Why did British Gas raise prices?Simply put, because they can. Centrica would actually be failing their shareholders if they did not take advantage of the total lack of clarity and knowledgeable regulation provided by Ofgem. I said when SSE raised their prices that any other gas company would have questions to answer to their shareholders if they didn't follow the SSE lead.The other reason they can is that what is in a gas or electricity price is completely untransparent: Ofgem themselves don't know, and worse, show no interest in knowing.The cost of service, i.e. what a gas provider pays transporters and meter operators is about 0.9 pence per kWh [England must have a lot of gas-fired electricity] for a domestic user. It varies around the country, but 0.9 is on the high side. Those costs are identical by law. Everyone gets the same price regardless of size.That leaves the commodity cost of the gas itself.British Gas, as do the other suppliers, tell their customers, and Ofgem who are so clueless that they believe them, that they buy gas 12 months or more in advance.It beggars belief that a price was settled 12 months ago and carved into stone a year ago. Apart from anything else, it is one of the basic truths of any commodity that spot prices trend lower than futures.For another thing, the difference between traded and physical volumes is at least 40 to one. That is, the kWh of gas you use today was traded at least forty times before it reaches your meter.This is how gas is traded in 2010: If it isn't please hire me Mr Centrica, I can really make you some money!Physical volumes of gas are rarely priced on anything except the spot market as settled daily at a virtual location called the UK National Balancing Point. Almost no gas at all is bought on long term contracts which included a fixed price.How do we know this? Its no secret. The UK gas market has multiple traders. Centrica is only one, with financial houses like JP Morgan, Barclays Capital and Goldman active although they don't supply anyone. There are producers and utilities from all over the world active in the UK spot market.But Ofgem, when it investigates gas prices at all, is unaware of those changes. It believes whatever suppliers tell them. There has never been a full analysis of what costs the suppliers actually incur. Why not? Because Ofgem doesn't think it necessary. So they take everything on trust. Imagine if banks were regulated this way!When a utility buys gas, it agrees the physical volumes, within tolerances, but the price is not set until the gas is delivered to the NBP, which is on the day of actual use.The NBP market, as we see above is very volatile. The figures on the chart come from the National Grid over the last six months. Price last winter averaged 1.229 [remember, not dollars] and only averaged 1.29 in January , the coldest month in 33 years.The gas market is volatile because it matches supply and demand, both equally volatile. The market settles each day. Basically a supplier has to balance. They can, and often do, put in gas one day that they bought the day before or traded during the actual day. They never, ever, ever, ever buy gas months or years in advance at the price on the wholesale market. They used to, sure. But not any time this century. They may for example buy July 2012, but the month will actually be traded multiple times before the stuff actually shows up. No way Jose are they stuck with the price for July 2012, or February 2011 or next Tuesday which they have to pass on to you.The price they pay is pretty close to the prices daily on the chart above. What is the average price? It's complicated, as although it looks like September 18 was a cheap gas day, who used much gas on September 18? But the average gas price since May was in the area of 1.4 pence per kWh. Add the cost of service and the average total cost to BG, or any other supplier, was 2.3 ish [remember, this is not dollars]. Anything else is gravy.It's hard to figure out how much gravy, unless you actually look at your bill. First problem is the tiered pricing. The first 600 or so kWh each quarter are over 6 pence per kWh most places. They are that high since there are fixed costs to serve that are the same for everyone. They should in theory cover most of the 0.9 cost of service. But if one averages out the cheaper units which are in the area of 2.9 most places, we see that at least 25% of your utility bill is pure margin.This will mystify North American readers. They have a default option denied to UK consumers. The state regulator publishes clear costs of service. The meter is read every month, usually remotely, usually accurately. It isn't rocket science. National Grid own utilities throughout New York and New England for example and manage that no problem.The commodity cost is also clear, and is based on an agreed formula linked to wholesale spot markets. It can go up, it can go down. It is completely transparent and clear. Unlike here in the UK, where even Ofgem admitted last year that up to a third of gas consumers who use switching sites "inadvertently" switched to a higher rate.UK consumers: go to one of those switching sites that run endless moronic TV commercials. Note that they do not exist in other countries. Eighty five percent of New York State consumers and over 95% in a very cold Chicago, remain with their local supplier. Despite it being so easy to switch that it can happen the next day, and not six weeks later as in the UK.The UK should have a basic, transparent and fair pricing structure. It doesn't. And Ofgem cost the nation billions during a downturn by being asleep.To the civilians visiting now in light of the BG news. One piece of advice that switching sites won't ever tell you: Don't fix for anything more than the year you are forced to.
Showing posts with label No Hot Air smart grid. Show all posts
Showing posts with label No Hot Air smart grid. Show all posts
Saturday, November 13, 2010
From No Hot Air -- Important
The following article from No Hot Air -- read it. I will be referring to it for a long time. We could substitute Duke Energy for "British Gas" and convert "pence" into American dollars, and change "raising gas prices" to "not lowering gas prices more," and substitute Ohio Public Utilities Commission for "Ofgem" and make the same stunning points which this excellent article does.
Tuesday, June 22, 2010
From the British Blog No Hot Air
Jun 21, 2010
Natural Gas Storage
The WSJ describes here a new, and to the non-expert, rather obvious way of producing and storing gas: Keeping it in the ground.
Because thanks to gravity gas flows out of the ground, until now it's been hard to modulate up or down. It comes out of the hole in the ground and although it declines over time, it's hard to switch it on or off. This causes bizarre economic outcomes, because demand for gas is seasonal. Which explains why there is gas storage. If it was possible to have enough gas wells to deal with one in 40 year demand levels, which it is, it wouldn't work because there would soon be so much gas that it would either go to waste, or actually get flared off as it is in Nigeria and Iraq. There is another issue in that much conventional gas is associated with oil production and if the gas isn't released then the oil can't be pumped either. Which explains why the actual cost of production of gas can actually be negative. Back in the days when North Sea oil was $25 or so, it was estimated that some gas landing at St Fergus in Scotland from North Sea associated oil fields had a cost of minus 4 pence per therm, in the days when the spot price was about 10 pence.
Some people use a similar theory to explain how Qatar can produce gas so cheaply, in that the true prize is Gas to Liquids for fuel. Gasoline or Diesel derived from gas is the true money-spinner according to that theory, and natural gas is a by product that technically the Qataris should pay people to ship away and burn.
Two big swing fields in Europe can be modulated up or down to reflect demand, Groningen onshore Netherlands and Morecambe Bay off shore Lancashire NW England. Both fields by the way are very close to possibly big shale plays.
Shale, as Art Berman likes to tell people declines rapidly, to 80% of it's opening peak within 18 months allegedly. Berman says that this makes shale uneconomic at less than $7-8 MMBTU. I say a lot of people disagree with him. But in Louisiana's Haynesville shale, they may have discovered ways of defying gravity in that they can choke gas:
Natural gas producers are choking back production from wells in the Haynesville Shale, a prolific natural gas-bearing rock formation in Texas and Louisiana, as a way of boosting the overall efficiency and life span of those wells.
The technique represents an important shift in the exploitation of gas from the dense sedimentary rock formations known as shales. Frenzied development flooded the natural gas market last year with, shale gas and the recession cut deeply into natural gas demand, pushing prices to a 7 1/2-year low last September. Now more measured growth from shales could help mitigate future gas gluts and allow for more orderly development of these gas-rich assets.
More orderly development will mean more orderly prices:
We are trying to optimize the reservoir," Kelleher said, noting that the company is trying to come up with the best "economic case" for the Haynesville shale. Devon will drill as many as 30 shale wells in the Haynesville area this year.
Companies have used other techniques to slow production from these fields such as drilling wells without completing them so they can bring production online at a later date and, perhaps, at better commodity prices.
A throwaway at the end here, which shouldn't have been. This could change the economics of gas (and storage) for both better and good:
Producers are starting to think about using these producing assets as a surrogate for storage," said Rusty Braziel, managing director for BENTEK Energy, which tracks energy-market data. Braziel notes that these techniques have an added advantage of allowing companies to manage through volatile swings in natural gas prices.
Surrogate for storage. Disruptor for prices.
Natural Gas Storage
The WSJ describes here a new, and to the non-expert, rather obvious way of producing and storing gas: Keeping it in the ground.
Because thanks to gravity gas flows out of the ground, until now it's been hard to modulate up or down. It comes out of the hole in the ground and although it declines over time, it's hard to switch it on or off. This causes bizarre economic outcomes, because demand for gas is seasonal. Which explains why there is gas storage. If it was possible to have enough gas wells to deal with one in 40 year demand levels, which it is, it wouldn't work because there would soon be so much gas that it would either go to waste, or actually get flared off as it is in Nigeria and Iraq. There is another issue in that much conventional gas is associated with oil production and if the gas isn't released then the oil can't be pumped either. Which explains why the actual cost of production of gas can actually be negative. Back in the days when North Sea oil was $25 or so, it was estimated that some gas landing at St Fergus in Scotland from North Sea associated oil fields had a cost of minus 4 pence per therm, in the days when the spot price was about 10 pence.
Some people use a similar theory to explain how Qatar can produce gas so cheaply, in that the true prize is Gas to Liquids for fuel. Gasoline or Diesel derived from gas is the true money-spinner according to that theory, and natural gas is a by product that technically the Qataris should pay people to ship away and burn.
Two big swing fields in Europe can be modulated up or down to reflect demand, Groningen onshore Netherlands and Morecambe Bay off shore Lancashire NW England. Both fields by the way are very close to possibly big shale plays.
Shale, as Art Berman likes to tell people declines rapidly, to 80% of it's opening peak within 18 months allegedly. Berman says that this makes shale uneconomic at less than $7-8 MMBTU. I say a lot of people disagree with him. But in Louisiana's Haynesville shale, they may have discovered ways of defying gravity in that they can choke gas:
Natural gas producers are choking back production from wells in the Haynesville Shale, a prolific natural gas-bearing rock formation in Texas and Louisiana, as a way of boosting the overall efficiency and life span of those wells.
