Elections Disad – Core – Hoya-Spartan 2012
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- INCREASES IN DEMAND FOR NATURAL GAS CAUSE INCREASE LNG IMPORTS.
- EXT: PRICE SPIKES LNG IMPORTS
- HIGH PRICES CAUSE DRILLING AND SHIFT TO LNG.
- NATURAL GAS SPIKES MAKE LNG COST COMPETITIVE -- CREATES MASS INFLUX IN IMPORTS.
- LNG IMPORT LEVELS DIRECTLY CORRELATE TO U.S. CONSUMPTION TRENDS .
IMPACT: LNG IMPORTSEPA REGULATIONS WILL CAUSE MASSIVE NATURAL GAS PRICE SPIKES.BERG 8. [Amanda, legislative assistant @ NCPA, “Regulating Global Warming: Expanding the Authority of the Environmental Protection Agency” National Center for Policy Analysis -- Oct Regulating Global Warming: Expanding the Authority of the Environmental Protection Agency -- http://www.ncpa.org/pub/ba634] Effects of Regulations on Energy Costs. As with other pollutants, if the EPA finalizes these findings, the agency could go beyond regulating CO 2 emissions from automobiles to regulating greenhouse gas emissions from stationary sources as well. The EPA would likely implement an emissions permit program covering stationary sources emitting 250 tons per year of any regulated pollutant. This would subject thousands of new sources to EPA regulations — including small businesses, hospitals and even large single-family homes. It would require costly new technology or retrofits to meet stringent emissions criteria. Furthermore, the proposed EPA rule would cause a shift from coal — currently used to generate half of the domestic electricity supply — to natural gas. Due to the limited domestic supply of natural gas and the moratorium on production from reserves on the Outer Continental Shelf, more natural gas would be imported, reducing U.S. energy security. According to a study by Science Applications International Corporation, an increase in demand for natural gas would cause its price to skyrocket, raising electricity prices: Natural gas prices could increase by as much as 146 percent. Electricity prices could increase 129 percent. A two-thirds reduction in coal-fired electric power generation would lower gross domestic product (GDP) by $371 billion annually, say Pennsylvania State University researchers. INCREASES IN DEMAND FOR NATURAL GAS CAUSE INCREASE LNG IMPORTS.BOWE ET AL 6. [James F, William Rice, Oleg Bilousenko, Federico Valle, Christian Rolf, Delia Patterson, Jan Krekeler, all at Dewey Ballantine LLP “Global Overview” Getting the Deal Through: Gas Regulation in 35 jurisdictions worldwide – published by Global Competition Review ] With US and Canadian production falling, achieving the goal of expanding United States gas supplies means a new reliance on imported LNG. Some 96 per cent of the world’s natural gas reserves are found outside North America. Growing demand for natural gas in the US will lead to an increase in gas imports in the form of LNG. Imports of LNG currently supply only about 3 per cent of US natural gas demand. North American LNG imports are expected to increase as new receiving terminals are built. In 2005, however, US gas markets were unable to compete for spot LNG on the international market as Spain and other LNG importing countries bid the price above US benchmarks. EXT: PRICE SPIKES LNG IMPORTSINCREASED DEMAND AND HIGH PRICES FORCE THE US TO INCREASE LNG IMPORTS FROM THE GLOBAL MARKET.ATTA 7. [Lee Van, Senior Director, “The ethanol facilities as a driver for new natural gas pipeline construction in the “corn belt” where the majority of ethanol Impact of Ethanol on Natural Gas: Could ethanol’s expansion be at risk from high natural gas prices?” 6-29-2007 http://rwbeck.com/insights/insightpdfs/EthanolandNG.pdf] The demand growth from ethanol refineries is coming at a challenging time for the natural gas industry. U.S. natural gas prices have increased over 60% since the start of this decade. The U.S. Energy Information Administration reports that natural gas wellhead prices averaged less than $4/MMBtu from 2001 to 2003 and from 2004 to 2006 have averaged approximately $6.40/MMBtu. In response to higher prices, drilling rig counts and gas well completions have increased dramatically but U.S. natural gas production has barely changed. U.S. natural gas producers say that they face difficult challenges and may not be able to increase U.S. natural gas production very much even with higher prices. They report that costs are increasing even faster than natural gas prices, new fields tend to produce far less gas per well than old areas, and decline rates across the board are getting steeper every year. It seems certain that the U.S. will be forced to rely on increasing imports of natural gas but Canada – our “go to” source for incremental supply during the 1990’s - is facing the same difficulty with flat or declining domestic gas production and growing demand. The growing global market for liquefied natural gas (LNG) is certainly a promising source of supply given that 96% of the world’s proven natural gas reserves are located outside of North America. However, just as with the global oil market, there needs to be recognition that LNG suppliers will look to sell to the highest price market and European and Asian demand for natural gas is expected to be strong. Furthermore, a quick review of the top LNG export countries notes several in the top 10 with recent security or instability issues (including Indonesia, Algeria, and Nigeria). A similar review of the top countries in terms of natural gas reserves (#1- Russia, #2 - Iran, # 9-Venezuela) highlights that reliance on LNG will bring its own set of geopolitical risks. HIGH PRICES CAUSE DRILLING AND SHIFT TO LNG.GIH 6. [Global Investment House, a firm regulated by the Central Bank of Kuwait, “GCC Natural Gas Outlook: The Fizz on Natural Gas” October] High natural gas prices encourage continued high drilling activity and investments necessary to develop gas supply from new regions in North America. High prices also help support the expected growth of LNG imports required to meet North American demand. Nonetheless, there is a cost consequence of high natural gas prices to consumers and energy-intensive industries in North America. NATURAL GAS SPIKES MAKE LNG COST COMPETITIVE -- CREATES MASS INFLUX IN IMPORTS.Robert Pirog, Specialist in Energy Economics and Policy Resources, Science, and Industry Division, Congressional Research Service, 12/8/4 http://bartlett.house.gov/uploadedfiles/Natrual%20Gas%20Price.pdf As discussed earlier in this report, when the ECUR is 90% or above, the