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Permalink Reply by Les Bamburg on February 4, 2011 at 3:47

Bacon, we will have to see those storage reports and their effect on prices.  There may be limited reaction by the market if the jump in withdrawals is less than anticipated based on the cold weather.

 

Cold weather can impact a much larger area but both cold weather and hurricanes tend to be short term events.  This may cause momentary jumps in the daily pricing for certain indices but would not necessarily increase baseload first-of-the-month prices which are the basis for royalty payments.

 

By the way, I believe over 600 MMcfd may have been shut-in of Texas onshore production.

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Permalink Reply by Bacon on February 4, 2011 at 5:24

Good info. Thanks.

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Permalink Reply by Mac Davis on February 4, 2011 at 6:04

Gas wells, power plants, and other infrastructure work fine in areas of the country that get cold like this every year.  Our problems are due to cost cuts on winterization.  You can argue whether the proper tradeoffs were made, but I don't think you can deny that they traded reliability for cost savings.

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Permalink Reply by Les Bamburg on February 4, 2011 at 10:04

Mac, who are "they".  Initially you implied this was an issue related to deregulation and gas traders or financial middlemen (ie Enron).  So who are you saying made the cost savings.  Surely you would not think every wellhead and gathering system should be designed for near arctic conditions.

 

By the way, even some production in the frigid Rockies was cut back due to the weather conditions.    

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