"The Saudi Arabia of Natural Gas"

[Hubbs]

I'm sure a decent chunk of Tailgaters, especially those of us interested in energy, the environment, or economics, have heard this phrase used to describe America before. I'm not too familiar with natural gas, and The Google seems to find all sorts of varying opinions on the matter, so I figured there should be at least a few smart people around here who can drop some knowledge about why we seem to be paying much, much less attention to a valuable resource than we should be paying. A few basic questions:

1. We've been complaining about dependency on foreign oil for decades, yet we apparently have more natural gas than God. Why haven't we become a gas-dependent economy instead of an oil-dependent one by now? I understand that the federal government will only stop half-assing any effort to even begin to seriously shift away from oil until oil becomes significantly more expensive, but is oil really still that much cheaper than natural gas? I couldn't possibly count the number of times I've heard that oil production has been getting more and more expensive as the "easy" wells go dry.

2. On a similar note, we've all seen the Metro buses with the "This bus is running on natural gas" signs. What's the main reason that natural gas hasn't carved out a chunk of the auto market like diesel has? Is it significantly more expensive (either in the costs of the gas itself or in the costs of the engine)? Is it the fact that it would require significantly different infrastructure, similar to the infrastructure we'll need to charge up electric cars at gas stations? Or something else?

3. What seem to be the best estimates as to what kind of prices we'd need to be paying for oil before it would become cost-effective for domestic natural gas production to really start eating away at our oil imports? How long would it take to make a big shift?

[Koolblue13]

Watch this movie and tell me if you think natural gas is a viable alternative.

[Ellis]

Well, I've been an advocate for NG for years.

In my opinion, Diesel gasoline and Unleaded gasoline are not competitive b/c they are produced from the same product--OIL. Therefore, their prices are not going to create any competition based on the fact that the base price starts with a barrel of crude oil. The base price is basically a simple combination of cost to extract & deliver as well as demand. There are other minor factors that affect the price as well but they're not necessary for this topic. B/c diesel and unleaded are in many ways the same (crude oil), the price of crude is insignificant to the competition on the market. if unleaded goes up, so does diesel. if diesel goes up, so does unleaded.

Natural Gas (NG) on the other hand has a base price that is not the same as unleaded or diesel gasoline. It is completely different. It comes from the earth as gas, not crude oil. Therefore, it IS a solid contender on the market b/c when crude oil prices go up, NG is completely unaffected. So is electric and Hydro-electric and solar.

IMO, what the market needs is a competition of the following things among the vehicles available to the consumer...

1. fuel cost per mile of each vehicle. (even cost per full charge/tank/etc)

2. production cost of vehicle. ($25K being the mid range, imo)

3. life of vehicle. (5 yrs? 7 yrs?)

4. cost of vehicle maintenance. (varies...)

If NG took up 15-20% of the domestic market in America, you would see far more stability in the the gasoline industry. Crude Oil producing nations would no longer be able to allow their prices to violently float high and low with almost no sanity or logic associated with the dramatic shifts in price. NG is basically drama free, if you will.

Legitimate competition on the market is the only thing that will put some sanity back in this business. It's a free-for-all at the moment.

[Titaw]

Watch this movie and tell me if you think natural gas is a viable alternative.

I watched this and I definitely have some reservations, but what kind of documentaries would be going around about oil drilling and the environmental impact? Didn't we just experience the WORST disaster in US history last year in the Gulf of Mexico and wasn't that a product of oil drilling?

Like I said I have my reservations, mainly because it is still a dependency on fossil fuels instead of a renewable energy source.

[SWFLSkins]

http://articles.sfgate.com/2009-12-15/business/17224204_1_xto-energy-natural-gas-gas-assets

Funny you should start this thread Hubbs, I was thinking the same for along time and now it occurs to me that indeed NG is set to become a much bigger energy player and will be better served on the floor due to the Ex/Mobil lobbyists already in place.

ACQUISITIONDecember 15, 2009|By Mark Williams, Associated Press

Exxon Mobil will buy XTO Energy in an all-stock deal worth $31 billion as the oil giant moved aggressively Monday to capitalize on the growing supply of natural gas at home.

The deal could signal a new rush to own natural gas assets by major integrated producers, and perhaps the start of a significant consolidation in the energy industry.

"Exxon is the group leader and it sets the trend. I would expect more acquisitions in the next three to six months," said Fadel Gheit, senior energy analyst for Oppenheimer. "Who that will be is the $64,000 question."

http://www.reuters.com/article/idUSTRE60J53920100120

Exxon Mobil (XOM.N) said last month it planned to buy XTO Energy XTO.N in an all-stock transaction worth about $30 billion, creating the largest U.S. natural gas producer and holder of gas reserves.

"The Exxon Mobil-XTO deal may prompt its peers to move forward similarly, consolidate an already tight oil and gas market, and create additional concerns for the regulatory bodies that oversee the oil and gas supply," Representative Doris Matsui said at a House Energy and Environment Subcommittee hearing on the effects of the merger.

