Analyst: Expect high energy prices

Paula Dittrick
OGJ Online

HOUSTON, Apr. 6 -- The US is running out of oil, natural gas, and electricity simultaneously, and higher energy prices are the only long-term solution, Marshall Adkins, Raymond James & Associates Inc. oil field analyst, said Friday.

"Like the 1970s, this is an energy supply-constrained market," Adkins told the Oilfield Breakfast Forum. "The bottom line is $5/Mcf gas, $30/bbl oil and $50 Mw-hr power are here to stay longer term."

He estimates a benchmark US light, sweet crude oil price of $29/bbl in the second half of the year, while gas prices will remain strong but volatile, leveling out at $5-6/Mcf.

"Gas prices will get whipsawed this summer. Prices will weaken and then come back up," he said at the meeting sponsored by Resource Marketing International, a consulting firm, and Randall Morton International Inc., an advertising and public relations agency.

Craig Clark, Apache Corp. executive vice-president of US operations, agreed 2001 oil and gas prices will be "very good."

"The longer high commodity prices persist, the more ingrained they become in expectations," Clark said.

David Welch, BP PLC's Houston regional vice president, said prices inevitably rise when supplies decline and demand goes up.

"I think we could say we're pretty confident that we are nearing an energy crisis here in the US," Welch said. "If we get into this crisis mode where we do have some brownouts, not only in California but perhaps in the Northeast this summer, it's likely we could have some type of an energy policy that would evolve sometime later this summer."

He urged the oil and gas industry to deliver a unified message to Congress regarding its wishes on energy policy.

"There are lots of hydrocarbons in the US, but a lot of them are off-limits right now to drilling, so we need to have access to lands that are locked up and that we are not able to explore," Welch said.

"The second thing is that we have had tremendous technological innovations for the last 30 years. This technology now enables us to go in and produce oil and gas without doing any long-term environmental harm, and it has a very low noticeable temporary harm."

Of an energy crisis, Welch said he does not see "any quick fix. I don't think there is going to be anything we can do over the next couple of months to deal with it."

Elements that might avert an energy crisis are access to new lands, both onshore and offshore; more infrastructure including an Alaska gas pipeline, liquefied natural gas terminals and power plants; and a streamlining of the permitting process to enable producers to get access to drilling faster.

"We need to think about ending some of these prohibitions we have in Iran … These sanctions actually just preclude the companies that are in the US from being able to go in and compete with the French and other companies that might be interested," Welch said.

"BP is the largest oil and gas producer here in the US, and closer to home here, we're the largest reserve holder in the Gulf of Mexico," Welch said. "Over the last few years, we've discovered 3.5 billion bbl net of oil in the Gulf of Mexico, and we've put in place contracts to enable those to come online very steadily."

Five years ago, BP produced 50,000 b/d from the gulf compared with 250,000 b/d now and a projected 750,000 b/d by 2007. "We'll ultimately get much, much higher than that," he said.

Contact Paula Dittrick at paulad@ogjonline.com

-- Anonymous, April 07, 2001

Answers

Response to ENER-Expect Higher Energy Prices

I read somewhere earlier tonight that we may expect near $3 a gallon gasoline this summer. Guess if these bad Texas oil men can make a decent profit for a change, we can expect a boost in production. Perhaps, it will all equall out again, someday. (just hope not near $3 a gallon)

Dennis

-- Anonymous, April 07, 2001

Response to ENER-Expect Higher Energy Prices

I think gas prices will go higher, Dennis. When I kept reading about the Californians who had already experienced blackouts and were talking about ways they might conserve--like turning off lights in unused rooms--I was flabbergasted. With all the talk on all the media about an imminent crisis in California, even with actual rolling blackouts, these people--apparently intelligent people--weren't even taking simple conservation measures. Multiply that sort of lack of concern over the country and. . . High energy prices.

I'm thinking about investing in some of that special reflective foil to go under the roof in the attic--anyone have any experience with it?

-- Anonymous, April 08, 2001

Response to ENER-Expect Higher Energy Prices

"special reflective foil" that never sees the sun? Splain please.

Unplugged my spare garage frig today. Me be helpin.

