Herein is revealed the 'true' nature of the Green Shift-- a massive resource giveaway to the worst environmental criminals on the planet.
In glut, EnCana's big find untapped
Company won't develop third-largest field until demand recovers and that
will take a major market shift
Shawn McCarthy
Ottawa -- Globe and Mail Update Last updated on Thursday, Sep. 10, 2009
08:02AM EDT
EnCana Corp is touting the Horn River shale deposits in British Columbia as the
continent's third-largest natural gas field, but needs a fundamental
market shift to make it commercially attractive.
EnCana's dilemma is reflected across North America - natural gas
companies are bullish on new sources of shale gas, but that very
prospect of new production is driving down prices to the point where
development is uneconomic.
With North America's glut of gas showing no signs of abating, producers
need a structural change in the energy markets - with more demand from
new natural-gas-fired power plants and the broad adoption of natural gas
vehicles - to boost the long-term demand for their fuel.
Even with depressed prices, the national gas industry likely faces a
long wait for demand to rebound to its pre-recession level, let alone
grow significantly beyond that. And so producers are faced with the
unhappy prospect of being forced to slash production in order to prop up
prices.
" We will probably have a situation where - for the next five or six
years - we will have abundant supplies of natural gas. "-- Mary
Novak, IHS Global Insight Inc.
At an investment conference in New York Wednesday, EnCana executive
vice-president Mike Graham said drilling results in the remote
northeastern corner of the province suggest the Horn River basin could
hold as much as 500 trillion cubic feet of gas in place.
Further confirmation of the Horn River potential is a boon for B.C.,
which stands to reap economic benefits from further development and
eventual production from the basin.
But at current gas prices, Calgary-based EnCana - North America's
largest gas producer - would be unlikely to develop its Horn River
properties. The company says Horn River needs prices of at least $6 for
1,000 cubic feet to be commercial. On the New York Mercantile Exchange
Wednesday, natural gas for delivery in October closed at $2.84 (U.S.)
per mcf.
EnCana expects the market to eventually recover to the point where it
can tap the high-cost Horn River field, which requires expensive
pipelines to get the gas to market.
"You have this great success in bringing on more supply [across North
America] and that came to the fore just as the economy turns and so
demand dropped off," EnCana spokesman Alan Boras said.
"Over time, we would anticipate that prices will recover ... to a level
where we believe we can bring on these new supplies."
http://www.theglobeandmail.com/globe-investor/in-glut-encanas-big-find-u...
One sign of the glut: Storage facilities in the United States are
virtually full. Analysts warn that, without dramatic production cuts
this fall, gas prices will plunge even further once producers can no
longer inject gas into storage.
Typically, a bust in the natural gas market would carry the seeds of its
own recovery: Low prices force companies to slash drilling and shut in
production, but also encourage consumers to use more gas.
That rebalancing could take years, especially if North America
experiences another relatively mild winter.
"We will probably have a situation where - for the next five or six
years - we will have abundant supplies of natural gas," said Mary Novak,
energy economist with IHS Global Insight Inc.
However, conventional production in both the U.S. and Canada is expected
to decline rapidly in the coming years, due to low prices and the
maturing gas fields. So, eventually, the market will tighten again.
"It's not like we're going to be awash in natural gas for the next 30
years."
In a forecast released Wednesday, the U.S. Energy Information
Administration said U.S. gas production - which climbed sharply in 2008
- rose another 0.9 per cent in 2009 but should fall by 3.5 per cent next
year as a result of a 45-per-cent drop in drill rig activity since the
start of the year.
In Canada, companies have begun shutting in wells as prices have fallen
below levels where production is profitable, says Martin King, an
analyst with First Energy Capital in Calgary.
He estimates that as much as one billion cubic feet per day of Canadian
production will be taken off the market this fall, and those cuts should
be enough to stem the price slide.
On the demand side, the IEA forecast that U.S. natural gas consumption
will decline by 2.4 per cent this year and remain flat next year.
One bright spot: While power generation was off 4.5 per cent for the
first half of the year, natural gas consumption in the power sector
actually grew by 3 per cent.
