Natural Gas Cheapest to Oil Since 1992 Signals Gain

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mancovaldez	Utilities Return To Natural Gas On Lower Price, Coal Concerns	#21	[-]
Member Posts: 10082 (06/25/09 22:38:58) Moderator Extraordinaire Reply Quote More My Recent Posts Message Me Connection Blocking Invite Ignore User's Posts	Utilities Return To Natural Gas On Lower Price, Coal Concerns Norm Alster On Thursday June 25, 2009, 7:11 pm EDT Natural gas power plants were all the rage back in the 1990s. They offered the promise of electricity generated at reasonable cost and with far less pollution than coal. But when gas prices began to climb at the turn of the century, natural gas was put on the back burner. Coal, long the workhorse fuel for electric generation, emerged once again as the first choice for utilities adding capacity. By 2002, there were plans to add 36,000 megawatts of coal-fired capacity within five years, according to the Energy Department's National Energy Technology Laboratory. But King Coal sits uneasy on its throne. Just 4,500 megawatts -- or 12% of that planned new coal capacity -- has been put in place, NETL said in an April report. Challenged by environmental opponents and mounting problems in financing, utilities have been dropping plans for coal plants faster than, well, hot coals. The upshot: Natural gas has once again emerged as a favored alternative. Earlier this year, Southern Montana Electric dropped plans to build a coal-fired plant. Instead, the utility will rely on a combination of natural gas and wind turbines for new capacity. Tim Gregori, general manager at Southern Montana Electric, blamed regulatory "uncertainties" over coal's future. Power company AES Corp. (NYSE:AES - News) also dropped plans for a coal-fired facility in Oklahoma. Speaking to investors in May, CEO Paul Hanrahan noted that energy security concerns were driving a shift to "indigenous fuels and renewables." At the same time, environmental concerns were driving shifts to "renewables and low-carbon sources." Both of those pushes favor natural gas. Art Holland, vice president of Pace, a Fairfax, Va.-based energy consulting firm, regularly consults with utility clients. He says interest in natural gas "has increased significantly with the decline in attraction of coal-fired generation." Coal's loss of appeal stems mainly from uncertainty over new regulation that would seek to curb greenhouse gas emissions. The consensus is that such regulations -- and their cost -- would fall most heavily on coal. Expensive Fix Coal's contribution to greenhouse gases is summed up in figures from DOE's Energy Information Administration. Electricity generation accounts for 40% of all U.S. carbon dioxide emissions. Coal produces 52% of U.S. electricity but 83% of the carbon dioxide produced by power plants. Natural gas produces 16% of the energy and 15% of the CO2. Technology for safely storing the carbon dioxide produced by coal plants would be costly and is still not fully tested. It also carries unknown safety risks, experts say. "The current debate on energy policy will by default make natural gas the path of least resistance for power generation," said Jeb Armstrong, an analyst at Calyon Securities. Meanwhile, expanded estimates of U.S. natural gas supplies have helped whittle away coal's chief advantage: price. New exploration and drilling technology have freed up vast gas reserves previously thought unrecoverable. The most recent estimates put U.S. natural gas reserves at a 100-year supply. This surfeit of supply, along with slowed recessionary demand, has helped to sharply lower gas prices in recent months. Coal is still cheaper, but the gap has narrowed. No More Coal Advanced Power North America, an independent developer of power plants, is currently working to develop gas-fired plants in New York and Massachusetts. With many older plants, New England and the rest of the Northeast are fertile ground for new generating facilities. But proposals for coal plants have been met with a frosty reception. "It would be impossible to develop a coal-based plant in Massachusetts," said Tom Spang, president of Advanced Power North America. Natural gas plants are more acceptable. "Natural gas is the cleanest fossil fuel there is," Spang said. In addition to halving carbon dioxide emissions, natural gas also slashes by "well over 90%" emissions of sulfur dioxide and nitrous oxide, Spang said. Natural gas also has appeal when paired with renewable sources such as solar and wind. For all the attention they receive, solar and wind are still limited to low single-digit market share in electric generation. Though technical advances and government support have brought prices down, they still remain comparatively costly. Another problem: The sun and wind only shine and blow some of the time. So a utility must be able to complement such stop-and-go power with a steadier source. Natural gas is ideal because it's "good at ramping up and down," said Spang. This is one advantage over nuclear power, for example, which cannot be readily turned on and off. Natural gas plants are also cheaper to build than nuclear or coal plants, Spang says. So utilities recoup their investment faster. The risk with natural gas is that its prices are volatile. Burned before by a sudden rise in gas prices, many utilities are showing caution in switching shelved coal projects to natural gas. And they are mostly tight-lipped about their plans. Little wonder. A massive announced rush to natural gas could trigger a new wave of price hikes, dimming some of the fuel's appeal.
mancovaldez	Natural Gas Trade Challenged by Commodity Focus Shift	#22	[-]
Member Posts: 10082 (06/25/09 22:41:56) Moderator Extraordinaire Reply Quote More My Recent Posts Message Me Connection Blocking Invite Ignore User's Posts	Natural Gas Trade Challenged by Commodity Focus Shift by G. Allen Brooks Parks Paton Hoepfl & Brown 6/25/2009 URL: http://www.rigzone.com/news/article.asp?a_id=77644 In recent weeks, Wall Street has been shifting its energy focus from crude oil to natural gas as the price of the latter has become historically cheap. The first signs of global economic recovery spurred investors to jump on the energy and materials stocks. The logic was that any increase in economic activity would require an increase in demand for industrial-related commodities and energy and their prices would rise. As we showed in our last Musings issue, industrialized commodities have been leading the recent rally in prices. The greatest price laggard of the 14 commodities we follow was natural gas, which through the end of May was down 44.3%. The heat content ratio (British thermal units) between a barrel of crude oil and a thousand cubic feet (Mcf) of natural gas is 5.6-to-1. For ease of analysis, most energy pros and investors use a 6-to-1 ratio to translate volumes of oil or gas into the comparable fuel for purposes of estimating reserve values. This heat content ratio has seldom been achieved price wise in the marketplace as many factors interrupt the straight heat value proposition. For example, natural gas must move through a pipeline from its production source to where it is burned. The lack of adequate pipeline capacity or the absence pipelines to consuming areas can limit market opportunities for natural gas and depress the relative price comparison. Other factors that can alter the heat-content price ratio include the lack of storage for competing fuels such as petroleum or coal; environmental restrictions on the burning of dirtier fuels; and concern about the availability and price of future supplies. All of these issues have at one time or another disrupted the pricing ratio from more closely matching the physical value of competing fuels. Over a long history of gas and oil price competition in this country, the average ratio has been 9.3 times - meaning that crude oil prices were slightly more than nine times the price for natural gas. That historical norm is shown in the chart of the ratio of the wellhead price for natural gas compared to the first price paid for oil by refiners during the period from 1976 to May of this year based on monthly price data. What the chart shows is that natural gas is almost as cheap compared to crude oil as it has ever been in the past 33 years with the exception of the time of the first Gulf War and during the oil price explosion in response to the 1979 Iranian revolution, the holding of American hostages and the withdrawal of oil supplies from the world market. If one goes back to the mid 1970s, oil was more valuable because natural gas was under significant use restrictions. Those restrictions followed the supply crisis precipitated by earlier federal government limitations on the price of gas that caused companies to stop seeking supplies for the interstate natural gas market. Today, natural gas is cheaper than it was in the 1980s and 1990s when supplies were plentiful and demand was restricted. Those years saw natural gas prices in the $1.50-$2.50 per Mcf range when oil sold somewhere in the mid-teen or mid-twenty dollars per barrel, or about a 10-times ratio. Since January 1994 to now, the average price ratio of crude oil to natural gas is 8.5 times. Today, natural gas is selling in the $3.75-$4.00 per Mcf range while oil trades for about $70, making the resulting price ratio closer to 15 -18 times, or nearly twice the 15-year average. While the current ratio is calculated by comparing the futures prices for crude oil and natural gas, they do not totally reflect the economic realities of oil and gas as in the longterm historical comparison reflected in Exhibit 5. Why is natural gas priced so cheaply in today's energy market? One has to conclude it is all about supply and demand. The imbalance between the two price determinants is behind the move to "Buy natural gas and sell crude oil" trade recommendations that started emanating from Wall Street brokers and commodity traders in the past few weeks. Part of the rationale for the trade was the belief that natural gas supplies would begin to decline as the downturn in the rig count curtails the petroleum industry's drilling as many new gas wells, especially since natural gas prices are so depressed compared to their levels of last year. This means that less new gas should come into the market, slowing the supply growth until it eventually declines leading to higher gas prices. A chart on natural gas industry economics prepared by analysts at Bernstein Research tends to support the view that the rig downturn will lead to cutback in new gas production. As they show, spot natural gas prices have fallen below their estimate for cash costs, and well below their estimate of the marginal cost to find new gas supplies. In their analysis, there have only been a few periods when natural gas prices rose to levels that destroyed demand - and almost all of those times were during periods of conflict or natural disasters. On the other hand, for almost the entire ten-year span from 1993 to 2003, natural gas spot prices hung close to the estimated cash cost for creating new supplies. The chart helps demonstrate why it was so hard to be in the exploration and development business during the 1990s. The global recession and credit crisis along with the deteriorating economics of natural gas exploration and development in the face of a continuing rise in gas supplies has combined to send the U.S. rig count into a depression. Since the industry peak in late August 2008, the total rig count has fallen by 1,155 rigs (as of June 12th) for a decline of 57%. Rigs dedicated to natural gas drilling have fallen by a similar percentage amount or by 921 rigs in the period. The share of the total working rigs drilling for natural gas has fallen slightly to 78.2% from 79.1% at the peak. This would certainly suggest that operators have not been overly dissuaded by low gas prices to cut back by a greater amount their gas-oriented drilling activity. In fact, the data for the types of drilling done since the peak in late August 2008 shows that vertical rigs drilling have fallen by 67% from 1,017 to 331. At the same time, horizontal rigs, mostly associated with drilling the prolific natural gas shale formations in this country, are down only 39% from 626 rigs to 381 rigs while directional rigs are down 58% to 164 from 388 rigs. Based on the expectation that the prolific natural gas shale formation wells experience declines of 60% - 70% from initial production by the end of their first year of operation, the slowdown in complex drilling (horizontal and directional wells) suggests that by 2010 the U.S. should experience a decline in natural gas production. That would be a welcome development for natural gas producers who are struggling with low gas prices due to rising production, demand destruction due to the recession, and growing supplies of liquefied natural gas (LNG). Since early 1999, the U.S. gas rig count was about 400 and daily natural gas production was around 63 billion cubic feet per day (Bcf/d). With the exception of the industry recession of 2001-2002, the gas rig count marched steadily higher reaching about 1,600 at the recent 2008 peak. The four-fold increase in the rig count has been only able to grow daily gas production by roughly 10 Bcf/d, or about 16%. But virtually all the production growth came in the period since 2007 as the technical success of the various gas shale plays around the country brought significant new production. This is the challenge the domestic gas industry faces - can gas production growth be choked off without destroying gas prices in the interim and setting up the country for a new price spike? While a drop in drilling and eventually a decline in natural gas production, the most important variable in the equation is the economy. If the U.S. economy experiences a recovery in both the housing and automotive industries, then the gas industry should be able to reach equilibrium sooner than many expect suggesting the natural gas trade could be very profitable. On the other hand, a weak economic recovery could doom the domestic natural gas and oil service industries to an extended, challenging and less profitable environment.
