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Marc Klein

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  • Timing The Next Move In Coal [View article]
    Paulo,

    Thanks for the article. I have a question for you or anyone that follows coal inventories.

    It appears the EIA is projecting US Electric Power Sector Coal Stocks to max out at 195 Million tons sometime in March/April of this year. With inventories bottoming at 180 Million tons sometime this summer. Given that it appears that coal usage by utilities appears to be running approximately 20% higher year over year and production according to EIA is down 10.5% year over year. I would be surprised to find out this summer (given the 3-4 month lag in reporting coal inventories) that utility coal inventories are currently any higher than 170 and that by summer, given current natural gas/coal utilizations, that inventories in June will be any higher than 160 Million. In other words, is it possible that whereas last year we had record high coal inventories, we could soon be at 5 year lows in coal inventories. If so, this would seem to be extremely bullish for both coal and natural gas. Could someone please tell me what I am missing or how my very crude, back of the envelope analysis of coal inventories is wrong

    Thanks
    Marc
    Mar 26 09:04 PM | 3 Likes Like |Link to Comment
  • Stockpile Drawdown Signals Strong Coal Rebound [View article]
    Mark,

    Sorry, you are correct, your prediction for May monthly nat gas usage in power generation was 641.09 BCF based on weeklies. You showed this in a table in your article "The Impact Of A Looming Natural Gas Supply Problem" http://seekingalpha.co... on June 8. And you show the same number in chart form on June 4 in your article "Rebalancing On Natural Gas Continues" http://seekingalpha.co.... The 241 BCF increase in Nat Gas usage for power generation for May 2012 vs May 2011 was the largest monthly increase year to date. You said when the monthly came out, the data would show the switch had mostly disappeared.

    In fact, according to Robry825, Nat Gas usage for July 2012 ran 6.18 BCF per day higher than July 2011 with the vast majority of it due to switching and not weather related. Yes lower than May's record but still very impressive.

    http://bit.ly/NdUDVl

    The utilities hedge a large portion of their fuel costs so I believe the switch back from natural gas to coal will be a lot slower than most analysts predict. I would be shocked to see monthlies vs last year for the remainder of this year run lower than 3 BCF per day higher for power generation even at nat gas prices higher than $4. Just my 2 cents.

    Happy Investing!
    Marc
    Aug 3 12:02 AM | Likes Like |Link to Comment
  • Stockpile Drawdown Signals Strong Coal Rebound [View article]
    Mark,

    I early June you widely proclaimed that coal to natural gas switching was largely finished and had reversed. You claimed that when the May monthly figures came out that Nat Gas usage in power generation would be approximately 650 BCF. The number was 819 BCF. Care to give an explanation?

    Thanks
    Marc
    Aug 2 08:17 PM | 1 Like Like |Link to Comment
  • Monthly Natural Gas Consumptions Show No Sign Of Fuel Switch [View instapost]
    I like your chart Mark. Very interesting. If this year's May weather is similar to last year's, would a figure above 700 BCF invalidate your theory? Personally I am looking for May figure above 750 BCF conservatively. If you are correct, and this figure drops again in May, we should start seeing huge inventory builds starting this week. Unless supply really is dropping off a cliff.

    Mark, Do you, or anybody else for that matter, have any comment on Lippman Consulting's monthly dry shale gas production estimate for April 2012? According to the chart linked below, it appears this is their first estimate for a significant decline in dry shale gas production in over two years. While in the past, this chart has showed month over month declines in early winter 2010 and 2011, those production declines appeared to be weather related, ie. extreme cold weather temporarily shut down some production. If Lippman's estimates for May shale gas production show another decline, this could have a major impact on the market. Although we should see below estimate storage injections in the next few weekly storage reports, if in fact, shale gas production is in decline.

    This chart appears to show a month over month April decline in shale gas production of approximately 1.5 BCF/day. While vs. last year, shale gas production is still over 4 BCF/day higher. However, since we know that overall US nat gas production is approximately 2.5 BCF/day higher than last. Non-shale gas production is obviously still in decline, something nobody disputes really. If Lippman is in fact correct and shale gas production indeed is in decline, the impact on nat gas prices should be profound. I realize one data point does not a trend make, but thought I would point it out as I have been unable to find anyone talking about this figure.

    http://bit.ly/KhC81a

    PS. The CEO of Pioneer Natural Resources believes that there are only a couple hundred rigs actually drilling for dry gas. I realize most of these rigs are moving from dry gas to liquids rich plays. And that there is dry gas by-product with these liquids rich plays, however, when rigs are moving from drilling wells that are 90% + dry gas to 5-40% dry gas by-product, eventually there should be a big drop in nat gas production which I believe Lippman might be finally showing is occurring. Link to short article below.