However, demand in the U.S. power sector should actually decline over
the next few years as new coal-fired plants come on stream, said Amber
McCullagh, a Houston-based gas market analyst with Wood Mackenzie.
While some fuel switching occurred in the power sector, residential,
commercial and industrial consumers are less able to respond to low gas
prices, and the industry expects little growth from those markets beyond
a normal rebound from recession.
One key unknown: To what degree will government policy encourage power
utilities and transportation networks to use natural gas as a low-carbon
fuel?
The industry in both Canada and the U.S. insists that natural gas is an
attractive alternative to coal in the power sector and to oil in
transportation.
But governments so far have focused their attention on renewables and
conservation, and on electric cars and gasoline-electric hybrids.
"We think of natural gas as part of the low-carbon solution and not an
impediment," said Chris McGill, managing director of policy analysts,
for the American Gas Association in Washington.
"We're not waiting for any huge technological advance or draconian
measure ... and we believe we can meet market requirements with a
domestic, secure, North American supply, to be sure."
9/10/2009 8:20:47 AM
So does this mean that we won't force Peru to keep killing its own
aboriginals to get their oil and gas rich 46,000 sq. km. reserve. I mean
just because Harper's Senate clowns approved this Free Trade Agreement
on June 17th, even though 34 of them were killed by the Peruvian Army in
a 'raucous' protest over the deal, doesn't mean that the Alberta
oil-patch has to persue this Canadian-Government Sanctioned persecution.
Yeah, the deal has a clause, that either Peru or Bolivia have to defend
Canadian companies against their own people. That is as sick as it gets.
9/10/2009 8:37:44 AM
Scotdoc, interesting post. My great uncles owned ElDorado back then,
actually from the mid-30's. What I fail to understand is that we can
develop a tuned vacine for a deadly flu in 3 months, but we can't
neutralize 7 atoms in Nuclear Waste, after 70 plus years of watching it
waste and kill people, and force huge populations to live with the
nuclear waste like the UK or US or even Canada, to put up with the lack
of will to research it and get it done!
This September, 2007 UK article is titled:
Caution over plutonium stockpile
http://news.bbc.co.uk/2/hi/science/nature/7006056.stm
And it leads to other side issues, like how deep to bury it, how long
the containers will last, what damage it causes to water and land, Radon
Gas and Lung Disease. Minor stuff, not worth researching. I mean the
cost to lose the FEAR FX is too cheap. FEAR FX count more.
Haven't we been researching Cancer for about the same time? Since one
cures the other? hmmm. Good Government, yep. Eyes closed shut.
9/9/2009 9:40:13 PM
so much for BC relying on nat gas to somehow compensate for the lack of
real industry.
As someone who used to work for an oil and gas drilling technology
company, I can assure you that developing these huge fields in the
muskeg of northern BC is anything but low cost no matter if the
government gives it away with 2% royalties or not.
9/9/2009 11:46:12 PM
I see we still have atomic power advocates around.....60 years ago I was
one, in my innocence.....and even handled a bar of uranium
metal.....rather like bronze and very heavy..........Atomic power was
sold back then on the prospect of UNLIMITED CHEAP ELECTRICITY that would
be delivered 'FREE' and unmetered like water..........Who would not fall
for that prospect at the age of 17?
Of course as we see now, (1) Atomic power did not live up to it's
promise(2) It was unreliable, and seldom produced to specification (3)
construction cost over runs were the norm. (4) Human error lead to near
catastrophic episodes in the USA and USSR(5)no super annuated reactor
site anywhere has been returned to green field status(regardless of
expense) and finally (6) there is as yet no secure safe repository for
radioactive waste.
CANADA SHOULD FORGET ATOMIC ENERGY....LET OTHER COUNTRIES TAKE THE RISKS!
Natural gas is an excellent fuel but also a feedstock for synthetic
gasoline using the SASSOL technology and a feedstock for methanol the
building block of many organic compounds.
Canada is blessed with a super-abundance of gas(for which I am happy,
being a shareholder of Encana) and this will support our Canadian
economy for many years ahead..........The low prices today will
certainly not impede demand from Industry or Home Owners who use it for
heating.