The technique represents an important shift in the exploitation of gas from the dense sedimentary rock formations known as shales. Frenzied development flooded the natural gas market last year with, shale gas and the recession cut deeply into natural gas demand, pushing prices to a 7 1/2-year low last September. Now more measured growth from shales could help mitigate future gas gluts and allow for more orderly development of these gas-rich assets.
More orderly development will mean more orderly prices:
We are trying to optimize the reservoir," Kelleher said, noting that the company is trying to come up with the best "economic case" for the Haynesville shale. Devon will drill as many as 30 shale wells in the Haynesville area this year.
Companies have used other techniques to slow production from these fields such as drilling wells without completing them so they can bring production online at a later date and, perhaps, at better commodity prices.
A throwaway at the end here, which shouldn't have been. This could change the economics of gas (and storage) for both better and good:
Producers are starting to think about using these producing assets as a surrogate for storage," said Rusty Braziel, managing director for BENTEK Energy, which tracks energy-market data. Braziel notes that these techniques have an added advantage of allowing companies to manage through volatile swings in natural gas prices.
Surrogate for storage. Disruptor for prices.
Tuesday, April 27, 2010
Cramer -- Just Brilliant Last Night
(c) 2010 F. Bruce Abel
OK, so I stopped TIVOing and stopped watching Cramer for the last month or so. Went over to Fast Money guys, whom I like a lot. (Remember, complexity is your friend in trading. It keeps your eye off the ball -- so to speak.)
So Eunie was going to be out until 8 pm or so (she hates the clatter of Cramer and hates the thought that I might be losing a lot of money). So I watched Cramer last night. Awesome! A seminal segment. Or is it just me?
ed note: I just went onto No Hot Air,
http://nohotair.typepad.co.uk/no_hot_air/
and I am reminded that Cramer has been awful when predicting natural gas. So maybe he's not so good on oil either.
Anyway, herein his monumental call on oil stocks and also his withering take on why the analysts are not doing their jobs (they don't read his books is their basic fault).
Here is the beginning of Cramer's verbatim comments for the latter segment. For the former, scroll down to the very bottom of my blog and click on the lisk to "the best of the best" or whatever.
Jim: Surprise! Surprise! Over and over again people have been shocked, absolutely shocked by positive earnings surprises… that should not have been surprising to anyone… hence, my desire to give you a surprise party… in honor of these bogus surprises… they have become the theme of this earnings season… and we saw it play out again today with the surprise of Caterpillar… and the surprise of Whirlpool… two companies that baffled market players with their strength when they reported… standouts on a blah day when the Dow gained less than a point… the S&P was down about a half a percent… just as Netflix, Deckers, and Chipotle shocked, surprised and amazed so many investors with the greatness of their quarters last week...
The only thing surprising here besides my full dressed cake explosion… instead of a more scantily clad, perhaps even a bare-chested bust out… is that anyone was surprised by these fabulous numbers… in fact, they were all predictable… and all easy to see from a mile away if you are looking from the friendly confines of Cramerica… yet these quarters astonished so many people… that is how you get a 10 point single day move in a stock like Whirlpool… I mean a washer and dryer company, this is not no biotech… because some key institutional investors, including short selling hedge funds, just did not see the strength coming… if you watch the surprise party, it all seems very dated to me… the surprise, I mean come on, shocker… and you probably saw the good news coming if you follow the show.
So how come so many investors were genuinely blindsided? How is that possible? Did they just like the movie “Blindside” so much that they decided that blindside would make a good investing strategy? Even if it was a coining, grading cinema… well, anyway… no, no, the institutional investors who were bewildered by Netflix… bewildered by Deckers… bewildered by Chipotle… hey, bewildered by Caterpillar… and bewildered by Whirlpool… well, wait a second, all have one thing in common… they believe the Wall Street analysts who write and squawk on these stocks… and when things got better for the companies during the quarter, the earnings estimates proffered by those analysts were frozen in time from the last quarterly update.
You see these surprises were effectively created by the analysts because they have for the most part, abdicated and advocated their chief responsibility… and stopped entirely trying to calculate or gain estimates intra-quarter… that is not the way it was when I was running my half a billion dollars… uh-uh, see the old days before the adoption of regulation FD, there would have been a slew of repeated intra-quarter estimate bumps on these names… which would have eliminated the blindside surprise factor… but now the analysts have become static and predictable… all they do is extrapolate the last quarter once, right after it reports… and do not take into account anything that has happened in the last three months… that is the root of the surprise factor and the bogus surprise party that I am throwing… that is what propelled these stocks higher.
That is how Caterpillar and Whirlpool took so many people by surprise today… because the people are supposed to be trying to help you stay ahead of the game, weren’t paying attention to what has been happening over the last 3 months… the lift in the consumer, which of course benefited Netflix… Deckers, Chipotle… and Whirlpool… or the obvious return of the emerging markets that helped Caterpillar… were you really surprised? No, because you are not an analyst… these developments were clear to everyone but the analysts who is supposed to tell you what is going to do well… they are paid millions of dollars to do this but they cannot seem to model for the changes that are occurring… positive changes in the worldwide domestic economies… so they just wait for the companies to report before they update their numbers… they listen to their conference call and then they do a spreadsheet… that is all they do now.
And what is so crazy to me is that this almost fictional surprise based on sloth and paralysis, keeps happening over and over again… it keeps working… here look, take Whirlpool, for months now this company… for so many months this company has been telling anyone who would listen that they are really seeing the benefits of the Maytag acquisition… as well as incentives to buy new energy efficient washers and dryers… plus Brazil is a huge market for them… it has been since 1980.. .how could this stock have almost 10 days to cover a short ratio? How could someone bet against this? Given how often Whirlpool told you that things were going great guns… and that is how you rally 10 points when you report… short squeezes by those un, using the previously outdated analysts numbers that do not take into account the nation and the worlds changes since Whirlpool reported last.
Okay, how about Caterpillar? Which has told you again, and again, and again, that orders are coming back globally… and they are a global company… at the same time the domestic market has been so-so.. which is why the analysts seem to be keep missing the big picture… they are like domestic analysts… Caterpillar is a gigantic emerging market play… and emerging markets are incredibly strong… how can people be surprised at the Premier earth moving company is putting up huge numbers? Also, how many times did investors have to hear that you have to buy these stocks… on this show we have been saying it… when the earnings blossom? But before the revenue growth kicks in… people are saying, oh no until I see sales I am not buying… okay, now you have saw your sales… look at what price you had to pay… now, you see what happens when sales accelerate and you are just… well, let’s just say that you almost missed it… you got hurt if you waited for the all clear… if you are waiting for the bell to go off? You are in the wrong game…. go into boxing... unlike the analysts who had to anticipate the turn, you had to jump the gun.
Okay, then there is Deckers… this is one of my plus $100 stocks that I said will not quit… it has now entered the parabolic phase .. in part because the shorts pressed their bets and mistakenly believed that Ugg’s must have cooled off… maybe, look some day they will… but this is a $2b company with a potential Nike like franchise… Nike has a $35b market cap.
How about the Chipotle? It is worth talking about… it has the domestic model of good food… that is right, food that actually does not kill you for reasonable prices… I bet you that that is going to play perfectly overseas… they have a new kind of store, they call it the Model A.. it fits into all of those openings in the mall that are not doing well.. they used to just be in new malls… now next month they are opening in London… Europe soon after… this will be so easy for them because do you know what they do? They source food locally… they will become the first American company to not be an ugly American… they will be using French food… again, it is only $4.5b company… never mind McDonald’s which I own for ActionAlertsPlus.com, my charitable trust, is a $76b company… once again, polymeric move courtesy of the frantic short coverings by hedge funds who simply refused to believe how good this story is.. and you have to be cognizant of how Europe and possibly Asia can fuel international growth… even as there are many more places to put this 1,000 store chain in America without cannibalization… the analysts kept their numbers static… the short sellers believed it.
And finally there is one of my absolutely favorite plays, Netflix… which has the best subscriber growth of any… this stock is now up 30 points from last week… you know, I have got to tell you, there are myriad portfolio managers that love subscriber models for incredibly consistent cash flow and easy does it renewals… again this is only a $5.5b company… it could double in size at a rather rapid pace… no wonder this stock is galloping.
These moves, these so called surprises, were telegraphed in advance… they were telephoned for heaven’s sake… Lady GaGa/Beyonce style… but the analysts were not listening… the surprises? They are surprised because the analysts have allowed themselves to be surprised… I call them sanction surprises… we on Mad Money do the opposite… it is why these Cramer fave situations like Whirlpool, Netflix, Chipotle, Deckers and Cat might elude the incredibly overpaid Wall Street researchers… but they should have been anything but surprising to you at home.
Here is the bottom line…
▼ ▼ ▼ ▼ ▼
Now that you know what is behind the mystifying fact that anyone is mystified by these quarters, well, maybe you can anticipate better… analysts who do not update their numbers during the quarter… and do not nail the top down improvements in the consumer and emerging markets with the franchises that they cover, are the fodder for the moves in a Whirlpool, or a Deckers, or a Caterpillar, or a Netflix, or a Chipotle… the big non-surprise surprise party, no wonder these big money managers cannot beat you… they are relying on the people who are the most surprised… so they get blindsided... I do not want that happening to you.
OK, so I stopped TIVOing and stopped watching Cramer for the last month or so. Went over to Fast Money guys, whom I like a lot. (Remember, complexity is your friend in trading. It keeps your eye off the ball -- so to speak.)
So Eunie was going to be out until 8 pm or so (she hates the clatter of Cramer and hates the thought that I might be losing a lot of money). So I watched Cramer last night. Awesome! A seminal segment. Or is it just me?
ed note: I just went onto No Hot Air,
http://nohotair.typepad.co.uk/no_hot_air/
and I am reminded that Cramer has been awful when predicting natural gas. So maybe he's not so good on oil either.
Anyway, herein his monumental call on oil stocks and also his withering take on why the analysts are not doing their jobs (they don't read his books is their basic fault).