mancovaldez	Capitalizing on Cheap Natural Gas	#23	[-]
Member Posts: 10082 (06/27/09 00:18:51) Moderator Extraordinaire Reply Quote More My Recent Posts Message Me Connection Blocking Invite Ignore User's Posts	Capitalizing on Cheap Natural Gas By Aaron Pressman On Friday June 26, 2009, 9:28 am EDT While the price of a barrel of oil has doubled since early March, to about $68, natural gas prices are languishing at about $4 per million BTUs. In markets where traders make bets based on those standard measures of barrels and BTUs, the 18-to-1 price ratio for oil is about double the typical ratio of 8 or 9 to 1. That has some speculators betting natural gas prices will spike. They're piling into the simplest form of a pure play on gas prices, the U.S. Natural Gas Exchange-Traded Fund. Assets in the fund, which invests mainly in gas futures contracts, have gone from less than $700 million in February to more than $4 billion in June. The bet hasn't paid off yet -- the fund is down 38% in 2009, owing to weak natural gas prices as well as a quirk in the futures market that cuts into its return every month when it rolls over contracts. Despite the historically extreme price ratio, those who watch the market closely say a rapid turnaround in price is far from a sure thing. Soaring production combined with declining demand from power plants, factories, and other industrial users has left storage facilities with near-record levels of natural gas in inventories. "It's just an ugly outlook near term because of the economy," says Jay Saunders, co-manager of the Jennison Natural Resources Fund. The amount of gas in storage as of June 12 was 23% higher than average for this time of year, according to the U.S. Energy Information Administration. And levels are just 2% below the all-time high ever stored. Conditions could change rapidly if broad swaths of the U.S. have a heat wave, forcing more gas-fired power plants into action. A hurricane in the Gulf of Mexico that knocked gas production rigs offline would also do the trick. "Weather can have a huge impact on price," says Evan Smith, co-manager of the U.S. Global Investors Global Resources Fund (NASDAQ:PSPFX - News). "You can't easily move natural gas in from outside the U.S. like you can with oil." With prices likely to remain volatile for the next few months, fund managers say the smart play is in companies positioned to benefit from natural gas trends over the long haul. The Obama Administration's tighter environmental rules are likely to favor cleaner-burning natural gas plants over coal-fired facilities. Couple that with an eventual economic recovery, and long-term demand for gas should be healthy. Shares of natural gas developer Southwestern Energy (NYSE:SWN - News) are up 44% this year, but Smith says they could rise much more over the next few years, thanks to the company's extensive gas reserves that can be tapped at low cost. A riskier play is oil and gas producer Quicksilver Resources (NYSE:KWK - News). Last year investors feared its debt load would cause problems, but fresh capital from venture partners should ease concerns, Smith says. Big gains in natural gas stocks this year make Edward Maran, co-manager of the Thornburg Value Fund, nervous. He favors more diversified plays, such as Marathon Oil (NYSE:MRO - News) and Apache (apa.), which would benefit from higher natural gas prices. Plus, they are a better value, he says. Jennison's Saunders agrees that it's not the time to buy natural gas producers. He expects the stocks to fall in the second half and not recover until 2010. After a price drop, his top picks include XTO Energy (NYSE:XTO - News) and Range Resources (NYSE:RRC - News). Even if prices rise, gains on the Natural Gas ETF will likely lag. It owns a huge slug of futures contracts on gas that expire every month and must be rolled over into the next month's contract. Since gas prices are higher on contracts for future months than the current rate, it loses money each month when it rolls contracts forward.
mancovaldez	ExxonMobil's Weapons of Gas Destruction	#24	[-]
Member Posts: 10082 (06/27/09 00:49:33) Moderator Extraordinaire Reply Quote More My Recent Posts Message Me Connection Blocking Invite Ignore User's Posts	ExxonMobil's Weapons of Gas Destruction by Liam Denning Dow Jones Newswires 6/26/2009 NEW YORK (THE WALL STREET JOURNAL via Dow Jones Newswires), Jun. 26, 2009 ExxonMobil has a loaded gun pointed at the U.S. natural-gas market -- and it isn't the only one. The ammunition is liquefied natural gas. Exxon is scheduled to start up another three LNG projects in Qatar this year. They will produce more than three billion cubic feet a day of natural gas and freeze it for transportation. Europe and Asia are potential markets. But the U.S. could be a magnet for LNG cargoes, despite not really needing it, a paradox that spells low prices. LNG is joining up the world's hitherto largely regional natural-gas markets just as demand is faltering. Declining natural-gas production in countries such as the U.S. and U.K., and rising energy prices, prompted LNG production and receiving terminals to sprout on coastlines around the world. Some 28% of internationally traded natural gas was in the form of LNG in 2008, according to data from BP PLC. Two things have turned this scenario on its head. One is recession. The other is the development of unconventional natural-gas resources in the U.S., leaving it oversupplied for now. Several Wall Street analysts expect inventories to reach the maximum capacity of about 3.9 trillion cubic feet later this year. So why would anyone ship LNG to the U.S.? In part, it's simple economics. Many projects were sanctioned and financed when lower natural-gas prices prevailed. In Exxon's case, valuable liquids also produced in its Qatari projects take the market break-even price of the natural gas itself "towards zero," says Deutsche Bank analyst Paul Sankey. Factoring in processing and shipping costs, that gas can be landed in the U.S. for less than $2 per million British thermal units, reckons Noel Tomnay, head of global gas at Wood Mackenzie. The current Nymex price is about $4. Futures prices for this winter are closer to $6 per million BTUs. Competing markets also look oversupplied. Wood Mackenzie estimates annual demand in Asia east of India will rise by 1.3 trillion cubic feet by 2015. New projects targeting the region and close to final investment decisions amount to more than two trillion cubic feet of capacity. In Europe, the prevalence of long-term pipeline contracts limits the size of the market up for grabs. Wood Mackenzie estimates about 4.9 trillion cubic feet of discretionary piped and liquefied natural gas a year will compete for a market half that size over the next three years. The U.S., with its large, liquid natural-gas market will be a natural destination for this surplus LNG. As a cap on prices, this effect of globalization in the natural-gas market is great news for customers. In a buyer's market, though, higher-cost sellers suffer. A big increase in low-cost LNG supply would displace some U.S. natural-gas production. The average U.S. field requires a Nymex natural-gas price of $7.79 per million BTUs to earn a 10% return on capital, according to Jonathan Wolff at Credit Suisse. Yet, as Mr. Wolff points out, natural-gas drillers' capital expenditures are still outpacing cash flow, as they have since 2006. The number of operating natural-gas rigs actually rose last week after many months of declining. Increasing globalization means a bigger range of factors affect U.S. natural gas and the fortunes of its producers. An extended spat between Russia and Ukraine this past winter, for example, would help draw more LNG cargoes toward Europe. Barring this, prices and drillers will likely remain under pressure. A question haunting the sector is why majors like Exxon haven't rushed in to scoop up distressed companies sitting on large U.S. natural-gas reserves. The answer may be that, with more LNG pointed at already weak markets, they can afford to take time, and take aim. Copyright (c) 2009 Dow Jones & Company, Inc.
