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Permalink Reply by Skip Peel - Mineral Consultant on November 14, 2012 at 16:55

The new boom: Shale gas fueling an American industrial revival

By Steven Mufson, Updated: Wednesday, November 14, 6:11 PM

The shale gas revolution is firing up an old-fashioned American industrial revival, breathing life into businesses such as petrochemicals and glass, steel and toys.

Consider the rising fortunes of Ascension Parish, La.

Methanex Corp., which closed its last U.S. chemical plant in 1999, is spending more than half a billion dollars to dismantle a methanol plant in Chile and move it to the parish.

Nearby, a petrochemical company, Williams, is spending $400 million to expand an ethylene plant. And on Nov. 1, CF Industries unveiled a $2.1 billion expansion of its nitrogen fertilizer manufacturing complex, aiming to displace imports that now make up half of U.S. nitrogen fertilizer sales.

These companies all rely heavily on natural gas. And across the country, companies like them are crediting the sudden abundance of cheap natural gas for revving up their U.S. operations. Thanks to new applications of drilling technology to unlock natural gas trapped in shale rock, the nation’s output has surged and energy experts almost unanimously forecast that prices will remain low or moderate for a generation. The International Energy Agency says that by 2015, the United States will overtake Russia as the world’s biggest gas producer.

Link to complete article:  http://www.washingtonpost.com/business/economy/the-new-boom-shale-g...

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Permalink Reply by GoshDarn on November 14, 2012 at 7:24

KOH:

The NG "futures" bump up was speculative gaming (i.e., re-balancing out of some "fiscal cliff" equity sales), along with "possible" storage withdrawals via the cold weather per certain parts (of the map).  In other words, it was not an unexpected supply-and-demand paradigm shift vis-a-vis a run up to $5.  (Historically, such bumps upward tend to happen this time of year -- repeatedly.  Nothing new.)

Also, it should be noted that you could end up only off by about a $1, KOH.  In other words, if you'd predicted $4 on NG by the end of the year, you might would come close to winning your steak-dinner bet (on a good "frigid" day at the racetrack).

Of course, if you lose the wager and NG only hits $4 by Dec. 31st -- you might wanna make a donation to Keith.

Oh, but wait.  Keith didn't say he'd cop for the dinner, did he, nor did anyone else take you up on your wager?

Huh.

And such would've been an easy way to get a free meal.

Maybe some sharpie will go on the record and gamble the farm.

So, without a bookie holding the vig, I guess you get to walk scot-free, KOH, having had your fun prognosticating against the Wall Street ticker.

GD 

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Permalink Reply by Roy Austin Smith on November 14, 2012 at 9:04

I am looking forward for over $2.00, when is that comming. I am with chesapeake.

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Permalink Reply by Frank on November 14, 2012 at 13:03

They are trading our March 2013 checks now.  You will see that. 

 

Not much more, I'm afraid.  CHK here as well.  (Where is the sad smiley?)

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Permalink Reply by Krkyoldhag on November 15, 2012 at 4:11

Laughing..you so right as usual.  But its not over til its over..

Might just have to pay for my own steak and invite you all to join me that night at Ernie's.  Wouldn't be the worst thing we have done.

Oh...BP checks to mineral owner very lot but the dividend was great..Stock is up faro $35 to $40 and paid dividend of 13%  ...that puts smile on faces that own stock rather then minerals.

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Permalink Reply by Roy Austin Smith on November 14, 2012 at 9:05

When do i get 3.81 . a cheaspeake landowner.

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Permalink Reply by Henry on November 14, 2012 at 21:31

Roy,

You won't see $3.81 on your CHK royalty until gas goes to about $4.50 or more.

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Permalink Reply by Joe Aldridge on November 14, 2012 at 23:48

I saw on Fox yesterday that the price of NG was over $6.00. Any comment why the difference between that price and the price posted here on GHS. Or did I see something wrong on Fox Business Channel.

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Permalink Reply by Skip Peel - Mineral Consultant on November 15, 2012 at 1:56

This morning the CME Futures price for December is $3.77.  To find a futures price above $4 you have to go to October, 2013.  The NYMEX Spot is $3.655 and the December Settlement price is $3.471.  The future price is for speculators.  As far as I can tell very little natural gas is sold at spot prices.  The vast majority to sold on long term contracts with take or pay provisions.  The Settlement price is the one actually used for short term contracts.

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Permalink Reply by Les Bamburg on November 15, 2012 at 5:06

Skip, I am not sure exactly what you mean by NYMEX Spot.  The NYMEX Natural Gas Futures contracts are traded daily for foward with the prompt month (December) being the most active.  The contract "settles" at the end of each day but the only price of importance to most people is the "expiration" price on the final day of trading for the contract that occurs three business days before the end of the month.  For example the November contract expired on October 29th with a price of $3.471 per MMBtu.  The majority of wholesale natural gas transactions in the eastern half of the US for November was linked to this value.

 

The NYMEX futures contract is typically used by producers, consumers and marketers to hedge a portion of their natural gas purchases and sales to "lock-in" the foward price for some time period.  Some speculators also trade in the NYMEX futures contract with no connection to physical gas transactions.

 

Some volumes of physical swing gas are purchased/sold on a daily basis for balancing the market.  These prices are published as daily cash prices.        

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Permalink Reply by Skip Peel - Mineral Consultant on November 15, 2012 at 8:12

In regard to spot:  http://www.wtrg.com/daily/oilandgasspot.html

futures: http://www.cmegroup.com/trading/energy/natural-gas/natural-gas.html

monthly settlement:  http://gsfi.net/common/NYMEXSettlementHistory.pdf

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Permalink Reply by Les Bamburg on November 15, 2012 at 8:36

Skip, the "spot" prices shown are daily Henry Hub cash rather than NYMEX.

The monthly settlement prices shown represent the final settlement price for the respective NYMEX futures contract month.  I realize you meant to say the November settlement price was $3.471 rather than December. 

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