Jatropha Investment Opportunity Offers 345% Cash Returns Over 5 Years by Copyrighte Patricia Ellis 2009, All rights Reserved

It is quite possible that the best source of renewable energy in the near future will be provided by the Jatropha Curcas plant - a source of quality green bio fuel. For investors, the plant offers an exceptionaly high return on investment.

Three main advantages of Jatropha plants are that they:-

(1) Can provide an oil supply that is renewable and natural

(2) Are developed through Investment Funds that offer investors astonishing returns, such as 93% Annual return on investment.

(3) Don't threaten normal food production because they grow only in soil unproductive for food crops.

Exploration for new oil reserves continues, but discovery rate is lower than current consumption rate. Experts may disagree about how long existing oil reserves may last, but they do all agree that it is being used faster than it is being found. BP's chairman recently indicated that in his opinion, based on today's extraction rates, there remains only forty-two years supply of crude oil left in the ground.

This paints a bleak picture for the future for nations relying on natural underground oil deposits.The chairman of British Petroleum is quoted as suggesting quite clearly that we are on a fast-track to complete depletion of our natural oil reserves. he gave a time span of well under 50 years at present usage rates. Oil experts across the world differ on the timescale but all agree on one thing:- It's going faster than new reserves can be found.

It's a dire situation, beyond doubt.If we can't uncover more natural deposits of oil than we are using then one thing is inevitable. The oil will run out one day.

While experts do disagree on the time left before 'doomsday', no one disagrees that consumption is far outstripping discovery of new reserves. On the subject of the size of existing reserves, one respected figure, Peter Sutherland of UKs PB group put a time limit of just over forty years on the availability of existing known oil reserves.

A sobering thought indeed.

As if the prospect of running out of oil or at least being dependent upon oil suppliers wasn't a big enough problem, there is also greenhouse gas emissions and global warning posing a threat. Not surprising, then, that there is considerable interest in finding diverse and renewable sources of energy.

That is precisely the opinion of the Indian government, which is years ahead of the rest of the world in developing Jatropha green oil as the renewable energy source of choice. It has committed some 27 million acres to its propagation.

The Jatropha tree has recently emerged from being considered by generations of farmers a nuisance plant only fit for hedging to a valuable oil-bearing plant. The oil is extracted from the crop sometimes twice a year and can be combusted without being refined. After refining it can be used like diesel fuel. The trees grow in tropical and sub-tropical areas, is drought-resistant and thrives on infertile soil.

When crushed and processed, the jatropha plant's seeds produce a sustainable, eco-friendly biofuel that can be used in standard diesel engines without modifications. Within a mere three years, jatropha-based fuel could even be used to power our transatlantic flights, according to Boeing.

A single Jatropha tree can produce around one litre of oil per annum in average conditions i.e. without forced watering - irrigation. Since they are planted at a density of 1000 trees per acre, it follows that one acre can yield 1,000 litres of oil every year. This would be enough to keep a diesel car going for the whole season. Jatropha farming does has characteristics that at first sight may be thought of as disadvantages, but upon closer inspection turn out to be advantageous. These apparent weaknesses in the Jatropha oil model are that the plants only survive in tropical areas and that farming and crop gathering is fairly labour intensive. Now consider the upside of those limitations.

The benefit of this situation is that many farmers in the typical Jatropha plantation areas are living at subsistence level. By providing them with seedling and teaching them to cultivate and tend the crop, they can increase their living standards at a relatively low cost to the investor. The locals become self sufficient without the need for charity or aid.

The private investor, through properly managed investment programmes, could provide these poor counties, quite literally with the 'seed' money they need to grow out of poverty. In return for a modest investment, the investor would see huge returns on his money and have the satisfaction that he is helping third world countries to prosper and also reducing global warming.