patgarrett666	Natural gas demand seen falling in ’09 – IEA	#25	[-]
Member Posts: 10880 (06/29/09 10:49:38) Reply Quote More My Recent Posts Message Me Connection Blocking Invite Ignore User's Posts	Natural gas demand seen falling in '09 - IEA By: Creamer Media Reporter 29th June 2009 Updated 1 hour 38 minutes ago Natural gas demand is likely to fall for the first time in 50-years in 2009, while some 60-billion cubic metres of liquid natural gas (LNG) capacity were planned to come online this year, the International Energy Association (IEA) said on Monday. The IEA, which released the 'The Natural Gas Market Review 2009' and 'Medium-Term Oil Market Report 2009', stated that the natural gas sector had moved from a "tight" supply and demand balance with high gas prices to an easing one with plummeting prices. Demand from the Organisation of Economic Cooperation and Development (OECD) increased by 1% in 2008, but fell by 4% during the first quarter of 2009 and was expected to further decline through the year. The agency said that the combination of weak demand and lower prices could undermine future investments. Despite the expected relief on engineering, procurement and construction costs, project sponsors face both financing problems and increasing uncertainty about when and at what pace the economy, and therefore gas demand, would recover. "If investments in production and supply infrastructure are delayed, there is a risk in the medium-term of tightening markets when demand recovers," the IEA stated. It noted that liquefaction capacity would see an unprecedented growth of 50% between 2009 and 2013, but stated that there would be a dearth of new capacity in the period after 2013 unless new projects were approved in 2009/10. The world's largest producer, Russia, faced considerable challenges, both technical and financial, already leading to project delays, the IEA said. The severe gas disruption in Europe at the beginning of 2009, following a dispute between Russia and Ukraine, highlighted the importance of diversified suppliers and supply routes, it added. "Critical improvements need to be made in developing cross-border interconnections and market functioning," said IEA executive director Nobuo Tanaka. He noted that the global oil and gas sector faced "enormous uncertainty". Tanaka said that two years of global oil demand contraction in 2008 and 2009 reflected the worst economic recession in over 50 years. "Oil prices are around half the level seen last year in July, when they peaked at $147, even though they have strengthened again recently, partly owing to a perception that economic recovery may be just around the corner." Tanaka warned that if oil prices increased too rapidly it could damage any such recovery. "Both markets [oil and gas] face enormous uncertainty surrounding the timing, pace and extent of any economic rebound, which affects all prognoses for oil and gas market fundamentals over the next five years," he said. For the oil sector, the 'Medium-Term Oil Market Report 2009' deals with this uncertainty through divergent scenarios showing the risk of a rapidly tightening oil market from 2012 onwards on the one hand, counterbalanced by another scenario which shows the Organisation of Petroleum Exporting Countries (Opec) spare capacity remaining around a more comfortable six-million barrels a day for the entire outlook period. "Whether we end up facing a supply crunch again by mid-decade, or with a more comfortable buffer of supply flexibility, depends largely on the pace of economic recovery and government action on efficiency," said Tanaka. Oil demand is seen to grow at between 0,4% and 1,4% a year after 2009, depending on the pace of global economic recovery and mid-term gross domestic product trend growth levels. The higher growth scenario results in 2014 demand of 89-million barrels a day, which was four-million barrels a day above the lower growth case. The IEA stated that for either scenario, however, demand contraction so far in 2008/9, plus early signs of structural shifts result in projections at least three-million tons a year lower for the outlook period than those generated last December. The IEA stated that it might be too early to cite a definitive structural downshift in oil use, but said that events such as General Motors and Chrysler filing for bankruptcy protection in the US, and further rationalisation affecting transport and power generation fuel use provided some hints that it would occur. However some key trends persist, with Asia and the Middle East generating the bulk of demand growth and non-OECD demand potentially eclipsing that within the OECD by 2014. Oil supply capacity would grow by four-million barrels a day between 2008 and 2014, which was around 1,5-million barrels a day less than in the previous outlook a year ago. However, the bulk of this growth comes from Opec crude capacity, Opec gas liquids and global biofuels. Spending curbs and endemic new project slippage see total non-Opec supply levelling off at between 50-million barrels a day and 51-million barrels a day during the outlook period. The IEA said that above ground constraints, not resource limitations, underpinned this sluggish performance. Supply could be lower still were upstream spending curbs to extend beyond 2009. "Yet, producer and consumer governments can also influence the path that oil markets take," Tanaka said. "A level investment playing field would help ensure the development of sufficient supplies. Consumer governments can also position fuel diversity, energy efficiency and a lower carbon future at the forefront of attempts to kick-start economic recovery. A return to razor-thin crude oil spare capacity and resultant price volatility are in the interests of neither producers nor consumers." http://www.engineeringnews.co.za/article/natural-gas-demand-seen-falling-in-09-iea-2009-06-29
MickyScars	Natural Gas Falls on Adequate Supply, Weak Industrial Demand	#26	[-]
Member Posts: 10520 (07/01/09 02:14:58) Reply Quote More My Recent Posts Message Me Connection Blocking Invite Ignore User's Posts	Natural Gas Falls on Adequate Supply, Weak Industrial Demand By Mario Parker http://www.bloomberg.com/apps/news?pid=email_en&sid=aeV6LYYr5I_4 June 30 (Bloomberg) -- Natural gas fell in New York a second day on skepticism the economy will recover fast enough to soak up excess supply. The International Energy Agency yesterday said U.S. gas production expanded 4 percent in the "early months" of this year. U.S. stockpiles are 22 percent above the five-year average for this time of year, according to the Energy Department. "Right now you don't have very much demand," said Michael Rose, director of trading at Angus Jackson Inc. in Fort Lauderdale, Florida. "You're very well supplied." Natural gas for August delivery fell 10.9 cents, or 2.8 percent, to settle at $3.835 per million British thermal units at 3:19 p.m. on the New York Mercantile Exchange. Gas is down 72 percent from a 2008 high of $13.694 per million Btu reached on July 2. Inventories of natural gas rose to 2.651 trillion cubic feet in the week ended June 19, the Energy Department said on June 25. The department is scheduled to release its inventory report for last week on July 2. Stockpiles may reach a record before demand picks up with colder weather. The high to start the heating season, when demand outstrips production, is 3.545 trillion cubic feet reached on Nov. 2, 2007. 'Pretty Remote' "In order to cut that down it would take many, many weeks of hot weather, and not just in the South, but across the country," or multiple hurricanes, said Martin King, an analyst at Calgary-based brokerage FirstEnergy Capital Corp. "The odds of that happening are pretty remote." Higher temperatures lift demand for power from gas-fired plants to run air conditioners. Hurricanes that enter the Gulf of Mexico can disrupt production from offshore gas platforms. The hurricane season started June 1 and ends Nov. 30. "Demand shows few signs of significant growth," Michael Fitzpatrick, a vice president for energy at MF Global Ltd. in New York, said in a note to clients. "Now that the heat has passed and storms remain disorganized, the glaringly weak fundamentals confront market participants." Total gas use in the U.S. is forecast to fall 2.2 percent this year from 2008, the department said June 9 in its monthly Short-Term Energy Outlook. Power generation accounts for 29 percent of U.S. gas consumption. "Demand is poor, storage is full and it's injection season, and the market will hinge upon major weather events like extended or sustained heat waves and tropical storm activity," Peter Beutel, president of Cameron Hanover Inc., an energy consulting company in New Canaan, Connecticut, said in a report. Normal to below-normal temperatures are probable for much of the U.S., except parts of Texas and Louisiana, through July 9, according to forecaster MDA Federal Inc.'s EarthSat Weather. Mild weather in the Northeast and Midwest has stifled demand for natural gas.
patgarrett666	What's in Store for the U.S. Natural Gas Fund?	#27	[-]
Member Posts: 10880 (07/01/09 07:53:09) Reply Quote More My Recent Posts Message Me Connection Blocking Invite Ignore User's Posts	What's in Store for the U.S. Natural Gas Fund? by: Charles Morand July 01, 2009 \| about: UNG Natural gas is the one commodity that has mostly resisted the rally ushered in some three months ago by a growing consensus that the worst may be over for the economy. A number of reasons have been put forward to explain this, including record storage levels and a growing supply base being unlocked through shale gas production in North America. Yet natural gas's future looks bright: [a] it burns a lot cleaner than coal, making it a superior alternative to meet for base- and peakload power requirements in a carbon-constrained world; [b] it is receiving growing attention as bridge fuel between gasoline-powered internal combustion engines and electric vehicles; [c] there is ample supply of it in the U.S. and Canada, making it popular with the energy independence crowd. The near-term picture, however, is bleak... and it could be about to get bleaker. According to analysts at Citigroup Global Markets, trading activity at the US Natural Gas Fund (UNG) may be 'artificially' propping the front-month NYMEX contract. The storage situation is apparently bleak enough to warrant yet lower prices, begging the question: when, if at all, will the chickens come home to roost? Although the combination of a bright future and depressed prices make natural gas - through UNG - an interesting investment idea for light-green alt energy investors with a time horizon beyond 12 months, there could be further price declines on the way. Right now may yet be a little early to pull the long trigger... DISCLOSURE: None http://seekingalpha.com/article/146316-what-s-in-store-for-the-u-s-natural-gas-fund
mancovaldez	Capitalizing on Cheap Natural Gas	#28	[-]
Member Posts: 10082 (07/01/09 22:38:34) Moderator Extraordinaire Reply Quote More My Recent Posts Message Me Connection Blocking Invite Ignore User's Posts	Capitalizing on Cheap Natural Gas By Aaron Pressman On Wednesday July 1, 2009, 8:08 am EDT While the price of a barrel of oil has doubled since early March, to about $68, natural gas prices are languishing at about $4 per million BTUs. In markets where traders make bets based on those standard measures of barrels and BTUs, the 18-to-1 price ratio for oil is about double the typical ratio of 8 or 9 to 1. That has some speculators betting natural gas prices will spike. They're piling into the simplest form of a pure play on gas prices, the U.S. Natural Gas Exchange-Traded Fund. Assets in the fund, which invests mainly in gas futures contracts, have gone from less than $700 million in February to more than $4 billion in June. The bet hasn't paid off yet -- the fund is down 38% in 2009, owing to weak natural gas prices as well as a quirk in the futures market that cuts into its return every month when it rolls over contracts. Despite the historically extreme price ratio, those who watch the market closely say a rapid turnaround in price is far from a sure thing. Soaring production combined with declining demand from power plants, factories, and other industrial users has left storage facilities with near-record levels of natural gas in inventories. "It's just an ugly outlook near term because of the economy," says Jay Saunders, co-manager of the Jennison Natural Resources Fund. The amount of gas in storage as of June 12 was 23% higher than average for this time of year, according to the U.S. Energy Information Administration. And levels are just 2% below the all-time high ever stored. Conditions could change rapidly if broad swaths of the U.S. have a heat wave, forcing more gas-fired power plants into action. A hurricane in the Gulf of Mexico that knocked gas production rigs offline would also do the trick. "Weather can have a huge impact on price," says Evan Smith, co-manager of the U.S. Global Investors Global Resources Fund (NASDAQ:PSPFX - News). "You can't easily move natural gas in from outside the U.S. like you can with oil." With prices likely to remain volatile for the next few months, fund managers say the smart play is in companies positioned to benefit from natural gas trends over the long haul. The Obama Administration's tighter environmental rules are likely to favor cleaner-burning natural gas plants over coal-fired facilities. Couple that with an eventual economic recovery, and long-term demand for gas should be healthy. Shares of natural gas developer Southwestern Energy (NYSE:SWN - News) are up 44% this year, but Smith says they could rise much more over the next few years, thanks to the company's extensive gas reserves that can be tapped at low cost. A riskier play is oil and gas producer Quicksilver Resources (NYSE:KWK - News). Last year investors feared its debt load would cause problems, but fresh capital from venture partners should ease concerns, Smith says. Big gains in natural gas stocks this year make Edward Maran, co-manager of the Thornburg Value Fund, nervous. He favors more diversified plays, such as Marathon Oil (NYSE:MRO - News) and Apache (NYSE:APA - News), which would benefit from higher natural gas prices. Plus, they are a better value, he says. Jennison's Saunders agrees that it's not the time to buy natural gas producers. He expects the stocks to fall in the second half and not recover until 2010. After a price drop, his top picks include XTO Energy (NYSE:XTO - News) and Range Resources (NYSE:RRC - News). Even if prices rise, gains on the Natural Gas ETF will likely lag. It owns a huge slug of futures contracts on gas that expire every month and must be rolled over into the next month's contract. Since gas prices are higher on contracts for future months than the current rate, it loses money each month when it rolls contracts forward.
