Why you shouldn’t bet on higher natural gas prices

Stockhouse ^ | April 2, 2014 | Matt Badiali

[octex]

... the gas revenue not recovered is relatively minor in comparison to the oil revenue gained, and when the pipeline is connected to feed that production to the gas revenue will be a bonus.
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Good posting and a good explanation of why there is flaring.

[Smokin' Joe]

Thanks!

[DaveA37]

is the writer silently suggesting we invest in the means to transport this surplus? I’ll consider buying into pipe manufacturing for now. Any other great opportunities on the horizon? (I’m staying away from rail cars, at least for now.)

[Smokin' Joe]

Rail cars will get a retrofit, likely, there are over 400,000 of them hauling crude oil, and it is likely they will get collision shields (not just the half-shield, but full end shields) and new valving in a retrofit to address safety concerns.

As for pipelines, we have seen the incredible resistance from everyone from environmentalists to the Government hold up the Keystone XL pipeline for over a decade. I have little faith that we will see adequate growth in capacity although I expect some in the next decade, mainly for Natural Gas and NGLs (especially after the propane shortage east of the Mississippi this last winter.

There may be some developments along the lines of LNG export to help relieve the EUs dependence on Russian Natural Gas, but I think the overall effect will be minimal there.

It is primarily a question of which sector will be most adversely affected by the environmentalists campaign against pipelines and rail transport (the two safest forms available). Rail car use will remain strong, just watch for who is doing the retrofits.

[ripley]

“I don’t think I’m the one who is confused.”

You aren’t and neither are they.

They’re engaging in doublethink.

IMHO

[thackney]

However, if the gas found in a particular oil drilling site is too low of a concentration, say 550 but/ cu ft, it is unsuitable for blending because far too much expensive gas would be required to make the end product burnability acceptable.

For natural gas to have such a low BTU rate, it must have significant contamination with non-combustibles like CO2.

Even blended with higher BTU natural gas liquids, it is not going to be accepted as pipeline quality gas. The standards require more than just BTU rate.

Just like a gas with too high a BTU rate, that low quality gas will needed to be cleaned up at a gas processing plant.

For example:
http://msdssearch.dow.com/PublishedLiteratureDOWCOM/dh_009b/0901b8038009bf53.pdf

[Nuc 1.1]

Thanks for that info.

[cartoonistx]

I was assuming the gas was scrubbed at one point (plant lab) in order to get an accurate BTU assessment.

[thackney]

If the natural gas had been processed (cleaned) it would not have a BTU content that low.

Pure methane is 1,011 BTU/ft3.

[Organic Panic]

Why? EPA and democrats.

[Praxeologue]

oil prices completely crash

Thank you for your insights.

Off topic for a natural gas read, but do you see the Bakken more exposed to an oil price decline than Eagle Ford? Production cost estimates seem to use widely different methods.