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Gold/Mining/Energy : Big Dog's Boom Boom Room
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To: tommycanuck who wrote (17825)2/4/2003 8:06:33 PM
From: Frank  Read Replies (1) of 206191
 
Ah, Tommy trust an old hand like you to raise the specter of reality. Good points all and I hope we are taking them into account. My thinking (from a far lower level of experience) goes something like this: (1)Theoretically, the new NG plants have more thermal efficiency than the older ones but there is evidence this may not be so clear in practice. Research has suggested that because the new NG units are used as peakers their actual performance is significantly below nameplate. (2) The extent of fuel switching is a matter of debate. Perhaps there is still 2.5 per day available--perhaps not. Nuclear and coal pretty well maxed out--hydro dropping. Oil works in East but not in midwest or other regions. As plants are retired the fuel switching degrees of freedom become less and less. (3) NG turbines have been cancelled no question. But we still added 55 GW of NG in 2000 and 2001 plus 2002 and plants which will certainly be built in 2003--another 50 or so? (4) Do we have data on how many fertilizer and ammonia producers are already out of the picture? Certainly some since otherwise the situation would be a disaster. (5) LNG may or may not be at 6 bcf by 2006 but my guess is not. Siting those facilities no easy task. And, at anyrate I believe we can't wait til 2006 to solve problem. I also note three relatively undeniable issues (a) As Mark Papa said today we are producing only 48 bcf as opposed to 62 in 2001. (b) Canada is not the calvary any longer and they have their own supply problems. (c) There have been millions (billions?) of square feet of NG heated space added to the residential and commercial sectors in the last decade. We have no metric for what these additions mean since winters have been warm. I believe this is why Lehman consistently underestimates the draw --their model is dated. Having said all this, I am looking at things with the same skepticism you show--I got my butt kicked as well. I appreciate your thoughts as you have been there for decades and I am a wannabe. But I hope we both make money--your old buddy--Frank
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