MickyScars	US natural gas industry may be close to hitting bottom: Barclays	#29	[-]
Member Posts: 10520 (07/03/09 03:10:31) Reply Quote More My Recent Posts Message Me Connection Blocking Invite Ignore User's Posts	US natural gas industry may be close to hitting bottom: Barclays Washington (Platts)--2Jul2009 A "race to the bottom" in the natural gas market is almost complete, and the industry is now waiting for signs that the cutback in drilling rigs or lower imports of liquefied natural gas will have a meaningful impact on the supply and demand balance, an analyst firm said late Wednesday. Barclays Capital analysts in a report examined the overall state of the gas market from three angles--rigs, LNG and storage--and noted that recent strength in prices has taken place "against a backdrop of otherwise weak fundamentals." While it said the downturn in drilling rigs has been much sharper than many had anticipated, gas supplies remain abundant. From a peak of over 1,600 rigs some seven months ago, the US rig count plunged 56% to 692 last month, representing a much steeper decline than Barclays had expected. "Yet neither monthly [production] data nor weekly storage numbers are showing tightening balances so far," the firm said. "Meanwhile, the combination of falling costs, stronger forward prices and increasingly accommodative capital markets [are] causing concerns about a premature rebound in drilling." The firm noted that operators this year shut in rigs primarily in marginal plays and migrated instead to lower-cost, high-return projects, such as the Haynesville Shale in Louisiana. Barclays said it believes the rig count is at a turning point, noting that it could fall by another 150 rigs before the end of 2009 or could rebound given improving capital markets and more favorable gas prices. Barclays' baseline scenario anticipates the gas rig count bottoming out at 650 rigs, with essentially no year-on-year production growth in 2009 and a 3.3 Bcf/d contraction in 2010. By October 2010, storage inventories would be "in a fairly bullish position," setting the stage for a greater pricerecovery. Meanwhile, the firm said it expects the economically driven downturn in industrial demand to hit bottom this year. "Our economists expect industrial production to turn higher in [the third quarter], which should also improve industrial gas demand." LNG imports are also potentially supportive for the gas market, Barclays said. With the LNG market behaving "in a truly global fashion" this year, a considerable amount of the liquefied fuel has gone to Europe, rather than to US terminals. While some analysts had anticipated a flood of LNG to hit US shores this year, imports averaged 960,000 Mcf/d in the first quarter, up just 130,000 Mcf/d from the same period of 2008, Barclays said. "Some of the global LNG demand weakness is offset by lower-than-expected supply growth as liquefaction projects coming online this year continue to face delays," the firm said, noting, for instance, that the first "mega-train" in Qatar is finally ramping up after shutting down in March shortly after its commissioning. And given current price differentials, Barclays expects only modest growth in LNG imports into the US through the remainder of the year, redicting 1.5 Bcf/d for Q2, 1.8 Bcf/d for Q3, 2.2 Bcf/d for Q4 and averaging 1.6 Bcf/d for all of 2009. The state of US storage is more bearish over the near-term, Barclays said, noting that inventories in the producing region and the West are each less than 300 Bcf from maxing out. If injections continue at an aggressive pace, these regions will fill up swiftly and divert gas to the East, which "has more space, with over 1,000 Bcf of room to go," the analysts said. Still, strengthening of the forward curve has occurred sooner than anticipated, Barclays said, and this is enabling producers to begin hedging more substantially. "[S]hould calendar 2010 prices keep rising, it would allow more sizeable hedge programs to be put in place, prompting producers to launch more ambitious drilling programs next year or even late this year, and thus limiting price recovery in 2010," Barclays said. --Jessica Marron, jessica_marron@platts.com http://www.platts.com/Natural%20Gas/News/8682983.xml?sub=Natural%20Gas&p=Natural%20Gas/News&?undefined&undefined
patgarrett666	Farmers blinded by 'Jed Clampett fever'	#30	[-]
Member Posts: 10880 (07/06/09 09:29:58) Reply Quote More My Recent Posts Message Me Connection Blocking Invite Ignore User's Posts	Farmers blinded by 'Jed Clampett fever' By CHIP MARTIN The pools of natural gas lying beneath the farm fields of Southwestern Ontario are being converted into something potentially more lucrative. Storage space. As gas reservoirs run dry, demand has grown to store natural gas in some of them, a move that has caught some farmers napping. Gas exploration firms have shifted to an emphasis on storage, pursuing lucrative contracts without sharing the wealth with landowners. So says Harry Lawson, a Chatham-Kent farmer whose advice is often relied upon by the Ontario Federation of Agriculture. Unbeknownst to landowners, the long-term value of storage can exceed the value of gas extracted under gas-rights agreements, he said. "People don't realize the actual value when they sign a storage agreement," Lawson said. "And landowners, most of them, will not pay for any legal advice. "They get what I call 'Jed Clampett fever' when the leasing agent comes around waving a cheque under their nose," he said, referring to the fictional poor mountain man of the television series The Beverly Hillbillies, whose rifle shot aimed at food produced an oil find instead. "This happens in the spring or fall, typically, when they're busy and they say: 'Where do I sign?,' " Lawson said. Many underground reservoirs, known as reefs, best suited for storage have already been put to use across the region except for a few in Lambton and Huron counties, he said. "Huron County is really the last frontier," he said, where resource companies are looking for new storage. Just days ago, a Huron County farm won a case brought by London-based Tribute Resources Inc. related to a gas lease extension and storage. Tribute went to the Ontario Superior Court of Justice to force McKinley farms near Zurich to continue to honour 10-year leases for gas and storage rights signed in 1977 and 1998 respectively. Justice T.D. Little said the natural gas was depleted in 2001. An extension of the original agreement ended with that, he ruled. And the storage agreement expired in 2008, he said. McKinley lawyer Jed Chinneck said the decision means operators of the 80-hectare farm can now seek a "fair deal" with Tribute or other operators. He said under existing payments, Tribute was paying the McKinleys only $400 a year and was proposing to pay the McKinleys and the four other landowners sitting on the "Stanley Pool" $50,000 annually when the company expects to earn $2 million annually from its storage of gas. He argued that after spending $1.6 million on the property, Tribute was trying to save money by extending an agreement that had lapsed. The case has drawn attention to what Chinneck, who was a geologist before he became a lawyer, describes as a "lessor beware" situation. Farmers "should get good, independent legal advice before they sign anything. There can be significant value in a depleted reservoir," he said. "I think you will see this happening more often," Chinneck said of companies seeking to lease underground storage capacity. For its part, Tribute didn't want to discuss the McKinley case, saying it was preparing an appeal. Its lawyer, Christopher Lewis, said he expects that might be heard in a year. The company's website indicates storage of natural gas is key to the 12-year-old firm's business plan. "Tribute's core focus is the development of market-based gas storage in Ontario," it says. Tribute is seeking to link five storage pools in Huron County by pipeline to Lobo to connect to the Union Gas distribution system. In public discussion of its 2008 annual report, Tribute management reported it expects $8 million in annual profits from gas storage at the Stanley, Bayfield and Zurich pools in Huron County. http://lfpress.ca/newsstand/News/Local/2009/07/06/10034151-sun.html
patgarrett666	Swimming in natural gas	#31	[-]
Member Posts: 10880 (07/07/09 06:53:29) Reply Quote More My Recent Posts Message Me Connection Blocking Invite Ignore User's Posts	Swimming in natural gas By Jonathan Ratner, Financial PostJuly 4, 2009 At a recent presentation to money managers in Canada's oil and gas heartland, the chief executive of a major Calgary-based energy trust used an interesting choice of words to describe natural gas. He referred to the commodity as a "wasted byproduct." The suggestion that natural gas is worthless may be extreme, but it is an indication of the challenge the industry faces. Market experts continue to expect weak prices for natural gas as a surge in unconventional gas discoveries, such as shale plays, pour on to an already-flooded market. Add in unpredictable weather and a slower-than-forecast economic recovery, and the outlook doesn't get much brighter. Canadian companies such as EnCana Corp., North America's largest natural gas producer, are trying to hedge production but investors might take a look at Australian players that are capitalizing on Chinese demand, or global majors such as Exxon Mobil Corp. and Royal Dutch Shell PLC, that are likely to come out ahead in the race to develop low-cost shale projects. "We're going into one of those periods where this commodity has everything going against it," said Norman MacDonald, who manages the Trimark Canadian Resource Fund. "When you couple low-cost gas from the Middle East about to hit the shores of North America with some of these shale plays that have been emerging, it's kind of a worst-case scenario for the overall supply outlook and supply cost for natural gas." While the stabilization of many global economies has sent oil prices higher, demand for natural gas has fallen off a cliff. The recession that closed factories and power plants has driven gas prices to roughly US$4 per MBTU, slightly above a six-year low of US$3.15 reached in April. NYMEX natural gas futures spiked above US$15 at the end of 2005 after a busy storm season marked by Hurricane Katrina, but prices fell back sharply less than a year later. They rose again to nearly US$14 by the summer of 2008 as oil prices surged above US$140 per barrel, but have declined more than 70% since then. Meanwhile, cargoes of excess liquefied natural gas (LNG) from offshore projects in Australia, Saudi Arabia and Qatar are heading for North America because it has storage capacity the other regions don't have. The Canaport LNG terminal in New Brunswick received its first cargo last week. It has the capacity to import one billion cubic feet per day of LNG. "Storage is basically the buffer zone between demand and supply," said Martin King, vice-president of institutional research at First-Energy Capital Corp. in Calgary. "The storage levels in Western Canada and the U. S. are the highest ever for this time of year." To top it off, Coloradobased Potential Gas Committee recently boosted its total potential U. S. gas supply estimate by 35% to 2,074 trillion cubic feet, the highest level in the gas supply authority's 44-year history, primarily due to the proliferation of unconventional shale gas plays. Shale gas, which is found locked in tightly layered rock formations, now accounts for 33% of recoverable U. S. natural gas. The Haynesville, in the southern United States, and Marcellus, in the northeast United States, shales are considered the most economically viable resource plays in the United States, even at today's depressed prices. New horizontal drilling technology has also unlocked shale plays in Canada, in places like Horn River and the Montney in northeast British Columbia. While