Replies to This Discussion

Permalink Reply by The_Baron on August 20, 2009 at 4:07

The question I have is what is the actual capacity of storage?

For example, Aren't the #'s from Centerpoint just theoretical?

• ▶ Reply

Permalink Reply by Les Bamburg on August 20, 2009 at 8:21

Baron, yes and no. If a company has operated a storage field for some time, they will know their max capacity. The uncertainty in total storage capacity is related more to adding up all the individual storage fields and the accuracy of information available to the energy consultants.

• ▶ Reply

Permalink Reply by The_Baron on August 20, 2009 at 10:18

I don't know Les.

I have heard to many stories of the storage facility by Buistineau and how when it began to fill, nearby wells would see an upsurge in production, presumably from over spillage from storage. I bet that max number is pretty fuzzy...

• ▶ Reply

Permalink Reply by Dion Warr, CPL on August 21, 2009 at 1:43

Baron:

I agree. I worked on a due diligence project in a depleted reservoir gas storage facility a few years back in which the operators "suspected" that stored gas was communicating into other producing reservoirs. As I remember, the intent of the gas storage operator was to collect from the mineral owners as to that portion of the gas produced from the gas wells which appeared to have been sourced from stored gas (gas already reduced to possession).

One of the observations made and advanced by the storage facililty operators was that the production would unexpectedly surge above expected rates (according to standard decline rate data) during periods of injection into storage, and return to 'normal' rates during periods of withdrawal.

Needless to say, the mineral owners were none too happy about this.

• ▶ Reply

Permalink Reply by Catfish on August 21, 2009 at 1:54

If it flows out could also flow in?

• ▶ Reply

Permalink Reply by Dion Warr, CPL on August 21, 2009 at 2:42

Catfish:

Not to try and channel what the engineers were thinking, but it seemed like the gist of it was that once the pressure in the storage formation reached a certain point, the stored gas would escape the containment and began communicating into other reservoirs, but not below a certain 'baseline' pressure. I wasn't involved to the extent as to whether a mechanism was proposed for this occurrence. Much like Bistineau, there were wells in place which penetrated through the storage formation, but production variances were occurring in wells drilled above the storage formation as well, which would indicate something was going on besides (or perhaps in addition to) possible communication along the production wellbore(s) and casing.

At any rate, I believe that the facility was to be retired during the next few years. This would not be the case with Bistineau. One would think that the possibility of such could be verified by gas tracing.

• ▶ Reply

Permalink Reply by Mac Davis on August 21, 2009 at 2:48

Did they have any success forcing the nearby mineral interest owners to pay up?

• ▶ Reply

Permalink Reply by Henry on August 20, 2009 at 7:55

All this makes me glad I'm not being drilled this year!!!!

• ▶ Reply

Permalink Reply by Grillin' - MmmMmm on August 21, 2009 at 7:00

Les, I wish I could argue with you on that last paragraph, I really do! But you know what, we could very easily dip under $2 for a little while! As long as folks are hedged out forward and leases still have expirations approaching, we'll keep seeing these wells drilled. And as long as we keep drilling, we'll keep seeing prices in the toilet! Maybe a few folks could take one for the team and drill some vertical wells to hold leases and do a crappy job of completing the wells! Please??

• ▶ Reply

Permalink Reply by Mac Davis on August 20, 2009 at 10:12

CNBC is currently listing NATGAS as $2.95.

I just got a royalty payment. It wasn't a check it was a BILL!!! jk

Be REALLY careful if you play with UNG. Look at a chart of UNG vs. natgas.

Here's a free link.

http://stockcharts.com/charts/gallery.html?UNG:$NATGAS

Translation: UNG loses value relative to the cost of natgas over time. Buying UNG for anything other than a short term play is a bad idea. It's not for the "normal" long term investor looking to invest in natgas.

I was always irritated at airlines, trucking companies, etc. hedging. Hedging is going to lose money over time. The companies that looked so smart hedging in July 08 looked like fools in December. If the management of an airline can make money hedging jet fuel prices, they should change jobs and trade jet fuel futures or options for a living. If I buy an airline stock, I want my stock price to gain or fall based on the profitability of the airline. If I want to be hedged against fuel prices, I'll buy my own hedging in addition to the airline stock.

• ▶ Reply

Permalink Reply by sesport on August 20, 2009 at 13:08

Thanks everyone. Seems much is impacted by this extreme downward trend. Anyone have any idea what the recent historical low might be, say within the last 10 years? (I know, I know, I should do the research. :0) )

Mmmarkkk, thanks for bringing a "torch" to shed some light on this. lol

best

• ▶ Reply

Permalink Reply by Grillin' - MmmMmm on August 20, 2009 at 16:06

here's a link to historic monthly prices:

http://tonto.eia.doe.gov/dnav/ng/hist/n9190us3m.htm

Feb 2002 it was in the low $2's. Today's price is a 7 year low. Back in 1976 it was $0.56!! That's the earliest the EIA has data but it was lower before then!

• ▶ Reply

• ‹ Previous
• 1
• 2
• 3
• Next ›
• Page