Here is the beginning of Cramer's verbatim comments for the latter segment. For the former, scroll down to the very bottom of my blog and click on the lisk to "the best of the best" or whatever.
Jim: Surprise! Surprise! Over and over again people have been shocked, absolutely shocked by positive earnings surprises… that should not have been surprising to anyone… hence, my desire to give you a surprise party… in honor of these bogus surprises… they have become the theme of this earnings season… and we saw it play out again today with the surprise of Caterpillar… and the surprise of Whirlpool… two companies that baffled market players with their strength when they reported… standouts on a blah day when the Dow gained less than a point… the S&P was down about a half a percent… just as Netflix, Deckers, and Chipotle shocked, surprised and amazed so many investors with the greatness of their quarters last week...
The only thing surprising here besides my full dressed cake explosion… instead of a more scantily clad, perhaps even a bare-chested bust out… is that anyone was surprised by these fabulous numbers… in fact, they were all predictable… and all easy to see from a mile away if you are looking from the friendly confines of Cramerica… yet these quarters astonished so many people… that is how you get a 10 point single day move in a stock like Whirlpool… I mean a washer and dryer company, this is not no biotech… because some key institutional investors, including short selling hedge funds, just did not see the strength coming… if you watch the surprise party, it all seems very dated to me… the surprise, I mean come on, shocker… and you probably saw the good news coming if you follow the show.
So how come so many investors were genuinely blindsided? How is that possible? Did they just like the movie “Blindside” so much that they decided that blindside would make a good investing strategy? Even if it was a coining, grading cinema… well, anyway… no, no, the institutional investors who were bewildered by Netflix… bewildered by Deckers… bewildered by Chipotle… hey, bewildered by Caterpillar… and bewildered by Whirlpool… well, wait a second, all have one thing in common… they believe the Wall Street analysts who write and squawk on these stocks… and when things got better for the companies during the quarter, the earnings estimates proffered by those analysts were frozen in time from the last quarterly update.
You see these surprises were effectively created by the analysts because they have for the most part, abdicated and advocated their chief responsibility… and stopped entirely trying to calculate or gain estimates intra-quarter… that is not the way it was when I was running my half a billion dollars… uh-uh, see the old days before the adoption of regulation FD, there would have been a slew of repeated intra-quarter estimate bumps on these names… which would have eliminated the blindside surprise factor… but now the analysts have become static and predictable… all they do is extrapolate the last quarter once, right after it reports… and do not take into account anything that has happened in the last three months… that is the root of the surprise factor and the bogus surprise party that I am throwing… that is what propelled these stocks higher.
That is how Caterpillar and Whirlpool took so many people by surprise today… because the people are supposed to be trying to help you stay ahead of the game, weren’t paying attention to what has been happening over the last 3 months… the lift in the consumer, which of course benefited Netflix… Deckers, Chipotle… and Whirlpool… or the obvious return of the emerging markets that helped Caterpillar… were you really surprised? No, because you are not an analyst… these developments were clear to everyone but the analysts who is supposed to tell you what is going to do well… they are paid millions of dollars to do this but they cannot seem to model for the changes that are occurring… positive changes in the worldwide domestic economies… so they just wait for the companies to report before they update their numbers… they listen to their conference call and then they do a spreadsheet… that is all they do now.
And what is so crazy to me is that this almost fictional surprise based on sloth and paralysis, keeps happening over and over again… it keeps working… here look, take Whirlpool, for months now this company… for so many months this company has been telling anyone who would listen that they are really seeing the benefits of the Maytag acquisition… as well as incentives to buy new energy efficient washers and dryers… plus Brazil is a huge market for them… it has been since 1980.. .how could this stock have almost 10 days to cover a short ratio? How could someone bet against this? Given how often Whirlpool told you that things were going great guns… and that is how you rally 10 points when you report… short squeezes by those un, using the previously outdated analysts numbers that do not take into account the nation and the worlds changes since Whirlpool reported last.
Okay, how about Caterpillar? Which has told you again, and again, and again, that orders are coming back globally… and they are a global company… at the same time the domestic market has been so-so.. which is why the analysts seem to be keep missing the big picture… they are like domestic analysts… Caterpillar is a gigantic emerging market play… and emerging markets are incredibly strong… how can people be surprised at the Premier earth moving company is putting up huge numbers? Also, how many times did investors have to hear that you have to buy these stocks… on this show we have been saying it… when the earnings blossom? But before the revenue growth kicks in… people are saying, oh no until I see sales I am not buying… okay, now you have saw your sales… look at what price you had to pay… now, you see what happens when sales accelerate and you are just… well, let’s just say that you almost missed it… you got hurt if you waited for the all clear… if you are waiting for the bell to go off? You are in the wrong game…. go into boxing... unlike the analysts who had to anticipate the turn, you had to jump the gun.
Okay, then there is Deckers… this is one of my plus $100 stocks that I said will not quit… it has now entered the parabolic phase .. in part because the shorts pressed their bets and mistakenly believed that Ugg’s must have cooled off… maybe, look some day they will… but this is a $2b company with a potential Nike like franchise… Nike has a $35b market cap.
How about the Chipotle? It is worth talking about… it has the domestic model of good food… that is right, food that actually does not kill you for reasonable prices… I bet you that that is going to play perfectly overseas… they have a new kind of store, they call it the Model A.. it fits into all of those openings in the mall that are not doing well.. they used to just be in new malls… now next month they are opening in London… Europe soon after… this will be so easy for them because do you know what they do? They source food locally… they will become the first American company to not be an ugly American… they will be using French food… again, it is only $4.5b company… never mind McDonald’s which I own for ActionAlertsPlus.com, my charitable trust, is a $76b company… once again, polymeric move courtesy of the frantic short coverings by hedge funds who simply refused to believe how good this story is.. and you have to be cognizant of how Europe and possibly Asia can fuel international growth… even as there are many more places to put this 1,000 store chain in America without cannibalization… the analysts kept their numbers static… the short sellers believed it.
And finally there is one of my absolutely favorite plays, Netflix… which has the best subscriber growth of any… this stock is now up 30 points from last week… you know, I have got to tell you, there are myriad portfolio managers that love subscriber models for incredibly consistent cash flow and easy does it renewals… again this is only a $5.5b company… it could double in size at a rather rapid pace… no wonder this stock is galloping.
These moves, these so called surprises, were telegraphed in advance… they were telephoned for heaven’s sake… Lady GaGa/Beyonce style… but the analysts were not listening… the surprises? They are surprised because the analysts have allowed themselves to be surprised… I call them sanction surprises… we on Mad Money do the opposite… it is why these Cramer fave situations like Whirlpool, Netflix, Chipotle, Deckers and Cat might elude the incredibly overpaid Wall Street researchers… but they should have been anything but surprising to you at home.
Here is the bottom line…
▼ ▼ ▼ ▼ ▼
Now that you know what is behind the mystifying fact that anyone is mystified by these quarters, well, maybe you can anticipate better… analysts who do not update their numbers during the quarter… and do not nail the top down improvements in the consumer and emerging markets with the franchises that they cover, are the fodder for the moves in a Whirlpool, or a Deckers, or a Caterpillar, or a Netflix, or a Chipotle… the big non-surprise surprise party, no wonder these big money managers cannot beat you… they are relying on the people who are the most surprised… so they get blindsided... I do not want that happening to you.
Friday, February 12, 2010
From No Hot Air
(c) 2010 F. Bruce Abel
Here's the last few days from "No Hot Air," the best link in this field. It comes out of the UK.
Pages
Total and Shale Video from Clean Skies
The Myth of Natural Gas Scarcity
No Hot Air in the Media
Can Shale Gas transform UK energy policy?
No Hot Air Energy Procurement
Recent Posts
As good, or as bad, as it gets?
Gas Market goes Global
Reality hits Russian Gas
BP on gas paranoia
Chesapake on Global Shale
Unconventional gas gaining momentum worldwide
Quebec Shale Gas
Bloomberg TV on shale in Europe
Ofgem should read this. But won't
A tale of two BG's
Categories
Books
Current Affairs
Design
Energy Prices
Energy Tech
Fixed Price Madness
Food and Drink
LED lighting
LNG
Next Big Things
Prices
Prices and Politics
Renewables
Science
Shale Gas
Smart Metering
Sports
Travel
Web/Tech
Archives
February 2010
January 2010
December 2009
November 2009
October 2009
September 2009
August 2009
July 2009
June 2009
May 2009
More...
About
Email Me
Subscribe to this blog's feed
Blog powered by TypePad
Feb 10, 2010
As good, or as bad, as it gets?
We haven't had the new Ice Age that gas traders were hoping for before Christmas, but it has been colder than usual in North America and Europe.
But we've lived. Storage is almost seven per cent up on the five year average in the US, which shows that increased production, and LNG imports, easily handled what has been the coldest and snowiest winter in over five years. But from now on, spring if not in the air is at least on the horizon:
Traders may be thinking this is as cold as it gets and from here there’s only one way to go and that’s back to the warmer side,” said Peter Beutel, president of trading adviser Cameron Hanover Inc. in New Canaan, Connecticut. “There were also two reports in a row that took what was effectively a flat situation for storage in comparison to previous years and turned it into a surplus.”
Which brings us to prices. March UK NBP is 34.75 right now. One year ago, it was over 57 and when the contract started trading in October 2008 it was 92.
For NYMEX US gas the same numbers are $5.34, 6.52 and 8.88. Which means that the NBP has fallen far further than NYMEX. Which also means that NYMEX has a better track record in predicting prices.
Based on the past, futures don't do such a great job predicting eventual outcomes, although NYMEX has the better record. One can reasonably expect a premium for the future, but why was that premium 18% for NYMEX and 39% for the NBP?
Price predictions based on charts and ruminating over the past in an expectation that the past is plan for the future strikes me as pointless. If no one can predict the weather or the economic activity of a year from now, why think anyone can do it with accuracy in gas? But NYMEX has for a number of complex reasons, number one being liquidity, been more accurate and one can't completely discount the past as pointer to the future.
