Charles Petredis'  Instablog

The domestic natural gas industry has fallen on hard times due to a supply glut and a sharp fall in commodity prices over the course of the last year, but with last week’s latest news things are beginning to look up again.  T. Boone Pickens, the long time crude oil bull turned alternative energy maven, has begun working on legislation that is gathering very impressive bipartisan support.  The conveniently named NAT GAS Act (New Alternative Transportation to Give Americans Solutions) was introduced by Pickens along with Senate Majority Leader Harry Reid (D-NV), Senator Robert Menendez (D-NJ), and Senator Orrin Hatch (R-UT) in a letter to President Barack Obama on July 8th, 2009.  The group’s legislation provides a real fundamental shift in the way investors should analyze natural gas companies, especially those in the natural gas transportation industry such as Energtek, Inc. EGTK.PK.

Recently I have been beginning to think that Big Ben and the Fed have lost control of the back end of the yield curve, maybe forever.  There are no reason for investors to be confident in the U.S. Treasury markets when they know that prices are being artificially inflated by false demand.  Eventually rates will have to rise to clean out the economic and financial excesses that are still occurring even to this day.  I fully believe that the government is only adding to the problem, not helping to expedite its departure.

The oil services giant Schlumberger Ltd. has purchased Techsia SA, a small petrochemical computer analytic company.  This move could signal the beginning of the consolidation in the services sub-sector that analysts have been long predicting.  The company has just over 50 employees, and no financial terms were announced with the deal.  These types of small services firms have no doubt seen their value fall significantly during the global financial crisis and it is likley that if Schlumberger paid a large "premium" for the company it was still less than its value a year ago.

Chesapeake Energy, the United States largest natural gas producer has announce that it is looking into developing shales in Europe with Royal Dutch Shell as early as 2010.  The companies already have a deal in the United States at the famous Barnett Shale but this announcement marks potentially the first shale play to be developed outside of the United States which should bring a lot of supply onto the market and could help Europe with their natural gas importing problems concerning Russia.

Natural gas looks pretty cheap here at $3.52 on the front month contracts.  Supply is extremely abundant but I don't think it has benefited from the fall in the U.S. dollar that oil has since the top of the DXY.