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RE: NG – New role in Clean Energy

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Charles Randall

It is understandable that Clean Energy propagadist like T Bone Pickens & Williams Energy want to push Nat Gas use and try make case for Liberal government pushing Carbon Tax to expend huge tax dollars for use in vehicles (and all the infrastructure much like Hydrogen Fueled cars – to deliver it at refill stations).
But this kind propaganda (filled with flaws and bad estimates) doesnt belong at Oil Refining blogg site where we deal with facts. The US has import Nat Gas from Canada & Mexico both of whom do not have enough to export but US & them use exchanges to avoid investments in P/L to move remote supplies into populated areas. Additionally until recently US even had to import Liquid Nat Gas from Russia during the summer to keep up with demand. Russia can easily place all its export LNG into Europe but has been avoiding storage investments by using high priced US export market – with Nat Gas collapse in price in late 2008 / early 2009 from $13.5/MMBTU back to pre-regulated price levels of $3.5-4.5/MMBTU, it now does not support LNG imports at this price level. 
They are right that US has gone to ~20% NG production levels  first with capture of Coal Bed Methane in Coal fields of Wyoming/Montana/Colorado areas ~10% and now from development of new gathering system in Eastern & Midwestern Shale coal fields. But this barely matches the decline in huge Texas Nat Gas field that supplies most of US production & without the recent demand destruction of one of Nat Gas larger consumers the US would be net short.
The Enviornmental groups, Nat Gas Marketers & of Course these Clean Energy groups all want you to believe in large reserve forecast that have never been correct & believe that Nat Gas can support additional demand sectors…….. it is lie.
The US used to regulate the price and use of Nat Gas so that only limited amounts could be used in the Power/Utility sector because we knew there was not enough to meet Residential, Industrial+Chemical, & Utility sectors. When it was deregulated in 1980’s based on unsubstantiated expectations of future reserve production levels – it was thought that the Coal power plants would be shut down as new CLEAN ENERGY NG power plants came online & combo would drive down power price. But the prices spiked, Power industry that did jump into large number of plants quickly found there wasnt enough NG & they couldn’t make returns at new price levels (California is power child for this stupidity & the Pacific NW power crisis of 2000 where drought in Hydroelectric supplies from Washington/Northwest wasnt available due lack snowfall/low water levels at dams). This same PNW power crisis still awaits California – only gas speculators like Enron have gone bankrupt along with other Nat Gas suppliers when Calif did not honor supply contracts made during the shortage.
And the continued increase in demand to Merchant & Private power producers drove prices to above $6.50-$8.00/MMBTU where Industrial, Chemical & Power consumers were just below breakeven on existing plants. When the speculators (Mutual fund & investment traders) began ramping price spikes like they have done on all global commodities it surged to $13.5/MMBTU and boosted the investment in LNG import sites in US. The +$6.50/MMBTU price levels finally forced most remaining / lingering US Chemical plants using Nat Gas (most already moved to China) to close – especially the Fertilizer Industry which consumed nearly 20% of US Nat Gas & had allowed US to Export Fertilizer at $100/ton levels. Now US has to import Fertilizer at $300/ton into the MidWest & only remaining producers (like Farmland) use petcoke/coal or Refinery offgas instead Nat Gas. 
The Nat Gas market price never recovered & you can easily see this from split in it tracking the WTI price & other energy fuel prices. Eventually the decline in US convential NG markets, loss LNG imports & market use will raise demand back to level to bankrupt another group investors who buy into this fairy tale of enough NG to meet all demand forces. I am supprised these guys did not mention the huge amounts of Gas Hydrate along the US eastern Coastal shores (see Ice that Burns articles) which no one has figured out how use so far.

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