Posts tagged “natural gas production”
I read an article this morning where one analyst predicted that we are in a 10-15 year bear market for oil. The analyst stated that the market is oversupplied by about a million barrels per day (it isn’t — see the charts in today’s article), that shale oil production will surge this year (it won’t), and that the OPEC agreement to cut production would fall apart (it won’t). His projection was that we will spend 2017 below $50 per barrel (bbl) and in 2018 prices will be back below $40/bbl.
I disagree with this assessment. I believe we will look back in a few years at 2016 as the year the energy sector recovery got underway in earnest. I believe 2017 continues the recovery. Today, I explain how I see the energy markets shaping up this year, in the context of my 2017 predictions.
1. Crude oil will flow through the Dakota Access Pipeline (DAPL) in 2017. CONTINUE»
In January of this year, as I do every year, I made several energy predictions for the upcoming year. (See My 2016 Energy Predictions). Now that half the year is in the books, I thought it might be a good idea to check in and see how these predictions are tracking.
As a reminder, I strive to make predictions that are specific, measurable, and preferably actionable. If forecasts are broad and vague, one can almost always declare victory. I would also remind readers that my predictions are based on what I believe will happen, which isn’t the same thing as predicting what I want to happen. My desire for a particular outcome has absolutely no bearing on a prediction. I am simply trying to accurately gauge the most likely outcome.
Here are the predictions, along with an update through the first half of the year. CONTINUE»
Each year in June two very important reports are released that provide a comprehensive view of the global energy markets. The highlight of the recently-released Renewables 2016 Global Status Report (GSR) was that the world’s renewable energy production has never been higher. But the biggest takeaway from this year’s newly-released BP Statistical Review may be that the world’s fossil fuel consumption has also never been higher.
Demand for crude oil set a new all time-high in 2015. Despite all the hype about electric vehicles and peak oil demand, the world’s oil demand continues to grow unabated — growing a robust 1.9 million barrels per day (bpd) from 2014 (+1.9% year-over-year).
When I made my annual energy predictions a year ago, I noted that I foresaw a “lot of uncertainty in the energy markets” and indicated that “the direction on several fronts is unclear.” That certainly proved to be the case as numerous pundits – including me – missed on oil price predictions.
Unfortunately, the market uncertainty is carrying over into 2016. This has implications for several predictions so, as I cautioned last year, it will be a challenge to repeat 2014′s record. But as always, the context is more important than the prediction itself, because context allows one to adjust one’s own views as events play out during the year. I may predict an oil price, but I also try to provide context as to what could go wrong with a prediction, so that readers can adjust their own expectations as the year unfolds.
As a reminder, I strive to make predictions that are specific, measurable, and preferably actionable. If forecasts are broad and vague, one can almost always declare victory. CONTINUE»
Back in February, I wrote an article called Natural Gas Inventories are Headed Toward Zero. The purpose of the article was to call attention to the fact that natural gas inventories were experiencing the fastest decline in U.S. history, and were approaching dangerously low levels heading into the end of winter. In August I did an update to that article called Why Natural Gas Prices Collapsed. Because natural gas prices rose following that article, and since injection season is now over (see below), let’s once more revisit what happened with natural gas this year.
In prior articles, I explained how the U.S. natural gas inventory system works. The U.S. has 9 trillion cubic feet (tcf) of natural gas storage capacity, but according to the Energy Information Administration (EIA), the actual amount in storage has never exceeded 4 tcf. During the summer season when demand is lower, natural gas inventories will usually build to between 3 and 4 tcf. This build usually starts around mid-April, and then about mid-November as cold weather begins to ratchet up natural gas demand, the withdrawal season begins.
This year injections began during the first week of April. At that time, natural gas inventories were at their lowest level in more than a decade, so that any supply/demand imbalances during injection season could cause natural gas prices to spike. In fact, gas prices did spike several times toward the end of what was the coldest winter in many years. My thesis was that low inventories would affect the natural gas markets in the following ways. Year-over-year natural gas prices were likely to be higher than the previous year because supplies were lower. Natural gas producers would need to produce at high rates to replenish the inventories, and since I believed they would be getting better prices for the natural gas, profits would be up for most producers. This, naturally, would cause the share prices of natural gas producers to rise. CONTINUE»
This is the 2nd installment in a series that examines data from the recently released Statistical Review of World Energy 2014. The previous post – World Sets New Oil Production and Consumption Records – delved into world oil production and consumption figures. Today’s post looks at the global natural gas picture.
In 2013 global natural gas production advanced 1.1% to a new all-time high of 328 billion cubic feet per day (Bcfd). Except for a one-year decline in 2008-2009, global gas production has risen fairly steadily for about three decades, and production has more than doubled during that time span:
This is the 4th installment in a series that examines data from the recently released 2013 BP Statistical Review of World Energy. The previous posts were:
- Renewable Energy Status Update 2013
- Hydropower and Geothermal Status Update 2013
- The State of Oil According to BP
Today’s post delves into the natural gas production picture.
The US as Gas King
Over the past seven years, the US has firmly established itself as the global king of natural gas production (and consumption). In 2011, the US produced 62.7 billion cubic feet per day (bcfd) — more natural gas than any country had ever produced in a single year. That record fell in 2012 when the US produced 65.7 bcfd — which represented just over 20% of all the natural gas produced in the world. And thus far in 2013, US natural gas production is running ahead of 2012’s record production level.
We all remember our Economics 101 lesson that price is the equilibrium point between supply and demand, and that fact has not changed. Right now, there are a plethora of opinions about the future direction of natural gas (NG) prices, both immediate and long-term, and you have probably heard most of them. Suffice to say, with the range of projected NG prices so wide, I decided to take a hard look at the data and keep my projected view of NG prices on a very short-term timeframe. Quite frankly, looking out more than one year is pure speculation even if it’s based on educated analysis.
The U.S. Energy Department (EIA) reported that U.S. gas inventories were 2.2 trillion cubic feet (Tcf) for the week ending February 22nd, a decline of nearly 6% year-to-date (YTD) compared to last year for the same period; however, storage remains 16% above the five-year average. Comparing the YTD averages since 2008, NG still remains above prior years except for 2012. So we have good news and bad news, good that 2013 NG levels are running below 2012, bad that NG levels still remain at very high levels.
Let’s look at the good news; it appears that NG production has slowed in early 2013. I looked at my NG database that covers U.S. NG production; year-over-year production 4Q 2012 to 4Q 2011 is flat at roughly 0.0% with the multinationals down 4% YoY on the quarter, and the U.S. Independent E&Ps up only 2% YoY on the quarter.
In this week’s episode of R-Squared Energy TV, I answer questions on palm oil and hydraulic fracturing (fracking). Some of the topics discussed are: The EPA decision to exclude palm oil from qualifying as renewable biomass under RFS2 The Chinese influence over the palm oil trade The issue of trade-offs in our energy choices Agendas in the fracking debate After I recorded the clip, I did some research on exactly how the EPA treats palm oil (I should have done it before recording the clip), and they say that “oil palm plantations would have to meet the criteria for existing agricultural land in order for their fruit and crop residue to qualify as renewable biomass under RFS2.” I am not… Continue»