development and drilling of many of these deposits has slowed because of the price downturn, their cost structures, reserve sizes and amount of production continues to lure both companies and investors. Some market observers say that natural gas has dropped so far it has nowhere to go but up. The reasoning is that the traditional pricing ratio between oil and gas appears to have completely broken down. The theoretical energy equivalent between the two commodities is a six to one ratio (six MMBTU of natural gas equates to one barrel of crude oil), but oil has appreciated so much that the ratio has surged to a 20-year high of almost 20 to one. "As tempting as this straightforward conclusion would seem, we are unconvinced that natural gas will reconnect with oil anytime soon, given the relative lack of 'switchability' between the fuels and the insular nature of the U. S. gas market," said Shannon Nome, an analyst at Deutsche Bank. While companies in Canada's natural gas sector move to diversify toward unconventional forms of production, many are opting to hedge their exposure to protect against weak prices. EnCana has entered into fixed price hedge contracts on about 35% of its anticipated production for the 2010 gas year, at an average price of US$6.21. Most companies are hedging what they can with what appears to be a floor near US$5 or US$6, according to Subash Chandra, analyst at Jefferies & Co. But hedging is no panacea. "All said, the industry can only hedge a small fraction of their ... enterprise value," he said in a note. "Also, the industry remains leveraged. So spending plans must be balanced against the need to reduce bank debt." Birchcliff Energy Ltd., Vero Energy Inc. and Iteration Energy Ltd. are among the names that have recently tapped the market for equity financings. However, an industry watcher, who asked not to be identified, said the proceeds are not going into spending but rather paying down bank lines. Meanwhile, U. S. shale assets will find their way into majors hands, predicted Mr. MacDonald of Invesco Trimark. "One thing they're good at is controlling the pace of development, which controls the supply of natural gas." Recent acreage deals involving British Gas, Royal Dutch Shell and Exxon Mobil suggest the appetite for corporate acquisitions isn't far behind, Mr. MacDonald said. He also suggested they might not even have to pay very much given the debt situation faced by names such as Chesapeake Energy Corp., Petrohawk Energy Corp, and some companies in Western Canada. "All you need is an unseasonably warm winter and these majors will be able to come in and name their prices," Mr. MacDonald said. "They're not going to be talking to the companies, they're going to be talking to the banks." He also considers Australia an interesting opportunity, not so much because of the quality of deposits, but the pricing dynamic. "The northeast portion of the offshore Australian gas market is becoming as hot as Fort McMurray." Australian gas had traded at a massive discount relative to global markets for a long time but has picked up dramatically because of the proximity to Asia for LNG export facilities. Mr. MacDonald considers Apache Corp. the best way to get some value out of the Australian gas market, while suggesting Calgary-based Enerflex Systems Income Fund as a way to take advantage of a secondary play on the market. Not everyone is a pessimist on the outlook for the market. Mr. King of FirstEnergy Capital expects supply to tighten in the United States because of the downturn in drilling that has been going on for almost a year now. Gas rigs now hover around the 690-level, marking a 57% peak-to-trough tumble in U. S. drilling activity since last fall. He expects to see some stabilization of demand into 2010. So, if supply continues to come off, non-weather related demand improves and winter is cold, the big storage overhang may start to be unwound. Those, however, are a lot of ducks to get in a row. http://www.canada.com/business/fp/Swimming+natural/1758452/story.html
patgarrett666	Why I've Waited to Buy Natural Gas	#32	[-]
Member Posts: 10880 (07/07/09 07:22:47) Reply Quote More My Recent Posts Message Me Connection Blocking Invite Ignore User's Posts	Why I've Waited to Buy Natural Gas by: Jason Kelly July 07, 2009 \| about: FCG / UNG / USO Many people have written asking why The Kelly Letter hasn't bought natural gas via UNG yet. The following June 21 article (sent to subscribers), re-displayed here in its entirety, explains why. The addendum at the bottom shows what's happened since we ran the article. ----- We've spent a lot of time looking at oil this year, and have put money on both the long and short sides of the fluctuating price. We're currently betting on lower prices ahead, and I still think we'll get them in the short term. A related commodity that we've discussed much less is natural gas. In some ways, it's a better place to invest than the oil market. Let's look at those ways. Natural gas is primarily a U.S. domestic commodity, much less exposed to the seemingly endless variety of pressures the world economy puts on oil. That, combined with limited storage capacity, makes natural gas less appealing than oil to speculators. Because of that, natural gas prices have badly lagged oil prices in the recent move higher. A good many analysts attribute the spring oil spike as much to speculation as anything, and a glance at the fundamentals of the market lends credence to their view. The missing speculative element has left natural gas prices far below oil prices and, more importantly, historically cheap when compared to oil prices. One way that's discussed is via the oil/natural gas ratio. Over the years, it has averaged about 8, which is to say that the price per unit of oil is usually about eight times more than the price per same unit of natural gas. Currently, that ratio is more than double, at 17. Something will give. Either oil prices will fall, natural gas prices will rise, or both. I'm guessing both. We already have money on the falling oil theme. Is it worth putting money on the rising natural gas theme as well? There are plenty of reasons to expect the price of natural gas to rise. For one, at its current $4, it's not profitable to hunt down and develop new sources of it. That will constrict supply, which contributes to a rising price. Also, there's no equivalent of OPEC in the natural gas market. Overseas sources have a hard time competing because natural gas must be turned into liquid natural gas, LNG, to be shipped. Converting, storing, shipping, storing, and regasifying LNG is expensive, and nobody's going to jump on it at $4 prices. So, the supply picture is looking tight and suggesting higher prices. What about demand? It's pretty strong. The Department of Energy projects that demand from both Canada and Mexico will grow in the coming years, and that Canada's unconventional production pace will not match that of the U.S. Currently, the U.S. imports about 16% of supply, and that's expected to decline to 3% in 2030. America's growing technology and unconventional reserves will give it an edge in the market, and allow it to become a gas exporter to meet rising demand. World liquefaction capacity is growing, so that will support demand in other markets. Focus for a moment on the source of natural gas in the future. As with oil, natural gas reserves are getting more complicated and scarcer. The more difficult and scarcer the supply becomes, the more expensive it becomes. That's another catalyst for higher prices. Now, having told you all that, I need to pull the rug out from under you by mentioning that all of the above factors are applicable in the longer term. In the short term, I find that supply is brimming and demand is weak. That's the reason natural gas prices are low. It's not hard to see why. Look at the recent economic figures we've received. Factories aren't exactly humming these days. Just last week, we saw another report showing that capacity utilization is still falling. The economy doesn't need as much natural gas in slow times, and these are slow times. That's why supplies are currently near peak levels. There are two ETFs for betting on a rising natural gas price. One is UNG, which is run by the same shop that runs USO for oil, and is a vehicle based on the price of natural gas directly. An indirect approach is also available via FCG, a fund that owns the stocks of companies that derive significant revenue from exploring and producing natural gas. They're listed on the ISE-REVERE Natural Gas Index. Like the Dow, it has 30 components including Apache (APA), Chevron (CVX), Quicksilver Resources (KWK), Noble Energy (NBL), Shell (RDS.A), and Questar (STR). As you can see by the inclusion of Chevron and Shell, it's hardly a natural gas pure play. Both UNG and USO, targeting the price of natural gas and oil respectively, peaked in July 2008. UNG kept falling all the way to the end of last month, but USO bottomed out in February. From its mid-February price of $23, USO has gained 65%. Since mid-February, UNG has lost 14%, and that's after a 17% pop in the last three weeks. The divergence between the two is obvious. FCG peaked in June 2008, and bottomed in March. Since its March bottom, it has gained 59%. How much of that is from the excitement over oil and its potential to boost profits at the companies on the index is hard to say, but it's safe to assume a lot. Many people have written to me about buying UNG, so many that it prompted me to check the popularity of the ETF. In two words: red hot. Its assets under management were only $700 million at the end of March. They hit $2.2 billion at the end of May and surpassed $4.5 billion just last week. More than $2 billion found its way into the fund in the first half of this month alone. That's 2.9 times the fund's entire asset base in March, proving that a stadium full of investors has concluded that natural gas prices are due for a bounce. I don't see it yet. Current storage levels are more than 20% above their five-year average, and recently discovered fields in Louisiana and Texas sport solid production rates. The industry needs prices to fall, but individual companies can't slow production because they need cash now and will sell even at low prices. Less money coming in has cut the rig count back, and that's one reason people are looking for a price spike eventually. As with oil, the time frame is critical. In the long term, almost every commodity will be higher in price, a conclusion you can reach by looking at nothing more than population trends and technology proliferation maps. More people demanding any finite resource will send the price of that resource rising, and that's nowhere clearer than in energy markets. Fine, but in the short term, anything goes and right now what's going on is a stockpiling of natural gas reserves that will be able to absorb quite a bit of demand. As we often do, we'll watch. The price to watch is Henry Hub spot, which closed Friday at $4.05 per million Btu, down from $6.10 on Jan. 6 but up from $3.19 on Apr. 27. How did UNG track during those time frames? Let's compare: 1/6 to 4/27 -48% Henry Hub spot -47% UNG 4/27 to 6/19 +27% Henry Hub spot +16% UNG Recent choppiness has kept UNG from keeping up, and if natural gas remains weak through the summer, it will get cheaper again because it tracks well to the downside. It closed Friday at $15.16. My initial buy price target is $14. Addendum Since that article ran on June 21, UNG has dropped from the previous Friday's close at $15.16 to Monday's intraday at about $12.50. The factors mentioned above still apply, so we're watching and waiting for the right cheap entry. Notice that we did not buy as soon as it hit the target price of $14. We often watch and wait for long periods before placing an active order, and this is one of those times. http://seekingalpha.com/article/147284-why-i-ve-waited-to-buy-natural-gas
