Skip Olinger

Plenty of Natural Gas: Exploration and Production Companies Keep Increasing Oversupply

Well done article but I have a question for you and the 2 previous commenters.

As I understand it, NG demand has fallen significantly primarily due to a drop in industrial demand and utility demand. Supply has increased as new unconventional plays have gone into production. So producers, who cannot just shut off wells like a light switch, have started to store gas in hopes of higher prices down the road. Storage is becoming full. Once full wells may be forced to shut down. Pressure in the system will fall so even pipelines won't be making revenue as no gas will be moving. Voila, end of the world. Do I have this correct?

But wait, if you want to sell your gas at say $4.50 rather than $2.73 all you would have to do is sell a futures contract for Dec delivery. That is 3.5 months away! There must be plenty of producers that have sold their production forward for winter delivery and intend of delivering. And, if you want $5 all you have to do is sell for June '10. What am I missing here?? I would appreciate some help.

Also, the economy seems to be turning around a bit. That should start to increase industrial and utility demand. How do you see that playing out??

Lastly, how do you see the Pickens theory play out with conversion to NG use away from Petroleum. I suspect that is a ways off but some government car fleets are now being converted?

Thanks to all for your help

Is There Enough Natural Gas?

Buddy, you seem a bit short on facts yourself. Rather than waste space and reader time with your less than clever retorts, why don't you start writing intelligent, well reasoned articles. Like the good republican I am sure you are, you spend all of your time condemning people without offering alternatives. I suggest that you spend a few days writing an article supported with facts (maybe even include a cite from a professor or two) about why we should continue to remain dependent upon foreign oil, burn more coal, and increase CO2 emissions. Your comments are unhelpful, not intelligent and written only to improve your opinion about yourself.


On Apr 30 03:20 PM ArtfulDodger wrote:

> My Dear Fitzy:
>
> You wrote: “one thing we both can agree on is that i wouldn't get
> far convincing you.”
>
> You are looking at me through your own eyes. Take a break; don’t
> be so defeatist. It makes me think you could be mentally lazy. For
> you can certainly convince me—that is, if you present a proper argument
> with well-presented facts in a well-written and well-reasoned paper.
>
>
> But you don’t have to convince me. You have to convince literate
> people who’re used to taking advice from people who know how to present
> it properly. Although, as I noted, this most recent article is far
> above your previous ones, you’ve still not presented a proper argument
> for all your positions.
>
> Whoever edited this article for you, get them to continue helping
> you. If you did it yourself, keep working on your writing, and perhaps
> before we run out of oil, you’ll be an argumentative writer of the
> highest import.
>
> You see Fitzy I like people who are passionate about what they're
> doing and also honest. And on these two points—as best I can tell—you
> get an A+.
>
> And so, just as you've put it on yourself to save the whole US, all
> I want to do is help little, old you a tiny bit. And again, as I've
> noted, with the lofty goal that you have, you need lots of help.
>
>
> Indeed, leftists are very sensitive people and almost universally
> refuse to listen to anybody except people who present them with negatives.
> They want someone to agree with them or they immediately begin slandering
> such folks or grouping them with someone all leftists hold in total
> scorn, such as Rush and Bush.
>
> Do you really think you're going to get anywhere by bashing Bush?
> Or even Obama. So, leave out the personal pejoratives.
>
> I don’t like Big Oil either—not for the same reasons you don’t, but
> nonetheless, I don’t like them. But when you toss a shot in a paper
> against them, you’re only throwing meat to the eco-maniacs. No one
> else cares. So, leave out the industry slanders—no matter how sly
> they are.
>
> Moreover, you’re going to need both political parties to achieve
> your goal of turning America into a natural gas grid. So, leave out
> your politics.
>
> The way I see it (and others should comment in this vein), Fitz,
> you have three things to prove to move the nation in your direction:
> 1) that NG is the best way to go over all else; 2) that C02 is a
> serious pollutant; 3) that “peak oil” is real and the world is headed
> down that hill already.
>
> You can’t simply say that C02 is a dangerous pollutant, Fitz; you
> have to show that it is, for merely because you have it in your mind
> that it is, does not mean most of the rest of the nation does. <br/>
>
> And you can’t simply say, Professor X says C02 is deadly and that
> the planet can’t last much longer if we don’t control it. We’ve all
> heard those tales before. You have to show how C02 is detrimental,
> what it’s already done, and what it may do in the future. Show! Don’t
> tell!
>
> As far as arguing for NG, you did a good job toward that end in this
> paper, but I’d consider it a rough draft. I hope you’re not firing
> your articles out to members of Congress and the Senate, or other
> people who have readers filtering their mail. For as soon as they
> see the bad transition, paragraphs stacked with multiple subjects,
> the unsubstantiated claims, and your punctuation, they’re not going
> to send your papers upstairs to the boss. They're going to get tossed
> pretty quickly.
>
> I don’t mean to talk down to you Fitz, but just as I am not an engineer
> and would need your help in that area, you are not a writer—and that’s
> where you need help if you’re ever going to get anyone on your side
> powerful enough to help you.
>
> You do certainly write, but you are not a writer, especially of the
> type you need to be, say, on the order of Rachel Granby (SA editor),
> whose writing is perfect—to say the least about it. She’s an editor;
> perhaps she would look over your papers for you.
>
> Writing is a series of processes that literate humans use to produce
> a product that enables them to communicate with others. So then,
> punctuation, syntax, transition, grammar, spelling, sticking to a
> subject, and editing are all required to complete the writing process.
>
>
> Writing is an acquired craft, Fitzy. And you’ve not yet acquired
> it to the point that you need to so that you can save our great nation.
>
>
> Hey, it’s not too late, Fitzy. You’re an intelligent, passionate
> person. A little cynical—but you mean well. Loosen that stiff neck
> of yours a mite, humble yourself, and get to work.
>
> That’s my bit to help you, and I hope it does.
>
> The best to you and to your effort to change the nation for what
> you see as the better.
>
> If you stay passionate and honest, others will come along who're
> much much smarter than I am (and that doesn't take much!), and they'll
> be able to help you moreso than I.
>
> But you have to be ready with an excellent product to present to
> them.

