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Permalink Reply by tc on March 31, 2014 at 0:37

This article from WSJ touches on some of the issues that were discussed earlier in this thread.

"Rig Counts Offer New Clues on Natural Gas"

By Tim Puko

Natural-gas traders are returning to a neglected data point to predict where prices will head next: the weekly rig count.

The count—a survey of the number of rigs drilling for gas released each Friday by oil-field-services firm Baker Hughes Inc.—is crucial to estimating U.S. production. This winter, the rig count played second fiddle to weather reports, as freezing temperatures sent gas demand and prices sharply higher. But now, with gas stockpiles at an 11-year low, the count is a key consideration for analysts once again.

Gas producers typically replenish inventories each spring, when mild temperatures limit demand. If producers don't refill storage by the following winter, gas prices could rise. Gas for May delivery ended Friday at $4.485, up 4% for the week, though down from above $6 in February.

Friday's Baker Hughes count shows gas drillers operated 318 rigs last week, compared with 326 a week earlier and 389 a year before.

That is a concern for some traders who question whether drillers can replenish supplies by November, when heating demand begins to pick up. The U.S. would need to see a 10% to 15% increase in rigs operating this summer to get storage levels to 3.9 trillion cubic feet of natural gas by November, about where they were entering previous winters, said Kevin Petak, vice president of fuel markets analysis for ICF International Inc. The U.S. Energy Information Administration reported 896 bcf in stockpile as of Thursday.

"If we don't see an increase in rigs it's only going to lead to more reasons for higher prices," analyst Jim Ritterbusch said.

However, if producers see prices above $4.50 as a reason to jump back into less-profitable gas-drilling areas such as the Haynesville and Fayetteville shales, it could lead to a supply glut, said Ryan Smith, energy analyst with Bentek Energy in Denver. "We're watching [the count] very closely," Mr. Smith said.

The rig count isn't the only factor at play in the gas market. A mild summer and high energy prices could damp consumer demand. Bentek and ICF think about 3.6 trillion cubic feet will be enough to avoid a price spike next winter.

Moreover, technology has vastly improved what each rig can produce, so fewer rigs may be needed, and there is still a backlog of previously drilled wells waiting to come online. New pipelines in the Northeast could lead to an additional 1.5 billion cubic feet a day of gas coming onto the market between April and November even without any other rigs going into the ground, Mr. Smith said.

According to Mr. Petak: "Every rig does matter, especially with the amount of production brought online for each well drilled. Having said that, I think watching the rig count is only one part of the puzzle, so to speak."

Permalink Reply by jim weyland on March 31, 2014 at 6:36

i found this company's products to be interesting. they're air-cooled and employ air bearings. so, no coolant or lube oil disposal issues. i recall tbo is 25,000 hrs. and, it sounds like they can burn just about any light fuel including lease gas.

http://www.capstoneturbine.com/company/valueofcapstone.asp

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Permalink Reply by ATLGator on March 31, 2014 at 3:16

Here's another article this morning from Bloomberg...

http://www.bloomberg.com/news/2014-03-30/record-natural-gas-need-ke...

 

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