eskardu	Natural Gas Drops for Fifth Day on High Supplies, Slow Economy	#33	[-]
Member Posts: 5975 (07/07/09 11:14:23) Reply Quote More My Recent Posts Message Me Connection Blocking Invite Ignore User's Posts	Natural Gas Drops for Fifth Day on High Supplies, Slow Economy By Christopher Martin and Mario Parker July 6 (Bloomberg) -- Natural gas fell in New York for a fifth day amid record inventories and concern that a global economic recovery is faltering. Gas declined with equities and other commodities amid skepticism the economy will recover fast enough to soak up U.S. stockpiles of the fuel, which are 21 percent above the five-year average for this time of year. Industrial users and power generators account for 29 percent of consumption. "The economy is not recovering in any substantive way and we just don't see factories reopening any time soon," said Brad Florer, a trader for Kottke Associates Inc., a commodity futures trading group in Louisville, Kentucky. "That's crushing industrial demand and with no hurricanes in the forecast, there's no reason to be bullish." Natural gas for August delivery dropped 12.8 cents, or 3.5 percent, to settle at $3.487 per million British thermal units at 2:58 p.m. on the New York Mercantile Exchange. The close was the lowest since April 30. Gas has dropped 12 percent in five trading days and 75 percent from the 2008 high of $13.694 per million Btu on July 2. "With everything else going on, the dollar's stronger, crude is down, and with renewed worry about the economy, I just don't think there's enough to give natural gas a boost," said Lisa Zembrodt, an analyst at Summit Energy Services Inc. in Louisville, Kentucky. U.S. consumer confidence slipped in June as unemployment rose to a 26-year high of 9.5 percent. U.S. employers slashed 467,000 jobs last month, and about 6 million jobs have been eliminated since the recession began in December 2007. June's jobless rate was the highest since August 1983. ISM Index Rises The Institute for Supply Management's index of non- manufacturing businesses, which make up almost 90 percent of the economy, rose to 47 from 44 in May, according to the Tempe, Arizona-based group. Readings less than 50 signal contraction. "The year-over-year reduction in industrial demand puts us into a supply-and-demand surplus," said Tim Evans, an energy analyst with Citi Futures Perspective in New York. "In order for us to hold steady or rally, we need some intense heat or see a dramatic drop in production." The lack of tropical storms has also contributed to lower prices for the fuel, Evans said. The hurricane season began June 1 and runs through November, producing storms that have the potential to enter the Gulf of Mexico and disrupt production from offshore gas platforms. Inventories Rise Inventories of natural gas rose to 2.721 trillion cubic feet in the week ended June 26, the Energy Department said on July 2. Stockpiles may reach a record before demand picks up with colder weather. The current record is 3.545 trillion cubic feet reached on Nov. 2, 2007. Mild weather in populous areas of the U.S. East and Midwest has limited demand as people use less air conditioning, said Chris Kostas, an analyst at Energy Security Analysis Inc. in Wakefield, Massachusetts. Normal to below-normal temperatures are probable for an area stretching from the Northeast to the Midwest through July 19, according to an outlook from the Climate Prediction Center in Camp Springs, Maryland. "These are key cooling-demand regions," Kostas said. "It doesn't look like summer's going to reach us in the Northeast. Without any significant cooling demand," supply will remain above demand. Natural gas also slipped as the dollar strengthened against the euro, curbing the appeal of commodities as a hedge against inflation. "Part of our problem is that petroleum and a number of other commodities are down sharply," Evans said. "The sympathy vote goes toward selling." http://www.bloomberg.com/apps/news?pid=20601072&sid=ab8hCiyyU8ag
mancovaldez	U.S. Natural Gas Fund Halts the Issuance of New Shares	#34	[-]
Member Posts: 10082 (07/08/09 01:23:26) Moderator Extraordinaire Reply Quote More My Recent Posts Message Me Connection Blocking Invite Ignore User's Posts	U.S. Natural Gas Fund Halts the Issuance of New Shares By IAN SALISBURY and DAISY MAXEY U.S. Natural Gas Fund, the giant exchange-traded fund that tracks the gas market, was forced to stop issuing new shares on Tuesday after failing to win regulatory approval in time. The $3.7 billion fund, which invests in natural-gas futures, essentially ran out of available new shares after the fund swelled from about $670 million in February. Typically, ETFs can create new fund shares whenever investor demand arises, but the natural-gas ETF's special legal structure limits its ability to do this. John Hyland The fund's managers filed with the Securities and Exchange Commission in early June to increase the number of shares it kept in reserve. Filings showed managers of the fund wanted to increase the number of shares available nearly 10-fold. But such requests can take weeks to be processed and the SEC has yet to give its approval. The failure to get approval to issue more shares throws light on the fund's enormous growth in recent months. At times, investors have voiced concerns that the fund is so big that it is distorting trading in the market. The Commodity Futures Trading Commission said Tuesday that it will conduct hearings in July and August, and will consider whether it should impose limits on trading and positions to curb issues resulting from excessive speculation on all commodities of finite supply, in particular energy commodities, such as crude oil, heating oil, natural gas, gasoline and other energy products. The CFTC said it will seek views on applying position limits consistently across all markets and participants, including index traders and managers of ETFs. U.S. Commodity Funds, which operates the natural-gas fund, welcomes the opportunity to discuss with the CFTC the impact of commodity funds on the markets, but believes its funds aren't hurting markets, John Hyland, chief investment officer at the company, said in an email Tuesday. "We believe that the actual evidence will show that, at least in the case of our funds, publicly listed commodity funds have not had the negative impact on the commodity markets that some may claim," he said. "As the manager of publicly listed funds with thousands of public shareholders, we support an orderly, transparent commodities market that is open to public investors." The natural-gas fund was designed to track in percentage terms the movement of the price of natural gas delivered at the Henry Hub in Louisiana. With the fund unable to create more shares, demand by investors for fund shares could push their market price above the value of U.S. Natural Gas Fund's holdings. That may benefit existing shareholders who want to sell, while harming investors who want to buy the fund. Exchange-traded funds are supposed to trade at prices that closely match the value of their holdings. Prices mightn't deviate immediately. The fund faced the same situation in May, suspending issuance of new shares for about two days before the SEC finally granted approval for more. Shares of the fund were at $12.18, down 38 cents, or 3%. Write to Ian Salisbury at ian.salisbury@dowjones.com and Daisy Maxey at daisy.maxey@dowjones.com
eskardu	EIA sees lower 2009 U.S. natgas production, demand	#35	[-]
Member Posts: 5975 (07/08/09 12:18:08) Reply Quote More My Recent Posts Message Me Connection Blocking Invite Ignore User's Posts	EIA sees lower 2009 U.S. natgas production, demand Tue Jul 7, 2009 10:24pm IST NEW YORK, July 7 (Reuters) - The U.S. Energy Information Administration said Tuesday there will be lower domestic natural gas production and consumption in 2009, as poor economic conditions continue to pressure drilling and overall demand. In its July Short-Term Energy Outlook, EIA forecast U.S. marketed natural gas output this year would decline 0.6 percent to 58.23 billion cubic feet per day from last year's daily rate of 58.59 bcf. "As both consumption and prices have waned amid the recent economic downturn, natural gas producers have responded with a dramatic reduction in drilling activities," the forecast said, noting that according to Baker Hughes, total working natural gas rigs are now down 57 percent since September 2008. Consumption is expected to decline 2.3 percent in 2009 to 62.10 bcfd, down from 63.53 bcfd in 2008. The largest decline in consumption will be in the industrial sector, which will experience an 8.2 percent decline from 18.15 bcfd to 16.66 bcfd in 2009. (Reporting by Rebekah Kebede; Editing by Marguerita Choy) "All Is Well"
MickyScars	US gas price rebound unlikely in next 2 to 3 years: analysts	#36	[-]
Member Posts: 10520 (07/09/09 03:34:34) Reply Quote More My Recent Posts Message Me Connection Blocking Invite Ignore User's Posts	US gas price rebound unlikely in next 2 to 3 years: analysts Denver (Platts)--8Jul2009 US natural gas producers looking for higher prices got gloomy news from two industry analysts at the Colorado Oil & Gas Association's annual meeting in Denver. Both said surging production from shale plays coupled with dampened demand from a wounded economy will keep prices well below $7/MMBtu for the next two to three years. "Capacity and production responsiveness will limit price increases, keeping prices well below $7/[Mcf] for many years," Bentek CEO Porter Bennett told executives at the COGA meeting. Denver-based Bentek analyzes gas flows along North American pipelines. The next three years is going to be a "challenge," Wood Mackenzie's Head of North American Gas Research Jen Snyder said. "It's difficult to see a rebound in prices or drilling." It will take until 2012 or 2013 for the US gas sector to rebound, Snyder said, although any rebound could be quicker if US policy regarding carbon emissions changes substantially. Wood Mackenzie analysis of the North American gas industry shows average well head prices rebounding slowly. The average is likely to be $4.50/MMBtu in 2010, $4.75/MMBtu in 2011 and just above $5/MMBtu in 2012, Snyder said. "Fundamentals will suppress upstream activity levels until [economic] recovery takes hold in 2012 or 2013," Snyder said. While the biggest drag on gas demand and price recovery is the global economic recession, Bennett and Snyder agreed that several other factors are also keeping the brakes on a rebound. There is 19.4 GW of coal-fired power generation scheduled to come online in the next three years, Snyder noted, reducing demand for gas for power generation even at prices as low as $4/MMBtu. Meanwhile, 11 Bcf/d worth of natural gas liquefaction capacity scheduled to enter the market in the next three years will create liquefied natural gas that will often end up in US terminals because of a lack of demand elsewhere. "This LNG is essentially [set to be] dumped into a US market that doesn't need it at all," Snyder said. US gas producers' ability to unlock shale plays is another factor inhibiting any quick rebound in prices, Snyder said. Producers will keep drilling in the shales--particularly Louisiana's Haynesville Shale--because they need to hold onto production leases they bought at a premium. One piece of good news, Snyder and Bennett said, is that the paradigm that producers need $6 to $7/MMBtu gas prices to make profits has been upended by gains in technology and drilling practices. Both analysts pointed to data from Houston-based Southwestern Energy's experience in Arkansas' Fayetteville Shale. "These plays have become economic, even in a low price environment," Snyder said, noting that in the past two years Southwestern's costs have dropped from $5/MMBtu to less than $3.50/MMBtu and that number should continue to fall as more drilling occurs. --Bill Holland, bill_holland@platts.com http://www.platts.com/Natural%20Gas/News/6449536.xml?sub=Natural%20Gas&p=Natural%20Gas/News&?undefined&undefined
