The Oil Drum

26 comments on Questions About the World's Biggest Natural Gas Field

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ThatsItImout on June 10, 2006 - 5:04am

The big issue to me is that natural gas must be, "not too hot, not too cold, but juuust right...."

If the natural gas price is too high, it destroys demand in the U.S. as people will try to "fuel switch" to electricity from cheaper coal even if that means more CO2 release (logic: I don't have to pay the "full price" of global warming, but I sure have to pay the full price, and NOW, to heat my home), and as companies "outsource" to places in the world with cheaper natural gas, and damage employment in the process.

But, if the natural gas price goes too low, the pipelines and LNG projects cannot possibly be done at a profit. This means that, as one other poster said, "one bad winter" could be catastrophic, because the lead time needed to have the gas pipeline and LNG plants up and providing gas is years. By the time we realized we needed the gas, we could not possibly build the infrastrure fast enough (go to TOD UK and look at exactly this situation in Britain) to save the U.S. from a very serious (and in New England/upper midwest states, a possibly deadly) supply problem. The LNG and Alaska gas pipeline are two perfect examples of projects that even thier backers admit must have a "sustainably high" price for natural gas to find investors/backing.

Right now, though, the price is bearish, as back to back to back to back mild winter/summer/winter/summer has led to an astounding amount of spare gas (and propane likewise, the great under utilized fuel is easily stored and in the summer, cheap and in surplus).

The best thing we could do is try to build faciliteis to store even more gas and propane, so that when we have these mild spells, we have somewhere to save the fuel for a rainy day!

Roger Conner known to you as ThatsItImout

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vtpeaknik on June 10, 2006 - 11:35am

Not sure Propane is that easy to store: yes it liquifies under moderate pressure at ambient temperatures, but in large quantities that's an expensive tank relative to unpressurized tanks for liquid fuels, or cavern storage of LNG.

OTOH, storing a moderate amount of propane as a liquid in a pressurized tank in a vehicle seems to me as a better way to go than pressurized (but still gaseous) methane. Why is that not done as often? Perhaps because methane has a price advantage over gasoline, while propane does not.

Talking about price, from what I've read, a large part of the propane supply (in the USA) is as a byproduct of the refining of oil, which may explain why its price is unlinked from that of NG, and tracks oil fairly well, despite NG "liquids" being the other source of much propane. As usual, the price is determined by the marginal, most expensive, source.

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vtpeaknik on June 10, 2006 - 11:37am

Oops, I meant "cavern storage of NG", not LNG of course. LNG isn't stored any longer than necessary for transport, as the energy cost of keeping it cold is enormous.

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