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Gold/Mining/Energy : Chesapeake Energy CHK -- Ignore unavailable to you. Want to Upgrade?

To: Aquaman who wrote (563)	9/8/1999 10:58:00 PM
From: Ed Ajootian	Read Replies (1) \| Respond to of 726

"The Oil and Gas Journal, an industry publication, just released its views of the current debate of natural gas supply vs. demand. I want to quote from the opening, ?The continuing decline in U.S. natural gas wellhead deliverability may be setting the stage for a sharp spike in natural gas prices later this year. While this trend of declining deliverability has been under way for some time, its impact on gas markets has been somewhat masked by recent lags in the rate of growth in U.S. gas demand-in turn largely the result of aberrant weather patterns. But the arrival of a hotter-than-normal summer and the forecast return of normal (or colder-than-normal) winter weather have stripped the mask away from the U.S. deliverability dilemma. ?Many industry observers are moving toward a consensus that the convergence of usual market factors-cooling load, storage injection levels, Canadian pipeline export capacity, etc.-are coupling with the fundamental problem of falling wellhead deliverability in the U.S. to firm up gas prices. While analysts offer a range of insights regarding a potential spike in natural gas prices, the extent of that price effect remains open to debate. ?Regardless of the debate over the scope of the price spike, analysts seem to concur on a few observations. First, there is a consensus that such a spike in gas prices will likely happen sometime during the upcoming winter heating season. Similarly, most analysts agree that a spike, however great, would depend on several other fundamental components. These include: gas storage inventory levels (both preceding and following the winter season); declines seen in U.S. gas deliverability curves, specifically, wellhead deliverability in the Gulf of Mexico; availability of imports from Canada (see related story, this page); overall sensitivities of gas supply to outside fundamentals; the weather in late 1999 and early 2000; and the construction of new pipelines. ?Finally, there remains the question of whether the recent uptick in oil and gas prices has generated enough cash flow to spur a rebound in gas drilling significant enough to dent the U.S. wellhead deliverability dilemma in the near term. It is too soon to tell on that score, but recent studies point to declining deliverability in the U.S. gas sector being a long-term, fundamental problem related to accelerating depletion rates in the shallow-water Gulf of Mexico. So the 1999 winter heating season might well set a pattern for some years to come, with gas prices reined only by market factors other than wellhead deliverability." ********************************************************** From Stephen King's PetroDispatch of today. Man, all these predictions are almost getting boring!