patgarrett666	Natural gas provides bright spot in energy picture	#37	[-]
Member Posts: 10880 (07/12/09 07:20:30) Reply Quote More My Recent Posts Message Me Connection Blocking Invite Ignore User's Posts	Natural gas provides bright spot in energy picture By STEVE EVERLY The Kansas City Star Oil and gasoline prices get the attention, but plummeting natural-gas costs are quietly freeing up billions of dollars and possibly setting up one of the cheapest heating seasons in nearly a decade. Energy prices across the board have dropped over the last year, but the decline for natural gas has been especially dramatic. The commodity closed Friday on the New York Mercantile Exchange at $3.37 per 1,000 cubic feet, a 73 percent drop from a year ago, when it was well over $12. That could save households that heat with gas, as most in the Midwest do, $200 or $300 over the coming winter. Across the economy, from fertilizer makers and utilities to farmers and consumers, by one estimate the lower prices may have saved as much as $70 billion this year. A lot of things affect a gas bill - from the weather to how much gas a utility has bought and stored in advance - so it's hard to say exactly how much winter heating costs will be down. But the "cost of gas" charge or "purchased gas adjustment" part of the bill, which lets utilities pass on the price of buying and storing and shipping gas, typically is 75 percent of the bill. And those charges are way down and likely to stay there. The amount of gas in storage, a key indicator of U.S. supplies, is on track to be at a record by the beginning of winter. That cushion is one of the reasons some analysts are saying prices could drop below $3 per 1,000 cubic feet as ample supplies overwhelm any speculation trying to push prices higher. About the only thing that could upset the picture would be a catastrophe such as a supply-disrupting hurricane in the Gulf of Mexico. "We have ample supply for the winter," said Tancred Lidderdale, an analyst for the Energy Information Administration. In fact, U.S. producers usually provide 85 percent of the natural gas the country uses. But given discoveries of new supplies in recent years and an 8 percent drop in industrial demand this year, they could provide all the gas the U.S. needs right now. Crude oil along with petroleum products such as gasoline and diesel have declined over the last year, but not as much as natural gas. Comparing prices for the same amount of energy output, you have to go back before the turn of this century to find a time when natural gas was this much cheaper than oil. The benefit has been especially striking in industries such as fertilizer, where manufacturers depend heavily on natural gas. The relief is particularly welcome, because the domestic fertilizer industry has lost 40 percent of its production capacity since 2001 - mainly because of previous run-ups in the price of natural gas. The lower prices are great for farmers, too. Ken McCauley, a corn farmer near White Cloud, Kan., for the current growing season had locked in much of the fertilizer he needed at $760 a ton, and some farmers had paid as much as $1,000 a ton. But he recently bought some for just $400 a ton and locked in prices for next year as low as $380. That means his future fertilizer costs will be $40 an acre, instead of $100. "It's a big deal," he said. "We've got some good profit potential." The economics are working in similar ways for electric utilities, which often use natural gas in the summer to quickly start generators to help meet peak demand from air conditioning. Westar Energy, Kansas' biggest electric utility, through the year generates most of its electricity at coal-fired plants. But on hot summer days, natural-gas generators can produce as much as half of the power it sells. The utility hedges some of its fuel costs, so it doesn't feel the full effect when prices drop - or spike. But it has still seen its fuel costs drop dramatically. John Olsen, executive director of bulk power for Westar, noted that at last year's peak price for gas, it cost as much as $140 to produce 1,000 kilowatts of power, enough to supply about 20 homes for a day. At recent prices, it's costing $30 to $36 to produce the same amount of power. For consumers, however, the biggest payoff from lower natural-gas prices probably will come this winter. The average home uses 85,000 cubic feet of gas a year, with most of that coming during the winter. "We are feeling good about the cost of gas," said Al Walker, a spokesman for Kansas Gas Service, whose current gas charges are the lowest they've been since early 2002. The story's the same at other area gas utilities. Missouri Gas Energy a year ago was charging $10.41 for 1,000 cubic feet of gas. It later began to reduce the charge, which is now down to $5.42. Atmos Energy, another area gas utility, adjusts its cost-of-gas charge monthly. For July, it's $4.43 per 1,000 cubic feet. A year ago it was $11.75, and during the winter it declined to $7.58. Jim Bartling, a spokesman for Atmos, said consumers were already building an advantage over last winter, when the break in gas prices came after most of the gas for the season had been purchased. Atmos and other utilities are buying and storing gas at this summer's low prices, and taking other hedging steps to take advantage of the price break. "It was too late to react last winter, but this year it's working to our customers' favor," Bartling said. http://www.kansascity.com/105/story/1317937.html
Black Blade.downstreamventures	Alaska natural gas gets new competition	#38	[-]
Member Posts: 798 (07/12/09 11:15:53) Reply Quote More My Recent Posts Message Me Connection Blocking Invite Ignore User's Posts	Alaska natural gas gets new competition LOWER 48: Improved drilling techniques in shale, sand unlock huge reserves. By ELIZABETH BLUEMINK ebluemink@adn.com (07/11/09 21:08:33) If there weren't already enough barriers to building a gas pipeline from Alaska's North Slope, the Lower 48 recently entered its biggest-ever natural gas boom. Just as the prospects for the Alaska gas line seem to be growing brighter, new drilling techniques have unlocked vast pools of natural gas all over the Lower 48, from Texas to Pennsylvania. For now, demand isn't keeping up. Prices have swooned and drill rigs are idling. Pundits, politicians and industry executives have been speculating for months about what bountiful, cheap gas in the Lower 48 means for the North Slope's gas. Emphasis on the word speculating. Analyzing the economic prospects of North Slope gas requires looking into a murky future that begins in 2018 -- the earliest year that an Alaska pipeline would be finished and North Slope gas could arrive in the market -- and projecting out 30 years beyond that. "Anything could happen between now and then," said Gary Long, a petroleum engineer who analyzes gas reserves for the U.S. Energy Information Administration. Skeptics -- including those who'd compete against Alaska's project -- have raised doubts about the multibillion-dollar project. Among them is T. Boone Pickens, the legendary Texas oilman, who recently said he thinks Alaska's gas line will be delayed 10 to 15 years because of giant shale-gas deposits now being exploited in Texas. Pickens isn't exactly neutral: He's invested in the Texas gas. The three major energy companies who hold leases to trillions of cubic feet of North Slope gas take a more optimistic view. Current conditions in the U.S. gas market aren't a factor in their decision-making, they say. In the future, "We believe there will be a place for Alaska's gas," said David McDowell, a spokesman for BP and Conoco Phillips' Denali pipeline project. As long as the costs of the pipeline project are kept under control, Alaska gas will be competitive with gas from other sources, according to Tony Palmer, a vice president for TransCanada Corp., a Canadian company vying with Denali to build the gas line. TransCanada was awarded a state license to develop the pipeline and recently entered into a partnership with Exxon Mobil, the North Slope's biggest gas lease holder. UPS, DOWNS OF GAS PRICES The cold reality that dashed Alaska's gas pipeline dreams for decades was the low price of natural gas in Lower 48 markets. Price is a key determinant of whether a gas line will be profitable in the future, and it's impossible to predict accurately. The best that anyone can do is plan a project that will remain profitable within a reasonable range of prices. In a recent press conference, Palmer of TransCanada conceded that the price of gas in the Lower 48 has declined this year, but he invoked long-term forecasts that predict the price will rise again. The major North Slope lease holders revived their interest in a gas-line project early this decade, when gas prices rose dramatically. They funded a $100 million study in 2001 to analyze potential pipeline routes. Later that year, gas prices dropped and the companies declared the project impractical. Yet the price decline was short-lived. Lower 48 natural gas prices spiked in 2005 and again last year. Prices have sunk this year as the national recession deepened, but still remained well above the historic range of the 1980s and 1990s. Prices could drop even lower in the near future, warned Porter Bennett, of Bentek Energy, a Colorado-based energy consulting firm. "The bottom line is right now that we are producing a lot more gas than we are consuming. Those trends are going to continue for several years at least," Bennett said. But what about beyond that? THE LURE OF GAS Federal forecasters and industry experts say natural gas prices will rise again, not just as a consequence of the easing of the global recession but also due to new trends in U.S. energy consumption and a shift to costlier production methods. Right now, some politicians and energy companies view natural gas as an attractive, cleaner alternative to two fuel sources in heavy use in the Lower 48 now -- crude oil and coal -- which generate a larger amount of greenhouse gas emissions, linked to global warming. The U.S. Energy Information Administration is projecting a 2.5 trillion cubic feet rise in annual demand for natural gas from 2009 to 2030. That leaves room for the roughly 1.6 trillion cubic feet a year an Alaska pipeline could supply, despite the new discoveries and production in the Lower 48. The potential growth areas for gas in the Lower 48 are electricity generation, transportation and factories that convert natural gas into a liquid fuel, said Bennett and other oil and gas experts. Such growth very much factors into the justifications provided by the Palin administration and by oil companies for the need for Alaska gas. "We have this huge lead time in front of us. The demand is, in fact, going to be there," said Joe Balash, a Palin administration special assistant on oil and gas issues. But Alaska gas will have to compete with other suppliers who are drilling so-called "unconventional" gas sources in the Lower 48, in shale and sand formations. Another potential competitor is liquified natural gas imports. The cost structure of developing and producing those two resources is different than a conventional gas project, but in the long term, the costs end up being comparable, the experts say. For example, while shale gas is cheaper to develop in the short term, the costs to produce it increase over time. Drillers have to constantly poke deep holes in the ground to keep wells in production. In the long run, the cost of developing Alaska's gas is comparable to the cost of developing shale gas or importing liquified gas, said David Hobbs, head of research for Cambridge Energy Research Associates, a global consulting firm that has advised both Exxon and the Alaska Legislature on energy issues in the past. Also, Hobbs