Report Example on Likely Future Product Prices for Gas and Other Products

2021-06-02 16:12:30
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University of California, Santa Barbara
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Report
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Future products prices for gas and other products are expected to rise. This will result from the natural gas market cycles. According to Speight (2015), there are two cyclical patterns that determine the natural gas prices which include the seasonal cycle and storage cycle. During winter, the prices of the natural gas are expected to rise due to the increase in demand for the gas to accomplish the various heating purposes. On the other hand, the natural gas will also be used to generate electricity although this will be to a smaller degree. However, that smaller degree will cause some shift in the demand for gas hence an increase in the prices of the same will tend to increase. However, this will be alternating depending on the season where in autumn and spring, the demand for the natural gas will go down hence will be accompanied by a decrease in prices.

The second cycle is the storage cycle. This is also one of the major cycles that tends to affect the future product prices for natural gas and other products. The demand for the natural gas will be catered for by distributing the gas through a pipeline. This will increase the transportation cost where the cost will be transferred to the prices of the gas and other related products. However, the price of the natural gas and other prices will slightly go down during the off-peak periods as this is the time when the gas is stored since the demand is relatively low (Lake, 1989). On the other hand, the same companies storing the gas have an obligation of storing them and publishing the stored gas. After publishing the prices are likely to either fall or rise. All that will be determined by the consumers' expectations.

Factors that will drive future prices for gas and other products

Although there will be the deviation regarding the future prices of the natural gas and other products, this difference is expected to be gradual. The prices no matter what have to remain within an anticipated range all of which is determined by the valleys and peaks in the market. Researchers have come up with a number of factors that will do lead to the change in future prices of the natural gas and other related products. Some of the factors that will result in a change in future prices of natural gas and other products include:

Weather: weather this comes out to be the major factor that will either lead to an increase in the natural gas prices and also a decrease in the same (Stark, 2015). Weather do play a great role in the determination of gas production all over the world. In the past weather has been associated with a change in the natural gas prices and this makes it the reason as to why weather is said to cause variances when it comes to demand for the natural gas.

Extreme weather: there is a major difference between weather and extreme weather. Extreme weather refers to the conditions such as the blizzards, floods and the hurricanes. The changes in weather are anticipated to cause greater variations when it comes to future prices of the natural gas and other products (Speight, 2015). The above-named weather conditions do determine the demand for natural gas by the consumers. This broadband is associated with the production of electricity of which is consumed domestically and also at the industrial level. On the other hand, during the distribution of the natural gas, the cost is expected to be high and hence this will increase the expenses that will have to be incurred. Change in expenses will in one way or another alter the prices of the future products for natural gas and other products. Extreme weather, on the other hand, may cause a lot of damage to the already established natural gas systems where all this is much related to the prices of the same.

Government regulations: future prices of products for gas and other products are also expected to rise in case the government changes the existing favorable regulations (Stark, 2015). Government regulations in most of the cases are attributed to the taxing system. There are more and more speculations that as the days are going by and much attention is being directed to the pollution aspect that results from natural gas, the government is said to put tough regulations which will increase the operating costs. When such operating costs are increased, this will directly raise the prices of the natural gas products.

Outages and source fuels: future prices of products for natural gas and other products are said to change now and then if the existing producing firms do close in future to cater for maintenance (Lake, 1989). When such unexpected closures take place, automatically the prices of the natural gas products will be affected. Day in day out the source of the natural gas is reducing, reduction in the source fuels means that the final gas that is produced does not meet the existing demand. Higher demand will cause the prices of the natural gas products to raise drastically.

Geopolitical events: most of the countries that are producing natural gas are being faced with the problem of political instability. Such unrest is always at the forefront in inhibiting stable natural gas prices. According to Lake (1989), political unrests will tend to cause a big margin in the future prices of products for natural gas and other products mostly affecting the short-term prices. The wholesale market prices, on the other hand, are said to change in the long term.

In summation, if the above factors are not put into consideration the future prices for products of natural gas and other products are said to undergo downs and ups. More and more factors do exist which will affect the future product prices for gas and other products. More and more changes in the natural gas sector regarding the prices are expected to occur since the above factors will always be there to interfere with.

