Arthur's Energy Observations

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Headline: Natural Gas, Suddenly Abundant, Is Cheaper, by Clifford Krauss, New York Times, March 20, 2009

"The decline in crude oil prices gets all the headlines, but the first globalized natural gas glut in history is driving an even more drastic collapse in the cost of gas that cooks food, heats homes and runs factories in the United States and many other countries."

Arthur Comments: We started this discussion about natural gas prices years ago with the GSX Pipeline. At the time, BC Hydro's energy economist was predicting a long term future price for natural gas of $3 a thousand cubic feet. Gas had recently shot up to $10 with the California energy crisis, so GSX opponents were taking every opportunity to observe that

$3 might be a tad unrealistic. As you can see from our gas price chart at the bottom of this article, BC Hydro and the BC government abandoned their economist and bailed on the Duke Point gas plant and the GSX, just before gas flared up to $16/mcf.

These high prices stimulated investment in getting cheap gas to North America and elsewhere in the high-demand, developed world - the LNG industry took off in tandem with the prices and we witnessed proposals for LNG import terminals all around North America. Well, prices have collapsed again, with the discovery of a lot of shale gas from northeastern BC to Texas, and with global economic collapse. And so too have the LNG import proposals. One of BC's LNG projects, Kitimat LNG, last year said it was reversing direction and would be exporting LNG.

The Texada Island project of WestPac LNG has disappeared from sight, gone silent, economically unviable, and resoundingly unpopular, with BC Hydro stating categorically that it has no intention of buying electricity from any new natural gas fired generation plants in BC.