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Permalink Reply by Mister Sunday on April 21, 2021 at 8:29

You've been saying something along these lines for a while now, haven't you?

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Permalink Reply by Mister Sunday on April 21, 2021 at 8:31

Commented on the wrong post.

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Permalink Reply by Skip Peel - Mineral Consultant on April 21, 2021 at 8:47

That's okay.  If there is an "x" in the upper right corner of a reply box, you can click to delete a reply but it was be done in something like 15 minutes from posting.

Considering the demand destruction created by COVID, I think it's dicey to be making predictions on what happens in the near future.  I don't always agree with some of the articles I post but I think they are worth the read and to debate or disagree with.

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Permalink Reply by JHH on April 27, 2021 at 14:18

Thanks for the article.  I'm confused by the prediction that use of coal and renewables for generation of electric power will increase as the price of NG rises.  I was under the impression coal plants were shutting down and replaced with NG.  Maybe not as fast as I thought.

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Permalink Reply by Skip Peel - Mineral Consultant on April 27, 2021 at 14:27

Most of the retired coal generation was the oldest and least efficient of the plants.  There are still plenty of coal fired plants and in certain areas where natural gas is periodically more expensive than say the Gulf Coast hubs, fuel switching will take place.  Getting rid of all coal fired plants ASAP would be a big boon to NG.  That can't happen soon enough.

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Permalink Reply by Steve P on April 27, 2021 at 13:56

I read most of the EIA report, and didn't find it as depressing as the article posted presents.  Considering the Pandemic, I would think that things could be much worse.  And for us on the production side, the article pays only passing mention of the growing LNG export market.

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Permalink Reply by Skip Peel - Mineral Consultant on April 27, 2021 at 14:22

I didn't find the article title significantly depressing but then again I'm a Haynesville Shale guy and was looking for a decline in production of associated gas particularly out of the Permian Basin.  Besides the still somewhat modest price of a barrel of WTI crude, major Permian operating companies have announced plans to moderate their increase in post-pandemic production.  They have sworn up and down to Wall Street and the Private Equity sector that they won't repeat the mistakes of the past when over production drove prices down to levels where is was a burden to serve debt and still generate free cash flow.  If those companies follow through on prioritizing free cash, dividends and lowering of debt, we will not see the over supply of associated gas that tends to put a lid on Haynesville/Henry Hub pricing.  A little discipline will go a long way to making both commodity prices less volatile.

To be blunt, if Biden limits or does away with new leasing on federal lands, it will absolutely help to support the price of oil and natural gas.  Some will complain about higher gas prices at the pump but we've lived through $80 barrel oil and it didn't prove to be an economic disaster.  If there is another Boom followed by a Bust, the O&G industry can forget about support from the capital markets ever again.  This is basically their last chance to get in right.

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