Tag Archives: Natural gas

Wind Power Is a Disaster in Texas, No Matter What Paul Krugman Says, by Robert P. Murphy

Texas was producing a lot more natural gas power than usual and a lot less wind power than usual during the recent freeze. From Robert P. Murphy at mises.org:

In the wake of February’s tragic power outages in Texas, during which 4.5 million households suffered service interruptions, partisans on both sides have been quick to interpret the events as confirmation of their preferred energy policies. With news images of helicopters deicing frozen turbines, conservatives lambasted Texas’s increasing reliance on wind power as the villain in the story.

Trying to temper this knee-jerk reaction, Reason.com columnist Ron Bailey argued that “[m]ost of the shortfall in electric power generation during the current cold snap is the result of natural gas and coal powered plants going offline.” And Paul Krugman for his part declared that it was a “malicious falsehood” to blame wind and solar power for what happened in Texas, as it was primarily a failure of natural gas.

In this article I’ll lay out the basic facts of which power sources stepped up to the plate during the crisis. Contrary to what you would have known from reading Ron Bailey (let alone Paul Krugman), when the Texas freeze hit, electricity from natural gas skyrocketed while wind output fell off a cliff. The people arguing that wind wasn’t to blame mean it in the same way Jimmy Olson wasn’t to blame when General Zod took over: wind is so useless nobody serious ever thought it might help in a crisis.

Continue reading→

Cascend: Data Shows Wind-Power Was Chief Culprit Of Texas Grid Collapse, by Tyler Durden

Most of Texas’s substantial wind power went off-line and natural gas couldn’t pick up the slack. From Tyler Durden at zerohedge.com:

With the worst of the Texas power crisis now behind us, the blame and fingerpointing begins, and while the jury is still out whose actions (or lack thereof) may have led to the deadly and widespread blackouts that shocked Texas this week, Cascend Strategy writes that “in case there was any doubt why the Texas grid collapsed, the data is clear”

  • Wind failed as “Ice storms knocked out nearly half the wind-power generating capacity of Texas on Sunday as a massive deep freeze across the state locked up wind turbine generators, creating an electricity generation crisis.”
  • Natural gas made up the difference for a while
  • But then everything else followed down

Some more detail from Cascend which lays out the events of this week in sequence:

  • A massive cold snap drove demand for electricity well beyond normal levels
  • Wind power failed to deliver it’s expected power – almost 40% of expected power – in part due to lack of winterized wind turbines

Continue reading→

“Power Bills To The Moon”: Chaos, Shock As Electricity Prices Across US Explode, by Tyler Durden

A lot of people may have trouble getting head during a mammoth Arctic cold spell across the Midwest and South. This could get quite serious and potentially deadly. From Tyler Durden at zerohedge.com:

Updated (1726 ET): Weather forecast models suggest the polar vortex will continue pouring Arctic air into much of the central US through Feb. 20. This means nat gas prices could rise even higher early next week as electricity demand continues to soar over the weekend as Americans crank up their thermostats and watch Netflix shows or mine Bitcoin.

* * *

On Thursday, when we reported that nat gas prices across the plains states had soared to never before seen levels as a result of a brutal polar vortex blast…

… which literally froze off nattie supply as wellheads freeze-offs, cutting production receipts just when they’re most needed by customers’ demand for heating, we said that since the winter blast is expected to last for the duration of the week, it is likely that nattie prices across the plains states could hit GME batshit levels.

Continue reading→

Dallas Fed Outlines Somber Oil & Gas Industry, “Flaring” of Natural Gas Comes into Focus by Wolf Richter

There’s more trouble looming for the Permian Basis petroleum industry. From Wolf Richter at wolfstreet.com:

“The capital markets for oil and gas remain extremely difficult.”

The Dallas Fed’s Forth Quarter Energy Survey, released today, portrays an industry that is turning increasingly somber. The data is based on responses of executives (names are not disclosed) of 170 energy companies – 111 exploration and production (E&P) companies; and 59 oil field services companies – located or headquartered in the Dallas Fed’s district, which covers Texas, northern Louisiana, and southern New Mexico and includes the most prolific shale oil-and-gas field in the US, the Permian Basin.

This time, there were additional questions, including on the reasons for “flaring” of natural gas in the Permian Basin. Natural gas is so abundant in the hydrocarbon mix produced at these wells (“associated” natural gas), and natural-gas pipeline takeaway capacity is so insufficient, that the surge in production led to the collapse of the price of natural gas in the area, reportedly dropping below zero on occasion. And it led to a record amount of natural gas getting flared in 2019.

