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

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From: LoneClone	12/18/2006 7:14:38 PM
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From Raymond James “Stat of the Week”: Lower Canadian gas exports to the U.S. paint a bullish gas price outlook for 2007 Canadian gas exports have long been viewed as a reliable and stable source of natural gas to the U.S. However, recent shifts in Canadian drilling activity, well decline rates, initial well production rates, and gas demand should materially limit the amount of excess production available for export to the U.S. In essence, lower natural gas flowing from Canada means less natural gas for the U.S. If we take the two spectrums of our estimate of 1 to 1.5 Bcf/d in lost exports, we anticipate that the U.S. may lose 1.5% to 2.5% of overall gas supply (or between 350 Bcf to 500 Bcf of available gas to inject into storage next year). This lends further support to our projections of an average natural gas price of $10/mcfe (or a 7:1 ratio with light sweet crude) in 2007. As Canadian gas production stagnates and with U.S. production on the decline, the tightening of the North American gas market should be a bullish long-term driver for gas prices.

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