Replies to This Discussion

Permalink Reply by Les Bamburg on May 15, 2009 at 9:55

KB, there should eventually be a transcript available as all the presentations were taped. California the rest of the West Coast will not be receiving shale gas production but as the volumes increase it will result in more Permian Basin and Rockies gas flowing west rather than east.

The various fields referenced in the complaint (McElmo Dome, Sheep Mountain, Bravo Dome) are accumulations of essentially pure CO2. These fields were developed (1980's) and the CO2 delivered via pipeline to the Permian Basin for CO2 flooding (enhanced recovery) of several large oil fields.

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Permalink Reply by Carter on May 15, 2009 at 16:10

Thanks, Les. No such thing as too much quality information.

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Permalink Reply by Carter on May 15, 2009 at 16:45

One of the reasons that I am cautions about natty is this perception of supply vs. demand going forward -- this has nothing to do with stacking rigs and reducing supply. What struck me about that CA Energy presentation is the folks from the Marcellus came with their information (promote). So everyone is saying that we have all this gas -- fine -- But what if we have a flat economy with no increased demand? I am not talking about technical bounces like we just had the past couple of weeks -- I'm talking long term fundamentals. Barring an act of God or various geo-political events, my take is that this last little bounce will provide the catalyst to push us under $3. Price has deviated from fundamentals, IMHO.

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Permalink Reply by Les Bamburg on May 16, 2009 at 3:01

Carter, the following are three factors that will significantly impact short term natural gas prices:

1) Recovery speed of the US economy will shape demand. Everything I am reading indicates industrial demand is still declining, although at a slower pace, and still has not hit bottom.

2) The hurricane season in the Gulf of Mexico. Below normal activity will cause gas storage to reach a record high level of 4.5 Tcf and push prices down. Above normal activity will delay gas storage fill and keep prices from collapsing.

3) The amount of LNG imports. Last year the average LNG imports were ~ 1 Bcfd. For this year projections range from 1.5 to 3.0 Bcfd with most of that increase coming from May to October. If these volumes arrive before US production has substantially declined natural gas prices could be under severe downward pressure.

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Permalink Reply by sesport on May 16, 2009 at 2:31

Geez, Les, I WAS gong to read a book last night ... lol. Ya' know I'm thankful. :0)

Carter, IMO, the price of ng will follow demand & consumption. I just read/posted a topic re. the LA plant that has put the brakes on conversion due, in part, to the fall in ng price. The plant was in the process of converting to petroleum coke, but current ng prices were a factor in halting progress.

The stimulus money is available for ng fleets (and being snapped up), and now Chu has backed off hydrogen cell vehicles. The voice/demand for personal NGV's is starting to grow & be heard.

Time will tell, but my thought is that this dip is temporary. Anyone know what the hedge is for ng? I'm sure Les is making us a chart as we speak?

Best all - sesport :0)

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Permalink Reply by Les Bamburg on May 16, 2009 at 3:25

Sesport, I assume you are referring to the NYMEX forward curve which I have attached thru 2010. I have heard some of the producers are holding off on hedging activity for 2010 because the average is only $6.27. Others are hedging as they believe prices will remain below that level until the end of 2010 even with the decrease in US gas production.

Attachments:

• NYMEX 5-15-09.pdf, 96 KB

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Permalink Reply by sesport on May 16, 2009 at 3:36

Les - No credit on the chart ... Yours? But I do see it goes over $7 at the end of 2010. Seems a long way off, but hopeful. It will take at least that long for some changes to occur.

Thanks again :0)

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Permalink Reply by Les Bamburg on May 16, 2009 at 3:47

Sesport, sure it's my chart delivered up fresh off the press. No sitting under heat lamps for my customers.

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Permalink Reply by sesport on May 17, 2009 at 0:34

Thanks again, Les. lol Like the word play. You've been holding back on the jokes? Anyway, since it's fresh and it comes with a side of humor, it's worth a 30% gratuity. ha, ha

Thanks for starting my day sunny side up - sesport :0)

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Permalink Reply by w.r. frank on May 16, 2009 at 18:20

Les, do you have a chart of forward Nymex vs. NBP (in $).

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Permalink Reply by Les Bamburg on May 17, 2009 at 5:16

WR, please see the attached. The lack of storage in the UK drives NBP much higher in the winter.

Attachments:

• NYMEX-NBP Fwd Curve 5-15-09.pdf, 108 KB

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