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Gold/Mining/Energy : Big Dog's Boom Boom Room

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From: Frank	9/9/2005 8:46:01 AM
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I have been trying to conceptualize the NG issue in the GOM within the context of systems theory. We get all these ad hoc reports about a pipeline here or a platform there but I believe it is important to step back and look at the problem broadly. Specifically, the entire NG system has been compromised --from every aspect of upstream to downstream. The media and some analysts focus on a bottleneck but the PROCESS has been disrupted. The system is in disarray and many links in the supply chain are damaged or broken ranging from workforce issues to fuel availability to communications to equipment constraints to rigs lost to platforms to pipelines to processing to service firm problems to buildings destroyed to records lost and on and on. But with the piece meal data we are getting it is hard to get one's mind around this issue in entirety. Yet, I have several working hypotheses and I have put my money there: (1) Despite the ingenuity of American industry the NG system will take a while to fix because all parts of the system are essential to full productivity. Thus, I say we will be set back between 600-800 bcf by this time next year. (2) the oil refinery issue is a huge problem --we will refine at least 50 million barrels less because of this storm--and HO supplies will suffer.(3) Last winter was very mild with February off the chart. A normal winter puts huge pressure on every fuel we have --coal supply is low, NG will be below 5 year, HO will be pressured in NE , nuclear plants are being ridden into the ground,and (4) as John C. said depletion broods in a corner spoiling the mood of the party --his partner (loss of marginal production) is an uninvited guest we have all ignored----Frank

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