Flaring large amounts of gas is a waste of natural resources, a source of air pollution, and a big financial drag for the already struggling oil-and-gas companies, investors, and banks.

Continue reading

Fracking Blows Up Investors Again: Phase 2 of the Great American Shale Oil & Gas Bust, by Wolf Richter

Fracking may be the greatest thing to ever happen to US oil and gas production, but it’s having a hard time paying for itself, especially when the cost of copious amounts of debt is thrown into the calculations. From Wolf Richter at wolfstreet.com:

Including billionaires who thought they’d picked the bottom in 2016.

In 2019 through third quarter, 32 oil and gas drillers have filed for bankruptcy, according to Haynes and Boone. Since the end of September, a gaggle of other oil and gas drillers have filed for bankruptcy, including last Monday, natural gas producer Approach Resources. This pushed the total number of bankruptcy filings of oil and gas drillers since the beginning of 2015 to over 200. Other drillers, such as Chesapeake Energy, are jostling for position at the filing counter.

Chesapeake has been burning cash ever since it started fracking. To feed its cash-burn machine, it has borrowed large amounts and has been buckling under its debt for years, selling assets to raise cash and keep drilling for another day. But its debt is still nearly $10 billion. Its shares [CHK] closed on Friday at 59 cents.

On November 5, in an SEC filing, it warned of its own demise unless oil and gas prices surge into the sky asap: “If continued depressed prices persist, combined with the scheduled reductions in the leverage ratio covenant, our ability to comply with the leverage ratio covenant during the next 12 months will be adversely affected which raises substantial doubt about our ability to continue as a going concern.”

Continue reading

There’s No Stopping The World’s Most Politically Charged Pipeline, by Irina Slav

Despite the best efforts of the US government to get Europeans to buy higher priced American liquified natural gas, the Europeans inexplicably want the cheaper gas Russia offers, so the Nord Stream 2 gas pipeline from Russia to Europe will go through. From Irina Slav at oilprice.com:

This week, Denmark granted Gazprom approval for its Nord Stream 2 gas pipeline project, a project that is set to bring 55 billion cubic meters of Russian gas into Europe annually. It is one of the most controversial pipeline projects in the world and is now moving ahead despite strong opposition from multiple EU members and the United States.

The geopolitical tensions surrounding the development of Nord Stream 2 are unprecedented. To begin with, Russia has very poor relations with the Baltic states and Poland, nations who will almost always fight against anything they see as empowering Russia geopolitically. Then there is Ukraine, a nation that is strongly against the pipeline due to its fear of losing the transit fees that it currently charges Russia for exporting gas to Europe. Finally, and perhaps most importantly, the United States sees this pipeline as a direct threat to its soft power in Europe as well as a threat to its growing LNG exports.

Continue reading

Forget Nordstream 2, Turkstream is the Prize, by Tom Luongo

Turkey moves farther and farther outside the US orbit. From Tom Luongo at tomluongo.me:

While the Trump Administration still thinks it can play enough games to derail the Nordstream 2 pipeline via sanctions and threats, the impotence of its position geopolitically was on display the other day as the final pipe of the first train of the Turkstream pipeline entered the waters of the Black Sea.

The pipe was sanctioned by Russian President Vladimir Putin and Turkish President Recep Tayyip Erdogan who shared a public stage and held bilateral talks afterwards.  I think it is important for everyone to watch the response to Putin’s speech in its entirety.  Because it highlights just how far Russian/Turkish relations have come since the November 24th, 2015 incident where Turkey shot down a Russian SU-24 over Syria.

Continue reading

Germany Admits it Needs More from Russia than Nordstream 2, by Tom Luongo

Germany is going to use the Nordstream 2 pipeline from Russia whether the US and Trump like it or not. From Tom Luongo at tomluongo.me:

During the years the U.S. and its satraps in Poland and the Baltics fought the Nordstream 2 pipeline it was always apparent Germany was in the driver’s seat.  It was also apparent that this would be the wedge issue that would ultimately force Germany to pursue independent policy from the U.S.

Nordstream 2 is and was always a reaction to the U.S.’s meddling in Europe’s energy policy which this cycle of began with the scuttling of the South Stream pipeline in 2013.

From the EU’s perspective changing the rules under which South Stream would operate after the contracts for it were signed was a way of gaining leverage over Russia and Gazprom.  So too was the help protesters in Kiev received to overthrow the Yanukovich government from the U.S. and the EU.

