Replies to This Discussion

Permalink Reply by Greedy Landowner on December 12, 2008 at 11:57

Good reading...

Unless CNG takes off, which right now isn't going to happen with gasoline prices as they are, this projection or something close to it will become reality.

I can see a period of massive drilling to get everything HBP before leases expire followed by them sitting on it for years until gas prices move. Eight wells per section won't happen for a long, long time.

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Permalink Reply by Skip Peel - Mineral Consultant on December 12, 2008 at 12:48

VSC 'O'. I review numerous energy/industry reports daily and this is one of the best I have seen. Thanks for posting it. I recommend that members use your link and read the report. The opportunity to build a new national energy model is obvious. And the significant potential benefits accrue not only to our nation as a whole but particularly to those with a stake in the HS. Natural gas is plentiful, economically producible, versatile in application, insulated from global political uncertainties and advantageous environmentally. The supply/demand equation is the controlling dynamic. Will we take advantage of the opportunity? Or continue to fiddle while Rome burns? We must increase the demand, and utilization, of natural gas.

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Permalink Reply by Spring Branch,mineral owner on December 12, 2008 at 12:58

I think you should start it off, Skip, by buying a natural gas powered Suburban. Help General Motors, the country, and Haynesville Shale royalty owners all @ the same time!

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Permalink Reply by Skip Peel - Mineral Consultant on December 12, 2008 at 13:04

Funny that you should mention that SB. I have been considering a new vehicle and I would very much appreciate the opportunity to switch over. However, it would be for a mid-size sedan for everyday transportation. The Suburban would be my weekend, long distance vehicle. It may be some time before there are CNG refueling options in the Ouachita Mountains. I'm working on it.

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Permalink Reply by Spring Branch,mineral owner on December 12, 2008 at 13:14

You might have to change your vocation to "Washington Lobbyist".

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Permalink Reply by Grillin' - MmmMmm on December 12, 2008 at 19:21

Jim Krow:

Couple of problems with your ideas. 1) in order to export nat gas out of the US one needs an export permit from the US Gov't. And they won't be giving any due to the need for cheap energy up in the Northeast. 2) those 10 year contracts don't exist and won't exist because no one wants to take a bet on prices for that long. 3) the other reason we don't export gas is because we don't have any LNG liquifaction plants (except the one in Alaska and the Senators are trying to shut it down.

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Permalink Reply by Les Bamburg on December 13, 2008 at 8:31

Jim, some industries that utilize high volumes of natural gas tend to locate in other countries because the energy cost can be significantly lower.

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Permalink Reply by Grillin' - MmmMmm on December 13, 2008 at 11:19

Gotcha ya! I think the only problem would be the cost of labor vs other countries. But maybe our cheap source of gas will overwhelm the labor costs.

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Permalink Reply by VSC DeSoto South on December 13, 2008 at 7:15

Mmmarkkk,

Let's be real.
With enough money on the table, the govt will rush throgh permits for LNG plants, anything else the one holding the paycheck wants to put enough 000000's behind.
You woudl beamazed how fast someone with enough bankroll coudl the drilling, the permits, the pipeline, the trucks, all of it in here and start producing for the US, and for shipping worldwide.
You are kdding yourself if you think ortherwise.
Remember, thr US is the epicenter of the financial meltdown and it is hurting US companies.
There are still people in other countries with plenty of money. They can buy the land, the leases, the local O&G companies, the rights of way, the permits, build the LNG plants when they please.
In their favor the dollar is so cheap against other currencies, it's like shopping at the dollar store.
I am sure they areon the sidelines right now, waiting for the right time to start their strategy to take control.
The problem is this, ouside owners will own it, they have no loyalty to the US.
They can price the gas however they want, and pull stakes or threaten to whenever the govt gives them grief. the givt will be so happy that they are making moeny and paying their (reduced taxes because they created jobs) taxes, that no one will touch them.
What to do think the overseas oil companies do, they price to keep us addicted, raise it a little bit, and then when we reduce consumption, they lower it so we think we are ok again. (BTW. Hedge funds and speculators here in the US ran it up the last tim.)

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Permalink Reply by Skip Peel - Mineral Consultant on December 13, 2008 at 7:29

VSC 'O'. I understand your point and many share your opinions. I do wish to make one point. This economic recession is not limited to the U.S., it is global. As bad as the near term economic future looks to us here, it is as bad globally. Some countries as already in more difficult straits than we are. And their near term future looks substantially worse. Read some of the reports coming out of Japan for instance. Some companies in other parts of the world may be capable of capitalizing new investments in U.S. assets and markets but not many. And the number is shrinking fast. The U.S economy sneezes and the rest of the world catches a cold. You can't cure a cold. You just have to wait until it goes away.

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Permalink Reply by Grillin' - MmmMmm on December 13, 2008 at 11:29

Are you serious? XOM has more money than most countries and they can't get the government to approve drilling offshore East Coast. So I don't think throwin money at the politicians will get the traction for exporting LNG. Again, on a small small scale COP is exporting LNG out of Kenai and there are Senators trying to shut that down. And that gas has no other market!! So no, I'm not kidding myself. Just work in this biz and are enlightened enough to know what pushes the wrong buttons in DC.

There is one other issue: economics. It takes about a $8-10 differential between the price of gas being liquified to the price of gas that is eventually re-gassed and sold. So, if gas in Japan is commanding $15, then you would have to buy the gas at $5-7. So far, so good except the equivalent of $15 gas is $100 oil. So the japanese can either buy oil or buy LNG. But with prices in the $40's for oil, the LNG has to be $6 to compete and that leaves no profit for a new LNG plant to be built on! Oh, that $8-10 differential, it has to be sustained for at least 15 years, maybe longer to reach a 10% ROR. Believe me, these numbers are worked over and over again by lots of folks and they just don't work well in the current low oil price market. Not to mention there are several plants currently being built which will form a worldwide glut when they come in over the next 2-3 years. Any new plant will take 42 months to build plus at least 12 months for permitting and an additional year for engineering! You may have hit on something I have some facts/figures/calcs' on!

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Permalink Reply by The_Baron on December 13, 2008 at 15:48

Thats a very utopian answer KB.

Relocating plants and manufacturing facilities????? Really?????

Why not, lets cut down some trees to build new industrial sites. Ohh, don't worry the old site will just be brownfields, like in the rust belt, no big deal.

How about this idea....Build a pipeline to the plants.

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