Going back to prices, NYMEX for next February is about 1.10 up on what February 2010 settled at, which is a 20% premium. But the NBP is up to it's old tricks with next February at a more reasonable but still outrageous 28% mark up on so far this month. The difference in a forward price for November 2010 against what actually outturned in November 09 is an even stronger, a whopping 55% difference between forward 11/2010 of 41.7 and System Average Price for November 2009 of 26.9.
What is going to happen next winter that is so scary? An even colder winter, combined with a mammoth economic recovery might do the trick. But what if there is more shale, more LNG, the economy continuing to flatline and a return to normal, or even milder temperatures? Then we can see that next winter may be, at least in the UK, cheaper than the past one, not 50%+ up year on year.
My theory about the inaccuracy of the UK curve is connected to the UK peculiarity of fixed term prices. Domestic consumers for example don't have a choice, and even worse, many UK business consumers don't give themselves the choice. Given the constant drumbeat of Ofgem who predict gas prices of over 60(!) in 2011, it's easy to get talked into the risk narrative. Don't fall into the trap,
Posted at 11:53 AM in Energy Prices Permalink Comments (4) TrackBack (0)
Feb 09, 2010
Gas Market goes Global
Shale's impact felt around the world is the headline in the Calgary Herald, consistently one of the best places to read about shale gas.
Within the past week, Russia's energy giant OAO Gazprom has announced it is delaying the development of the Shtokman natural gas field, while at the same time trotting through major investment centres saying the company is poised for growth. Is it another sign of the rapidly changing nature of the world's natural gas markets or a fresh instance of Russia looking to flex its muscles using its natural resources?One of the reasons given for the decision was the shale gas phenomenon in North America that has effectively decimated the need for imports of liquefied natural gas.But the very fact Russia is making a decision to delay the development of a massive natural gas field as a result of what's happening halfway around the globe potentially speaks volumes that the market for the commodity is moving slowly but surely from being continental to one that is global.
The plan for Shtokman had been tied to growing demand for liquefied natural gas, particularly into U.S. markets.However, the shale gas revolution -- which has helped the U.S. to leapfrog ahead of Russia as the world's largest natural gas producer -- means the LNG export strategy needs to be rethought.No kidding.Not only has the shale gas revolution changed the landscape, global LNG supplies are expected to continue to increase and global demand has yet to show significant signs of recovery.Taken together, these factors point to an oversupply of natural gas for the foreseeable future
Nothing particularly new to us of course. But bizarrely, here in the UK, The Telegraph seems to think that this a vindication for Ofgem's fears:
Some commentators believe Ofgem was off target with its diagnosis of the perils faced by the UK energy market in its Project Discovery document.
Possibly, but the regulator seems rather more prescient than its detractors, given the news that Gazprom, and its joint venture partners, are mothballing the enormous Shtokman gas field under the Barents Sea.In a recovery, where is Europe going to get its gas? Shtokman won't open until at least 2016, but only then if a new decision to invest in 2011 goes ahead.
Europe doesn't have the liquefied natural gas storage facilities sufficient to rely on imported LNG – new ones in Poland and Croatia are rumoured to be on hold.The UK does have facilities which Europe could suck dry unless Parliament legislates to hold it back – Shtokman means the politics of energy just got meaner.
The Telegraph should know better. The point here is that Shktoman LNG was never meant for Europe, but for North America, so the impact on us is non-existent. Where will Europe get it's gas they ask?
LNG from Algeria, Norway, Qatar, Egypt, Nigeria, Equatorial Guinea, Yemen and Canada would be one answer. Another answer is the LNG destined for Asia from further afield that will be displaced by shale production in China and India and many other places.
Another place they can get gas is from shale in Poland or Germany or Ukraine or Sweden or even the UK itself. But going back to the Calgary Herald, the idea that it's Shtokman or nothing in Russia is wrong too.
Russia also has significant, undeveloped shale gas reserves; the question is where these are relative to existing infrastructure, as well as the cost of development.If, in fact, the shale gas plays are proven to be as prolific as they are in North America, it's not out of the question these will be developed ahead of the Shtokman field, which is thought to contain almost four trillion cubic feet of natural gas. It's a situation not unlike the one faced in North America regarding the development of the Alaska or Mackenzie Valley pipelines.
Posted at 09:16 AM in Current Affairs, Energy Prices, LNG, Next Big Things, Prices and Politics, Shale Gas Permalink Comments (4) TrackBack (0)
Feb 07, 2010
Reality hits Russian Gas
I've noted before that Ofgem and Gazprom, as two semi-state organisations have a lot in common: both are desperately trying to rationalise their existence and both share a common obsession with Russian gas. The slight difference is Ofgem paranoia is about supply shortages as Gazprom is similarly delusionary in trying to avoid today's reality of demand falls.
Does this sound like a shortage?
An oil consortium headed by Russia’s Gazprom is considering postponing its vast Shtokman liquefied natural gas project in the Russian Arctic due to depressed global demand for gas.
Ofgem and it's Peak Oil pals would of course say the demand drop is caused by the recession. But even Gazprom has given up on that one:
.. a surge in domestic shale gas production has reduced the US’s need for LNG in the past 12 months, and forced the Shtokman partners to review their strategy.
Over at the WSJ, Gazprom are still trying to talk up the market:
State-controlled Gazprom said demand for natural gas will rise 70 billion cubic meters by 2020, Sergei Komlev, head of contract strategy and pricing at Gazprom Export, said at an investment conference in Moscow.
But reality intrudes again:
Yet experts, including Fatih Birol chief economist at the International Energy Agency, foresee low demand for gas in the coming five years."I have no good news for Russia, I'm afraid," Birol said. "I see a global gas glut hitting until 2015."
And Ofgem, sorry Gazprom counter:
Gazprom's Komlev said 2009 was a difficult year and that this year will be equally challenging."But we aren't as pessimistic about gas demand as some commentators," Komlev said. "We don't see a catastrophic decline in demand."Demand will rise as indigenous production in Europe declines, and under current export contracts, Gazprom will attain around one-third of the European gas market by 2020, up from the current 25%, he said."Despite lower demand last year, our European buyers haven't asked us to lower volumes in the longer term," said Komlev. "They assume that demand will rise."
One reason that they assume demand will rise is that the delusions of Ofgem are still widely held. For now.
Of course, Ofgem will soon have other Russian gas exporters to worry about.
Top Russian gas independent Novatek is considering fast-tracking its Arctic Yamal LNG project and will this year try out a potential shipping route to international markets
Posted at 07:33 PM in Current Affairs, Energy Prices, Next Big Things, Prices and Politics, Shale Gas Permalink Comments (1) TrackBack (0)
BP on gas paranoia
Sorry, I missed a very important story here. I can't stomach waking up to the BBC Today show every day, and on the one day something interesting turns up I missed it!
The chief executive of BP has said there is 'unreasonable paranoia' about gas supplies to the UK.In a rare broadcast interview, Tony Hayward told Today presenter Evan Davis that it was "curious as to why there is so much concern about us becoming more reliant on imported gas".
Gas is from 2:30 but the entire interview is worth it. Interesting how he then gave another rare interview, this time to The Guardian,
Dash for gas is UK's best energy strategy, says BP chief
there should be more emphasis put on gas, which was very commercial, using a mixture of what remained of UK North Sea supplies and imports. The BP man believed the UK should drop its "paranoid" concerns about gas imports from Russia and accept that piped and liquefied natural gas from overseas sources offered a better solution to help beat global warming and energy insecurity in the short term."There is a lot of gas in the world. There are a lot of diverse sources of gas in the world. The paranoia has been about Russia, but it is misplaced. We have approximately zero Russian gas in the UK [imported currently] and if you look at Europe, the imports of Russian gas into Europe have halved since 1980.
Much of that paranoia comes from newspapers like the Guardian. Who, unlike Ofgem, can at least change their minds when the facts change.
Tony Hayward said much of the same in a speech to the London Business School.
Europe is already a big user of natural gas, which is one reason why its industrial and power sectors emit less carbon than the US. The trouble is that European politicians sometimes speak as if dependence on imported gas is a problem.To them I say three things. First, Europe has long been structurally dependent on imported energy and - unlike the US - will become more so in the next few decades. The most effective way to reduce such dependence is to curb energy consumption – and costs - by significantly investing in energy efficiency. Second, even though the concern often focuses on Russian dominance, the supply picture is actually more diverse. Ample pipeline volumes from Norway, North Africa and soon the Caucasus are being augmented by a growing volume of liquefied natural gas at competitive prices. Russia’s share of EU gas imports has halved since 1980, and Russian gas represents only 6.5% of EU primary energy supply. In fact abundant new supplies from places like Qatar mean LNG is coming into its own as a globally traded commodity like oil. This is not a market Europe needs to fear.
And then this:
The issue for Britain is not a potential shortage of gas but a limitation on our ability to balance supply and demand across the country. In other words, it’s about the need for investment in infrastructure such as pipelines and storage capacity, not about the structure of supply.Only one third of our supplies in the coldest period last month came from the North Sea, nearly half was made up with imports either by pipeline from Norway and the Continent or in the form of LNG from Qatar, Trinidad, Algeria, Egypt and even further afield – that’s hardly an over-reliance on one supplier.
The message is clear, but will it be heard? Even on the reporting on this speech for example, Reuters reported on the big story of oil, but not a single mention of the merely pretty big gas angle.
Posted at 09:29 AM in Current Affairs, Energy Prices, Energy Tech, Next Big Things, Prices and Politics, Shale Gas Permalink Comments (0) TrackBack (0)
Feb 05, 2010
Chesapake on Global Shale
This is the only story so far on an Aubrey McLendon at the Credit Suisse Energy Summit, and the Reuters report sends a mixed message.
