Saturday, October 23, 2010

Daily Marcellus

Must read from the National Geographic of all places. Covering all sides it has: Forcing Gas out of Rock with Water. Also in same issue: A Drive for New Jobs Through Energy and A Dream Dashed by the Rush on Gas and Parks, Forests Eyed for the Fuel Beneath
For those waiting for royalty checks it is important to note that natural gas prices continue to plummet.  What is the great mystery is that given lower prices, along with the fact that T Boone Pickens is virtually pleading with natural gas producers to cut back production, nothing seems to be slowing the development of shale gas in Pennsylvania.  I wonder a bit.. if the summer had not been excessively hot, which boosted natural gas generated electricity, what would prices be now and would there be a storage problem in the industry?

Speaking of mysteries... some recent jobs number document the vast increase in mining jobs statewide.


Anonymous BrianTH said...

I'm not sure I see the mystery. Low gas prices are as much or more a supply-side effect as a demand-side effect, and that new low-cost supply is basically Marcellus. In fact low prices should increase demand for gas, causing even more of a supply-side response--but preferentially from the new low-cost source, thus driving down gas prices further, and thus increasing demand further, and so on.

So the expected outcome of this dynamic is an ever-increasing share of natural gas production, and indeed energy production in general, going to the new low-cost source, until we reach something close to the maximum rate of production from that low-cost source.

Saturday, October 23, 2010 8:25:00 AM  
Anonymous The Wiz said...

Just got back from Ohiopyle where I rode my mountain bike all day...too tired to type right now and didn't have time to read all the linked articles. But I will buy a copy of that NG as it looks very interesting.

Here's an AP article about the affects of cheap gas on other energy sources that was in the Youngstown Vindicator. Delayed wind farms, canceled or delayed nuclear plants.

And CNBC Friday quoted analysts that said they expected gas to stay below $5 or $6/MCF until 2012 at the earliest.

Saturday, October 23, 2010 8:57:00 PM  

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