Forewarned is Forearmed


Thomas Jeffers 8 Co., LLC
November 9, 2006

Natural Gas (‘NG”) is a most amazing substance. When we speak of NG in the industry we are referring to Methane for the most part, CH4 for those of you interested in the chemistry. Let me digress for a moment. Say the word “hydrocarbon” out loud. Hydrogen and Carbon! Hydrocarbons have different molecular shapes and strings, which gives them their individual properties such being a gas (NG), liquid (Oil), or solid (Coal) at sea level and room temperature.

Sorry, back to amazing NG.

NG is our only source of instant space heating. It lends itself to the efficient manufacture of fertilizers. It can be shut off and turned on instantly (think of a gas fired kitchen stove) – try that with a coal fired electrical plant as loads change throughout the day.

NG has some practical drawbacks. It does not transport easily. If you find oil some place on the globe it is a fairly simple matter to ship it. Not so NG. In order to ship it, it must be compressed and liquefied, contained under pressure, collected at the delivery point and regasified, and then transported by pipeline to its final destination, the end user. All the while it must be contained and maintained under pressure.

Oil will sit patiently in tanks until you need it. Gas will continually try to escape whatever means one has devised to hold it. Consequently, the U.S. has about 3.2 tcf (trillion cubic feet) of storage – about 50 days supply. As winter lasts longer than 50 days, and we tend to draw down the inventories as winter progresses, it should be obvious that we must therefore rely on current production to provide a cushion of flows to maintain the system’s pressure during the months of peak demand. That reliance might not prove very wise in the relatively near future. If the pressure in a pipeline system for delivering gas should fall below a certain level a great many “pilot lights” will be extinguished. One cannot simply turn the system back on and repressurize the pipeline or NG will be filling houses and buildings and sewers – one little spark…

Now it is winter, it is cold, the heat is off for a day or 2, maybe more. At what point do water pipes start to burst? My first job after college was selling heating oil for my family's business. I can tell you from first hand experience that the attitude of people without heat in their homes leaves much to be desired, and their plumbing problems are manifest. Now we have compounded our technical challenge of reigniting the pilot lights, building by building, and reestablishing pressure in the pipelines with a massive plumbing problem and probable water damage - on a regional scale.

The supply problem is that North America has doubled its drilling activities in the past 5 years, but our extraction rate has remained flat. The new wells we are drilling are declining much faster than those drilled just 8 years ago. What[ is going on here? It is only common sense to drill the easiest and most prolific sites first, and now we are left with the rest.

The NG supply situation needs to be addressed on many levels. But if you rely on NG directly, forewarned is forearmed.

Greg Jeffers

Mentatt (at) yahoo (dot) com