LNG Solutions of Boston

There has been a flurry of commentary recently about the LNG tankers that cruise through Boston Harbor on a weekly basis. I read the Lynch piece in the Boston Globe and now I see a local grass roots type blog has sprouted up called LNG Solutions.

Even though this is a noble fight, in reality, what is really going to change? Nothing. New England is natural gas starved (end of the pipeline) and all models call for major increases in LNG imports. It takes at least 3-5 years to permit and construct a safe and acceptable LNG heating facility. At that point, the entire supply situation in North America will be much more clear (and likely scary). Do you really think the Everett LNG terminal will ever close? Not likely in my opinion ... but interesting to note the activity and interest in LNG of the past few months

you have got to be kidding me

somewhat off topic, but this nytimes article has a couple of amazing stories:

Urbanologists call them extreme commuters, and to qualify for that title you have to travel at least 90 minutes each way to work. According to the Census Bureau, 3.4 million American workers fall into this category, an increase of 95 percent since 1990.

Ms. Fucito and her husband drive up Interstate 95 every morning, dodging tractor-trailers. The ride takes up to two hours, and Ms. Fucito gets to listen to her husband yell at the other drivers, who cannot hear him.

"I do enjoy the trip," says Kellie Anglin, who travels 72 miles each way every day from her home in Carroll County, Ga., to her job as an account executive with a financial processing firm outside Atlanta. "Is that crazy?"

umm ... Yes

bad idea jeans

reading an article from the dfw star-telegram on drilling the continental shelf on either coast of america for natural gas makes my head spin:

Never known to take "no" for an answer, the Republican Congress stands ready to toss out a more than 20-year moratorium on drilling for natural gas on the outer continental shelf.

i'm sure eventually once the energy crisis swings into full scale attack mode (maybe 5 - 10 years from now), america is going to end up drilling all of these places - ANWR, continental shelf, florida, etc

but i'm maybe not going to place the blame on the republicans. how about the democrats? where is their energy policy platform? how this issue is not front and center on everyone's radar is beyond me. and i think the dems deserve a good amount of the blame for that

pathetic the way they are missing a golden opportunity to alert americans and win some political capital

are LNG tankers safe?

when i see a picture like this - very large tanker full of highly flammable gas, trawling through a dense urban environment - i can't help but feel ... uncomfortable.

as the article states, "Recent federal government studies have shown that an explosion of a large LNG tanker — whether caused by accident or caused by terrorist attacks — could devastate nearby areas via intense thermal heat."

i know that boston harbor is very well protected, especially when an LNG rolls into town, but the potential for badness here is basically off the charts

conservation will be key

many have said it: the easiest way to produce more energy is to reduce consumption. or something like that ...

i stumbled upon this article in the westport (conn) minuteman, highlighting issues for businesses in fairfield county.

not surprisingly, primary trouble spots include the traffic issue and energy costs. regarding traffic in fairfield county - i grew up in that area and also have commuted to work in that area in the past. the traffic problem is significant and a major detractor to the quality of life for the average joe. around 1990 i could drive from shelton to fairfield at rush hour in about 25 minutes. today, that drive will probably be closer to an hour of stop and go madness ...

anyway, back to the article. business leaders are very aware of energy prices. the article states:

"Businesses in Fairfield County are also willing to take conservation steps and endure short-terms spikes in order to get longer-term, lower costs of power.

Thirty-two percent of respondents have taken five or more steps to conserve energy. Between 30 and 73 percent of respondents have already taken steps to adjust HVAC, install new energy equipment and procedures, and replace or upgrade lighting to save energy."

i imagine the higher part of that range applies to the upgrade lighting and the lower part of the range applies to install new energy equipment. regardless, i was surprised that so many businesses have started to conserve.

the effects of high natural gas prices, which appear to have forced some industry to shut down unprofitable operations plus these types of conservation efforts have likely mitigated the effect of the hurricanes in 2005. the market does seem to be working to avoid serious problems.

i wonder what it will take to reach a true crisis point? clearly, 2006 will not be the year ... i wonder when things will get dicier?

deflating natural gas price balloon

as i write this, the spot price for henry hub natural gas future contract is $8.70 per million cubic feet

safe to say that concerns about old man winter have receded to the background. it appears that the speculators realized the jig was up and sold overpriced contracts. the market appears to have stabilized in the past week or so at this price level

the EIA's weekly natural gas storage report showed stock drawdowns of only 20Bcf and - more importantly - showed that current storage volumes are well above the 5 year average for this week of the year

so the air is officially out of the ng balloon. safe for now, but the future still looks quite hazy, as the oil drum explains

one vote for old man winter

per this article, price is being supported by concern over a long, extended cold snap this winter that could draw down gas in storage. i'm still looking for more insight into what futures traders are concerned about, but the article contains some interesting nuggets ...

In New England, however, fully 40 percent of electricity is drawn from natural-gas-fired power plants, up from just 17 percent in 1999.

Still, hurricane damage continues to block about 6 percent of the nation's gas supply flowing through pipelines north from the Gulf of Mexico. The government reported last week that 32 percent of the Gulf supply remains "shut in" - a loss of 3.2 billion cubic feet per day. That's at the high end of the range the INGAA predicts will be "missing" this winter. This missing flow of gas could be critical in mid- to late winter, when reserves are drawn down.

Train Kept A-Rollin'

the writing on the wall is somewhat difficult to interpret. on a day when the entire energy complex is selling off - and doing it quite dramatically - natural gas just keeps chugging along.

are energy traders concerned about the prospects of a cold winter, which might act as a vice - tightening a market that is struggling to find breathing room? if they are, that concern may be misplaced in light of the eia's latest ng update, which shows that natural gas in storage has grown nicely post-katrina and is above normal levels. given that high price is likely destroying some demand, one would think price might begin to recede.

that is not happening. something else is keeping traders nervous about natural gas this winter. either that, or the price is being supported by speculation. i'll continue to try to dig up reasons underlying these high price points