If you are interested to investigate what these Jatropha Investment Programmes can offer, then I there is a new company in the United kingdom that can provide information. They offer an annual return of 93% which is quire remarkable. They claim that the they have insured the Fund against risks like Acts of God and civil unrest, so it may be a secure investment.

Jatropha Green Oil Investment's Commercial Director, Patricia Ellis explains, "This is a once-in-a-lifetime investment opportunity with the real potential of delivering an ROI of 345%, which means that an once-off investment of £10,000 would generate £44,500 at the end of a five year investment period. For people experiencing a poor performing pension this is very good news, because they can now enter into a Jatropha Green Oil Investment Programme via a SIPP pension scheme."

If you are type of person who likes to get in on the ground floor then find out more about the Jatropha Green Oil Investment opportunity by:-

Contacting Patricia Ellis in the United kingdom on +44 (0) 845 226 2931

Or Click Here to go to the {a target="_blank" href=" http://jatrophagreenoilinvestment.com/hidden/investment-opportunity"} JatrophaGreenOilInvestment.com website.

Additional Resources:-
http://jatrophainvestment2.wikispaces.com/Jatropha+Investment+Programme+Yields+Exceptionally+High+Annual+Return+On+Investment


Copyrighte Patricia Ellis 2009, All rights Reserved

About the Author

Patricia Ellis from JatrophaGreenOilInvestment.com says, "This is a attractive investment opportunity having a potential of returning 345%. For example, a seed investment of £10,000 would compound to £44,500 in a five year investment span."

Contact Patricia Ellis in the U.K on +44 (0) 845 226 2931 or go to the {a target="_blank" href=" http://jatrophagreenoilinvestment.com/how-to-invest"} website

Are You Searching For Oil Rig Jobs? by John

Oil rig jobs are very attractive options for young men looking for high paying entry level oil rig jobs that need little in the way of experience and qualifications. A quick search will reveal that there are plenty of websites pointing out how you can find oil rig jobs. The catch is that you will have to pay a small upfront fee to be entered onto their database. With the current round of layoffs though, you will find that the oil rig jobs that you thought where so easy to find are now being pursued by hundreds of unemployed people from around the world.

So what do you need to do to go about getting recruited for work on an oil rig? At first it may seem quite difficult as the companies doing the oil drilling are international, so you can't just arrive with your CV in hand. Honestly? It's actually even easier than you think because most of the oil rig recruitment companies do their oil rig job recruiting online. You just have to sit back at home and take the plunge. Although this appears to be the easiest route, you only have to look through the job forums and you will find that experienced workers who have years of experience are struggling to find oil rig jobs right now.

If you want to successfully secure an oil rig jobs then you are going to have to work much harder to make sure that you get your resume in front of the right people but even then your chances are pretty slim of actually securing an interview. Even if you do secure an interview and pass the physical tests and exams your chance of actually getting a job on an oil rig will still be quite tough.

Your best chance of getting oil rig jobs requires that you must first get all your qualifications together, copies of certificates etc. that may be asked for. You will need the safety courses required for working offshore otherwise you will be wasting your time, they won;t even look at you. Make sure your resume is up to date and begin submitting to as many oil rig recruitment companies as possible. You need to do this to every oil drilling company in the Gogle lists. The reason this is the recommended way is that not every oil drilling company employs every oil rig recruiter. To cut costs, most companies will advertise their oil rig jobs on their own company notice board first and on the free job boards all over the new. You don't want to miss out on a job because you only applied to one agency.

A large number of oil rig recruitment companies as well as the drilling companies have a form on their website where you are required to fill in all your details when applying for oil rig jobs. Don't ignore it and just email your CV off, as they'll very likely just delete it. This form is an automatic way for them to have you load your information onto their database system. Whenever a position becomes available, they query the database and a shortlist is drawn automatically by the computer. Instead of manually going through hundreds of CV's trying to find suitable candidates for the oil rig jobs the computer creates a shortlist. This is the reason that you need to be very careful and enter every bit of relevant information about your skills, qualifications and experience. If you miss some of it, you may find that you miss out on a job you could have got because of a silly oversite. The oil rig recruitment companies also have a process they have to go through. That is the way that they receive their resumes. They can be quite sticky about it. So if you see a form on the website and it says to fill it in...just do it. If there is no form, then send your CV any way you wish and don't forget a motivational letter. Why should the oil rig recruitment agency push your resume forward and not some other guy? That's what the motivational letter is all about!

