LOCAL energy expert Dr Raymond Wright speculating that Jamaica should be in a better position to source gas from the US Gulf Coast at cheap rates at a time when turmoil in the Middle East and North Africa is pushing up oil prices.
"Jamaica should be in a better situation to get gas from the Gulf Coast... gas should be available on the spot market or possibly on long-term contracts for many years, as projections are that prices will remain depressed for up to a decade and possibly beyond," said Wright, a consultant at the Petroleum Corporation of Jamaica (PCJ).
According to business watcher Bloomberg two weeks ago, US natural gas prices are set to extend their longest-ever decline as "heavier-than-normal rainfall boosts hydropower generation from plants in the Pacific Northwest, cutting demand for gas-fired electricity", and as rising production from shale rock sources swells stockpiles.
Commodity watchers said natural gas prices fell for an unprecedented fourth consecutive year, due to the combination of rising production from shale and hydroelectricity.
Current estimates indicate that hydroelectricity generation could displace as much as 1.5 billion cubic feet a day of gas consumption from January to July. Several analysts feel that differential is more than enough to run all of the gas-fired electricity plants in Oregon and Washington, and predict that this could lead to prices slipping another 12 per cent in the second quarter, Bloomberg notes.
The upshot is that this should result in the US having excess supplies of gas to sell to countries like Jamaica.
Bloomberg observed that "natural gas for April delivery fell 3.9 cents or one per cent, to $3.779 per million British thermal units (Btu) on the New York Mercantile Exchange (Nymex) at 12:02 pm New York time Thursday (March 3), bringing the market's decline this year to 14 per cent. A fourth drop this year would extend the longest stretch of annual declines since the futures began trading on the Nymex in 1990."
Rising output also pushed gas inventories to a record 3.84 trillion cubic feet in the week ended November 5. Gas stockpiles were projected to reach four trillion cubic feet in late October or early November last year after utilities and storage companies stocked up the fuel to prepare for peak demand during the cold-weather months, according to Barclays Capital.
Production of gas may average a record 62.32 billion cubic feet a day this year, according to the US Energy Department.
The government "expects near-record-high inventories to continue through most of 2011," the Energy Department said in its monthly Short-Term Energy Outlook on February 8.
Forecasts by major energy bodies, such as the International Energy Agency (EIA), the United States Energy Information Administration and the Massachusetts Institute of Technology, all show gas outstripping and displacing coal and other alternatives as a fuel for power generation in the coming decades.
The EIA's 2011 Annual Energy Outlook projects that between the current period and 2035, the US power sector will see gas far outstripping coal and nuclear power in terms of new generation additions, with 135 gigawatts of natural gas, 14 gigawatts of coal and six gigawatts of nuclear power.
Energy Minister James Robertson has long championed the need for Jamaica to access natural gas.
"Natural gas is the quickest implementable alternative to oil... Jamaica has already reached an advanced stage in the development of an LNG project and. LNG facilities and modern power plants to utilise gas can be constructed within 30 months," Robertson states.
By contrast, experts estimate that it would take approximately five to six years to plan and construct a coal-power plant and 10-12 years before it is feasible to implement a nuclear-power plant.
(Source: http://www.jamaicaobserver.com/business/Natural-gas-prices-head-south-as-oil-rises_8545998)
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