Energy Update.....
From my perspective as a producer and supplier of energy commodities [oil and gas], things are looking very good indeed for the near future. We who explore for, and produce oil and natural gas are like farmers. We spend large amounts of money to produce the raw commodity, but have no say so in the price we get for our products. This is decided these days in the world markets and on the commodity exchanges of New York. And for so many years, decades really stretching back into the mid 1980's, oil and gas has been oversupplied, keeping prices low.
In fact in some years because of low prices it did not even make economic sense to drill new wells, and to operate existing wells meant barely breaking even. But things are changing now. Many analysts believe that we have crested the top of the curve where new supplies coming into the market outweighed the demand. Now demand in growing energy use in the industrialized world, and especially the newly developed third world is going to, henceforth, outstrip existing and newly found supplies. Of course daily world events, weather and manmade market disruptions cause fluctuations, but the trend in prices is definetly and irreversably towards the upside. Just this week the US Department of Energy raised their predictions for year 2003 natural gas price averages by 11%......this over their prediction of just one month ago, and 80% over year 2002!
It is an exciting time to be in the energy business in Midland Texas, not only because our bottom lines look better, but more importantly because of the new innovations that are being developed in response to the growing awareness of our energy needs and the recognition that our area is one of the world's leading locales for expertise in the energy business. Just this week we have had in town a large group from Japan who are exploring ways to more efficiently produce gas from their fields, and due to our Sister City arrangement with Dongying, China we have Chinese techicians in town constantly and now televised classroom links between our college and theirs .
People are looking at new ways of doing things in the oil field. My partners and I have decided to look more broadly at things and truly go into the energy business. We are in negotiations with a major US oil and gas corporation to construct an electrical power generation plant for their use powered by low BTU gas from existing wells that we have. This gas contains high levels on nitrogen and sulphur causing it to sell for a very low price and with the consequence that no one will drill new wells of this type. But this gas will power modern electric generation equipment with no problems. So we will turn an unused resources into one that will turn out low cost, clean electrical power. The Department of Energy is interested in our concept, as is the State of Texas.
Our region is at the forefront in the development of renewable resources too. Over 1000 Megawatts of electricity is currently being produced by wind driven generators, and solar powered plants are finally being considered. An Australian company is exploring solar power on a grand scale as seen in the article Solar Turbine Towers. These are exciting developments, but of course, have their drawbacks as well. The wind turbines, massive and numerous, are placed on hills and mesas which out in this country pass for our only scenic views. Visual pollution. And the solar turbine project is so costly and massive I have doubts about it's viability. And none of these alternative energy sources work economically without large tax incentives. But these new avenues for energy must be explored and perfected. For although when prices are high, we in the business benefit, prices that are too high are no good for anyone.
From my perspective as a producer and supplier of energy commodities [oil and gas], things are looking very good indeed for the near future. We who explore for, and produce oil and natural gas are like farmers. We spend large amounts of money to produce the raw commodity, but have no say so in the price we get for our products. This is decided these days in the world markets and on the commodity exchanges of New York. And for so many years, decades really stretching back into the mid 1980's, oil and gas has been oversupplied, keeping prices low.
In fact in some years because of low prices it did not even make economic sense to drill new wells, and to operate existing wells meant barely breaking even. But things are changing now. Many analysts believe that we have crested the top of the curve where new supplies coming into the market outweighed the demand. Now demand in growing energy use in the industrialized world, and especially the newly developed third world is going to, henceforth, outstrip existing and newly found supplies. Of course daily world events, weather and manmade market disruptions cause fluctuations, but the trend in prices is definetly and irreversably towards the upside. Just this week the US Department of Energy raised their predictions for year 2003 natural gas price averages by 11%......this over their prediction of just one month ago, and 80% over year 2002!
It is an exciting time to be in the energy business in Midland Texas, not only because our bottom lines look better, but more importantly because of the new innovations that are being developed in response to the growing awareness of our energy needs and the recognition that our area is one of the world's leading locales for expertise in the energy business. Just this week we have had in town a large group from Japan who are exploring ways to more efficiently produce gas from their fields, and due to our Sister City arrangement with Dongying, China we have Chinese techicians in town constantly and now televised classroom links between our college and theirs .
People are looking at new ways of doing things in the oil field. My partners and I have decided to look more broadly at things and truly go into the energy business. We are in negotiations with a major US oil and gas corporation to construct an electrical power generation plant for their use powered by low BTU gas from existing wells that we have. This gas contains high levels on nitrogen and sulphur causing it to sell for a very low price and with the consequence that no one will drill new wells of this type. But this gas will power modern electric generation equipment with no problems. So we will turn an unused resources into one that will turn out low cost, clean electrical power. The Department of Energy is interested in our concept, as is the State of Texas.
Our region is at the forefront in the development of renewable resources too. Over 1000 Megawatts of electricity is currently being produced by wind driven generators, and solar powered plants are finally being considered. An Australian company is exploring solar power on a grand scale as seen in the article Solar Turbine Towers. These are exciting developments, but of course, have their drawbacks as well. The wind turbines, massive and numerous, are placed on hills and mesas which out in this country pass for our only scenic views. Visual pollution. And the solar turbine project is so costly and massive I have doubts about it's viability. And none of these alternative energy sources work economically without large tax incentives. But these new avenues for energy must be explored and perfected. For although when prices are high, we in the business benefit, prices that are too high are no good for anyone.
