What Gas Shortage?

Everybody seems to be in a sissy fit panic, with the fact that “Big Oil” is closing the Kenai LNG plant, after 30-years in operation. It's all based on economics. And believe it or not, this “Big Oil” company is not throwing in the towel with respect to its Cook Inlet holdings, but expanding its profit profile with this announcement. The LNG plant was an “on & off” proposition, wherein it would utilize Cook Inlet natural gas, excess gas to fuel an export industry. And with the world-wide market flood of LNGs, it makes sense to find more profitable ventures. So it isn't cost effective any longer, and has nothing to do with the so-called dwindling supply of natural gas from the inlet. There is “NO SHORTAGE”! The entire fear factor is playing out very handsomely for “Big Oil”. It goes to show that after 30-years, the state bureaucrats still have not an iota of an idea the fundamentals of “Natural Gas” exploitation, which includes equitable taxation and royalties. If they have failed to figure it out for the Inlet resources, that failure escalates exponentially when one considers the North Slope infrastructure. This state has been ripped off the true value of “our” resources, yet we cannot turn back the pages of history to fix those economic mistakes. We are stool stuck, so as long as there exists one recoverable barrel of crude oil or one cubic foot of recoverable natural gas, we will be at the mercy and misery of “Big Oil's” price manipulation schemes. Look, they are in it for the money, that's it in a nutshell. They don't care about providing jobs or anything else, unless it is profitable. It's a business! But I preach it again, there is “NO SHORTAGE” of Cook Inlet natural gas, not for the present consumer base and there is probably enough gas without new exploration or discoveries to last at least another 10-years. There is no growth potential anticipated for the Inlet or Anchorage, so “make do with what you got” is the sentiment from the “Big Oil” board rooms. And the lower echelon are good at following that edict, as it is a profitable motive incentive. When one looks at the supply and demand theory controlling Cook Inlet natural gas, which said theory still rallies today except challenged by speculation and futures' manipulation, it is more economical to store natural gas in the recently approved depleted oil stratum found in the Inlet. This move places exports on the back burner and out of reach. It works like this. In the summer months when gas demand is low, that commodity is routed to the underground storage facility, usually an abandoned oil well approved for storage by the state. So it is a full time 24/7 operation, a 365 days a year proposition. And gas compression and storage in the summer season is a real cheap way to store gas, as the fields produce on an even keel and don't have to go into overdrive. See, over the years the problem which incited the fear and scare factor was the “overdrive”, which has a tendency to deplete the down-hole pressure of a producing field. It promotes the doom & gloom scenario. But when gas is extracted at a calculated rate, it is the “quiet before the storm” wherein the entire process now allows for a predictable outcome. So with a little compression, to force pack the underground storage, it is money in the bank. And most underground storage facilities work on the supply and demand theory. When demand is low, the price is right to send it down hole. When demand is high, what comes out of the ground is sold at a premium. It finds itself a money multiplier factor. And the way consumers pay for gas nowadays, we pay the same price regardless of the time of year or where it is coming from. We are blinded by the might the true identity of this commodity's worth. In Canada, underground storage facilities - like can be found at Atkin Creek - it makes an estimated billion dollars in profit, take home - based on the supply and demand theory. Just for storing another outfits gas! This reserve is used to supplement the main gas line feeding the U.S. consumers. So when we hear the Anchorage Mayor crying out loud about gas shortages and warning residents to beware of gas curtailments, it is all nonsense. It points the finger that he nor his administration understands the gas business. It is all for profit. And with the doom and gloom followers, do you have any idea what gas pressure can be found in that plastic pipeline that brings gas to your house? It is 60 pounds! Wow, you say. Do you have any idea what pressure your firebox works under. How about 7” of water column. The force of a mosquito passing gas! Look, due the phenomenon called “line pack”, there is plenty of gas in the Enstar transportation and distribution system. And “Big Oil” is modifying the existing infrastructure to accommodate this gas storage future, the for-more-profit future! Look, “Big Oil” would not be spending millions on this new delivery and storage if they could not make back a great return on the investment. True, the Beluga gas field pressure has depleted over the years, but “Big Oil” is going to install several new low suction compressors, this year, so there can be a constant low drain on the gas field. With predictions that this move will provide many years of service once it is realized this modification is complete. It will help in efforts to fill the void, the underground storage that is about to make “Big Oil” even wealthier then ever. The doom and gloom caper has allowed the consumer gas prices to escalate beyond reasonableness. For the past several years now we have heard about it, shortages. But the underground storage thing started two years ago, and guess what? We didn't hear anything about shortages this year. It required a few years for things to jell, for Enstar to get contracts, as there has come a shift upon the entire market-nomics of Cook Inlet gas from a wealth and necessity standpoint. Guess which of the latter comes first? That is what “Big Oil” is good at, fixing things if indeed it is profitable. They have succeeded in getting “blood out of a turnip” this venture. So today we see solutions, and “Big Oil” is realizing the profits that the fear, doom and gloom factor has promoted. And with respect to the jobs thing? The modifications will suck up those that are loosing their jobs from the LNG finding a “Closed for Business” sign illuminated. There will be opportunities for construction work, for the modifications that will probably last several years. And for those that don't believe there isn't a gas shortage, put this tidbit in your pipe and smoke it. An independent energy company ran a test well from Nikiski a few years ago, found a whole lot of gas in close proximity to an existing natural gas transportation pipeline, called the Cosmo field. That prospect has been abandoned. Why? Big Oil owns this state and have the ways and means to control who gets what. With the threat of an Independent making in-roads into the lubricative Alaskan scene, it threatens the 30-year mainstay of manipulation, something “Big Oil” will not stand for, not just yet. The sad thing about it all, with the doom and gloom litmus test wherein we the consumers were the guinea pigs, the prices escalated based on that test, and we all know that once prices make it top-side, we pay as they play and our return on that investment is pittance sakes!! Buy blankets.