I don't see the world being swamped by shale gas in the next 10 years," McClendon said in remarks broadcast over the Internet. (But not yet on the CHK website)He noted he has yet to see a formation overseas that has the potential to rival those found in the United States.To successfully develop a shale gas basin a company needs infrastructure such as processing facilities, indigenous demand for gas and favorable commercial terms. Without those factors, many basins around the world are eliminated right away, the executive said.
Nothing really new in the last paragraph, but the middle one sounds depressing. Or is it? He has yet to see a formation to rival the US ones, but they never will see if they don't look. And boy are they looking. There has been a lot under the radar as people have been saying all along, even if specifics are still unidentified foreign objects:
Chesapeake and its joint venture partner Statoil ASA (STL.OL) have narrowed their search for an overseas shale play to about 15 basins, down from an initial survey of about 200, McClendon said.
Fifteen basins is more than there are in North America, and that leaves 185 left for the other guys to squabble over. At the end of the day, why should there not be somewhere in the world equivalent to some of the smaller NA shales? Depending on where it is, even a small shale could be game changing for that market. Or in the UK's case even for markets next door.
This is educated guess time. I'm the last person in the world to give investment advice, and I'm not. But exactly because Ofgem is so obsessed about Russia, start thinking of the disruptive impact on the UK of major shale discoveries in order of likelihood: France, Italy and Ireland.
Which still leaves a dozen other possibilities worldwide, any or all of which will impact world LNG prices. At least one of the 15 basins is in China, again an educated guess. Removing that demand from world LNG markets will be big.
Other guesses are left field ones, but there will definitely be something in Latin America, an area relatively isolated from world energy markets until recently. That however would definitely be the type of area where the gas may continue to be stranded, far from markets and infrastructure.
UPDATE: The presentation is here:
Posted at 09:17 AM in Energy Prices, LNG, Next Big Things, Shale Gas Permalink Comments (0) TrackBack (0)
Feb 04, 2010
Unconventional gas gaining momentum worldwide
This update from Petroleum Economist is part of a free preview. When I appeared in the December issue, even I had to sneak a free trial as the only way to see that piece. I'm sure that Ofgem and DECC's budget runs to paying for PE, so bang goes that excuse as we see one more nail in the coffin of gas scarcity.
Unconventional gas has driven some of the biggest energy news stories in North America and Australia in recent years as production ramps up and companies look to build positions in this long-term growth play. There remain many growth opportunities in these regions and, despite the slowdown driven by the market turmoil over the past 18 months, unconventional gas remains an attractive long-term investment. Meanwhile, outside North America and Australia, momentum is also building and these new regions could create the headlines of the future.
The dramatic rise in shale-gas production in the US, following tight-gas and coal-bed methane (CBM) production growth, has demonstrated the scale of the effect unconventional gas can have on even the very largest gas market.
What's interesting here is that the author Rhodri Thomas of Wood Mackenzie has been quoted as being skeptical of the time scales of shale in the past. Judging from this snippet, he, unlike the experts at Ofgem is capable of changing his mind when the facts change. At Ofgem, when the facts change, they simply ignore them.
Anyone want to pass on the rest to me? Or to offer high priced consultancy work so I can pay my own way? Naturally, I can't publish the rest, PE isn't the (involuntary) charitable organisation NHO is. :)
Posted at 10:40 AM in Energy Prices, Energy Tech, Next Big Things, Shale Gas Permalink Comments (2) TrackBack (0)
Quebec Shale Gas
More news on the Utica Shale in the Saint Lawrence Valley, where shale gas is conveniently situated between Montreal and Quebec City. The location obviously makes gas for those cities far cheaper than Alberta or US Gulf Coast Gas. But how much gas is actually there? It could be a lot. Another game changer (yawn)?
A pair of Calgary juniors are eagerly awaiting the results of the latest shale gas wells in Quebec.Questerre Energy and Canadian Quantum Energy Corp. both announced that drilling on the Gentilly No. 2 horizontal well has finished and testing will begin later this year.The well, which is being operated by Talisman Energy, is only the second horizontal well to be drilled into the emerging shale basin, but observers are already comparing region's Utica shale to the Marcellus shale in Pennsylvania, which is shaping up to be one of the largest natural gas fields in North America.
As we have pointed out, the only controversy over the size of the Marcellus is whether it is as big as the Qatar gas field or merely only the second largest gas field in the world.
Posted at 09:52 AM in Energy Prices, Energy Tech, Next Big Things, Shale Gas Permalink Comments (1) TrackBack (0)
Here's the last few days from "No Hot Air," the best link in this field. It comes out of the UK.
Pages
Total and Shale Video from Clean Skies
The Myth of Natural Gas Scarcity
No Hot Air in the Media
Can Shale Gas transform UK energy policy?
No Hot Air Energy Procurement
Recent Posts
As good, or as bad, as it gets?
Gas Market goes Global
Reality hits Russian Gas
BP on gas paranoia
Chesapake on Global Shale
Unconventional gas gaining momentum worldwide
Quebec Shale Gas
Bloomberg TV on shale in Europe
Ofgem should read this. But won't
A tale of two BG's
Categories
Books
Current Affairs
Design
Energy Prices
Energy Tech
Fixed Price Madness
Food and Drink
LED lighting
LNG
Next Big Things
Prices
Prices and Politics
Renewables
Science
Shale Gas
Smart Metering
Sports
Travel
Web/Tech
Archives
February 2010
January 2010
December 2009
November 2009
October 2009
September 2009
August 2009
July 2009
June 2009
May 2009
More...
About
Email Me
Subscribe to this blog's feed
Blog powered by TypePad
Feb 10, 2010
As good, or as bad, as it gets?
We haven't had the new Ice Age that gas traders were hoping for before Christmas, but it has been colder than usual in North America and Europe.
But we've lived. Storage is almost seven per cent up on the five year average in the US, which shows that increased production, and LNG imports, easily handled what has been the coldest and snowiest winter in over five years. But from now on, spring if not in the air is at least on the horizon:
Traders may be thinking this is as cold as it gets and from here there’s only one way to go and that’s back to the warmer side,” said Peter Beutel, president of trading adviser Cameron Hanover Inc. in New Canaan, Connecticut. “There were also two reports in a row that took what was effectively a flat situation for storage in comparison to previous years and turned it into a surplus.”
Which brings us to prices. March UK NBP is 34.75 right now. One year ago, it was over 57 and when the contract started trading in October 2008 it was 92.
For NYMEX US gas the same numbers are $5.34, 6.52 and 8.88. Which means that the NBP has fallen far further than NYMEX. Which also means that NYMEX has a better track record in predicting prices.
Based on the past, futures don't do such a great job predicting eventual outcomes, although NYMEX has the better record. One can reasonably expect a premium for the future, but why was that premium 18% for NYMEX and 39% for the NBP?
Price predictions based on charts and ruminating over the past in an expectation that the past is plan for the future strikes me as pointless. If no one can predict the weather or the economic activity of a year from now, why think anyone can do it with accuracy in gas? But NYMEX has for a number of complex reasons, number one being liquidity, been more accurate and one can't completely discount the past as pointer to the future.
Going back to prices, NYMEX for next February is about 1.10 up on what February 2010 settled at, which is a 20% premium. But the NBP is up to it's old tricks with next February at a more reasonable but still outrageous 28% mark up on so far this month. The difference in a forward price for November 2010 against what actually outturned in November 09 is an even stronger, a whopping 55% difference between forward 11/2010 of 41.7 and System Average Price for November 2009 of 26.9.
What is going to happen next winter that is so scary? An even colder winter, combined with a mammoth economic recovery might do the trick. But what if there is more shale, more LNG, the economy continuing to flatline and a return to normal, or even milder temperatures? Then we can see that next winter may be, at least in the UK, cheaper than the past one, not 50%+ up year on year.
My theory about the inaccuracy of the UK curve is connected to the UK peculiarity of fixed term prices. Domestic consumers for example don't have a choice, and even worse, many UK business consumers don't give themselves the choice. Given the constant drumbeat of Ofgem who predict gas prices of over 60(!) in 2011, it's easy to get talked into the risk narrative. Don't fall into the trap,
Posted at 11:53 AM in Energy Prices Permalink Comments (4) TrackBack (0)
Feb 09, 2010
Gas Market goes Global
Shale's impact felt around the world is the headline in the Calgary Herald, consistently one of the best places to read about shale gas.
Within the past week, Russia's energy giant OAO Gazprom has announced it is delaying the development of the Shtokman natural gas field, while at the same time trotting through major investment centres saying the company is poised for growth. Is it another sign of the rapidly changing nature of the world's natural gas markets or a fresh instance of Russia looking to flex its muscles using its natural resources?One of the reasons given for the decision was the shale gas phenomenon in North America that has effectively decimated the need for imports of liquefied natural gas.But the very fact Russia is making a decision to delay the development of a massive natural gas field as a result of what's happening halfway around the globe potentially speaks volumes that the market for the commodity is moving slowly but surely from being continental to one that is global.
The plan for Shtokman had been tied to growing demand for liquefied natural gas, particularly into U.S. markets.However, the shale gas revolution -- which has helped the U.S. to leapfrog ahead of Russia as the world's largest natural gas producer -- means the LNG export strategy needs to be rethought.No kidding.Not only has the shale gas revolution changed the landscape, global LNG supplies are expected to continue to increase and global demand has yet to show significant signs of recovery.Taken together, these factors point to an oversupply of natural gas for the foreseeable future
Nothing particularly new to us of course. But bizarrely, here in the UK, The Telegraph seems to think that this a vindication for Ofgem's fears:
Some commentators believe Ofgem was off target with its diagnosis of the perils faced by the UK energy market in its Project Discovery document.
Possibly, but the regulator seems rather more prescient than its detractors, given the news that Gazprom, and its joint venture partners, are mothballing the enormous Shtokman gas field under the Barents Sea.In a recovery, where is Europe going to get its gas? Shtokman won't open until at least 2016, but only then if a new decision to invest in 2011 goes ahead.