    http://bloom.bg/IbGl9V
    May 14 04:35 PM | Likes Like |Link to Comment
  • Natural Gas Bears Now In Full Retreat [View article]
    Great Article Kenneth, Do you, or anybody else for that matter, have any comment on Lippman Consulting's monthly dry shale gas production estimate for April 2012? According to the chart linked below, it appears this is their first estimate for a significant decline in dry shale gas production in over two years. While in the past, this chart has showed month over month declines in early winter 2010 and 2011, those production declines appeared to be weather related, ie. extreme cold weather temporarily shut down some production. If Lippman's estimates for May shale gas production show another decline, this could have a major impact on the market. Although we should see below estimate storage injections in the next few weekly storage reports, if in fact, shale gas production is in decline.

    This chart appears to show a month over month April decline in shale gas production of approximately 1.5 BCF/day. While vs. last year, shale gas production is still over 4 BCF/day higher. However, since we know that overall US nat gas production is approximately 2.5 BCF/day higher than last. Non-shale gas production is obviously still in decline, something nobody disputes really. If Lippman is in fact correct and shale gas production indeed is in decline, the impact on nat gas prices should be profound. I realize one data point does not a trend make, but thought I would point it out as I have been unable to find anyone talking about this figure.

    http://bit.ly/KhC81a

    PS. The CEO of Pioneer Natural Resources believes that there are only a couple hundred rigs actually drilling for dry gas. I realize most of these rigs are moving from dry gas to liquids rich plays. And that there is dry gas by-product with these liquids rich plays, however, when rigs are moving from drilling wells that are 90% + dry gas to 5-40% dry gas by-product, eventually there should be a big drop in nat gas production which I believe Lippman might be finally showing is occurring. Link to short article below.

    http://bloom.bg/IbGl9V
    May 14 04:08 PM | Likes Like |Link to Comment
  • Natural Gas Storage Still On Sustainable Path [View article]
    Great article again Paulo! Do you have any comment on Lippman Consulting's monthly dry shale gas production estimate for April 2012. According to the chart linked below, it appears this is their first estimate for a significant decline in dry shale gas production in over two years. While in the past, this chart has showed month over month declines in early winter 2010 and 2011, those production declines appeared to be weather related, ie. extreme cold weather temporarily shut down some production. If Lippman's estimates for May shale gas production show another decline, this could have a major impact on the market. Although we should see below estimate storage injections in the next few weekly storage reports, if in fact, shale gas production is in decline.

    This chart appears to show a month over month April decline in shale gas production of approximately 1.5 BCF/day. While vs. last year, shale gas production is still over 4 BCF/day higher. However, since we know that overall US nat gas production is approximately 2.5 BCF/day higher than last. Non-shale gas production is obviously still in decline, something nobody disputes really. If Lippman is in fact correct and shale gas production indeed is in decline, the impact on nat gas prices should be profound. I realize one data point does not a trend make, but thought I would point it out as I have been unable to find anyone talking about this figure.

    http://bit.ly/KhC81a

    PS. The CEO of Pioneer Natural Resources believes that there are only a couple hundred rigs actually drilling for dry gas. Link to short article below.

    http://bloom.bg/IbGl9V
    May 14 04:00 PM | Likes Like |Link to Comment
  • Natural Gas Weekly Update: The Highlights [View article]
    Mark,

    If you fix your spreadsheet to show 0% for February 23, then your spreadsheet will show readings of 100+ BCF greater usage in power generation than it currently does for March and April, which means your spreadsheet is now showing considerable year over year growth in nat gas usage for electric power through April. March will actually be higher than February.

    That said, I believe the BENTEK weekly numbers are useless, to many weeks where each sector is negative and total is positive and vice versa. Week vs last year data MIGHT be a good rough estimate. Will wait for further confirmation in future releases.
    May 1 11:57 PM | Likes Like |Link to Comment
  • Continuing The Debate On The EIA Natural Gas Weekly Updates [View article]
    Mark,

    Check out Calpine's 1st quarter presentation. They are an independent power generation company with 95% of output from natural gas plants. 1st quarter year over year generation was up 52%. Utilization factor at record levels.
    May 1 03:43 AM | 1 Like Like |Link to Comment
  • EIA Data Continues To Be Supportive Of Natural Gas Thesis [View article]
    Paulo,

    Your projections for the next 6 months on supply, demand and storage injection are looking better by the day, congrats! I am sure you saw this but for other readers, here is some other data worth mentioning.

