Natural Gas Supply Glut

Tuesday, March 16, 2010

By Energeticcity.ca staff

The Vancouver Sun has pubished a new story, that could be viewed as a serious stormy weather economic forecast for this region.
It says there is now so much natural gas available in North America, that the International Energy Agency is speculating about an "acute" world-changing glut.
It 's said to be a classic textbook case of supply and demand driven by technological innovation.
Prices are crashing, markets are shifting, and governments that rely on gas royalty revenue, like the one in Victoria, are into a revenue scamble.
The B.C. finance ministry is quoted, as expecting a 740 million dollar drop in gas royalty revenues by 2012, as compared to calculations made as recently as last fall.
The Sun story also notes the commodity trading price of gas in North America has dropped from nine dollars US per unit in 2008, to about four dollars.
However, the real scary part of this story for areas of the country like this one is the expectation, that the situation will persist well beyond any presumed recession recovery.
In fact, it says the U.S. Energy Information Administration projects an average gas price though 2035 below eight dollars... which is generally accepted as the bottom line price needed to be sustained for three months, in order to instill producer drilling confidence.
It's speculated, one of the long-term victims could be the Mackenzie Valley gas pipeline project, which cannot compete with the Horn River unconventional gas patch on price or volume.