Is There Enough Natural Gas?

What a pathetic post.


On Apr 27 10:30 AM Ferdinand E. Banks wrote:

> Hmm. I like to see this kind of work. Too many mediocrities working
> in energy for my taste. But even so I know a couple of things that
> bother me when reading this article. I'm thinking of 'FUELING HALF
> OF ALL US TRUCKS AND CARS WITH NATURAL GAS, AND REPLACING 50% OF
> COAL FIRED PLANTS WITH NATURAL GAS. 'That may sound good, and make
> sense from the point of view of chemistry, physics, biology, political
> science, witchcraft and gender studies, but from the point of view
> of energy economics - and the leading academic energy economist in
> the world, as I occasionally call myself - it is very very wrong.
>
>
> Then why don't I produce some numbers which show that it is wrong.
> Well, as a Canadian billionaire once said, we are living in the most
> dishonest period in history, and so I belong on the sidelines. But
> I will say that ANDY has the right idea: flow rates and possible
> flow rates tell a very different story from inventory values. And
> by the way Mr Nieder, Germany had some of the highest electric prices
> in Europe, and given their grotesque belief in wind I doubt whether
> it has decreased.

Is There Enough Natural Gas?

Very well done. Nothing like a big dose of algebra with my coffee.

You did not mention NG imports from Canada. We import not an insignificant amount now, I believe. We also import LNG. This would add life and availability to the equation.

Al Neider's comments were interesting. Are you going to investigate?

Natural Gas Companies Increasingly Important

Marc,
You are long on opinion and short on detail here. How much cash is APL getting from Williams to pay down their debt? Is not the goal to pay down debt to avoid covenant breech? I see no mention of that. How did you or your mentor come up with $400M for the sale of NOARK? What effect on Adj EBITDA will that sale have. NOARK is one of their few assets that generates revenue from fee or toll contracts so the sale further exposes the company to commodity risk. And, could you please enlighten us all as to why your favorite pick of all the NG transportation companies is APL? If you like transportation and distribution, why on Energy Transfer or Enterprise Products. They are bigger, not in financial peril. They make much more of their revenue from fee based contracts, not keepwell contracts. I have to be blunt here in the interest of trying to keep high quality analysis on SA; I don't care about your "feelings" about a company. I am interested in hard analysis as to why APL is now a deep value play with little downside risk and very large upside. I see nothing here that tells me how and when APL will raise sufficient capital to pay down debt to avoid default. It won't matter how much they earn if the bank defaults their loan. This is an interesting story so do some real analysis before you publish. There is no value in putting up a piece that tells readers to look at the company's powerpoint.

Your Oil Stocks Aren't Coming Back

You don't seem to address the fundamentals of peak oil or the ability of suppliers to bring production into balance with demand. This was not a well reasoned article and forgive me, but a good example of the worst side of SA.