It is critical that you target both your CV and your motivation letter to each and every oil rig vacancy that you are applying for. The ,ost inefficient thing you can do is send a generic letter with your resume to all the oil rig jobs sites. Your time and effort you take to make contact with a person who can introduce you to someone in the organisation who is hiring will make a huge difference to your chances of securing oil rig jobs. By using the free online services such as LinkedIn to find out who can help you with your job search.

By using networking, you will get an introduction to the person you need to impress to secure the oil rig job you want. It makes sense that you will be taken far more seriously by the recruiter or hiring manager if you are introduced by someone they know and trust.

Currently the oil and gas industry is going through a change of fortune and you are not going to have an easy time finding oil rig jobs. There have been plenty of layoffs just like in the rest of the economy; so finding and securing an offshore job is going to be a challenge. It is not impossible but you are not going to walk into an oil rig job as easily as you could have done in the past. Despite all of that, oilfield jobs are hard and dangerous and the number of people who work in the industry are changing all the time. As more senior employees decide to opt out or are promoted, new positions become available.

It is the norm for a new recruit to start at the bottom as a roustabout or roughneck. These are the dirty dangerous oil rig jobs that are vital to the functioning of an oil rig. You will learn everything you need to know about drilling from the more experienced hands and once you have the experience that you acquire after 3 or 4 years you will be eligible for the more skilful jobs such as driller. There are quite a few driller jobs being advertised right now but unless you have the experience and skills you will not be considered for the job.

Don't forget though, that the big oil companies are still spending billions of dollars every year on drilling and exploration. This means that the industry is still very strong and you will just need to have the guts to go after the job you want, put in the effort and if at first you are not successful then try again.

So apply now for oil rig jobs.

About the Author

To make a success of your job search you are going to have to sell yourself. To become a part of the oil and gas industry will be a life changing experience. If you are successful it can set you up financially for life, and once you've got oil in your blood, you'll never want to work in another industry again. Check out the oil rig jobs available at Hunter Recruitment.

Documenting Visual Quality Controls on the Evaluation of Petroleum Reservoir-rocks through Ontology-based Image Annotation by Felipe I. Victoreti1 ,

