But just remember Chancels, NG is the only resource we have going in our favor now. Market sentiment is swinging wildly (as in the past) from whether it's a relief that we have found more NG, to whether it's a curse. It's very clear to me the US will not be seeing any meaningful increase in available crude, with our traditional suppliers Nigeria, VZ, and Mexico either in decline, or in chaos. The long-term aggregate effects of the damage Chavez has done to his resource is now showing through. It mirrors what we have seen in other exporting nations like Russia. The price of Nationalism is that you hurt your fields. In addition, these increases in OPEC production no longer translate into the available-for-sale supply, as they once did. An NG shortage in the GCC countries means they have to keep burning alot of oil for power generation. The power generation story in the Mid-East is astonishing.
Moreover, I am sticking hard with my prediction that NG is going to be an investing theme approaching maniacal proportions next year, as an iron curtain comes down on Coal. I don't know if anyone has noticed, but Boone Picken's ideas are now being sucked up by Gore, Ted Turner, Obama guy and fellow Chigagoan Rahm Emanuael, and Obama himself. Let's just leave aside for a moment any judgement we may have about the political aspects of this. I prefer to move straight in to what I think will happen: NG will be the preferred hyrdocarbon of the next Administration. It will not be taxed. It will not be attacked. In fact, it will be promoted and pushed. I expect them to lower the boom initially on the entire federal and state vehicle fleets. They will do a new round of transport budgets for the states, and induce them to buy CNG vehicles.
I'd also add that it's becoming more clear to me that these new Shale NG plays are not quite the fast and easy flowing resource that the analytical community fears. I expect to see further bullishness on supply from these plays (well deserved to be sure)--while at the same time a concurrent tailoring and defining of core vs periphery. Not to mention the declines, and, the costs. My position is; yes, we have the resource and that's great. We will need it. But in a world of 150 oil, 12-14.00 NG will look tasty.
If we fart around this 8-9 level for the next 8 weeks, however, I see reduced drilling plans. 8-9 is not enough to realize the Big Blue Sky flows, from these plays.
Best,
G |
