Why The Europeans Tried To Convince The World The Need To Go To Renewable Energy -- September 20, 2018

Natural gas: before we go any farther/further ...

Disclaimer: I do not understand natural gas. Or much else for that matter.

Now back to natural gas.

It looks like one of the many stories that is not getting enough play in the national media, much less the international media, the US is awash in natural gas. It doesn't need nuclear energy. It doesn't need coal. And it sure as hell, as they say, doesn't need solar and/or wind. Natural gas in the Permian is now trading as low as 50 cents / unit. See RBN Energy today.

In the old days, if you opened a new account, the bank would give you a free toaster. Here, the banks are giving you a lifetime supply of natural gas if you open a new bank. Some banks are still throwing in the free toaster.

The US is awash in natural gas.

• in the northeast, they have so much natural gas they are shutting down new pipelines
• in the Boston area, there's so much natural gas, the old pipes can't handle all the pressure (resulting in Armageddon for some)
• operators in the Marcellus/Utica are diverting their natural gas to Florida (previously posted)
• in Texas, as noted, natural gas in the Permian is trading for 50 cents/unit
• California says it doesn't want any more natural gas
• the Pacific Northwest has more than enough hydroelectric power
• the upper midwest no longer needs to heat their homes in the winter -- global warming has solved that problem

The rest of the world is desperately short natural gas. Asians are paying $8 / unit for natural gas. The Germans are so hard-pressed they are selling their Faustian soul to help Russia finance a natural gas pipeline to Angela's penthouse on the Rhine.

The Germans and the EU saw this decades ago. The writing was on the wall. The US was going to have a glut of natural gas and the EU was going to go bankrupt paying for energy -- and that was before the aforementioned Merkel shut down the country's nuclear program, convincing Germans that coal was safer and cleaner.

The Germans were so concerned they begged Algore to write a book on global warming, hoping the US would be forced to give up fossil fuel and join the rest of the world with renewable energy. If everyone went to renewable energy, it would be an energy-level-playing field, they thought. Algore was promised a Nobel Prize if he would also do a PowerPoint Presentation.

I Never Promised You A Rose Garden, Trudeau's favorite singer

They had Obama in their corner; and the "world order" was almost ready to claim victory.

Then Trump came along.

Now that the US is not going down the renewable energy road, the rest of the world has a choice: depend on really, really expensive non-dispatchable intermittent solar/wind energy; or start building natural gas import terminals (which, by the way, Germany is now doing). Australia has also decided. Canada: eh, what just happened?

The renewable energy ploy almost worked. Jerry Brown, if elected to a fifteenth term as California governor, will continue to press the issue out west. And there's no doubt in my mind he will win. Anyone who can convince voters to pay $100 billion for a train to nowhere and one they won't see in their lifetime (or their children's lifetime for that matter) and who plans to launch a CO2-monitoring satellite will be able to convince Californians to build more dicers, slicers, and condor fryers.

Switching gears.

What does 50-cent natural gas mean for the Permian?  A couple reminders for newbies: the Bakken is pretty much a pure-crude-oil play. The Marcellus/Utica play is pretty much a pure-natural-gas play. The Eagle Ford, about 40-40-20 with the "20" being condensate. The Permian, probably 50-30-20, but it can actually be almost anything -- the Permian is so huge. But, for those folks who recently paid $95,001 for a mineral acre in the Permian, natural gas at 50 cents -- ouch.

Remember, you can still buy into the Bakken for under $100/acre.

The Permian:

• short term, one year out: a lot of companies are going to struggle; I think a lot will go bankrupt
• mid-term, out to five years: a lot of companies drilling today won't be in the Permian in 2023
• long-term, out to ten years: those who survive will be doing very, very well

Now, for the best part. RBN Energy.

RBN Energy features a song to accompany their daily energy blog. Yesterday I spent a fair amount of time listening to some Guy Clark music. I forget what particular song, but possibly "Desperados Waiting for a Train."

In today's RBN Energy blog, the featured song is Guy Clark classic, "LA Freeway."

LA Freeway, Jerry Jeff Walker