Europe doesn't have the liquefied natural gas storage facilities sufficient to rely on imported LNG – new ones in Poland and Croatia are rumoured to be on hold.The UK does have facilities which Europe could suck dry unless Parliament legislates to hold it back – Shtokman means the politics of energy just got meaner.
The Telegraph should know better. The point here is that Shktoman LNG was never meant for Europe, but for North America, so the impact on us is non-existent. Where will Europe get it's gas they ask?
LNG from Algeria, Norway, Qatar, Egypt, Nigeria, Equatorial Guinea, Yemen and Canada would be one answer. Another answer is the LNG destined for Asia from further afield that will be displaced by shale production in China and India and many other places.
Another place they can get gas is from shale in Poland or Germany or Ukraine or Sweden or even the UK itself. But going back to the Calgary Herald, the idea that it's Shtokman or nothing in Russia is wrong too.
Russia also has significant, undeveloped shale gas reserves; the question is where these are relative to existing infrastructure, as well as the cost of development.If, in fact, the shale gas plays are proven to be as prolific as they are in North America, it's not out of the question these will be developed ahead of the Shtokman field, which is thought to contain almost four trillion cubic feet of natural gas. It's a situation not unlike the one faced in North America regarding the development of the Alaska or Mackenzie Valley pipelines.
Posted at 09:16 AM in Current Affairs, Energy Prices, LNG, Next Big Things, Prices and Politics, Shale Gas Permalink Comments (4) TrackBack (0)
Feb 07, 2010
Reality hits Russian Gas
I've noted before that Ofgem and Gazprom, as two semi-state organisations have a lot in common: both are desperately trying to rationalise their existence and both share a common obsession with Russian gas. The slight difference is Ofgem paranoia is about supply shortages as Gazprom is similarly delusionary in trying to avoid today's reality of demand falls.
Does this sound like a shortage?
An oil consortium headed by Russia’s Gazprom is considering postponing its vast Shtokman liquefied natural gas project in the Russian Arctic due to depressed global demand for gas.
Ofgem and it's Peak Oil pals would of course say the demand drop is caused by the recession. But even Gazprom has given up on that one:
.. a surge in domestic shale gas production has reduced the US’s need for LNG in the past 12 months, and forced the Shtokman partners to review their strategy.
Over at the WSJ, Gazprom are still trying to talk up the market:
State-controlled Gazprom said demand for natural gas will rise 70 billion cubic meters by 2020, Sergei Komlev, head of contract strategy and pricing at Gazprom Export, said at an investment conference in Moscow.
But reality intrudes again:
Yet experts, including Fatih Birol chief economist at the International Energy Agency, foresee low demand for gas in the coming five years."I have no good news for Russia, I'm afraid," Birol said. "I see a global gas glut hitting until 2015."
And Ofgem, sorry Gazprom counter:
Gazprom's Komlev said 2009 was a difficult year and that this year will be equally challenging."But we aren't as pessimistic about gas demand as some commentators," Komlev said. "We don't see a catastrophic decline in demand."Demand will rise as indigenous production in Europe declines, and under current export contracts, Gazprom will attain around one-third of the European gas market by 2020, up from the current 25%, he said."Despite lower demand last year, our European buyers haven't asked us to lower volumes in the longer term," said Komlev. "They assume that demand will rise."
One reason that they assume demand will rise is that the delusions of Ofgem are still widely held. For now.
Of course, Ofgem will soon have other Russian gas exporters to worry about.
Top Russian gas independent Novatek is considering fast-tracking its Arctic Yamal LNG project and will this year try out a potential shipping route to international markets
Posted at 07:33 PM in Current Affairs, Energy Prices, Next Big Things, Prices and Politics, Shale Gas Permalink Comments (1) TrackBack (0)
BP on gas paranoia
Sorry, I missed a very important story here. I can't stomach waking up to the BBC Today show every day, and on the one day something interesting turns up I missed it!
The chief executive of BP has said there is 'unreasonable paranoia' about gas supplies to the UK.In a rare broadcast interview, Tony Hayward told Today presenter Evan Davis that it was "curious as to why there is so much concern about us becoming more reliant on imported gas".
Gas is from 2:30 but the entire interview is worth it. Interesting how he then gave another rare interview, this time to The Guardian,
Dash for gas is UK's best energy strategy, says BP chief
there should be more emphasis put on gas, which was very commercial, using a mixture of what remained of UK North Sea supplies and imports. The BP man believed the UK should drop its "paranoid" concerns about gas imports from Russia and accept that piped and liquefied natural gas from overseas sources offered a better solution to help beat global warming and energy insecurity in the short term."There is a lot of gas in the world. There are a lot of diverse sources of gas in the world. The paranoia has been about Russia, but it is misplaced. We have approximately zero Russian gas in the UK [imported currently] and if you look at Europe, the imports of Russian gas into Europe have halved since 1980.
Much of that paranoia comes from newspapers like the Guardian. Who, unlike Ofgem, can at least change their minds when the facts change.
Tony Hayward said much of the same in a speech to the London Business School.
Europe is already a big user of natural gas, which is one reason why its industrial and power sectors emit less carbon than the US. The trouble is that European politicians sometimes speak as if dependence on imported gas is a problem.To them I say three things. First, Europe has long been structurally dependent on imported energy and - unlike the US - will become more so in the next few decades. The most effective way to reduce such dependence is to curb energy consumption – and costs - by significantly investing in energy efficiency. Second, even though the concern often focuses on Russian dominance, the supply picture is actually more diverse. Ample pipeline volumes from Norway, North Africa and soon the Caucasus are being augmented by a growing volume of liquefied natural gas at competitive prices. Russia’s share of EU gas imports has halved since 1980, and Russian gas represents only 6.5% of EU primary energy supply. In fact abundant new supplies from places like Qatar mean LNG is coming into its own as a globally traded commodity like oil. This is not a market Europe needs to fear.
And then this:
The issue for Britain is not a potential shortage of gas but a limitation on our ability to balance supply and demand across the country. In other words, it’s about the need for investment in infrastructure such as pipelines and storage capacity, not about the structure of supply.Only one third of our supplies in the coldest period last month came from the North Sea, nearly half was made up with imports either by pipeline from Norway and the Continent or in the form of LNG from Qatar, Trinidad, Algeria, Egypt and even further afield – that’s hardly an over-reliance on one supplier.
The message is clear, but will it be heard? Even on the reporting on this speech for example, Reuters reported on the big story of oil, but not a single mention of the merely pretty big gas angle.
Posted at 09:29 AM in Current Affairs, Energy Prices, Energy Tech, Next Big Things, Prices and Politics, Shale Gas Permalink Comments (0) TrackBack (0)
Feb 05, 2010
Chesapake on Global Shale
This is the only story so far on an Aubrey McLendon at the Credit Suisse Energy Summit, and the Reuters report sends a mixed message.
I don't see the world being swamped by shale gas in the next 10 years," McClendon said in remarks broadcast over the Internet. (But not yet on the CHK website)He noted he has yet to see a formation overseas that has the potential to rival those found in the United States.To successfully develop a shale gas basin a company needs infrastructure such as processing facilities, indigenous demand for gas and favorable commercial terms. Without those factors, many basins around the world are eliminated right away, the executive said.
Nothing really new in the last paragraph, but the middle one sounds depressing. Or is it? He has yet to see a formation to rival the US ones, but they never will see if they don't look. And boy are they looking. There has been a lot under the radar as people have been saying all along, even if specifics are still unidentified foreign objects:
Chesapeake and its joint venture partner Statoil ASA (STL.OL) have narrowed their search for an overseas shale play to about 15 basins, down from an initial survey of about 200, McClendon said.
Fifteen basins is more than there are in North America, and that leaves 185 left for the other guys to squabble over. At the end of the day, why should there not be somewhere in the world equivalent to some of the smaller NA shales? Depending on where it is, even a small shale could be game changing for that market. Or in the UK's case even for markets next door.
This is educated guess time. I'm the last person in the world to give investment advice, and I'm not. But exactly because Ofgem is so obsessed about Russia, start thinking of the disruptive impact on the UK of major shale discoveries in order of likelihood: France, Italy and Ireland.
Which still leaves a dozen other possibilities worldwide, any or all of which will impact world LNG prices. At least one of the 15 basins is in China, again an educated guess. Removing that demand from world LNG markets will be big.
Other guesses are left field ones, but there will definitely be something in Latin America, an area relatively isolated from world energy markets until recently. That however would definitely be the type of area where the gas may continue to be stranded, far from markets and infrastructure.
UPDATE: The presentation is here:
Posted at 09:17 AM in Energy Prices, LNG, Next Big Things, Shale Gas Permalink Comments (0) TrackBack (0)
Feb 04, 2010
Unconventional gas gaining momentum worldwide
This update from Petroleum Economist is part of a free preview. When I appeared in the December issue, even I had to sneak a free trial as the only way to see that piece. I'm sure that Ofgem and DECC's budget runs to paying for PE, so bang goes that excuse as we see one more nail in the coffin of gas scarcity.
Unconventional gas has driven some of the biggest energy news stories in North America and Australia in recent years as production ramps up and companies look to build positions in this long-term growth play. There remain many growth opportunities in these regions and, despite the slowdown driven by the market turmoil over the past 18 months, unconventional gas remains an attractive long-term investment. Meanwhile, outside North America and Australia, momentum is also building and these new regions could create the headlines of the future.
The dramatic rise in shale-gas production in the US, following tight-gas and coal-bed methane (CBM) production growth, has demonstrated the scale of the effect unconventional gas can have on even the very largest gas market.
What's interesting here is that the author Rhodri Thomas of Wood Mackenzie has been quoted as being skeptical of the time scales of shale in the past. Judging from this snippet, he, unlike the experts at Ofgem is capable of changing his mind when the facts change. At Ofgem, when the facts change, they simply ignore them.
