instead being put to work drilling for oil, whose price has averaged more than $100 a barrel for months. The oil rig count in the U.S is at a 25-year high. This activity is adding to the natural gas glut because natural gas is almost always a byproduct of oil drilling.

Analysts say that before long companies could have to start slowing the gas flow from existing wells or even take the rare and expensive step of capping off some wells completely "Something is going to have to give," says Maria Sanchez, manager of energy analysis at Bentek Energy, a research firm U.S. natural gas production has boomed in recent years as a result of new drilling techniques that allow companies to unlock fuel trapped in shale formations. Last year, the U.S. produced an average of 63 billion cubic feet of natural gas per day, a 24 percent increase from 2006. But over that period consumption has grown half as fast. The nation's storage facilities could easily handle this extra supply until recently because cold winters pushed up demand for heating and hot summers led to higher demand for air conditioning. Just over half the nation's homes are heated with natural gas, and one-quarter of its electricity is produced by gas-fired power plants. But this past winter was the fourth warmest in the last 117 years, according to the National Oceanic and Atmospheric Administration. It was the warmest March since 1950. Between November and March, daily natural gas demand fell 5 percent, on average, from a year earlier, according to Bentek Energy. Yet production grew 8 percent over the same period "We haven't ever seen a situation like this before," says Chris McGill, Vice President for Policy Analysis at the American Gas Association, an industry group. At the end of winter, there is usually about 1.5 trillion cubic feet of gas in storage. Today there is 2.5 trillion cubic feet because utilities withdrew far less than usual this past winter. There is 4.4 trillion cubic feet of natural gas storage capacity in the U.S. If full, that would be enough fuel to supply the country for about 2 months. (I find that figure hard to swallow and short)

If current production and consumption trends were to continue, Bentek estimates that storage facilities would be full on October 10. Storage capacity, which has grown by 15 percent over the past decade, cannot be built fast enough to address the rapidly expanding glut. And analysts note there is little financial incentive to build more anyway. The low price brought on by the glut has increased demand for natural gas among industrial users and utilities. Makers of chemicals, plastics and fertilizers that use natural gas as a feedstock are expanding. Garbage trucks, buses and delivery vehicles are using more natural gas. Electric power producers are switching from coal to natural gas whenever possible. This won't add up to enough new demand quickly enough to relieve the pressure on storage facilities this summer. Scorching temperatures this summer would do the trick, but Mother Nature is not expected to cooperate. Temperatures this summer are forecast to be about normal, and much cooler than the last two summers, says David Streit, a meteorologist at Commodity Weather Group expects. Sultry winters, he said, do not usually develop into sultry summers.
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blue2

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Re: Natural gas glut means drilling boom must slow
« Reply #1 on: April 08, 2012, 08:10:33 PM »

And some people want to drill for more oil and that will result in more natl gas too.  There use to be a program in Toledo where at least Columbia Gas fueled some of their vehicles with natl gas.
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Frenchfry

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Re: Natural gas glut means drilling boom must slow
« Reply #2 on: April 09, 2012, 12:05:12 AM »

My wife has been commenting about how low our gas bills have been for the last couple months.

Of course the mild winter should be credited but she's been crediting our energy efficient appliances.
I have to admit our Samsung dryer is really fast though.

And some people want to drill for more oil and that will result in more natl gas too.  There use to be a program in Toledo where at least Columbia Gas fueled some of their vehicles with natl gas.
But it's the Republicans that are always shouting drill-drill-drill.....your Party.
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This is what I see when I visit:

"Sorry Frenchfry, you are banned from posting and sending personal messages on this forum.
This ban is not set to expire."

No emails, no warnings, no communication whatsoever...just that ban

May be what happened to the other libs as well.

I guess disabling the report to admin link only on the lib side was indicative of the slanted games they play.

Enjoy your spoon-fed Faux News type right-wing echo-chamber.

Edited to add:

This is the only way to answer some of the questions posed:

1) I did nothing to warrant the banishment, it's political.

2) It's the router that's blocked but considering all the nonsense right-wing games being played by those running the site...it's just not worth it to bypass the banishment block.

3) The moron stalkers from MT contemplating a visit will be considered a threat and can expect to have a bad day if they act upon those idiotic thoughts.

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Baggins

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Re: Natural gas glut means drilling boom must slow
« Reply #3 on: April 09, 2012, 09:48:36 AM »

And some people want to drill for more oil and that will result in more natl gas too.  There use to be a program in Toledo where at least Columbia Gas fueled some of their vehicles with natl gas.

Sad thing about drilling for more oil is that it will not translate into lower prices as it does with natural gas...Too many speculators and a world needing more and more fuel every day, our supplies will never cover the demand to a point of "cheap" gasoline and it's only going to get worse people...It's far past the time to walk away from the oil teat.  Our consumption of oil has become so ingrained in our daily lives it's hard for some to even think there is an alternative.

I get so frustrated at times to think there are are people out there actively suppressing the advancement of green energies, as if they are some sort of pagan deviltry...
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blue2

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Re: Natural gas glut means drilling boom must slow
« Reply #4 on: April 09, 2012, 09:55:25 AM »

It's more than the government walking away for other sources.  Just a few months ago the residents ran a company out of southern Mich in Riga township because they didn't want the windmills. The Kennedy's didn't want them off shore near their property in Mass. 
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Baggins

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Re: Natural gas glut means drilling boom must slow
« Reply #5 on: April 09, 2012, 10:41:14 AM »

It's more than the government walking away for other sources.  Just a few months ago the residents ran a company out of southern Mich in Riga township because they didn't want the windmills. The Kennedy's didn't want them off shore near their property in Mass.


Yep, I supported that, and very familiar with the NIMBY mindset...I sure wouldn't mind one in my back yard if it meant cheaper energy WITHOUT pollution(not to meantion wind if f***ing free!), and do they really look THAT ugly...???  I guess these people are fine with yellow streaked sulfur clouds, acid rain and high energy costs...Well, not me...

F*** the Kennedy's...Like I give a s*** about an uber rich persons opinion when it comes to energy cost savings, they're out of touch with reality and don't know what it means to budget yourself and sacrifice one bill for another...they just write a f***ing check without worry. (F*** their veiw!)

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"Praise not the day until evening has come,
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 A maiden until she is married,
 Ice until it has been crossed,
 Beer until it has been drunk!" - (Viking proverb)
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