scfranklin94

Six Reasons Natural Gas Is Better than Oil

1) Reserves deplete faster than oil - generally true; depends on the formation, some gas wells drilled in West Texas are still producing 45 years later. Shale wells deplete much faster than conventional wells, but then you get 8x+ initially than what you get with a conventional well.
2) Oil/NG ratio - please get off of this; if you can put NG in your car instead of gasoline, then we would have interchangeability, but until then, forget the friggin' ratio.
3) $4 dollar gas is uneconomical to develop - check out the whole curve, 2010 is at $6+. If you drill now, the well won't be completed until the fall and probably won't flow until November. Gee, maybe that explains why strip after calendar strip has been sold the last two weeks and the rig count went slightly up.
4) LNG is uneconomical - Trinidad & Tobago's cost of nat gas is 1.50/mcf or less and then it costs a dollar to get it here, they'll do fine. Qatar just sold 250 bcf to Sempra for 2010 to bring in at Cameron. LNG producers don't like to sell at such low prices, but LNG liquification facilities are a sunk cost and the cost of operation is relatively low, so it will eventually come here.
5) Politically more favorable than coal - you would think so, but then how come in the Waxman cap & trade bill coal generators get their emission credits for free and gas generators and industrial users of gas have to buy their credits at auction? In effect we are subsidizing coal at the expense of NG. Could it be that the Dems need coal-state votes to get their brain-damaged bill passed?
6) Supposedly this will happen in 2025, when the coal generators have to buy their emission credits at auction, like everyone else. Be prepared for Senators and Congressmen getting on the tube, howling how we're raising the cost of electricity for poor consumers and how we're legislating US jobs out of existence.

Other than #1, I don't think you have much of an argument.

Natural Gas: The Next Big Thing

All the talk of the Obama administration helping out NG usage is just that, a bunch of talk. The Waxman Cap and Trade bill gives the coal-fired generators free carbon emission allowances, while industrial users of NG have to buy the emission credits at auction; so in effect, we're subsidizing coal over natural gas.

I wish people would stop bringing up the oil to natural gas ratio; there's only a very small part of the country that can swap oil-fired generation for nat gas generation, and over 99% of cars can't use natural gas for fuel, so the fuels aren't interchangable.

If natural gas is so valuable, how come it trades in the $2.50 to $3.00 range out west? Could it be that we have too much supply; no it must be evil speculators forcing the price down!

Three Reasons to Be More Bullish on Natural Gas than on Oil

No need to get bullish on NG just yet; we'll probably hit the limits on storage by September, forcing massive shut-ins. Aubrey is dreaming if he thinks NG is going to be back to $9 by December. Most likely scenario is that gas declines to $2.50 by Sep/August and then that will be the time to buy. This coming winter will have record storage on hand, so even if it is as cold as this last one, prices probably won't rebound greatly until a year from now. If the winter of 2009-10 is a warm one, be prepared for an end-of-winter storage number of 2 Tcf or more, which will keep a lid on prices until 18 months from now.

So will NG prices go up in the long-term? Of course, but it might be a year to 18 months.

Natural Gas Price Outlook

Please note that while the rig count is down, the horizontal drilling in the more prolific plays, Haynesville, Fayetteville, and Marcellus shales is actually increasing. The Barrett shale has seen lower rig counts, but it hasn't fallen off like the Rockies. Therefore the percentage reduction in rig counts can't be applied at 1:1 ratio to anticipated drop off in new production.

Ending inventory in October is still predicted to be 4.2 to 4.4 Tcf. Note to self: there isn't that much gas storage in the US, so it doesn't matter if we have the winter from hell coming up, we aren't going to run out of NG in Nov09-Mar10. The recovery in NG stocks won't materialize until spring 2010 at the earliest.

Learn some real fundamentals and not some btu ratio to cl bs.

Natural Gas Prices Set To Surge - Canaccord

jjason, get real; if you think a commodity is overvalued, go produce it for less and make a killing. I guess the fall in crude from $147 to $113 is all do to evil speculators 'forcing' prices down...

As for NG prices to surge; Bigrock is right way too much gas is coming on in the next couple of years; natural gas is going to be unlinked from crude for the next decade unless 1) we start using NG as a transportation fuel 2) someone builds some gasification facilities to export LNG. If you don't believe me, review the latest exploration results from the Haynesville and Fayetteville shales; then consider that those wells break even at $4 to $5/MMBtu.