Hi Daniel,
I'm not following your logic here: there are a lot of businesses that are shut down now because of energy pricing and shortage such ALCOA and once there is availability of sufficient reliable power, then these users will come online and relieve any glut issues and provide growth opportunity for CPN.
While I agree that demand will pick up, I can't quite see how it impacts CPN, in any significant way. Here's my rather rambling overview:
Up here in the PNW, BPA just shunted 5 or 6 major smelters off the system, permanently. They'll all be looking at co-gen as the way to re-open the pot lines. Lots of interest in wind generation right now because the economics are finally making sense. The fools in the aluminum world will try to go with NG, but I think that it has become obvious to most observers that the days of surplus gas are over.
There is also a very firm floor to the NG price, inasmuch as there are many industrial users, beyond the smelter-pot crowd, who've been crowded out of the NG market by high prices. Ammonia fertilizers, and petro-chemical users have scaled way back on production. Simmons & Co. International sees $3.80 as the tipping point where many of these players on the demand side come back into the equation. With spot hovering in the $3.10's we'll see some pickup in demand, beyond the seasonal power generation blip for a while through the fall. No one expects a spike in NG prices this winter like we had last, so CPN ought to have a pretty nice ride with the NG resources it's recently acquired, but not a windfall as might have been the case 8 months ago.
End ramble. |
