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Gold/Mining/Energy : ADRIAN RESOURCES
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To: rdww who wrote (43)12/11/1997 12:21:00 AM
From: Fred Corsiglia  Read Replies (1) of 56
 
Let's assume current natural gas prices are $2.00/MCF. A minimum profit margin of $0.30/MCF would be needed by Enron to make a natural gas project economic leaving a development/operating cost of $1.70/MCF as the entry barrier cost. Assume pipeline transportation/capital recovery costs to an LNG plant could easily amount to $0.10/MCF, liquification costs of another $0.05/MCF, and LNG transportation costs to Japan of $0.10/MCF (all of these gross estimates for purposes of demonstration). Delivery of product to a local consumer (ADL) would lower entry barrier costs by $0.25/MCF (about 12%) making otherwise marginal hydrocarbon projects economically viable. Often 1% or 2% is the difference between decided to develop or delay developing a reserve.
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