1 Introduction

The most important intrinsic properties of petroleum reservoir rocks are their porosity - the percentage of their total volume occupied by fluids, i.e., oil, natural gas or water - and their permeability - the amount of such fluids that can flow through a rock section in a time unit. The values and distribution of porosity and permeability within reservoir rocks are conditioned by depositional and post-depositional (diagenetic) aspects, such as the depositional structures, grain size and selection, the types, textures and location of diagenetic processes and constituents. These parameters are described during the systematic petrographic analysis of reservoir rocks, in order to provide the essential information for the creation of models for the characterization of the quality and heterogeneity of reservoirs under production, or for the prediction of quality of new reservoirs during exploration. Therefore, the acquisition and documentation of the key textural and compositional petrographic features has an enormous importance for the evaluation of effective or potential reservoir rocks. However, capturing information from images is a natural uncertain process. Image recognition involves previous knowledge and hypothesis about what is being seen, the progressive adjustment of the viewer in order to fit the understanding to the seen features during image scanning and, also, judgments about the significance of this features related to geological interpretation. This paper describes an approach to overcome the difficulty in applying visual knowledge in reservoir evaluation. We formalize a workflow for the systematic description and storage of the key visual petrographic features, as seen in petrographic microscopes, and provide computer support by a system composed by a piece of software and hardware. The treatment of uncertainty provided by the system was conceived to deal with the incomplete collection of information and the partial confidence of the expert interpretation rules. The system tries to offer the best support to overcome the information loose in image recognition. It provides a petrographic ontology to orient the feature recognition and, when it is done, saves the spatial locations of the key features and associates them both to ontological terms as well as to hyperlinks for other objects supporting the description, such as pictures, audio and video files, websites, etc. As a result, it produces a complete documentation of the features, in the form of a virtual map of the thin section, that preserves the evidences for the reservoir evaluation. The reasoning method searches over this description for the required features to prove one or other interpretation hypotheses. The approach was implemented in the PetroGrapher system, an intelligent database application designed to support the detailed petrographic description and interpretation of oil reservoir rocks, and the management of relevant data using resources from both relational databases and knowledge-based expert systems. Systematic description through the system is facilitated by the use of flexible menus with standardized nomenclature and parameters, what radically reduces description time and errors. An integrated electromechanical microscope stage, the StageLedge, allows an optimized quantification, as well as the referencing of every point identified and/or photographed in the thin sections. The collection of qualitative features is driven by a domain ontology [1] that formalize the knowledge related to petrographic description and diagenetic interpretation. The main approaches of PetroGrapher system are described in [2-4]. In this paper, we present the basis for the automation of the process of quantitative petrographic analysis with the support of an electromechanical appliance [5] attached to the microscope and interfaced to the software system. This approach reduces the uncertainty associated to visual interpretation by improving the semantic capturing and allowing a better register for recovering the evidences that support inference. This information is used by the problem-so living method implemented in the system to propose the probable diagenetic environment where the rock where formed...

2 Preliminary Concepts

The structuring and the representation of the knowledge for problem solving in domains that require image pattern matching and then high level of abstract inference is a challenge for knowledge engineering although is essential for many critical tasks, such as automatic surveillance in intensive care units [6], recognition of biological organisms [7], and biochemistry [8]. The uncertainty in the task are related mainly to the follow factors: (1) the collection of information is not complete because the observer does not posses the knowledge to recognize what is being seen providing incomplete or wrong descriptions; (2) even with the adequate capture of the diagnostic features, the level of significance of these features in indicating a particular interpretation may not provide a fully trustful solution. Our system helps in making available the knowledge by supporting the feature recognition through a domain ontology and providing a problem-solving method to deal with significance and confidence factors of the interpretation task.

2.1 Ontology and Image Annotation

Ontologies that formalize the visual concepts of the domain are shown as the alternative to reduce the gap between the knowledge representation and image features, as presented in [9] and also in this paper. The most common definition of ontology asserts that an ontology is a formal, explicit specification of a shared conceptualization [10]. Formal refers to the fact that the ontology should be machinereadable, and shared reflects the notion that an ontology captures consensual knowledge, accepted by a group. Ontologies express the descriptive knowledge and also the way in which the evidences support the conclusions. Usually, they are combined with problem-solving methods [11] to provide reasoning features to expert systems, like we done in our system. There are many approaches to ontology-based content annotation of images, based on a standardized vocabulary defined by a domain ontology that allows further processing [11] [6] [12]. Images must be annotated with keywords and content-based combined queries and refinements [13]. During annotation, a lot of information can be expressed, helping to improve the understanding and to reduce ambiguity. The images can also be annotated with links over the image to any kind of multimedia content like it was done in [14]. It is possible to associate data under analysis to different resources, in order to provide a complete documentation.

2.2 Spatial Referencing

A spatial reference system provides an association of the object with its location related to a specific coordinate system. A coordinate system can reference a particular point in an n-dimensional space defined by an origin, directions of the axis and a distance scale. The quantitative analysis of a thin section in an optical microscope is usually done referring each identified feature to an imaginary net of points along a sequence of evenly-distanced steps, corresponding to successive positions marked by the cross lines of the microscope eyepiece. In some cases, this net is scanned with the help of some equipment, such as performed in [5] and in [15]. However, the complete association of the net of points to a spatial coordinate system with an anchor linked to a real reference of a physical object, as developed in this work, is a new proposition.

