Natural gas under Gulf may be too much of a good thing

chron.com ^ | Jan. 16, 2010 | Brett Clanton

[smokingfrog]

The prospect of yet another new frontier for U.S. natural gas development, this time in super-deep wells beneath the Gulf of Mexico's shallow waters, is not all good news for Houston's energy sector.

A big uptick in output from the emerging region — predicted this week after announcement of a major discovery there — would clearly signal new life for the heavily explored offshore region. But it could also boost already swollen U.S. gas supplies, weaken prices and keep producers on the sidelines.

Such a scenario is unlikely to play out in the next year or two, given the time needed to develop the complex wells. But within three to five years, if output materializes and gas from other sources keeps rising, it “adds one more brick to the natural gas wall of worry,” said David Pursell, a managing director with local investment bank Tudor, Pickering, Holt & Co. Securities.

“It could be meaningful to U.S. supply in a time frame when we really don't need more additions to supply,” he said.

A team led by New Orleans' McMoRan Exploration Co. said this week it made one of the biggest discoveries in the Gulf's shallow waters in decades.

The claim was based on results from a well, drilled in 20 feet of water to a depth of more than 28,000 feet, that found a 135-foot column of petroleum-rich rock at the Davy Jones prospect.

Additional drilling will be needed to confirm the well's true potential, but the team said the early results suggest, even beyond Davy Jones, there is plenty more oil and gas to be found in the deeply buried layers of sediment.

[meatloaf]

The energy contained in natural gas varies depending on the area. As someone mentioned other flammable gases are also found with natural gas. A vehicle setup to run on both will have less power on natural gas. Using natural gas for motor vehicle fuel would throw a hitch into gasoline pricing.

State public utility commissions control the pricing of natural gas for heating purposes. That somewhat protects the homeowner using natural gas.

The wild card is the hang on the wall natural gas compressors that were designed for homeowners to refill a vehicle’s natural gas cylinder over night.

Gasoline demand peaks in the summer months. Natural gas demand peaks in the winter. You’d see a more even demand for natural gas year round with vehicle conversions. Ford offered multifuel cars and trucks unil some what recently.

If you want greater efficiency, the engine for a natural gas only vehicle is already designed for that.

The technology is already available. About five years ago, one of the gas companies had natural gas filling stations in many areas in WV. There was no reason for people to buy multifuel vehicles at that time.

As for damage there are an incredible number of well locations in the US that already exist. Many of the ones in WV are relatively shallow and still producing after many decades of use. A couple of years ago, the pipeline infrastructure locally couldn’t handle all of the gas produced.

We do need more upgrades in the pipeline infrastructure.

[Gondring]

You’re looking at only the efficiency as a fuel. You’re disregarding the fact that by burning it, we’re losing the used of it as a chemical feedstock—which means that future industrial costs will be even higher. Factor in the cost to produce ethane, for example, and it’s a rotten long-term deal.

But Golden-Egg Goose is tasty now.