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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: BigBull who wrote (43457)4/28/1999 5:43:00 PM
From: Douglas V. Fant  Read Replies (1) of 95453
 
BigBull, Natural gas in North America- some facts. First note that a series of electrical generating units will open for business this summer, helping increase demand for natural gas.

Remember as these gas fired generators get fired (start up that is), that a new corollation between the weather and gas demand is building.

That is- either a hot summer OR a cold winter will push natural gas demand in North America.

Second many utility generating units can burn either oil or gas- at what point will a gas-fired unit switch to oil? Well it will take a prolonged potential BTU price differential between oil and gas- say for a 12-18 month period before a gas fired unit will be switched over to oil.

That is because you do not simply change fuels and flip a switch to go from gas to oil. You must actually activate a series of parallel but integrated equipment skids just like a process unit in a refinery. That costs money and causes down time (loss of cash flow) in the generating unit.

And this is not even talking about the air pollution requirements of various regulatory authorities...

So power generating units do not switch easily between oil and natural gas. There has to be a pretty significant pricing differential between oil & gas to make that switch plausible to a utility....
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