That operation was meant to put the Ukrainian pipelines under EU control where they could dictate terms to Gazprom and choke the profit out of its gas deliveries.  It would also advance NATO and the EU to Russia’s western border and there was to be nothing Putin could do to stop the U.S. from putting nukes targeting Moscow there.

Too bad for them it didn’t work out that way.

Continue reading

Republican Senators Introduce Bill to Snuff out Europe’s Independence, by Alex Gorka

Europe cannot be allowed to go against the dictates of its US masters, especially if it involves buying natural gas from Russia. So what if Europe will have to pay more for US gas? From Alex Gorka at strategic-culture.org:

In a meeting with Russia’s ambassadors and permanent representatives on July 19, President Vladimir Putin said that “the principles of competition and openness in global trade are increasingly being replaced by protectionism, while economic gain and expediency are being swapped for partisan agendas and political pressure. Economic ties and entrepreneurial freedom are being politicized.” He feels that Russia must counter this trend. There is ample evidence to prove his point.

There is a large group of US lawmakers chomping at the bit to support anything that would bring Europe to heel and hurt Russia. Their target is the Nord Stream 2 gas project that has a pipeline running under the Baltic Sea from Russia to Germany with an annual capacity of 55 billion cubic meters. That joint venture between Russian energy giant Gazprom and the French company Engie, Austria’s OMV AG, the British-Danish Royal Dutch Shell, and Germany’s Uniper and Wintershall is expected to be operational by the end of 2019. The US president has the authority to impose sanctions on the project under the CAATSA sanctions law, but there is a risk that he will not. And so some US lawmakers believe that should be rectified by making those punitive measures mandatory.

On July 18, Senator John Barrasso (R-Wyo.) introduced a bill, co-sponsored by Sens. Cory Gardner (R-Colo.) and Steve Daines (R-Mont.), to allow NATO member states to — in his words — “escape from Russia’s political coercion and manipulation.” That’s too much of a good thing, but then nobody in Europe asked for such “help.”  The senator’s website claims “the Energy Security Cooperation with Allied Partners in Europe Act, or the ‘ESCAPE Act,’ enhances the energy security of NATO members by providing those countries with reliable and dependable American energy. It also mandates sanctions on the Nord Stream II pipeline that would carry natural gas from Russia to Germany, along with other Russian energy export pipelines.”

To continue reading: Republican Senators Introduce Bill to Snuff out Europe’s Independence 

Russia’s Grip on European Natural Gas Markets Tightens, by Nick Cunningham

Europe remains dependent on Russia for much of its natural gas. From Nick Cunningham at oilprice.com via wolfstreet.com:

US LNG has been billed as a game changer, threatening to end Russia’s control of the European market.

Despite years of effort from the EU, Russia’s grip over natural gas supplies in Europe is tightening, not waning.

Gazprom shipped 190 billion cubic meters of natural gas to Europe in 2017—a record high, according to Bloomberg. In 2018, that figure is expected to dip slightly to 180 billion cubic meters, which will still be the second most on record.

The higher reliance on Russian gas may come as a surprise, not least because of the ongoing tension between Russia and some European countries on a variety of issues. Russia’s intervention in Ukraine and its annexation of Crimea in 2014 led to a standoff between Russia and the West—but Europe’s imports of Russian gas are up more than 25 percent since then, despite a lot of rhetoric in Brussels about diversification.

There has been some progress. U.S. LNG has begun arriving on European shores for the first time, promising to compete with Russian gas. Importing LNG has been a lifeline particularly in some areas that are acutely exposed to Russia’s gas grip. Lithuania began importing LNG, offering an alternative to Russian gas and forcing price concessions from Gazprom.

For years, U.S. LNG has been billed as somewhat of a game changer, threatening to end Russia’s control of the European market. There have been some notable concessions from Gazprom—more flexible pricing, for example, and an erosion of oil-indexed pricing—but the Russian gas giant has not lost market share. A lot of U.S. LNG has been shipped to Latin America, not Europe.

Part of the reason is that European natural gas production continues to fall, leaving a void that Russia has been eager to fill. At the same time, Gazprom’s Deputy Chief Executive Officer Alexander Medvedev told Bloomberg that coal prices are expected to rise a bit in 2018, making Russian gas more competitive.

To continue reading: Russia’s Grip on European Natural Gas Markets Tightens