3 Petrographic Analysis Using Software Control and the StageLedge Device

...

3.1 Virtual Thin Section

Our approach is based on the creation of a digital version of the thin section, on top of which virtual feature maps can be created. Although it does not completely eliminate the need for the real thin section, it has some significant advantages over the traditional approach that uses the original section both for description and for later verifications. This virtual thin section allows the recording of reference features through an existent ontology. For instance, our electronic version of the section can be sent over the Internet to an arbitrary number of petrographers, who can independently go over the reasoning process previously applied in the original documentation. Besides reducing the risks associated with a possible loss of the physical section, it also eliminates the costs associated to shipping the real thin section. Moreover, the virtual thin section has the potential for unlimited documentation via hyperlinks to images, video, audio, and text provided by expert petrographers, as well as to other resources available on the Internet and related to the contents of the section. This sets the stage for a new level of rich documentation, turning the virtual thin sections into ideal training tools. This situation is illustrated in Fig. 2, which shows an image corresponding to a portion of a thin section containing links to different media formats: audio, video, other images, websites, and other observations...

3.2 Complete Description Process

The analysis of a thin section starts with its positioning in the petrographic microscope, which has a rotating stage that allows the examination of the optical properties of minerals when examined with polarized light. The direction of the transect lines across which the points are quantified during analysis is defined transversally to the structures and fabric of the rock, and the modal size of grains indicates the adequate size of the step to be used with the StageLedge. In the process of creating a digital map of the rock, we digitize a physical thin section using a regular flatbed scanner and use the resulting image as a base map on top of which the additional documental information will be placed. This stage requires the careful correction of the scale, tilt and coordinates of origin of the scanned image, in order to provide a correct association with the origin and scale provided by StageLedge. Once the image has been captured and associated to the actual position in the equipment, the documentation can be referenced to the real spatial coordinates. Since flatbed scanners can capture images at different resolutions, it is necessary to specify the selected resolution in points per inch (ppi), thus relating pixels to real distances in the thin section. According to our experience, the use of 600 ppi provides satisfactory results. In order to support the petrographic description, the PetroGrapher system controls the steps of the StageLedge and allows the user to select constituents and features described in the domain ontology and associates them to the current position under analysis in the thin section. Fig. 3 illustrates the interface of the PetroGrapher system, showing the constituents of a given rock sample and a partial menu providing specific ontology terms. The quantitative petrographic analysis identifies and saves the location of every constituent positioned in each of the coordinates in the virtual net, controlled by StageLedge. The PetroGrapher interface depicts different minerals using colors, as presented in Fig. 4. Thus, with just a quick glance, the geologist can have a good idea of the spatial distribution of the constituents and pores identified in the thin section. The possible constituents and pores that can be found in a thin section are fully described in a domain ontology, as well as the attributes and domain of values of them. The ontology also describes in which way the instances of qualified constituents can indicates the rock-formation environment. This is expressed by knowledge graphs, a one-level tree where the root node represents the interpretation hypothesis and the leaf nodes represent visual chunks identified by the experts in the image of rock as pieces of evidence necessary to support the interpretation. The uncertainty of interpretation is represented in the knowledge-graph by a threshold value that represents the minimum amount of evidence needed to indicate it. Also, the chunks have an influence factor and are combined to increase the influence and the certainty of the interpretation stated. By their side, the chunks represents in an AND-OR tree the several ways in which way an evidence can be recognized in the rock, such as, possible minerals, possible habits, locations, etc. The knowledge model and problem-solving method of the system is extensively described in [3]...

