March 2017

Hello - Please enjoy this edition of the Prospect Resources newsletter

Did You Know - How is Natural Gas Liquefied?

Natural gas is moved through a wide network of pipelines throughout the United States and around the world. When it is shipped overseas, however, there are typically no pipelines available. Consequently, the gas is liquefied and shipped in tanks across the ocean.

Liquefied natural gas (LNG) is produced as follows: the gas is first extracted from a production field and moved to an appropriate production facility. Impurities such as water, hydrogen sulfide, and carbon dioxide are removed so that they do not freeze. The gas is the cooled to a temperature of approximately -260 degrees F at ambient pressure until it liquefies. This condensed liquid form of natural gas takes up about 1/600th of the volume of natural gas and is about 2.4 times denser than compressed natural gas (CNG). For safety and insulation purposes, the LNG is loaded onto double-hulled ships. Upon arrival, the LNG is likely to be off-loaded into well-insulated storage tanks. The LNG is gradually warmed to return it to its gaseous state and delivered to natural gas customers through local pipelines. This process is known as regasification.

The volume of LNG exports from the US is still relatively small, but growing.

Two short informational videos on LNG can be seen here and here,

Renewables - Changing "Old-School" Market Economics

Renewable energy sources, i.e. wind turbines and solar power are still slowly making inroads into the mainstream power markets. As these supply sources continue to grow, though, we can expect existing market paradigms to disappear, replaced with new market realities.

A recent article in The Economist shows how renewable energy sources are altering power market economics. Key variables in this transformation are government subsidies, lower operating costs, and intermittent operating intervals. Ultimately public utilities see lower returns and investors will be less eager to come to the party.

For more details about this story, click here

Peoples Gas Pipeline Project On Hold 

The Illinois Commerce Commission (ICC) recently suspended a large scale, multi-year infrastructure project started by Peoples Gas.  Large cost overruns were uncovered, which require further examination in order to protect consumers from extremely high delivery rates.  The project's aim is to replace 2,000 miles of gas mains running through Chicago neighborhoods by 2030. Many of those pipelines are over 100 years old.

Most agree the project is essential. However, the ICC questions if the utility was managing the project correctly.  Questions arose over work prioritization, cost containment, and undue financial burden being passed on to the consumer.  In 2015, Wisconsin Energy acquired Peoples Gas.  Shortly thereafter, the ICC imposed financial penalties on the utility due to cost overruns being hidden by the previous management company as a means to push the acquisition through.  
For more details about this story from Crain's Chicago, click here.

Prospect Resources Inc. (PRI) is a firm that specializes in managing energy procurement (gas and electricity) for medium and large commercial and industrial clients.

The only constant in the energy markets over the past 15 years is price volatility. This reality turns energy procurement into a very risky business.  

PRI's Layered Hedging strategy is a proven alternative.
Check out what we can do for you!


Layered Hedging

Learn about PRI's hallmark strategy
Click Here


Learn about one of PRI's many satisfied clients
Click Here

Working for You

Learn about PRI's Managed Portfolio
Click Here
Copyright © 2017 Prospect Resources, Inc., All rights reserved