Replies to This Discussion

Permalink Reply by P.G. on March 13, 2011 at 6:54

From the looks of those pictures on the news over in Japan, I would think the demand for petroleum would have been severely dampened. I mean they are going to have to replace those cars tore all to heck before they are going to be needing any fuel for them..

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Permalink Reply by Les Bamburg on March 13, 2011 at 7:31

KCM, the disaster will have little or no impact on US natural gas prices.

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Permalink Reply by kittycatmama on March 13, 2011 at 9:55

I am thinking in terms of hedgers driving the market up because of increased demand internationally

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Permalink Reply by Les Bamburg on March 21, 2011 at 2:45

KCM, hedging would only move the NYMEX futures strip price up if the market was concerned that US gas prices were going to escalate.  It appears that is not the current view.  A drop in US gas production and a slow injection rate during the storage refill season could change that perception.  

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Permalink Reply by Badfish Ranch on March 14, 2011 at 1:58

This event will create a psychological shift in the market, likely marking the end of sub-$4.00 NYMEX pricing as coal prices and LNG catch a larger bid. With coal already trading higher than last summers peak pricing, before this event unfolded last Friday, the economics for coal to gas inthe power stack were already pointing to a high burn this season. Now thermal coal is getting a larger bid and should remain at large premiums, thus "locking in" this economical switch in the US power stack.

 

In other words, it is no longer chic to be a gas bear down here, likely hazardous to your health. The forward curve should be the largest beneficiary now (2012-2015) and even further out.

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Permalink Reply by P.G. on March 15, 2011 at 3:01

Now if someone could just define what "soon" means, huh?

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Permalink Reply by little ole 1st grade teacher on March 16, 2011 at 5:19

While defining "soon", would someone please answer where they intend to drill?????  It seems as though GHS has been dampened somewhat with prices so low and at the same time there seems/seemed to be talk about other plays.  Does anyone see GHS picking up soon?  I certainly hope so....and if it does will the companies begin to lease again.

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Permalink Reply by Skip Peel - Mineral Consultant on March 16, 2011 at 5:32

Are you referring to participation on this website, GHS, or the HA/BO Play as it relates to exploration and development across it's presently defined extent?

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Permalink Reply by little ole 1st grade teacher on March 20, 2011 at 16:16

Actually, I am talking about the Haynesville Shale Play as it relates to exploration and development across the East Texas area...especially, Shelby County. 

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Permalink Reply by Skip Peel - Mineral Consultant on March 21, 2011 at 1:30

The E. TX. portion of the HA/BO Play remains in more of an exploration than a production phase of development,  And only a few lease terms are approaching expiration that were taken specifically for shale propects.  The best I can tell there was little shale focused leasing as early in the Play compared to LA.  That should change some time this year though as the operators with more modest leaseholds go into production mode and start drilling mainly alternate unit wells.  I expect that EnCana and Chesapeake will continue step out drilling along with a few smaller operators such as Goodrich.  I suspect that by year's end, operators will consider the basin as defined in Texas as they seem to do now in LA.

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Permalink Reply by Les Bamburg on March 21, 2011 at 2:48

LOFGT, GHS discussions and leasing activity in the Haynesville/Bossier Shale play will pick up if US gas prices move back above $7-$8/MMBtu.  It will also depend on the level of success operators have in other shale gas/oil plays.

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Permalink Reply by Badfish Ranch on March 17, 2011 at 12:36

LNG is not what is going to drive the US gas pricing this summer. It is KING COAL. CAPP coal is and has been trading at a higher level than last years peak when we had severe heat; australian floods and lower US production are two factors. Japan generates more electricity from coal than it does LNG, and with the issues at hand not only in Jpan, but in other countries with nuke shutdowns (germany), and likely longer outages at other nuke facilities, coal will have a strong bid this entire summer, and that is pushing the coal to gas switch in our country. At this point, we are going to burn roughly 4.5-5.0 BCF gas a day from coal-to-gas switching this summer. Remember, witrh all the focus on high supply, many have forgotten it is a balance of supply and DEMAND that make the case for price, and demand is on the increase.

 

With oil now at $100, we will also see less canadian imports this summer as they burn more domestically for tar sand processing, again the economics are strong for that.

 

I remain in the neutral to bullish camp for anything $4.00 and below this summer, and I strongly believe we will see decline by year end in our domestic production #'s.

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