3.3 The interpretation process

The features described are stored in a database, along with the spatial coordinates of their position in the virtual map. The reasoning method loads each knowledge graph and match the chunk representation from the knowledge base against the user descriptions on the database. When the set of features that describes a chunk is found, the reasoning accumulates the related influence factor. When the sum reach the threshold of the graph, the conclusion is stored in the database in the description record and presented to the user. More than a conclusion can be associated to one rock, since more than one environment can act in rock consolidation.

4 Conclusions

The tool described in this paper has been tested by a group of six geologists from the Geosciences Institute at the Federal University of Rio Grande do Sul (Brazil), who works usually with petrographic analysis. The group has long time experience with the manual method and has migrated recently to PetroGrapher system. The goal was measuring the time expending in the task description and the amount of information that was collected in each method in normal work condition. Each participant received six different rock samples to be described. Each sample was described by four geologists, two using the PetroGrapher system, two using an electronic spreadsheet and a mechanical stage. According to these experiments, the use of the PetroGrapher system with the StageLedge has led to a reduction of 25% in the time required for a full petrographic description. Otherwise, the descriptions are longer and contain more information than those made by manual method. The spontaneous comments from PetroGrapher´s users include: (1) the system guarantees a standard documentation without loosing semantic of feature description; (2) the possibility of recovering the original position of some specific feature provides a better framework for reservoir understanding; and (3) the information can be easily queried and reused. As a result, one can draw further correlations between petrographic data and well logs, seismic profiles and core descriptions. These capabilities are essential for a powerful tool used for advanced reservoir characterization.

About the Author

For the full and illustrated version of this article, visit http://www.endeeper.com

Natural Gas Price Forecast by Chris Nelder

The market rarely provides buying opportunities where the risk to value proposition is extremely disconnected, but the natural gas market is having one of those moments now.

The news could hardly be more bearish for prices.

The nation's limited gas storage capacity, estimated at roughly 4 trillion cubic feet, is approaching the full line. Consumption has crashed 36% from 2.7 trillion cubic feet in January, to 2.1 trillion in March, to 1.7 trillion cubic feet in April. Stockpiles remain 18% over the five-year average.

Summer temperatures have been remarkably moderate, making for a lower-than-usual demand on gas-fired power plants for air conditioning. Weather forecasts expect temperatures to remain below seasonal levels.

With little other news to drive the trade, everyone is focused on inventories. The Energy Department's weekly inventory report showed that stockpiles had grown by 66 billion cubic feet to 2.95 trillion cubic feet, and that was enough to drive natural gas prices down 6.4% to $3.55 per million Btu on Thursday, giving the popular United States Natural Gas Fund (NYSE: UNG) a 6.7% loss on the day.

Meanwhile, supply continues to grow. An exciting new field called the Granite Wash play in the Texas panhandle and western Oklahoma is showing prolific production rates. Newfield Exploration (NYSE: NFX) claimed average initial production rates of 22 million cubic feet per day from its seven horizontal wells this week, giving its stock a nice 11% bump on Thursday. Forest Oil Corporation (NYSE: FST), another driller in the Granite Wash and the Haynesville Shale, saw its stock rise 14% the same day.

Another growing horizontal shale play is the Eagle Ford field in south Texas, where St. Mary Land & Exploration Co. (NYSE: SM) has claimed a 5.6 million cubic feet per day flow rate of oil and gas equivalent from one of its wells.

Horizontal shale gas plays are nothing new to readers of this column, of course. Producers of the Marcellus Shale and Haynesville formations are still drilling profitably, even while producers of the Barnett and Fayetteville formations have been forced to scale back drilling due to their higher production costs. Barnett producers claim they need gas back in the $6-8 range before they'll resume drilling.

To the north, the latest and greatest gas shale story is the Horn River Basin, in northern British Columbia. Exxon Mobil (NYSE: XOM) believes its first four wells will produce between 16 to 18 million cubic feet of gas per day-about five times the flow rate of a typical Barnett shale well. The basin's potential is unknown, but some speculate that recoverable reserves in the basin may run from 10 to 60 trillion cubic feet.

