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A picture that is worth a thousand words - in summary, Coal falling, Crude and Nuclear flat with Nat Gas and Renewables rising.

Doesn't look like US O&G business is going anywhere in a hurry - but with seemingly greater emphasis on G than O.

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7 hours ago, AcK said:

image.png.957aee96c67834bbe3560c23148f95bf.png

A picture that is worth a thousand words - in summary, Coal falling, Crude and Nuclear flat with Nat Gas and Renewables rising.

Doesn't look like US O&G business is going anywhere in a hurry - but with seemingly greater emphasis on G than O.

Even more, EIA says planned new electrical generation of 24 GW capacity (not all energy consumption as in the graph above) is to be made up of 46% (11 GW) wind, 18% (4.3 GW) solar, 2% (0.5 GW) other, and only 34% (8.2 GW) natural gas. Electrical retirements of 8 GW are 53% (4.2 GW) coal, 27% (2.2 GW) natural gas, and 18% (1.5 GW) nuclear.

This is a very substantial shift from last year where natural gas made up 60% of all new electrical generation.

In a couple of years, natural gas may well start shrinking not just market share, but in absolute terms in the US electricity market.

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This is a question, not a comment.

If oil production/exploration peaks, won't that lead to a peak in natural gas production/exploration?

From my perspective they are handcuffed together. The same rigs, tools, equipment and personnel are utilized to drill gas and oil wells. If operators, service companies and equipment/tubular suppliers can not generate sufficient profits exploring for and producing gas as opposed to crude, isn't there a risk of these companies simply disappearing?

Okay, that's two questions...

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On 7/3/2019 at 11:29 PM, Douglas Buckland said:

This is a question, not a comment.

If oil production/exploration peaks, won't that lead to a peak in natural gas production/exploration? 

From my perspective they are handcuffed together. The same rigs, tools, equipment and personnel are utilized to drill gas and oil wells. If operators, service companies and equipment/tubular suppliers can not generate sufficient profits exploring for and producing gas as opposed to crude, isn't there a risk of these companies simply disappearing?

Okay, that's two questions... 

I'm not sure I understand the question.  As I see it, gas supply is coupled to oil at low gas prices and decoupled from oil at high gas prices. This is because, at low gas prices, gas can only be produced as a byproduct of oil. 

The price of gas depends on whether demand outstrips the supply of associated gas.  Electricity markets have substitutes for gas, so they can only drive the price of gas so high before demand plateaus.  Home heating gas demand is being pressured by increased efficiency and improving heat pump technology.  Petrochemical demand is increasing for now, but may struggle as petroleum products are recycled at higher rates.  I'm not sure about industrial gas demand. 

Thus, it's theoretically possible that gas prices could increase and gas supply decouple from oil, but by no means guaranteed. 

Is that what you were getting at?

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Ben,

What I was trying to get at is that oil and gas exploration are essentially one and the same industry. If oil exploration (the big profit maker of the two) is no longer pursued due to demand, green issues, etc.... then exploration for natural gas should falter as well.

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(edited)

Gas and oil used to track relatively close to each other from a cost per btu. That all changed with fracking. Unconventional gas in the USA fundamentally changed the game. And this wasn't associated gas. I suspect the Marcellius play made this happen for than the Texas plays.

Great graphic for coal's trend.

Edited by John Foote
additional info

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