-- Anonymous, April 08, 2001

Response to ENER-Expect Higher Energy Prices

RealGoods.com has it:

Reflectix Insulation

Reflectix is a wonderful insulating material with dozens of uses. It is lightweight, clean, and requires no gloves, respirators, or protective clothing for installation. It is a 5/16"-thick reflective insulation that comes in rolls and is made up of seven layers. Two outer layers of aluminum foil reflect most of the heat that hits them. Each layer of foil is bonded to a layer of tough polyethylene for strength. Two inner layers of bubble pack resist heat flow, and a center layer of polyethylene gives Reflectix additional strength.

See the chart below for comparable R-value performance. Multiple layers of Reflectix will not increase the R-value. Reflectix inhibits or eliminates moisture condensation and provides no nesting qualities for birds, rodents, or insects. It is Class A Class 1 Fire Rated and nontoxic.

Reflectix BP (bubble pack) is used in retrofit installations. Proper installation requires a 3/4-inch air space on at least one side of any Reflectix products. The best application for Reflectix products is preventing unwanted heat gain in attics in the summertime. Reflectix is also a great add-on to already insulated walls, providing a radiant barrier, vapor barrier, and increased R-value.

R-value ratings are dependent on the direction of heat flow. "Up" refers to heat escaping through the roof in the winter or heat infiltration up through the floor in the summer. "Down" refers to solar heat gain through the roof in the summer or heat loss through the floor in the winter. "Horizontal" refers to heat transfer through the walls.

As well as its most common usage as a building insulator, Reflectix has a myriad of other uses: pipe wrap, water heater wrap, duct wrap, window coverings, garage doors, as a camping blanket or beach blanket, cooler liner, windshield cover, stadium heating pad, camper shell insulation, behind refrigerator coils, and camera-bag liner. USA.

Reflectix 48x125' 500 Sq Ft"BP $259.00

Reflectix 48x125' 500 Sq Ft"ST $259.00

Reflectix 24x125' 250 Sq Ft"BP $125.00

Reflectix 24x125' 250 Sq Ft"ST $125.00

Reflectix 48x50' 200 Sq Ft"ST $109.00

Reflectix 16x125' 166.66sq Ft"ST $85.95

Reflectix 24x50' 100 Sq Ft"BP $49.95

Reflectix 24x50' 100 Sq Ft"ST $49.95

Reflectix 16x50' 66.66 Sq Ft"ST $34.95

Listed on this page

-- Anonymous, April 08, 2001

Response to ENER-Expect Higher Energy Prices

Related links for reflective foil:

Charley's Greenhouse--sells by the foot, also tape and accessories, Phillips Building Supply, Astrofoil, The Insulator

-- Anonymous, April 08, 2001

Response to ENER-Expect Higher Energy Prices

OG, in the Houston, the contractors are pushing a paint on coating for the underside of your roof, supposed to decrease attic heat by as much as 30%. I am not familiar with the product. When we built this house 20 yrs ago, we left seven oak trees over 80' tall surrounding it. Sure helps the electric bill, just have to wash the mildew off every few months.

-- Anonymous, April 09, 2001

Response to ENER-Expect Higher Energy Prices

When we had to have two sweet gums cut down at our last house, our electric usage rose about 20% in the summer. The first thing I did when we moved here was plant Leyland cypress and a paulownia on the bare front yard (west). We're on a long, narrow lot so there's no room for shade trees on the south side but we have some on the east that were already there. Columnar evergreens are now growing on the north side to help in the winter. The 1963 builder was sensible and put good overhangs on the house; they help tremendously. Solar film helps where the overhang doesn't. (I really like the solar film, which also aids in privacy.)

The Leylands and paulownia on the front have made quite a difference. Used to be I couldn't put my hand on the back of the front door on a summer's afternoon; it was way too hot. I like the fact that the bird population has multiplied enormously too--they especially like the shelter (from weather and predators) of the Leylands.

I've heard about that paint but, given the low angle of the roof (standard ranch) I thought it would be easier to staple or glue the foil up there. In addition, the Highway Dept. is getting ready to widen I-85, three blocks north, and I think the bubble foil will help insulate against the increased traffic noise. (They're going to install a baffle wall but I still would like the added noise insulation.)

When we get a new roof, we plan to put our four solar panels--and maybe a couple more--up on the roof. (They're on an unused deck at the moment.) I know there are solar shingles nowadays but they're not cost effective for us, not yet. Depending on finances, we may also have a solar hot water system installed. These additions will help shelter the hosue from summer sun too--and probably help keep the warmth in in winter.

-- Anonymous, April 09, 2001