Such a supply glut and anemic demand certainly seems to portend low gas prices for the foreseeable future. Bearish analysts eager to make the early call are even suggesting $2 gas by the end of the year.

I don't believe it for a minute.

Was the 2001 North American "Peak" Wrong?

The explosion of North American shale gas and tight sands gas plays has made a bit of a stir in peak oil circles. These unconventional gas sources pushed the continent's production in 2007 over the 2001 peak of 33.8 trillion cubic feet (EIA data), seemingly putting an end to the notion that North American gas had peaked and gone into terminal decline.

Complete official 2008 data is not yet available for all of North America, but I estimate that its gas production for the year came in at around 35.2 trillion cubic feet, roughly 4.3% gain over the previous 2001 peak.

North American Natural Gas Production. Chart by Chris Nelder using EIA data for 1995-2007. 2008 data from EIA for the U.S., and estimated for Canada and Mexico.

Now, that may be a picture that gets some people excited, but not me. I know that unconventional shale gas wells deplete very rapidly, paying out 60 to 90% of their production in the first year. It takes a great deal of drilling to maintain overall production rates, and in a low-price environment like today's, the prospects for additional drilling are dubious.

For the straight dope on the North American peak question, I turned to David Hughes, the now-retired Canadian geologist who is a bona-fide expert on North American gas.

He pointed out that it has taken 33,000 successful gas wells per year to exceed the 2001 peak, and noted that rig counts are still well down from last year. (According to Baker Hughes, gas rigs operating in the U.S. are now down to 665, the lowest number since May 2002, and off 59% from September of last year.) It's hard to imagine how this will not result in diminishing supply, and Hughes expects we'll feel the effects some time in the next six to nine months.

Canadian gas production fell 11% year over year in April, he said, so these new unconventional plays will have to compensate for a rapid decline. He believes "the jury is still out" on the Haynesville Shale and other shale gas plays outside of the Barnett, as we still lack a detailed understanding of the formations, which ultimately determines the flow rates. The "core" Barnett is twice as productive or more than the non-core, so until we have more detailed information about the newer shale plays, we should take their cost and productivity projections with a large grain of salt.

When considering the North American gas peak, we must also bear in mind that over 50% of natural gas consumed in the U.S. today comes from wells drilled in the last three years, and 25-30% of the gas produced today comes from wells drilled last year, according to data from the IHS Energy Group

This is why Hughes has called unconventional gas a treadmill: because you have to keep drilling like crazy just to stay in one place.

So while we have indeed exceeded the 2001 North American peak, I think it's premature to expect production to keep rising from current levels when gas has spent most of this year at about half the price it needs to be for the lesser plays to be profitable.

There is no doubt that the domestic gas resource is large. According to a new study under the direction of the Colorado School of Mines, the U.S. has about 2,000 trillion cubic feet of natural gas reserves-enough supply to last for decades, even with increased demand.

But as my readers well know (all together now): It's not the size of the tank which matters, but the size of the tap.

Should drilling over the next three years fail to keep pace with the rapid underlying decline rates, that new 2008 peak will fade into just another bump on the long plateau of North American gas production. We should not be too quick to turn our backs on the supply issue.

Is Demand Really Dead?

Many investing analysts have focused on high inventory numbers and the mild weather as key forces pushing down gas prices. This has contributed to the gas market disconnect, since these are actually fairly marginal drivers.

The lack of demand is the most important factor weighing on prices, with U.S. demand for all uses down 36% from January to April this year.

However, most of the loss in gas demand owes to the industrial sector. As I explained in my April natural gas analysis ("Natural Gas Under $4 Is a Steal"), gas consumption in the US is split roughly in thirds between commercial and residential demand (which is fairly constant), electricity demand (which grows at about 5% each year) and industrial demand. Vehicular demand, while up 6.2% over last year, is still a miniscule component.