    Estimates for February based on week to week changes in nat gas usage for electric power, industry, and commercial/residential (per Mark Anthony spreadsheet) were 593, 588, 1,111 BCFs. Estimates based on week vs last year were 618, 582, and 1058 BCFs. (My calculations: vs. last year 28.25% growth for electric power, 0.1% growth Industry, 12.5% decline for residential/commercial.

    Actual numbers: 649 Electric Power, 588 Industry, 1059 Res/Com.

    Bottom line: For this one month, both week to week and week vs last year largely underestimated nat gas for power generation usage but vs last year was closer. For industry sector, week over week has a better estimate but vs last year was also within 2%. This number is less important to me because it is way less volatile than Electric power, Commercial or Residential sectors. For Res/Com, the year over year estimate of 1058 vs actual 1059 was near perfect. Week to week estimate (per mark Anthony) was off nearly 5%, 1111 estimate vs 1059 actual.

    Again this is only one month, draw your own conclusions.
    May 1 03:09 AM | 3 Likes Like |Link to Comment
  • EIA Weekly Natural Gas Updates Indicate No Coal To Gas Switch [View instapost]
    Mark,

    I am very excited for Monday's EIA release of February's monthly data and am very appreciative of you providing the above chart. I could find no errors in your chart showing us what the Bentek week over week data predicts for February monthly data. For february electricity generation, the versus last year BCF number should be approximately 618 (last year's 483BCF * 1.2825) vs your week over week number of 593. Of course I will be looking at all categories to see which method (vs last week, or vs last year) better explains what is happening in the natural gas market. Or whether the Bentek data is completely meaningless with regards to predicting EIA monthly data. Your chart will make that much easier for me decide, less work for me. By any chance do you know if the monthly EIA data is often revised? If so, are the revisions ever material?

    Thanks again.

    Marc
    Apr 28 03:10 PM | 1 Like Like |Link to Comment
  • EIA Weekly Natural Gas Updates Indicate No Coal To Gas Switch [View instapost]
    Mark, I appreciate the level of detail in the above charts and respect your insights. And I am looking forward to your analysis on the inaccuracies of the weekly supply and demand data provided by Bentek and released by the EIA. I have noticed them as well. In fact, I wonder if the data for the week ending 2/22/12 has a misprint. They show a 49% year over year increase in nat gas usage for power generation, but a weekly decline of 16.8%. I wonder if that is a misprint and supposed to be a weekly increase of 16.8%. Looking at all the weeklies for the past 4 months this would be more consistent with the data. It would also help explain why your chart of weekly natural gas demand and supply based on weekly EIA demand and supply data , is inconsistent with the weekly storage data. Example, according to your chart, for the week ended 3/14, there should have been a slight injection but EIA reported a 64 BCF withdrawal. All weeks thereafter seem to show a larger withdrawal than actually occurred. Perhaps you will touch on this in your analysis of errors in the Bentek data. Thanks again for your analysis and insights.
    Apr 27 10:25 PM | 1 Like Like |Link to Comment
  • EIA Weekly Natural Gas Updates Indicate No Coal To Gas Switch [View instapost]
    Total nat gas consumption is running just under 70 BCF/day. Nat gas consumption for power generation from last jan and december (last 2 months of data) were approximately 20 BCF/day. 7 BCF/day switch from coal to nat gas, IF TRUE, is a major deal. That's a 10% increase in total demand and a 35% increase in electric utility demand for power generation.
    Apr 27 10:01 PM | Likes Like |Link to Comment
  • Natural Gas Weekly Update: The Highlights [View article]
    Another excellent article Paulo. What are your thoughts on natural gas switching back to coal for electricity generation in a nat gas price spike situation? I belief it will be switched back very slowly as utilities can lock in prices near or below $3 for much of this year with hedges. And lock in prices near or below $3.50 through next summer. Southern company, the 4th largest utility, has stated that in 4q11 electric generation was 40% for coal 40% for nat gas and projects this year. in 2007, mix was 70% coal, 16% nat gas. The CEO quote from last conference call "We now project that our mix for the full year of 2012 will be 47% natural gas and only 35% coal." This is likely to mean that at least some and possibly a large majority of their switching from coal to natural gas has been hedged. Otherwise why make a full year projection on energy mix. With the greater efficiencies of nat gas plants it seems to me that any price under $3 for natural gas would be extremely competitive if not much cheaper than coal for base-load generation.
    Apr 27 07:20 PM | 1 Like Like |Link to Comment
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