Decommissioning techniques and costs for facilities after abandonment

There are several decommissioning techniques available for the engineers. The four main decommissioning techniques include the nuclear measurement, decontamination, simulations and tools/ remote operation technique. On the other hand, there are some of the costs that are mostly incurred when a facility is abandoned.

According to Bourgoyne et al. (1986), the first decommissioning technique is the nuclear measurement. Measuring the radiation usually does takes place under a different system of units which all relies on the standards that are set by the government of that country. We have different conventional systems which include the curie, rem and rad. The process of nuclear measurements is accompanied with different terms that all depends on the aspects of the radiation. The first term is the amount of radiation being given off. The unit that is used in such circumstance is the curie of which its SI unit is the Becquerel. The second term often used is the radiation that has to be absorbed by the person. The radiation that has been absorbed by the person and has an SI unit known as the rad. The third term used in this technique is the biological risk that comes as result of being exposed to the radiation. The SI unit of the same is the rem.

The second decommissioning technique is the decontamination (Shokouhi et al., 2014). This all has to do with the removal of all the contaminants that either a piece of equipment or a personnel has accumulated. The role played by the decontamination is offering protection to the workers and keeping them away from being contaminated with harmful substances when working at a waste site. This is prevented through an offering of respiratory equipment's and protective clothing all that aims at reducing the transfer of possible harmful substances. No, any single chemical can be carried away from the site.

According to Meng et al. (2016), the other decommissioning techniques are the simulations and the remote operation. Simulations aim at reducing that traffic and enhancing the network traffic during the operation process. The remote operation helps in sensing the earth's surface. This type of decommissioning technique is mostly preferred when there is no any other appropriate natural radiation source.

Abandoning a facility is accompanied with a number of costs. This not only applies during the abandonment period but is also applicable either when the drilling process starts off even failure to complete the drilling process as earlier agreed. Some of the costs that are incurred when the facility is abandoned are the surface site preparation and the excavation (Bourgoyne et al., 1986). All this have to be catered for whatever the case as it is always stated clearly when starting the drilling process. Failure to cater for this cost can lead one to incur huge and severe consequences in return.

The other costs incurred when a facility is abandoned is the daily rental rate of a drilling rage and the fuel costs (Shokouhi et al., 2014). A drilling rage is a machine that facilitates the drilling of a wellbore. The overall cost that had been agreed upon must be met whatever the case. This is all clearly stated at the beginning of drilling process. The other cost that has to be incurred in case the facility is abandoned is the fuel cost. All the fuel that has been consumed must be paid up to the last dollar.

According to Meng et al. (2016), another cost that arises from the situation whereby the facility is abandoned includes the cement and logging, drill pipe, testing and coring among others. All the costs mentioned earlier are approved by a group of partner immediately before or starting of the drilling process. If the partners in any way delay to approve the expenditure that has to be covered, then the whole project may end up being canceled.

Some of the major costs that have to be incurred the moment a facility is abandoned include the temporary abandonment operation costs, collapsed casing, and materials that all depends on the evaluation of the wellbore and also the stuck valves (Bourgoyne et al., 1986). Temporary abandonment operation costs depend on two variables that are the daily cost to rent and the rig in the whole operation process. The other variable is the determination of the number of days required to complete the whole job. This kind of cost takes place in three main ways: one way is from a fixed installation. The second way is from the drilling support vessel. The third way is the semi-submersible or the famously known as the jack-up rig. Furthermore, there are the costs that relate with the problematic wells.

According to Shokouhi et al. (2014), the next class of the costs that result of facility abandonment is the estimated costs which result from the individual components that rely on the individual platforms and projects and the overhead costs. This will include the mobilization cost, setup cost, and bring down cost, work provision, weather contingency and other project management cost. Consequently, we have the overhead costs that result from operating the rig which in most of the cases is referred to as the rig rate. All these costs can only be avoided only if the facility is not abandoned and the whole operation is undertaken to the last minute.

In summation, decommissioning is a process which is made up of different techniques. The four main types of decommissioning techniques include the nuclear measurement, decontamination, simulations and remote operation. All this helps in fully understanding the topic of decommissioning in a clearer manner. Furthermore, there are the costs that have to be incurred the moment a facility is abandoned. All this are well stated in the policies that had been set aside when the whole operation was starting. Some of the abandonment costs include the drilling cost vessel and the tempo...

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