Brahm

While Natural Gas Production Increases, Company Stock Prices May Not

Here are a few caviets to this excellent 'shale' story. Shale is not really a new territory, and many companies have been engaged in exploration/production from shale for more than a decade or two. It has recently become more attractive because alternative new NG supplies/discoveries involve high costs due to more difficult and deep terraine, especially in the Gulf of Mexico. So, it is always going to be a "competition" between the two alternatives as the older supplies from easier terrains are depleted. Shale exploration and devleopment for gas production involve high capital investments, production expenses, and relatively specialized manpower experienced resources which are not availablein great abundance. Lower prices for NG derived from shale will have a some floor which will be influenced by alternatives as well as the depletion rate ofNG from the old wells. Barring a serious slowdown in the economy, the depressed NG prices prevalent now may just be a six month or a year's episode. Perhaps, also Alaska may just become less and less attractive and iffy, due to pipeline costs and uncertaintieson the feasibility of financing the proposed pieplines contemplated.