What the American Petroleum Institute Has to Say About Natural Gas Futures

American Petroleum Institute ^ | American Petroleum Institute

[Dr Warmoose]

Natural Gas Supply: An Overview

Current Natural Gas Situation

As of June 2003, supply and demand for natural gas are delicately balanced. However, natural gas prices are significantly higher than this time last year; some prices have doubled for gas purchased by the companies that supply it to consumers. Storage levels are at near record lows while demand for natural gas is growing. In the short term, increases in demand due to weather (hot summer and/or cold winter) could stress the supply/demand balance. Also, hurricanes in the Gulf of Mexico could disrupt offshore natural gas production and reduce supply.

Long-term Supply Outlook

Factors shaping long-term demand for natural gas:

• 80 percent of new electric generating capacity is natural gas fired.
• Demand is growing because clean-burning natural gas is a preferred fuel due to its environmental benefits.
• The U.S. Department of Energy's Energy Information Administration forecasts that natural gas demand will grow by more than 50 percent by 2025.
• The new domestic fields being found are smaller and have shorter lives.

Short-term Supply Potential Limited

In the short term, there is not much additional supply to be had. Some additional volumes of liquefied natural gas (LNG) might be imported and Canada may be able to provide a bit more supply. Our nation is suffering from the legacy of government policies that have discouraged the development of domestic natural gas supplies while, at the same time, encouraging consumption. And, substantial increases in supply cannot be expected in the short term as it takes a number of years to develop and produce new supplies and to build the pipelines needed to get the gas to consumers. What can be done in the short term is to emphasize energy efficiency and to conserve our energy use.

Government Policies Limit Supply

While natural gas demand has grown, government policies have limited potential supply:

 

• Within the last decade, moratoria that closed areas off the East and West Coasts and in the Eastern Gulf of Mexico were renewed. They extend to 2012 and affect an estimated 70 trillion cubic feet (Tcf) of natural gas resources.
  
• Even lands that are seemingly "available" for energy development have significant limits on development - in some cases, these restrictions are de facto removals from development.
  
  • A U.S. Department of the Interior study (required by the Energy Policy and Conservation Act - EPCA) found that limits imposed in conjunction with leases affected 36 percent of the lands in five key areas in the West - areas with about 15 Tcf of natural gas resources (24 million acres). And, this does not include additional restrictions that can be imposed after the leasing phase.
    
• And, there are barriers to development:
  
  • Many resource management plans are outdated. These plans (required by Congress) are a necessary step in preparing for lease sales and for managing development on federal lands.
    
  • The process for getting permits to drill is fraught with delays:
    
    • Regional Bureau of Land Management (BLM) offices are inadequately staffed.
      
    • The permitting process is overly bureaucratic and delays are frequent. Although BLM's own regulations call for approval within 30 days, there is a backlog currently of more than 2,800 applications for permits to drill and permits can take in excess of 130 days to process.
      
    • Litigation is frequently pursued by environmental groups to block development despite the lower emissions associated with clean-burning natural gas.

Meeting Natural Gas Needs

The U.S. oil and natural gas industry has nearly 20 percent more drilling rigs looking for new supplies than six months ago. Natural gas users can help alleviate the tightness in supply by using gas efficiently and eliminating waste. However, the ability to meet the nation's natural gas needs will continue to be in question until promising areas are opened for responsible exploration and production and impediments to development are removed -- and until our supplies are diversified, for example, through imports of LNG.

[Dr Warmoose]

Once again, Government (as in EPA) is said to be encouraging Natural Gas use by declaring by fiat every other source of energy too dirty. In the meantime, other government agencies are working as hard as possible to make sure that Natural Gas cannot be easily obtained domestically.

[Gabrielle Reilly]

Ping.

[Dane]

Once again, Government (as in EPA) is said to be encouraging Natural Gas use by declaring by fiat every other source of energy too dirty. In the meantime, other government agencies are working as hard as possible to make sure that Natural Gas cannot be easily obtained domestically.

It was Clinton/Gore which pushed natural gas for new electric generation.

IIRC, the Bush administration has been pushing an easing of regulations so that new coal plants can be built, but you can hear the howls from the demo's.

[Bloody Sam Roberts]

Conservation tip:

If it is summer time where you live, turn off the pilot light to your gas fired furnace. No need for it until it gets a lot colder.

[BOBTHENAILER]

Litigation is frequently pursued by environmental groups to block development despite the lower emissions associated with clean-burning natural gas.

Non-government enviro groups are working even harder to stop access to this crucial fuel.

[SAJ]

Energy requirements will never shrink. When that fact imbeds itself in the brains of Mr. and Mrs. Middle America, and they face the choice of gigantically escalating energy bills or exploring for more energy (or, gasp, building nuke plants, which is the only long-long term solution), the assorted enviro- and bureaudorks who stand in the way had better hold on to their a$$es, or else get them handed to them.

We saw a mini-version of this effect in the late 70s...stand by for Act II, shortly.

[Carry_Okie]

Non-government enviro groups are working even harder to stop access to this crucial fuel.

