Serious question for Nat Gas Bulls re: LNG ..........
Someone just asked about the LNG Terminal in Chesapeake Bay.
Within 2 short years.... LNG from this terminal alone - will heat 6 Million New England Homes.
6 Million Homes is no drop in the bucket.
bye-bye Fuel Oil...bye bye $7 NG - Hello cheap LNG.
Huge Fields in Qatar...have "0" finding costs.
ex Quatar:
$1 to find it
$1 to ship it to the USA
$1 to reliquify it.
LNG is price competitive at $3
The convergence of LNG and Nat Gas is coming rapidly.
I am VERY VERY BULLISH ON ENERGY !
- just not traditional & Crude Oil based plays.
Fwiw: I am the least bullish on Nat Gas because of LNG and the fact that far more Electricity is generated via coal fired plants than Nat Gas.
*** The most profitable future leverage to Energy is NOT going to be found in Crude Oil, or in Nat Gas... it is going to be found in alternative Energy & New Technologies. ***
- THIS..... is THE biggest mistake most Oilpatch Bulls are now making.
Matt Simmons's PEAK OIL theory has a couple of problematic weaknesses.
1. The Assumption that we will arrive at PEAK OIL within a vacumn.
- that the free markets are not smart enough to be bringing new technologies online & into the void of depleting Crude Oil Production.
- that is ARROGANCE.
Quite obviously Crude Oil Production will peak.
Whether it is within the next 5 years, or 20 - is open for debate.
Whether it will occur into the world standing idly bye as it happens - is not...
Where Matt Simmons PEAK OIL message falls short imho; is in communicating that the upside leverage to this event lies not in CRUDE OIL....but, in new and alternative technologies.
- that should be the message and the "trading" thesis on Peak Oil.
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Posted on Sat, Jan. 22, 2005
U.S. Importing More Liquefied Natural Gas
H. JOSEF HEBERT
Associated Press
Kansas.com
COVE POINT, Md. - Once or twice a week, a tanker unloads millions of gallons of frosty liquid at a terminal on the Chesapeake Bay, bringing to the United States a fuel that many economists believe will help temper energy prices in the coming decades.
For years, liquefied natural gas (LNG) was too expensive. It really was not needed. Even today, there are safety and terrorism worries, exaggerated or not, about shipments of the fuel.
But as growing demand for natural gas outstrips North America's conventional supplies, many experts view imports of LNG as the only way to head off decades of soaring prices for businesses and the tens of millions of households that rely on the fuel for heat and electricity.
While politicians talk of the need for greater U.S. energy independence, American consumers are expected to be relying increasingly on LNG imports from Algeria, Qatar, Russia and elsewhere.
If current trends continue, the United States "by far will be the largest consumer of LNG in the next decade," says Guy Caruso, head of the government's Energy Information Administration.
"If we don't have the capacity to bring in the amount of gas we need and domestic supply goes the way we think it will, the clear implication is higher prices," Caruso says.
Nowhere is the emerging global LNG market more evident than on the shores of Chesapeake Bay 70 miles south of Baltimore.
It was only two years ago that Dominion Resources Inc.'s LNG import terminal, in the shadow of the Cove Point lighthouse, was in mothballs. Its offshore docking platform, able to handle two LNG tankers at a time, sat idle - a monument to a business gone awry.
Now, the platform built in 1974 and shut down in 1981 unloads a tanker full of imported LNG on average every four days. The cold liquid is piped through a 1.2-mile underwater tunnel to four huge storage tanks. Delivered at minus-260 degrees Fahrenheit, the fuel is warmed and turned back into gas, then shipped over pipelines to mid-Atlantic customers.
A larger tank is near completion and two more tanks are planned.
**** By 2008, the terminal will be able to handle 1.8 billion cubic feet of imported gas daily, more than double today's volume and enough fuel to serve 6.1 million homes, Dominion spokesman Daniel Donovan says.
LNG import terminals in Louisiana, Georgia and the Boston area also are expanding. Despite community opposition, more than 40 new LNG projects are proposed around the nation. About a dozen probably will be built, according to experts.
LNG imports still account for less than 3 percent of the 61 billion cubic feet of natural gas used every day in the United States. But LNG's share could grow tenfold in the next 20 years, some analysts predict...."]
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PS: vis a vie "stops" etc
Obviously "stops" whether mental, or already entered in your trading accounts are part & parcel of cyclical & volatility survivability.
Another fairly simplistic strategy is if you were heavilly weighted "long" in Oilpatch Shares in this recent Jan to March move...
- why not sell into significant breakout strength (1/3rd, 1/2, whatever...) & take a portion of those profits and buy some out of the money - outlying Call Options/LEAP Calls ?
- you can retain significant...even equal upside leverage; but yet limit and quantify your downside...and also free up cash to re-enter & buy pullbacks without going to margin, or suffering cyclical rollover giving back 20%ish chunks etc.
IF I was a PEAK OIL - New Paradigm'er (actually since it's 3 cycles old - it's really an "Old" Paradigm now...(vbg):
- I'd be continually selling "shares" into any & all strength...and then rolling out of the money & forward into "calls/Leaps" here.
...but, that's just me.
There's always the 200% Mad Max Margin Strategy that's worked so well in the past here...
(it seems to work especially well, when employed "after the fact" fwiw...)
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