(click on graph for updated prices)
Okay, natural gas prices are waaay down from their highs, so all's fine, right? It doesn't matter than these prices are still double the highest power plant developers expected only a couple years back, they are down. Alert over.
Hah! Let me show you just one new graph below the fold.
This is a simple compilation of the prognoses made each year by the US government, through the Energy Information Agency of the DoE, for expected future production in North America.
The top line was the prediction made in 2002 for future years. The next line the prediction made in 2003, etc...
Notice something? The predictions have been going down every single year... and so has production, in recent years.
As I posted a while ago, the problem is that more and more wells are being drilled, but they run out quicker and quicker.
This graph shows the rates of decline depending on the year the field was put in production: the slopes are getting steeper and steeper, i.e. new production is declining really quickly, and thus total production is going down.
This prediction, made in 2003 by the National Petroleum Council (pdf - see p.11), shows where the gas was expected to come from back in 2003: a good chunk of it is expected to come from Alaska or Artic Canada, and lower 48s was supposed to remain stable. This seems increasingly unlikely.
The ONLY solution will be to bring in more LNG, but guess what: - all the expected import terminals are expected to be built right on Hurricane Lane:
If there's any problem with import terminals, or any other supply problem of any kind, you get a tight supply-demand balance and what happens is what we saw in the UK last week when a cold snap happened at the same time as an accident on a storage facility: prices quadrupling overnight...
What the first graph above means is that the decline in production is much faster than was expected only a few years ago, which means that, like in the UK, the facilities that have been planned to replace that production will be available too late and, in the meantime, the system will be highly vulnerable to any incident.
Earlier "Countdown Diaries":
Countdown to 100$ oil (22) - gas shortages in the UK - 240$/boe
Countdown to 100$ oil (21bis) - long term vs short term worries
Countdown to 100$ oil (21) - 8-page extravaganza in the Independent: 'we're doomed'
Countdown to 100$ oil (20) - Meteor Blades is Da Man in 2005
Countdown to 100$ oil (19) - Your bets for 2006
Countdown to 100$ oil (18) - OPEC happy with oil above 50$
Countdown to 100$ oil (17) - Does it matter politically? A naked appeal for your support
Countdown to 100$ oil (16) - We'll know on Monday
Countdown to 100$ oil (15) - the impact on your electricity bill
Countdown to 100$ oil (14) - Greenspan acknoweldges peak oil
Countdown to 100$ oil (13) - Katrina strikes / refinery crisis
Countdown to 100$ oil (12) - Al-Qaeda, oil and Asian financial centers
Countdown to 100$ oil (11) - it's Greenspan's fault!
Countdown to 100$ oil (10) - Simmons says 300$ soon - and more
Countdown to 100$ oil (9) - I am taking bets
Countdown to 100$ oil (8) - just raw data
Countdown to 100$ oil (7) - a smart solution: the bike
Countdown to 100$ oil (6) - and the loser is ... Africa
Countdown to 100$ oil (5) - OPEC inexorably raises floor price
Countdown to 100$ oil (4) - WSJ wingnuts vs China
Countdown to 100$ oil (3) - industry is beginning to suffer
Countdown to 100$ oil (2) - the views of the elites on peak oil
Countdown to 100$ oil (1)