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18 comments on A little more on gas, European and Asian

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westexas on March 16, 2006 - 1:17pm Permalink | Subthread | Comments top
IMO, California is to the North American gas markets as the UK is to the European/Russian gas markets, i.e., at the end of the distribution system, with declining local production.  

The UK is offering a cautionary look at the future for California and for many other areas that are on the ends of the distribution systems.

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westexas on March 16, 2006 - 1:25pm Permalink | Subthread | Parent | Comments top
If my math is correct, UK natural gas prices are at $44/MMBTU, or the equivalent of about $264/BOE.  
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Chris Vernon on March 16, 2006 - 1:35pm Permalink | Subthread | Parent | Comments top
The price spike that made the news on Monday was just that, a spike. That's not to say UK wholesale gas is cheap, far from it. Here's the wholesale spot price graph:

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Whitehall on March 17, 2006 - 11:49am Permalink | Subthread | Parent | Comments top
Your analogy of California is to the US as the UK is to Europe is correct.  Our state's production is way down and only provides about 13% of our needs.  We pipe the rest in from Canada, Wyoming, the Four Corners area (New Mex/Colorado/Utah/Arizona, and even West Texas and Oklahoma.

There are two worrisome prospects:  Canadian depletion and their increased domestic consumption and the new pipeline Kinder Morgan is building eastward from Wyoming to Chicago.
That means increase competition for our two main suppliers!  Heck, Texas is building LNG terminals - talk about hauling coals to Newcastle!

That's why Arnold is so hot on a LNG terminal off Malibu and Sempra is expanding their still-under-construction terminal below TJ.

Compounding the problem is so much existing electrical generation in California is NG-fired (18 GW) and ALL serious new generation has to be NG to get emissions permits.  (Solar and wind are insignificant in the big picture.)

My analysis, albeit self-serving, is that California needs to start construction on at least 4 big nuclear reactors today.  Looks like Tony Blair has come to the same conclusion in the UK too.

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