The Really Negative Story on Natural Gas

[cjppjc]

Re: The Really Negative Story on Natural Gas

Welcome back indeed.

I, for one, would be very interested in your thoughts concerning what the US might put together regarding a domestic energy plan.

It seems to me there are quite a few markers on the 'plus' side regarding resources, but equally a large number of markers on the 'minus' side regarding utilization of energy vs. GDP creation (or lack thereof).

What a great request. I also would be very interested.

Add me to the welcome back list too.

[touchring]

Re: The Really Negative Story on Natural Gas

It'll probably take a while for reservoir depletion to soak up the surplus as the investment and drilling finally falls off. Have a look at the volatility of natural gas prices over time on any long term chart (such as the charts in lower right of this page: http://geology.com/articles/natural-gas-prices/ ). One of the things that seriously discourages capital investment in industries that create high natural gas demand (such as ammonia/urea fertilizer manufacturing) is the near impossibility of making a rational and reliable business plan when one of the largest input costs moves around so much. One can spend 2 to 4 years permitting and constructing a plant and suddenly find it is completely uneconomic on start-up day. The natural gas futures and derivatives markets aren't deep enough to adequately hedge this risk, especially after the demise of the merchant energy companies like Enron and Dynegy, who in their early (pre-corruption) days played an important and valuable role in that market.

Which brings me to the prickly topic of a "USA domestic energy plan"...but that's a subject for another day...

Thanks GRG55 for your great insight. I believe the key is legislation. If there are indications that legislation will be passed to allow export of NG, prices of NG stocks will shoot through the roof. There is no need to wait till prices recover. The question is when will it happen? Probably only next year. In the meantime, prices will continue falling.

[sunpearl71]

Re: The Really Negative Story on Natural Gas

Legislation supporting exports could be difficult in the backdrop of divergent global prices, high in Asia and low in NA.

"U.S. Rep. Edward Markey, D-Mass., told oil giants BP, ConocoPhillips and Exxon Mobil his natural gas export bills now in Congress would block a proposed $40 billion pipeline to export Alaska natural gas to Asia."
http://juneauempire.com/state/2012-0...s#.T2w52GFs6oc

PS: Not sure if this was posted elsewhere in the site.

[Raz]

Re: The Really Negative Story on Natural Gas

Thanks, GRG55. Your input is not only most appreciated, but most valuable!

Do you have any quick thoughts on two Canadian NatGas producers, Peyto Exploration (PEY.TO)and Progress Energy Resources (PRQ.TO)?

[bill]

Re: The Really Negative Story on Natural Gas

http://www.bloomberg.com/news/2012-0...hale-glut.html
4-13-2012

The global LNG market is tight and spot prices are going to be quite high at least until 2018,” when several new Australian LNG export projects are scheduled to ramp up, said Asish Mohanty, senior global LNG analyst at Wood Mackenzie, the Edinburgh-based energy researcher.
U.S. exporters that start shipping before 2018 have the best chance of recovering capital costs and reaping a profit within a few years, “before prices start softening,” he said.
Houston-based Cheniere probably will get the go-ahead to build, although the timing is uncertain and approval will come with conditions attached, David Wochner, a partner in the Sutherland Asbill & Brennan LLP law firm’s energy practice, said during a March 22 Argus Media Ltd. conference in Houston.
Reviewed Next Week

The Federal Energy Regulatory Commission, or FERC, is scheduled to discuss Cheniere’s project at an April 19 meeting in Washington, according to an agenda posted on the commission’s website yesterday.