So that we're forced to buy LNG from the Persian Gulf?

[BOBTHENAILER]

You beat me to it. Thanks for the ping.

[Eric in the Ozarks]

One of the reasons we put in a ground source heating and cooling system in our new house. Subtracting the refrigerators and other power consuming systems, our AC for the house is about $35/month.

[Gritty]

Non-government enviro groups are working even harder to stop access to this crucial fuel.

It seems they won't be happy until we are all living in teepees. Then they will scream bloody murder because we are burning wood and polluting the environment by crapping in holes in the ground.

On the other hand, I think their real goal is to force us all into Soviet-style apartment blocs where we can be restricted, controlled and milked for our labor - which will support their life-style and leave the rest of the pristine planet for their enjoyment!

Of course, they don't plan that end result for all of us. In their view there are simply too many people around polluting the Earth, destroying valuable resources and getting in the way. So,....

[Dr Warmoose]

an easing of regulations so that new coal plants can be built

The problem is not building the plants, the problem is in running them. How long before the Clean Air Act is modified again making compliance and coal burning impossible? Remember, the Grand Staircase/Escalonte National Monument? That trick by Clinton locked up 62 billion tons of compliant coal. We really should name the national monument the Charlie Trie Monument because Trie represented an Indonesian billionaire who exports compliant coal.

[BOBTHENAILER]

So that we're forced to buy LNG from the Persian Gulf?

Good question to be asked of Sierra Club, et al.

Although much LNG will come from Trinidad-Tobago, offshore West Africa, Indonesia and Algeria (possibly Russia), LNG could be huge from the middle east. An inconvenient little factoid for the enviros to contemplate.

[Dane]

Remember, the Grand Staircase/Escalonte National Monument? That trick by Clinton locked up 62 billion tons of compliant coal.

Yep, I think that Indonesian billionaire's name was James Riady.

You're right, and the bad thing is if Bush tried to rescind that, the enviro wackos and the press would not focus on the clean burning coal, but Bush is not a friend of the enviroment, blah, blah, blah.

Just another thing that a "principled" vote for Perot brought the country.

[Dr Warmoose]

On the other hand, I think their real goal is to force us all into Soviet-style apartment blocs where we can be restricted, controlled and milked for our labor

Pretty sinister outlook, but either that or collective brain damage can only explain their actions.

"Environmentalists" say that coal and oil burning is too pollutive and therefore we must go to natural gas. (Never mind nukes). But they then make going to natural gas impractical by closing off desert wasteland so that natural gas can't be extracted. This is a priority issue. What is more important Clean Air, or unblemished desert wasteland? If they say "both", then they are saying that they want to destroy the economy and our way of life. Since they are saying "both", then we can only conclude that they are our enemy. They really do seek to destroy us. The problem is, since they represent NGOs, run on donations, they will be the first looking for new work. But there won't be any.

I wonder how many environmentalists know how to live off the land, or will their philosophy have them starve sitting amidst bounty?

[KarlInOhio]

Do you have any suggestions on buying one? My AC is long overdue for replacement, and I was going to check on the price of an AC/Heat pump because it might be cheaper than running the gas furnace this winter. If it's not to expensive, a ground source might be a good alternative.

[Dr Warmoose]

Although much LNG will come from Trinidad-Tobago, offshore West Africa, Indonesia and Algeria (possibly Russia), LNG could be huge from the middle east. An inconvenient little factoid for the enviros to contemplate.

Another inconvenient factoid (ok, two), dependence on those areas of the world. Dependence breeds obligation. not only is LNG the most expensive form of fuel, but as we depend on warring nations and volatile regions of the world for this product we will be obligated to pay tribute to kleptocracies through military and financial support. of course these won't be factored into the cost you pay for the fuel, but will appear on your 1040 each April.

[SAJ]

Bet your life! I'm always astonished that more people don't take similar action, because the initial expense gets paid for over and over and over again. The relative value of ground-sourcing will enhance the property value over time, too (as I'm **certain** you know (g~!)).

FReegards!

[Eric in the Ozarks]

The unit is called a Water Furnace, made in Indianapolis. There are four 200 foot wells drilled (under our driveway) with a sealed liquid ground loop running from the wells to a heat exchanger and compressor (the Water Furnace) inside. The system collects heat from the house into the incoming liquid which is 59-60 F, so its easy to make chilled forced air. In the winter, the unit pulls this same liquid in and bumps it 10 degrees electrically for forced air heat on the second floor. The floor in the main level is tile and has radiant in-floor heat, also from the Water Furnace. This works best for new construction but I'd take a look if you don't mind the up-front cost (a little pricy). This system will also make hot water for showers.
Good luck.

[Eva]

Don't let the oil companies fool you, there is more natural gas than they know what to do with. It is a by- product of oil drilling and is produced inside the pipelines as well. The oil companies let the gas that is produced in the pipelines go off into the atmosphere rather than recapture it. My husband participated in a study of the health effects on oil workers from this release of natural gas. He had to wear a monitor everytime he visited a ship or worked on refinery property.

[BOBTHENAILER]

Nice summary of the TRUE enviro goal.