said, the energy giants are better positioned to tackle the expense of building Alaska gas line than they were eight years ago. Thanks to high oil prices, they have much stronger balance sheets, plus Congress gave them federal loan guarantees for the project. He said he wouldn't argue that Palin administration legislation has also "been a factor in sharpening focus on the gas line issue." GAS EVERYWHERE Many factors still could derail Alaska's gas project or make it unprofitable. Chronic low gas prices. Political infighting. Construction costs that spiral out of control. North Slope lease holders refusing to commit their gas to a pipeline because it seems too risky. TransCanada's Palmer said at a recent press conference that the builder of a pipeline has to keep the cost of gas production as low as possible and maintain a tight construction schedule rather than waste time worrying about things it can't control. "We think that Alaska gas can be very competitive if we can keep the (cost) of the gas down," he said. One Alaska petroleum geologist said he's less worried about competition from shale gas than he was a few months ago. The geologist, Dan Seamount of the Alaska Oil and Gas Conservation Commission, said he recently toured some massive natural gas fields in British Columbia with much bigger reserves than the North Slope has been calculated to hold. "My first reaction was, 'You guys have just killed the Alaska pipeline,' " Seamount said. But he said in recent weeks, he's looked at the issue a little deeper, realizing, for example, that shale gas projects in the Lower 48 face some hurdles that won't exist for a North Slope gas project. For example, activists in many Lower 48 communities have claimed that shale gas projects have contaminated their water supplies. Some Democrats in Congress this year have filed legislation to force shale gas projects to comply with stricter environmental rules. No matter how much shale gas is considered recoverable, people who think it's as "easy as turning open a valve" are being overly optimistic, Seamount said. That being said, U.S. natural gas production rose by nearly 8 percent last year -- its biggest increase on record, according to a recent BP report on global energy. Last month, a national committee of gas experts estimated that the country has a total gas resource base of 1.8 quadrillion cubic feet of known or probable gas resources -- a roughly 75-year supply if consumption doesn't grow. Alaska's portion of that is about 157 trillion cubic feet of gas -- a mere 11 percent, according to numbers provided the group, called the Potential Gas Committee. "We've only begun to scratch the surface of this resource," said Mark Finley, general manager of global energy markets for BP America, during a visit to Anchorage last month. He said it is hard to tell now how Alaska's gas line will stack up against other projects throughout the country, but he noted that natural gas has a bright future as the cleanest-burning of all fossil fuels. "There's demand potential for sure," Finley said. http://www.adn.com/money/industries/oil/pipeline/story/861753.html
patgarrett666	Natural gas fuel of immediate future	#39	[-]
Member Posts: 10880 (07/14/09 08:02:37) Reply Quote More My Recent Posts Message Me Connection Blocking Invite Ignore User's Posts	Natural gas fuel of immediate future By Don Briggs Editor's note: The Times will periodically run columns by Don Briggs, president of the Louisiana Oil & Gas Association, on The Times' Business page. The stage is set for the transformation from an oil-supplied transportation system to a natural gas-supplied transportation system. A year ago, T. Boone Pickens went on the world stage using his own money campaigning for the "Pickens Plan." Part of the Pickens Plan was the use of compressed natural gas-powered vehicles to wean the U.S. off the ever-growing imports of foreign oil, which has grown to 70 percent of U.S. consumption at a cost of $400 billion annually. For decades every U.S. president has been warned of the national security risk of growing oil imports, all the way back to President Truman when imports were at 20 percent. The Energy Information Administration projects continued growth in U.S. oil demand and imports. In another 10 years we could easily be importing 75 percent of our demand at an even greater cost. However, this does not have to happen. The United States has an abundance of natural gas. Last month the Potential Gas Committee, a natural gas think tank, released a report estimating gas resources in the U.S. have surged by 35 percent due to new technologies that have unlocked domestic supplies of the clean burning fuel. The Potential Gas Committee estimated gas reserves rose to 2.07 quadrillion cubic feet in 2008. The report confirms the Department of Energy estimates of a 100-year supply of natural gas. It only makes sense that natural gas is the fuel of the future, or should I say the immediate future. 98 percent of the natural gas used in the United States is produced in North America. The cost of compressed natural gas currently averages up to 40 percent less than an equivalent gallon of gasoline. American natural gas producers control all of our needed reserves for natural gas compared to the U.S. control of 4 percent of the world oil reserves. Compressed natural gas is by far the environmental answer for America; natural gas vehicles show an average reduction in ozone-forming emissions of 80 percent compared to gasoline vehicles. The transformation from gasoline-powered vehicles to natural gas won't take place overnight. There are over 9.5 million natural gas vehicles worldwide. Argentina, Brazil, Iran, and Pakistan, lead the world in natural gas vehicles with one million or more vehicles. The United States has a mere 100,000. The kicker is infrastructure: where do you fill up and how often. In the 1989 movie "Field of Dreams," the catch phrase was, "If you build it, they will come." Fueling stations around the United States will have to be built in the years to come for consumers to feel comfortable in purchasing CNG vehicles or purchasing conversion kits for their vehicles. In the meantime the conversion of fleet vehicles will be a big part of the instant growth in CNG vehicles. AT&T recently announced converting nearly 8,000 vehicles to CNG in the next five years. Also many cities plan to convert their fleet vehicles and public transportation systems. Louisiana is doing its part, not only as a major producer of natural gas but providing incentives for consumers and industry to convert to CNG vehicles. Gov. Jindal recently signed House Bill 110. The legislation increases the existing income tax credit from 20 percent to 50 percent for purchase of qualified clean burning motor vehicle fuel property; includes equipment installed on a motor vehicle; includes property directly related to the delivery of an alternative fuel. The legislation was authored by Rep. Jane Smith, R-Bossier City, and Sen. Nick Gautreaux, D-Morgan City, and strongly supported by industries throughout the state. CNG fueling stations will soon become more readily available as will CNG vehicles for purchase. Don Briggs is president of the Louisiana Oil & Gas Association, which represents the independent and service sectors of the oil and gas industry in Louisiana. Contact him at don@loga.la. http://www.shreveporttimes.com/article/20090714/NEWS05/907140312/1064
MickyScars	Natural gas could brighten America's energy future	#40	[-]
Member Posts: 10520 (07/15/09 03:22:06) Reply Quote More My Recent Posts Message Me Connection Blocking Invite Ignore User's Posts	Natural gas could brighten America's energy future Joseph Lazzaro Jul 14th 2009 at 2:50PM http://www.dailyfinance.com/2009/07/14/natural-gas-could-brighten-americas-energy-future/ It's plausible to argue that oil, the world's most important commodity, will contribute to another U.S. recession, as it did in 1973-74, 1979-80, and 2008-09. So you have to ask if there is another fossil-based energy source that can weaken, if not break, oil's grip on the U.S. economy? Natural gas has a chance, if the right factors line-up. Natural gas: looking better all the time There are objective events in the natural gas market that could substantially increase both the U.S.'s natural gas supply and use in the decade ahead. Here's the low-down: Chief among these is an estimated U.S. natural gas reserve increase of 35 percent, due to new drilling technologies that are unlocking large amounts of natural gas from shale rocks, according to a new study by the Potential Gas Committee, The New York Times reported. The shale gas, or unconventional gas, is freed in a process called 'hydraulic fracturing.' If all of that extra natural gas is able to be tapped, estimated U.S. natural gas reserves would totaled 2,074 trillion cubic feet in 2008, up from 1,532 trillion cubic feet in 2006, when the last report was issued, The Times reported. Veteran energy/oil industry analyst Daniel Yergin of Cambridge Energy Research Associates, told Bloomberg Radio that, "The biggest innovation in the energy business has been unconventional natural gas." A domestic energy source Further, natural gas has what economists call a 'source advantage' over oil: An enormous amount of natural gas exists in the United States. There's no need to worry about the shifting political sands in the Middle East, Venezuelan autocrats, or other geopolitical factors jeopardizing the energy supply. Further, although natural gas can be shipped by large tankers, it's best produced regionally, or transported by pipeline. Why hasn't natural gas accounted for a larger portion of the nation's total energy use? In cars, the ease and (before this decade) low-cost of gasoline kept it the motor fuel of choice. In electric power generation, intolerably dirtier coal is vastly cheaper. And up until this decade, climate change was ignored: Sustained efforts to reduce pollution and emissions will reduce coal's advantage over natural gas. In homes and businesses, particularly in the northeast U.S., oil was the established fuel, but that's changing: cleaner gas burners and those aforementioned oil shocks are convincing families and businesses to convert to natural gas, where possible. Another area likely to reinforce the trend to natural gas and away from oil: large vehicle fleets, particularly mass transit systems, such as buses. Look for more systems to convert wholesale to natural gas buses, retiring diesel fleets. Get stuck driving behind one decades-old diesel bus and you'll understand why it makes sense to convert these vehicles to natural gas. What's prevented even more access to shale gas? Natural gas' price. Natural gas traded Tuesday afternoon up 14 cents to $3.39 per million BTUs. Guy Caruso, a former administrator for the U.S. Energy Information Administration, told The Times natural gas prices would have to rise to $4-$6 per million BTUs to justify developing shale beds. Energy Analysis: Natural gas can play a large role in the nation's move away from oil, and from dirtier energy sources, in all zones: residential, commercial, power generation, and transportation. Concerning electric power, renewable sources, such as wind and solar, continue to progress, but those two alone will not be able to displace carbon dioxide-laden coal's 50 percent market share at power plants: that's a market share that natural gas, along with nuclear power, can substantially cut. Meanwhile, homes and businesses can continue to switch to natural gas heat from oil, with considerable benefits to their budgets. Natural gas as a vehicle fuel remains more-complex: public fleet use will increase, but there's little likelihood of natural gas displacing gasoline as a primary civilian car fuel. Bottom Line: It behooves the nation to use natural gas where possible, and reduce the nation's dependence on the dirty coal and unpredictable oil energy sources.