ability of the industry to respond to increased demand with expanded supply from existing wells is limited, causing price to increase quickly. However, the higher prices do provide an incentive to begin the process of drilling new wells and exploring for new supplies. The resulting supply increase will tend to cause price to fall as productive capacity is enhanced, reducing the ECUR. The nature of this relationship in the natural gas industry can, under some circumstances, lead to a cycle of unstable boom and bust feared by those investing in gas production. Taken to its extreme, this could lead to chronic under-investment in gas production and stagnant supply. Higher prices for natural gas justify investment in exploratory drilling by increasing the value of the expected cash flow derived from the new production. In an efficiently operating market, a sustained, marginal increase in price is supposed to elicit a marginal increase in production. In natural gas, when the price rises, hundreds of extra rigs drill thousands of additional wells. Historical averages suggest that about 80% of these efforts will be successful and yield some new production. Once a well is brought into production, there is little economic rationale for not producing at full capacity. As a result, the market moves to a condition of excess supply as new production begins, causing a fall in the price. The reduced price brings a disincentive to invest in exploratory drilling, which leads to a period of stable supply setting the stage for a rising ECUR a tightening market balance and rising prices. A key factor in the ability of the rate of investment in exploration to affect the ECUR is the degree to which existing wells deplete, or yield declining output levels. For example, the EIA expected that in 2003 the estimated effective productive capacity of the U.S. natural gas industry would be approximately 57 billion cubic feet per day (bcf/d). For 2003, production was expected to be approximately 51.4 bcf/d, leaving a surplus of 5.6 bcf/d, or about 10%. To demonstrate how this balance depends on new drilling and expansion of capacity, the EIA estimated that 25% of effective productive capacity comes from wells one year old or less. The two largest suppliers of U.S. natural gas, Texas and the Gulf of Mexico, derive 30% of their production from wells one year old or less. If drilling were to stop in the U.S., all surplus capacity would disappear in less than one year. In 2001, the incentive of high prices led to 22,800 well completions that resulted in increased productive capacity. Only 17,800 wells were completed in 2002 and productive capacity declined. If, as this recent data suggests, the potential for a boom/bust investment cycle may be developing in the natural gas industry, the result will be brief periods of low prices and plentiful supply followed by periods of high prices and potential physical shortages.9 Gas Imports The measures analyzed in the EIA study of effective productive capacity only refer to resources in the lower 48 states. As the U.S. natural gas market develops, this restriction will become less appropriate. The U.S. natural gas market is well integrated with the Canadian market. Imports of Canadian natural gas have long been an important supply source when U.S. consumption exceeded U.S. production and available stock draw down. Imports of natural gas from Canada, all via pipeline, reached over 3.7 tcf per year in 2001 and 2002, but declined to less than 3.5 tcf in 2003. Canadian gas fields, like those in the United States, may be unable to easily expand output without the development of new fields. An additional source of imports might be liquefied natural gas (LNG).10 The U.S. has four operational (or near operational) LNG receiving facilities with an annual operational send-out capacity of 1.4 tcf per year after all planned expansions are completed.11 The critical issue concerning LNG is cost. Although the cost of a complete LNG facility has fallen substantially (30%) due to economies of scale and enhanced technology over the last decade, LNG cost is greater than most conventional gas from wells in the lower 48 states.12 As a result, dependence on LNG may safeguard the nation from physical shortage by building a new, higher, baseline price into the market. NATURAL GAS PRICE SPIKES CAUSE MASS INCREASE IN LNG IMPORTS – imports are low now proves there’s uniqueness for our turn.STATES NEWS SERVICE 10. [“Jobs for Pennsylvania, clean air for everyone” June 11 -- lexis] With easily acquired natural gas deposits beginning to run dry, energy companies started to look to foreign liquefied natural gas to make up the difference. Gas prices spiked and there were battles over where to locate new industrial facilities to import gas. Now, however, the Energy Information Agency predicts that we will decrease the percentage of natural gas imported into the U.S. from 13 percent in 2008 to 6 percent in 2035. Thats quite a turnaround, and it will happen because of hard working Pennsylvanians unlocking the Marcellus Shale that runs below much of our state. LNG IMPORT LEVELS DIRECTLY CORRELATE TO U.S. CONSUMPTION TRENDS .KNOWLES 3. [Gearold, partner at Schiff Hardin & Waite law firm, member of the firm’s Energy Telecommunications and Public Utilities Group, “Liquefied natural gas: Regulation in a competitive natural gas market” Energy Law Journal -- Vol 24 No 2] The attitude of regulators and the natural gas industry changed significantly as the natural gas shortage dissipated in the late 1970s, and the price of imported LNG became significantly higher compared with the price of domestic natural gas. The Economic Regulatory Administration (ERA), which at that time was the body within the U.S. Department of Energy (DOE) and responsible for regulating the importation of natural gas, was of the view that the need for imported LNG to serve high priority requirements had been alleviated by the increased availability of domestic supplies of natural gas.'g Directory: file -> view view -> Western Europe after wwii view -> Author study: paul fleischman view -> Qpa1 7ela study Guide view -> Arctic Oil/Gas Neg view -> November 1970 Approximately 150,000-500,000 deaths Bhola Cyclone Bangladesh view -> Grade Level: 6 Unit of Study: Caribbean glce view -> Citation: Duffield, Katy view -> Table of Contents Lesson # view -> Chinese Wind Energy Disad Download 2.41 Mb. Share with your friends:
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