Ergs, Joules, BTUs, Watt Hours and So On

Suppose your business is the finding, producing, processing and marketing of this commodity. You have no idea of how much is available, and a bit more certainty as to demand. Capital costs are considerable as are technical problems. Transportation is difficult and getting more so particularly in accessing new markets. Regulators maintain a high level of control.

Over time the industry has passed through many cycles of despair and euphoria. Sometimes the commodity is revered. Specialists will decry waste if used for anything but the highest of callings. At other times developers simply quit the industry. Technology has a habit of upsetting the apple cart by inventing new production methods.

There remains an over riding belief that this stuff will some day be truly valuable and irreplaceable. Ergs, joules, btus and watt hours are simply measures of the capacity of natural gas to help us through to the promised land of bountiful energy.

A quotation from the movie “A Beautiful Mind ” describes an individual’s tortuous path. Similarly methane has gone through the physical, the metaphysical, the delusional and back. Nothing seems to generate a modicum of stability.

Forecasting is hazardous under the best of circumstances. When it comes to natural gas the difficulty increases many fold. For  example Canadian producers had to maintain twenty years of domestic supply to gain export approval. Ask yourself how much was thought to be in place for recovery and what was consumption expected to be. The MacKenzie Valley pipeline was evaluated for many years. It is safe to say that none of the models considered a price of two dollar and fifty cents per thousand cubic feet. The limitations are not with the forecasters, rather the very process itself.

At any time the best of minds are working on reducing the uncertainty. No one should be surprised if the results continue to be iffy at best.