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Napanee, Ontario | you folks down there have almost 250 years of coal power supply ready and available to use... it's a shame the witch hunt thats been taking place there against coal. These 50 year EURs on many of these shale gas projects are a joke and nothing but a scam against investors. There have been several majors that have already taken big write-downs on NG investments... or when the depletion rate turns out to be much higher than projected at the drilling stage...surprise surprise.
Easy to suck in the money when the recovery curve is massively front-end loaded -it all looks like roses at the outset. Then low and behold, a cpl years down the road the flow has tailed off much sooner, and lower, than the orginal projections and investors are staring at a loss on invested capital for the drill-out. That's the problem when everyone drills at once - the shale boom as it were. The market is incredibly oversupplied, and thats why you have NG at 3.50. Except very few NG producers can make any money at 3.50 NG, but as it happens, it is at 3.50 because all the flows are being front loaded at the same time as invesotrs rush to get a piece of the pie, drilling everything in sight. So the recovery curve flows where all the money should be made is actually pumping losses.
But once those flows start to dry up, and supply tails, NG will start rising rapidly above 3.50. Except Coal becomes cost competitve at around 3.50 NG, and takes the cake anywhere over 4.25 -4.50 - and thats just CAPP and NAPP coal. NG can't even compete with Power river baisn Coal as it is cost competitive under $3.
The only way NG continues to take market sahre is at investment losses to oversupply the market with cheap NG that nets nothing for investors. It's a doomed scenario - fact of the matter is simple: coal is just a cheaper and better energy source to supply electricity from vs NG. And it can be stored. And shipped. And moved and handled easily by utilities. In a few years time, we are going to look back at this - the discarding of coal infrasturcure for the 'NG reveolution" - as one of the biggest energy boondoggles in North America. NG has it's place, but powering the one of the world's biggest demander of electricity is not it.
Edited by OldMcdonald 7/29/2014 09:02
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coal vs "natural" gas, thought coal was natural
