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Chesapeake: When Gas Prices Will Recover

After carefully reading the CHK Conference call for Q3 '08, I came away satisfied that Chesapeake management has a handle on future developments whether or not, natural gas prices rise or fall. Considering that these comments were made in a highly uncertain economic climate Aubrey McClendon's team has hedged major percentages of 2009 and 2010 reserves at attractive prices. (75% in '09, 50% in'10)

Those hedges should be entirely sufficient to carry CHK profitably forward during the economic uncertainty going forward. Bottom line is the uncontrovertible fact that Aubrey McClendon has acquired very valuable undeveloped reserves and negotiated deals with companies that wanted a percentage of access to those properties. With the hefty cost involved in developing gas reserves I think it makes perfectly good business sense in sharing those costs while retaining half (or more) of the production when it does come on line.

The trick is "being firstest with the mostest", and when it comes to American unconventional natural gas reserves Chesapeake is at the top of their game. CHK and McClendon didn't become the top natural gas producer in the US by being stupid.

What's Oil's Future?

Compressed natural gas' future lies in an alliance between environmentalists, auto/truck manufacturers and the government.

If the Big 3 auto mfgrs receive the bail out money they need to stay afloat, the government and the environment forces must dictate the roll over to CNG powered vehicles as well as the mandated requirement that a national re-fueling infrastructure be implemented.

The sooner this alliance comes together the better for all Americans.
Utilizing OUR fuel; an abundant fuel and considerably cleaner burning (think about cooking with gasoline versus natural gas in your kitchen stove) will create millions of jobs and keep BILLIONS of dollars in our economy. This "roll over" will keep us rolling while the development of solar power is perfected---currently prohibitively expensive for widespread utilization nationally.

The first step is getting the re-fueling facilities in place and if those are built you can rest assured that the Big 3 will come---and quickly. They don't have much choice to do otherwise3

Increase of State-Controlled Resources Threatens U.S. Consumers

Could not agree more with this article.

To think (or not to think in their case) that "Big Oil" would drop everything and chase around the most dangerous and anti-American areas of the world ---especially after the disastrous 8 decades, 'er years, of Bush and Cheney-- to time and time again, sail off to those "forbidden" lands, develop their oil and gas and then promptly get told to "hit the road" (which they undoubtedly built) bogs the mind.

Take ExxonMobil, Shell and ConocoPhillips with offices in Dallas and Houston virtually ignoring the vast natural gas resources within a 200 mile radius of those cities to risk their share holders' money chasing after thug government resources in virtually inaccessible places 10,000 miles away. And if and when those resources are developed represent a prime nationalization project as soon as the oil and gas starts flowing. It's too absurd to even contemplate.

In fact though it just might not be coincidental that those "Big Oil" boys continue to perpetuate this world wide scheme. It gives them a ready explanation for high energy costs. They develop; the thugs expropriate and sell the crude by the boatload back to Big Oil's refineries who then pass the costs on to American consumers.

This absurdity can be ended. Demand that Congress push natural gas infrastructure build up. When Americans can either fill their cars in their own garages or up the street at the corner fuel station, that national debacle will be ended.

But relying on the Russians, the Venezuelans, OPEC and others with names we cannot even pronounce, much less spell to "provide" our transportation fuel will, and is, bankrupting this nation.

Natural gas is our way out of this trap and we need to take immediate advantage of it.

Why "Drill, Baby, Drill!" Does Not Translate Into Effective National Energy Policy

I own mineral rights in the Haynesville Shale play in East Texas.

So if there is a national reliance on natural gas by Americans for some, much, or virtually all of the nation's transportation needs, that increased demand will of course benefit me directly.

That said, I believe that any energy source that is American based will have a tremendously beneficial effect on our economy. Especially so if that primary energy source can be provided at a reduced cost to that of an increasingly less available source, ie, gasoline and diesel. Adding the significant benefits that natural gas brings to the environment should make it our number 1 transportation fuel of choice.

No matter how much additional oil is discovered, it is not going to be done cheaply so the massive capital costs involved will require that those costs be passed directly to the consumer. It's not a reach to look forward and see future pump prices at $5.00, $6.00 or more. Under the rosiest of scenarios, the OCS and ANWR exploraton might supply us with another 4 or 5 years' crude supplies at the present rates of consumption---that's 1500 to1800 days. What then? Can we have additional nuclear plants permitted and operational in this time frame? Hardly in this environmentally conscious atmosphere. 1000 MW power generating plants---under the best cases require 5 to 10 years' construction time without considering the permitting headaches involved. We can though, build up the re-fueling facilities that will support a compressed natural gas (CNG) transportation system in less that 5 years time if we embrace it on a national basis.

Boone Pickens said yesterday before the National Press Club that 10 strategically located re-fueling stations could enable a heavy truck to go coast to coast---3500 miles.

Its abundant, clean and 40 percent less expensive that gasoline but the thing that recommends it above all is the simple fact that it is 100 percent American. Keeping a significant portion of that annual $700 billion dollar cash flow out of OPEC's greedy hands and into American hands is the best aspect of it by far.