...it is a tale told by an idiot, full of sound and fury, signifying nothing...Moving on to another good scribe, Kate Mackenzie has been writing some of the best big-picture stuff on natural gas that's out there. Here's a taste via FT Alphaville:
Since 2009 the stark contrast between oil prices (high) and natural gas prices (low) in the US has prompted questions, and visions of a new future of transport fuels.If the demand from the transportation sector had achieved the projections of 3 to 5 years ago natty would be trading at $7.00 in the U.S.
There was some excitement that this might be gathering steam when Warren Buffett’s freight train network BNSF revealed it would trial LNG powered trains. This is the sort of thing that T. Boone Pickens has been pushing for years: use domestic natural gas as transport fuel to reduce costs, reduce emissions and diminish US dependence on oil imports, while providing a ‘bridge’ to renewables-based infrastructure.
BNSF is not the only one trying it. This FT oped by Citi’s Seth Kleinman argues that there is “a rush in the US to substitute natural gas for oil”, which “will soon go global” (his related full note is in the usual place). Kleinman talks about cars, trucks, trains and even aircraft running on natural gas.
Will this be enough to help bring about the end of the age of oil demand? Kleinman in his note forecasts that “some 30 per cent of carrier fleets and 50 per cent of rubbish trucks will be running on CNG in the US by the decade’s end”.
Making long-term energy predictions is a mug’s game and Todd Woody at Quartz has just dug up a nice example: looking at what the EIA (the US energy statistics agency) predicted back in 1999 about the energy landscape in 2020. Not only did it fail to predict shale gas — a forgiveable miss — but its forecasts also wildly underestimated wind and solar capacity, expecting them to grow by roughly a third through to 2020. Interestingly, even though the EIA didn’t predict the shale gas boom, it was over-optimistic about the growth trajectory for global natural gas consumption – predicting it would be the fastest-growing energy source through 2020, when for several years now coal has taken that honour. The EIA’s total gas consumption forecast for 2010 was also too high, with almost 3,500bn cubic metres of consumption forecast compared to 3,153bn in reality.
Kleinman cites Warren Buffett’s BNSF railway as another example of substitution; that’s indeed a big company that uses a lot of diesel. Yet its move to natural gas is nowhere near certain. As the WSJ’s Russell Gold, who reported the BNSF’s testing of natural gas instead of diesel, reports, it would raise by 50 per cent the cost of a each locomotive’s roughly $2m price tag. That’s why it’s a test....MUCH MORE
Right now the front futures are down 2 cents at $4.15.
Until we see gas make some serious inroads, say as a bunker fuel for ships, anyone who does natural gas-oil ratios is just wasting brain cells.
We have dozens of posts on Boone Pickens, his (and Nancy Pelosi's) Clean Energy Fuels and Westport Innovations with their natural gas engines although the most recent post was Nov. 2012's "Soros-backed Westport Innovations Approaching Triple Bottom Low (WPRT)".
The first two parts of Kate Mackenzie's Natural Gas: The Hot Air Case series:
The US manufacturing renaissance
About that peaking global oil demand…
