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With LNG in Europe at $12 to $16 and prices in Asia even higher what makes anyone believe the approx. 2 to 1 imbalance btw world and US NG prices will continue indefinitely? Spot prices do not define the LT price... Nor do prices over the next two or three months. The fact that NG is at $7.30 now (HH) says nothing about prices in 2009, 10 and beyond.
Sep 07 12:15 pm
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All Comments by andydee »Unconventional Energy Still Attractive - UBS [View article]
While I'm no supporter of the "analysts" in the industry, Aubrey of CHK and Bob Simpson of XTO may not agree on Haynesville, but they do agree that U.S. NG prices will be in the range that UBS asserts, $9 to $12. I suggest that those two gentlemen know a good deal more about energy than the poster AEB...
$30K per acre sounds high now, but wasn't it only a few years ago that gasoline at $2/gal at the pump was unthinkable? The Haynesville wells, as most of the unconventional wells do, yield about 80% of the EUR in the first 18 months or so...so a driller will get his investment back quickly...thereafter these wells have lifetimes ranging from 10 years to 40 years.... Oil wells in Calif, abandoned, or sold it for chump change when oil sold at $10 barrel - just a few years ago, are now making good returns when oil is at $100 barrel, even when just dribbling oil. Who can predict what the price of NG will be in 2020? except that it will be much higher than it is now...
A good example for Mr B to contemplate...DNR and others, including ECA are returning to old Oil fields and making money using tertiary recovery...(Liquid CO2 pumped into old reservoirs). Garth, at DNR estimates 1Billion barrels of oil, net to DNR out of played-out fields along the Gulf Coast. All-in cost of a barrel of oil to DNR will be about $30 per barrel...definitely economic to the producer at current prices and even at $75/barrel. DNR does no hedging...
Why bring up DNR and tertiary recovery? Gas in place in Haynesville, Barnett, etc. is a lot higher than EURs...someone sometime will figure out how to make that rock give up more of the gas trapped in it...