badbernanke

How Much Natural Gas Remains in the USA?

NG reserves are always understated when looking only at proved reserves. Take one company that comes to mind, ATN (now merged with ATLS). Its proved reserves are in the neighborhood of 1 Tcf, but based on wells drilled and production from "unproved" Marcellus shale in Pennsylvania, the company believes that there is more than 9 Tcf of unproved NG eventually recoverable in a portion of its holdings.

Another way to look at the reserves is historical. As I recall, 25 years ago, we had 11 years of NG reserves remaining. Now, after 25 years of consumption, we still have 11 years of proved reserves.

People looking only at proved reserves thought we'd have run out of NG nearly two decades ago.

Will Windows 7 Resurrect IT Spending?

I will be a reluctant Win 7 user. When I "upgraded" my computers with 2 Vista 64 machines in early 2009, several "peripheral" devices refused to work due to no drivers -- the scanner on my HP multifunction refused to make the switch and I ended up having to buy a new multifunction. Dictation software was thankfully upgradeable, but no drivers for the hand held dictation devices (that worked with XP and 32 bit Vista) became electronic garbage because the dictation could no longer be downloaded.

Oddly enough, my HP multifunction's scanner does work under Ubuntu although the Brother multifunction I bought to replace the HP does not.

Anyone changing things that work for new OS technology has to be prepared for spending a lot more than a couple hundred bucks for the software.

Another Natural Gas Bull Sticks His Neck Out

I don't recall whether I read the earlier article, however if it mentioned the huge divergence between oil and NG prices as an indicator that NG had room to go up, then I did. My reaction then was "well, oil also has room to go down ". I bought puts on several oils and made some good money in a very short time.

I love NG, but it is a victim of its own success with shale drilling and a slowing economy. Unless there are big changes in domestic consumption, NG probably will remain oil's little brother for some time to come.

The Non-Stimulating Stimulus Bill

"The nation's long-term fiscal challenge is a matter of utmost concern. The federal government faces large and growing structural deficits due primarily to rising health care costs and known demographic trends. Simply put, the federal government is on an imprudent and unsustainable long-term fiscal path. Addressing this challenge will require a multipronged approach. Moreover, the longer that action is delayed, the greater the risk that the eventual changes will be disruptive and destabilizing."

Quoting the Bush Administration's Comptroller General in his report on the US financial statements in 2007.

Of course we will have huge deficits in the future. The $50+ trillion in unfunded obligations for federal medicare, medicaid, federal pensions and social security become due and payable. Those unfunded obligations -- which are not reported as part of the federal budget deficit as the obligations build (let ENRON try that trick) -- have been growing like topsy during the Bush administration.

Obama's attempt to rein in future healthcare costs is the first presidential action in the direction of addressing this fundamental imbalance that I can recall, and he's allegedly not a fiscal conservative.

The difference in "stimulus" for Democrats and Republicans was spend on programs and increase the deficit (Democrat) or cut taxes and increase the deficit (Republican). Both approaches were destined to have virtually the same effect on the federal fisc -- increase in the current federal budget deficit.

The Bull Case for EnCana

Useless blog with not a whit of analysis.

Even the Gas Crisis Needs a Culprit

Funny how basic economic theory kicks in when prices are high. All of a sudden alternative energy has the prospect of being cost-effective, possibly without giving away the farm on tax breaks like ethanol production.

And alternative energy has the prospect of converting demand for fossil fuels into demand for solar, wind and perhaps ocean tidal power. How is that a bad thing?

If I had to choose between paying the world's oil unfriendly robber barons (which are nations, not oil companies by the way) or paying domestic producers for energy, I'd take the domestic producer. That would arguably help US employment, cut trade deficits caused by oil prices and perhaps increase tax revenue from the profits which would inhere in the US -- right now, the profits are frequently either non-taxed foreign income or simply a transfer from US citizens to oil tyrannies.

Atlas Pipeline Holdings: Accelerated Growth in the Pipeline

As I understand the APL's releases, they will raise about $250 million from the offerings and the GP's contribution and then close a hedging position which will apparently increase cash flow from operations by about $250 million over the next 18 months. Even with increased distributions on new units and old units, APL should have additional positive cash flow of over $200 million over the next 18 months - the $250 million in new cash flow minus about $50 million in additional distributions.

It looks to me that what APL is really doing is getting an additional $200 million to use to build out its infrastructure in the Marcellus Shale play in Appalachia. A smart move since it has a contract to provide gas transmission to its affiliate, ATN, and ATN is growing its Appalachia production at double digit rates with its Marcellus drilling. RRC just announced a $175 million contract with Mark West to build pipelines for RRC's Marcellus properties .

The negative press from the hedging payoff is really due to the public's misunderstanding of hedging in oil and gas and goofy GAAP accounting which recognizes liabilities for hedges but does not match those liabilities with the increased cash flow which results from rising oil and gas prices. People hear "derivative losses" and panic, not understanding the whole financing mechanism in an environment where the hedge obligation is backed up by product and cash revenues that increases in value along with the hedge -- often in equal measure, but not recognized by GAAP.

Penn West Energy: More Questions Than Answers

Nice objective report. This raises may of the same issues that have concerned me about PWE. It does not read as a hatchet job, so I am a little surprised that people react so negatively and personally to a iteration of facts. However, that seems to often happen when someone has an investment they are "personally invested in" questioned. They take it as a personal affront to their own wisdom in choosing the investment rather than investigating the facts themselves.