Representative Edward Markey, who chairs the subcommittee, raised questions about whether hydraulic fracturing, which the combined Exxon-XTO plans to use when drilling for natural gas locked in shale rock, could pollute drinking water supplies.

"This merger heralds a fundamental long-term shift in U.S. energy markets and one that deserves our close attention," he said.

Hydraulic fracturing, or "fracking," injects a mixture of water, sand and chemicals into rock formations to stimulate production. Some environmental groups oppose the technique as unsafe and seek more regulation over it and some lawmakers want to curb the practice.

[Koolblue13]

I watched this and I definitely have some reservations, but what kind of documentaries would be going around about oil drilling and the environmental impact? Didn't we just experience the WORST disaster in US history last year in the Gulf of Mexico and wasn't that a product of oil drilling?

Like I said I have my reservations, mainly because it is still a dependency on fossil fuels instead of a renewable energy source.

I agree about the second part, but what is slowly happening because of fracking might be worse disaster, just happening slower.

[FanboyOf91]

Natural gas prices are more volatile than crude oil prices.

For example:

http://en.wikipedia.org/wiki/Amaranth_Advisors

http://www.investopedia.com/articles/07/amaranth.asp

[SnyderShrugged]

Natural gas prices are more volatile than crude oil prices.

For example:

http://en.wikipedia.org/wiki/Amaranth_Advisors

http://www.investopedia.com/articles/07/amaranth.asp

though I do wonder if more demand and an abundant supply would smooth that out some over time.

[Elessar78]

Living near the Marcellus Shale that lies in Pennsylvania, we have a few acquaintances that have become wealthy quickly and more than a handful who receive a modest to "not too bad" royalty check. The people that we talked to who have a stake in this thing say that Gasland is alarmist and overblown. But take it FWIW, they obv. have money tied into it.

[Predicto]

though I do wonder if more demand and an abundant supply would smooth that out some over time.

Possibly. It's worth a try.

Although I also think that America's prosperty arose and rests in large part on its enormous access to abundant clean water. I'm not opposed to natural gas in the least, but unregulated fracking has the potential to really screw with our water, and in a way that we will not be able to readily fix.

[twa]

You got something against flammable water?

I agree with both you and Ellesar,the dangers are overblown...but there is a need for regulation.

[Stadium-Armory]

FWIW, I just got something in the mail from Xcel energy notifying me that my natural gas would be going up 2.5% in 2011. Not educated enough to know if that's a big or small change year over year.

I also learned, somewhat off topic, that I can purchase wind and solar credits from Xcel. If I so chose, I could power my house solely by wind and / or solar - but the price is higher. Interesting option though.

[Koolblue13]

You got something against flammable water?

I agree with both you and Ellesar,the dangers are overblown...but there is a need for regulation.

I'm sure it is. Most if not all docs are. We had the envo regs in place, but lifted them for this modern gold rush.

[Hubbs]

Watch this movie and tell me if you think natural gas is a viable alternative.

I'd need to see some other sources on the matter. Interesting concern, though.

Possibly. It's worth a try.

Although I also think that America's prosperty arose and rests in large part on its enormous access to abundant clean water.

How do you figure?

[Elessar78]

Predicto is right. I used to work for an Environmental magazine (as the Art Director, I'm not a hippie!). One of the most interesting articles we ran was on how access to water has been the underlying source of conflict in the middle east for millenia. Clean, drinking water is completely underrated in this country—we don't know how good we have it until it's not available. Anyway, we've been able to settle large swaths of this country because of access to water and you can't start building a world-class economy until you get the issue of basic sustenance out of the way.

[mardi gras skin]

Fracking uses a large amount of fresh water and produces billions of gallons of wastewater annually, GE said. The company says its mobile evaporator will cut the volume of wastewater and fresh water needed by between 50 percent and 90 percent by recycling water directly at the well site. That will also lower producers' transportation and disposal costs.

The machine boils the used water, turning it into steam which then condenses into distilled water. That water can be reused for fracking and results in a much smaller volume of contaminated water for disposal.

GE's mobile evaporator, which will be available early next year, is expected to be used in regions such as North America, Europe, China and Indonesia. One of the first markets expected to use the device is the gas-rich Marcellus Shale, located in the Northeast U.S. The company's competitor in the market is Aquatech International Corp., based in Canonsburg, Pa.

http://www.huffingtonpost.com/2010/10/01/ge-mobile-evaporator-will_n_746659.html

[Hubbs]

Predicto is right. I used to work for an Environmental magazine (as the Art Director, I'm not a hippie!). One of the most interesting articles we ran was on how access to water has been the underlying source of conflict in the middle east for millenia. Clean, drinking water is completely underrated in this country—we don't know how good we have it until it's not available. Anyway, we've been able to settle large swaths of this country because of access to water and you can't start building a world-class economy until you get the issue of basic sustenance out of the way.

Hold on. Stating that water is a source of conflict in regions full of desert and stating that our prosperity "arose and rests in large part" on our access to water are two completely different things. Europe, the Pacific Rim, and South America aren't overwhelmed by desert, either.