Anyone want to pass on the rest to me? Or to offer high priced consultancy work so I can pay my own way? Naturally, I can't publish the rest, PE isn't the (involuntary) charitable organisation NHO is. :)
Posted at 10:40 AM in Energy Prices, Energy Tech, Next Big Things, Shale Gas Permalink Comments (2) TrackBack (0)
Quebec Shale Gas
More news on the Utica Shale in the Saint Lawrence Valley, where shale gas is conveniently situated between Montreal and Quebec City. The location obviously makes gas for those cities far cheaper than Alberta or US Gulf Coast Gas. But how much gas is actually there? It could be a lot. Another game changer (yawn)?
A pair of Calgary juniors are eagerly awaiting the results of the latest shale gas wells in Quebec.Questerre Energy and Canadian Quantum Energy Corp. both announced that drilling on the Gentilly No. 2 horizontal well has finished and testing will begin later this year.The well, which is being operated by Talisman Energy, is only the second horizontal well to be drilled into the emerging shale basin, but observers are already comparing region's Utica shale to the Marcellus shale in Pennsylvania, which is shaping up to be one of the largest natural gas fields in North America.
As we have pointed out, the only controversy over the size of the Marcellus is whether it is as big as the Qatar gas field or merely only the second largest gas field in the world.
Posted at 09:52 AM in Energy Prices, Energy Tech, Next Big Things, Shale Gas Permalink Comments (1) TrackBack (0)
Tuesday, February 2, 2010
No Hot Air
No Hot Air
Pages
Total and Shale Video from Clean Skies
The Myth of Natural Gas Scarcity
No Hot Air in the Media
Can Shale Gas transform UK energy policy?
No Hot Air Energy Procurement
Recent Posts
North American LNG exports?
China and shale again
FT on "The Shale Gas Bonanza"
Davos and Shale
The Guardian discovers shale.
Ukraine and gas
Shale and Norway
Surprise
Ofgem and Gazprom's obsession
More on India and shale
Categories
Books
Current Affairs
Design
Energy Prices
Energy Tech
Fixed Price Madness
Food and Drink
LED lighting
LNG
Next Big Things
Prices
Prices and Politics
Renewables
Science
Shale Gas
Smart Metering
Sports
Travel
Web/Tech
Archives
February 2010
January 2010
December 2009
November 2009
October 2009
September 2009
August 2009
July 2009
June 2009
May 2009
More...
About
Email Me
Subscribe to this blog's feed
Blog powered by TypePad
Feb 01, 2010
North American LNG exports?
I've been talking for six month or so on how the Kitimat LNG plant in British Columbia is going to disrupt world LNG markets even further. British and world prices have been impacted by US shale since shale has meant the US is seeing far less LNG imports than the LNG industry planned for. That means that Qatari and other LNG has to go either to Europe or Asia. Qatari gas is bumping up against existing Asian suppliers such as Australia, Malaysia, Indonesia for those markets. Further massive Oz LNG, along with new sources such as Timor, Papua New Guinea, Peru, Sakhalin and Kitimat will mean further pressure on Pacific Basin prices.
Kitimat has Korea and Spain's Gas Natural as lead customers. I figured that the Gas Natural cargoes are for trading, not physical supply. But suddenly, the possibility of of Pacific North America supplying Europe won't be far-fetched in the not too distant future:
Shipments of liquefied natural gas through the Panama Canal may climb once expansion work on the waterway is completed in 2014, TradeWinds reported, citing Silvia de Marucci, an official in the canal’s market research and analysis department.Once work is completed, 80 percent of liquefied natural gas carriers will be able to fit through the canal’s locks, up from 6 percent now, TradeWinds said. In practice, no such vessels presently use the link, de Marucci told the newspaper.Repsol YPF is interested in using the canal to ship LNG from Peru and Kitimat LNG Inc. is also considering using the waterway to sell Canadian cargoes to customers in the Atlantic, TradeWinds reported.
And why stop at Kitimat and Peru? Latin America is another area where shale gas is even deeper under the radar than in Europe, although much more active than people let on.The continental USA itself is not going to be an LNG net exporter for political reasons. But Alaska is in the USA, if only just and their massive North Slope gas reserves are Sarah Palin's Drill, Baby, Drill cure for energy. But the Alaska gas pipeline is something that worked in a shortage but will be an expensive failure today.
But who's to say that Alaska can't monetize that gas via LNG exports?
Potential shippers have the option of committing to an overland route to the Alberta border or a second option that would divert the gas to Valdez for loading on LNG tankers, but not both, said Tony Palmer, Trans-Canada's vice-president of Alaska development.
That could keep Alaska in the Union. But this is where we came in: The impact of shale reaches everywhere. Except to Ofgem of course!
Palmer said there isn't enough gas supply to support both options. Although he expects Lower 48 demand will be sufficient to support an overland route to the United States, he refused to speculate on whether the growing proliferation of shale gas and lower domestic pricing played a factor in advancing the Valdez option."Shale gas is a reality in the natural gas business," he said. "We're not making a judgment (on the LNG option) at this point."
Posted at 12:19 PM in Current Affairs, Energy Prices, Energy Tech, LNG, Next Big Things, Prices, Shale Gas Permalink Comments (2) TrackBack (0)
China and shale again
China is the biggest card in the gas bear deck as I've pointed out many times before. But a China that is both an emerging leader in renewable energy technology and a producer of more of it's own gas removes a large part of that scenario of fear. First, clean tech:
These efforts to dominate renewable energy technologies raise the prospect that the West may someday trade its dependence on oil from the Mideast for a reliance on solar panels, wind turbines and other gear manufactured in China.These efforts to dominate renewable energy technologies raise the prospect that the West may someday trade its dependence on oil from the Mideast for a reliance on solar panels, wind turbines and other gear manufactured in China.This still gives the Sinophobes some ammunition, but that is that all it is: the same old energy security fear. China led in toys, socks, tee shirts and everything in Wal Mart, the idea that they would overlook high value items isn't realistic. Wait for 5 to 10 years and see their impact on electric vehicles for only one example. Throw in LED manufacture which will lead to printable OLED, which will then flow into printable solar panels which will flow into printable batteries is another.
But going back to gas. Who, apart from Ofgem, ignores the possibility that shale technology won't be used in China to produce gas, leaving more and cheaper gas for the rest of us? Not China themselves
The National Development and Reform Commission, the country's top economic planner, is reviewing a plan to encourage the development and utilization the unconventional gas source in an effort to meet rising energy demand without excessively increasing greenhouse gas emissions, the ministry said in its in-house newsletter, which was published Friday.Shale gas comprised a negligible portion of the 83 billion cubic meters of natural gas China produced in 2009. Beijing wants natural gas to account for 10% of the nation's energy mix by 2020, up from 3% in 2005, as part of pollution-cutting efforts. Natural gas currently accounts for around 4% of its total energy use.The nation aims to achieve recoverable shale gas reserves of 1 trillion cubic meters by 2020 after identifying 20-30 main exploration and development blocks, the report said. It has very limited experience in developing the fuel.China's three top oil companies have all listed shale gas as their priority among unconventional oil and gas sources, and are cooperating with international oil majors that can provide the technology necessary to stimulate the flow of gas, which is trapped in relatively impermeable rock.
Pages
Total and Shale Video from Clean Skies
The Myth of Natural Gas Scarcity
No Hot Air in the Media
Can Shale Gas transform UK energy policy?
No Hot Air Energy Procurement
Recent Posts
North American LNG exports?
China and shale again
FT on "The Shale Gas Bonanza"
Davos and Shale
The Guardian discovers shale.
Ukraine and gas
Shale and Norway
Surprise
Ofgem and Gazprom's obsession
More on India and shale
Categories
Books
Current Affairs
Design
Energy Prices
Energy Tech
Fixed Price Madness
Food and Drink
LED lighting
LNG
Next Big Things
Prices
Prices and Politics
Renewables
Science
Shale Gas
Smart Metering
Sports
Travel
Web/Tech
Archives
February 2010
January 2010
December 2009
November 2009
October 2009
September 2009
August 2009
July 2009
June 2009
May 2009
More...
About
Email Me
Subscribe to this blog's feed
Blog powered by TypePad
Feb 01, 2010
North American LNG exports?
I've been talking for six month or so on how the Kitimat LNG plant in British Columbia is going to disrupt world LNG markets even further. British and world prices have been impacted by US shale since shale has meant the US is seeing far less LNG imports than the LNG industry planned for. That means that Qatari and other LNG has to go either to Europe or Asia. Qatari gas is bumping up against existing Asian suppliers such as Australia, Malaysia, Indonesia for those markets. Further massive Oz LNG, along with new sources such as Timor, Papua New Guinea, Peru, Sakhalin and Kitimat will mean further pressure on Pacific Basin prices.
Kitimat has Korea and Spain's Gas Natural as lead customers. I figured that the Gas Natural cargoes are for trading, not physical supply. But suddenly, the possibility of of Pacific North America supplying Europe won't be far-fetched in the not too distant future:
Shipments of liquefied natural gas through the Panama Canal may climb once expansion work on the waterway is completed in 2014, TradeWinds reported, citing Silvia de Marucci, an official in the canal’s market research and analysis department.Once work is completed, 80 percent of liquefied natural gas carriers will be able to fit through the canal’s locks, up from 6 percent now, TradeWinds said. In practice, no such vessels presently use the link, de Marucci told the newspaper.Repsol YPF is interested in using the canal to ship LNG from Peru and Kitimat LNG Inc. is also considering using the waterway to sell Canadian cargoes to customers in the Atlantic, TradeWinds reported.
And why stop at Kitimat and Peru? Latin America is another area where shale gas is even deeper under the radar than in Europe, although much more active than people let on.The continental USA itself is not going to be an LNG net exporter for political reasons. But Alaska is in the USA, if only just and their massive North Slope gas reserves are Sarah Palin's Drill, Baby, Drill cure for energy. But the Alaska gas pipeline is something that worked in a shortage but will be an expensive failure today.
But who's to say that Alaska can't monetize that gas via LNG exports?
Potential shippers have the option of committing to an overland route to the Alberta border or a second option that would divert the gas to Valdez for loading on LNG tankers, but not both, said Tony Palmer, Trans-Canada's vice-president of Alaska development.