How about some coal?
http://fuelfix.com/blog/2012/04/10/c...el-since-1991/

4-10-2012
BILLINGS, Mont. — Government data show U.S. coal exports reached their highest level in two decades last year as strong overseas demand offered an outlet for a fuel that’s falling from favor at home.
U.S. Department of Energy data analyzed by The Associated Press reveal that coal exports topped 107 million tons of fuel worth almost $16 billion in 2011. That’s the highest level since 1991, and more than double the export volume from 2006.
Much of the increase went to slake the thirst of power-hungry markets in Asia, where rapid development has sparked what mining company Peabody Energy calls a “global coal super cycle” that heralds renewed interest in the fuel.
The AP’s analysis showed coal exports to South Korea leapt 81 percent last year to more than 10 million tons. India saw a 65 percent jump, to 4.5 million tons. And Japan bought almost 7 million tons — a 119 percent increase — as the nation sought alternatives to nuclear power after an earthquake and tsunami prompted the Fukushima nuclear complex meltdown.
King Coal faces a tougher outlook in the U.S., where competition from cheap natural gas and costly new rules for power plants are eroding its historic dominance in electricity generation.
Coal’s share of the domestic power supply has dipped by more than 20 percent in the past several years, forcing companies to search out new customers overseas or risk having to cut production from U.S. mines that produced almost 1.1 billion tons last year.
“There’s no question that our supplies of coal are adequate. The question is, how do we find new markets for coal to keep the share of electricity generation strong?” said Luke Popovich with the National Mining Association. “While its use is relatively declining here, it is absolutely soaring in most other places.”


Companies including Arch Coal Inc. have offered more optimistic scenarios under which exports continue to grow. Arch has predicted export capacity could reach 245 million tons by 2015.
To make that happen, companies want new or expanded coal ports on the West and Gulf coasts. Pending proposals in Washington state would add tens of millions of tons of port capacity in coming years for coal that would be mined from the Powder River Basin of Montana and Wyoming.
Port expansions also are envisioned along the East Coast and in Texas, where Kinder Morgan Energy Partners plans to invest $140 million to expand a coal terminal in Houston. But many of those port plans are being challenged by the coal’s industry’s long-time opponents.

[touchring]

Re: The Really Negative Story on Natural Gas

Legislation supporting exports could be difficult in the backdrop of divergent global prices, high in Asia and low in NA.

"U.S. Rep. Edward Markey, D-Mass., told oil giants BP, ConocoPhillips and Exxon Mobil his natural gas export bills now in Congress would block a proposed $40 billion pipeline to export Alaska natural gas to Asia."
http://juneauempire.com/state/2012-0...s#.T2w52GFs6oc

PS: Not sure if this was posted elsewhere in the site.

It appears that the democrats are against natural gas exports? So, the presidential election will impact on the nas gas prices?

[touchring]

Re: The Really Negative Story on Natural Gas

btw, when does the weather gets hot in north america? July? or june?

[jpatter666]

Re: The Really Negative Story on Natural Gas

Tomorrow. 88 in Washington DC!

[bill]

Re: The Really Negative Story on Natural Gas

Berman out with one also, below.

http://www.theoildrum.com/node/8914

Berman says

The gold rush is over at least for now for the less commercial shale plays. The money and activity have moved to more oil-prone shale plays such as the Eagle Ford


Look at all the pipeline links I posted above.

and now this


http://af.reuters.com/article/commod...8D677D20120206[/QUOTE]



http://www.eia.gov/todayinenergy/detail.cfm?id=5950

April 23, 2012 Eagle Ford oil and natural gas well starts rose sharply in first quarter 2012

Source: U.S. Energy Information Administration, Bentek Energy LLC.

---

New well starts in the Eagle Ford region in Texas increased 110% from January through March 2012 compared to the same period in 2011, according to reporting and analysis by BENTEK Energy LLC (Bentek).

Other key findings include:

• Operators started drilling (spudded) 856 new wells in January through March 2012 compared to 407 in January through March 2011.
• In early April 2012, the Eagle Ford active rig count set a new high of 217 units.
• Increased drilling and rig deployment translated into higher crude oil and condensate production, which is projected to average over 500 thousand barrels per day (bbl/d) in April, up from 182 thousand bbl/d in April 2011.
• Current Eagle Ford area natural gas production is about two billion cubic feet per day.
• Horizontal wells accounted for nearly all of the new well starts so far in 2012.
• Much of the drilling activity in the Eagle Ford is targeting both crude oil and wet natural gas resources.
• Bentek estimates that in March 2012, Eagle Ford crude oil and lease condensate production was approaching crude oil production in the North Dakota part of the Bakken formation.

[touchring]

Re: The Really Negative Story on Natural Gas

3.5 years on, UNG has fallen below 10 bucks. Chienere will start exporting LNG next year, but will exporting 27 million metric tons per year (mmtpy) affect NG prices?

http://www.cnbc.com/2015/10/26/cheni...th-russia.html