Saturday, January 7, 2012

Suggested Reading

The reality of the lower 48 shale gas glut may have finally sunk into Alaskan policy makers (see previous entry).  Here's a good paper on the dynamics of the shale gas business. (Musings From the Oil Patch LINK) Turns out $3/MMBTU is an insane price for shale gas drilling.  The data indicates at current prices sane people stop drilling for dry gas, i.e. gas not loaded with higher value liquids.

Impacts to Alaskan gas projects: Less drilling leads to higher prices. At $6/MMBTU the rigs switch back to gas.  A gas market oscillating between $3 and $6/MMBTU is unlikely to justify a $40 billion gas line.

IF, and that's a big if, Alaska and the oil companies can align their common interest and build an in state line and LNG export plant then it's possible that the state and the producers will benefit from higher lower 48 gas prices.

No comments: