Overlap of oil outlook into gas outlook frequently hurts gas
✍ Scribed by Willett, Robert E.
- Publisher
- John Wiley and Sons
- Year
- 2008
- Weight
- 198 KB
- Volume
- 9
- Category
- Article
- ISSN
- 0743-5665
No coin nor oath required. For personal study only.
✦ Synopsis
Oil and gas are separate industries. Even the exploration is largely separate: In the chapter "An Update on Natural Gas Recovery Technologies " by Michael A. German and Robert B. Kalish of the American Gas Association in the 1992 Natural Gas Yearbook, (edited by William A. Mogel andpublished by the same company that brings you this magazine), the point was made that only 20 percent of gas is currently discovered as "associated reserves" with oil. Downstream, of course, the paths of the two fuels go in completely different directions and only intersect again when they compete in a couple of end-use markets that are much more important to the gas industry than to the oil industry.
Moreover, theprice of oil no longer seems to dictate the price of gas. Industry economists have noted that coal prices, not residualfuelprices, seem to be a better indicator of gasprices, or at least to provide a firmer lid on them. As the decade continues, gas and coal prices will lock step even more as more electric utilities and independent power producers step up their gas purchases. Thus gas prices will become even more unhinged from oil prices.
But in spite of these differences and the efforts of everybody from Mike Baly to A1 Gore to show that gas i s unique, the tendency to assess the industry's performance, especially upstream, seems too often connected to the performance of oil.
In addition to the sameness of the upstream technology, much of the blur may be caused by SEC and other statistics that lump oil and gas reporting together, and in this lump, gas is very definitely the smaller part.
Some good examples of the unavailability of complete upstream operating statistics for gas, as opposed to oil, emerged from some questions I asked Victor A. Burk, managing director, oil and gas industry practice, Arthur Andersen & Company, Houston, after a June press briefing for Arthur Andersen's annual study about oil and gas reserves.