Major capital investments in the North American gas shales sector could accelerate rates of drilling and production to cause downward pressure on prices. An article on the Reuters.com website explores gas shale investments and their potential impact upon prices.
Natural Gas Economics
The low price of natural gas has some people questioning the profitability of shale gas plays in the United States. An article on the NASDAQ.com website explores these questions – especially with the entry of major oil companies into the plays.
“Net imports of natural gas continue at much lower levels than in previous years, likely as a result of higher U.S. domestic production. [...] During the report week, net Canadian imports averaged 5.3 Bcf per day, which is 20.7 percent lower than the same week in 2010. Sendout from U.S. liquefied natural gas (LNG) import terminals averaged about 1.1 Bcf per day during the report week, or 8.2 percent lower than the same week in 2010.” Quote from the Energy Information Administration’s Natural Gas Weekly Update.
An article on the EnergyTribune.com website reviews how just a few years ago LNG terminals were being built in the United States to receive liquefied natural gas, yet today some of those same terminals and more are candidates for exporting the same commodity.
An oversupply of natural gas in the United States and the movement of natural gas drillers to more lucrative oil targets is expected to cause a drop in the amount of natural gas produced in Canada. More in the Calgary Herald.
“Outside the United States, Canada, and the United Kingdom, almost all wholesale natural gas is sold under long-term contracts. The price of natural gas within the contracts is commonly determined by a formula that links the natural gas price to the price of crude oil or some oil-based product.” In those countries the price of natural gas is generally a lot higher than spot prices in the USA. Quote from the Congressional Research Service report.
The Congressional Research Service has a new report that addresses the international movement of natural gas. About 70% of the natural gas produced is consumed in the same country. This leaves 30% of all gas production moving via international trade. This trade occurs through pipelines and LNG shipments. The map below shows the global pattern of the international natural gas trade.
Image by the Congressional Research Service
Lawrence Livermore National Laboratories has a very interesting chart that maps energy sources such as natural gas, solar and coal with energy uses such as electricity generation, residential, transportation, etc. Check it out.
A study on the economic, legal, regulatory, and environmental issues related to development of the Marcellus Shale has been published by the West Virginia University College of Business and Economics, Bureau of Business and Economic Research.
In a blog post on the Reuter’s.com website, Christopher Swann, argues that Washington could take easy steps to reduce America’s dependence on foreign oil, reduce carbon emissions and save citizens money by promoting the use of natural gas in vehicles and electricity generation. He thinks that the natural gas lobby needs to work harder than those promoting coal and railroads.
West Virginia has a wealth of energy resources. It has historically been a leading state for coal production and now much of northern West Virginia is over the Marcellus Shale natural gas field. An article in the Beckley Register-Herald titled “Will Natural Gas Replace Coal” explores how these two fuels might compete in the marketplace and how that competition might impact the West Virginia economy.