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Permalink Reply by 2yddy2rsrm3o2 on February 24, 2014 at 16:27

Feb. 27

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Permalink Reply by ledlights on February 25, 2014 at 6:30

Long term gas prices face a lot of headwind IMHO. Many of the factors potentially affecting future gas prices have already been mentioned on GHS. Here's another article summarizing those and possibly a few other factors not previously mentioned:

http://seekingalpha.com/article/2039803-beware-buyers-12-reasons-wh...

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Permalink Reply by Joe Aldridge on February 27, 2014 at 1:13

Well we are back in the 4's. I think we saw what traders and speculators can do to a market, So is the true value of NG 5'ish? 

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Permalink Reply by Joe Aldridge on March 23, 2014 at 22:48

OK, I did not anticipate the price falling this far this soon; especially with the continued cold weather across the Northern part of the nation. I expected the price to stay above 4.50 through March. So since we'll be under 1 T in storage this week and the gas refilling of the storage has yet to begin; what are the chances that the price will rebound to 5.00+ early this year?  Say, July, August or Sept. I think Sept. would be my guess. Any other guesses...........

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Permalink Reply by tc on March 24, 2014 at 0:47

NG traders use a lot of models and technical indicators, so I think that in April the traders will have models about how the injection season needs to go to get to 3.6 TCF.  If the injections match the models, we stay under $5, if they fall short of the models then we start rising higher toward $5 and above.  Because of these models I think if we get above $5, it will be around July as by then they will have a pretty accurate prediction of the ending amount of storage.  It will also be interesting to see if an increased upward basis spread happens between the summer front months and the 2015 winter months, right now its about 24 cents.  Of course as we saw this winter, fear (end users who need the gas this winter) & greed (traders who don't care where NG prices go, just as long as they can profit from price movements) can cause volatile short term price movements.

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Permalink Reply by Joe Aldridge on March 24, 2014 at 1:20

Thanks TC for your input. I did not know that the trading was modeled to that degree. And I agree that we saw what speculators can do to the price and market over a  short period.

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Permalink Reply by IRielley on March 24, 2014 at 9:34

Maybe I'm missing something, but aren't we going to have relatively low supplies of gas for the next year or so, and shouldn't that support a consistent price somewhere near $5.00?

Last year's total injection was well under 3.6 tcf. To inject more gas this year, E&Ps would need to have an incentive to drill significantly more gas than last year. Horizontal rig counts continue to drift lower. Is $4.30 a sufficient price to motivate companies to produce such an extraordinary amount of gas between now and November?

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Permalink Reply by Spring Branch,mineral owner on March 24, 2014 at 10:12

For today, the market must think so.

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Permalink Reply by tc on March 24, 2014 at 10:30

US production last year was 25.6 TCF, an increase of 3.3 TCF from 2010 and during most of that time NG prices were under $5.  So there is supply to fill storage.  So the question is how much will summer demand use up production, needed to fill storage.  As the price goes higher, energy producers can switch from NG to coal.  While some coal plants are being decommissioned (announcements can happen months to years before the actual closing), there are still a lot of them left in the US. 

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Permalink Reply by jim weyland on March 24, 2014 at 11:15

there's three sorts of gas consumers: industrial, commercial and residential. 

of the three, the later two are mostly price in-elastic; exhibit 'a' to this is the huge amounts of gas that the residentials consumed this past winter. i call it the let's not freeze grandma syndrome.

in a related note, the commercials undoubtedly burnt more than the average winter. it was cold and to some degree the economy is improving.

there are at least three wildcards as to gas available for injection: summer weather, industrial use and how much of the produced gas streams is stripped out for/as gas liquids. of those wild cards, two are price elastic. ac useage ain't, folks are going to stay cool.

and, as previously noted in this thread, there's going to be some gas on coal competition this summer. already, txu has announced they're going to spool up 4 of their idle coal units for this summer. i'd be surprised that they'd be the only outfit doing so.

and, or now, there's no price reason for the processors to not knock out all of the propane + fractions this summer. (if you think gas was high this winter, ask someone in the midwest who had to buy supplemental propane mid winter.)

there's one summer load factor, somewhat exclusive of temperature for this year. and, that's going to be the extra need in the pacific northwest for otherwise fired electricity to replace the hydro capacity lost due to an extreme lack of the snowpack needed to feed their hydros. 

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Permalink Reply by Joe Aldridge on March 24, 2014 at 11:26

Jim, 

Very good points. Thanks for the analysis.

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Permalink Reply by tc on March 24, 2014 at 11:29

Jim, I can't remember if you are from the pacific northwest, but I saw in today's paper that a LNG was approved for Coos Bay, Oregon.  There is a link in the article for the whole 163 page LNG export order.

Another facility aiming to export U.S. shale gas overseas got the green light to ship liquefied natural gas to countries that do not have free trade agreements with the U.S.

The Department of Energy granted conditional approval to Veresen Inc.’s Jordan Cove LNG export terminal in Coos Bay, Oregon, to export up to 0.8 billion cubic feet per day (Bcf/d) of LNG for a 20-year term, the DOE said in an order issued today.

The facility is expected to begin commercial production in 2019, according to Veresen. The company said the next step is getting approval from the Federal Energy Regulatory Commission.

Jordan Cove is the seventh of 25 proposals to the DOE to export LNG to non-FTA countries. Thus far, the DOE has approved non-FTA exports totaling 9.27 Bcf/d of natural gas from terminals, including Dominion Cove Point in Maryland, and others along the Gulf Coast.

http://powersource.post-gazette.com/powersource/policy-powersource/...

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