[kublikhan]

Sounds about right Synapsid. Although I don't see OPEC's budget issues having much impact on the price of oil. Supply/demand will be the more important factor there. OPEC price fixing power seems a pale imitation of it's days of yore.

LNG typically needs oil above $80 a barrel to be profitable($12+ MMBtu). Could be awhile before we see oil at $80+ levels. LNG has been fetching closer to $8 MMBtu and could fall as low as $6 MMBtu before we see the end of this slump. LNG profits from the spread between domestic prices and foreign prices. Ex: the difference between henry hub and Asia. Oil should come back up eventually.

But then US natural gas prices should come back up eventually as well. EIA is projecting rising US natural gas prices from now until 2040. We have seen the US natural gas drilling rig count drop from around 1000 to 200. We are just about at the point were declines from existing wells have caught up with new gas coming online and overall US natural gas production will start to fall.

When Brent crude sells for $100, oil-linked natural gas contracts typically translate to around $14 MMBtu, giving U.S. LNG a big price advantage. This advantage disappears as crude prices fall, with crude at $60 LNG indexes to $8.40 per MMBtu. U.S. LNG producers have been targeting prices of $11 or $12 per MMBtu to be profitable after absorbing the costs of buying the gas, liquefying it, shipping it around the globe and regasifying it. When crude oil prices dropped below $80 per barrel, LNG from the US became less competitive in Asia compared to plentiful gas from Australia and Qatar. Many countries have entered the LNG export trade in the last decade, contributing to a crowded market.

Impact of Falling Oil Prices on LNG

Asian liquefied natural gas (LNG) prices could fall a further 25 percent in coming months as new supply, falling demand and weaker oil prices put it on par with iron ore and coal as the worst performing commodity of recent years.

Asia's LNG market has already fared worse than slumping oil markets, with spot prices LNG-AS down 60 percent since 2014 to $8 per million British thermal units (mmBtu), ending half a decade of high prices. Australia's biggest energy firm, Woodside Petroleum, in August reported a 40 percent slide in first-half profits and said it expected LNG prices to remain low into 2016. Ratings agency Moody's said on Monday it expected Woodside's credit metrics "to deteriorate substantially from its previously very strong levels." LNG prices look to have further to fall. Analysts and traders said Asian LNG prices could fall to $6 per mmBtu, representing a 70 percent price drop since 2014 and putting it in the same league as coal and iron ore.

Asian LNG price faces steep fall

Natural gas production across all major shale regions in EIA's Drilling Productivity Report (DPR) is projected to decrease for the first time in September. Production from these seven shale regions reached a high in May at 45.6 billion cubic feet per day (Bcf/d) and is expected to decline to 44.9 Bcf/d in September. In each region, production from new wells is not large enough to offset production declines from existing, legacy wells. As rig counts fall, increases in rig productivity are necessary not only to compensate for the reduced rig total, but also for rising levels of legacy-well declines. Given the substantial drop in rig counts since the fourth quarter of 2014 in each of the DPR regions and growing declines in production from legacy wells, productivity increases are less able to completely offset lower rig counts and legacy-well declines.

EIA expects near-term decline in natural gas production in major shale regions

[kublikhan]

Just as fracking has become significantly cheaper due to tech improvements I have no doubts LNG transport tech will follow suit. Never predict tomorrow on today's tech, if the fuel is present and the profit is there then the discoveries follow. In fact, lower gas prices could well drive the whole transport system to new methods and cheaper levels- were talking about floating liquids around the world- not particle physics.

Sure there will be improvments made. But LNG will never be as cheap as piped gas. There are sunk capital/energy costs with the cryogenics involved with LNG.

LNG projects are well on their way- I think these LNG people know what they are doing and trust their inside knowledge of whats coming.

Check again. These guys are struggling.

Renewable fuels are best suited for sparse populations with plenty of land vs. people- not concentrated mega-cities that need non-intermittent fuels sources for industrial and commercial activity. Gas and nuclear are the only two fuels that can pull of this trick with the least CO2 impact.

Sure there are some small scale renewables in off grid applications. But the vast majority of renewables are deployed in the same area as their fossil fueled and nuclear counterparts: grid tied.

MYTH 3: RENEWABLE ENERGY CAN’T SUPPLY ELECTRICITY 24/7
Renewable energy can meet all our energy needs in a safe and reliable way. When the shares are small, balancing supply and demand goes with the flow as part of the overall grid management. As shares of wind and solar approach 30% and more, smart integration becomes important. Intelligent technologies can track and manage energy use patterns, provide flexible power that follows demand through the day, use better storage options and group producers together to form virtual power plants. With all these solutions we can secure the renewable energy future needed. We just need smart grids to put it all together and effectively ‘keep the lights on’.

6 MYTHS ABOUT RENEWABLE ENERGY, BLOWN AWAY

[ROCKMAN]

Just a reminder of how LNG sales work. Most important: the price of the NG purchased to liquify has no bearing on the profit margins of the LNG company. $billions are not invested on these facilities on the hopes of future LNG prices. Check the Chenier web site: they break it down. The LNG buyers signs a contract agreeing to pay the Henry Hub NG price + the cost to liquify + The cost to transport + the Chenier PROFIT MARGIN. And it's an iron clad contract backed up by bonded guarentees. Contracts that typically run 15 to 20 years.

If LNG infrastructure projects are being delayed/suspended it's because those contracts are not being signed by the LNG buyers. But here's their problem: the economics might not work for them today. But in 5 years...10 years? LNG is a very long term game and you take your chances. Look what happened to Japan after their little nuke problem: they paid up to $30/mcf for spot LNG. And not just them: a couple of winters ago the Boston utility paid $25/mcf (when well head NG was selling for less than $3.50/mcf) for a number of loads of spot LNG during a very bad cold snap.

[Plantagenet]

NG can replace oil as a transportation fuel for many purposes.

I'm in New Delhi just now, and just about all the tuktuks (little three wheeled scooters used as a taxis and small trucks) are powered by CNG. They used to run on diesel ---and were notorious for blasting out black cloud of soot.

The new CNG tuktuks run great and are much cleaner.

[ROCKMAN]

There has been no significant improvement in frac'ng tech in years. Until the recent decline in oil prices frac'd wells were costing more then ever before. That cost has come down this year but has been due entirely to the increase in competition amongst the service companies resulting from the collapse in the rig count. A collapse obviously due to the decline in oil prices.