That could keep Alaska in the Union. But this is where we came in: The impact of shale reaches everywhere. Except to Ofgem of course!
Palmer said there isn't enough gas supply to support both options. Although he expects Lower 48 demand will be sufficient to support an overland route to the United States, he refused to speculate on whether the growing proliferation of shale gas and lower domestic pricing played a factor in advancing the Valdez option."Shale gas is a reality in the natural gas business," he said. "We're not making a judgment (on the LNG option) at this point."
Posted at 12:19 PM in Current Affairs, Energy Prices, Energy Tech, LNG, Next Big Things, Prices, Shale Gas Permalink Comments (2) TrackBack (0)
China and shale again
China is the biggest card in the gas bear deck as I've pointed out many times before. But a China that is both an emerging leader in renewable energy technology and a producer of more of it's own gas removes a large part of that scenario of fear. First, clean tech:
These efforts to dominate renewable energy technologies raise the prospect that the West may someday trade its dependence on oil from the Mideast for a reliance on solar panels, wind turbines and other gear manufactured in China.These efforts to dominate renewable energy technologies raise the prospect that the West may someday trade its dependence on oil from the Mideast for a reliance on solar panels, wind turbines and other gear manufactured in China.This still gives the Sinophobes some ammunition, but that is that all it is: the same old energy security fear. China led in toys, socks, tee shirts and everything in Wal Mart, the idea that they would overlook high value items isn't realistic. Wait for 5 to 10 years and see their impact on electric vehicles for only one example. Throw in LED manufacture which will lead to printable OLED, which will then flow into printable solar panels which will flow into printable batteries is another.
But going back to gas. Who, apart from Ofgem, ignores the possibility that shale technology won't be used in China to produce gas, leaving more and cheaper gas for the rest of us? Not China themselves
The National Development and Reform Commission, the country's top economic planner, is reviewing a plan to encourage the development and utilization the unconventional gas source in an effort to meet rising energy demand without excessively increasing greenhouse gas emissions, the ministry said in its in-house newsletter, which was published Friday.Shale gas comprised a negligible portion of the 83 billion cubic meters of natural gas China produced in 2009. Beijing wants natural gas to account for 10% of the nation's energy mix by 2020, up from 3% in 2005, as part of pollution-cutting efforts. Natural gas currently accounts for around 4% of its total energy use.The nation aims to achieve recoverable shale gas reserves of 1 trillion cubic meters by 2020 after identifying 20-30 main exploration and development blocks, the report said. It has very limited experience in developing the fuel.China's three top oil companies have all listed shale gas as their priority among unconventional oil and gas sources, and are cooperating with international oil majors that can provide the technology necessary to stimulate the flow of gas, which is trapped in relatively impermeable rock.
Friday, October 2, 2009
Sunday, September 27, 2009
Smart Grid From No Hot Air, a British Blog
I'm just starting to explore this great blog written in the UK. It covers the same topics as I do.
Sep 22, 2009
Smart Grid Savings
Before we discovered Shale Gas, No Hot Air was very interested in Smart Metering.
We want to help business users control their costs. One way is to avoid long term prices and their associated risk of paying through the nose, or through the teeth of shark consultants, for the sake of a fixed price.
We also wanted to point out the bleeding obvious that the cheapest energy of all, is the energy not used. Why obsess about a few decimal points per kWh on price, when the lowest hanging fruit is wasted energy? So, one thing that hasn't changed since April 2008 is that the best savings are from combined smart metering and index prices.
We haven't done a Smart Meter story for a while. From a UK viewpoint the continual bickering, pointless consultation upon pointless consultation and general inablility to make a decision are symptomatic of all that's wrong in UK energy. If half the energy wasted on deciding the reasons for one of many organisations (DTI,DECC, Ofgem, National Grid, Suppliers, Manufacturers) to avoid making a decision were instead spent on implementation....
We'll leave the depressing news to www.smartmeters.com:
UK SmartMeter Rollout – Not Likely This year or The Next or the Next.....
The UK government is still procrastinating on Smartmeters, and UK energy firms are wasting millions of pounds in dumb pre-pay meter rollouts.The UK Government announced on the 11th of May 2009, the rollout of 46 Million Smart Utility Meters, this was hailed the revolution of the 21st Century. SmartMeters were the answer to see the end of the highly controversial Estimated Billing, a sigh of relief must have been heard across the entire UK population.Estimated billing, you either pay too much, therefore giving the utility an interest free loan; or you pay not enough, only then to be hit with a massive shortfall and demands for payment
Positive news of the potential which we could achieve, or negative news in how much we squander in time wasting comes from the NY Times:
A smart grid pilot project in Fayetteville, N.C., has resulted in an initial 20 percent decline in average electricity consumption
A smart grid is the next iteration of smart meters in that everything down to plug level is just another node on a wireless network. The chance of the UK having a smart grid anytime before 2050 are slim to none judging from the Smart Metering Fiasco. Still, we can dream....
Consert attached controllers on hot water heaters, air conditioners and pool pumps and then let customers go online and set targets for their monthly electricity bill. Smart meters and a wireless communications system provide real-time electricity consumption data to allow the utility to cycle appliances on and off to achieve the savings and help it manage peak demand.
One of the problems of the UK system where financial institutions have sliced and diced every part of the energy chain into miniscule pieces (generator, upstream, terminal operator,national transmission, local network, meter provider, meter operator, data provider, data comms provider, emergency service provider, supplier, billing contractor, energy consultant etc) is that getting a network of people like that to work together makes linking plugs together childs play, especially with the Ofgem mantra of competition solves everything. One of the really pointless discussions is obsession with costs. Any one of the above actors worries about their selfish costs of literally pennies per user per year.But the opportunity costs of not acting are far higher for both energy users (all of us) and the planet (that's all of us too!).
But the crazy thing is that a smart grid is far cheaper overall:
The Consert system, which is based on IBM software, would allow the Fayetteville Public Works Commission to selectively reduce demand among its 80,000 customers without having to, say, shut off everyone’s air conditioners at the same time.
Utilities typically spend hundreds of millions of dollars building so-called peaking power plants that provide electricity when demand spikes, and otherwise sit idle for most of the year.
Keith Lynch, an executive at the Fayetteville Public Works Commission, said the utility hopes the Consert system will help it to cut such capital costs and reduce greenhouse gas emissions.
“We’re looking at building a new gas-fired generation plant, but this solution would mitigate the need to build the size power plant that we had anticipated,” he said.
Sep 22, 2009
Smart Grid Savings
Before we discovered Shale Gas, No Hot Air was very interested in Smart Metering.
We want to help business users control their costs. One way is to avoid long term prices and their associated risk of paying through the nose, or through the teeth of shark consultants, for the sake of a fixed price.
We also wanted to point out the bleeding obvious that the cheapest energy of all, is the energy not used. Why obsess about a few decimal points per kWh on price, when the lowest hanging fruit is wasted energy? So, one thing that hasn't changed since April 2008 is that the best savings are from combined smart metering and index prices.
We haven't done a Smart Meter story for a while. From a UK viewpoint the continual bickering, pointless consultation upon pointless consultation and general inablility to make a decision are symptomatic of all that's wrong in UK energy. If half the energy wasted on deciding the reasons for one of many organisations (DTI,DECC, Ofgem, National Grid, Suppliers, Manufacturers) to avoid making a decision were instead spent on implementation....
We'll leave the depressing news to www.smartmeters.com:
UK SmartMeter Rollout – Not Likely This year or The Next or the Next.....
The UK government is still procrastinating on Smartmeters, and UK energy firms are wasting millions of pounds in dumb pre-pay meter rollouts.The UK Government announced on the 11th of May 2009, the rollout of 46 Million Smart Utility Meters, this was hailed the revolution of the 21st Century. SmartMeters were the answer to see the end of the highly controversial Estimated Billing, a sigh of relief must have been heard across the entire UK population.Estimated billing, you either pay too much, therefore giving the utility an interest free loan; or you pay not enough, only then to be hit with a massive shortfall and demands for payment
Positive news of the potential which we could achieve, or negative news in how much we squander in time wasting comes from the NY Times:
A smart grid pilot project in Fayetteville, N.C., has resulted in an initial 20 percent decline in average electricity consumption
A smart grid is the next iteration of smart meters in that everything down to plug level is just another node on a wireless network. The chance of the UK having a smart grid anytime before 2050 are slim to none judging from the Smart Metering Fiasco. Still, we can dream....
Consert attached controllers on hot water heaters, air conditioners and pool pumps and then let customers go online and set targets for their monthly electricity bill. Smart meters and a wireless communications system provide real-time electricity consumption data to allow the utility to cycle appliances on and off to achieve the savings and help it manage peak demand.
One of the problems of the UK system where financial institutions have sliced and diced every part of the energy chain into miniscule pieces (generator, upstream, terminal operator,national transmission, local network, meter provider, meter operator, data provider, data comms provider, emergency service provider, supplier, billing contractor, energy consultant etc) is that getting a network of people like that to work together makes linking plugs together childs play, especially with the Ofgem mantra of competition solves everything. One of the really pointless discussions is obsession with costs. Any one of the above actors worries about their selfish costs of literally pennies per user per year.But the opportunity costs of not acting are far higher for both energy users (all of us) and the planet (that's all of us too!).
But the crazy thing is that a smart grid is far cheaper overall:
The Consert system, which is based on IBM software, would allow the Fayetteville Public Works Commission to selectively reduce demand among its 80,000 customers without having to, say, shut off everyone’s air conditioners at the same time.
Utilities typically spend hundreds of millions of dollars building so-called peaking power plants that provide electricity when demand spikes, and otherwise sit idle for most of the year.
Keith Lynch, an executive at the Fayetteville Public Works Commission, said the utility hopes the Consert system will help it to cut such capital costs and reduce greenhouse gas emissions.
“We’re looking at building a new gas-fired generation plant, but this solution would mitigate the need to build the size power plant that we had anticipated,” he said.
Subscribe to:
Posts (Atom)