Natural Gas Consumption by End Use. Chart by Chris Nelder using EIA data.

Demand outside the industrial sector is actually quite resilient. Gas consumption is off only slightly year-over-year as of April, with residential demand gaining 0.7%, commercial losing 4.1%, and electric power losing 1.8%. (April is a good month to consider for our purposes here, because the mild weather of the equinox months make them the low points of the seasonal demand cycles.)

Industrial sector demand, by contrast, is down a whopping 11.5%. Cutbacks in the production of petrochemicals, plastics, wood products, metals, motor vehicles and fertilizers, as well as lower gas demand for industrial boilers, are primarily responsible for the decline.

In short, we may expect demand to creep up again in concert with an overall recovery in the economy, particularly the manufacturing sector. Depending on whose estimates you believe, that recovery may be less than a year off.

Gas prices could easily double from today's levels when that happens, whereas it's hard to imagine much more downside risk with an unrelentingly bullish overall market sentiment in place since March. More Bullish Factors

Climate change concerns will lend further support to gas demand. As carbon emissions start coming with a price attached, cleaner-burning gas will be increasingly favored over coal for fueling power plants. Many newer plants use dual-fuel designs, enabling them to switch readily to whichever fuel is cheapest. As the hidden subsidy of externalized emissions costs is taken away from coal, gas will be cheaper, and it will stay cheaper.

The vehicle angle is another hugely bullish factor for gas, but so far the markets don't seem to have discounted it at all.

As I have often suggested, the combined virtues of lower emissions, an inexpensive and large domestic supply, and its suitability as a bridge fuel to wean us away from oil will prove irresistible to policymakers, particularly as we begin to feel the effects of peak oil. Accordingly, a raft of new gas legislation is now working its way through Congress.

A huge win for the Pickens Plan and other natural gas vehicle boosters came early this week when the House overwhelmingly approved H.R. 1835, its portion of the so-called NAT GAS Act. The bill would authorize $30 million a year for the next five years for research and development, increase and extend tax credits for buying natural gas vehicles, and offer a suite of tax credits and other incentives to expand natural gas refueling capacity and push government vehicle fleets toward alternatives.

Assuming the new incentives become law, which seems a safe assumption, a significant chunk of new gas demand for vehicles could materialize right around the same time as the economy begins to recover. It wouldn't take much increased demand to blow right through the perceived gas "glut" we have today, and cause prices to spike. But it will take many months for drillers to catch up with rising prices.

The longer prices remain too low to sustain increased drilling, the more tension there will be in the price slingshot.

A year from now, I think we'll be looking back on those analysts who predicted $2 natural gas by the end of this year with the same sad regard that we now have for the ones who saw oil trading in the $40s in December and thought it was going to $25.

You may recall that's when I got bullish-because I knew that the price of oil was wrong. I feel exactly the same way about gas now.

Another reason to start getting bullish is the extremely bearish gas sentiment itself. We haven't seen gas prices stay this low in years, and gas continues to trade at an historically low price relative to oil on an energy basis. As Warren Buffett likes to say, "Be fearful when others are greedy, and be greedy when others are fearful."

Natural gas under $4 was a steal in April, and it's even more of a steal now. Ignore the nattering nabobs of natty who worry on about inventory numbers; that's all noise. Lift your eyes from your shoes to the horizon, and you'll see that there's only one direction that gas prices can go over the coming year, and that's up.

Until next time,

Chris Nelder

This article was originally found here: Natural Gas Price Forecast

About the Author

Chris Nelder is a self-taught energy expert who has intensively studied peak oil for five years, and written hundreds of articles on politics, peak oil and energy in general. He also founded and published an online magazine called Better World in the mid '90s, as part of his lifelong interest in sustainability.